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WTF Happened in 1971? (2019)

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Re: WTF Happened in 1971? (2019)

#371

Post by Zviedris »

TwoBit wrote: post #277
Zviedris wrote: post #235

Earlier quoted context omitted.

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 don't see how your first sentence follows when looking at all the graphs.

Question is - why people where not able to save more money? From 1971 until housing crises in 2008 personal savings diminished. While top 1% earnings increasing. If you look at housing price index Vs salary then real estate rose by 250% while salary not some much. Rent increase proporsonal to housing prices. It just generates so much cash from those who can't buy it. And paying higher rent set you back from saving and buying your own. And without savings you have also limited negotiation options.

Re: WTF Happened in 1971? (2019)

#372

Post by taylodl »

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've always thought moving off the gold standard was the impetus for the OPEC oil crises.

Re: WTF Happened in 1971? (2019)

#373

Post by 6gvONxR4sf7o »

jjoonathan wrote: post #353
6gvONxR4sf7o wrote: post #89

Earlier quoted context omitted.

Can you provide more detail? I’ve definitely wondered about how general-purpose an inflation correction mechanism can be. When I see rising rents, corrected for inflation, I always wonder if maybe rent should be a more significant part of the correction, until it’s flat-ish after the correction. But then food, another universal necessity, wouldn’t be flat. Choosing the right deflator, if I’m using the word correctly,…

It's not just hard, it's also political. The amount of nuance can be overwhelming. CPI doesn't account for the ability of consumers to substitute inferior goods, but GDP doesn't account for the sacrifice involved in doing so. CPI focuses on consumers, while GDP focuses on all sectors. CPI includes the price of imports while GDP does not. The list goes on. Making all of these choices and keeping in mind the consequenc…

That was a very informative explanation. Thanks. There was a sentence that sounded really interesting, but which I didn't understand:

> CPI doesn't account for the ability of consumers to substitute inferior goods, but GDP doesn't account for the sacrifice involved in doing so.

Would you be down to unpack how that works? I'm intrigued.

Re: WTF Happened in 1971? (2019)

#374

Post by Zviedris »

thehappypm wrote: post #260
Zviedris wrote: post #245

Earlier quoted context omitted.

If transportation is so expensive then why a lot of stuff is made in China? How cheap gasoline would afford you to rent a flat?

Oh, lots of ways cheap gas would help me afford a flat! First of all it takes a ton of energy to build a home, so housing would be fundamentally cheaper. Then, every month, I'd be spending less money on heating or air conditioning. I'd also be spending less of my own money on transportation (either through less gas costs, or buses/trains being cheaper). Then since goods are cheaper at the store, I have more money to…

If shipping is cheap why does goods go from Chine to US not from US to China?

Would cheap energy lower land costs for a house or flat? Cheap energy would improve situation. But a lot of competition comes from productivity and wages. Low wages in Asia made possible to import goods cheaper from Asia rather than produce locally.

Re: WTF Happened in 1971? (2019)

#375

Post by webmaven »

jfk13 wrote: post #239
thehappypm wrote: post #193

Earlier quoted context omitted.

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.

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

It's worth noting that due to Jevon's Paradox, investments in energy efficiency also result in greater energy consumption.

Re: WTF Happened in 1971? (2019)

#376

Post by csomar »

There are a few points not quite highlighted in this thread:

- Woman entering the workforce: I think this is the primary driver of wage deflation. You suddenly doubled the supply of the workforce, this means you can afford to pay workers much less. The end of WWII also means you have new supply of men who were doing army stuff.

- US Trade Balance: With the gold standard abolished and countries using the USD, the US can now afford to offshore some of its work to other countries. They get these products for free. The US trade deficit is being financed by the money printing machine. There is a tax to trade internationally and to mismanage your country currency: It's the USD. This means less jobs for Americans. Along with the doubled supply of workers, this over-complicates the situation.

- Brave new world of Global Capital: Imo, the next challenge is just starting and it's global capital. With a doubled work force and less jobs, your average American will have trouble getting anywhere in life. But wait, it's going to get worse. Your top earners in foreign countries can now transfer their money to the US and buy property. Luckily, they are only doing it now in hot spots (LA, NYC, SF, DC). But it's a matter of time before this spread further, fueled by the Internet (people can discover more places and don't have to rely on the most known ones) and people who used to own in hot spots and decided to buy somewhere else because it's cheaper. Cities like this because it drives their real-estate market and create jobs, so it seems like it should fix the problem.

The next decade is going to be an interesting one.

Re: WTF Happened in 1971? (2019)

#377

Post by jjoonathan »

6gvONxR4sf7o wrote: post #373
jjoonathan wrote: post #353

Earlier quoted context omitted.

It's not just hard, it's also political. The amount of nuance can be overwhelming. CPI doesn't account for the ability of consumers to substitute inferior goods, but GDP doesn't account for the sacrifice involved in doing so. CPI focuses on consumers, while GDP focuses on all sectors. CPI includes the price of imports while GDP does not. The list goes on. Making all of these choices and keeping in mind the consequenc…

That was a very informative explanation. Thanks. There was a sentence that sounded really interesting, but which I didn't understand: > CPI doesn't account for the ability of consumers to substitute inferior goods, but GDP doesn't account for the sacrifice involved in doing so. Would you be down to unpack how that works? I'm intrigued.

This page has a specific example: https://www.economicsdiscussion.net/differences-between/diff...

Keep in mind that their example chose a very gentle substitution (apples and oranges) while my example chose a very extreme substitution (housing and clean water for tents and unfiltered water). A nontrivial amount of your opinion-formation should include deciding where typical substitutions (e.g. moving back in with parents) actually lie on that scale. Of course, this choice is peanuts compared to the choice of whether or not you lump high income earners in with low income earners. Hence my focus on the Elysium test.

Re: WTF Happened in 1971? (2019)

#378

Post by claudiulodro »

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

How much of the total compensation is health insurance premiums increasing, though? It doesn't seem like it would improve a worker's situation if the chart just shows that an increasingly greater percentage of their compensation has been funneled to insurance companies over the years . . .

Re: WTF Happened in 1971? (2019)

#379

Post by AnimalMuppet »

oh_sigh wrote: post #344
AnimalMuppet wrote: post #314

Earlier quoted context omitted.

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?

> But let's just say the backhoe didn't require any special training.

Can you give me an example of any more-advanced and more-productive tool that does not require at least some special training?

Re: WTF Happened in 1971? (2019)

#380

Post by nxpnsv »

csomar wrote: post #376

There are a few points not quite highlighted in this thread: - Woman entering the workforce: I think this is the primary driver of wage deflation. You suddenly doubled the supply of the workforce, this means you can afford to pay workers much less. The end of WWII also means you have new supply of men who were doing army stuff. - US Trade Balance: With the gold standard abolished and countries using the USD, the US c…

Aren't you a quarter of a century off on the WWII thing?
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