Economics: The 1960s

Economic Conditions in the 60s

• Prosperity occurred under Kennedy and Johnson.
• The Vietnam War and Great Society initiatives led to demand-pull inflation due to increased spending exceeding production.
• A recession occurred in 1969-70 as the government cut spending and the Federal Reserve raised interest rates.
• From 1944 to 1960, the US annual growth rate was 2%.
• The 1960s saw an average growth rate of 5%, with peaks of 8.5% in two quarters, marking the highest job growth post-WWII.
• The 1964 Tax Reduction Act incentivized work by dropping income taxes by 20% and business taxes by 8%.
• This act exemplified Supply Side Economics, where a rising tide lifts all boats.
• The expansion was the 2nd longest in US history, with federal tax revenue increasing by 65% from 1965-1970.
• Union gains empowered workers to spend more, further fueling inflation.
• Great Society spending increased the number of Americans on welfare by 225% during the 60s.
• The cost of the Vietnam War in 1968 was $25 billion.
• The federal budget increased from $41 billion in 1950 to $77 billion in 1960 and $195 billion in 1970.
• The 1968 budget deficit, largely due to Vietnam, was $25 billion.
• The annual inflation rate rose from 4% in 1969 to 6-7% in 1970, as measured by the Consumer Price Index (CPI).
• The government tried to cut spending and the Federal Reserve raised interest rates to combat the deficit.
• This led to less borrowing and spending, slowing the economy and causing a recession that lasted 11 months.
• Unemployment reached 6% during the recession.

Nixon Shock 1971

• Nixon implemented price and wage controls, ended the gold standard, and imposed tariffs.
• The causes included Europe and Japan wanting fewer US dollars due to inflation making US products expensive and the US unable to cover dollars with gold.
• By 1971, the US could only cover 22% of its dollar supply with gold.
• Investors began exchanging dollars for gold, decreasing US wealth.
• In 1944, the Bretton Woods Conference fixed the dollar to $35 per ounce of gold, with other countries' currencies tied to the dollar, to stabilize the world economy.
• The US emerged as the economic world power, becoming a gold deposit and not trading dollars for other currencies.
• The G-10 industrialized democracies agreed to new fixed exchange rates during the December 1971 Smithsonian Agreement due to the falling dollar value.
• The agreement effectively abandoned the Bretton Woods System.
• Nixon ended the convertibility of dollars to gold, imposed a 10% tariff on all dutiable imports, and proposed tax cuts and a 90-day freeze on prices and wages.
• These measures began in 1971 and continued until Nixon's reelection in January 1971.

Oil Crisis of 1973

• The Yom Kippur War in October 1973 led to an oil embargo by OPEC, causing cost-push inflation and stagflation.
• By 1971, the US imported over ⅓ of its oil, mostly from the Middle East.
• OPEC, led by Saudi Arabia, put an embargo on oil to the US and nations supporting Israel, and raised prices nearly 400%.
• The price of oil jumped from $3 to $12 a barrel, doubling gas prices by 1974 (from $0.35 to $0.70 a gallon).
• November 1973 saw a 40% rise in gas prices, the largest single-month increase.
• Rising energy costs increased all prices, leading to cost-push inflation.
• The Arab nations ended the embargo in March 1974, but energy problems persisted.
• The airline business was significantly impacted.
• Bread prices increased from $0.28 to $0.89 per loaf.
• Wheat sales to the USSR in July 1972, along with harsh winters in 1972-73, contributed to shortages.
• Car prices increased by 72% by 1978.
• Unionization of farm workers from 1965-1970, also played a role.
• Stagflation, a rise in both inflation and unemployment, occurred.
• By 1974, inflation was 11% and unemployment was 7%.
• Nixon responded with rationing, a 25% reduction in jet fuel for passenger flights, and Congress enacted a 55-mph speed limit on January 2.
• Heating oil deliveries were cut by 15% to homes, 25% to stores, and 10% to factories.

Economic Weakness at Home

• US businesses struggled with increased unemployment, inflation, and stagflation, and prioritized short-term profits over long-term health.
• Lack of research and development led to inefficient equipment in Detroit's automobiles and other industries.
• In 1970, the Penn Central Railroad became the largest corporation in US history to go bankrupt.
• Japan and Western European countries rose to create efficient and up-to-date industries, rivalling the US even in the US market.
• Japan's televisions, electronics, and cars (Datsun) gained popularity.
• In 1950, the US accounted for 40% of the value of all goods and services provided around the world, but by 1970 this dropped to 23%.
• By the end of the 70s, the US imported more manufacturing goods than it exported creating a trade deficit.
• Multinational corporations, firms with factories in several countries, accounted for 15% of the world’s annual gross product causing deindustrialization.
• US firms expanded abroad, increasing from 9% in 1957 to 25% in 1972, moving to foreign nations with lower wages and less labour laws.
• Outsourcing and automation contributed to the decline of US manufacturing.
• In 1954, US companies made 75% of the world's TVs; by 1974, less than 25%.

