WTF Happened in 1971? (2019) • Hacker News Board

Re: WTF Happened in 1971? (2019)

#231

Post by candiodari » Mon, Nov 23, 2020, 6:11 PM UTC

tomp wrote: post #184

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…

> And energy is a massive component in the price of almost everything we consume. Is it really? What would be different if energy was much cheaper? Would we have more advanced rockets or robots or phones? Better CPUs? More and cheaper housing built in dense cities? Cheaper education or medicine? More job security? Even more food? I realize that energy is an important input into some industrial processes, but I don't…

Energy allows you to trade one thing against another. For instance, we have a "white sand" shortage (for making chips). (Vastly) more energy would mean more kinds of sand would be perfectly fine for production.

So energy is special: it is the universal input to industrial processes. Unlimited energy would make almost anything (more) plentiful. We'd essentially have more of what people want, whatever that is. So yes, more and cheaper housing in dense cities, but it's probably easier to see that faster and better transport options would result. That limits everything, not just manufacturing.

Re: WTF Happened in 1971? (2019)

#232

Post by rbanffy » Mon, Nov 23, 2020, 6:12 PM UTC

AndrewKemendo wrote: post #158

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…

I find the great decoupling fascinating and I don't think it gets enough study. There are a couple other things that I think contributed: The massive increase of women joining the labor market in the US just after 1970 largely as a consequence of the widespread adoption of oral contraceptives in the young population. [1] The People's Republic Of China was formally admitted to the UN in 1971, and following that in 197…

> The massive increase of women joining the labor market in the US

This drives down the cost of labor. If, to make ends meet, you need two people working, they won't be able to easily move to pursue better employment unless both find employment at the same place at the same time, or that the new offer is significantly better than the previous one. As this would depress salaries everywhere, that's very unlikely.

Re: WTF Happened in 1971? (2019)

#233

Post by tankenmate » Mon, Nov 23, 2020, 6:12 PM UTC

AndrewKemendo wrote: post #158

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…

I find the great decoupling fascinating and I don't think it gets enough study. There are a couple other things that I think contributed: The massive increase of women joining the labor market in the US just after 1970 largely as a consequence of the widespread adoption of oral contraceptives in the young population. [1] The People's Republic Of China was formally admitted to the UN in 1971, and following that in 197…

Another big mover came just after, 1973, the oil supply shock. This in turn lead to stagflation.

Another thing I didn't see in that data set was the relative growth / decline of union membership; i.e. how that affected wage growth, indirect effect of negotiating power. It would also be interesting to see whether that was a leading co-factor or a following co-factor.

Re: WTF Happened in 1971? (2019)

#234

Post by CryptoPunk » Mon, Nov 23, 2020, 6:12 PM UTC

telaelit wrote: post #150

The beginning of the failed neoliberal politics.

Social welfare spending, as a percentage of GDP, has massively increased since 1972.

On the regulatoey side, major regulatory agencies, including the OSHA and EPA, were also created in the 1970s. Every broad-based measure of regatory burden shows increasing since 1971.

So if anything, post 1971 United States has demonstrated the failure of abandoning economic liberalism in favor of central economic planning.

Re: WTF Happened in 1971? (2019)

#235

Post by Zviedris » Mon, Nov 23, 2020, 6:13 PM UTC

dgb23 wrote: post #104

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…

The graphs show two things: A relative increase of income for the wealthiest and a relative decrease for everyone else, specifically in the US. The 70s and 80s mark a political shift to privatization of public service/infrastructure and deregulation of and trade-agreements for the investor market.

Yeah, liberalisation just made rich richer. All that government debt went to entrapanuer not working mass. If capital accumulation is too fast then he need to put in somewhere. If that somewhere is housing then normal working people can't compete.

Re: WTF Happened in 1971? (2019)

#236

Post by jandrese » Mon, Nov 23, 2020, 6:14 PM UTC

hosh wrote: post #198

aazaa wrote: post #107

Plenty of events to choose from here: https://en.wikipedia.org/wiki/1971 Highlights: - "A new stock market index called the Nasdaq Composite debuts." - "Starbucks, a major coffeehouse and outlet in worldwide, is founded in the U.S. State of Washington." - "The U.S. ends its trade embargo of China." - "President Richard Nixon declares the U.S. War on Drugs." - "Southwest Airlines, a low-cost carrier, begins its first…

I'd add that in 1970, the intermodal shipping container became an ISO standard. Containerization has been developing since 1956, and along with minicomputers, would have an impact on world trade and manufacturing for decades to come.

