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Con ser va t i ve
A scendanc y
C hap ter 30: 1 9
74 - 1 9 9 1
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Ronald Reagan as a broad caster He was the governor of California
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Reaganomics caused thegreatest recession until
19(*s in 19!1+19!%. ,etafter downsi-ing theirworforces shifted#roduction overseas andtoo advantage of newtechnologies such assatellite communication.The rate of inflation 1(./#ercent at the beginning of
19!1 declined to (./ in19!! #artly because a#eriod of e$#anded oil#roduction
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ECONOMY BEFORE REAGAN
•Three worsening recessions starting in1969 were about to culminate in theworst of all in 1981-1982.•Unemployment soaring into double
digits at a pea of 1!.8".
•#oaring double-digit inflation$ with the%&' at 11.(" in 19)9 and 1(.*" in198! +2*" in two years,.•ouble digit interest rates$ with theprime rate peaing at 21.*" in 198!.•The poerty rate started increasing in19)8$ eentually climbing by (("$ from
11./" to 1*.2".•0 fall in real median family incomethat began in 19)8 snowballed to adecline of almost 1!" by 1982.•rom 1968 to 1982$ the ow onesindustrial aerage lost )!" of its real
alue$ reflecting an oerall collapse ofstocs.
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REAGAN’S ECONOMIC SUCCESS
•2! million new 3obs were created.•Unemployment fell to *.(" by 1989.•The top income ta4 rate was cut from )!" to 28".•The #eagan #ecoery too off once the ta4 rate cuts were fully
phased in.•Total federal spending declined to 21.2" of 5& in 1989 +een with
the #eagan defense buildup$ which won the %old ar.,•7liminated price controls on oil and natural gas. &roduction soared$
and aided by a strong dollar the price of oil declined by more than*!".•#eal per-capita disposable income increased by 18" from 1982 to1989 +meaning the 0merican standard of liing increased by almost2!" in 3ust ) years.,•The poerty rate declined eery year from 198/ to 1989$ droppingby one-si4th from its pea.
•The stoc maret more than tripled in alue from 198! to 199! +alarger increase than in any preious decade.,•The #eagan recoery started in official records in oember 1982$and lasted 92 months without a recession until uly 199! +when theta4 increases of the 199! budget deal illed it.,•uring this )-year recoery$ the economy grew by almost one-third+euialent of adding the entire economy of est 5ermany to the U.:.economy
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0 19!1 Reagan #ersuaded Congress to reduce the to# ta$rate from 2 to /2 and to inde$ ta$ bracets to taeinflation into account. &ive years later' the Ta$ Reform Act
reduced the rate on the wealthiest Americans to %!2.These measures mared a chart retreat from the #rinci#lesof #rogressively 3 the idea that the wealthiest Americansshould contribute much more). This led to su##ly+side
economics.
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The Reagan Revolution
4 The Problem of ne!"ality
4 The #econd $ilded A%e
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htt#566www.youtube.com6watch7
v8::im-Ty1;
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htt#566www.youtube.com6watch7v8y<b10Ayy=
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The Over e$tended>ociety6 A troubled
economy
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The Rising Tide ofConservatism
4 The Ta& 'evolt
4 The (lection of 19)0
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The Reagan Revolution
4 'ea%an and American *reedomhttp:++,,,yo"t"becom+,atch.v/h42p*P3a,
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>tagflation5 ?y the mid+19 the unem#loyment rate had reached nearly92 its highest level since the @reat e#ression and it remained close to2 for most of the rest of the decade. 0nflation meanwhile reacheddouble digits rising to 1(./2 by 19!
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>tagflation ;$#lainedhtt#566www.youtube.com6watch7v8bT-Bt$D;,
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\
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A&E+C0O leader com#lained that the nited >tateswas becoming "a nation of hamburger stands . .
.A&E+C0O lost (2 of its membershi# with out ofcountry contracts.
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Forers trying to deal with crowds of customers at theo#ening of the first Gconald*s restaurant in ?eiing in 199%.
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?etween 19/( and 19( median family income had double. ?utbeginning 19( real wages essentially did not rise for twenty years.The 19*s was one of only two decades in the twentieth century3 the other 19() that ended with Americans on average #oorer thawhen it began. "The RiverI "0s a dream a lie if it don*t come true6or iit something worse.
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Title J005 African American women made some gains . Through Title J00of the Civil Rights Act which outlawed wor#lace discrimination by se$ orrace and establishment of the ;<ual ;m#loyment O##ortunityCommission to enforce it' they managed t clime the lower levels of the
ob adder. ?y 19!' northern blac women*s median earnings wereabout 9/2 of white women*s earning.
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K;A: Kerformance5 The studies of Columbia niversityshowed that #olitical cartoons have a #sychological
influence none other. They will tell the story were wordscannot go. 0m#rovement of the mind must im#rove to otherworld which the mind usually does not go. Hitler hatedcartoonist because of their #ower
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>unbelt6RustbeltCommunities
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G h f th > b lt* th d d d h tl f f d l f d Th
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Guch of the >unbelt*s growth de#ended on a huge outlay of federal funds. Thenumber of residents over D/ increased by (2 during the 19s reaching %Dmillion by the time Kresident Reagan too office. Armed with retirement #acagesmigrations increased new communities in &lorida' Ari-ona and southern California.
Ko#ulation 0ncrease
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?y the mid+199*s the steel industry em#loyed only 1'#ersons down from D' in 19(. Only 112 of worers withnon+government obs were union members
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The
;ndangered;nvironment
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0n Eove Canal near ?uffalo' ew ,or' following the discovery of high rates of cancer'miscarriages and birth defects in the community there was an out rage. There wereto$ic wastes dum#ed by the Hooer Chemical Eaboratory had oo-ed into basement andbac yard' and homemaer Eois @ibbs organi-er a cam#aign of national attention.
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0n 19! after a
health emergencywas declared' thestate of ew ,orbrought #ro#ertiesand fenced off the#ublic schools an
move theresidents to newHomes.
