Live data from Hacker News

WTF Happened in 1971? (2019)

wtfhappenedin1971.com

241–250 of 477 posts

Re: WTF Happened in 1971? (2019)

#241

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…

Between 1965 and 1988, the share of women in the labor force rose from 35% to 45% and has held around 45% since then. [1]

The added labor could have pushed down the price of labor. Productivity acts as a ceiling for the price of labor, so seem those two track suggests that there was a shortage of labor.

While the trend started in the 60's, likely in response to social changes in the 60's, it could have been accelerated by households struggling with 70's stagflation, sending more people to work to overcome stagnating wages. There'd be something like the paradox of thrift, but for labor, where people work more, but aggregate income doesn't change much.

Real household income has actually gone up 28% since 1985 [2], so there might be something to viewing this through a household lens, not a wage lens.

And as others, and even the link say. there was a lot going on in the 70's, so this is hard to tease apart.

1: https://www.dol.gov/agencies/wb/data/facts-over-time/women-i...

2: https://fred.stlouisfed.org/series/MEHOINUSA672N

Re: WTF Happened in 1971? (2019)

#242

Earlier quoted context omitted.

I don’t understand how baumol’s cost thing is any different than lower supply of labor causing price of labor to rise, and why it would merit a special name or Wikipedia entry.

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 to be a musician.

Going back to your string quartet example, which I do not know if it's true or not, but let's suppose it is:

>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.

The reason a string quartet costs more now is because there are fewer people who can play instruments (relative to demand, since price is where the supply and demand curves intersect). Because other things pay better, fewer people (again, relative to demand) might choose to play instruments, causing less supply (relative to demand), causing prices to rise.

My point is that it's all still just simple supply and demand curves. If the demand for corn skyrockets, causing the price of corn to increase, and farmers choose to plant corn instead of wheat, then causing a decrease in the supply of wheat, then causing the price of wheat to increase, is that anything other than supply and demand?

Re: WTF Happened in 1971? (2019)

#243
post #184

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, but I don't really think we're constrained by it (or by manufacturing in general) right now...

You should probably reevaluate this. Energy costs are most of the costs of production much of the time. Sometimes it is hidden in the costs of components or of the labor involved, but it’s fundamentally an energy cost.

Re: WTF Happened in 1971? (2019)

#244
post #184

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…

> 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. For the latter-two, power storage is a critical factor as well, but it's at least a little bit less critical when there are ample places to cheaply recharge.

> More and cheaper housing built in dense cities?

Dense housing tends to require things like elevators (unless you expect people to climb tens or hundreds of flights of stairs every day), climate control (in places naturally too hot or too cold for humans to safely live), and the very equipment and materials to construct that housing in the first place (cranes and bulldozers don't run on magic, and neither do steel mills or window factories). Not to mention the things people like to be able to do within those homes, the vast majority of which require electricity. Cheaper electricity makes these things cheaper.

> Cheaper education or medicine?

Electricity is typically required for distance education and telehealth. It's also typically required for modern education and medicine, period. Cheaper electricity makes these things cheaper.

> More job security?

Not only does energy itself tend to create jobs (especially solar, what with all the rooftops and parking lots begging to be made useful with solar panels), but so does the resulting burst in commercial and industrial opportunities when people are able to drive down or outright eliminate electricity's cost to business.

> Even more food?

Vertical farming at scale will absolutely require more electricity. So will water production; desalination is typically an energy-intensive process, but with enough energy production, it could make water shortages in places like California a thing of the past. Even traditional/flat farms have tractors and combines and other equipment that are costly to run; slash those run costs, and farming just got that much more viable for smaller farmers that can't otherwise foot the bill.

> I don't really think we're constrained by it (or by manufacturing in general) right now...

Right now the energy and manufacturing capacity we have is built on egregious exploitation of fossil fuels, particularly coal and oil. Those won't last forever; either they'll run out, or we'll end up wiping ourselves out with the resulting greenhouse gases (or probably both).

Re: WTF Happened in 1971? (2019)

#245
post #113

Earlier quoted context omitted.

ya but i am not sure anyone of the things i named will drop by 5% or more... and mean while they keep going up faster than inflation... Cheap energy is good, but i worry more about our ability to afford those things.

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…

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?

Re: WTF Happened in 1971? (2019)

#246

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 author obviously wants you to believe that it was the abandonment of the gold standard

How is that obvious? I see a lot of data, but not many conclusions. And even the data presented doesn't seem to me to present a particularly compelling case that it was the abandonment of the gold standard, among the many, many historically pivotal things that happened in or around 1971, that caused the systemic changes that followed.

Re: WTF Happened in 1971? (2019)

#247
The ability for the US to print it's own currency has had positive and negative effects. It requires a great deal of self control regardless. It's like a company with the ability to create new shares - great for raising capital, bad for existing shareholders (but hopefully just in the short term)

It seems like we've avoided the hyper hyper inflation thus far, though recent events make it seem like the government is ready to spend trillions of dollars on a whim. That in addition to one party's desire to lower taxes, and another party's desire to increase social services - make for a constantly devolving financial situation no matter who is in power.

It could be that inflation drives productivity by way of businesses innovating in order to minimize the amount of price increase caused by inflation. Without additional revenue though wages would stagnate and not match inflation.

All of this might really be necessary in the 'new world' where countries are more like companies and need to constantly innovate to stay ahead.

Given the long history of humanity, I don't believe things are generally as peaceful as they are now, and that may either represent an anomaly or a stalemate, but I don't believe it will last forever.

I guess the gist of this post is, if you're a country then a fiat currency is ideal to keep ahead of the pack with your population constantly working/producing/innovating. If you're an individual and understand this game - then holding equities, property, cypto is in your best interest, but doesn't obviate the need for a fiat currency to exist.

Re: WTF Happened in 1971? (2019)

#248
post #31

Earlier quoted context omitted.

Yes, we narrowly averted disaster. Did you know that amendment required a supermajority to raise taxes?

At this point I kind of wish a supermajority was required for every vote. Then neither party could control legislating over the objections of the other. This trading back and forth every so often thing doesn’t seem to be working great.

If you had that nothing would ever get done.

Re: WTF Happened in 1971? (2019)

#250

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'm very much with you on this. Increasing standards of living are directly tied to a decreased cost of energy. Aside from property absolutely everything can be decomposed into physical or mental effort — energy [omitted at suggestion of follow-up, merci!]. The industrial revolution allowed the substitution of wood or coal or uranium or PV cells for food that powers oxen, horses, and humans.

>energy (or energy * distance aka work)

Your comment would be improved by omitting the words in parentheses: work is force times distance, and energy and work have the same dimensions (namely mass * distance * distance / time / time).

(I agree with the rest of your comment.)

Post reply on HN