1. Inequality Understanding and Fixing American Economic Malaise, 1970s to Present

2. The Problem Slowing American economy Stagflation: simultaneous high inflation and high unemployment Oil shocks Competition from Europe and Japan (and later all Asia and Latin America)

3. Solutions Keynesian “pump priming” – no longer effective Economic restructuring – long term and painful solution Remove “barriers” to economic innovation Maintain living standards to encourage consumption

4. Balance of Power in the White House and Congress Congress –House – Democratic (28 years); Republican (12 years) 1968 - 1994 - Democratic 1994 - 2006 - Republican 2006 - 2008 - Democratic –Senate - (Democratic 23 years; 17 years) 1968 - 1980 - Democratic 1980 - 1986 - Republican 1986 - 1994 - Democratic 1994 - 2000 - Republican 2000 - 2002 - Republican/Democratic 2002 - 2006 - Republican 2006 - 2008 - Democratic White House: –Republicans – 28 years (1968-76; 1980-92; 2000-2008) –Democrats – 12 years (1976-80; 1992-2000)

5. Balance of Power, 1968-2008 Presidency RRRRRRRRDDDDRRRRRRRRRRRRDDDDDDDDRRRRRRRR House DDDDDDDDDDDDDDDDDDDDDDDDDDRRRRRRRRRRRRDD Senate DDDDDDDDDDDDRRRRRRDDDDDDDDRRRRRRRDRRRRDD

6. Balance of Power, 1968-2008 Presidency RRRRRRRRDDDDRRRRRRRRRRRRDDDDDDDDRRRRRRRR House DDDDDDDDDDDDDDDDDDDDDDDDDDRRRRRRRRRRRRDD Senate DDDDDDDDDDDDRRRRRRDDDDDDDDRRRRRRRDRRRRDD 1976-1980 1992-1994 2002-2006

7. Conservative Solutions: Reagan/Bush I Era Tighten monetary policy to control inflation End welfare and coddling of criminals Curb the power of unions Ease civil rights enforcement and affirmative action Deregulate industry to create more competition: –Airlines, 1978 –AT&T breakup, 1984; –loosen environmental rules. Cut taxes - to rein in big government and free private markets.

8. How Effective are the Solutions? What are the underlying dynamics? Who is helped or hurt (long run and short run) by: –Economic restructuring –Policy changes

10. 1970

11. 1969

17. Willie Horton adHorton Bush and Dukakis on crime Bush supports the death penalty for first-degree murderers Dukakis not only opposes the death penalty, he allowed first-degree murderers to have weekend passes from prison One was Willie Horton, who murdered a boy in a robbery, stabbing him 19 times Despite a life sentence, Horton received 10 weekend passes from prison Horton fled, kidnapped a young couple, stabbing the man and repeatedly raping his girlfriend Weekend prison passes. Dukakis on Crime [political message paid by National Security Political Action Committee]. http://www.cnn.com/ALLPOLITICS/1996/candidates/ad.archive/horton.mov

18. Median Family Income by Age Cohort, 1947-2005

19. Inflation Adjusted Median Family Income, 1959-89

37. Median Family Income by Age Cohort, 1947-2005