1 00:00:00,370 --> 00:00:17,250 Okay, so let's continue with the situation in Europe, in this case in the US, after the First World War. As we have seen, the situation in Europe is going to be bad, but in the US is going to be positive. 2 00:00:17,250 --> 00:00:33,750 After the First World War, the US is increasing the profits, is earning more money because they are selling all their products around the world. They are producing more industrial products and agricultural products than Europe. 3 00:00:33,750 --> 00:00:42,070 So Europe is becoming poorer while the U.S. is living a moment of prosperity. 4 00:00:42,609 --> 00:00:49,149 This period of time after the First World War is called this way, the Roaring Twenties. 5 00:00:49,810 --> 00:00:53,070 And in Spanish is Los Felices Años Veinte. 6 00:00:53,450 --> 00:01:02,409 And we are going to talk about Los Felices Años Veinte because it's the 20s from 1920 till 1929 with a crash. 7 00:01:02,409 --> 00:01:13,569 This is the period where not only the US but Europe is going to start increasing or they are going to start developing their economies. 8 00:01:13,849 --> 00:01:22,469 So they are going to start earning more money, moving more money and the social and working conditions are going to be better. 9 00:01:23,150 --> 00:01:26,069 So let's look first at the US. 10 00:01:26,329 --> 00:01:29,150 We are going to focus our attention on the US. 11 00:01:29,150 --> 00:01:31,930 So what is happening in the US? 12 00:01:31,930 --> 00:01:38,209 What is the characteristics of this Felices Años 20 related with the US and Europe, okay? 13 00:01:38,849 --> 00:01:41,370 So the thing is, it's going to be a period of economic growth. 14 00:01:41,510 --> 00:01:42,670 It's true what I said. 15 00:01:43,049 --> 00:01:46,969 So it's a moment when the economy is going to grow after the First World War. 16 00:01:47,469 --> 00:01:51,670 The US is giving loans to Europe in order to develop their industry and agriculture. 17 00:01:52,409 --> 00:01:56,730 The USA is the most powerful economic power in the world. 18 00:01:57,209 --> 00:01:58,909 So everything is positive. 19 00:01:59,209 --> 00:02:00,150 There is no war. 20 00:02:00,150 --> 00:02:06,730 there are treaties in order to avoid war okay the different countries have signed treaties in order 21 00:02:06,730 --> 00:02:13,009 to say okay we are not going to start another war like the first world war what we want is to live 22 00:02:13,009 --> 00:02:19,789 in peace and develop our economies so that's the point so what we are going to see is this felices 23 00:02:19,789 --> 00:02:27,689 or this roaring 20s are going to be a period of economic growth in general it means there is more 24 00:02:27,689 --> 00:02:33,210 money, they are going to produce more, the wages, it means the salaries, are going 25 00:02:33,210 --> 00:02:38,430 to be higher. Okay, so in the beginning the 20s are a positive period. Remember 26 00:02:38,430 --> 00:02:45,210 they end in 1929 with a crash, so they are not going to end very good. Okay, so 27 00:02:45,210 --> 00:02:49,250 why we are going to have this economic growth? Because of the technical 28 00:02:49,250 --> 00:02:54,330 innovations and the use of Fordism and Taylorism. We have explained these two 29 00:02:54,330 --> 00:03:00,870 concepts related to the second industrial revolution. So these two ways 30 00:03:00,870 --> 00:03:07,090 to produce, remember the assembly lines, remember to organize the production, 31 00:03:07,090 --> 00:03:12,569 is what is going to make us to increase the production, because we can 32 00:03:12,569 --> 00:03:18,210 produce faster, and also we can reduce the cost of this production. So for this 33 00:03:18,210 --> 00:03:28,129 and Taylorism is making these countries or these industrial powers to increase the production 34 00:03:28,129 --> 00:03:29,889 and reduce the costs. 35 00:03:30,889 --> 00:03:38,830 So, technical innovations are letting the US and Europe to increase or to leave a period 36 00:03:38,830 --> 00:03:39,849 of economic growth. 