Impact of Deindustrialization

• Workers were affected by job losses and shifts in the labour force.
• By the late 1970s, less than 1 in 4 workers belonged to a union.
• The unemployment rate increased from 2.8% in 1969 to 9% in 1975.
• Organized labour lost power and influence.
• Women in the workforce increased as spendable income dropped, from 36% in 1960 to 50% in 1980.
• Reasons for these changes included the rising costs of business due to inflation and unions.
• Americans wanting to buy foreign products caused a trade deficit.
• Unemployment for factory workers and a demand for service jobs caused businesses to move countries.
• Multinational corporations invested in other countries, not the US.
• The Rust Belt, the north with cold, snowy winters, was vulnerable to the oil embargo and higher energy prices.
• In the 70s, the Rust Belt experienced empty, decaying factories.
• The Sun Belt, including Florida to California, saw northerners move south.
• Cities such as Orlando, Houston, Phoenix, Las Vegas, & San Diego boomed due to cheaper energy, less unions, and new opportunities.
• Texas and southwestern states, rich in oil & natural gas reserves, profited from the energy crisis.
• The Sunbelt was home to new high-technology businesses, including aerospace firms, electronics companies, and defense contracts.
• Walt Disney World opened in 1971 in the Sun Belt.

Economic Policy under Ford & Carter

• Ford had no solutions for deindustrialization & stagflation and believed inflation was the largest problem, doing little to stop unemployment which topped 9%.
• Ford's anti-inflation program, Whip Inflation Now (WIN), encouraged Americans to control price increases voluntarily, which was unsuccessful.
• Ford implemented a stop-go economic policy.
• The Federal Reserve began raising interest rates.
• The stock market crashed at the end of the year.
• The recession of 1974-75 was the worst since the Great Depression, with unemployment reaching 9% in 1975.
• Inflation did begin to fall, reaching 6% in 1975.
• In 1975, Congress passed a spending package to jump start the economy again, increasing deficits.
• Inflation slowly returned.
• By the 1960s, some economists advocating deregulation of businesses as lowering costs, increasing competition, and improving services.
• In 1978, the government removed price controls on the airline industry.
• The move lowered fares in the short run but drove some airlines out of business in the long run.
• Deregulation marked a change in political power; big businesses lobbied effectively against regulation, organized labour, and taxes.
• Liberals failed to convince Congress to create the Consumer Protection Agency or make labour organization easy.
• Carter proposed alternative energy options.
• The 1976 election saw the unemployment rate at 7.5% and the inflation rate at 6%
• February 1977 witnessed Carter's Sweater Speech after a harsh winter and energy shortage.
• Carter called the energy crisis the “Moral Equivalent of War” (MEOW) in April 1977.
• His solutions were long term, including reducing gas consumption, establishing a Department of Energy, creating a strategic Petroleum reserve, and alternative energy initiatives (Coal, Solar, Nuclear).
• Carter gave 2 speeches on the topic because the first was unpopular with the environmental lobby.
• Carter spoke to the televised audience that the nations was suffering a “crisis of the American spirit” (Americans had lost confidence)
• Carter implored Americans to return to the values that made the country strong and share the responsibility of sacrifice.
• As a result of his speech, Carter's approval rating fell.
• Carter became more embattled when the Shah of Iran was overthrown by the followers of Ayatollah Ruholla Khomeini in February 1979.
• The Iranian revolutionaries condemned America for imposing the Shah and modern culture on their nation.
• During the Oil Crisis of 1979, the price of oil climbed from $12 to $34 a barrel and US gas prices doubled again.
• Inflation hit 13.5% by 1980 and unemployment rose to 7%, causing stagflation.
• Government policies encouraged refiners to hold gasoline.
• Rationing occurred.
• The standard of living by 1980 had fallen to 5th in the world.
• Real income fell 18% during the 70s, while the cost of living rose 110%.
• By 1979, 55% of Americans believed “next year would be worse than this year,” and 90% believed inflation was permanent.

