What is meant by the term “Nixonomics,” including wage and price controls? What was the overall effect of Nixon’s economic policies on the United States? Explain
The Vietnam War and Johnson’s fiscal policy has led instability in the American economic system when Nixon became President, with significant price hikes and inflation. Nixonomics refers to general economic policy which Nixon applied during his presidency, that included a number of different approaches that he attempted to reverse the economic situation. At first, he attempted to use the Friedman monetary theory which suggested that prices could be lowered by cutting the money supply. This was unsuccessful and led to an even greater recession. Afterward, Nixon attempted to use jawboning, which sought to pressure businesses and trade unions to maintain low prices and wages but resulted in continuous stagflation (Moss and Thomas 2012, 163).
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With a lack of success, Nixon applied Keynesian economics to unbalance the budget with the purpose to stimulate demand and employment. However, the inflation and unemployment remained at high levels. In 1971, Nixon froze wages, prices, and rents, enabled tax cuts and introduced a 10 percent tariff (Moss and Thomas 2012, 164).
Eventually, the freeze was removed, but guidelines were still in place. Such strict measures had a profound effect on ending the recession and rise of GDP, but eventually, the controls were undermined by businesses and inflation rose again. Unfortunately, Nixon’s erratic economic policies were shortcoming and led to more instability. His approach almost destroyed the US economy and believed to be the cause of a deep recession in 1973. Furthermore, it led to a discussion of how far the government should ultimately intervene in the American free market economy.
What was “Watergate” and how did it affect U.S. politics? Explain
After Nixon’s reelection in 1972, he felt empowered to drive the country into a conservative direction, both politically and economically. He reorganized the government to be more influential towards his authority and greatly conflicted with the Democratic Congress. Watergate refers to a political scandal which emerged that revealed Nixon, his administration, and campaign using immoral and dirty methods to maintain control and prevent leaks.
From the start of his presidency, Nixon abused his power and engaged in illegal activities such as placing wiretaps and using the IRS to blackmail opponents and raise illicit campaign funds. The scandal is most known for the Watergate break-in to the Democratic National Committee. Afterward, Nixon engaged in direct cover-up efforts that led to a constitutional crisis (Moss and Thomas 2012, 171).
Watergate led to a profound and deep impact on U.S. politics and society. First, it led to a significant mistrust of the American public in the honesty and campaign tactic of elected officials as well as the general involvement of the government in the election process. U.S. politics saw a tremendous reverberation by introducing numerous laws and guidelines on election finances and management. For a time, U.S. politics was characterized by a weakened presidency as Congress sought to aggressively face any executive challenges. Furthermore, candidates were expected to maintain an unblemished moral record. In general, Watergate led to a symbolical and literal cleansing of U.S. politics.
Describe Nixon’s China Policy. What was its significance to the Cold War?
Nixon’s policy on China was a very reasonable and diplomatic approach. As China was experiencing conflicts with the Soviet Union, its leader Mao reached out to the United States after years of political and economic isolation. Nixon accepted this and with the help of Henry Kissinger, began rebuilding diplomatic relations with China. Nixon was under some political pressure as well since most European allies already had normalized their relations with China, and there was pressure to unseat Taiwan from the UN and establish China in its place.
Many American politicians and businesses were encouraging for the bilateral relationship to prosper despite China’s Communist government. Meanwhile, Nixon hoped that a good standing with China will lead to a positive agreement to withdraw the US from Vietnam (Moss and Thomas 2012, 182).
The relaxation of tension with China was beneficial to Cold War rhetoric in the Southeast Asia region. Nixon viewed that this move of establishing diplomatic relations was not in support of Communism but rather helping an exchange of ideologies and knowledge. Nixon believed that China has numerous internal problems and was not focused on exporting the Communist revolution like the Soviet Union. China was recognized as a key player in the region and could help the United States to achieve necessary outcomes (Nixon 1969). Eventually, this relationship led to the US withdrawal from Vietnam as part of the treaty negotiated at the Paris Peace Accords in December of 1972 (Nixon 1973).
What was the energy crisis? How did it come about and what was the U.S. response to it? Discuss
The energy crisis of the 1970s represented a perpetual petroleum shortage for businesses and consumers as well as rapidly increasing prices on gasoline. The energy crisis began when OPEC countries led by Saudi Arabia chose to boycott oil shipments to the US as part of a geopolitical protest that the US was actively supporting Israel in its military conflicts against Arab states. Despite OPEC removing the embargo months later, the cost for a barrel of crude oil and subsequent price for a gallon of gasoline rose exponentially between 1970 and 1980. This strongly affected many American industries and regions dependent on their prosperity as oil prices and lack of government economic incentives led to their decline (Moss and Thomas 2012, 196).
However, the US began to slowly adapt. In the last days of his presidency, Nixon created the Federal Energy Office which focused on energy policy and conservation. He began an initiative to establish American energy independence by increasing domestic oil production through oil fields in Alaska and offshore drilling. This led to the production of not only more oil but coal and natural gas as well while increasing investment into nuclear and non-renewable energy. However, this was met with public protest and plans were halted as American imported up to 40 percent of its oil usage (Moss and Thomas 2012, 197).
What was the Iranian Hostage crisis? How did this crisis reveal the foreign policy weakness of the Carter administration? Describe the circumstances surrounding the release of the hostages. What are some possible lessons that the United States could learn from this experience? Explain
For years Iran served as a strategic ally to the US in the region and against the Soviet Union. The Carter administration was close with the Iranian Shah and despite some public disdain, the CIA noted that there were no revolutionary tendencies. This was inherently the policy weakness of the Carter administration, reliance on Iran and assuming that there will be no anti-American tendencies or change of government.
In 1979, clergy led by Ayatollah Ruhollah Khomeini seeking to establish an Islamic republic began an assault on the shah. Eventually, the government was overthrown, and a new Islamic government came into power. Khomeini immediately denounced both, the US and the Soviet Union which threw US leaders into confusion. Despite Carter attempting to normalize relations with the new government, he was rejected and anti-American radical groups began to emerge (Moss and Thomas 2012, 207).
The Iranian Hostage crisis began when a well-organized group of radicals and Iranian university students attached the US embassy and took hostage a number of diplomats, CIA officers, and military liaisons. The crisis dominated US foreign policy as diplomatic relations were severed. A secret military operation was planned but miserably failed which symbolized the inability of Americans to protect its citizens.
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Eventually, the previous Shah died, and Iran was deeply distracted by a war with Iraq. An agreement was made which guaranteed the release of the hostages in return for $8 billion of Iranian assets being released (Moss and Thomas 2012, 207). This crisis indicates that the US leadership could do better in practicing diplomacy and understanding nationalist movement. Instead of using invasive and solely beneficial politics, it is vital to understand domestic sentiments in foreign countries.
Nixon, Richard. 1969. “Informal Remarks in Guam With Newsmen.” The American Presidency Project. Web.
Nixon, Richard. 1973. “Address to the Nation Announcing Conclusion of an Agreement on Ending the War and Restoring Peace in Vietnam.” The American Presidency Project. Web.
Moss, George D., and Evan A. Thomas. 2012. Moving on: The American People Since 1945, 5th ed. London: Pearson.