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?y the time Carter too office more than % nuclear #lantswere o#erating or on order. ?ut in 199 the industrysuffered a near fatal blow when an accident at the ThreeGile 0sland blow in Kennsylvania #lace a strong failure ofconfidence with nuclear #ower #lants
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To# official such as @eorgeGeany' #resident of A&E+
C0O denounced "treehuggersI environmentalistsas enemies of economicgrowth' and nited Auto
Forers lobbyist oinedautomaers resistingcom#ulsory gas mileage'right before OK;C raises#rices of gas.
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0n 19! the ;KA3;nvironmental
Krotection Agency)established in 19grew to become the
federal governmentslargest regulatoryagency' em#loyingmore than 1'
#eo#le by the end ofthe decade.
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The ;KA 3;nvironmental Krotection Agency) was the federallargest regulatory agency em#loying more than 1'
#eo#le.
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Eean
,ears &ord
and Carter
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Re#ublican Jice #resident elson Rocefeller and Kresident @erald &orddid not get along. Rocefeller' maret driven man would not wear &ord*sbutton F0 which was win inflation now. He did not want to hold bac#ersona consum#tion.
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Ford presidential museum
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Kresident @erald &ord5 Fhi# 0nflation owhtt#566www.youtube.com6watch7v8LEw!<snHc,
The End of the Golden
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Age
4 *ord as President
4 The Carter Administration
4 Carter and the (conomic Crisishtt#566www.youtube.com6watch7v8#y/EKH;MB
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Carter had control of
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the emocraticKresidency and also
the house and the>enate. Carter*s#roblems where moreeconomic than #olitical.
Carter ran for #residentas an "outsider mainga virtue of the fact thathe never held federaloffice. A devout "?orn
Again ?a#tistI hisintegrity was never<uestioned.
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One of Carters biggestsuccess was the deregulationof the air industry. Fith hisresults he was able to increasesales and decrease #rices ofair fare.
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Fith high inflation interest rate rose' driving mortgages out of reach for manywould be home buyers Rents in many locations doubled sale of many small
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would be home buyers. Rents in many locations doubled' sale of many smallbusinesses went under. Tuition syrocet along with unem#loyment and youngmen and women could neither afford to go to college not find a ob moved bac
home.
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The Eimits of
@lobalKower
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Carter transferred the authority of the Kanama Canalto the local #eo#le in Kanama by the year %.
Limmy Carter on the Kanama Canalhtt#566www.youtube.com6watch7v8rK-M9HFC
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Carter at first signed the>AET % arms reductiontreaty then withdrew hisagreement with RussiaNsinvasion of Afghanistan
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Kresident Carter' ;gy#tian #resident Anwar >adat and0srael #rime minister Genachem ?egin celebrating thesigning of the 199 #eace treaty between 0srael and ;gy#t.
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Eeft wing >andinistamovement overthrew
icaraguan dictator Anasatasi >om-a 3ally to>A) Gilitary Aid sto##edto icaragua when nunsmurdered
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0ran
Hostage
Crisis
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;arly in 199 a #o#ular revolution ins#ired by the e$iled
Guslim cleric Ayatollah :homeini overthrew the shah anddeclared 0ran an 0slamic Re#ublic. >hah of 0ran soughtmedical treatment and was taen to Cleveland. 0ranfollowers of :homeini is irate and taes >A ;mbassy
&or ecades the nited
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>tate foreign #olicy in theGiddle ;ast had de#endedon a friendly government in0ran. After the C0A hadhel#ed to overthrow thereformist government' thenited >tates C0A installedthe Kahlavi Royal family
and the >hah of 0ran in19/(. Gillions of nited>tates dollars had #ouredinto the 0ranian economyand the >hah*s armedforces. Kresident Carter
toasted the shah for hisgreat leadershi#.
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Fhen Carter in ovember 199 allowed the de#osedshah to see medical treatment in the nited >tates:homeini*s followers invaded the American ;mbassy in
Tehran and sei-ed /( hostages. 0ran dislie >A forhel#ing their removed leader.
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The Ayatollah :homeini over the the shah. The shah had been a crueltotalitarian leader even though he hel# the nited >tates. The Ayatollah
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:homeini too the nited >tates ;mbassy 3/! #eo#le) as hostages for day
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The Reagan Revolution
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g
4 The ran-Contra Aair
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The ewRight
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eo
Conservative
The heart of the neo+conservatism was however' foreign #olicy. Angered over thefailure to #ursue victory in Jietnam' neoconservatives called for a stronger nationdefense against Jietnam They o##osed detents an accuse the #resident of
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defense against Jietnam. They o##osed detents an accuse the #resident ofallowing Communism to advance. They wanted invasion to free Afghanistan.
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The Heritage &oundation is an American conservative thin tan based in Fashington' .C.HeritageNs stated mission is to formulate and #romote conservative #ublic #olicies based on the#rinci#les of free enter#rise' limited government' individual freedom' traditional American values'and a strong national defense.P%Q
The foundation too a leading role in the conservative movement during the #residency ofRonald Reagan' whose #olicies drew significantly from HeritageNs #olicy study Gandate forEeadershi#.P(Q Heritage has since continued to have a significant influence in .>. #ublic #olicymaing' and is considered to be one of the most influential conservative research organi-ations
in the nited >tates
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The Rise of Conservatismhtt#566www.youtube.com6watch7v8OCr$19HA!
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Fith the face of ?ull Connor and @eorge Fallace forconservatives. There became a new movement"eoconservativesI a grou# of intellectuals who charged that the
19D*s had #roduced a decline in moral standard and res#ect forauthority. Once su##orters of liberalism' they had come tobelieve that even well intentioned government social #rogramsdid more harm that good.
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Religious
Right
Tom 5olfe 67e ecade8
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The Goral Gaority claimed ( millionmember advocated tough laws'against homose$uality' #ornogra#hy
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g y' # g # yand #romoted a reduction ofgovernment service es#ecial welfare#ayment of single mothers. GoralGaority was against integration andbusing of school children
0n 199 Lerry &alwell' aJirginia minister created
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Jirginia minister createdthe self+styled GoralGaority devoted towaging a war against sinand electing #ro+life #ro+family' #ro+AmericanI.
