about one of the most important periods in American history, the mid-to-late 1970s. Stan

why is there nothing on the chalkboard? We can’t find a picture of Gerald Ford somewhere

around here? Don’t worry Crash Course fans we got one.

Thanks for your support through Subbable. It paid for this 90 cent Gerald Ford photograph.

These really are the years where everything changed in the United States and amidst all

that turmoil something wonderful was born. Mr. Green? Mr. Green? Strong with the force,

this episode is. No, me from the past, Yoda doesn’t show

up until Empire Strikes Back which came out in 1980. I’m referring of course to the

fact that we were born! It’s the beginning of the John Green era!

From here on out, almost everything we discuss will have happened in my lifetime. Or as most

Crash Course viewers refer to it, “that century before I was born”.

But it wasn’t just the birth of me and the death of Elvis, the late 1970s were truly

a period of momentous change, and for most Americans it sucked.

Intro So how Americans reacted to those no good

very bad years really has shaped the world in which we find ourselves.

The big story of the 1970s is economics. Twenty-five years of broad economic expansion and prosperity

came to a grinding halt in the 1970s meaning the our party was over. And what did we get

instead? Inflation and extremely slow growth. The worst hangover ever. Just kidding, the

worst hangover was The Depression. The 2nd worst hangover was the 2008 recession,

and then the 3rd worst hangover was Hangover Part III. It was the 4th worst hangover in

American history. Narrowly beating out America’s 5th worst

hangover the Hangover Part II. What happened to the American economy in the

1970s was the result both of long-term processes and unexpected shocks. The long-term process

was the gradual decline of manufacturing in the U.S. in relation to competing manufacturing

in the rest of the world. Part of this was due to American policy; after

World War II, you’ll remember that we promoted the economic growth of Japan, Germany, South

Korea and Taiwan, ignoring the tariffs that they set up to protect nascent industries,

and effectively subsidizing them by providing for their defense.

And not having to build nuclear arsenals of their own really allowed them to invest in

their domestic economies. And then one day, a bunch of Toyotas and Mercedes

showed up, and you could drive them up to like 40 thousand miles before they would break

down and we were like, “wait a second”. In 1971, for the first time in the 20th century,

America experienced an export trade deficit, importing more goods than it exported, which

is the same problem that my aunt has with QVC. I mean, they hardly import anything from

her. One reason for this deficit was because the

dollar was linked to gold, making it a strong currency but also making American products

more expensive abroad. So Nixon took the U.S. off the gold standard, hoping to make American

goods cheaper overseas and reduce imports, but that didn’t really work.

Because the U.S. was also competing against cheaper labor costs, and cheaper raw materials,

and more productive economies. And in many cases this growing global competition

put American firms that couldn’t compete out of business.

This was especially true in manufacturing. In 1960, 38% of Americans worked in manufacturing.

In 1980, it was 28%. Today, it’s nine. Not 9%, nine people.

Stan wants me to tell you that was a joke. It actually is 9%.

Unionized workers were hit particularly hard. In the 1940s and 1950s unions had won generous

concessions from corporate employers including paid vacation, and health benefits, and especially

pensions, which employers would agree to as a kind of deferred compensation so that they

wouldn’t have to pay higher w ages to people while they were working.

And this worked great, until people started to retire.

So by 1970, competition led employers to either eliminate high-paying manufacturing jobs,

or else to increase automation, or to shift workers to lower wage regions of the U.S.

or even overseas. The American South benefitted from this trend

because its anti-union stance was attractive to manufacturers. But then, non-union industries

that were already in the South found that they had no way to find new workers so the

only way to survive was to move production overseas.

And also as industries moved production to the Sunbelt that increased the political influence

of the region, and because the South and Southwest are generally conservative politically, the

nation’s politics continued to move to the right.

Meanwhile the northern industrial cities, particularly the Rust Belt of the Midwest,

were becoming the empty urban playgrounds that we know and love today.

Detroit and Chicago had lost half of their manufacturing jobs by 1980 and smaller cities

fared even worse. As industry moved away, they found their tax bases dried up, and they

were unable to provide even basic services to their citizens.

