History - T3 - C1

Reaganomics

* **Reducing the growth of the gvmt to increase the growth of the economy**
* 4 major goals: reduce gvmt spending, regulation, inflation, and taxes
* But, spending did not come down with taxes, defense spending grew, which **increased the federal debt** (from 995 billion to 2,9 trillion)
* In 1981-82, recession (=GDP went down)
* **20 mil jobs created**
* Inflation and unemployment decreased
* **Largest peacetime expansion** of the US economy
* GDP went up 2%

The "**New Right**"

* Movement **against the social changes in the 60s/70s** born in the Sun Belt
* Frustrated by a **decline in morality**
* **Fervent pro-life mvmt** against Roe v. Wade to protect the "unborn child," antifeminists railed against the Equal Rights Mvmt
* New right = combination of Christian religious leaders, conservative business moguls and fringe political groups = **shared demographic characteristics** (white, middle class, protestant, suburban)
* **Grassroots coalition** of American conservatives led the "conservative ascendancy"   
* Rise in the number of evangelical christians (x5), homosexuality = crime against god, "liberal"media corrupting America's youth
* Contained an **extremist mvmt** (racist hatred groups like the KKK, American Nazi Party, who considered the US gvmt too invasive, and supported right to bear arms)
* Arizona senator **Barry Goldwate**r 1964 presidential campaign views as a key event in the rise of the New Right
* Ronald Reagan = iconic hero

Europe and the **Single European Act of 1986**

* **European Economic Community** put in place by the SEA


* designed to create a common market among its members through the elimination of most trade barriers and the establishment of a common external trade policy (= Protectionism) 
* Opened the way to further political integration and an economic union that would be enshrined in the Maastricht Treaty
* Predecessor of the EU
* Created after WWII, creating a common market by erasing trade barriers and establishing a common external trade policy
* Objectives: body of supranational institutions for Europe, creating economic benefits, contributing to peace/security and sustainable dvmt
* provided the foundation for an economic and monetary union, which included the creation of a single currency, the euro.  

China

* Before: Mao’s **Cultural Revolution** left the majority of the population in extreme poverty
* Deng Xiaoping introduced the concept of the **socialist market economy** in 1978
* Market economy with the predominance of public ownership and state-owned enterprises.
* Opened country to foreign investors
* Lowered trade barriers 
* **Dropped poverty from 88% in 1981 to 6% in 2017**
* Opened way to China becoming the biggest trading nation in the world
* Deng also stated there would only be one China, but distinct Chinese regions, such as **Hong Kong and Macau,** which could retain their own legal and economic systems, including trade relations with foreign countries ⇒ **“one country, two systems” policy**
* 1979: One child policy
* 1980: China joined the IMF + World Bank
* Creation of the **Special Economic Zones** – enclaves, such as Shenzhen,  with tax and business incentives to attract foreign firms  which produced goods mainly for export
* **Four modernization: Industry (light industry ) /Agriculture (Responsibility system) / Science and Technology (Removed policy of isolation → foreign trade and investment + creation of Special Economic Zones) / Defense**
* **Pros: Economy boom (GDP increased, Trade flowed smoothly, Industrial output raise)**
* **Cons: Crime, Water + air pollution, Bigger disparities between poor and rich, Overpopulation (due to urbanization)**
* Deng Xiaoping introduced the concept of the **socialist market economy** in 1978
* Market economy with the predominance of public ownership and state-owned enterprises.
* Opened country to foreign investors
* ==Lowered== trade barriers
* **Dropped poverty from 88% in 1981 to 6% in 2017**
* Opened way to China becoming the biggest trading nation in the world
* Deng also stated there would only be one China, but distinct Chinese regions, such as Hong Kong and Macau, which could retain their own legal and economic systems, including trade relations with foreign countries ⇒ **“one country, two systems” policy**
* 1979: One child policy
* 1980: China joined the IMF + World Bank
* Creation of the **Special Economic Zones** – enclaves, such as Shenzhen,  with tax and business incentives to attract foreign firms  which produced goods mainly for export

Oil crisis 1 - **1973**

* Conditions created by Nixon’s decision in **1971** to **take the United States off the Gold Standard** ⇒ countries could no longer redeem US dollars held in their foreign exchange reserves for gold (against the Bretton Woods Agreement). 


* price of gold shot up
* value of the dollar fell 
* **hurt the OPEC countries** bc all oil contracts were priced in US dollars ⇒ their revenues fell with the dollar


* 1970: **83%** of American oil imports **from Middle East**
* **October 1973:** Members of **Organization of Petroleum Exporting Countries** (OPEC) proclaimed oil embargo 
* Targeted at nations that supported Israel during Yom Kippur War
* **By 1973, oil exports from Middle East to West down by 60-70%**
* **By end of march 1974, price of oil risen by 300% ⇒ OIL CRISIS**
* Embargo lifted in **march 1974** after negotiations at the **Washington Oil Summit**, effects lingered through 70s
* Ended long period of prosperity in the West that had begun in 1945 (fin des *Trente Glorieuses*)
* Threw world into **steepest economic contraction since Great Depression** (unemployment on the rise and raging inflation)
* US automobile industry specialized in producing "gas guzzler" vehicles ⇒ shift by consumer to lighter/more fuel efficient cars ⇒ **US auto industry in decline**
* The destabilization experienced by industrialized countries led to a **new level of international cooperation.**
* In **November 1976**, formation of **G7** (USA, France, Italy, Japan, UK and FRG) formed the Group of Six (G6)  (+ Canada later on) to discuss global economic questions