&alwell has s#ecial #lansfor the great free countryof ours.
Lerry &alwell Kreachinghtt#566www.youtube.com6watch7v8=?bc@0rgOds
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A shift of #o#ulation andeconomic resources toconservative strongholds on
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conservative strongholds onthe sunbelt of the southlandwest. There is a growth of51)Activists%)Conservative Christianity
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Lerry &alwell was fined D' for misusing contributions of the Church.
Tom 5olfe 67e ecade8
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The Rising Tide ofConservatism
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4 The 'eli%io"s 'i%hthttp:++,,,yo"t"becom+,atch.
v/Cr&19A)
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The Kro+
&amilyGovement
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Khyllis >chlaflyEawyer
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Eawyer Khyllis GcAl#in >tewart >chlafly is an American
constitutional lawyer' conservative activist'author' and founder of the ;agle&orum. Fii#edia
Born: August 1/' 19% 3age !!)' >t.EouisSpouse: Lohn >chlaflyChildren: Andrew >chlaflyEducation: Fashington niversity in >t.Eouis' Radcliffe College' HarvardniversityMovies: The &irst ?last of the Trum#et
Against the Gonstrous Regiment ofFomen
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Khyllis >chlafly a self+described suburban housewife and#o#ular lecturer headed the >TOK+;RA cam#aign'describing the amendment su##orts as a "bunch of bitterwomen see a constitutional cure for their #ersonal
#roblems.
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The ;RA bill died in Congress in 19!% with!/2 of the emocrats and only (2 of the
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Re#ublicans voting in its favor.
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The Rising Tide ofConservatism
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4 The 'eli%io"s 'i%hthttp:++,,,yo"t"becom+,atch.
v/Cr&19A)
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19!
;lection
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The United States presidential election of 1980 was the 9th <uadrennial #residentialelection. 0t was held on Tuesday' ovember ' 19!. The contest was between incumbentemocratic Kresident Limmy Carter and his Re#ublican o##onent' former California @overnorRonald Reagan' as well as Re#ublican Congressman Lohn ?. Anderson' who ran as aninde#endent. Reagan' aided by the 0ran hostage crisis and a worsening economy at home
mared by high unem#loyment and inflation' won the election in a landslide' receiving thehighest number of electoral votes ever won by a non+incumbent #residential candidate.Carter' after defeating ;dward G. :ennedy for the emocratic nomination' attaced Reaganas a dangerous right+wing radical. &or his #art' Reagan #ledged to u#lift the #essimistic moodof the nation' and won a decisive victoryS in the simultaneous Congressional elections'Re#ublicans won control of the nited >tates >enate for the first time in %! years. Thiselection mared the beginning of what is called by some the Reagan RevolutionP%Q or
Reagan ;ra' and signified a conservative realignment in national #olitics
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The Reagan
Revolution
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Reagan wasan actor and#layed theotre ameHero @eorge@i##.
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After #laying a leading role in ?arry @oldwater*s 19D #residential cam#aign and
with the financial bacing of some wealthy conservatives Reagan won the 19DDrace for California governor securing %2 of Orange County vote. Reagan cutta$es in California and with it achieved a healthy economy
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Reaganomics
The Reagan Revolution
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4 'ea%anonomics4 'ea%an and ;abor
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Reagan broe with the traditional style of government control with :eynesian whichwas #art o the ew eal and @reat >ociety. Reagan went to the conce#ts ofsu##ly+side economics or maret driven economics of &rederic Haye and Gilton&riedman*s Austrian or Chicago ;conomics. Eet government more maret.Fhatever revenues were lost in lower ta$ rates would be offset by revenue fromne economic gro th At the same time s#ending c ts o ld ee# the federal
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new economic growth. At the same time s#ending cuts would ee# the federal
deficit under control and there by ee# rates down.
Lohn Gaynard :eynes 3government) versus Gilton &riedman 3maret)
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1)@overnment formula control 1) Garet Control
%)Ta$es6Tariffs6Regulation %) &ollow the rules of free tradeShonesty();<uity () ;<ual o##ortunity6variance in wealth)Ginimi-e #overty ) Create innovation6invention6motivate/)Hamilton'American >ystem'Clay /) >t. Thomas A<uinas' Austrianew eal &R'@reat >ociety E?L >chool' Jon Gise' Adam >mith'
Lefferson' Lacson' Coolidge
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@eorge @ilder conservative author of Fealth andKoverty. He states a successful economy de#ends onthe #roliferation of the rich. On the #olitical level' su##ly+siders looed to reward the most loyal Re#ublican
constituencies. The affluent and business communities. At the same time the ho#ed to reduce the flow of federaldollars to two core emocratic constituenciesS thereci#ient and #rofessional #roviders of heath and welfare#rograms.
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The ust #rice is a theory ofethics in economics thatattem#ts to set standards of
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fairness in transactions. Fithintellectual roots in ancient@ree #hiloso#hy' it wasadvanced by Thomas
A<uinas based on an
argument against usury'which in his time referred tothe maing of any rate ofinterest on loans. 0t gave rise
to the contractual #rinci#le oflaesio enormis
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The Eouisiana Civil Code article %/!9 #ermits Rescission for lesion beyond moiety.0t states that the seller may rescind the sale of an immovable when the #rice' or the#ro#erty it is e$changed for' is less than one half of the fair maret value. >#ecialrules a##ly to e$changes that have one #arty e$changing immovable #ro#erty for ami$ture of immovable or movable #ro#erty' and cashthe #arty e$changing themi$ture of #ro#erty has the right to rescind the e$change' not the #arty e$changing
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mi$ture of #ro#erty has the right to rescind the e$change' not the #arty e$changing
the immovable.
