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A Time of Malaise

58b. The Sickened Economy

Jimmy Carter
Jimmy Carter used his "common man" image to defeat Gerald Ford and capture the White House in 1976. This campaign shirt assures voters that there is more to Carter than just his previous job as a peanut farmer.

Malaise Noun. 1) An indefinite feeling of debility or lack of health. 2) A vague sense of mental or moral ill-being.

People can feel malaise. Nations can feel malaise. Economies can feel malaise. In the mid-1970s much of America suffered a collective malaise.

Nothing fuels a strong case of malaise like a sputtering economy. The United States had grown accustomed to steady economic growth since the end of World War II. Recessions were short and were followed by robust economic growth. For the first time since the Great Depression, Americans faced an economy that could result in a lower standard of living for their children.

Inflation, which crept along at one to three percent for the previous two decades, exploded into double digits. Full employment, defined as five percent or less, had been achieved in most years since 1945. Now the unemployment rate was nearing the dangerous ten percent line. Americans asked the question: what went wrong?

Whip Inflation Now
Gerald Ford hoped to curb the inflation rate with his "Whip Inflation Now!" or "WIN" campaign of 1974. Despite this effort, inflation continued to rise throughout the 1970s.

Economists had long held that inflation and unemployment were polar forces. High inflation meant a great deal of spending; therefore, many jobs would be created. Unemployment created jobless Americans with less money to spend; therefore, prices would stay the same or fall. Surprisingly, the United States experienced high unemployment and high inflation simultaneously in the 1970s — a phenomenon called stagflation. Experts and commoners debated the roots of this problem with differing opinions.

One possibility was the price of oil. When Israel defeated its Arab neighbors in the Yom Kippur War of 1973, Arab oil producers retaliated against Israel's allies by leading the Organization of Petroleum Exporting Countries (OPEC) to enact an embargo. Oil prices skyrocketed immediately in the United States as the demand outstripped the supply. Automobiles and drivers sat in long gas lines at service stations.

The price of oil is independent of other factors such as falling worker productivity and foreign competition, which led to greater unemployment. Oil prices also influence the prices of all consumer goods. Products that require oil to produce would now cost more. Any commodity shipped by truck or airplane would pass its new expenses off to the consumer. As the decade progressed, the embargo was lifted, but OPEC steadily raised prices each year. The price of a gallon of gasoline more than tripled from the 1970 to 1980.

Richard Nixon tried to fight inflation first by cutting government spending, but ultimately by imposing wage and price controls on the entire nation. Gerald Ford watched the inflation rate soar above 11 percent in 1974. He enacted a huge propaganda campaign called Whip Inflation Now (WIN), which asked Americans to voluntarily control spending, wage demands, and price increases. The economy, along with Watergate disillusionment, led Ford to suffer defeat at the hands of Jimmy Carter in the 1976 Presidential election.

OPEC ministers
The Organization of the Petroleum Exporting Countries — or OPEC — consists of 11 member nations that currently supply more than 40% of the world's oil. Seen here are representatives of the member nations in 1999.

Carter tried tax and spending cuts, but the annual inflation rate topped 18 percent under his watch in the summer of 1980. At the same time, the unemployment rate fluctuated between 6 and 8 percent. Economic woes may well have been the decisive factor in Carter's defeat to Ronald Reagan in the election of 1980.

On the Web
Organization of Petroleum Exporting Countries (OPEC)
Whenever gas and oil prices go up, people tend to look to OPEC for the reason. Learn about this somewhat mysterious organization that represents the interests of the most important crude oil producing countries in the world from this, the official OPEC website.
The Yom Kippur War
When talks stalled between Israel and Egypt, tensions rose. Then, on Yom Kippur, one of the most holy days on the Jewish calendar, Egypt and Syria jointly attacked Israel. Read about this war which may have changed U.S. — Middle East relationships forever.
Stagflation
The 1970s saw the beginning of "spiralling stagflation." No, it wasn't a rock band, but the combination of unemployment and inflation. Find out the nitty-gritty on stagflation on the UC-Berkeley site. Be sure to check out the animated graph of the factors leading to stagflation.
Jimmy Carter
Jimmy Carter is a saint. So begins this essay on the PBS Character Above All series. The author goes on to explain the legacy of Jimmy Carter — how his post-Presidential career has influenced the Presidency itself. He does not wax too sentimental — he acknowledges Carter's inability to effectively manage and his overwhelming political difficulties. But by identifying Carter's strength as a moral idealogue, Carter and the Presidency come away seeming purposeful and good.
The Outsider President
The American President Series is one of the finest when it comes to getting dirt on the Presidents. Jimmy Carter confounded his Secret Service agents by throwing caution to the wind and hobnobbing with the folks; his wife, Rosalynn, never even bothered to commission a china pattern for the executive mansion. This site brings the personalities of these leaders out while conveying the serious issues of their leadership. Was Carter doomed from the getgo? Did his independence harm or strenghten the Presidency?
Hey! Gimmee back my gas! The gasoline shortage of 1973-74 was so bad that some car owners installed locks on their gas tanks to deter thieves.
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