544 ChaPter^10
Clinton made much of this possible not by traditional Democratic policies
based on Keynesianism or even working with labor unions and consumer
groups, but in a free-market fashion in the tradition that Reagan had estab-
lished. Much of the economic success of the 1990s actually had little to do
with presidential decisions. Oil prices were low internationally, thus creating
low inflation and keep wages stable in the U.S. Meanwhile, without the Soviet
threat, military budgets did not rise at the pace they had before. Maybe of
more consequence was the so-called dot.com bubble of that decade.
In the earlier part of the decade, the Internet had become accessible to
computer users and then ballooned and became widespread. To investors, this
new technology, like railroads and automobiles in the past, was a “can’t miss”
opportunity to make big money, so they poured funding into stocks for the
“dot.com” companies, technology firms so named because that was the suffix
of their internet addresses. From 1997 to around 2000, market prices rose
incredibly as investment in dot.com companies soared. But then, just as sud-
denly, that market crashed. Too many dot.coms existed on paper but not in
reality. Investors were so intrigued by the prospects of huge returns on this
new technology that they were investing in ideas, not real companies. By
2001, the bubble burst. Pets.com, which had spent $2 million for a commercial
during the 2000 Super Bowl, went entirely out of business. Stock in Cisco, a
company established in San Francisco to design, manufacture, and sell network-
ing equipment, declined by 86 percent. Even Amazon.com, the retail giant that
sells virtually everything, saw its stock fall from $107 to $7 per share; of course
it rebounded and now sells above $300 a share, but that kind of recovery was
the exception, not the rule. Despite the crash, the massive amounts of surplus
capital put into dot.coms before the bubble burst had a major impact on eco-
nomic growth, and account for much of the data listed above.
Clinton also made much of this growth possible by helping organize and
make the U.S. a member of international organizations regarding trade and
finance, especially the World Trade Organization [WTO] and the North
American Free Trade Agreement [NAFTA]. The WTO and NAFTA were
groupings of countries–the WTO had 139 members across the globe and
NAFTA included the U.S., Canada, and Mexico–that would organize collec-
tively to set rules for trade and markets. These organizations promoted free
trade, the idea that countries should be able to trade with one another with-
out heavy tariffs or other barriers such as strict environmental laws. In reality,