9.4 A Changing Economy

LEARNING OBEJCTVE: Explain the causes and effects of economic and technological change over time.

INTRODUCTION

• George H. W. Bush was nominated by Republicans for 2nd term

  • End of Cold War—→ Americans enjoying economy & technology

ELECTION OF 1992

• Bill Clinton became Democratic primary

  • Presented him as a moderate “New Democrat”

    - focused on economic issues (jobs, education, health care)

    - Clinton recaptured majority of elderly & blue-collar back

    - Clinton won majority of electoral votes

CLINTON’S FOCUS ON THE ECONOMY

• Republicans used fillibusters to prevent Clinton’s reforms

  • Clinton reforms included:

    - economic stimulis package

    - campaign finance reforms

    - environmental bills

    - health care reform

EARLY ACCOMPLISHMENTS

• Democratic Congress passed several laws & reform

  • Family and Medical Leave Act

    - required business to allow unpaid leave for medical reasons

  • Moter voter law

    - enabled citizens to register to vote when they got licenses

  • Brady Bill

    - mandated 5-day waiting period for purchase of handguns

  • Anti-Crime Bill

    - funded police protection & crime-prevention programs

    - banned sale of most assult rifles (angred NRA)

  • Deficit-reduction budget

    - included $255 billion in spending cuts & tax increases

    - incorporated education & job training into budget

DEFEAT AND ADJUSTMENTS

• Republicans regained control of congress in midterm elections

  • Republican Revolution

    - led by representative Newt Gingrich

    - promoted short list of polict priorities (“Contract with America”)

  • Democratic Congress was unpopular:

    - raised taxes & limited gun owndership

    - Clinton delcared era of big government over

BALANCED BUDGET

• Congress & president compromised on new budget

  • Left Medicare & Social security in tact

    - Personal Responsibility & Work Opportunity Act enacted

    - set benefits to five years

  • Curbed on immigration

  • Increased minimum wage

• Spending cuts & tax increases + economic growth—→ federal surplus

CLINTON REELECTED

• Clinton positioned himself as moderate

  • Called Republicans extermist but took over their positions

    - blanced budget & reformed welfare

  • Clinton was aided by fast-growing ecnomy in reelection

    - created millions of new jobs

    - Clinton became reelected but Republicans control congress

TAX CUTS VERSUS SOCIAL SECURITY

• Prosperity—→ debate over federal surplus

  • Congress & president compromised on legislation

    - cut taxes on estates & capital gains

    - gave credits for families with children

    - pushed for higher education expense

  • Republicans wanted more:

    - elimination of estate tax & taxes on two-income families

  • Clinton wanted more:

    - support for social security, expansion of Medicare, & less debt

CLINTON IMPEACHMENT

• Clinton was impeached for lying under oath

  • Abused power & participated in sexual relations

    - was not convicted & became nicknamed “slick willie”

TECHNOLOGY AND A CHANGING ECONOMY

• US enjoyed longest peacetime ecnomic expansion under Clinton

  • Productivity from technology—→ economic boom

TECHNOLOGICAL INNOVATIONS

• Internet, computers, software, wireless communication

  • Fueld increased national productivity

    - e-commerce became part of American life

    - GPS, digi-photos, renewable energy brought more to ecnomy

  • Tech companies boomed

    - Apple, Intel, Microsoft

    - Amazon, AOL, Yahoo, Google (“dot-com” boom)

• Innovations in medical field—→ growth & promise for conquest of disease

  • DNA testing & sequencing, genome mapping, MRI, laser surgery

  • New diagnostic tools, advances in surgery, drug development

FLATTENING OF THE EARTH

• Technology—→ new opportunities for growth & development globally

  • Cellular communication grew through mobile device

    - could easily connect humans & knowledge

    - leveled playing field regardless of region

    - new wealth was created in developing world (no competiton)

THE BOOM OF THE 1990s

• American businesses had cut cost

  • Increased profitability & held down infaltion rate

    - investors were rewareded with gains in stock market

    - households quadrupled

    - unemployment rates fell (lowest record for minorities as well)

  • Peack prosperity—→ middle & lower class gaining real incomes

    - economic boom lasted until 2001 (another recession)

GLOBALIZATION

• Globalization premoted devlopment of economic organizations

  • North American Free Trade Agreement (NAFTA)

    - passed by congress under Clinton

    - created free-trade zone between US, Canda, & Mexico

    - Unions feared job losses due to low-wage work in Mexico

  • World Trade Organization (WTO)

    - oversaw trade agreements, trade rules, & settled disputes

  • International Monetary Fund (IMF) & World Bank

    - gave loans & supervised economic policies of poorer nations

  • Group of Eight (G8)

    - World’s largest industrial powers (controlled 2/3rd of wealth)

    - Canda, France, Germany, Italy, Japan, Russia, UK, US

    - China, India, & Brazil soon surpassed older nations

    - gap between rich & poor nations—→ tension (over debt)

    - workers in rich nations resented poorer ones (cheap job market)

DIGITAL SECURITY AND PRIVACY

• Wireless communication & internet—→ privacy concerns

  • Hacking & social media

    - disrupted politics & exposed abuses of large companies

    - Google & Facebook extracted personal data from users (ads)

    - Government fairly regulated internet (promoted innovation)

    - some saw “surveillance capitalism” as growing threat

INCOME AND WEALTH

• Americans were achieving the American dream

  • Homeownership climbed

  • Economy generated more wealth

  • Percapita income was constant (inflation-adjusted)

• Average-income tax declined

  • Distrivution of income varied by race, sex, & education

    - income was typically higher for white families

    - high school graduates earned half the income of college

CONCENTRATION OF WEALTH

• Wealth was concentrated in hands of few

  • Wealth 1% (posessed 35% of nation’s wealth)

  • Next 19% (possessed 50%)

  • Bottom 80% (owned 15%)

• Wealthy possessed greater finanical opportunities

  • Low-income lived without savings or assets

    - US was rich but has largest gap between classes

    - economist argue decline of unions was rise of inequality

    - concentration of wealth goes back to gilded age

    - scholars & political leaders express concerns of oligrachy

  • Debated causes of wage stagnation from increased immigration

    - effects of immigration and growth of south & west