Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

WTF Happened in 1971? (2019)

wtfhappenedin1971.com

Post reply on HN
Print view View original

411–420 of 477 posts

Re: WTF Happened in 1971? (2019)

#411

Post by justinzollars »

notahacker wrote: post #389
983279432879432 wrote: post #365

Earlier quoted context omitted.

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…

> 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. The promise of an absence of inflation (which I agree is not the same as a gold-backed currency; moderate price inflation took place throughout the Bretton Woods era) is a guarantee that currency will hold its's va…

> moderate price inflation took place throughout the Bretton Woods era

Bretton Woods collapsed because the United States' gold reserves were depleted in half honoring the $35 then $41 fixed exchange. Too many dollars were printed during Bretton Woods to fund the Great Society and Vietnam war. Ending the system made sense because it enabled the United States to keep what was left of its Gold reserves.

Re: WTF Happened in 1971? (2019)

#412

Post by webmaven »

onlyrealcuzzo wrote: post #103
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.

Yeah, A Farewell to Alms makes a pretty convincing argument that 1945 to 1971 was an anomaly. Ever since the advent of agriculture, income inequality has been on the rise. The Belle Epoch in France was the peak of that - then revolutions, World Wars, and Socialism happened. Once that civil unrest stopped, the trend continued back up. (We might have recently passed Belle Epoch-levels of inequality - not sure this is a…

> Yeah, A Farewell to Alms makes a pretty convincing argument that 1945 to 1971 was an anomaly. Ever since the advent of agriculture, income inequality has been on the rise. The Belle Epoch in France was the peak of that - then revolutions, World Wars, and Socialism happened. Once that civil unrest stopped, the trend continued back up.

Its worth noting that large scale disasters (of all sorts) were always great equalizers, a countervailing force to rising inequality. In general, the more you had to lose, the more you lost.

We've been getting better at preventing or coping with a lot of these things like plagues, famines, and so on, but we've become even better at insulating accumulated wealth from being destroyed by them (including by financial crises), by privatizing gains and socializing losses.

I have a feeling that we've entered a new period of larger scale social unrest and natural disasters which may or may not significantly destroy and/or redistribute wealth to level the playing field again somewhat.

Re: WTF Happened in 1971? (2019)

#413

Post by [deleted] »

noch wrote: post #404
crazygringo wrote: post #320

Earlier quoted context omitted.

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…

> For instance, I point out in my book (Piketty 2014a, ch. 8–9) that the rise of top income shares in the United States over the 1980–2010 period is due for the most part to rising inequality of labor earnings, Rognlie(2014) points out fatal errors in Piketty's primary analysis of wealth inequality. In summary: “ Recent trends in both capital wealth and income are driven almost entirely by housing, with underlying me…

[deleted]

Re: WTF Happened in 1971? (2019)

#414

Post by crazygringo »

bko wrote: post #369
crazygringo wrote: post #320

Earlier quoted context omitted.

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/…

Sure, but the entire point for inequality is the tax brackets, not the overall tax receipts.

As for education, the relevant factor here is college education, not K-12. It's precisely all the benefits accruing to people with a good college education that aren't accruing to those without.

Re: WTF Happened in 1971? (2019)

#415

Post by dnautics »

trixie_ wrote: post #383
dnautics wrote: post #336

Earlier quoted context omitted.

> 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.

The tax system is not the place to try to solve poverty - you just end up over complicating it without even fixing the problem. Zero tax does not equate to zero poverty. Let the tax system and social services systems stand on their own. Don't conflate one with the other.

I tend to agree, but it's also crazy to suggest that inflation affects society evenly.

Re: WTF Happened in 1971? (2019)

#416

Post by 6gvONxR4sf7o »

jjoonathan wrote: post #377
6gvONxR4sf7o wrote: post #373

Earlier quoted context omitted.

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 par…

Great link. So a GDP deflator corrects for what our current equilibrium would have cost back then, while the CPI deflator corrects for what our equilibrium from back then would cost now?

Re: WTF Happened in 1971? (2019)

#417

Post by ehmish »

taffer wrote: post #160
wheelie_boy wrote: post #19

Reminds me of https://tylervigen.com/old-version.html Especially some of those graphs about stuff like childhood obesity. It would be nice if all problems in a society had a single, simple cause (bad people doing stuff!) and a single, simple solution (stop 'em!), but the world is a complex place I did notice that the people hawking bitcoin didn't include any graphs about climate change..

Essentially, this website wants to make you believe that going off the gold standard (which only existed on paper at the time) is the root cause of all the bad things in the world. All documented by cherry-picked numbers and shoehorned graphs. And now we are supposed to buy Bitcoin to make everything better. It is crazy that this wacky stuff is upvoted on HN.

Ignoring their conclusion aboutwhat they think it was, it's interesting that _something_ happened in 1971, personally I think it's more likely the opening of trade with china than going off the gold standard. It does a good job of showing the sheer broadness of the effect on American society.

Re: WTF Happened in 1971? (2019)

#418

Post by iguy »

brandmeyer wrote: post #356
tboyd47 wrote: post #165

Earlier quoted context omitted.

Thanks. I prefer the Nixon dollar float theory. The OPEC oil crisis was only 6 months. And as you say, oil prices in general have not had a clear trend. So those don't seem related to what is being presented on WTF Happened in 1971. When the government can print money willy-nilly, it can finance any boondoggle it wants to. This free money would pull qualified people away from more productive endeavors. It makes sense…

> This free money would pull qualified people away from more productive endeavors. If this was actually happening, we would see the impact in increasing labor prices, not stagnating labor prices.

We did? I mean salaries in finance from the 80s on were much higher than in the 60s. They went from being some kind of accountants to being masters of the universe.

And incomes of people near the top, in all fields, increased relative to the median too.

Re: WTF Happened in 1971? (2019)

#419

Post by pashamur »

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.

Obligatory Paul Graham article about that period, since we are on HN: http://www.paulgraham.com/re.html

Re: WTF Happened in 1971? (2019)

#420

Post by trixie_ »

dnautics wrote: post #415
trixie_ wrote: post #383

Earlier quoted context omitted.

The tax system is not the place to try to solve poverty - you just end up over complicating it without even fixing the problem. Zero tax does not equate to zero poverty. Let the tax system and social services systems stand on their own. Don't conflate one with the other.

I tend to agree, but it's also crazy to suggest that inflation affects society evenly.

70% of Americans have less than $1,000 in the bank.

Say there was 0% inflation for the last 50 years, how much do you think the number above would change?

Post reply on HN