The Austrian Civil Code U9( allows the #arty to a contract may rescind it if it receivesless than half of the fair value of the consideration. The other #arty may avertrescission by agreeing to #ay the difference to full value. The laesio enormis has beencritici-ed from a law and economics #ers#ective for its inefficient incentives. 0n many
cases it is im#ossible to #rofit from gathering information because #rofits above thementioned threshold are #rohibited by the law.
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>t. Thomas A<uinas "Lust KriceI theory has influence on maret economics today.However' he believed if there was a scarcity caused by a disaster' it would be a sinto radically raise #rices.
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The Omnibus reconciliation Act of 19!1. This bill mandatedhuge cuts affecting more than % social and cultural#rograms. The hardest+hit areas were education' theenvironment' health' fuels' food stam#s and the arts.
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The Krofession Air TrafficControllers Organi-ation 3KATCO)went on strie. The #resident firedall the stries and a crash coursestarted by &ederal Aviation
Administration #ermanentlyre#laced them.
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Fith the lac of success with the KATCOstrie' fewer than 1/2 of the Americanworers belonged to a labor union' thelowest #ro#ortion since before Forld Far00
Reagans deregulation weaened the Lustice de#artmentNs Antitrust ivision' the >ecurities and ;$change Commissionand &ederal Home Eoan ?an ?oard. Earge cor#orations andFall street stoc broerages and investment baning houses.
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This causes an un#recedented scandal in the financial andbaning industries. ;s#ecially the savings and loan frauds inlate 19!*s
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19!D >avings and Eoan ?ubble. Eac of Trust with regulation not marets causesthis decrease in the economy
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The savings and loan crisis of the 19!s and 199s 3commonly dubbed the >VE crisis) was thefailure of 1'( out of the ('%( savings and loan associations in the nited >tates from 19!D to199/5 &>E0C closed or otherwise resolved %9D institutions from 19!D to 19!9 and the RTC closedor otherwise resolved institutions from 19!9 to 199/.P1Q
A savings and loan or thrift is a financial institution that acce#ts savings de#osits and maesmortgage' car and other #ersonal loans to individual members 3a coo#erative venture nown in
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g g 3
the nited :ingdom as a building society). ?y 199/' the Resolution Trust Cor#oration 3RTC) hadclosed failed institutions nation+wide' worth a total #ossible boo value of between % and billion' with an estimated cost to American ta$#ayers of 1D billion.P%Q 0n 199D' the @eneral
Accounting Office estimated the total cost to be 1D billion' including 1(%.1 billion taen fromta$#ayers.P(Q
Filliam :. ?lac wrote that Kaul Jolcer as Chairman of the &ederal Reserve >ystem 3founded191( under Kresident Foodrow Filson)' hel#ed create a criminogenic environment for the long+time established community+based financial institutions of the building or savings and loansassociations in 199 by doubling the interest rate 3to reduce inflation)5 >VEs issued long+termloans at fi$ed interest rates using short+term money. Fhen the interest rate increased' the >VEscould not attract ade<uate ca#ital and became insolvent. Rather than admit to insolvency' la$regulatory oversight allowed some C;Os to become reactive control frauds by inventing
creative accounting strategies that turned their businesses into Kon-i schemes that looed highly#rofitable' thereby attracting more investors while actually losing money. This had two effects5 itmeant that the fraud continued longer and substantially increased the economic losses involved'and it attracted o##ortunistic control frauds who were looing for businesses they could subvertinto Kon-i schemes.PQ &or e$am#le' infamous financier Charles :eating #aid /1 million fromGichael GilenNs un bond o#eration for his Eincoln >avings and Eoan Association' which at thetime had a negative net worth e$ceeding 1 million
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;lection
of 19!
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Recession'
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Recovery and
&iscal Crisis
Reagan was a success with5 1) Eowered the unem#loyment rate from 1./ millionnearly 112 before his rule. nem#loyment dro##ed to !2.%) 0nflation went from 1/2 to below /2.() The stoc maret went from D #ts in August to an all time high of %'%% #ts. 0n August of 19!.) 0nnovation such as the use of the 0nternet and Kersonal com#uters rose.
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/) Although e$#ort im#ort dro##ed the car industry had to learn from foreign carmanufacturing #lants to u#grade <uality
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0nnovation with trade of ideas with La#an
and nited >tates the com#arativeadvantage.
Fith innovation came new forms of #rocessing gas. Off+shoredrilling' Alasa Ki#eline' Cor#orate synthetic fuel. Reagan wasable to stabili-e gas.
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Bill Gates of the computer revolution
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Young people seemed to adapt to the computer revolution
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Ford Krocessingrevolutioni-ed thebusiness andeducational
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communities with#ersonali-edcom#uters. Theseare 0?G and
=ero$innovations.Gicrosoft will bethe off shot of
these word#rocessingcom#anies. Again19! innovation
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;arly form of #ersonal com#uter. Garet value increased because of a toolto save time and increase the <uality of a #roduction.
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Com#uter technology too off
in >ilicon Jalley Californiawith inventions of cell #honesand com#uter technology.
Arcade games and video games had been growing in #o#ularity since the late 19s' and by 19!% were a
maor industry. ?ut a variety of factors' including a glut of low+<uality games and the rise of home com#uters'caused a tremendous crash in late 19!(. &or the ne$t three years' the video game maret #ractically ceased toe$ist in the >. ?ut in the second half of the decade' it would be revived by intendo' whose &amicom consoleand mascot Gario had been enoying considerable success in La#an since 19!(. Renamed the intendo;ntertainment >ystem' it would claim 92 of the American video game maret by 19!9.
