The price of civilization chapter 5 and 6

1. The price of civilization chapter 5 and 6 By John Giuffrida

2. Chapter 5 – The divided nation

3. Social cleavages • Red States vs. Blue states, Suburbs vs. Urban centers, Rural vs. Urban, Conservatives vs. Liberals, etc. • During 1930’s and 1940’s the Great Depression united Americans • Then World War II united most Americans • These events were what allowed American to join together and created consensuses • Up until 1965 presidents could feel like they were presiding over a society that shared key touchstones

4. Social Cleavages Cont. • Consensus began to unravel after 1965 • Reasons were the Cold War and it’s attitude, Women’s changing role in society, The Vietnam War etc • There are trends that caused the changing in Washington….

5. Civil Rights and Political realignment • Marked moment in which political power shifted from Snowbelt to Sunbelt • Uses Detroit as an example, riots occurred in African American community, Detroit spirals into poverty • Civil Rights movement caused political realignment, South which had been democratic, suddenly switch to become republican • This helped elect first Richard Nixon (in 1968) then Reagan (in 1980), then the Bushes (in 1988, and 2000 respectively)

6. Civil Rights and political realignment cont. • Ushered in an era of white opposition to federal programs • Until this time federal support was mostly for white voters (Farmers, home owners, and retirees) • White evangelical Christians turned divided support into solely republican support in the South

7. The Hispanic immigrant surge • Surge of Hispanic immigrants pushed white voters into the mind low taxation and entrenchment of the federal government • Immigration and Nationality Act of 1965 caused a sharp spike in immigration and changed the demography • By 1990 population was 22 million, by 2009 it had doubled • Hispanic votes have become key in national and state elections

8. The Hispanic immigrant surge cont. • This surge fed urge for immigration reform and by extent increased racial tensions and the anti-tax sentiment of the 1970’s and onward • Illegal immigration led to a loss of sense of community, which is necessary for program that assist the poor (ex: Health Care, Education, income support, food stamps, etc…) • Sense of community was already almost impossible to achieve with racial tension, but open borders to illegal inflow ruined all chance • Washington squandered trust over immigration reform and social spending

9. The sunbelt overtakes the Snowbelt • Civil rights movement divided American’s according to ethnicity, but also changed the geography of power (Contradicts himself slightly, segregation also divided Americans) • For a century after Civil War, American power was centered in the north • After 1964, the Sunbelt provided almost every president up until Obama • South became economically powerful during and after WWII • Infrastructure also increased the South's economic and political power

10. The sunbelt overtakes the Snowbelt cont. • Industry migrated to the South • Immigration increased South’s population and by extension, political power • Nations values hardly changed, Because of the Seats in Congress a minority “ruled”

11. Sunbelt values • Rise of the government led to an increase in anti-government fervor • South became the bastion for fundamentalist Christianity • Counterculture drugs, increased sexual liberation, and the surge of women’s rights all led to cultural upheavals and eventually led to cultural divides • Conservatives rose up against an activist federal government

12. Suburban Flight • Affluent white households migrated in mass to the suburbs in the 1960’s • Desire to live in homogenous white neighborhoods contributed to the cultural divides • Quality schooling was a main reason for migration • School funding was divided: Inner city schools were very poor while suburban schools flourished • Suburbs became republican while poorer urban areas became democratic • Both parties moved farther right however because of big companies

13. Still a consensus beneath the surface • Real question is not whether Americans can agree on everything, but whether they can agree on a set of economic policies • Things that Americans agree on: Equality of opportunity, individuals should use maximum effort to improve their lives, Government should help those in need, Rich should pay more in taxes (More contested) • Sachs states these values could form a economic consensus (If you haven’t noticed, there is a leftward tilt on what policies he prefers) • Talks about income differences and how Americans agree they are too large

14. Still a consensus beneath the surface cont. • Too much power in the hands of the big companies, but they still approve private run business • The environment is widely important to all Americans according to census data • Energy is also a key issue for Americans (Clean energy) • However, the biggest issue of contention is how the federal government should tax and spend (Federal spending and taxation) • States that lead the “crusades” actually receive the most federal assistance (According to the Tax Foundation 2005 survey)

