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WTF Happened in 1971? (2019)

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Re: WTF Happened in 1971? (2019)

#361

Post by [deleted] »

lokar wrote: post #18
ZacharyPitts wrote: post #10

Amazed that the site does not call out Nixon completely abandoning the gold standard in 1971. Financial investments thusly did not need to be backed by actual assets anymore, to the point of today where the whole of money is loans against loans against loans.

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.

[deleted]

Re: WTF Happened in 1971? (2019)

#363

Post by Gibbon1 »

tankenmate wrote: post #233
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…

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.

What interesting is looking at world oil production over the last 100 or so years. Oil production follows a smooth exponential curve right up till about 1970. And then it becomes supply constrained.

Re: WTF Happened in 1971? (2019)

#364

Post by gpanders »

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…

The social responsibility of businesses is to increase its profits because businesses shouldn't have social responsibility, people should.

People complain that corporations and businesses have too much impact and control over our society (which I agree with) and then in the same breath complain that they don't take on enough social responsibility. These are incompatible statements. Businesses should not have any social responsibility other than doing the thing for which they exist: make money. All other social responsibilities, such as ensuring we live in free, fair, and just society, fall to the people and their representatives.

Unfortunately, in our current situation, the people's representatives have spinelessly kowtowed to businesses and corporations and are completely unwilling to embrace any such social responsibility. But the blame and fault for this lies solely at the feet of these representatives and their governments (and, to an extent, the people who continue to elect them).

Re: WTF Happened in 1971? (2019)

#365

Post by 983279432879432 »

notahacker wrote: post #343
983279432879432 wrote: post #237

Earlier quoted context omitted.

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 dir…

People can (and do) invest in gold right now. Nothing would change significantly for rich people as they would continue to put most of their money in the same investments they do today which generally have higher risk adjusted returns than gold and would continue to have higher risk adjusted returns than a gold backed currency.

The difference would be in the liquid portion of a person's assets and poor people need to hold a much larger part of their assets as cash and are therefore much more affected by inflation.

It should also be noted that neither fiat currencies nor currencies backed by precious metals are guaranteed to maintain their value and are usually not the most secure means of long term wealth storage.

Re: WTF Happened in 1971? (2019)

#366

Post by TimTheTinker »

AnimalMuppet wrote: post #311
TimTheTinker wrote: post #225

An 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.

I have a bit of a hard time tracking how, say, removing the Ten Commandments from schoolrooms changed the ratio of gains between the 1% and everybody else. Or church attendance. But other people have made a case here that more women in the workforce was a plausible factor. They point to birth control as a key to that. But I suspect that abortion also contributed, and it was legalized in 1972.

> removing the Ten Commandments from schoolrooms

That was just one small part of a society-wide change of worldview. Prior to 1970, Christian values, ideals, and beliefs were assumed by the majority of the US population and respected by all but a tiny minority.

However, even by 1900 the philosophical basis for this shift had been laid, starting in 19th-century France and Germany with enlightenment (and particularly existentialist) philosophy, like that of Nietzsche and Sartre, joined by Marxist atheism, and finally making its way to the US and the rest of the post-WWI Western world as secular humanism--and to weaker parts of the Western world, and other places as well, as full-blown Socialism/Communism.

Re: WTF Happened in 1971? (2019)

#367

Post by flurben »

chmod600 wrote: post #57
ZacharyPitts wrote: post #10

Amazed that the site does not call out Nixon completely abandoning the gold standard in 1971. Financial investments thusly did not need to be backed by actual assets anymore, to the point of today where the whole of money is loans against loans against loans.

I'm curious about the mechanism. It seems important, but can you elaborate on the effects?

The mechanism for U.S. currency creation and management is constantly evolving, and its effects are as well.

Effectively what we're talking about are central bank operations, which is a dry and boring subject within economics, that is both misunderstood by mainstream economists and misused (for political reasons) by heterodox economists (many of whom are charlatans).

Generally speaking though, everyone tends to agree that central bank policies became looser over the 20th century, and IMHO that's really the only relevant kernel of truth in the OP link, who seems to be a promoter of fringe economic theories.

The best place to read about the topic is at the Federal Reserve Bank's website. Alternatively, I would recommend reading any of this :

https://orcamgroup.com/understanding-money/

Re: WTF Happened in 1971? (2019)

#368

Post by ohyes »

davidkuhta wrote: post #174
ohyes wrote: post #109

This is clearly because 1970 is the Unix epoch when this version of the simulation began. It took about a year for things to get sufficiently out of whack so that stuff started to diverge in a noticeable way. I hope our implementors are proud of me for making reference to the simulation that we're all in.

That would be the revised simulation history, the original did actually diverge in 1971. https://stackoverflow.com/questions/11573024/when-was-unix-e...

that is a really interesting tidbit of unix lore.

Re: WTF Happened in 1971? (2019)

#369

Post by bko »

crazygringo wrote: post #320
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…

According to Thomas Piketty [1], it's mainly a result of a bifurcation in education, and dramatically rising managerial compensation helped with tax cuts. I personally also think this is the main answer. In other words, all our massive productivity increases have come from people with a ton of education, and they reap all the rewards, helped with lower taxes. The median worker isn't any more educated and hasn't reape…

> tax cuts

Although the top marginal tax rate has changed drastically throughout America's history, if you look at federal tax receipts as a percentage of GDP, they've been remarkably stable hovering around 17% [0]

Similarly, education spending on K-12 has grown a lot per pupil (in constant dollars) since 1970 [1]. Its roughly doubled (in constant dollars) between 1970 and 2000

[0] https://fred.stlouisfed.org/series/FYFRGDA188S

[1] https://www2.ed.gov/about/overview/fed/10facts/edlite-chart....

Re: WTF Happened in 1971? (2019)

#370

Post by dgb23 »

Zviedris wrote: post #235
dgb23 wrote: post #104

Earlier quoted context omitted.

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.

I like this quote from John Locke:

> Our incomes are like our shoes; if too small, they gall and pinch us; but if too large, they cause us to stumble and to trip.

Liberalism is not at odds with sensible resource distribution. On the contrary: A free society is rooted in participation of all, both political and economical.

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