Kersonal com#uters e$#erienced e$#losive growth in the N!s' going from being a toy for electronics hobbyists
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to a full+fledged industry. The 0?G KC' launched in 19!1' became the dominant com#uter for #rofessionalusers. Commodore created the most #o#ular home com#uters of both !+bit and 1D+bit generations. G>=standard was the dominant com#uter #latform in La#an. A##le #hased out its A##le 00 and Eisa models' andintroduced the first Gacintosh com#uter in 19!. 0t was the first commercially successful #ersonal com#uter touse a gra#hical user interface and mouse'P9Q which started to become general features in com#uters after themiddle of the decade
Falman and ?oombo$es' introduced during the late 19s' became very #o#ular and had a #rofoundim#act on the Gusic industry and youth culture. Consumer JCRs and video rental stores becamecommon#lace as JH> won out over the com#eting betama$ standard. 0n addition' in the early 19!s variouscom#anies began selling com#act' modestly #riced synthesi-ers to the #ublic. This' along with thedevelo#ment of Gusical 0nstrument igital 0nterface 3G00)' made it easier to integrate and synchroni-esynthesi-ers and other electronic instruments' lie drum machines' for use in musical com#osition.
High definition television 3HTJ) of both the analog and digital variety were first develo#ed in the 19!s
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though their use did not become wides#read until the mid %s.
19! ?etaversus JH>
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Fars.JH> won yet
evolutiontoo over
JH> withJs
;mail too on another #ersonality fromthe innovations and com#uter #rogress.
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0n ew ,or theconstruction of the19 Forld Trade
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Center symboli-ed theshift frommanufacturing obs toservice obs. Thisbuilding caused thedis#lacement of smallelectronics' #rinting andother firms causing theloss of thousands
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A Two
Tiered>ociety
own side of Reagan was the national debt51)The national debt tri#led growing from 91 in 19! to over %. trillion in 19!9more that the federal government had accumulated in in its entire #revioushistory. 12 of the national budget went to interest. ?ig deficits e#t interest rateshigh.%)The dollar was over valued since @overnment bonds were attractive thus bring
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in ca#ital from other countries but nited >tates was indebted to foreigners to( ?illion.() ifficult to trade since American dollar was too high.
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>tengths of Reaganomics5 1) Kroduction increase %)0nvention Feanesses5 1) Fidening ga# rich and #oor %)ebt increased
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The million dollar <uestion why the government was in debt7>ome say it was greed of businessmen a) ;nron >candal b) >avings andEoans >candals.
Garet economics wors but it must be e$ecuted correctly.
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0n the 19!s' he ran American Continental
Cor#oration and the Eincoln >avings and Eoan Association' and too advantage of loosenedrestrictions on baning investments.P1Q Hisenter#rises began to suffer financial #roblemsand were investigated by federal regulators.His financial contributions to' and re<uests for
l t i t ti f fi itti >
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regulatory intervention from five sitting .>.senators led to those legislators being dubbedthe :eating &ive.Fhen Eincoln failed in 19!9' it cost the federalgovernment over ( billion and about %('customers were left with worthless bonds. 0nthe early 199s' :eating was convicted in bothfederal and state courts of many counts offraud' raceteering and cons#iracy. He servedfour and a half years in #rison before thoseconvictions were overturned in 199D. 0n 1999'he #leaded guilty to a more limited set of wirefraud and banru#tcy fraud counts' and wassentenced to the time he had already served.
Gilen was indicted for raceteeringand securities fraud in 19!9 in aninsider trading investigation. As theresult of a #lea bargain' he #led guiltyto securities and re#orting violationsbut not to raceteering or insider
t di Gil t d t t
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trading. Gilen was sentenced to tenyears in #rison' fined D million' and#ermanently barred from the securitiesindustry by the >ecurities and;$change Commission. His sentencewas later reduced to two years for
coo#erating with testimony against hisformer colleagues and for goodbehavior.P%Q
His critics cited him as the e#itome ofFall >treet greed during the 19!s'and nicnamed him the Lun ?ond:ing.
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;nron was formed in 19!/ by :enneth Eay after merging Houston atural @as and 0nterorth.
>everal years later' when Leffrey >illing was hired' he develo#ed a staff of e$ecutives that' bythe use of accounting loo#holes' s#ecial #ur#ose entities' and #oor financial re#orting' were ableto hide billions of dollars in debt from failed deals and #roects. Chief &inancial Officer Andrew&astow and other e$ecutives not only misled ;nronNs board of directors and audit committee onhigh+ris accounting #ractices' but also #ressured Andersen to ignore the issues.
;nron shareholders filed a billion lawsuit after the com#anyNs stoc #rice which achieved ahigh of >9 / #er share in mid % #l mmeted to less than 1 b the end of o ember
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;nron shareholders filed a billion lawsuit after the com#any s stoc #rice' which achieved ahigh of >9./ #er share in mid+%' #lummeted to less than 1 by the end of ovember%1.P%Q The .>. >ecurities and ;$change Commission 3>;C) began an investigation' and rivalHouston com#etitor ynegy offered to #urchase the com#any at a very low #rice. The deal failed'and on ecember %' %1' ;nron filed for banru#tcy under Cha#ter 11 of the nited >tates?anru#tcy Code. ;nronNs D(. billion in assets made it the largest cor#orate banru#tcy in .>.history until ForldComNs banru#tcy the ne$t year.P(Q
Gany e$ecutives at ;nron were indicted for a variety of charges and some were later sentencedto #rison. ;nronNs auditor' Arthur Andersen' was found guilty in a nited >tates istrict Court ofillegally destroying documents relevant to the >;C investigation which voided its license to audit#ublic com#anies' effectively closing the business. ?y the time the ruling was overturned at the.>. >u#reme Court' the com#any had lost the maority of its customers and had ceasedo#erating. ;m#loyees and shareholders received limited returns in lawsuits' des#ite losingbillions in #ensions and stoc #rices. As a conse<uence of the scandal' new regulations andlegislation were enacted to e$#and the accuracy of financial re#orting for #ublic com#anies.PQOne #iece of legislation' the >arbanes+O$ley Act' increased #enalties for destroying' altering' orfabricating records in federal investigations or for attem#ting to defraud shareholders.P/Q The actalso increased the accountability of auditing firms to remain unbiased and inde#endent of theirclients.P
&ollowing the %1 scandal in which 1bn in revenue from energy giant ;nron was found to have sustained
itself by means of institutional and systematic accounting fraud' AndersenNs #erformance and allegedcom#licity as an auditor came under intense scrutiny. On Lune 1/' %%' Andersen was convicted ofobstruction of ustice for shredding documents related to its audit of ;nron' resulting in the ;nron scandal.