Nixon Administration

• Nixon took office with the Republican goals of taming big government with a balanced budget & reduction in federal power.
• Nixon's spending cuts included defense & Congress slashed NASA’s budget.
• Nixon succeeded with the moon landing.
• Nixon had a feeling of revenge & spite assuming he was cheated from the 1960 election.
• Nixon was paranoid.
• The “New” Nixon recalculated his persona making everything political.
• Nixon believed himself to be above the law to get things done.
• Nixon created New Federalism to return a greater share of control to state & local government & to the people.
• By 1971, the cost of big government, combined with the unsettled economy, produced a large budget deficit.
• Nixon attacked the federal power of the Great Society.
• Nixn tried to reform the federal welfare system believing it made the federal bureaucracy too large & the poor too dependent.
• Family Assistance Plan, provide poor families a guaranteed minimum annual income, but required the poor households to accept any jobs.
• Nixon’s Admin went with several liberal initiatives expanding federal regulatory powers in the 1970s
• Americans worried that corporation did not protect workers, consumers, or the environment
• Nixon created The Environmental Protection Agency (EPA) (1970), Occupational Safety & Health Administration (OSHA) Consumer Product Safety Commission (CPSC)
• These enhanced government power over corporations, as did laws to safeguard coast lines & endangered species & limit strip mining of coal, air & water pollution, & pesticide use

Road to Re-election

• Nixon tried to join white ethnics & white southerners in a Republican counterattack against radicalism, liberalism, & the Democratic party.
• President condemned protestors & demonstration (“Anarchy”).
• IRS investigations to harass liberal & antiwar figures
• FBI to infiltrate & disrupt the Black Power movement, the Brown Berets & the New Left
• 1968, The FBI begins COINTELPRO.
• The CIA was illegally used domestically against anti war movement.
• Between 1973-1977, eleven states decriminalized marijuana possession
• November 1969, Turning point as Nixon had his Primetime “Vietnamization” speech followed with analysis & criticism.
• Nixon created a press room for reporters @ the White House.
• Spiro Agnew was used as hatchet man.
• Memos leaked outlining the use of the FCC, IRS, & Justice Department to target major networks.
• 1972, Nixon determined “The press is the enemy”.
• Nixon reached out to Sunbelt voters by opposing busing, rapid integration, crime, & radicalism with the Southern Strategy.
• Nixon wanted to create a more conservative less activist Supreme Court.
• In 1972 Election President Nixon defeated Democrat George McGovern winning 49/50 states & 61% popular vote.

Watergate Scandal Part 1

• Every President since Truman was illegally involved in Vietnam (as uncovered with the release of the pentagon papers).
• June 1971, Ellsberg takes it to the New York Times; after NYT released the papers Nixon had federal judge give an injunction against the newspaper.
• The Plumbers were created to gather intelligence on enemies
• Nixon had Campaign Finance Reform Act of ‘71.
• Nixon was involved in extortion, bribery, criminal fraud, pay to play schemes.
• There were $22 million in secret funds to campaign, in his first term but mostly in 1970 to 1972.
• The Watergate Scandal started when five men were caught breaking into the offices of the Democratic National Headquarters in the Watergate hotel in Washington D.C.(June 17,1972).
• Nixon ordered the CIA to shut down the FBI investigation as he began an attempted cover-up
• The story gradually emerged with two reporters for the Washington Post, Bob Woodward & Carl Bernstein.
• End of April, Nixon had to accept the resignation of his trusted aides, H.R “Bob” Haldeman & John Ehrlichman.
• To investigate Watergate, Nixon named a special federal prosecutor, Archibald Cox.

Watergate Part 2

• A Senate committee, chaired by Sam Ervin of North Carolina, began hearings on Watergate in May 1973 .
• Nixon claimed executive privilege and refused to turn over tapes of his conversations after the break-in.
• Nixon sued Archibald Cox & ordered him fired on Saturday October 20, 1973.
• People were brought into the Senate and asked “What did he know, and when did he know it?”.
• Nixon had to name a new special prosecutor, Leon Jaworski “Jaws”.
• “I am not a crook,” Nixon insisted.
• By 1974: it became clear that the Nixon administration had engaged in a shaking range of improper and illegal behavior/
• Vice President Spiro Agnes found to have accepted bribes as governor of Maryland in the1960s accepted a plea deal & resigned in 1973.
• He was replaced by Republican Congressman Gerald R Ford.
• July 1974, the House of Judiciary Committee voted to recommend to the House of Representatives to impeach Nixon.
• August 9, 1974, Nixon left office in disgrace as he resigned rather than face a trial in the Senate & be impeached.
• The government works and public trust in presidency declined (Watergate Scandal).