Oil crisis 2 - **1979**

* Associated with events in the Middle East and strong global demand
* **Iranian Revolution** led to lower oil output by 4,8 mil barrels/day (7% world production) and Iran/Iraq war that followed Iranian Rev
* **Rapid rise in oil prices mid 1979**, doubling with a year
* Increase in precautionary demand and speculative hoarding
* Auto companies were unprepared for the sudden rise in fuel prices. As the price of oil rose from $15.85 to $39.50 over the next 12 months, motorists began panic-buying gasoline.
* High oil prices caused industrial nations to take steps to reduce dependence on OPEC oil. Non-OPEC production dramatically increased, notably in the U.S.S.R, Venezuela, Nigeria and Alaska and the North Sea.
* The crisis contributed to the global recession of the early 1980s, which was marked by high unemployment and inflation rates in many countries ⇒ **stagflation**
* From 1979, **neoliberalism** and **deregulation** were pursued as policy options in order to confront the crisis.
* High oil prices caused industrial nations to take steps to reduce dependence on OPEC oil. Non-OPEC production dramatically increased, notably in the U.S.S.R, Venezuela, Nigeria and Alaska and the North Sea.
* From 1979, **neoliberalism** and **deregulation** were pursued as policy options in order to confront the crisis.

rise of political Islam since the Iranian Revolution of 1979

* **Iranian Revolution** = overthrows the **Shah Pahlavi** (An Iraqi originally who was US backed) in favor of **Ayatollah Khomeini** to establish an Islamic Republic guided by fundamentalist islamic values and a religious supreme leader
* Brought about by the failure of the Shah to fix economic issues and corruption


* Spurred similar movements in neighboring countries (ex: Egypt) because political Islam offered solutions of political and cultural changed based on Islamic values integrated deeply into the region (not Western ones forced on people)
* Mixed results: some brought progress, but mostly a lot of instability and violence
* Rise of Al-Qaeda and other fundamentalist terrorist organizations

Rise of the EU + significance of EU expansion

* process of European integration began in the immediate aftermath of World War II with the **European Coal and Steel Community (ECSC)**


* 1987 - Erasmus program, to fund university students wishing to study in another European country
* **1992 - Maastricht Treaty**, EU officially created to set rules for currency, foreign and domestic affairs
* issues with the integration of the ‘Eastern Bloc’ states: many required serious investment to bring them up to Western standards and some would need ‘propping up’ with Western funds + problem over where the new border line should be drawn
* **1995 - Schengen Agreement**, border free travel allowed within the Schengen Zone
* 1999 - the Euro 
* The **Lisbon Treaty**, signed in 2007 and enacted in 2009, was a major step towards **political and social integration**

Significance of EU expansions

* Establishing relations in Europe over domestic/foreign policy
* Creating systems to unite economies
* Structuring alliances to defend one another
* Opening borders for commodities trade and interaction 
* Unifying under democratic principles while the “east” dissolves under communist regimes
* Significance for the Soviets: 
* Immediately after the fall of communism in Europe, former satellites of the Soviet Union clearly chose to join the unified European family and NATO

Factors leading to the fall of the USSR 

* **Collapse of the Soviet economy**, enormous **cost of the 1st war in Afghanistan** (79-89)
* Poverty ran rampant while communist leaders grew richer (corruption)
* Gorbachev's policies (Perestroika + Glasnost)
* Failure of perestroika → encouraged group of Communist officials to stage a coup in 1991 → Russian parliament election of Boris Yeltsin as president of the Russian Republic instead of a Communist candidate but coup failed
* USSR dissolved + ripped apart → officially ended on midnight at December 31, 1991

Perestroika

* the USSR would adopt a mixed communist-capitalist economic system


* supply and demand would decide how much of what would be produced
* draw new, younger voices into elite circles of the Communist party

Glasnost

* remove the decades-old limitations on the daily lives of the Soviet people 


* Freedoms of speech, press, religion
* Dissidents released from prison
* Soviets began to speak out against the gvmt, began to demand the end of the Soviet rule

Main internal forces (fall of USSR)

* **Chernobyl disaster** (1986) = spread lies ab the effects of radiation ⇒ falsehoods of the Communist party propaganda was exposed ⇒ public trust in the gvmt shatters


* Dependance of satellite countries
* Limited foreign trade, collective agriculture, use of heavy industry…

Main external forces (fall of USSR)

* Space race/Marshall Plan = weakened, exposed USSR and its influence
* China issues (**Sino-Soviet split**)
* **Eastern political unrest** (Ukraine, Poland) = democratic reform in the soviet block, USSR begins to fracture
* Fall of Berlin wall (1989), Germany reunited after 40 years

Al-Qaeda

* The USA provided weaponry (e.g. Stinger missiles to shoot down Soviet helicopter gunships), Saudi Arabia encouraged volunteers to go and fight in Afghanistan, and the US, UK & Pakistani intelligence services trained and armed these recruits to fight against the Soviets. 


* In 1989 the Soviet Union withdrew. Many Islamist groups felt if they could defeat the USSR then they could also defeat weaker, unpopular Arab regimes (e.g. repeated terrorist attacks on police and government officials in Egypt throughout the 1990s).

Market socialism

economic system representing a compromise between socialist planning and free enterprise, in which enterprises are publicly owned but production and consumption are guided by market forces rather than by government planning.