I mean with the world of Wall Street fat cats this is hard to imagine today, but in 1975

New York City faced bankruptcy. In addition to these long term structural

changes to the American economy and our demographics, the 1970s saw two oil shocks that sent the

economy into a tailspin. In 1973, in response to Western support of

Israel, Middle Eastern Arab states suspended oil exports to the U.S which led to the price

of oil quadrupling. This resulted in long lines for gasoline,

dramatically higher oil prices, and Americans deciding to purchase smaller, more fuel efficient

cars, which is to say Japanese cars. Also, prices of everything else went up because

oil is either used for the production of or transportation of just about everything.

I mean with 70’s inflation, this 90 cent portrait of Gerald Ford would have cost at

least $1.10. The paint that covers the green parts of not-America,

oil based. The plastic that comprises the DVD’s of

Crash Course World History, available now at DFTBA.com, oil based.

Those were a fantastic bargain and they would have been way more expensive if the price

of oil was higher. And then, in 1979, a second oil shock hit

the United States after the Iranian revolution. Wait Stan, did we say 1979? We’ve got to

put up a picture of Jimmy Carter. Bam! Sorry, Gerald Ford there’s a peanut

farmer in town. So during the 1970s inflation soared to 10%

a year and economic growth slowed to 2.4%, resulting in what came to be known as stagflation.

Unemployment rose, and a new economic statistic was born: the misery index, the combination

of unemployment and inflation. At the beginning of the decade it was 10.8, by 1980 it had

doubled. If you’re looking for the roots of America’s

contemporary economic inequality, the 1970s are a good milestone, since according to our

old friend Eric Foner, “beginning in 1973, real wages essentially did not rise for twenty

years.” [1] Americans got to experience the joy of two

years of Gerald Ford before poor Jimmy Carter had a chance to fail at improving the economy.

The only president never to have been elected even to the vice presidency, Gerald Ford was

so insignificant to American history that we already replaced him on the chalkboard.

One of Ford’s first acts was to pardon Nixon making him immune from prosecution for obstruction

of justice. That very unpopular decision probably made it impossible for Ford to win in 1976.

Coincidentally, WIN was the only memorable domestic program that Ford proposed. It stood

for Whip Inflation Now and it was basically a plea for Americans to be better shoppers,

spend less, and wear WIN buttons. Thirty-five years later Charlie Sheen would

turn winning into an incredibly successful social media campaign, but sadly at the time

there was no Twitter. Inflation did drop, but unemployment went

up, especially during the recession of 1974-75 where it topped 9%. Now, Ford would have liked

to cut taxes and reduce government regulation, but the Democratic Congress wouldn’t let

him. So that’s Ford, probably best known today

as the first president to be satirized on Saturday Night Live. Then, in 1976, we got

a new president: Jimmy Carter. Now Jimmy Carter is generally considered by

historians to have been a failure as president. Although, he is often seen as a really good

ex-president. He tried to fight the inflation part of stagflation, but to do it he acted

in some rather un-New Deal Democrat ways. He cut government spending, deregulated the

trucking and airline industries, and he supported the Fed’s decision to raise interest rates.

Oh, it’s time for the mystery document? The rules here are simple...

I read the mystery document, I guess the author, and if I’m wrong I get shocked.

Alright, let’s see what we’ve got today. “I want to speak to you first tonight about

a subject even more serious than energy or inflation. I want to talk to you right now

about a fundamental threat to American democracy.

I do not mean our political and civil liberties. They will endure. And I do not refer to the

outward strength of America, a nation that is at peace tonight everywhere in the world,

with unmatched economic power and military might.

The threat is nearly invisible in ordinary ways. It is a crisis of confidence. It is

a crisis that strikes at the very heart and soul and spirit of our national will. We can

see this crisis in the growing doubt about the meaning of our own lives and in the loss

of a unity of purpose for our nation.

The erosion of our confidence in the future is threatening to destroy the social and political

fabric of America.” It’s Jimmy Carter’s “Crisis of Confidence”

speech, my favorite speech ever made that also cost a president 20 points of approval

rating. So Carter says that Americans have lost their

ability to face the future and some of their can-do spirit. The rest of the speech talks

about how Americans’ values are out of whack, how Americans are wasteful, and need a new

more vibrant approach to the energy crisis. Let me tell you a lesson from history Jimmy

Carter, you don’t get reelected by telling Americans how to do more with less.