Although the conviction was later reversed by the >u#reme Court' the im#act of the scandal combined with thefindings of criminal com#licity ultimately destroyed the firm. ancy Tem#le 3Andersen Eegal e#t.) and aviduncan 3Eead Kartner for the ;nron account) were cited as the res#onsible managers in this scandal as theyhad given the order to shred relevant documents. >ince the .>. >ecurities and ;$change Commission cannotacce#t audits from convicted felons' the firm agreed to surrender its CKA licenses and its right to #ractice
before the >;C on August (1 %%effectively #utting the firm out of business 0t had already started winding
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before the >;C on August (1' %%effectively #utting the firm out of business. 0t had already started windingdown its American o#erations after the indictment' and many of its accountants oined other firms. The firmsold most of its American o#erations to :KG@' eloitte V Touche' ;rnst V ,oung and @rant Thornton EEK. Thedamage to AndersenNs re#utation also destroyed the viability of the firmNs international #ractices. Gost of themwere taen over by the local firms of the other maor international accounting firms.
The Andersen indictment also #ut a s#otlight on its faulty audits of other com#anies' most notably Faste
Ganagement' >unbeam' the ?a#tist &oundation of Ari-ona and ForldCom. The subse<uent banru#tcy ofForldCom' which <uicly sur#assed ;nron as the then biggest banru#tcy in history 3the record is now held byEehman ?rothers and Fashington Gutual) led to a domino effect of accounting and lie cor#orate scandalsthat continue to tarnish American business #ractices.
On Gay (1' %/' in the case Arthur Andersen EEK v. nited >tates' the >u#reme Court of the nited >tatesunanimously reversed AndersenNs conviction due to what it saw as serious flaws in the ury instructions.P1(Q 0nthe courtNs view' the instructions were far too vague to allow a ury to find obstruction of ustice had really
occurred. The court found that the instructions were worded in such a way that Andersen could have beenconvicted without any #roof that the firm new it had broen the law or that there had been a lin to any official#roceeding that #rohibited the destruction of documents. The o#inion' written by Chief Lustice FilliamRehn<uist' was also highly se#tical of the governmentNs conce#t of corru#t #ersuasion#ersuadingsomeone to engage in an act with an im#ro#er #ur#ose even without nowing an act is unlawful.
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Cartoonist David Jacobson’s comment on the
Enron scandal
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<a22e vs=niversity ofCalifornia
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Gichigan niversity was also sued for admissions #olicy
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& i i ti
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&ermini-ation
of Koverty
?y 199% female headed households com#rising 1(. million #eo#le accountedfor (2 the nation*s #oor. Among blac women the of female headedincreased in ust on decade from (2 in 19 to 2 in 19!. Gore than half ofall blac babies were now born to unmarried mothers.
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There was a A&C Aid to
&amilies with
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&amilies withe#endentChildren with
#ayments offood stam#s for
unem#loyedsingle mothers
; id i
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;#idemics5
rugs A0>'Homelessness
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Reagan*s >ocial #rograms
we to "Lust say o to drugs.Ginimi-e affirmative action
0n 19!% the Reagan administration declared a highly #ublici-ed "war on drugsI amultibillion dollar #aramilitary o#eration to halt drug trafficing.. &irst Eady ancyReagan*s Lust >ay oI #rogram was one of education.
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The
AID!uilt
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Researchers in Atlanta CC called the new disease Ac<uired 0mmune eficiency >yndrome A0> and identifiedthe means of transmissions he e$change of bodily fluidssuch as semen and blood' Homose$ual men were morea#t to ac<uire A0>. The CC has accumulated the deathtoll of A0> as high as D'(.
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This is a chart of the homeless in shelters slee#ing each night. The e#artmentof Housing and rban evelo#ment #laced the number of homeless between%/' and (/'. However' many advocates of the homeless say thenumber is ( million
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T d
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Toward a
ew ForldOrder
; il
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;vil;m#ire
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nited >tates defense s#ending increase /2 to reach 1./ Trillion to accom#lish
the largest military buildu# in #eacetime. Reagan launched a %D ?illion dollar#rogram called >tar Fars to efeat the evil em#ire. Reagan said it was defensemechanism but was actually a lie. There was a build u# of 0ntercontinental ballisticmissiles or 30C?G)
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TheR
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Reagan
octrine
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Reagan was successful with Afghanistan in defeating Al+Maida. Reagans#ent billions of nited >tates dollars to the Guahedeen to fightcommunist
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Reagan s#ent more in the defense of Eatin America between 19! and 19!(than the nited >tated did in ( ,ears. 0n October ' 19!( the administratingdirected the nited >tates Garines to invade @ranada claiming that the tinyisland governed by Gar$ism since 199 had become Cuban military base andtherefore was an out#ost for Communism. Reagan ustified himself by saying wegot there ust in time.
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0n other nations such as >alvador thissore of unilateral military action#roved more #olitically and
strategically more difficult to carry out.Reagan directed nearly / ?illion to
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Reagan directed nearly / ?illion toshore u# ;l >alvador #ro Americanyet highly re#ressive regime. ?y 19!(
the right wing death s<uad hadtortured and assassinated thousandsof o##osition leader. The election ofcentrist #resident Lose a#oleonuarte in 19! failed to end the
bloody civil war and too one out ofhundred >alvadorans.
