I've long thought of this as the 1973 problem, not the 1971 problem, most of the trends were not clear until 73-75.
WTF Happened in 1971? (2019)
221–230 of 477 posts
Re: WTF Happened in 1971? (2019)
#222[deleted]
Re: WTF Happened in 1971? (2019)
#223Earlier quoted context omitted.
The thing is, there was a lot going on in the 1968-1971 period. Everything from civil rights to the moon landings. The collapse of Bretton Woods is important, but we have to ask why and what pressures led to that point.
I find Yanis Varoufakis' account of the history leading up to the collapse of Bretton Woods very telling: As the combined costs of the Vietnam War and the Great Society began to mount, the government was forced to generate mountains of US government debt. By the end of the 1960s, many governments began to worry that their own position, which was interlocked with the dollar in the context of the Bretton Woods system,…
> Beyond mere inflationary concerns, the Europeans and the Japanese feared that the build-up of dollars, against the backdrop of a constant US gold stock, might spark off a run on the dollar which might then force the United States to drop its standing commitment to swapping an ounce of gold for $35, in which case their stored dollars would devalue, eating into their national ‘savings’.
Isn't this an inflationary concern? The problem is that there are too many dollars for the price of gold to stay low. The devaluation has already happened regardless of whether a run has occurred; there is no way to realize the value of your "national 'savings'" without performing the run and dropping the value.
The only way for this concern to make sense is if
(1) You are committed to never spending your "savings", no matter what; but also
(2) You need the paper value of your "savings" to be a particular number, even though you will never do anything with that number other than look at it.
Re: WTF Happened in 1971? (2019)
#224ugh not this again
Re: WTF Happened in 1971? (2019)
#225An unpopular opinion, but circa 1970 and many of the effects in these charts likely represents an inflection point where the US population at large left its Christian heritage.
Re: WTF Happened in 1971? (2019)
#226Earlier quoted context omitted.
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.
Something that surprises me is that nobody ever talks about efficiency, as a trait of a particular piece of regulation. The goal of a regulation, like a project constraint, is to enforce some outcome. This is often a good thing. However, not all implementations of the "code" of that regulation are going to be equal. There's a huge gap between the desired outcome and the way it's articulated as law; there's a ton of w…
As weird as it sounds, inefficiency can be a feature of regulation, especially for big companies because it creates a slow and expensive hurdle for smaller competitors.
Sometimes, even as a consumer, this is desired, for ex when new drugs are coming to market. Sometimes, as you point out, it’s stifling.
Government is also inefficient by design. Imagine the gov’t pivoting to different laws every week - it would be completely unsustainable and would drive people crazy.
To answer your question, “regulation engineering” probably doesn’t exist because it’s designed to be slow.
Re: WTF Happened in 1971? (2019)
#227Earlier quoted context omitted.
Looking at economic graphs is hard because it’s laggy. The problems that lead to 2008 were a gradual accumulation through the preceding 10-20 years.
If "it's laggy" is a valid explanation, then literally any economic change since 1971 can be used to "support" the OP's theory.
s/literally any economic change since 1971/literally any economic change/
Re: WTF Happened in 1971? (2019)
#228Earlier quoted context omitted.
> The period of growth was a period of massive decline in the price of energy. This is referring to the decades before 1970, not after the oil crisis. > We've since had 50 years of stagnation in energy prices. This is the period of 1970-2020. The price of oil has oscillated (jumping around, as you say) during this period, but the overall price of energy has not had a clear long-term trend. The earlier poster's argume…
Thanks. I prefer the Nixon dollar float theory. The OPEC oil crisis was only 6 months. And as you say, oil prices in general have not had a clear trend. So those don't seem related to what is being presented on WTF Happened in 1971. When the government can print money willy-nilly, it can finance any boondoggle it wants to. This free money would pull qualified people away from more productive endeavors. It makes sense…
Free money also pulls many of the brightest into finance, as big finance's proximity to Washington and the money spigots is lucrative. There is a proper place for finance, but right now it seems everything is finance.
Re: WTF Happened in 1971? (2019)
#229The graph showing divergence between wages and productivity is almost solely due to different inflation indexes being used to measure the two:
https://www.brookings.edu/opinions/sources-of-real-wage-stag...
The two inflation indexes produced mostly similar rates until 1971, when the index used to measure real wages began rising faster than the one used to measure productivity.
Re: WTF Happened in 1971? (2019)
#230Earlier quoted context omitted.
For something searchable, see “Baumol’s cost disease.”
I don’t understand how baumol’s cost thing is any different than lower supply of labor causing price of labor to rise, and why it would merit a special name or Wikipedia entry.
It's not just about a lower supply of labor, really. It's not cleanly captured in terms of supply and demand. The reason a string quartet costs more now isn't because there are fewer people who can play instruments, it's because other things pay better.
In other words: if the average worker salary suddenly rose by 100% in every area except classical musicians (let's say there's some magical new productivity technology that increases productivity for every job except music, and further say that the workers capture that value) then the classical musician salary would also rise, because otherwise people would stop becoming musicians at the same rates. Nowhere in this thought experiment did the supply of labor change.