The Price of Civilization

1. The Price of Civilization Chapters 5-6

2. Detroit • Where Sachs grew up • Home of a lot of riots during the Civil Rights movement • Lead to a huge flight of whites to suburbs and out of Detroit • Dozens died, city up in flames, mass poverty and abandonment • Gave George Wallace (Alabama governor) ability to run third party and win a primary

3. Civil Rights Movement • Lead to : • Attempting to end discrimination through affirmative action • Desegregation of neighborhood schools • White evangelical Christians congregating into one party (split before, but the desegregation of religious schools made a push into a bloc of opposing racial background) • Came with a lot of political backlash, but also economic and social victory for many African American communities

4. Surge of Immigration • Immigration and Nationality Act of 1965- ended quotas on national origin, leading to a sharp rise in immigration • Dates: 1970 – 10 million immigrants 1990 – 22 million immigrants 2009 - 48 million immigrants • Proposition 13, a piece of tax legislation in California, lead to mass tax revolts because it required taxes to help lower grade schools where that these new immigrants were filling

5. Sunbelt vs. Snowbelt • Industry and better education in the North used to mean the North controlled political power along with wealth • Between 1900-1960, the Snowbelt provided all but one U.S presidents, between 1960-2008, the Sunbelt provided every one. This represents the gradual rise of economic power in the South. • The rise of anti-governmental political power created new Sunbelt power without a nationwide swing in values due to demography

6. Sunbelt Values • Very anti-government • Highly valued Christianity • 37% Evangelical protestants (13% in North) • 65% Protestants (37% in North) • Pro-life • Anti-gay marriage • Anti-Evolution curriculum These views were seen as threatened

7. Suburban Flight • The baby boom and the automobile led to large suburban flight in the 1960’s • Residential sorting became a way in which educational and income inequalities were propagated • This made Congressional districts “safer”

8. What Americans think • 72% said income differences are too large • 68% said distribution is unfair • 87% aid the government should spend whatever it needs to in order to ensure good public schools for all • 80% favor having their taxes help pay for retraining programs for those who have been fired • 73% say it is the responsibility of the federal government to make sure everyone has healthcare coverage • 95% say one should always find ways to help those less fortunate

9. Americans still left thinking • 77% say there is too much power concentrated in the hands of a few businesses • 62% say big businesses make too much profit • 83% say there needs to be stricter environmental regulation • 71% say the government should regulate greenhouse e gases • 66% say renewable energy would be a better long-term investment than fossil fuels

10. Spending differences • Of the ten largest net-recipient states, Obama carried only two • Of the ten largest giving states, Obama won all Receiving States New Mexico – 57% Mississippi – 43% Alaska – 38% Louisiana – 40% West Virginia – 43% North Dakota – 45% Alabama – 39% South Dakota – 45% Kentucky – 41% Virginia – 53% Giving States Colorado – 54% New York – 63% California – 61% Delaware – 62% Illinois – 62% Minnesota – 54% New Hampshire – 54% Connecticut – 61% Nevada – 55% New Jersey – 57%

11. Globalization • Started a huge shift in the United States economy in the 1970’s • The lead protagonist was MNC’s or multinational corporations • America’s include: General Electric, Exxon Mobil, Ford Motor Company, Wal-Mart, Chevron Corporation, IBM, etc. • In the 1960’s Hong Kong, Taiwan, and South Korea came to the table • In 1978, the biggest change occurred when the People’s Republic of China joined the global market • 1991- India joined as well

12. China • In 1985, trade between the U.S and China was equal at 3.9 billion dollars in each direction • By 2009, The United States has raised their output to 69.5 billion dollars • At the same time, China has raised it’s share to 296.4 billion dollars • In 2010, China overtook Japan as the second-largest economy in the World

13. The 1970’s mishaps • The U.S international monetary fund collapsed in 1971 • In 1973, Oil prices soared – the great stagflation • 1975, the U.S lost the War in Vietnam • Late 1970’s Japan rapidly rose in the auto industry • Reaganomics focused on monetary policy, scarcity of resources, and foreign competition, trying to fix the government from the inside

14. Alan Greenspan • Alan Greenspan was Federal Reserve Chairman from 1987-2006 • He overlooked the severe risks of his own policies • He pushed down interest rates • He said the inflation was an occurrence of productivity • Inflation was really a product of Chinese imports • The Fed’s monetary policy did create jobs, but in China, rather than the U.S • Ben Bernanke is following down the same path

15. Different Effects • Three overarching effects of globalization that is transforming the global economy: • The Convergence effect- refers to the new globalization providing the availability for today’s emerging economies to leapfrog technologies – Allowing China to quickly master imports and then branch out (The Process of Absorption) • The Labor effect – refers to China’s opening being tantamount to hundreds of millions of low-skilled worked being thrown into the labor pool – China’s costal cities were designated as “special economic zones” • The Mobility effect – refers to the asymmetry of internationally mobile capital and immobile labor – created a ‘Race to the bottom’

16. Mobile Capital effects • Globalization has allowed China, India, and others to have the fastest growing economies in history • Internationally mobile capital gains in three ways • The sharp boost in productivity means huge investment opportunities with high rates of return • The surge of global labor means wages around the world are bid down • Governments around the world are cutting corporate taxes easing regulations to raise competition • All three of these effects are negative for U.S workers

17. Winners and losers • Winners are owners of human capital (i.e. corporate lawyers, high-tech engineers, Wall Street bankers, senior managers, etc.) • The biggest losers BY FAR are those with a low level of education, thus leading to huge income gaps • Governments have cut the EATR (effective average tax rate) which has increased capital mobility • New York and London were two cities over the past twenty years on a dramatic race to the bottom • The end result was a massive financial bubble the imploded in 2008

18. Solution <3 • International Cooperation! • By banding together to set international minimum norms such as a common approach to eliminate tax havens, financial environmental regulation, etc. • The race led to the depletion of natural resources and long-term damage to earth’s ecosystem • The technological knowhow to deploy technology still requires large-scale research and development • Market regulations are necessary to steer markets toward sustainable solutions – so far such measures have been blocked