USA: Social and political change, 1973-80 Flashcards
Why was the US’ economy in a weaker position in 1973?
After the Second World War, the United States was the world’s wealthiest nation. However, by the 1960s there were worrying economic trends. First, while the United States still led the world in manufacturing industries that employed many Americans, those industries were in decline. Second, the expense of the Vietnam War and to a lesser extent of the Great Society raised the federal government deficit from $1.6 billion in 1965 to $25.3 billion in 1968, leading to inflation and a weakened dollar.
By 1973 other countries seemed poised to overtake the USA as the world’s leading economic power. The American economy suffered from inflation (mostly due to rising oil prices and federal government overspending), a balance of trade deficit and a weakened currency. All of this impacted upon the lives of Americans, many of whom had an insatiable appetite for the consumer goods and oil (for cars and heating) that they now struggled to afford.
How far did inflation rise between 1973 and 1980 and how far was this a concern for Americans?
During 1973-80, Americans experienced unprecedented inflation. Inflation was in or near double figures for much of the decade. It made everything more expensive: mortgages, loans, food and energy. During July 1974 alone, prices rose by 3.7 per cent. A 1978 poll showed that 63 per cent of Americans considered inflation their greatest concern.
1955-Inflation is 0%
1973-13.8%
Why was the rust belt hit especially hard by inflation?
As the cost of living rose at a yearly average of 8.2 per cent between 1973 and 1983, inflation greatly affected family incomes. The hardest hit were those in the areas of declining manufacturing output known as the Rust Belt. Increasing numbers previously accustomed to well-paid manufacturing work found themselves unemployed
Why was there an increase in service jobs, and why was this not a stable solution for many families?
It was difficult to find alternative employment, apart from within the service industries. Service jobs constituted 60 per cent of employment opportunities in 1970 but 70 per cent by 1980.
However, many were low paid. Although the federal minimum wage rose from $2.10 an hour in 1975 to $3.35 per hour in 1981, it failed to keep pace with rising prices. Many mothers had to work in order to maintain the usual family income; 38 per cent of women worked in 1960, 43 per cent in 1970 and 52 per cent in 1980.
What evidence do we have that poverty increased in the 1970s? Write down at least 3 pieces of evidence.
Poverty increased as the 1970s wore on. The proportion of US citizens living below the poverty line grew from 11.2 per cent in 1974 to 12.5 per cent in 1976 and included 50 per cent of all black female heads of household.
The numbers eligible for the food-stamp programme grew from 18.5 million in 1976 to 20 million in 1980.
Homelessness became an increasing problem. By the early 1980s politicians and the press recognised that the USA was experiencing a homelessness crisis. Estimates of the total number of homeless people in 1980 vary from 200,000 to 1 million.
What evidence do we have that poverty increased in the 1970s? Write down at least 3 pieces of evidence.
Poverty increased as the 1970s wore on. The proportion of US citizens living below the poverty line grew from 11.2 per cent in 1974 to 12.5 per cent in 1976 and included 50 per cent of all black female heads of household.
The numbers eligible for the food-stamp programme grew from 18.5 million in 1976 to 20 million in 1980.
Homelessness became an increasing problem. By the early 1980s politicians and the press recognised that the USA was experiencing a homelessness crisis. Estimates of the total number of homeless people in 1980 vary from 200,000 to 1 million.
What is foreclosure?
Foreclosure – if a resident fails to pay their mortgage (loan for their home), the lender, usually a bank, can ‘foreclose’, meaning they take possession of the house and the residents have to move out.
What was the crack cocaine crisis?
• According to the U.S. Drug Enforcement Agency (DEA), the price of illegal cocaine dropped by as much as 80 percent during the late 1970s as the white powder flooded the U.S. market.
• Crack cocaine was noted for its instantaneous and intense high, which kept users craving more, thus causing an upsurge in crack cocaine addictions. Between 1982 and 1985, the number of cocaine users increased by 1.6 million people.
What was the problem with poverty in Philadelphia in the 1970s?
• Pre-WW2: Great Migration. Factory jobs.
• 1951 = 46% of jobs were manufacturing (specifically steel). By 1977 this had fallen to 24%.
• This meant more people relied on welfare – 200,000 in 1970 to 340,000 in 1980 (more than 20% of people!)
