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WTF Happened in 1971? (2019)

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Re: WTF Happened in 1971? (2019)

#71

Post by lumost »

mason55 wrote: post #12
ZacharyPitts wrote: post #10

Amazed that the site does not call out Nixon completely abandoning the gold standard in 1971. Financial investments thusly did not need to be backed by actual assets anymore, to the point of today where the whole of money is loans against loans against loans.

That’s the point of the site. It doesn’t say it explicitly but leaving the gold standard is the answer to the question in the URL

Trade with China also opened at around the same time. A plausible explanation for the decoupling of wage growth is competition or the threat of competition with international labor.

Re: WTF Happened in 1971? (2019)

#73

Post by gshubert17 »

Morris Berman's Dark Ages America posits that the U.S. leaving the Bretton Woods agreement (of which devaluation relative to gold was one aspect) was the policy change desired by finance capitalism. Bretton Woods had restricted international capital flows and let nations restrain some abuses of financial power. In effect it made it easier for countries to set up welfare states if that's what they wanted. Afterwards, without these restraints, the top few percent in wealth were better able to use their money to make more money. The FIRE (finance, insurance, real estate) economy grew relative to the ordinary industrial, commerce, and service economy, in which lower- and middle-income people worked. Hence the growing inequality and relative impoverishment. I believe Berman says the discipline imposed by the semi-gold standard was only part of the reasons for prosperity from 1947-1970s. And for the big economic changes afterwards. Restraining abuses of globalism and financial capitalism were also important.

Re: WTF Happened in 1971? (2019)

#75

Post by christophilus »

bryanlarsen wrote: post #25

The author obviously wants you to believe that it was the abandonment of the gold standard, but there are several other theories that have more credence with mainstream economists. The early 70's was the start of a horrible period of stagflation: stagnation coupled with inflation. Some do blame the loss of the gold standard, but the leading theory is the OPEC oil crisis. Others blame market regulations, the EPA was p…

Another plausible explanation I’ve heard is that you had a massive influx of new consumers (baby boomers) entering the workforce. You almost can’t avoid inflation in that scenario.

Re: WTF Happened in 1971? (2019)

#76

Post by analog31 »

triangleman wrote: post #9

Love the charts, then scroll to the bottom and "oh, Bitcoin". Sorry but there are other ways. Did you know that the Balanced Budget Amendment (proposal) failed by a single vote in 1995?

Many of the states have balanced budget provisions in their constitutions (either originally or by amendment) and have growing debt.

Re: WTF Happened in 1971? (2019)

#78

Post by nemo44x »

lokar wrote: post #18
ZacharyPitts wrote: post #10

Amazed that the site does not call out Nixon completely abandoning the gold standard in 1971. Financial investments thusly did not need to be backed by actual assets anymore, to the point of today where the whole of money is loans against loans against loans.

That theory would explain financial gains going up faster (eg the pie getting bigger, more return to capital), but not a stall in wages for workers. Worker productivity went up, but wages for workers did not. ~1970 is about when the % of workers in unions really started to fall in the US.

I think we need to look at the bigger picture though. Working class wages haven't kept pace but interest rates have gotten much lower making it "easier" to borrow money. In addition, because of increased productivity (in part because of out sourcing work which unions can't easily defend against), consumer goods are far cheaper than they used to be.

We've also seen a great domestic expansion in the upper middle class and a reduction in the lower class since then. More people are "middle class" than ever before with a larger percentage being "upper middle class". However, the middle class feels further away from the upper middle class in large part because there are simply many more upper middle class people than ever before (and more upper class for that matter).

I'm not trying to make a counter argument or anything but just trying to make an argument that we can't do an apples-to-apples comparison between today and 1971. Relative wages are less for a group of people, but consumer goods are relatively cheaper as well. Home prices are relatively higher but interest rates are far, far lower. The middle class has grown and poverty has been shrunk to record low levels (people often forget how many people were impoverished in this country not too long ago) but a lot of that growth has been in new upper middle class people.

We've seen union participation fall, yes - but have we asked "why" it has fallen?

Re: WTF Happened in 1971? (2019)

#79

Post by Juliate »

api wrote: post #43

I think the idea that major historical trends have one cause is a huge fallacy. There are almost always many causes. Other than the end of Bretton Woods a lot of things happened in the early-mid 1970s, like... * Breaking of union negotiating power by explicit anti-union measures and by globalization that allowed corporations to undercut domestic labor with cheaper overseas labor. * The establishment of environmental…

Correlated only, the race to space (& moon) was essentially called off?

- feasability (putting a human in space, and on the moon) was demonstrated - equivalence between Russia and America was set - there was no big price left within reach at that point - Apollo stopped around 72 - international cooperation started

Re: WTF Happened in 1971? (2019)

#80

Post by treeman79 »

bryanlarsen wrote: post #25

The author obviously wants you to believe that it was the abandonment of the gold standard, but there are several other theories that have more credence with mainstream economists. The early 70's was the start of a horrible period of stagflation: stagnation coupled with inflation. Some do blame the loss of the gold standard, but the leading theory is the OPEC oil crisis. Others blame market regulations, the EPA was p…

People always underestimate the cost of regulations.

Even when good, the cost is big.

Health care is a good example. Keeping patient data private is a good thing.

However it’s also absolutely crushing in its impact in the industry.

Tiny projects can take months or years.

HIPPA terrifies so many IT people. Driving away top developers.

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