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9.4 A Changing Economy

5 min readapril 19, 2023

Robby May

Robby May

K

Krish Gupta

Caleb Lagerwey

Caleb Lagerwey

Robby May

Robby May

K

Krish Gupta

Caleb Lagerwey

Caleb Lagerwey

Globalization & Post-industrialization

The rise of in the late 20th century continued to affect the United States’ economy as it became more and more enmeshed with the rest of the world. Some jobs went overseas and US companies became even larger

The United States was the world’s manufacturing powerhouse during the late 19th and early 20th centuries, but this began to change after the 1950s and 1960s. The US economy in the 1980s continued to lose industrial jobs as more manufacturing jobs went overseas or became automated. This transition into a post-industrial economy especially hurt industrial cities in the midwest like Pittsburgh, Toledo, Detroit, and Gary. They made up the new , a term that describes their downgraded status as factories closed and fewer and fewer unionized, blue-collar jobs were available. This increased demand for (college or university) since booming fields like healthcare, finance, or computing often required BA or BS degrees.

The Digital Age

While the shifting US economy hurt sectors of workers in manufacturing towns and other blue-collar areas, the economy as a whole did well during the 1980s and 1990s. This was partly thanks to a new focus on digital companies like Apple and Microsoft that increased automation and digital workflows in factories and companies. More and more people began to use the internet, which went public in 1991 in the form of the —why websites sometimes begin with “www.” Desktop computers began affordable and then ubiquitous. 

While not unfamiliar, you should know some of the more recent digital inventions and trends and how they changed American society and the US economy as a whole. Email, the internet, and cellular phone continued and accelerated and enabled new working patterns like tele-commuting. Sites like Amazon, Ebay, and Paypal all changed the way people shopped and paid, often to the detriment of brick-and-mortar stores; malls began to fade away or adapt by the 21st century. like MySpace, Xanga, Facebook, Twitter, and Instagram changed how people connected and communicated and even dated (see Tinder and Match.com). They also changed the media and more and more media began to be consumed online instead of in print: long-running newspapers and magazines developed digital presences or failed. Some websites like pets.com failed in 2000 in the so-called as early internet commerce was risky and new.

Two inventions require a bit more detail. Cell phones, and later (the was first launched in 2007 by Apple) continued the trend toward more instant gratification and less privacy, but they also increased connection and changed the definition of loneliness and solitude. also changed how Americans drove: it started with the popularity of car phones in the 1980s and led to problems with texting and driving or Pokémon Go and driving during the 21st century. 

Growing Income Inequality

The effects of the unstable economy in the 1970s and then the deindustrialization and deregulation of the 1980s and 1990s meant that the US economy did really well for some people and failed to help others. Economic inequality increased as real wages for the working and middle classes stayed largely the same—when adjusted for inflation—from the 1970s through the 21st century. 

The causes of this are many and debatable, but some saw the Reagan and Bush (43) tax cuts as examples of policies that benefited the rich and left the rest behind. The transition into a post-industrial economy meant that many working and middle class people could no longer have union-protected, steady jobs. The jobs that replaced those manufacturing jobs were often minimum-wage service sector jobs. The federal minimum wage also failed to keep up with inflation: it was the highest in 1968, when it was $1.60/hour, which, adjusted for inflation, would have been about $12/hour in 2019. In fact, if the minimum wage in 1968 had kept up with the increasing productivity growth in the next few decades, it would have reached $19.33 by 2017. 😳

Finally, racism often played a role in economic inequality, with the the continuing to grow (medians of $110,000:$7,000 for White and Blacks, respectively, in the most recent post-2010 recent data) and economic downturns like the 2008/2009 often hurting minorities the most, partly thanks to from banks that targeted minority communities. 

This wealth inequality existed on an international scale too: the World Trade Organization (WTO) was established in 1994 to oversee trade agreements, but critics attacked it for increasing , global wealth inequality, and favoring developed nations like the US. The US and other advanced economies formed international cooperative organizations like the Group of 8 (G8) in 1997 and included more emerging economies like China, India, and Saudi Arabia in the Group of 20 (G20) in 1999. 