IMHO this could be larger than most people would think. This made it affordable to export labor overseas, starting the power imbalance between employers and employees.

I'll bet if you look this is the start of die off of Unions. Now there is an alternative to employees who start demanding living wages and benefits, you can build your factory in another country where labor has few rights. The only unions you would expect to survive are ones where the labor can't be outsourced. Service unions. Transportation. Mining in cases where the material is too expensive to ship like coal.

Re: WTF Happened in 1971? (2019)

#237

Post by 983279432879432 » Mon, Nov 23, 2020, 6:14 PM UTC

Ericson2314 wrote: post #196

justinzollars wrote: post #171

I'm a proponent of the Gold Standard because inflation is a hidden tax. Worse, it is a regressive tax on the poor. There is a cost to having 6 fleets of aircraft carriers, 20 years of endless war and a huge unfunded pension liability. If we decided to pay for our promises in an honest way - it would equal 10% of our GDP for 75 years. Gold is honest money. Fiat currency is not.

Pure inflation is actually progressive: wages and prices go up in tandem (workers are fine), but savings (right peoople's) are debased.

Rich people have no reason to keep significant amounts of currency while poor people have fewer options. Workers must also actively negotiate for higher wages while the value of their wage is passively going down.

Re: WTF Happened in 1971? (2019)

#238

Post by nabla9 » Mon, Nov 23, 2020, 6:14 PM UTC

Cost of labour = compensation + direct and indirect overhead. I suspect that there was a change in direct or indirect overheads. Medical insurance, pension or some other thing.

Another explanation is declining wage share.

Costs per unit of real gross value added of nonfinancial corporate business: Compensation of employees https://fred.stlouisfed.org/series/A460RD3Q052SBEA

Share of Labour Compensation in GDP at Current National Prices for United States https://fred.stlouisfed.org/series/LABSHPUSA156NRUG

First microprosessor appeared in 1971 (Intel 4004)

Re: WTF Happened in 1971? (2019)

#239

Post by jfk13 » Mon, Nov 23, 2020, 6:15 PM UTC

thehappypm wrote: post #193

bwb wrote: post #113

Earlier quoted context omitted.

ya but i am not sure anyone of the things i named will drop by 5% or more... and mean while they keep going up faster than inflation... Cheap energy is good, but i worry more about our ability to afford those things.

If gas was $.10 / gallon, everything we consume would be cheaper because every single thing we buy is transported in trucks. A huge portion of what you pay for at the supermarket is the raw cost of getting a good to the shelf from the farm/factory. If gas was $.10/gallon, cars would be cheaper. We wouldn't need ridiculously complex gas engines tuned to yield another 1 mpg, or electric cars with $30,000 of Lithium-ion…

And we could destroy the habitable world even more rapidly than we're doing. Sounds great.

Re: WTF Happened in 1971? (2019)

#240

Post by mordymoop » Mon, Nov 23, 2020, 6:15 PM UTC

jkepler wrote: post #216

Afforess wrote: post #156

Earlier quoted context omitted.

> our currency is being debased at a rate we have never seen. Looks at $1 gasoline. Looks at $2 eggs. Looks at $3 gallon of milk. Debased. Sure thing. (Maybe gasoline is an unfair example, but essential good prices are largely unchanged in the last decade. The point stands)

True, but when you compare the price of housing, rent, higher education, or health care, or art, you'll see a different story. The Consumer Price Index (at least in the US) excludes so many things as to not be a real measure of the dollar's buying power. If the dollar isn't debasing, how do we explain so many sectors with rising prices? Is college education today really multiple times more valuable than 10 or 20 year…

College education is probably mostly explained as being a positional good being propped up by a bubble. On the other hand, I actually agree with you that inflation may have sneaked into specific domains. Eggs are cheap, but we've also gotten much, much better at making eggs cheaply. A static egg price actually implies inflation, if it costs less to produce an egg.