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Pivotal Decade: How the United States Traded Factories for Finance in the Seventies

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Pivotal Decade is a well-written history of American political economy in the 1970's, with a policy agenda just below the surface. If you thought that the 1970's were about the end of Vietnam, Watergate, bell bottoms, disco, and Iran, then this book will try to disabuse you of those notions, and go a long way toward doing so. The problem is that it doesn't really make the sale. It leaves us with more questions than answers, which is fine -- even preferable -- for a work of history, but frustrating for a policy piece.

Stein argues that the 1970's represented a time of US deindustrialization, and that federal policy failures were a principal cause of this trend. Instead of aggressively fighting for domestic manufacturing, both Republican and Democratic administrations chose to placate Japan and European allies on Cold War grounds: keeping them prosperous would strengthen the western alliance. And instead of intervening "microeconomically" to assist key sectors like autos and steel, economic policymakers, focusing on Keynesian fine-tuning, denied that there was a problem altogether and insisted that the federal government's only job was to stimulate and maintain aggregate demand.

Jimmy Carter comes in for particular abuse, although he is seen as part of a long-term trend within the Democratic party, namely, the dominance of "new politics" liberals uninterested in bread-and-butter economic issues like wages and living standards, and focused only on foreign policy, cultural issues, and the environment. These "new politics" forces developed when the critique of America's "affluent society" was at its apex; by the mid- to late 1970's, when these issues had been eclipsed by the flatlining of the US economy, they had no ideas to solve the problem. The picture of Carter is a continual ditherer, unable to decide on a coherent policy, and if anything too focused on inflation.

The book is particularly valuable for its discussion of economic policy debates in the 1970's, and its focus on the state of American workers and the labor movement. Stein is persuasive in contending that these issues, not the better-known ones of Vietnam, Watergate, and cultural transformation, were at the heart of American politics. Unlike many academic historians, Stein can write well, and by taking us into the policy debates in the Nixon, Ford, and Carter administrations, she shows us a side of US history that has unfairly been neglected for too long.

The biggest problem with Pivotal Decade is that, at least for me, it really doesn't prove its case that had US policy been different, outcomes would have been different. Stein never tires of decrying the refusal of US administrations to set "industrial policy" and intervene in the "microeconomy." She holds up Japan's Ministry of International Trade and Industry (MITI) as an example of the kind of approach the US should have taken. But it is anything but clear that MITI was a success, and the collapse of the Japanese economy in the 1990's -- elsewhere a boom decade -- casts doubts on the assertion that industrial policy would have been anything but the kind of corrupt dealing that Japan was revealed to have had. Similarly, she argues that American should have been tougher on trade and block European auto and steel imports. But would that really have made a difference? Her suggestions that the oil price shocks of the 1970's meant that Detroit needed time to adjust are plausible; but the fact remains that Detroit had three decades to put together stronger firms, and didn't do so. In any event, would government have been better able to direct private investment than the market? Perhaps, but she needs to make her case more directly.

And she had the space to do so. The last chapter -- the longest in the book -- is very fittingly called "The Age of Inequality." It runs us through the Reagan Administration to Obama's auto and finance policies. But it wasn't really necessary: this is a book about the 1970's, supposedly. Stein could have better used this space to make the case that had trade and industrial policies been different, America would have moved in a different direction. She marshals a lot of episodic and anecdotal evidence for this case, but really needs more, in my view. And she is a good enough writer to have taken us through these sometimes abstruse and needlessly technical economic debates without putting us to sleep.

An excellent book, but it could have been even better.

Very detailed coverage of US economic policy-making in the 70's, with an emphasis on international trade and macroeconomics. A very well-researched, original work of history, not a polemic, although the author clearly has a few points to make. One is that since WWII, the US has been far too willing to allow our allies to flout the rules of fair trade in order to gain their support for our political ambitions. Another is that we've never developed effective strategies to target our corporate investments on the areas that will best improve overall productivity and help us to develop and retain high-value-added manufacturing jobs. At any rate, it's one of the best books on US political economy and trade that I've read. Also has good coverage of the presidential campaigns from an economic perspective.