Trade Relations

Over the past 50 years, the United States has had a complex and evolving relationship with other countries when it comes to trade. In the early 1970s, the United States was a major player in the global economy, and it had a number of significant trade relationships with other countries. In the late 1970s and early 1980s, the United States was led by , who implemented a number of trade initiatives, including the creation of the and the negotiation of a number of .

In the 1980s and 1990s, the United States was led by , who implemented a number of trade initiatives, including the negotiation of the and the North American Free Trade Agreement (NAFTA). These agreements helped to increase trade between the United States and its North American neighbors, and they helped to stimulate economic growth in the region.

In the early 21st century, the United States was led by , who implemented a number of trade initiatives, including the expansion of with countries in Latin America and Asia. The Bush administration also supported the creation of the World Trade Organization, which helped to facilitate trade between countries around the world.

In 2009, took office and implemented a number of trade initiatives, including the negotiation of the Trans-Pacific Partnership (TPP), a free trade agreement with countries in the Asia-Pacific region.

In 2017, was elected to office, and his presidency has been marked by a number of significant changes in American trade policy, including the withdrawal from the TPP, the renegotiation of trade agreements with countries like Mexico and Canada, and the implementation of tariffs on a number of imported goods.

Overall, the past 50 years have seen significant changes in American with other countries, with a number of different presidents implementing a wide range of trade initiatives.

Key Terms to Review (38)

Amazon.com, Inc.

: Amazon.com, Inc. is an American multinational technology company based in Seattle that focuses on e-commerce, cloud computing, digital streaming, and artificial intelligence. It's one of the world's largest online marketplaces.

Apple Inc.

: Apple Inc. is a multinational technology company based in the United States that designs, manufactures, and sells consumer electronics, computer software, and online services. It's best known for products like the iPhone, iPad, Mac computers, and software like iOS.

Bush (43) Tax Cuts

: The Bush Tax Cuts refer to changes in the United States tax code passed originally during the presidency of George W. Bush. They reduced marginal tax rates for nearly all taxpayers.

Canada-United States Free Trade Agreement

: An agreement reached by negotiators for Canada and the United States on October 4, 1987, and signed by the leaders of both countries on January 2, 1988. The agreement phased out a wide range of trade restrictions between the two nations over a ten-year period.

Cell Phones

: Portable devices that connect to cellular networks for communication purposes such as calling, texting, browsing internet, and using applications.

Department of Trade

: The Department of Trade (often called the Department of Commerce in the U.S.) is a government body responsible for promoting economic growth and job creation, often through regulating and facilitating international trade.

Digital Age

: The Digital Age refers to the current era characterized by the widespread use of digital technology in all aspects of human life.

Dot Com Bubble

: A speculative market bubble in the late 1990s centered around the rapid rise and fall in value of Internet-based companies.

Ebay Inc.

: eBay Inc. is an American multinational e-commerce corporation based in San Jose, California that facilitates consumer-to-consumer and business-to-consumer sales through its website.

Federal Minimum Wage

: The federal minimum wage is the lowest pay that employers can legally give their employees. It's set by the federal government.

Free Trade Agreements

: These are treaties between two or more countries to establish a free trade area where commerce in goods and services can be conducted across their common borders, without tariffs or hindrances.

Globalization

: Globalization is the process by which businesses or other organizations develop international influence or start operating on an international scale.

Great Recession

: The Great Recession was a severe worldwide economic crisis that took place from 2007-2009. It was sparked by a downturn in housing markets, risky lending practices, and complex financial products tied to U.S mortgages.

Group of 20 (G20)

: The G20 is an international forum for governments from 19 countries and the European Union. It aims to discuss policy issues pertaining to the promotion of international financial stability.

Group of 8 (G8)

: The G8 was an inter-governmental political forum from 1997 until 2014, comprised by eight major industrialized countries - France, Germany, Italy, Japan, United Kingdom, United States, Canada and Russia.

Income Inequality

: Income inequality refers to the uneven distribution of income within a population. The rich earn a disproportionately larger share of the total income compared to the poor.

iPhone

: The iPhone is a line of touchscreen-based smartphones designed and marketed by Apple Inc. All generations of the iPhone use Apple's iOS mobile operating system software.

