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WTF Happened in 1971? (2019)

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Re: WTF Happened in 1971? (2019)

#121

Post by thanhhaimai »

The biggest reason for the wage drop is the trade with China. The US and China started trading in 1971: https://apjjf.org/2013/11/24/Dong-Wang/3958/article.html

As with any economic question, it's usually not due to one reason. The combination of energy price and workforce age comes into play. But the biggest trigger of all was the trade with China. That put a serious pressure to job competition, and led to significant wage stagnation in the US. On the other hand the 1% benefited a lot from the trade.

https://en.m.wikipedia.org/wiki/China%E2%80%93United_States_...

Re: WTF Happened in 1971? (2019)

#123

Post by tboyd47 »

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…

Didn't the OPEC oil crisis drive the price of oil higher? But then you say that the problem is that oil prices saw a massive decline. So which is it?

When I look at the graph of oil prices between 1970 and 2020, I see it jumping around between $20 and $160, but they are always higher than they were in 1970. What exactly are you saying is the problem with oil prices? Are they too high or too low?

Re: WTF Happened in 1971? (2019)

#124

Post by rmah »

bobcostas55 wrote: post #26

Nothing, these charts are just the result of picking the wrong deflator. This chart shows what happens when you use the (correct) GDP deflator: https://worthwhile.typepad.com/.a/6a00d83451688169e20134878d...

The logical implication of that chart is that the CPI overestimates "real inflation". Most people who dislike the CPI argue the exact opposite of that. Could you share the source of that chart?

Re: WTF Happened in 1971? (2019)

#126

Post by Supermancho »

treeman79 wrote: post #80
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.

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

I've worked in healthcare tech stacks. It's like saying the GDPR is driving away top developers. Not true in the slightest. The problems with making money in healthcare are business related, not developer related. HIPAA is just another set of rules to abide by when creating systems.

Re: WTF Happened in 1971? (2019)

#127

Post by raiflip »

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…

A fairly simple explanation that for some reason I don't see a lot of is the drop in union membership density around this time period. Such a drop would decrease bargaining power and therefore decrease the rate of wage increase

Re: WTF Happened in 1971? (2019)

#128

Post by gen220 »

topspin wrote: post #52
lokar wrote: post #18

Earlier quoted context omitted.

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.

~1970 was the beginning of the rapid growth of commercial intermodal containerization. A couple of WTO charts in this[1] document show the trend. The US military pioneered standardized containers (for shipping supplies to S. Vietnam) in the late 1960's and the commercial world caught on very quickly. Since then the captains of industry in the West have been able to arbitrage labor world wide. Thus labor unions in dev…

The shipping container was the self driving truck of the 20th century. That one invention eventually put so many people out of work, it’s difficult to fathom.

We live in Brooklyn near the water. The entire coastline from Red Hook to Greenpoint was once dedicated to the loading, unloading, and storage of pre-shipping container cargo. This industry employed many thousands of people. It was a dangerous job but it sustained families, and it was a bootstrap to a career in the shipping industry. (There are analogies in textiles and meatpacking, in this same city).

Now, the warehouses have been converted into housing, coffee shops, art centers, and the like. The working class job is the service industry (waiting, serving coffee, delivering food), and it’s a very different culture from the working class job of the 60s.

I’m not at all saying the technological innovation was a bad thing. But it did have a huge impact on the local economies of every seaport in the world (Bay Area included, for those that live there).

If you’re interested in learning more, there’s an 8-part audio documentary on shipping containers. You can listen to episode 7 about automation here: https://soundcloud.app.goo.gl/AfzxGaUKuceh4W9W7

Re: WTF Happened in 1971? (2019)

#129

Post by refulgentis »

thanhhaimai wrote: post #121

The biggest reason for the wage drop is the trade with China. The US and China started trading in 1971: https://apjjf.org/2013/11/24/Dong-Wang/3958/article.html As with any economic question, it's usually not due to one reason. The combination of energy price and workforce age comes into play. But the biggest trigger of all was the trade with China. That put a serious pressure to job competition, and led to significa…

Many, many, many, more of "the 99%" benefited than the theoretical benefit of opening the US to competition did to "the 1%". https://ourworldindata.org/exports/share-of-population-livin...

Re: WTF Happened in 1971? (2019)

#130

Post by rthomas6 »

bwb wrote: post #67
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…

hmmm... dropping energy isn't going to help with the big costs families face in terms of health insurance and costs, day care, college costs, or housing. Am i wrong :)?

Reduced transportation and shipping costs means lower cost of basically all material goods, including the material cost of building housing. And in that kind of economy, I think overall wages will be higher in terms of actual purchasing power. Not only would almost everything be cheaper, real wages would probably increase due to overall increased demand.

But I agree that health insurance, day care, and college would not get magically fixed by lower energy cost. I believe those costs have risen for other reasons.

Also I am not totally convinced by grandparent's theory that energy cost is what caused the decoupling of wages from productivity. Maybe.

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