Coming out of the Watergate scandal and the Vietnam war, the USA was a humbled superpower. The oil crisis had caused hyper-inflation and high unemployment. The nation had to undergo a military, economic and psychological rebirth.
The Cold War was at its peak. In 1979, for example, the Soviet Union invaded Afghanistan, the Sandinistas (a communist guerrilla movement) seized power in Nicaragua, and the USA lost Iran to the Islamic fundamentalists. Taking office in 1981, Ronald Reagan launched a vigorous campaign to counter the Soviet Union anywhere anytime at any cost. He launched an expensive nuclear-arms race and even announced a missile-defense program dubbed "Star Wars". Reagan was also determined to curb the international traffic of illicit drugs, that had become a multi-billion dollar business, most notably in Colombia. Reagan's and Thatcher's brutal policies were highly controversial, but fundamentally represented the painful last-ditch attempt by the two empires to regenerate themselves and stand up to the monolithic might of the Soviet Union.
In the meantime, the Soviet empire was showing signs of wear and tear. The election of Polish cardinal Karol Wojtyla to Pope John Paul II (the first non-Italian Pope in centuries) in 1978 and the strikes organized by the Polish union Solidarnosch in 1980 had fostered a mood of rebellion within the communist world itself. In 1985 Mikhail Gorbachev became the new leader of the Soviet Union and proceeded to launch a campaign of openness ("glasnost") and restructuring ("perestroika").
However, the real rebirth was coming from an important transformation: the transformation from industrial economy to service economy. Between 1977 and 1981 Steve Jobs and Steve Wozniak developed a desktop computer called "Apple II", Atari introduced a videogame console, Bill Gates' Microsoft unveiled a graphical operating environment called "Windows", and IBM launched the "Personal Computer". For the first time computers were affordable, no longer science-fiction monsters but simple domestic appliances. At the same time the government had created a geographic network of computers called "Arpanet" that in 1980 had 430,000 users, who were able to exchange messages via software called "E-mail". They were also able to post comments on the "Usenet", a shared space in cyberspace. The Arpanet was renamed "Internet" in 1985. This boom in high technology was going to change the social landscape of the entire planet.
The media were revolutionized too: CNN was born in 1980, the first cable television devoted to world news; MTV debuted in 1981, a cable television devoted to videos of music hits; the compact disc (CD) was introduced in 1982.
Technology had a huge impact on music, with new instruments creating entire new genres like hip-hop, techno and house. The 1980s witnessed spectacular progress in electronic instruments: Sequential Circuits' synthesizer "Prophet-5" (1978), Roland's MC-4 sequencer (1978), Fairlight's digital synthesizer CMI (1979), Roland's TR808 drum-machine (1981), Toshiba's digital sampler LMD-649 (1981), LinnDrum's drum-machine (1982), Yamaha's DX7 (1983), the world’s first FM synthesizer, Roland's MSQ-700 (1983), the world's first MIDI sequencer, keyboard samplers like the Ensoniq Mirage (1985) and the Korg DSS-1 (1986), E-mu's sampler SP-1200 (1987), Akai's music workstation MPC-60 (1988), and of course the MIDI digital interface (1982).
It was a sign of the time that the country was moving west: in 1983 Los Angeles passed Chicago as the second largest city in the country, and soon California would become the most populous state. In particular, Silicon Valley (the source of innovation for so much of the semiconductor industry) was rapidly becoming one of the richest economic centers of the world, the equivalent of what Detroit had been for decades when car manufacturing was the leading business.
There were clouds on the horizon. An accident at the Three Mile Island nuclear power plant in 1979 created the fear of a nuclear disaster that became reality in 1986 in the Soviet Union at Chernobyl. The first cases of AIDS were discovered in 1981. For the first time terrorism directly affected dozens of USA families when (in 1988) Libya orchestrated the bombing of a plane that killed 259 people (in retaliation for the downing by the USA of an Iranian civilian plane that killed 290 people). In 1989 president George H Bush declared a “war on drugs”, arguing that drugs were the main domestic threat to the USA. Many were also sensing that human activity was causing significant damage to the planet. Scientists in 1985 discovered a hole in the ozone layer. The environmentalist movement grew bigger, and in 1979 a major "Green Party" was founded in Germany.
The 1960s had witnessed a rapid rise in violent crime, something difficult to explain from a purely economic point of view. The crime rate continued to rise during the 1970s. The national murder rate went from 4.0 in 1957 to 10.2 in 1980 (number of killings per 100,000 people per year). As a reaction, the 1980s witnessed a boom of imprisonment. Politicians competed to prove that they were "tough on crime".
While organized crime was enjoying a boom of profits thanks to the drug trade, many cities experienced a different kind of crime, one that was humbler but also more intrusive: the "street gangs". Street gangs had always existed, but in the 1980s they frequently became a substitute for broken families and managed to enroll and brainwash thousands of kids. There was no ideology behind their actions, just a code of honor and a sense of territory. The police were largely unable to fight them and limited themselves to containing them. The "Bloods" and the "Crips" (both founded in 1968) were the most notorious black gangs in South Central Los Angeles, but no less numerous were the members of Hispanic gangs such as the "East Side Longos" and the Cambodians such as the "Tiny Rascals", the "Lazy Boys" and the "Asian Boyz". Chicago was another battlefield, dominated by black gangs such as "El Rukns", "Gangster Disciples" and "Vice Lords", and Hispanics such as "Latin Kings" and "Latin Disciples".
Europe had suffered too from the oil crisis, but the continent was becoming less and less relevant in the Cold War between the USA and the Soviet Union. Both France and Germany (Europe's largest economies) seemed happy with the status quo represented by two very long regimes, namely those of the socialist president Francois Mitterrand and of chancellor Helmut Kohl (both lasted 14 years). Their stability helped cement an atmosphere of peace and cooperation that buried forever 16 centuries of intra-European warfare. If Europe lagged behind the USA in almost every field, nonetheless France and Britain unveiled the the supersonic airplane Concorde in 1976 and the first high-speed train debuted in France in 1981. Britain, in particular, was ruled for eleven years by the conservative "iron lady" Margaret Thatcher. The country, that had declines badly since winning World War II, was rocked by high unemployment, strikes, racial riots (notably in 1981 at Brixton) and even a war with Argentina over the Falkland Islands (in 1982), but Thatcher turned the economy around, although at a high social price, and restored a degree of the old imperial glory. For the British working class those were not happy years.