This is a very important book for anyone who wants to understand the root causes of our current economic troubles. One of the most frustrating aspects of the mainstream media's coverage of the recession of 2008 and 2009 is the complete absence of historical context. In The Pivotal Decade Professor Stein provides the reader with a brilliant, detailed economic history of the 1970s, demonstrating that America's 21st century economic catastrophe has its roots in the 1970s, when our political leaders utterly failed to understand the changing global economy, largely because they were mesmerized by the theology of Free Markets and Free Trade while more pragmatic nations protected and nurtured domestic industry. While our competitors understood the importance of intelligent government involvement in the economy and developed industrial policies, US leaders did nothing as our industrial base evaporated and good jobs disappeared forever. (If you wonder, as many have, whatever became of good jobs, the answer is, we eliminated most of them 30 to 40 years ago. Our failure to do anything to protect our industrial base and to preserve good jobs is hardly a secret; the deindustrialzation of America happened right before our eyes, and often with government assistance in the 1970s and 1980s).

Stein has produced a very well researched and brilliantly incisive economic history of the 1970s. The Pivotal Decade is quite well written, and like a good detective story, it is a page turner which maintains the reader's interest to the last page. It is also an infuriating book, but one feels grateful to Stein for providing her readers with the absolutely necessary historical context of our current economic crisis, a context the mainstream media cannot, or will not, discuss. One hopes that Stein will also provide us with an economic history of the 1980s that is as fascinating and well researched as The Pivotal Decade's economic history of the 1970s.

I love the concept behind this book and I love the wealth of research that went into this book but I just feel that it is poorly written. I could only recommend this book to people who have a strong desire to understand U.S. economic policy during the 1970's. I almost feel that the title is a bit misleading as I think the book severely lacks analysis of the actions of the financial industry in the 70's. This book is about U.S. political and economic policy which gave rise to the finance industry but doesn't go into much detail about the financial industry during the decade. Additionally, there is no cohesive theme that allows the author to tie each chapter together. The book is written in a 'here's some information, here's some more information, then this happened, okay now let's move on to some more information' style. I feel this book would have greatly benefitted by a couple paragraphs at the end of each chapter to tie together the information presented in the chapter to the title of the book. Once again, if you have a strong desire to learn about the topic, please read this book but understand that it's not an easy/fun/flowing read.

This book is very well researched but it often seems the facts gained from that research don't get put to good use. I wasn't sure what the author's thesis was through most of the book; there were threads of foreign trade, New Democrats, Keynesianism v. supply side, unions, national manufacturing policy, etc. but I didn't feel like it was adequately pulled together to form a coherent argument.

I did basically enjoy the book, having come of age in the '70's, so it was interesting to resurrect some of the old political names and issues that I remember hearing nightly on the evening news. And it was useful to be reminded that the U.S. trade imbalance began as long ago as the Nixon administration, it didn't just begin with Reagan and continue with succeeding administrations, as seems to be a current popular theme among some political pundits. This, and the idea that ecomomy-stimulating measures, whether Keynesian or supply-side, won't get results if the economy's structurally flawed, are the two points I got from reading this book. But the rest--should we redevelop our manufacturing base, is it even possible, have we moved along too far to go back, should there be a national manufacturing policy--is not discussed particularly well in this book and one should probably turn to other books for better insight. I suppose I'd start with Robert Reich's "Work of Nations", which the author cites, and go from there.

One minor quibble: the author spends entirely too much time on the details of presidental primary battles. How does it matter to the question of the trade imbalance that Wilbur Mills made a run at the presidency in 1972?

