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WTF Happened in 1971? (2019)

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Re: WTF Happened in 1971? (2019)

#341

Post by throwaway-8c93 »

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 linked article obviously has a gold-bug agenda. That's why I think it's important to bring one more argument in favor of the root cause being some physical constraint, rather than legal or organizational:

At around the same time, the growth of GDP and standard of living dramatically slowed down in the Soviet Union, too. From venerable ~5% per year in 50s and 60s, to ~2% in 70s, to ~1.25% in 80s.

Different legal, political, financial and managerial framework, the same decline.

Re: WTF Happened in 1971? (2019)

#342

Post by raiflip »

throwaway-8c93 wrote: post #328
raiflip wrote: post #127

Earlier quoted context omitted.

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

After having witnessed dramatic declines in union membership in new European Union members, and continuing downward trend in Scandinavian countries, I feel like the drop in membership is the consequence of unions becoming powerless, not a cause. If even the large unions cannot mount any effective pressure for increasing compensation, shrug at layoffs, and are fatalistic about outsourcing, what's the point of being a…

The drip is definitely correlation until proven to be causation. So it is possible the drop was a function of a common underlying cause.

The reason no other explanation makes sense to me is that any purely market based explanation, like energy or China, we would see a corresponding drop in US labor force productivity, but the whole point is that that productivity did not drop.

One question i have for you is, why didn’t the union just fight the cuts? A union is not a nicety granted by the corporation, its whole reason to be is to fight corporate power when needed. It sounds to me like that union was already made powerless by the time the crisis occurred.

Re: WTF Happened in 1971? (2019)

#343

Post by notahacker »

983279432879432 wrote: post #237
Ericson2314 wrote: post #196

Earlier quoted context omitted.

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.

> Rich people have no reason to keep significant amounts of currency

Eliminate inflation and they do though (if your currency is guaranteed to hold or even increase its purchasing power, the risk adjusted returns on investing it in productive activies aren't very attractive). Which is bad news for workers who feel they could be productive enough to negotiate for higher wages, if only the rich had any incentive to direct their gold reserves towards creating better jobs.

Re: WTF Happened in 1971? (2019)

#344

Post by oh_sigh »

AnimalMuppet wrote: post #314
oh_sigh wrote: post #261

Why should productivity be tied to compensation? If I hire myself out to dig foundations for a living, I will be more productive if I'm provided with a backhoe versus provided with a shovel. But isn't it the business investing in productivity enhancing measures that is responsible for my increased productivity, not anything intrinsic in myself?

Because the person who hires you wants foundations dug, not just to hire a fixed amount of headcount. To an employer, the worker who knows how to run a backhoe is more valuable than the person who knows how to run a shovel.

Right. If only select people could run the backhoe because of training, but anyone could shovel, then it would make sense that part of the productivity enhancements comes from the employee themselves. But let's just say the backhoe didn't require any special training. Should the worker capture some of the performance improvements that were derived purely from the business investing in productivity enhancements?

Re: WTF Happened in 1971? (2019)

#345

Post by wffurr »

UncleOxidant wrote: post #65
wffurr wrote: post #38

It's more like WTF happened between 1945 and 1971. I think that was an ahistorical period of low income inequality, and now we're back to "normal" such as it is.

> I think that was an ahistorical period of low income equality You mean low income inequality, right? That post WWII era in which the US was pretty much the only developed nation with it's manufacturing capability still intact. That and the GI Bill explain how that era was exceptional - a large number of folks who returned from WWII got free college educations.

>> You mean low income inequality, right?

Fixed, thank you.

Re: WTF Happened in 1971? (2019)

#346

Post by gpanders »

faet wrote: post #327
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…

Their was also the greater shift to non-wage benefits. If you look at total compensation vs productivity the chart tracks much closer. https://imgur.com/Juc8FMn

Do you have a source for this chart?

Re: WTF Happened in 1971? (2019)

#347

Post by lutorm »

yellowapple wrote: post #244
tomp wrote: post #184

Earlier quoted context omitted.

> 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…

> Would we have more advanced rockets We wouldn't need rockets at all , or at least far less; we could power things like launch loops and railguns to get things into space (and then either settle for rockets to circularize or else use laser ablation or orbital tethers or other fancier systems to circularize). > or robots or phones? Better CPUs? Robots, phones, and CPUs all benefit from power being readily available.…

I don't think the fact that we don't use railguns to launch things into space is because of energy cost. It's just not technologically feasible.

Re: WTF Happened in 1971? (2019)

#348

Post by russellbeattie »

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…

Population then was also half of what it is today. (Imagine Thanatos snapping his fingers! Huh, I guess it wouldn't really be that bad.).

I was also conceived in 1971, so maybe it was my personal existence. Sorry to everyone affected. I'll be dead within the next 50 years most likely, so be patient.

Re: WTF Happened in 1971? (2019)

#349

Post by mordymoop »

lotsofpulp wrote: post #242
mordymoop wrote: post #230

Earlier quoted context omitted.

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 technolog…

The supply of labor would have changed. See below where you wrote: >because otherwise people would stop becoming musicians It's about as cleanly supply and demand as you can get. The supply of musicians willing to work for $x decreases, since they now have the option to do other work that is more preferred than being a musician for $x. Therefore, you now have to pay more than $x to continue incentivizing a musician t…

All I can say is that it seems more like a second-order consequence of supply and demand, and an unintuitive one for many people. The counter factual/subjunctive “the musicians are paid more because otherwise they would have chosen other jobs” is not the way in which people usually talk about supply and demand. You could also say that the rules that govern the supply and demand of labor are not quite the same as the rules that govern supply and demand of goods, and people’s general failure to realize this results in the Bamoult effect being surprising.

Re: WTF Happened in 1971? (2019)

#350

Post by macinjosh »

Some interesting 1971 events from Wikipedia [0]

- February 8 – A new stock market index called the Nasdaq Composite debuts.

- February 14 - Western oil companies sign a treaty with 6 Khalij el-Arab countries to stabilize oil prices

- February 21 – The Convention on Psychotropic Substances is signed at Vienna. Essentially, banning psychedelics globally.

- April 1 – The United Kingdom lifts all restrictions on gold ownership

- April 20 - Swann v. Charlotte-Mecklenburg Board of Education: The Supreme Court of the United States rules unanimously that busing of students may be ordered to achieve racial desegregation.

- May 5 – The US dollar floods the European currency markets and threatens especially the Deutsche Mark; the central banks of Austria, Belgium, Netherlands and Switzerland stop the currency trading.

Not implying any correlations here. Just amazing what all was going on at the time.

[0]: https://en.wikipedia.org/wiki/1971

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