Microsoft Corporation

: Microsoft Corporation is an American multinational technology company that develops, manufactures licenses supports and sells computer software (like Windows), consumer electronics (like Xbox), personal computers (like Surface), cloud computing services (like Azure) among others.

Multinational Corporations

: Multinational corporations are large companies that operate in several countries around the world. They have offices or production facilities in multiple nations and conduct business on a global scale.

North American Free Trade Agreement (NAFTA)

: NAFTA is a trade agreement that was signed by the United States, Canada, and Mexico in 1994. It eliminated most tariffs on goods traded between these countries to encourage economic integration.

Paypal Holdings Inc.

: PayPal Holdings Inc. is an American company operating a worldwide online payments system that supports online money transfers and serves as an electronic alternative to traditional paper methods like checks and money orders.

Post-industrialization

: Post-industrialization is an economic shift from manufacturing-based industries to service-based industries, along with an increase in information-driven sectors.

Post-secondary Education

: Post-secondary education is any level of education after high school. It can include studying at colleges and universities as well as vocational or trade schools.

Predatory Loans

: Predatory loans are unfair lending practices where lenders take advantage of borrowers through deception, coercion, or exploiting their lack of understanding about loan terms.

President Barack Obama

: Barack Obama was the 44th president of the United States, serving from 2009 to 2017. He was the first African American to be elected to the presidency. His administration focused on issues such as healthcare reform (Obamacare), economic recovery after the Great Recession, and environmental policy.

President Donald Trump

: The 45th president of the United States, serving from January 2017 to January 2021. He is a businessman and television personality known for his controversial policies and statements.

President George W. Bush

: George W. Bush was the 43rd president of the United States from 2001-2009, known for his response to the September 11 attacks, initiating wars in Afghanistan and Iraq, tax cuts, and education reform (No Child Left Behind Act).

President Jimmy Carter

: The 39th president of the United States from 1977 to 1981. He is known for his emphasis on human rights in foreign policy and his role in negotiating the Camp David Accords.

President Ronald Reagan

: The 40th president of the United States (1981-1989), known for his conservative economic policies, referred to as 'Reaganomics,' which aimed at stimulating the American economy through tax cuts, reduced social spending, increased military spending, and deregulation.

Racial Wealth Gap

: The racial wealth gap refers to the economic disparity between different racial and ethnic groups, where certain groups have more accumulated wealth than others. This is often due to systemic issues such as discrimination and unequal access to resources.

Reagan Tax Cuts

: The Reagan Tax Cuts, officially known as the Economic Recovery Tax Act of 1981, were a series of reductions in income tax rates and business taxes enacted during the presidency of Ronald Reagan.

Rust Belt

: The Rust Belt refers to a region in the Northeastern and Midwestern US that was once dominated by manufacturing industries, but has seen economic decline, population loss, and urban decay due to the shrinking of its once-powerful industrial sector.

Smartphones

: A smartphone is a mobile device that combines cellular and mobile computing functions into one unit. They are distinguished from feature phones by their stronger hardware capabilities and extensive mobile operating systems, which facilitate wider software, internet, and multimedia functionality.

Social Media Sites

: Online platforms that allow users to create and share content or participate in social networking. Examples include Facebook, Instagram, Twitter, and Snapchat.

Trade Relations

: Trade relations refer to the economic interactions between countries, including the exchange of goods and services. These relationships are often governed by international trade agreements.

Trans-Pacific Partnership (TPP)

: The TPP was a proposed trade agreement among twelve Pacific Rim countries concerning various matters of economic policy, which was signed in 2016 but never entered into force as required ratifications were not met.

World Trade Organization (WTO)

: The WTO is an international organization that deals with the global rules of trade between nations. Its main goal is to ensure that trade flows as smoothly, predictably, and freely as possible.

World Wide Web

: The World Wide Web (WWW or web) is an information system where documents and other web resources are identified by URLs, interlinked by hypertext links, and can be accessed via the internet.

