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WTF Happened in 1971? (2019)

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Re: WTF Happened in 1971? (2019)

#331

Post by justinzollars »

trixie_ wrote: post #330
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.

Here's your requirements - lots of government services and low (upfront) taxes. Here's the solution - use inflation as a hidden tax to cover the spending without an upfront tax. Do you have another solution that meets the requirements without changing the requirements?

no. I am also invested for inflation. I can't imagine my parents giving up their retirements

Re: WTF Happened in 1971? (2019)

#332

Post by d_burfoot »

A simple theory would be: normal people don't adequately adjust their salary requirements to account for inflation. Incomes of regular people are going down constantly because of inflation, but they feel like they're doing okay because they have a notion of what a good salary is, and that notion is chronically out of date.

Re: WTF Happened in 1971? (2019)

#334

Post by triceratops »

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…

> I realize that energy is an important input into some industrial processes,

s/some/every/g

Re: WTF Happened in 1971? (2019)

#335

Post by TOGoS »

OliverJones wrote: post #141

Uncle Milty (Milton Friedman) published, on Sept 12, 1970, The Social Responsibility of Business is to Increase Its Profits. https://www.nytimes.com/1970/09/13/archives/a-friedman-doctr... This doctrine of irresponsibility was gobbled up by businesses. It gave them (us) permission to switch from the post-WW2 cooperative way of doing business to an extractive model: get the most you can from workers, suppliers, host c…

Friedman may have written them a nice excuse, but capitalists have always behaved this way. Look at the behavior of the robber barons around the turn of the 20th century for example.

The question is not one of motivation, but what allowed them to get away with it? So I would like to combine your comment with the root from another thread: "Business managed to exploit a number of crises to break the power of labor unions. The gold standard had nothing to do with it: sticking with gold would not force management to share productivity gains with labor."

Among the 'number of crises' being that the boom from rebuilding after WWII was basically over, which has also been mentioned in other comments.

Re: WTF Happened in 1971? (2019)

#336

Post by dnautics »

trixie_ wrote: post #326
dnautics wrote: post #194

People are asking why decoupling from the gold standard would cause a loss in earning power for labour: https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hi... "when you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts. So having a somewhat higher inflation rate would lead to lower unemployment, not just temporarily, but on a sustained bas…

Another great use of inflation is to reduce the value of the national debt. It's like a flat tax that affects everyone equally.

> a flat tax that affects everyone equally.

I think you mean "a sneaky way of implementing a regressive tax".

If you are spending 90% of your income on your day to day, inflation-sensitive expenses, versus 20% of your income, any positive inflation rate will have a greater effect on your margin of survival. Plug in 10% and 1% and see for yourself.

Re: WTF Happened in 1971? (2019)

#337

Post by earthboundkid »

rbanffy wrote: post #232
AndrewKemendo wrote: post #158

Earlier quoted context omitted.

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.

Unlike increasing the labor market via immigration or population increase, women mostly live in households with men, so adding them to the pool increases the number of workers, but not the number of households. Employers need to pay enough for it to be worthwhile for the household, not the individual worker. The result is lower wages per worker.

Re: WTF Happened in 1971? (2019)

#338

Post by nickpp »

The question is meaningless unless asked at global level. Was the US economy walled off from the rest of the world? If not, what is the productivity/earnings chart at GLOBAL level?

Re: WTF Happened in 1971? (2019)

#339

Post by Lammy »

wyldfire wrote: post #22

Some of these graphs are laughable and are candidates for "Spurious Correlations" [1]. Childhood obesity is not due to the US getting rid of the gold standard. [1] http://archive.is/9VFmh

The cheapest foods are the highly-processed terrible-for-you ones. There's a reason obesity rate tracks income.

Re: WTF Happened in 1971? (2019)

#340

Post by marsokod »

benlivengood wrote: post #281
JKCalhoun wrote: post #210

Earlier quoted context omitted.

It was only a single point of the OP's that you're targeting but I have to agree (I agree with other OP points though). Would a lower energy cost bring wages up? No reason to believe that would be the case. Would it lower the cost of goods so that at least the working poor could have a better standard of living? Perhaps, but how much of the cost of a good is the energy, how much labor and raw materials? Would we see…

https://www.eia.gov/todayinenergy/detail.php?id=36754 claims about 5% of GDP is energy costs. It is on a mild downward trend since increasing since the 1970s. Considering that percentage is higher than margins in quite a few businesses I'd say it has a limiting effect on the economy.

Portion of cost in GDP is not equal to importance.

What is the cost of water in the GDP? Much less than the cost of the energy. What would be the GDP without water? Nil. There would be no GDP because we would all be dead.

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