37 00:03:40,830 --> 00:03:41,629 What else? 38 00:03:41,629 --> 00:03:48,750 thanks to this economic growth thanks to these technical innovations that led the industrial 39 00:03:48,750 --> 00:03:54,949 powers or agricultural powers to increase the production is going to be reflected in first 40 00:03:54,949 --> 00:04:01,490 a rise in the workers wages what i said the salaries are going to be higher second we are 41 00:04:01,490 --> 00:04:06,909 going to talk about a period of mass consumption it means everyone wants to buy like nowadays 42 00:04:06,909 --> 00:04:13,870 we can buy coca-cola it is needed to drink coca-cola no but it's part of the advertising 43 00:04:13,870 --> 00:04:23,250 campaigns trying to make people to buy new stuff okay so as the workers has higher salaries they 44 00:04:23,250 --> 00:04:31,370 can pay for other products that maybe they are not products they need i mean we are not talking 45 00:04:31,370 --> 00:04:36,449 about food or we are not talking about a house we are talking about for example what i said 46 00:04:36,449 --> 00:04:45,129 different type of drinks different type of clothes etc something that you don't need but you buy it 47 00:04:45,129 --> 00:04:51,290 because you have money there are advertising campaigns that they are going to try to make 48 00:04:51,290 --> 00:04:59,189 you or persuade you to buy and also because what we have is bank loans remember the usa 49 00:04:59,189 --> 00:05:07,290 is giving loans to europe so there is a lot of money in the u.s they want to invest it and one 50 00:05:07,290 --> 00:05:14,350 of the best ways is to give loans to the population in order these workers or other people to develop 51 00:05:14,350 --> 00:05:22,230 this mass consumption okay for example these are two other spanish advertisements advertisements 52 00:05:22,230 --> 00:05:28,970 sorry so chronometer ideal for una peseta okay do you need a chronometer a timer no i don't need 53 00:05:28,970 --> 00:05:32,850 I donate it, but maybe, ok, it's only one peseta 54 00:05:32,850 --> 00:05:36,230 So I can buy it and I can maybe give it a use 55 00:05:36,230 --> 00:05:38,069 Like I'm going to start running, etc 56 00:05:38,069 --> 00:05:40,069 Why? Because I have money 57 00:05:40,069 --> 00:05:42,870 I have enough money in order to buy this 58 00:05:42,870 --> 00:05:46,410 Or I have enough money in order to buy a car 59 00:05:46,410 --> 00:05:51,089 Maybe I do not have this money to pay the car now 60 00:05:51,089 --> 00:05:54,910 But I can ask for a loan to the bank in order to pay the car 61 00:05:54,910 --> 00:06:07,949 OK, so money is moving. The advertising campaigns are trying to persuade population to buy more and more and develop this mass consumption society. 62 00:06:08,529 --> 00:06:16,629 OK, and everything is possible due to sorry, due to these technical innovations and this economic growth. 63 00:06:16,629 --> 00:06:24,829 let's check this for example homes with electrical appliances for example the radio in 1912 zero 64 00:06:24,829 --> 00:06:30,550 percent remember we are talking about a percent of total number of households okay so radio zero 65 00:06:30,550 --> 00:06:38,329 percent but in 1932 the 65 percent do you need a radio no it's like saying nowadays do you need a 66 00:06:38,329 --> 00:06:45,509 playstation or a video game no but i have money okay and there are advertising campaigns that 67 00:06:45,509 --> 00:06:51,089 they are going to persuade me to buy it okay so the idea is i have the money i'm going to buy it 68 00:06:51,089 --> 00:06:57,290 and i'm going to start developing this mass consumption society so for example vacuum cleaner 69 00:06:57,290 --> 00:07:06,329 30 percent washing machine 27 percent in 1932 okay nowadays it's almost 100 percent 70 00:07:06,329 --> 00:07:15,470 iron it means iron is la plancha 65 percent you see the refrigerator the fridge is only 71 00:07:15,470 --> 00:07:23,389 a 12% or a coffee maker 19% all these machines are are necessary no we have 72 00:07:23,389 --> 00:07:29,449 survived until 1932 without them but now what we are living is a period of 73 00:07:29,449 --> 00:07:35,470 economic growth in the US mainly and in second place in Europe okay thanks to or 74 00:07:35,470 --> 00:07:39,589 due to these technical innovations and thanks to these wages that they are 75 00:07:39,589 --> 00:07:44,930 higher thanks to advertising campaigns