9.4 A Changing Economy

5 min readapril 19, 2023

Robby May

Robby May

K

Krish Gupta

Caleb Lagerwey

Caleb Lagerwey

Robby May

Robby May

K

Krish Gupta

Caleb Lagerwey

Caleb Lagerwey

Globalization & Post-industrialization

The rise of in the late 20th century continued to affect the United States’ economy as it became more and more enmeshed with the rest of the world. Some jobs went overseas and US companies became even larger

The United States was the world’s manufacturing powerhouse during the late 19th and early 20th centuries, but this began to change after the 1950s and 1960s. The US economy in the 1980s continued to lose industrial jobs as more manufacturing jobs went overseas or became automated. This transition into a post-industrial economy especially hurt industrial cities in the midwest like Pittsburgh, Toledo, Detroit, and Gary. They made up the new , a term that describes their downgraded status as factories closed and fewer and fewer unionized, blue-collar jobs were available. This increased demand for (college or university) since booming fields like healthcare, finance, or computing often required BA or BS degrees.

The Digital Age

While the shifting US economy hurt sectors of workers in manufacturing towns and other blue-collar areas, the economy as a whole did well during the 1980s and 1990s. This was partly thanks to a new focus on digital companies like Apple and Microsoft that increased automation and digital workflows in factories and companies. More and more people began to use the internet, which went public in 1991 in the form of the —why websites sometimes begin with “www.” Desktop computers began affordable and then ubiquitous. 

While not unfamiliar, you should know some of the more recent digital inventions and trends and how they changed American society and the US economy as a whole. Email, the internet, and cellular phone continued and accelerated and enabled new working patterns like tele-commuting. Sites like Amazon, Ebay, and Paypal all changed the way people shopped and paid, often to the detriment of brick-and-mortar stores; malls began to fade away or adapt by the 21st century. like MySpace, Xanga, Facebook, Twitter, and Instagram changed how people connected and communicated and even dated (see Tinder and Match.com). They also changed the media and more and more media began to be consumed online instead of in print: long-running newspapers and magazines developed digital presences or failed. Some websites like pets.com failed in 2000 in the so-called as early internet commerce was risky and new.

Two inventions require a bit more detail. Cell phones, and later (the was first launched in 2007 by Apple) continued the trend toward more instant gratification and less privacy, but they also increased connection and changed the definition of loneliness and solitude. also changed how Americans drove: it started with the popularity of car phones in the 1980s and led to problems with texting and driving or Pokémon Go and driving during the 21st century. 

Growing Income Inequality

The effects of the unstable economy in the 1970s and then the deindustrialization and deregulation of the 1980s and 1990s meant that the US economy did really well for some people and failed to help others. Economic inequality increased as real wages for the working and middle classes stayed largely the same—when adjusted for inflation—from the 1970s through the 21st century. 

The causes of this are many and debatable, but some saw the Reagan and Bush (43) tax cuts as examples of policies that benefited the rich and left the rest behind. The transition into a post-industrial economy meant that many working and middle class people could no longer have union-protected, steady jobs. The jobs that replaced those manufacturing jobs were often minimum-wage service sector jobs. The federal minimum wage also failed to keep up with inflation: it was the highest in 1968, when it was $1.60/hour, which, adjusted for inflation, would have been about $12/hour in 2019. In fact, if the minimum wage in 1968 had kept up with the increasing productivity growth in the next few decades, it would have reached $19.33 by 2017. 😳

Finally, racism often played a role in economic inequality, with the the continuing to grow (medians of $110,000:$7,000 for White and Blacks, respectively, in the most recent post-2010 recent data) and economic downturns like the 2008/2009 often hurting minorities the most, partly thanks to from banks that targeted minority communities. 

This wealth inequality existed on an international scale too: the World Trade Organization (WTO) was established in 1994 to oversee trade agreements, but critics attacked it for increasing , global wealth inequality, and favoring developed nations like the US. The US and other advanced economies formed international cooperative organizations like the Group of 8 (G8) in 1997 and included more emerging economies like China, India, and Saudi Arabia in the Group of 20 (G20) in 1999. 

Trade Relations

Over the past 50 years, the United States has had a complex and evolving relationship with other countries when it comes to trade. In the early 1970s, the United States was a major player in the global economy, and it had a number of significant trade relationships with other countries. In the late 1970s and early 1980s, the United States was led by , who implemented a number of trade initiatives, including the creation of the and the negotiation of a number of .