• Philadelphia lost 5% of its population in the 1950s (suburbanization), 3% in the 1960s and more than 13% in the 1970s (factories closing or moving).
By 1970, a City Planning Commission survey found that crime was the number 1 problem – this continued through the 70s – 80s. Often linked to drugs – by the 80s, crack cocaine.
How did Vietnam War veteran end up homeless?
• Many Vietnam War veterans faced inadequate care when they returned.
• Link to the closing of mental hospitals in the 1970s. The number of patients living in state hospitals dropped from 535,000 in 1960 to 137,000 in 1980.
• Link to PTSD and trauma, family breakdown
• Escalated in the 1980s but began in the 1970s. In 1987, the number of homeless veterans was as high as 300,000.
Why did many people formerly regarded as mentally ill end up on the streets?
During the mid-1970s, the number of institutions for the mentally ill decreased. There were two reasons.
First, the American Association for the Abolition of Involuntary Mental Hospitalization campaigned to give these people greater personal freedom and independence.
Second, these institutions increasingly struggled for financial survival. A 1973 federal district court ruled that patients in mental health institutions had to be paid for their labour, but that unpaid labour had helped keep the institutions running.
Conservatives wanted to decrease expenditure on such institutions and were reluctant to make up for the shortfall, so some were forced to close. Many former residents ended up on the streets and homeless.
What other factors influenced the rise of homelessness in the 1970s?
As a result of continuing urban renewal policies , many inner-city ‘skid row’ hotels that had housed the exceptionally poor were demolished. Those who had formerly obtained shelter in such hotels struggled to find alternative accommodation.
• Rising unemployment led some people into depression, despair and life on the streets. Budget cuts and lower welfare benefits contributed to the sense of hopelessness.
• The number of homeless women increased because of declining marriage rates and the increased number of single mothers. The lack of support from a partner and feeling that the authorities were unsympathetic led many to simply give up and live on the streets.
• The increased use of crack cocaine in the inner cities resulted in addicts spending all their money on the drug and unable to afford regular living accommodation.
How dependent was the US on foreign oil in the 1970s?
In the three decades after the Second World War, the United States went from energy self-sufficiency to an energy deficit situation.
With 6 per cent of the world’s population, Americans consumed one-third of the world’s oil production. Roughly 30 per cent of the oil Americans used had to be imported, mostly from the Middle East.
By becoming dependent on the resources of other countries, especially such an important resource like oil, it puts the USA if tense relations and conflict were to break out, like it did in 1973.
What happened in 1973 and how did this affect the price of oil in the USA?
The resulting American economic vulnerability was exposed when Nixon’s support of Israel in the Yom Kippur War (1973) led to an Organization of Petroleum Exporting Countries (OPEC) oil embargo on the United States.
The end of the embargo was followed by a 387% hike in the price of oil that greatly damaged the American economy (except for the US oil companies). Americans now paid around 30 per cent more for heating oil and petrol.
What were the strikes due to the oil crisis?
In 1974, a strike by 100,000 independent truckers demanding lower fuel prices brought the nation’s roads to a standstill for 11 days and left stores with empty shelves.
• In late 1977, 165,000 United Mine Workers began a three-month strike. The consequent coal shortage led to school closures and shortened working weeks in the Eastern USA.
What happened in Levittown, Pennsylvania in 1979, and why might this be regarded as symbolic of American decline?
In the exceptionally harsh winter of 1976-77, a natural gas shortage forced the closure of schools and factories, especially in the Eastern USA.
Fuel stations closed on Sundays or cut their hours in order to conserve supplies, and long queues developed at the petrol pumps.
The first American energy riot occurred in Levittown, Pennsylvania, in 1979, post second oil shock, when truckers barricaded expressways; 100 were injured and 170 arrested in two nights of violence.
What was the ‘second oil shock’?
• 7 January 1978 – 11 February 1979 – the Iranian Revolution. The US-backed Shah was overthrown, leading to Iran becoming an Islamic republic.
• Strikes on Iran’s oil fields meant that world oil production declined by only 7% or less, (not as dramatic as an event in the long-term) but the short-term supply disruption led to a spike in prices, panic buying, and long lines at gas stations.
• Oil prices rose from $13 per barrel in mid-1979 to $34 per barrel in mid-1980.