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The >alvadoran Civil Far 3199W199%) was a conflict between the military+led
government of ;l >alvador and the &arabundo GartX ational Eiberation &ront3&GE)' a coalition or Numbrella organi-ationN of five left+wing guerrilla grou#s. A cou#on October 1/' 199 led to the illings of anti+cou# #rotesters by the government aswell as anti+disorder #rotesters by the guerillas' and is widely seen as the ti##ing #ointtowards the civil war.P%1Q
?y Lanuary 19!' the left+wing #olitical organi-ations united to form the CRG3Coordinated Revolutionaries of the Gasses) and a few months later the left+wing
d it d t f th R 3 ifi d R l ti i t t ) hi h
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armed grou#s united to form the R 3nified Revolutionary irectorate) which'following its merging with the Communist #arty in October 19!' was renamed the&GE.P%%Q
The full+fledged civil war lasted for over twelve years' and saw e$treme violence fromboth sides. 0t also included the deliberate terrori-ing and targeting of civilians by deaths<uads' the recruitment of child soldiers' and other violations of human rights' mostlyby the military.P%(Q An unnown number of #eo#le disa##eared during the conflictand the re#orts that more than /' were illed.P%Q The nited >tatescontributed to the conflict by #roviding large amounts of military aid to the governmentof ;l >alvador during the CarterP%/Q and Reagan administrations.
0n 199' the began #eace negotiations and on Lanuary 1D' 199%' a finalagreement' The Cha#ulte#ec Keace Agreement'P%DQ was signed by the combatants inGe$ico City' formally ending the conflict
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Lean onovan was born to Katricia and Raymond onovan' who raised her in an u##er middle+class home in Fest#ort'Connecticut. >he had an older brother' Gichael.P1Q >he attended Gary Fashington College in Jirginia 3now the niversity ofGary Fashington)'P%Q and s#ent a year as an e$change student in 0reland at niversity College Cor' dee#ening her RomanCatholic faith through her contact with a #riest there who had been a missionary in Keru.P1Q
#on the com#letion of her masterNs degree in business from Case Festern Reserve niversity'P1Q she acce#ted a #osition as amanagement consultant for the Cleveland branch of the nationwide accounting firm' Arthur Andersen.P%Q
onovan was engaged to a young #hysician' ouglas Cable' and felt a strong call to motherhood as well as her call to domission wor5 ...0 sit there and tal to @od and say NFhy are you doing this to me7 Fhy canNt 0 ust be your little suburbanhousewife7N P1Q
Fhile volunteering in the Cleveland iocese ,outh Ginistry with the #oor' she decided to oin the iocesan Gission Kroect in ;l
>alvador. >he was acce#ted into and com#leted the lay+missionary training course at Garynoll in ew ,or >tate.
onovan traveled to ;l >alvador in Luly 19' where she wored as a lay missioner in Ea Eibertad' along with orothy :a-el' anrsuline nun. The #air wored in the #arish of the Church of the 0mmaculate Conce#tion in Ea Eibertad' #roviding hel# torefugees of the >alvadoran Civil Far and the #oor. They #rovided shelter' food' trans#ortation to medical care' and they buriedthe bodies of the dead left behind by the death s<uads.P%Q
onovan was a follower of Archbisho# Yscar Romero' and often went to his cathedral' the Catedral Getro#olitana de >an
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nsert map> p 111?
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The >andinistas in ?lac started to gain stronger control of icaragua. 0n 19! theC0A secretly mined icaraguan harbors. Fhen icaragua won a udgment againstthe nited >tates in the Forld Court over this violation of its sovereignty' the
Reagan administration refused to recogni-e the courts urisdiction and ignored theverdict. 0n 19! the Congress sought to rein in the cover war by #assing the?oland Amendment. 0t forbade government agencies for su##orting any#aramilitary o#eration in icaragua.
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Contra*s were freedom fighters for the nited >tates down inicaragua they had to fight the >andinistas who were communistsand close to Russia and Cuba.
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?oland Amendment #lace a #olitical tension. How do we sto#communism in icaraguan lands.
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The Giddle;ast and the
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The Giddle;ast and the
0ran+Contra
>candal
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?rendan >ullivan wasthe lawyer for Oliverorth. He was a folhero for the American
Keo#le who saw himeveryday on TJ
The nited>tates withoutCongress
sanctions gavesu##ort toContras 3anti+communist
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0n 19!D Reagans advisers changed course and began secret negotiation with the
revolutionary 0ranian government. The nited >tated eventually offered to su##ly 0ranwith wea#ons for use against 0ra< in e$change for hel# in securing he release of Americans who were being held hostage by radical 0slamic grou#s in Eebanon.iscussion elevated. The arms for hostages deal into a maor scandal. The American#ublic soon learned the sordid details from investigative ournalist and television in thesummer of 19!. The >C had sold missiles to the 0ranians using 0srael for a o+
between. The #ublic also found out that millions of dollars from the wea#ons sale hadbeen secretly diverted into cover aid for the icaraguan Contras a blatant and illegaldisregard for the ?oland Amendment
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disregard for the ?oland Amendment
The administration #oured in funds to combatinsurgencies against the governments of ;l >alvador and@uatemala' whose armies associated death s<uadscommitted flagrant abuses against their own citi-ens.
Fhen ;l >alvador*s army massacred hundreds ofcivilians in the town of ;l Go-ote in 19!1 the >tate t t d i d th t th t t l
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e#artment denied that the event too #lace
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Colonel Oliver orth too center stage and defended his grossly illegal action inthe name of #atriotism. ,et' Admiral Lohn Koinde$ter*s administration had to lie toCongress shred evidence and refused to ee# the #resident in informed in ordert guarantee his #lausible deniability. The full role of C0A irector Filliam Caseydied in 19!' #articularly his relationshi#s with orth and the #resident remainedmur. ?oth orth and Koinde$ter we convicted of felonies. ?ut higher courseoverturned their convictions on technical gourds. Reagan when #ress in whatha##en' 0Nm still trying to find outI
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Admiral Lohn Koinde$ter
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Terrorist acts including sei-ing Festern hostages and bombing commercialair#lanes continued to redefine the #olitics of the Giddle ;ast. The Reaganadministration insisted the hind international terrorism lay the >oviet bloc' the Ayatollah :homeini of of 0ran Eibyan leader Guammur el+Maddafi.