In the 1980s and 1990s, the United States was led by , who implemented a number of trade initiatives, including the negotiation of the and the North American Free Trade Agreement (NAFTA). These agreements helped to increase trade between the United States and its North American neighbors, and they helped to stimulate economic growth in the region.

In the early 21st century, the United States was led by , who implemented a number of trade initiatives, including the expansion of with countries in Latin America and Asia. The Bush administration also supported the creation of the World Trade Organization, which helped to facilitate trade between countries around the world.

In 2009, took office and implemented a number of trade initiatives, including the negotiation of the Trans-Pacific Partnership (TPP), a free trade agreement with countries in the Asia-Pacific region.

In 2017, was elected to office, and his presidency has been marked by a number of significant changes in American trade policy, including the withdrawal from the TPP, the renegotiation of trade agreements with countries like Mexico and Canada, and the implementation of tariffs on a number of imported goods.

Overall, the past 50 years have seen significant changes in American with other countries, with a number of different presidents implementing a wide range of trade initiatives.

Key Terms to Review (38)

Amazon.com, Inc.

: Amazon.com, Inc. is an American multinational technology company based in Seattle that focuses on e-commerce, cloud computing, digital streaming, and artificial intelligence. It's one of the world's largest online marketplaces.

Apple Inc.

: Apple Inc. is a multinational technology company based in the United States that designs, manufactures, and sells consumer electronics, computer software, and online services. It's best known for products like the iPhone, iPad, Mac computers, and software like iOS.

Bush (43) Tax Cuts

: The Bush Tax Cuts refer to changes in the United States tax code passed originally during the presidency of George W. Bush. They reduced marginal tax rates for nearly all taxpayers.

Canada-United States Free Trade Agreement

: An agreement reached by negotiators for Canada and the United States on October 4, 1987, and signed by the leaders of both countries on January 2, 1988. The agreement phased out a wide range of trade restrictions between the two nations over a ten-year period.

Cell Phones

: Portable devices that connect to cellular networks for communication purposes such as calling, texting, browsing internet, and using applications.

Department of Trade

: The Department of Trade (often called the Department of Commerce in the U.S.) is a government body responsible for promoting economic growth and job creation, often through regulating and facilitating international trade.

Digital Age

: The Digital Age refers to the current era characterized by the widespread use of digital technology in all aspects of human life.

Dot Com Bubble

: A speculative market bubble in the late 1990s centered around the rapid rise and fall in value of Internet-based companies.

Ebay Inc.

: eBay Inc. is an American multinational e-commerce corporation based in San Jose, California that facilitates consumer-to-consumer and business-to-consumer sales through its website.

Federal Minimum Wage

: The federal minimum wage is the lowest pay that employers can legally give their employees. It's set by the federal government.

Free Trade Agreements

: These are treaties between two or more countries to establish a free trade area where commerce in goods and services can be conducted across their common borders, without tariffs or hindrances.

Globalization

: Globalization is the process by which businesses or other organizations develop international influence or start operating on an international scale.

Great Recession

: The Great Recession was a severe worldwide economic crisis that took place from 2007-2009. It was sparked by a downturn in housing markets, risky lending practices, and complex financial products tied to U.S mortgages.

Group of 20 (G20)

: The G20 is an international forum for governments from 19 countries and the European Union. It aims to discuss policy issues pertaining to the promotion of international financial stability.

Group of 8 (G8)

: The G8 was an inter-governmental political forum from 1997 until 2014, comprised by eight major industrialized countries - France, Germany, Italy, Japan, United Kingdom, United States, Canada and Russia.

Income Inequality

: Income inequality refers to the uneven distribution of income within a population. The rich earn a disproportionately larger share of the total income compared to the poor.

iPhone

: The iPhone is a line of touchscreen-based smartphones designed and marketed by Apple Inc. All generations of the iPhone use Apple's iOS mobile operating system software.

