The Real Legacy of the 1970sRoundup
tags: political history, 1970s, financial history
Mr. Tomasky is a contributing writer and the author of “If We Can Keep It: How the Republic Collapsed and How It Might Be Saved,” from which this essay is adapted.
In most histories of how Americans became so polarized, the Great Inflation of the 1970s is given short shrift — sometimes no shrift at all. This is wrong. Inflation was as pivotal a factor in our national crackup as Vietnam and Watergate.
Inflation changed how Americans thought about their economic relationships to their fellow citizens — which is to say, inflation and its associated economic traumas changed who we were as a people. It also called into question the economic assumptions that had guided the country since World War II, opening the door for new assumptions that have governed us ever since. Here is the story:
The United States of the 1960s experienced many social upheavals. But in one realm, all was copacetic. The economy roared. The gross domestic product was increasing between 2 percent and 6 percent, wages grew, jobs were stable. The year 1968 was an annus horribilis — assassinations, riots, a bitter presidential race. But the Economic Report of the President for that year reflected at length on — imagine this — “the problem of prosperity.”
Slowly, though, inflation entered the picture. It hit 5.7 percent in 1970, then 11 percent in 1974. Such sustained inflation was something that had never happened in stable postwar America. And it was punishing. For a family of modest means, a trip to the supermarket was now a walk over hot coals.
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