TO THE EIGHTIES:
was really happening in the American economy during the Eighties
and why was Mara so upset? Well, during most of the twentieth
century, America grew strong because it produced and exported
more manufactured goods than it imported, American citizens
saved more than they consumed and America borrowed less money
than other counties to fuel its Second Wave industries. After
the Second World War most of the planet was in economic ruins
and American money and manufactured goods poured into the new
markets with little threat of foreign competition. America was
the most powerful country on Earth and it not only exported
its goods to the world, but also lent money to the world so
that it could buy these goods. It was a pretty good deal.
America during this time of high economic productivity, the
industrial unions were strong and they were able to negotiate
good wages for their workers. Tax revenues were high and the
American government invested in education, housing, and transportation.
As farm work decreased, the pace of urban and industrial development
accelerated. Besides manufacturing jobs, the American economy
began producing many white-collar jobs that demanded more education.
It became easier for the average American worker after the Second
World war to own a home. Especially, outside the cities in the
new expanding suburbs.
have talked about this before, but it's important to mention
all this again. During the Fifties and Sixties the idea of extending
consumer credit to more Americans became acceptable because
of the continuing prosperity mirrored in real growing wages
and low unemployment. Often small businesses extended credit
to American customers in the small towns and local regions were
many Americans lived, but small businesses and their credit
began to disappear when huge shopping malls and giant retail
stores began to appear in the new suburbs.
the early Seventies, mounting international and domestic pressures
began to erode America's economic and political foundations.
The cost of the Vietnam war and the rise of new economic competitors
in Europe and Japan forced many American corporations to shift
their attention away from exports and into focusing their energies
on producing and marketing for the rich American consumer market.
With the exception of the military industries, American companies
began investing in consumer products, not in the production
of goods. That was done more and more in other countries where
labor was cheaper. Financial services, health, recreation, and
information became the new money making sources for American
big business. These were the new Third Wave industries which
would in time become connected to digital computers and credit
new economic post-industrial trends were accelerated by the
oil shocks of the Seventies. Remember, Second Wave industries
need lot's of oil. Automobiles need lot's of gasoline and power
plants and factories need much fuel to burn. Many new jobs that
were created by the new Third Wave economy needed more educated
workers. But many of the new service jobs also being created
were often low-wage, unskilled, and non-union kinds of work.
By the time President Reagan came to power, American corporate
profits were falling, more and more Americans were making less
money, and America's ability to be the policeman of the world
was becoming harder and harder to do without some new kind of
solution to these problems was simple to President Reagan and
his advisors. America would cut taxes for the rich, start a
defense boom, and borrow money like crazy from the rest of the
world to finance all this new government spending. Social spending
was slowed down, but except for cutting programs for poor people
little change actually occurred. America now became a nation
centered on consumption, debt, and imports. America's national
debt began to sky-rocket to over two trillion dollars. Americans
stopped saving as foreigners began pumping money into America
to finance America's huge military and social programs.
and more money was used by American companies to buy each other
out so that only a few very large companies remained. The American
stock market began to boom also. America became a good place
to invest one's money if one was rich and also foreign. The
decade of the junk bond arrived. Corporate debt became a big
business and even smaller companies were able to buy out bigger
ones with the new financial tools being invented in New York,
but it was all just a paper game with little economic production
behind it. Many American investors became rich and the American
government benefited also from these short-term economic policies.
most Americans did not. The number of billionaires in America
went up even as more and more Americans scrambled just to keep
up with rising living costs and with insecure jobs that paid
less and less. The Third Wave was becoming no fun at all. Yet
it was the American worker who was told he had to consume more.
Where would he find the money to do this? Like the American
government he would borrow, but instead of using government
bonds he would use his credit card.
was important because by the late eighties consumer spending
would amount to two-thirds of all American economic activity
and three-fourths of all American employment. The American consumer
was finally king even if he was broke. The credit card would
become his lender of last resort and at high interest too. America
was fast on its way to becoming a credit-card nation. Plastic
money combined with digital computers would define the new post-industrial