Ford Presidency & Election of 1976

• Ford offered Nixon a full pardon for all crimes committed as President (on September 1974).
• Ford's popularity dropped immediately, his presidency never fully recovered.
• Ford was deemed unpopular due to the struggling economy, his image, pardon on Nixon, and Inability to do anything about Vietnam.
• Republican President Elect Gerald Ford
• Democratic President Elect Jimmy Carter
• His anti-inflation program, “Whip Inflation Now” encouraged Americans to control price increases voluntarily, but was ineffective.
• Jimmy Carter ran as an “outsider” and religious president.
• Carter won 50.1% to Ford's 48%.
• Democratic won the electoral college majority by carrying the Northeast & taking all the South from the republicans.
• It was the Last time the South votes democratic.

Carter Administration

• As he took office in 1977 Jimmy Carter seemed capable & efficient.
• Carter’s perfectionism was captured in the title of his autobiography, Why Not the Best?
• 3 Mile Island damaged Carter's push for nuclear energy.
• Iranian Hostage Situation occurred during Carter's presidency
• Washington create “Superfund”, $1.6 billion to clean hazardous-waste sites following The hazardous Love Canal waste case.
• Carter failed to gain much support in the West following The Sagebrush Rebellion with his environment programs.
• Congress passed the Airline Deregulation Act in 1978 under Carter
• Carter’s economic plan included: Department of Energy, taxes on gas-guzzling automobiles & consumers of oil, tax incentives to stimulate oil & gas production, & alternative energy
• Carter froze Iranian assets in the US but could not compel the release of hostages
• Carter spent the last year of his presidency working to get the hostages released.

Liberal Feminism

• The Civil Rights movement for African Americans have a profound effect on other minorities & women, fueling The Women’s Rights Movement.
• Betty Frieden (The Feminine Mystique (1963)), and a founder of NOW (National Organization for Women) worked to change the image of women.
• Bill of Rights (Equal Rights Constitutional Amendment (ERA), enforce a ban on sex discrimination in workplace.
• In 1963, Congress passes the Equal Pay Act, which mandated the same pay for men & women who did the same work, but the measure, full of loopholes, had little impact.
• Overall Women going into the workforce was a large success, it was empowering (gains as the average College admission changes).
• 1972, Congress approved Title IX of The Higher Education Act, which required schools & universities receiving federal funds to give equal opportunities to women & men in admissions, athletics, & other programs
• Billie Jean King supported the women's movement (Battle of the Sexes).
• The Supreme Court ruled Texas anti abortion law unconstitutional on the grounds that it violated the “right to privacy” guaranteed by the Ninth & Fourteenth Amendments (Roe V Wade).

Radical Feminism

• Radical feminists focused on a broader range of private & public issues ( oppression in bedroom & kitchen, then school & workplace).
• In September 1968, New York Radical Women organized a protest against the annual Miss America pageant in Atlantic City, New Jersey as they believed the pageant was an act of “thought control” intended to oppress women.
• Gloria Steinem began the feminist magazine MS. on television, popular sitcoms portrayed independent women.
• Fearing that equal rights would end their femininity and their protected legal status, conservative women (ex activist Phyllis Schlafly), campaigned effectively against the ERA.
• In the 1970s (The application of Marxism to sex) The Divorce rate climbed 10% during the 60s, & another 85% during the 70s.
• After businesses have to hire minorities & women, there can be pushback.

Gay Rights Movement

• Medical professionals and federal actions historically discriminated against those in Gay and LGBTQA positions.
• The Stonewall Riot in June 1969 increased awareness and rallied members.
• Bill Johnson becomes first openly gay minister (1972), the American Psychiatric Association decided that gay identity was not a “mental disorder” & that gays deserved equal rights (1973), civil service commissions lifted ban on gays (1975)
• Harvey Milk becomes the first openly gay officer (1978).
• 1979 was the PEAK OF gay movement.
• Conservative states still resist civil rights.

Chicano Movement

• Large hispanic population in southwest states cause The reasons for the movement to push for civil rights and fair opportunities (low standards of life).
• 1970's LA Raza United pushed for racial pride.
• Cesar Chavez (specifically in California) promoted non violence and fair rights and pay for farm workers.
• M.E.Ch.A became large college student movement helping more hispanic students get admitted into college.
• 1967, some paramilitary groups created the Brown Berets.

Native American Activism

• 1970s: Native American population rapidly growing and divided into tribes with tribal laws.
• Termination Policy of earlier decades lead to great civil rights push and movements.
• Native American Youth Council (1961)
• American Indian Movement (AIM)(1968)
• 89 AIM activists occupied Alcatraz Island in San Francisco Bay to push for civil rights recognition.
• Occupation losses but support gains.