that they are persuading me 76 00:07:44,930 --> 00:07:52,730 to buy thanks to the bank loans and the mass consumption, okay? What we need, and thanks to 77 00:07:52,730 --> 00:07:58,970 all of this, sorry, we are developing this mass consumption society. But it is important, keep in 78 00:07:58,970 --> 00:08:04,029 mind that the wages are higher, that the people is buying, consuming a lot, and they are asking 79 00:08:04,029 --> 00:08:10,269 for bank loans. This is important for the next slide, okay? How is this going to be reflected 80 00:08:10,269 --> 00:08:17,269 it in two areas, okay? The first one is the huge stock market boom. It means that as we have a 81 00:08:17,269 --> 00:08:23,769 mass consumption, the different industrial factories or industrial companies and in the 82 00:08:23,769 --> 00:08:30,110 agricultural areas, they are going to start producing more and more and more. The problem is 83 00:08:30,110 --> 00:08:36,129 we can start buying a lot because we do not have a coffee maker or because we do not have a car. 84 00:08:36,129 --> 00:08:43,909 But as soon as we have one car and they keep producing the cars, it means the production starts to increase. 85 00:08:44,450 --> 00:08:49,090 And in a specific moment, what we see is the prices are going to decrease. 86 00:08:49,490 --> 00:08:55,110 Why the prices decrease? Remember la ley de la oferta y la demanda, the law of the offer and demand. 87 00:08:55,990 --> 00:09:03,210 We said, okay, we produce a lot, as much as we have, and the population is not demanding these products, 88 00:09:03,210 --> 00:09:05,549 the prices are going to turn down. 89 00:09:06,129 --> 00:09:21,710 So, as you can see, from 1926 till 1929, this is the moment of the crash, the production is really high, but the consumption, as you can see in the prices, that they are lower, are decreasing, ok? 90 00:09:21,710 --> 00:09:26,929 so the consumption is decreasing while the production is increasing this is 91 00:09:26,929 --> 00:09:32,470 going to be one of the main problems for the crisis in 1929 okay because we are 92 00:09:32,470 --> 00:09:37,590 producing a lot but we are selling less and less and less that's why we need to 93 00:09:37,590 --> 00:09:43,389 decrease the prices trying to catch the people try to persuade the people to buy 94 00:09:43,389 --> 00:09:48,590 decreasing the prices okay if we do not decrease the price they are not going to 95 00:09:48,590 --> 00:09:54,230 Dubai, okay? So this is one of the problems related with the crash of 1929. 96 00:09:54,230 --> 00:09:59,409 So this period, Los Felices Años 20, is marked by an economic growth, the technical 97 00:09:59,409 --> 00:10:04,049 innovations, all these characteristics, but one of the main characteristics is a 98 00:10:04,049 --> 00:10:09,289 huge stock, stock is a cantidad, the quantity of product we have, a huge stock 99 00:10:09,289 --> 00:10:15,289 market boom, and also the American way of life. And when we talk about the American 100 00:10:15,289 --> 00:10:23,690 way of life what we are talking about is this this image is perfect what you see is a line 101 00:10:23,690 --> 00:10:33,409 of unemployed unemployed people in 1929 they are waiting to get a job and this advertisement says 102 00:10:33,409 --> 00:10:39,330 world's highest standard of living they are talking about america there's no way like the 103 00:10:39,330 --> 00:10:45,730 american way what is the american way of life to have your own car to have your puppy or your dog 104 00:10:45,730 --> 00:10:56,889 to live in a family all smiling and buying anything they want okay to have a comfortable life 105 00:10:56,889 --> 00:11:06,710 okay we individually can move anywhere anywhere we want thanks to our car we are all happy we have 106 00:11:06,710 --> 00:11:15,730 and we have anything we need and we have a puppy okay we have money not to feed this puppy okay 107 00:11:15,730 --> 00:11:22,149 but the contrast is this is the american way of life what the companies are selling but this is 108 00:11:22,149 --> 00:11:30,169 the reality it means after 1929 what we have is unemployment everywhere okay so when we talk about 109 00:11:30,169 --> 00:11:35,750 american way of life means individual