The author's goal in writing Pivotal Decade is to determine why economic policy in the United States took such a turn towards less government intervention. Pivotal Decade describes the American policies associated with increasing international trade, a larger financial sector, and an alleged decline in manufactering in the United States. The author focuses on the debates over federal policy in the 1970s. Throughout the period after the Second World War, the United States had subordinated economic goals to other foreign policy objectives. Thus, when there was an economic conflict with another nation, such as dumping goods priced below cost in the United States, the federal government was likely to ignore the protests of domestic producers in order to preserve good relations with the other nation. The drawbacks of this policy became more apparent starting in the 1960s. Starting then, the trade barriers of the European Economic Community and other foreign actors encouraged American firms to establish or buy overseas units to get around these barriers. Consequently, investments that could have been made in the United States were made overseas. These trade barriers, and a delay in adopting a floating exchange rates, and the rise of OPEC all led to a persistent American trade deficit.

The author focuses on executive branch policy making in the Nixon, Ford, and Carter administrations. The people in these adminstrations thought of economic policy as something focusing on macroeconomic indicators, such as the total demand for goods and services in the country and interest rates. Microeconomic issues, such as trade policy for a particular industry, were of less interest. This way of thinking about economic policy was nearly the reverse of that employed by foreign governments. This Keynesian way of thinking was deemed to be discredited, starting in the Ford administration, but only with the coming of the Reagan adminstration was this change in thinking complete. The Carter administration was when the conflict in world views was most marked, because the issues were still in play then.

I'm not completely sure of the correctness of the author's economic diagnosis, but I found her political diagnosis of the Democratic Party in the 1970s convincing. Basically, one reason why Carter dealt badly with economic issues is that he had difficulty seeing it as important until it was too late. I was astonished that when the opportunity came to strengthen his political base by strengthening labor unions he didn't put all of his effort towards this.

My main quarrel with the author is that its not clear to me that the manufacturering sector in the United States has declined as a percentage of gross domestic product. That the number of people working in manufacurering has declined is true, but could be do largely to technological change. Perhaps more people would be working in manufacturering, and manufacturering would be a greater proportion of GDP, if other policies had been followed. The author did convince me that a number of specific industries, such as steel, were harmed by American trade policies.

Overall, an interesting book which I shall re-read. I earlier published this review at Goodreads.com

The author does an excellent job in general.Basically, America is now a " Wall Street economy " based on financial manipulation,leveraging,speculation and Ponzi schemes.How did this happen ? The author is correct to take a look starting in the 1970's .However,she needed to focus in on the years 1977-1980.These are the Jimmy Carter years .Jimmy Carter was the first " Wall Street " President since Harding and Coolidge.Presidents Nixon and Ford belonged to the Theodore Roosevelt-Hiram Johnson-Robert LaFollette wing of the Republican Party as did the 1952 Republican Party primary candidates Dwight D Eisenhower and Douglas MacArthur.Nixon's SEC chair ,Bill Casey,single handedly stopped the Wall Street speculators plans to return the American economy to the speculative type of economy of the 1920's in the period 1970-1974.Wall Street decided that they had to eliminate Ford because he would not go along with their plans to deregulate the banking and finance sectors to the degree they desired.

Carter ran the same kind of disingenuous,deceptive campaign that would serve as the model for Bill Clinton and Barack Obama.Present yourself as an outsider who ,if elected,will clean house , eliminate the Washington insiders and lobbyists dominated by Wall Street and clean up the government.The problem is that the major campaign contributors for Carter,Clinton,and Obama were all linked to Wall Street.An important role was assigned to R Reagan by Wall Street.It required him to switch sides from being a conservative to becoming a libertarian.Unfortunately,Reagan agreed so as to run against Gerald Ford in the 1976 Republican primary campaign so that Ford would be weakened and lose to Carter.Reagan would then easily beat Carter in the 1980 election.This permanently eliminated the Theodore Roosevelt wing of the Republican Party.
The story of the deindustrialization,hallowing out ,outsourcing and downsizing of America's mighty manufacturing -industrial sector is correct as covered in this book.However,the same correct story can be found in the books of Ross Perot,Pat Buchanan ,and Lou Dobbs.

I recommend this book for purchase.