Amin Bakhtiyor 1. (1) Yuppies-The Yuppies was a term that referred to young adults that focused on material wealth and success. It was short for "young urban professionals" and is significant because they were a symbol during the 1980s economic boom and consumer culture. Reagan's policies heavily benefited "yuppies" because they tended to be materialistically wealthy. They were also the main winners of the Reagans time. 2. (2) The Great Compression- The Great Compression was a time during the 1930s-1950s when the wealth gap between the rich and poor was declining, and there was a growing increase in the middle class. The reason for this was because of government policies and strong labor unions. It was significant because this was a period in the history of America where income inequality was decreasing among Americans and the standard of living for the middle class had increased before the significant divergence happened, which we never fully recovered from. 3. (12) Stagflation- Stagflation is an economic period of a country's economy that experiences an increase in unemployment and an increase in inflation at the same time. This is so significant because it is a massive problem for the economy. Usually, during a recession, you see only one of the problems happen (unemployment goes up and inflation stays the same/goes down, or inflation goes up while unemployment remains the same/goes down). This occurred because of the Confidence Crisis, where people were accustomed to expensive lifestyles when their wages decreased. They kept the same spending habits while not making the same amount of money. They kept consuming without saving, especially when their incomes were decreasing. 4. (8) Securitization- Securitization is where a Bank has a bunch of loans they gave with a certain interest rate, and they bunch it up into a larger package of loans and sell them off to other companies/banks. They would call these packages “securities” and make large profit off of them. This is significant because there was a period of time in US history when the securities market was not heavily regulated, and there was a crazy boom in the use of them. Financial institutions would trade "securities" amongst each other for very high profits. Essentially, by selling the package of loans, they would make a profit and eliminate all the associated risks. Banks would make it easier to get loans so that they would assign them to securities and sell them off for a profit. They still have them today but are much more regulated than before. 5. (4) Regonomics- Reagonomics is a term used to explain the economic policies and processes during Reagans precedency. Reagonomics was a mentality of economics and business that focused on an increase in the spending of the military budget, a decrease of taxes on corporations so there was an incentive to make more profit, and deregulation for businesses. By decreasing taxes on businesses, he also would cause them to have more income which would " trickle down" to the economy. This was significant because it caused a new shift to a more capitalistic era of America. The new profits made by companies would be spent which would ultimately benefit the lower class because corporations would create jobs and invest into communities. Our country never recovered from Reagens time because we still don't have as high taxes, we still have a very high military budget, and businesses aren't as heavily regulated as they were before Reagens time. 2) Since the 1950s, American manufacturing has experienced a massive decline in terms of employment and in terms of the share of profit it generates in the economy. What is the reason for this decline? What domestic and global economic forces, political choices, new cultural trends, and decisions by management contributed to this shift away from manufacturing and towards other sectors? Since the 1950s, American manufacturing has experienced a massive decline in employment due to many factors such as globalization, the atomization of manufacturing jobs, and the deregulation of financial markets. The reason for the decline of American manufacturing was the rise of globalization. The production cost in certain counties, such as China, made it harder for America to compete for cheap production costs. Since it was cheaper to transport with newer technology, businesses in America would buy things produced in places with lower production costs to increase profits. Companies no longer had to wait long for their products and transportation; American businesses didn’t have to buy from America, so they purchased from cheaper places. New technologies such as shipping containers and improved planes/boats made it easier to export things and buy from countries with cheap production costs. Thus, led to America have a huge shift and becoming more focused on becoming an importer rather than an exporter. Another reason for the decline of American manufacturing jobs was the increase of atomization for the manufacturing process. Many jobs in manufacturing were lowskilled labor jobs that were being taken over by robots and machines. Businesses would shift over to using machines and robots to increase profits. For example, the car manufacturing business used to create many jobs. However, due to the increase in automation, many parts of the manufacturing process involve robots and machines to produce cars. Especially with the new introduction of AI, there will only be an increase in these types of jobs taken, and manufacturing jobs will be the first to go due to it being a low-skill labor job majority of the time. The deregulation of the financial markets during the Reagan era allowed more people to shy away from manufacturing/blue-collar work to white-collar jobs. The financial sector wages were paying significantly higher, and the policies towards them only benefited them. People were incentives and motivated to go more into financial markets due to the high income they pay. The mentality towards going into the financial sector would change because of insane profits, as seen through the increased use of conglomerates, securities, and the influence of the yuppies.
