How the West Was Lost, Part Seven: Warning Signs—Stagflation, Vietnam, and the Limits of Power
The glow of American dominance in the postwar era faded under the shadow of the 1970s. What began as an age of prosperity and confidence soon unraveled into a decade of crisis—unprecedented economic turmoil, painful foreign policy missteps, and societal upheaval. The warning signs of decline were impossible to ignore.
Stagflation: A New Economic Malaise
For decades, Americans had believed their economy was immune to the kinds of stagnation and instability that plagued others. That story shattered in the 1970s when the U.S. confronted stagflation: the confounding mix of stagnant growth and soaring inflation. Unemployment rose even as prices spiraled upward, defying the old rules of economics and causing shockwaves from Main Street to Wall Street.
This economic malaise was rooted in deep structural problems. Spending on the Vietnam War without equivalent tax hikes fueled deficits and pumped excess money into the economy, driving inflation higher. The situation turned dire with the twin oil shocks—most notably, the 1973 OPEC embargo—which quadrupled the price of oil almost overnight, deepening the crisis and exposing America’s vulnerability to foreign energy supplies.
The Vietnam War: Bleeding Power and Confidence
America’s long and costly involvement in Vietnam compounded economic woes and sapped national confidence. What had started as an effort to contain communism became a quagmire, consuming resources, dividing the nation, and delivering a stinging defeat. The war strained industrial capacity, diverted billions from domestic programs, and ultimately led to inflation, a weakened dollar, and rising debt. Abroad, U.S. credibility suffered; at home, trust in government eroded sharply amidst protests and political scandals.
Social Unrest and Institutional Crisis
The economic pain and foreign policy failures fueled a new age of social conflict. The late 1960s and 1970s saw widespread protests—against war, for civil rights, women’s rights, and against economic injustice. Urban riots erupted, political leaders were assassinated, and faith in institutions began to crumble. Revelations like the Watergate scandal only deepened the national sense of crisis and exposed the limits of American power, both at home and abroad.
Limits of Power
By the end of the 1970s, the American narrative had shifted—from confident world leader to a nation struggling with self-doubt and exposed vulnerabilities. The era forced a reckoning with the costs of hubris and the challenge of renewal.
Next, we’ll examine how these warning signs paved the way for new global competitors—and a world where American dominance could no longer be taken for granted.