The 2000s were the worst decade for job creation ever recorded in US history. Between 2000 and 2010 the U.S .economy added a grand total of just two million jobs. That compares with more than 20 million new jobs created during the infamous 1970s. The American economy had problems in the 1970s but nothing like the problems of the 2000s. Ten times as many jobs were created in the 1970s as in the 2000s. Real median wages for Americans of all ages were higher in the 1970s than at any time since. In the 1970s the official poverty rate averaged 11.9%. In the years since 1980 the average has been 13.6%. In 2012 it reached 15.0%. Seen from the perspective of someone coming out of the glorious boom years of the 1950s and 1960s, the 1970s might have seemed pretty awful. Dispassionately evaluated in retrospect they seem pretty good, at least economically. Some people even like the clothes—maybe not the hairstyles, but then you can’t have everything.

The big economic problem of the 1970s was inflation. Annual consumer price inflation hit 12.4% in 1974 and 13.3% in 1979. Everyone who lived through those days remembers the long lines at service stations and skyrocketing prices for gasoline. We may not remember that in 1973-74 the Arab countries withdrew oil from the world market in protest against US support for Israel in the 1973 Yom Kippur War. In 1978-80 Iranian oil exports were disrupted by the Iranian revolution and Saddam Hussein’s invasion of Iran. In other words, the biggest economic problem of the 1970s—inflation—was mainly the result of our foreign policy debacles in the Middle East. It’s no wonder that every President since has focused so much foreign policy (and military) firepower on the region. The Middle East killed the presidency of Jimmy Carter just as surely as it killed the government’s commitment to maintaining full employment.

Where did we go wrong? The economics profession doesn’t seem to have the answers. It is hard to take conservative economists very seriously when they tell us that the problem today is too much regulation, or too much taxation, and too much government spending.