You get reelected by telling Americans, “more, more, always more, more for you. More. More.

More. I promise.” The speech ultimately called for a renewal

of spirit, but all people remember is the part where Jimmy Carter was criticizing them,

and it’s gone down as a great example of Carter’s political ineptitude.

Domestically, Carter paid lip-service to liberal ideas like energy conservation, even installing

solar panels on the White House, but his bigger plan to solve the energy crises was investment

in nuclear power. And nuclear power did grow, although never

to the extent we saw in certain European countries, partly because of the accident at Three Mile

Island in 1979 when radioactive vapor was released into the air.

This of course spurred public fears of a nuclear meltdown and drove a huge anti-nuclear energy

movement. But some of Carter’s more conservative policies

did ultimately have an impact, like his support for deregulation of the airlines. Before airline

deregulation, prices were fixed, so airlines had to compete by offering better service.

Now, of course, flights are much cheaper and also so much more miserable.

In many ways, Carter was more important as a foreign policy president, but as with his

energy initiatives, he’s mostly remembered for his failures.

Aiming to make Human Rights a cornerstone of America’s foreign policy, Jimmy Carter

tried to turn away from the Cold War framework and focus instead on combatting 3rd world

poverty and reducing the spread of nuclear weapons. Let’s go to the Thought Bubble.

Carter’s notable changes included cutting off aid to Argentina during its “Dirty War”

and signing a treaty in 1978 that would transfer the Panama Canal back to Panama.

His greatest accomplishment was probably brokering the Camp David Accords. This historic peace

agreement between Egypt and Israel has, as we all know, led to a lasting peace in the

Middle East, just kidding, but it has been a step in the right direction and one that’s

lasted. But the U.S. continued to support dictatorial

regimes in Guatemala, the Philippines and South Korea. Carter’s most significant failure

in terms of supporting international bad guys, though, is the Shah of Iran.

Iran had oil and was a major buyer of American arms, but the Shah was really unpopular and

our support of him fuelled anti-American sentiments in Iran. Those boiled over in the 1979 Iranian

Revolution, especially after Carter allowed the Shah to get cancer treatments in America,

which in turn prompted the storming of the American embassy in Tehran and the capture

of 53 American hostages. The Iranian hostage crisis lasted 444 days and although Carter’s

secretary of state did negotiate their release, it didn’t happen until the day Carter’s

successor Ronald Reagan was inaugurated. The inability to free the hostages and the

botched rescue attempt -- Affleck’s ARGO notwithstanding -- added to the impression

that Carter was weak. Events in the Middle East also increased Cold

War tensions especially after 1979, when the USSR invaded Afghanistan.

Carter claimed that the invasion of Afghanistan was the greatest threat to freedom since World

War II and proclaimed the Carter Doctrine, which was basically said that the U.S. would

use force, if necessary, to protect its interests in the Persian Gulf region. In direct response

to the Soviets, the U.S. put an embargo on grain shipments and organized the boycott

of the 1980 Olympics in Moscow. Thanks for another dose of good news Thought

Bubble. So despite focusing on Carter, I’ll again stress that the real story of the 1970s

was the economy. High inflation and high unemployment had monumental

effects in shaping America. And no president could have dealt with it effectively. Not

Carter, not Gerald Ford, not anyone. The truth is, history isn’t about individuals.

Oil shocks and inevitable systemic changes led to the poor economy and that weakened

support for New Deal liberalism and increased the appeal of conservative ideas like lower

taxes, reduced regulation, and cuts in social spending.

All of which, for the record, started under the Democrat Jimmy Carter, not the Republican

Ronald Reagan. More abstractly, the economic crisis of the

1970’s dealt a serious blow to the Keynesian consensus that Government action could actually

solve macro-economic problems. I mean according to the economic theory that

had prevailed for the previous 50 years, unemployment and inflation were supposed to be inversely

proportional, the so-called Phillips Curve. When that relationship broke down and we had