15. Toward a new consensus • Sachs finishes this chapter with the opinion that “America is stronger than what divides us” • Citizens simply have a biased view because of politicians (they prefer rich and special interests) • Public must stay informed

16. Chapter 6 – The new globalization

17. The new globalization • All parts of the world are linked in trade, investment and production • Sachs argued the process began with Christopher Columbus and Vasco de Gama • Created more economic interconnections than ever before: Led to increased division of labor and increased sophistication of the labor force • The lead protagonist of the new globalization is the MNC: Multinational Company • 25 percent of corporate benefits now come from abroad, compared to 5 percent in 1960

18. The New Globalization cont. • Sachs also states that World War II increased the pace of globalization • Many economic opportunities that were once happening only with big powers spread to China and India, and were more profitable there • Trade between the U.S and China became hugely profitable • China will overtake US by 2020 • China is an importer of world resources (Think iron, coal, copper and food)

19. The tendency to underestimate the new globalization • Politicians and academics often underestimate the “power” and effects of globalization • The US began to slip from its “complete” dominance after World War II in the 1970’s when it’s international monetary system collapsed (This was brought up in previous chapters) • This new globalization should have become America’s priority after the 1970 fiasco, he hates on Reagan some more for this

20. How Alan greenspan misjudged globalization • He was the Federal Reserve chairman from 1987 to 2006 • Sachs states he overlooked key problems because of ignorance or misunderstanding • He only fixated on pushing down interest rates, and said America had a new “source of productivity” • Sachs states he was largely responsible for the 2008 economic crisis because he forced the US to create runaway consumption and the housing binge • This policy created jobs but they quickly fell through and cost America a net loss • It was a hopeless, self defeating strategy This guy!

21. Long-term effects of the new globalization • Globalization played a role in the “Boom-bust” cycle in America • Key government strategy was to insist that foreign investors desiring to enter the Chinese market to do so in a join-venture partnership with a Chinese counterpart (This is a Chinese strategy) • China’s GDP rose around 10 percent per year from 1980 (on average) • Workers left the country side in China and more to the cities, leading to a massive migration of the population (Yes, I know I use massive too much Coach Simpson) • Caused pollution, regulations issues, etc…

22. Income inequality and the new globalization • In principle, New globalization can ultimately be beneficial to the entire world • New Economies win, Old economies have new trading partners • However, gains are unlikely to be distributed equally • High skilled workers benefit immediately, low skilled workers would feel tremendous pressure (Notice I didn’t use massive) • Whole world could theoretically lose from globalization if the surging income in the emerging economies leads to global environmental calamities – China’s pollution is a good example

23. Home inequality and the new globalization cont. • Big business in America could be benefitted greatly but at the expense of the workers • This is good for investors • Owners of Physical, Financial and / or Human Capital are all going to do well because of Globalization • Biggest losers because of the new globalization are by far those with little education (Hint: Finish high school) • Biggest realization must be about the new competition that American workers are facing from low-wage countries • Corporate tax rate is declining because the ability to move capital to other countries • Only solution to prevent the inequality is international cooperation and setting minimum international norms

24. The Depletion of natural resources • Sachs argues that the rise of other countries through industrialization and increased industry will deplete natural resources to new lows • The world economy is pressing hard on many natural finite resources • Loss of supply has led to a surge in pricing for coal, gas, and oil but also for copper and aluminum, iron ore and others • Repercussions can be worse in areas where there are no market prices to warn us • Public action is necessary

25. America’s failed response to the new globalization • This chapter sums up with the idea that America failed to respond effectively to the challenges new globalization provides • Manufacturing sector shrunk • The working class has been squeezed • Washington was unable to come up with any long term, serious responses to the lack of American competitiveness • Cuts in infrastructure, education and science are hurting just what America needs to regain its competitive edge