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The son of an im#overished ?edouin goat herder' @addafi became involved in #olitics while at school
in >abha' subse<uently enrolling in the Royal Gilitary Academy' ?engha-i. &ounding a revolutionarycell within the military' in 19D9 they sei-ed #ower from the absolute monarchy of :ing 0dris in abloodless cou#. ?ecoming Chairman of the governing Revolutionary Command Council 3RCC)' heabolished the monarchy and #roclaimed the Re#ublic. Ruling by decree' he im#lemented measuresto remove what he viewed as foreign im#erialist influence from Eibya' and strengthened ties to Arabnationalist governments. 0ntent on #ushing Eibya towards 0slamic socialism' he introduced sharia asthe basis for the legal system and nationali-ed the oil industry' using the increased revenues tobolster the military' im#lement social #rograms and fund revolutionary militants across the world. 0n
19( he initiated a Ko#ular Revolution with the formation of @eneral Keo#leNs Committees 3@KCs)'#ur#orted to be a system of direct democracy' but retained #ersonal control over maor decisions. Heoutlined his Third 0nternational Theory that year' #ublishing these ideas in The @reen ?oo.
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0n 19' he dissolved the Re#ublic and created the Lamahiriya' a state of the masses #art+governedby @KCs. Officially ado#ting a symbolic role in governance' he retained #ower as militarycommander+in+chief and head of the Revolutionary Committees res#onsible for #olicing andsu##ressing o##onents. Overseeing unsuccessful border conflicts with ;gy#t and Chad' @addafiNssu##ort for foreign militants and alleged res#onsibility for the Eocerbie bombing led to EibyaNs label ofinternational #ariah. A #articularly hostile relationshi# develo#ed with the nited >tates and nited:ingdom' resulting in the 19!D .>. bombing of Eibya and nited ations+im#osed economicsanctions. Reecting his earlier ideological commitments' from 1999 @addafi encouraged economic#rivati-ation and sought ra##rochement with Festern nations' also embracing Kan+Africanism andhel#ing to establish the African nion. Amid the Arab >#ring' in %11 an anti+@addafist u#rising led bythe ational Transitional Council 3TC) broe out' resulting in civil war. ATO intervened militarily on
the side of the TC' bringing about the governmentNs downfall. Retreating to >irte' @addafi wasca#tured and illed by TC militants.
&all ofC i
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&all ofCommunism
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&all of?erlin
Fall19!9
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The Reagan Revolution
4 Conservatives and 'ea%an
4 'ea%an and the Cold 5ar
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0n 19!! @orbachev began #ulling >oviet troo#sout of Afghanistan. Having entered office as anardent Cold Farrior'
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A :inder
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A :inder'
@entleration
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?acground was with C0A and China Ambassador
Reagan*s>uccessor
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Reagan s>uccessor
@eorge
H.F. ?ush
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Filliam ?ennett was a##ointed to the #osition of "rug C-arI and outlined
a #lan to increase funding for more #olice and #rison. He also fortified theborder #atrols in and attem#t to stem the flow of drugs from Eatin America.
?ennett was born in ?roolyn' the son of ancy3nZe Falsh)' a medical secretary' and &. Robert?ennett' a baner.P1QP%Q He moved to
Fashington' .C.' where he attended @on-agaCollege High >chool. He graduated fromFilliams College' where he was a member ofThe :a##a Al#ha >ociety' and went on to earna Kh from the niversity of Te$as at Austin in
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a Kh.. from the niversity of Te$as at Austin inKolitical Khiloso#hy. He also has a L.. fromHarvard Eaw >chool
Kresident ?ush sent nited >tates troo#s to Kanama on a mission to
ca#ture @ernal Ganuel oriega' an international drug dealer who had beenon the C0A #ayroll Thousand of Kanamanians died before oriega was taeninto custody and brought to nited >tates to stand trial. rug control tri#led.
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$eneral 7an"elAntonio@orie a
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Clean Air
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Clean Air Act
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The
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The
Kersian@ulf Far
The nited ation sanctions against 0ra< an there invasion of :uwaitdid little. The nited >tated announce on Lanuary 1991 the start ofO#eration esert storm. On &ebruary %' 1991 the nited >tatesentered and too over 0ra< with huge success. The nited >tatesonly lost 1! deaths com#ared to nearly 1' 0ra<uian deaths.
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Kresident ?ush identified the @ulf Far as the first ste# in the struggle to createa world rooted in democracy and global free trade. >oon after the end of thewar @eneral Colin Kowell' chairman of the Loint Chiefs of >taff and ic
Cheney' the >ecretary of efense' outlined different visions of the future. &orthe rest of the 199*s it was not certain which definition of the American role inthe #ost Cold Far world would #redominate
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The $"lf 5ar
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htt#566www.youtube.com6watch7v8f!e9J!?C=0
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0n &ebruary 1991' the nited >tatesEaunched O#eration esert >torm'which <uicly drove the 0ra<i army from
:uwait. Tens of thousands of 0ra<isand 1! Americans died
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The ;conomyand the ;lection
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of 199%
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(lectionof Clinton
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"erbert Bloc#’s $%%& cartoon
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?ritish Cartoonist uses the K;A:a##roach with #olitical cartoonses#ecially #eo#le6#residents.arasy studies the #ower of #olitical
cartoons as being stronger thanwords.
Cold Farand ?retton
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Foods not inte$t
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0n 191 for the first time in the twentieth century' thenited >tates e$#erienced a merchandise trade deficit'that is it im#orted more goods than it e$#orted. ?y19! nearly three <uarters of good and #roduced in thenited >tates were com#eting with foreign made#roducts and number of manufacturing worers. (!2of the American worforce in 19D had fallen to %!2.Gore over' the war in Jietnam #roduced ever+higherfederal deficits and rising inflation
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federal deficits and rising inflation
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Gisery 0nde$ is the sum of the unem#loyment and inflation
rates. ?y 199 La#an had become the world*s leadingautomobile #roducer for nearly %/2 of our cars
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