initiative i want to set my own business or okay my own 110 00:11:35,750 --> 00:11:43,610 business. Individual effort. If I work hard I will get as much money as I want. If I work hard 111 00:11:43,610 --> 00:11:53,649 I will be promoted in my company and also I will achieve success. So this is the American way of 112 00:11:53,649 --> 00:12:01,009 life and this American way of life is based on this period of time, los felices años 20, a moment 113 00:12:01,009 --> 00:12:04,649 of economic growth, with these technical 114 00:12:04,649 --> 00:12:07,389 innovations, this mass consumption 115 00:12:07,389 --> 00:12:10,389 and loans that they are going to lead 116 00:12:10,389 --> 00:12:13,330 to this increase in production and 117 00:12:13,330 --> 00:12:16,570 decrease in consumption, that's why they are decreasing 118 00:12:16,570 --> 00:12:19,549 the prices, and also a moment 119 00:12:19,549 --> 00:12:21,950 a period of time where the population is 120 00:12:21,950 --> 00:12:25,409 buying new inventions that they 121 00:12:25,409 --> 00:12:27,230 are going to make our life easier 122 00:12:27,230 --> 00:12:36,529 to keep our, to maintain or to keep our food fresh, to make coffee really fast, to toast 123 00:12:36,529 --> 00:12:42,090 the bread really fast, so all these products that we do not know to survive, but they are 124 00:12:42,090 --> 00:12:49,970 going to make our life easier, and this is known as the American way of life, okay, so 125 00:12:49,970 --> 00:12:58,269 far so good i hope okay the problem is that we are living in the 20s in the roaring 20s 126 00:12:58,269 --> 00:13:05,190 is a moment of economic expansion of economic growth but there is a paradox 127 00:13:05,190 --> 00:13:13,269 what is the meaning of the paradox of prosperity that in the u.s they are going to increase their 128 00:13:13,269 --> 00:13:19,769 their life standards, they are going to live better, but at the same time they are setting 129 00:13:19,769 --> 00:13:27,769 the basis of the crisis. Remember this graph, okay? The American way of life means we are going 130 00:13:27,769 --> 00:13:32,289 to produce a lot and we are going to sell a lot. The problem is we are producing more, more, more, 131 00:13:32,389 --> 00:13:38,769 more, more, more, and more because what we want is this mass consumption, but the prices are going 132 00:13:38,769 --> 00:13:45,990 to decrease because the population is not buying so that's the paradox we want this life we want 133 00:13:45,990 --> 00:13:52,990 this life with the coffee maker etc and we are going to produce a lot but at the same time we 134 00:13:52,990 --> 00:14:01,629 have no people to buy all this stuff okay because they have increased the wages the salaries but not 135 00:14:01,629 --> 00:14:07,590 enough let's see this as right okay so the prosperity didn't affect everyone equally what 136 00:14:07,590 --> 00:14:12,730 I have said okay so we are going to have poor people and rich people and in the middle the 137 00:14:12,730 --> 00:14:17,309 middle class but the problem is in the 20s we are going to have of course poor people that they are 138 00:14:17,309 --> 00:14:24,370 now in the middle class but they are not the vast majority of the society so this prosperity this 139 00:14:24,370 --> 00:14:32,649 increase in production doesn't mean okay that everyone is going to be able to buy so this 140 00:14:32,649 --> 00:14:39,730 prosperity is not going to be shared equally. For example, this is the data in Europe 141 00:14:39,730 --> 00:14:53,289 related with the years 2007 and 2017. This is how the wages of the workers is going to increase 142 00:14:53,289 --> 00:14:57,909 until 2009. Them is going to start decreasing, decreasing, decreasing, decreasing, is going to 143 00:14:57,909 --> 00:15:02,110 start increasing and and yet they are going to increase the wages but the same 144 00:15:02,110 --> 00:15:06,070 with the but we are going to talk here with the businessman the businessman 145 00:15:06,070 --> 00:15:11,169 their their wages are going to start increasing less than the employees but 146 00:15:11,169 --> 00:15:18,149 in 2013 their their wages are going or salaries are higher they increment is 147 00:15:18,149 --> 