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C O U R S E 
The Modern World: Global History since 1760
Prof. Philip Zelikow, University of Virginia
C O U R S E   L E C T U R E 
1970s Obstacles to Reducing Cold War Tensions
Notes taken on August 17, 2014 by Edward Tanguay
large bureaucracies produced by the Cold War began show signs of inefficiencies
socialist economy models were beginning to show signs of erosian
the feeling that both socialist and capitalist governments were become too big, bureaucratic entities engaged in a military competition
the inflation of 1970s
governments are spending and printing too of money
common economic belief that if inflation goes up, unemployment would come down
even if it devalues the currency
but governments discovered that you can indeed have high inflation and high unemployment
end of the Bretton Woods financial system
1870s: World Money 1.0
gold exchange
1944: World Money 2.0
the Bretton Woods system
gold dollar standard
gold as anchor but print dollars
trouble maintaining the value of the dollar
established the International Monetary Fund (IMF)
1971: broke this system
nothing really took this place
currencies go into a free float against each other
1973: first oil shock spike in oil prices
oil producing countries raise price of oil
1978: another price jump because of Iranian revolution
how do these problems affect each economic model:
ISI: Import, Sustitute, Industrialize (e.g. Brazil: trade low, support local)
any oil you import becomes more expense
you have few exports so it is hard to compensate
you may even have to pay more subsidies to further protect your industries
you'll start printing money
creates endemic and hyper inflation
EOI: Export Oriented Industrialization
Japan, South Korea
depressed their domestic standard of living in order to compete internationally
as economy worsens globally, you are not able to export as much
United States suffers a defeat in the Vietnam War
1973 troops out, signs treaty
treaty breaks down
North Vietnam overruns South Vietnam
it feels like the expansion of American power is in retreat
it looks in ways that the USSR is getting stronger during the 70s but socialisms were having economic troubles
obstacles to reducing the peaceful coexistence
1. exposed realities such as Alexandr Solzhenitsyn
exposes Soviet Union's slave labor system
2. each superpower has different forces
Soviet army much larger
NATO forces more advanced
but this means that if Soviet force overrun Europe, NATO countries have to be the first to use nuclear weapons
i.e. will the United States sacrifice Chicago to save Hamburg?
3. Nuclear asymmetry
Soviets have huge force of heavy land-based missiles
USA has longer missiles and submarines
USA feels Soviets would tend to strike first
Soviets fear that USA will build up too much power and offset the balance
4. ongoing struggles in Third World
each was seeking unilateral advantage
Vietnam finds itself at odds with Chinese dominated Cambodia
Vietnam invades Cambodia putting an end to the genocide being conducted by that communist regime
Angola being secretly backed by each superpower
Somalia, Soviets supporting military dictator, sides get help from each superpower
El Salvador, Guatemala
5. Afghanistan invasion
Soviets feared that the Americans would get involved, but this move seen largely as SovietSoviet aggression
military balance looked stable on the surface but not when you looked deeper