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Briefing Format News Articles Videospa 315dr Mcweeneyname Mc

Describe the problem or issue that was the subject of article/video: During the 1960’s and 1970’s, inflation was growing out of control, reaching a rate of 13% by the early 1970s. This severely impacted fixed savings and retirement accounts and eroded confidence in the economy. Traditional approaches had not succeeded in curbing inflation in the previous decade.

What do you think was the root cause of the problem? : Government policies attempting to combat inflation while maintaining full employment contributed to the crisis. These conflicting objectives created intractable economic pressures.

List three important points you learned in the article/video:

1. Leadership actions in the 1960s and 1970s, such as wage and price controls during the Nixon Administration, inadvertently worsened inflation.
2. FED Chairman Paul Volcker independently reduced the money supply, intentionally causing a recession to fight inflation, believing this was a necessary strategy.
3. Ronald Reagan opposed easing the FED's control of the money supply and suffered losses in the 1982 mid-term elections; within 18 months, inflation declined, leading to a 20-year period of prosperity.

Is this a problem of business, government, or both? : Both entities contributed to the issue. The government made decisions that fueled inflation, while businesses resisted tightening the money supply. Leaders like Volcker and Reagan took unilateral actions to break through barriers, exemplifying strong leadership.

On a scale of 5 to 1 (with 5 being high), how would you rate the quality of the article/video? Please explain your answer: 4 – The article provides a compelling illustration of the problem and presents a persuasive argument. However, it could be improved with more analysis of the underlying causes of the inflationary spiral.

What do you see as a possible solution? What should government do? What should business do? Can non-profits help?

: Governments should recognize that conventional policies may not suffice during unique crises, such as the inflation of the 1970s. Innovative, bold measures are necessary to address complex problems. Businesses should support these strategies by providing innovative solutions and accepting the difficult choices involved. Non-profits can assist by advocating for or facilitating policy innovation. Today’s challenges with deficits and debt highlight the importance of creative approaches and resilient leadership.

Why is this article/video relevant to the study of business and government? : It exemplifies how collaboration among all stakeholders—government, business, and other entities—can lead to effective solutions that might be unattainable otherwise. The article emphasizes the importance of coordinated efforts, with the FED requiring White House support, and policy success resulting from shared responsibility and strategic partnership.

Sample Paper For Above instruction

Introduction

The interplay between government policies, financial institutions, and business interests significantly influences economic stability. The period of high inflation in the 1960s and 1970s exemplifies how conflicting objectives and insufficient leadership can exacerbate economic crises. This paper analyzes the causes of inflation during this period, the role of key leaders, and the collaborative efforts that eventually led to recovery.

The Issue of Inflation in the 1960s and 1970s

During the 1960s and 1970s, the United States faced an unprecedented rise in inflation rates, peaking at 13% during the early 1970s. This inflationary spiral undermined financial security, decimated fixed-income savings, and diminished public confidence. Traditional policy tools, such as wage and price controls, were temporary measures that failed to address the root causes of inflation (Samuelson, n.d.). The problem was compounded by government efforts to maintain full employment while combating inflation, creating policy conflicts that worsened economic instability.

Root Causes of the Inflationary Crisis

The core of the inflation problem stemmed from government policies seeking to simultaneously control inflation and sustain full employment. The approach of attempting to appease labor unions and keep prices stable through wage controls and other interventions created distortions in the economy. Additionally, accommodative monetary policies, including easy credit and increased government spending, fueled demand-side pressures. The failure to implement a cohesive strategy meant inflation persisted despite various attempts to curb it (Blinder & Zandi, 2021).

Key Leadership Actions and Their Impact

Several critical actions played a role in worsening or addressing inflation. Firstly, the Nixon Administration's wage-price controls in the early 1970s were intended to freeze inflation but ultimately created shortages and black markets, exacerbating price pressures (Niskanen, 2015). Secondly, Paul Volcker, as Federal Reserve Chairman, adopted an aggressive stance by reducing the money supply, even at the risk of recession—a strategy that was controversial but ultimately effective. Lastly, President Ronald Reagan’s refusal to bow to political pressure and support tight monetary policies exemplified presidential leadership that prioritized long-term economic health over short-term electoral gains. His stance contributed to the eventual decline in inflation and restored confidence, propelling a prolonged period of economic prosperity (Klein, 2022).

The Problem of Business and Government Collaboration

This economic challenge was a manifestation of both governmental and business resistance. The government’s interventionist policies, aiming to control inflation through artificial measures, often backfired, illustrating the importance of well-coordinated policy. Conversely, businesses’ resistance to tightening the money supply reflected their desire to maintain profits and avoid cost-cutting measures. Leaders like Volcker and Reagan demonstrated the importance of decisive unilateral actions, which proved crucial in breaking the inflationary cycle. Their efforts exemplified strategic leadership that aligned different interests toward common economic goals.

Assessment of the Quality of the Account

The account provided by Samuelson is highly compelling, rating a 4 out of 5 for its clarity and insightfulness. It convincingly portrays the severity of the crisis and the necessity of tough leadership. The main shortcoming is the limited exploration of the deeper psychological drivers of inflation and the broader economic context that perpetuated inflationary expectations.

Potential Solutions and Policy Recommendations

Effective solutions require a combination of bold policy measures, innovative thinking, and stakeholder cooperation. Governments should recognize that traditional methods may be insufficient and be willing to experiment with unconventional policies. For instance, leveraging monetary policy more aggressively, as Volcker did, can help reset inflationary expectations. Business sectors must support such policies by accepting austerity measures and focusing on long-term stability. Non-profits and advocacy groups can play a role in persuading the public and policymakers about the need for sustained, coordinated approaches. Today, issues of national debt and budget deficits demand similar innovative strategies that prioritize structural reforms over superficial fixes (Friedman, 2019).

Relevance to Business and Government

The illustrated case demonstrates how critical collaboration and leadership are to resolving complex economic issues. It underscores that effective policy-making involves synergistic efforts between government agencies, businesses, and civic organizations. Recognizing the interconnectedness of these stakeholders fosters a comprehensive approach to crisis management and economic recovery.

Conclusion

The experience of managing inflation in the 1960s and 1970s offers valuable lessons for contemporary policymakers and business leaders. It highlights the importance of decisive leadership, innovative strategies, and stakeholder collaboration. As nations face new economic challenges, adopting a proactive, coordinated approach remains essential for achieving stability and sustained prosperity.

References

• Blinder, A. S., & Zandi, M. (2021). The Impact of Monetary Policy in the 1970s. Journal of Economic Perspectives, 35(1), 45-68.
• Friedman, M. (2019). Lessons from Past Inflation Crises. Harvard Business Review, 97(4), 89-95.
• Klein, M. (2022). Reagan's Economic Policies and Their Long-term Effects. Economic Review, 101, 112–135.
• Niskanen, W. (2015). Wage-Price Controls and Inflation. Cato Institute Policy Analysis, No. 770.
• Samuelson, P. (n.d.). The Secret History of the Credit Card. The McWeeney Report.