00:15:25,210 higher than if we compare them with the workers or the other employees that they 148 00:15:25,210 --> 00:15:30,669 are decreasing or that the their salaries are decreasing okay so it means 149 00:15:30,669 --> 00:15:34,629 depending on where you are in the company if you're a businessman you are 150 00:15:34,629 --> 00:15:39,210 just sorry if you're a businessman you are a worker or you are in the middle 151 00:15:39,210 --> 00:15:48,610 okay so you are going to your salary is going to be higher or or lower okay the 152 00:15:48,610 --> 00:15:53,929 other part is the agricultural prices are going to increase but less rapidly 153 00:15:53,929 --> 00:16:01,690 than the industrial prices what does it mean that the demand of agricultural products is going to be 154 00:16:01,690 --> 00:16:08,549 less than the industrial products okay everyone was a car everyone was a machine a coffee maker 155 00:16:08,549 --> 00:16:15,889 etc but regarding to these agricultural products you are not going to demand them as fast as you 156 00:16:15,889 --> 00:16:23,570 are demanding these industrial products okay so what is the problem the agriculture the peasants 157 00:16:23,570 --> 00:16:27,710 in order to produce more, what they are going to do is to ask for money 158 00:16:27,710 --> 00:16:31,950 to buy this, the machines, to increase 159 00:16:31,950 --> 00:16:35,769 the production. What makes sense, right? The farmer wants to increase the production 160 00:16:35,769 --> 00:16:39,730 they are going to buy a tractor and they are going to start producing 161 00:16:39,730 --> 00:16:43,710 more and they hope that thanks to these 162 00:16:43,710 --> 00:16:47,149 machines, what they are going to do is increase the production 163 00:16:47,149 --> 00:16:51,929 and probably earn more money. Makes sense, 164 00:16:51,929 --> 00:16:58,809 right? What is the problem? The problem is the market, the people that needs to buy couldn't 165 00:16:58,809 --> 00:17:06,529 absorb all their production, okay? So remember, the problem is we are increasing the production, 166 00:17:06,690 --> 00:17:14,150 agricultural and industrial, but there is not enough people to buy these products, okay? 167 00:17:14,650 --> 00:17:21,250 So there is the, here is the paradox, okay? Here is the paradox. When we can, we are producing a 168 00:17:21,250 --> 00:17:24,950 but we have no people to buy all this stuff, ok? 169 00:17:25,470 --> 00:17:29,609 So the problem is the stock, it means the quantity of a product we are producing, 170 00:17:30,049 --> 00:17:34,289 accumulates and the prices fall, ok? 171 00:17:34,369 --> 00:17:38,809 What we have seen, the production increase, but the prices decrease. 172 00:17:39,049 --> 00:17:43,289 Why? Because there is no people interested in buying these products. 173 00:17:44,230 --> 00:17:49,430 However, check this, the production is increasing while the prices are decreasing 174 00:17:49,430 --> 00:17:52,269 and there is no population buying these products. 175 00:17:52,890 --> 00:17:57,309 So one question would be why they keep increasing the production 176 00:17:57,309 --> 00:17:59,809 if there is no people buying the stuff. 177 00:18:00,609 --> 00:18:04,029 We will see that with the crisis of 1929. 178 00:18:04,450 --> 00:18:05,910 But keep this in mind. 179 00:18:05,910 --> 00:18:09,609 They are producing a lot, but they do not have population enough 180 00:18:09,609 --> 00:18:11,690 to buy these products. 181 00:18:13,130 --> 00:18:16,069 So the stock accumulates and prices fell. 182 00:18:16,450 --> 00:18:18,650 So farmers could not pay back their loans. 