Stagflation: The Weird Economy 801television speech he complained that “a moral and spir-
itual crisis” had sapped people’s energies and under-
mined civic pride: “We’ve learned that piling up
material goods cannot fill the emptiness of lives which
have no confidence or purpose.” Critics responded
that the nation needed a president rather than a
preacher, and that sermons on the emptiness of con-
sumption rang hollow to those who had lost their jobs.
The economic downturn, though triggered by the
energy shortage, had more fundamental causes. In the
prosperous postwar decades, many companies had
grown too big and complacent, more attuned to the
demands of the corporate bureaucracy than the needs
of customers. Workers’ boredom lowered productivity.
Absenteeism at General Motors and Ford had doubled
during the 1960s. On an average day in 1970, 5 per-
cent of GM’s workforce was missing without explana-
tion, and on Mondays and Fridays 10 percent failed to
show up. That year Lee Iacocca, the president of Ford,
was unnerved by employee attitudes during his visit to
a plant at Wixcom, Indiana: “I see some young guy
who’s going full-time to school at Wayne State, his
mind is elsewhere, and he doesn’t give a shit what he
builds, he doesn’t care and he isn’t involved in his job.
We can’t change a man like that anymore.” Incapable
of eliminating slipshod work in Ford plants, Iacocca
recommended that dealers improve their repair shops.
Two years later simmering discontents among
young workers boiled over at the GM assembly division
at Lordstown, Ohio. GM had installed robotic welding
machines, streamlined the workforce, and accelerated
the assembly line: 100 cars passed through the line each
hour—40 more than under the previous system.
Without authorization from the national UAW, younger
workers refused to work at the faster pace, allowing
many chassis to pass through untouched and throwing
the factory into chaos. “Significant numbers of
American workers,” the U.S. Department of Health,
Education, and Welfare concluded, had grown dissatisfied
with the “dull, repetitive, seemingly meaningless tasks” of
the postwar workplace.
Younger workers were growing impatient too with
aging union leaders and a system that welded salary
increases to seniority. Increasingly the young
rejected the postwar accord in which organized
labor essentially ceded control of the workplace in
return for cost-of-living increases and job security.
Union membership slipped badly from the high
point of the mid–1950s, when over one in three
nonagricultural workers belonged to unions; by 1978,
the proportion had declined to one in four, and by
1990, one in six. During the 1940s and 1950s, most
workers voted to join a union, pay dues, and have the
organization bargain for them. By 1978, however,
union organizers were losing three-fourths of their
campaigns to represent workers; and many workers
who belonged to unions were opting to get out.
Every year, 800 more union shops voted to rescind
their affiliation.
Carter,Crisis of Confidence (1979)at
http://www.myhistorylab.comStagflation: The Weird Economy
Recessions are part of the natural business cycle:
When economies overheat, they eventually cool
down. But the economic crisis after 1973 was unset-
tling because, for the first time in the nation’s history,
the rising tide of unemployment had failed to extin-
guish inflation. Millions of workers lost their jobs, yet
wages and prices continued to rise. The term
stagflation(a combination of stagnation and infla-
tion) was coined to describe this anomaly. In 1971 an
inflation rate of 5 percent had so alarmed President
Nixon that he had imposed a price freeze. By 1975
inflation had soared to 11 percent and by 1979, it
peaked at a whopping 13 percent; unemployment
ranged from 6 to 10 percent, nearly twice the usual
postwar level.ReadtheDocumentThis unused Pittsburgh steel mill was demolished in 1982.