The reason the student protests of the 1960s didn't lead to political correctness was precisely that — they were student movements. They didn't have any real power.
I don't know what Graham thinks 'political correctness' would have looked like in the 1960s – most Americans still thought women's lib was a joke, many Americans were fighting to preserve segregation, and nobody had heard of such a thing as a gay rights movement.> A successful theory of the origin of political correctness has to be able to explain why it didn't happen earlier. Why didn't it happen during the protest movements of the 1960s, for example? They were concerned with much the same issues. [1]
> The reason the student protests of the 1960s didn't lead to political correctness was precisely that — they were student movements. They didn't have any real power.
The issue is a factual one. Student protests were in fact a huge contributor to the civil rights movement which was undoubtedly very successful. Applying his theory with this correction:
"The output of progressive movements is political correctness" + "1960s student movement output civil rights" = "civil rights are political correctness"
Of course Paul Graham believes in civil rights, which is why he instead decided that the 1960s student movements must have had no power or effect. Remove the modern context/our understanding of PG and the philosophy of the piece boils down to "things progressives try to impress on society are bad". Vague asterisks in regards to the distant past don't solve that fundamental problem.