183 00:18:18,650 --> 00:18:24,930 perfect the problem is as they are producing more they ask for money to the bank to pay the 184 00:18:24,930 --> 00:18:29,930 machinery the tractor in order to increase the production they do it they increase the production 185 00:18:29,930 --> 00:18:39,809 but they have no people okay to buy the production so the farmers have no money to pay back their 186 00:18:39,809 --> 00:18:46,930 loans make sense the farmer asked for money to the bank in order to pay the machine with the 187 00:18:46,930 --> 00:18:51,269 machine produce more, but the problem is this production is not going to be bought by the 188 00:18:51,269 --> 00:18:59,710 population. That's why the farmer has no money enough to pay back the bank the money he has 189 00:18:59,710 --> 00:19:07,750 borrowed. Okay, so far so good? Venga, let's continue. So, also, they could not buy industrial 190 00:19:07,750 --> 00:19:13,569 products, so they lost everything. It means, as they have no money to pay back the loans, 191 00:19:13,569 --> 00:19:15,109 They cannot buy more machinery 192 00:19:15,109 --> 00:19:17,710 So they cannot increase the production 193 00:19:17,710 --> 00:19:18,950 They cannot sell more 194 00:19:18,950 --> 00:19:22,690 So they are going to start losing everything 195 00:19:22,690 --> 00:19:25,210 It means the industrial production 196 00:19:25,210 --> 00:19:28,730 Also is going to be affected by the crisis 197 00:19:28,730 --> 00:19:31,329 So they are producing a lot 198 00:19:31,329 --> 00:19:35,349 The industrial activity and the agricultural activity 199 00:19:35,349 --> 00:19:38,609 The farmers ask for money to the banks 200 00:19:38,609 --> 00:19:39,970 In order to pay the machines 201 00:19:39,970 --> 00:19:42,430 They have no money to pay back the machines 202 00:19:42,430 --> 00:19:48,109 because the people is not buying stuff so if the farmers do not need more 203 00:19:48,109 --> 00:19:54,490 machines the consumption of industrial products is going to decrease so the 204 00:19:54,490 --> 00:19:59,430 factories are going to start shutting down there is no money to buy industrial 205 00:19:59,430 --> 00:20:05,410 products make sense these are the basis of the crisis of 1929 we will see them 206 00:20:05,410 --> 00:20:07,210 in the next class 207 00:20:07,210 --> 00:20:09,369 so moreover 208 00:20:09,369 --> 00:20:11,410 the rising wages was 209 00:20:11,410 --> 00:20:13,450 much lower than corporate 210 00:20:13,450 --> 00:20:14,990 profits and production 211 00:20:14,990 --> 00:20:15,869 what does it mean? 212 00:20:16,410 --> 00:20:18,849 that the companies are producing a lot 213 00:20:18,849 --> 00:20:21,150 they are increasing the wages 214 00:20:21,150 --> 00:20:22,049 but not enough 215 00:20:22,049 --> 00:20:25,069 so these people that they are supposed to buy 216 00:20:25,069 --> 00:20:26,269 all this production 217 00:20:26,269 --> 00:20:28,329 they have not money enough 218 00:20:28,329 --> 00:20:30,089 to pay for these products 219 00:20:30,089 --> 00:20:32,390 so the people had little 220 00:20:32,390 --> 00:20:34,190 purchasing power 221 00:20:34,190 --> 00:20:40,289 Purchasing power means poder de adquisitivo, poder para comprar 222 00:20:40,289 --> 00:20:45,490 So that's the idea, we are going to suffer an overproduction 223 00:20:45,490 --> 00:20:52,109 Because the population has no money to buy the stuff 224 00:20:52,109 --> 00:20:59,109 So the basic idea of this slide is that we are going to increase the production 225 00:20:59,109 --> 00:21:05,109 but this prosperity the production is producing is not going to affect everyone equally. 226 00:21:06,130 --> 00:21:12,869 And second, that the increase in the agricultural production and in the industrial production 227 00:21:12,869 --> 00:21:21,230 is not going to suppose or is not going to have as a consequence an increase in the consumption 228 00:21:21,230 --> 00:21:25,750 because the people have not enough money to consume 229 00:21:25,750 --> 00:21:29,809 so that the companies are producing more and more and more 230 00:21:29,809 --> 00:21:33,869 but the population as they are not increasing the wages 231 00:21:33,869 --> 00:21:38,369 they can buy less, less and less 232 00:21:38,369 --> 00:21:43,069 so the companies are accumulating the stock 233 00:21:43,069 --> 00:21:45,970 they are decreasing the prices 234 00:21:45,970 --> 00:21:48,910 and they are going to start losing money 235 00:21:48,910 --> 00:21:53,269 and this is one of the reasons of the crisis of 1929 236 00:21:53,269 --> 00:22:01,029 And this is one of the reasons why these Felices Años 20 are going to end with this huge crisis. 237 00:22:01,789 --> 00:22:15,269 So, in fact, overproduction was becoming a problem in the US in the end of the 20s, in the end of that decade, at the end of the Felices Años 20.