Microsoft Corporation

: Microsoft Corporation is an American multinational technology company that develops, manufactures licenses supports and sells computer software (like Windows), consumer electronics (like Xbox), personal computers (like Surface), cloud computing services (like Azure) among others.

Multinational Corporations

: Multinational corporations are large companies that operate in several countries around the world. They have offices or production facilities in multiple nations and conduct business on a global scale.

North American Free Trade Agreement (NAFTA)

: NAFTA is a trade agreement that was signed by the United States, Canada, and Mexico in 1994. It eliminated most tariffs on goods traded between these countries to encourage economic integration.

Paypal Holdings Inc.

: PayPal Holdings Inc. is an American company operating a worldwide online payments system that supports online money transfers and serves as an electronic alternative to traditional paper methods like checks and money orders.

Post-industrialization

: Post-industrialization is an economic shift from manufacturing-based industries to service-based industries, along with an increase in information-driven sectors.

Post-secondary Education

: Post-secondary education is any level of education after high school. It can include studying at colleges and universities as well as vocational or trade schools.

Predatory Loans

: Predatory loans are unfair lending practices where lenders take advantage of borrowers through deception, coercion, or exploiting their lack of understanding about loan terms.

President Barack Obama

: Barack Obama was the 44th president of the United States, serving from 2009 to 2017. He was the first African American to be elected to the presidency. His administration focused on issues such as healthcare reform (Obamacare), economic recovery after the Great Recession, and environmental policy.

President Donald Trump

: The 45th president of the United States, serving from January 2017 to January 2021. He is a businessman and television personality known for his controversial policies and statements.

President George W. Bush

: George W. Bush was the 43rd president of the United States from 2001-2009, known for his response to the September 11 attacks, initiating wars in Afghanistan and Iraq, tax cuts, and education reform (No Child Left Behind Act).

President Jimmy Carter

: The 39th president of the United States from 1977 to 1981. He is known for his emphasis on human rights in foreign policy and his role in negotiating the Camp David Accords.

President Ronald Reagan

: The 40th president of the United States (1981-1989), known for his conservative economic policies, referred to as 'Reaganomics,' which aimed at stimulating the American economy through tax cuts, reduced social spending, increased military spending, and deregulation.

Racial Wealth Gap

: The racial wealth gap refers to the economic disparity between different racial and ethnic groups, where certain groups have more accumulated wealth than others. This is often due to systemic issues such as discrimination and unequal access to resources.

Reagan Tax Cuts

: The Reagan Tax Cuts, officially known as the Economic Recovery Tax Act of 1981, were a series of reductions in income tax rates and business taxes enacted during the presidency of Ronald Reagan.

Rust Belt

: The Rust Belt refers to a region in the Northeastern and Midwestern US that was once dominated by manufacturing industries, but has seen economic decline, population loss, and urban decay due to the shrinking of its once-powerful industrial sector.

Smartphones

: A smartphone is a mobile device that combines cellular and mobile computing functions into one unit. They are distinguished from feature phones by their stronger hardware capabilities and extensive mobile operating systems, which facilitate wider software, internet, and multimedia functionality.

Social Media Sites

: Online platforms that allow users to create and share content or participate in social networking. Examples include Facebook, Instagram, Twitter, and Snapchat.

Trade Relations

: Trade relations refer to the economic interactions between countries, including the exchange of goods and services. These relationships are often governed by international trade agreements.

Trans-Pacific Partnership (TPP)

: The TPP was a proposed trade agreement among twelve Pacific Rim countries concerning various matters of economic policy, which was signed in 2016 but never entered into force as required ratifications were not met.

World Trade Organization (WTO)

: The WTO is an international organization that deals with the global rules of trade between nations. Its main goal is to ensure that trade flows as smoothly, predictably, and freely as possible.

World Wide Web

: The World Wide Web (WWW or web) is an information system where documents and other web resources are identified by URLs, interlinked by hypertext links, and can be accessed via the internet.


© 2024 Fiveable Inc. All rights reserved.

AP® and SAT® are trademarks registered by the College Board, which is not affiliated with, and does not endorse this website.


© 2024 Fiveable Inc. All rights reserved.

AP® and SAT® are trademarks registered by the College Board, which is not affiliated with, and does not endorse this website.