She applied the “Page 99 Test” to her new book, Pivotal Decade: How the United States Traded Factories for Finance in the Seventies, and reported the following:
On page 99 I am in the midst of telling the story of the American response to the rise of OPEC after the 1973 oil embargo and price rise. OPEC attempted to use its new wealth and power to woo other developing nations. The U.S., trying to counter OPEC’s influence, began to acknowledge some of the complaints of the newly independent countries. The U.S., and especially Secretary of State Henry Kissinger, had viewed the “third world” through the lens of the Cold War. Thus, Kissinger cut off aid to left-leaning Chile in 1970, a prelude to more active intervention against Salvador Allende, which led to the successful coup in September, 1973. But in 1975 and 1976, Kissinger advised President Ford to cultivate Socialist Michael Manley of Jamaica, even when the prime minister initiated several joint projects with Fidel Castro of Cuba. Jamaica received more assistance. Kissinger made his first trip to Africa. (See the cartoon on p. 93) Aid was one tool employed to keep developing countries in the American strategic orbit. But the more significant techniques, written about earlier in this chapter, were loans for industry and non-reciprocal trade access to the U.S. market. Both policies produced new competition for American industry.Learn more about Pivotal Decade at the Yale University Press website.
This chapter demonstrates two of the factors that hobbled U.S. manufacturing. First, rising oil prices raised production costs. Although many Americans supported an industrial policy to keep jobs here, banks and multinationals opposed, preferring to meet the crisis by producing, not selling abroad. Second, diplomats used the American market to bolster strategic alliances. Market access was employed after 1945 to bind Europe and Japan to the United States. After 1973, American consumption cemented strategic relations with developing countries.
American elites thought that U.S. affluence was eternal or that the “serious injury” of “some domestic industry” was necessary for “the broader national self-interest.” This second point was not articulated publicly. (That is why the presidential and departmental archives, which reveal intra-governmental debates, were vital for this book.) Over time, the burdens on manufacturing shifted domestic investment to the “non-tradables,” like housing and finance and reduced the real wages of most Americans. The resulting trade deficits produced the global imbalances between consuming nations (United States), and producing nations (now China) that are at the root of the contemporary global economic crisis.