• This led to several states passing state-mandated gasoline rationing, including California, New York, Pennsylvania, Texas, and New Jersey. In these populous states, consumers could only purchase gas every other day, based on whether the last digit of their license plate numbers was even or odd.
Why was the changing price of oil so significant for the American economy?
In 1979, half the nation’s petrol stations were without fuel. Those that had it were charging 50 per cent more than the year before. Drivers queued for petrol on specified days, often for several hours.
The end of the era of cheap energy hit Americans’ standard of living. Probably one-third of the alarming rise in prices was due to the increased cost of oil.
Cheap oil had been vital to post-Second World War prosperity and economic growth, helping industry and accelerating socially transformative suburbanisation and consumerism.
How did the energy crisis lead to a growing sense of politician disillusionment?
The energy crisis provided politicians with an apparently insoluble problem, but voters wanted them to ‘do something about it’. One obvious way to decrease energy consumption was to raise taxes on oil, but voters disliked increased energy prices. The inability of politicians to solve this conundrum contributed to the growing political disillusionment.
From 1973, many private citizens tried to save fuel, turning down the thermostat and joining carpools. In 1977, President Carter suggested that thermostats be adjusted so that heating was at a maximum 18°C in winter, and air conditioning would only kick in at 26°C in summer. Government buildings led the way in implementing these suggestions and some factories cut hours. However, Americans still consumed frightening quantities of fuel
What was the US trade deficit by 1979?
In combination with the energy crisis, foreign economic competition contributed to a sense of national decline from the mid-1970s.
Although the United States still produced 25 per cent of the world’s manufactured goods in the 1970s, American companies struggled against technologically superior rivals in Germany and Japan. Such foreign competition led to increased unemployment and a trade deficit. By 1978-79 the annual US trade deficit was around $40 billion.
Why did Japanese cars start to take over the American market?
The impact of foreign competition was demonstrated in the automobile industry. Inexpensive and well-made Japanese car imports were extremely attractive to American consumers. Japanese companies had 23 per cent of the US automobile market by 1981. American car companies were slow to adapt. Even as sales of American cars fell, manufacturers continued to produce ‘gas guzzlers’ that used a great deal of fuel, while Japanese cars were smaller and more economic.
How did the car industry cope with the growth in foreign competition?
Chrysler lost billions and needed a controversial $1.5 billion government bailout in 1980, the largest package ever granted by the U.S government to an American corporation.
The number of permanent jobs in the automobile industry fell from 940,000 in 1978 to 500,000 in 1982. In the car manufacturing city of Detroit, unemployment reached 24 per cent by 1980.
How did President Ford try to address the crisis, and with what results?
Voters were unimpressed by the federal government response to the economic problems of 1973-80. Ford had various ideas for improving the economy. He asked Americans to voluntarily cut their mileage by 5 per cent and stop throwing out food, and he distributed red-and- white WIN (‘Whip Inflation Now’) buttons. America liked his buttons but rejected his suggestions.
He cut federal expenditure and asked Congress to approve a tax rise. When that made him unpopular, he proposed a tax cut, which the Democrat-controlled Congress made larger than he thought wise. In the long run, the tax cut and 1975 Omnibus Energy Act (domestic oil prices were allowed to rise slowly so consumption decreased) helped bring the economy out of recession.
Why were Carter’s policy responses to the economic crisis and inflation so unpopular?
Carter’s responses to rocketing inflation, increasing unemployment and rising energy prices pleased no one. He adopted standard methods for handling inflation such as decreasing government expenditure (for example, he froze federal workers’ wages) and urging voluntary wage and price controls in the private sector.
Blue-collar workers who traditionally voted Democrat disliked Carter’s focus upon inflation rather than unemployment, his voluntary wage guidelines and his criticism of striking miners in 1977, and considered him unsupportive over the minimum wage. This is particularly important, as blue-collar workers are supposed to be hard-core democrats, historically.
The business community distrusted Carter; they feared his energy proposals would damage industry and worried about the impact of mounting trade deficits on the dollar, which had slumped on the world currency markets.
All of this added to the growing sense of crisis and of failure of presidential leadership. In many ways, Carter was unfairly judged; his support for his Federal Reserve Board chairman’s tough stance on inflation (he curbed the money supply) led to revival under Reagan.
