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 passed in 1970; the late 60s and early 70s saw many financial and environmental regulations passed.
I like the oil price theory. The period of growth was a period of massive decline in the price of energy. We've since had 50 years of stagnation in energy prices. But that looks to be breaking now. If solar energy & battery prices continue to decline the way they have been, we could see energy prices decline at a rate reminiscent of Moore's law.
And energy is a massive component in the price of almost everything we consume.
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 1972 Nixon visited - effectively opening China as an actual labor market.
Edit: I think one of the major takeaways should be that, changes in worldwide monetary policy allowed for pent up demand for globalization to be realized and that accelerated shifts from onshore to offshore manufacturing. Basically it allowed the US to stop building, and start buying.
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 reaped anything.
> ...I certainly do not believe that r > g is a useful tool for the discussion of rising inequality of labor income: other mechanisms and policies are much more relevant here, e.g., supply and demand of skills and education. 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, which can itself be explained by a mixture of two groups of factors: rising inequality in access to skills and to higher education over this time period in the United States, an evolution which might have been exacerbated by rising tuition fees and insufficient public investment; and exploding top managerial compensation, itself probably stimulated by changing incentives and norms, and by large cuts in top tax rates...
The thing is, there was a lot going on in the 1968-1971 period. Everything from civil rights to the moon landings. The collapse of Bretton Woods is important, but we have to ask why and what pressures led to that point.
> but there are several other theories that have more credence with mainstream economists
It's baffling that mainstream economists don't believe this (of course a single event with explanatory power diminishes the utility of the economist profession, and the Upton Sinclair quote comes to mind). In the words of a VERY mainstream economist:
"when you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts. So having a somewhat higher inflation rate would lead to lower unemployment"
In short: as a policy, we should reduce the real returns to labor in order to "keep the labor class employed". This policy choice (enabled by the end of bretton-woods) is quite well-captured in all of these graphs. This is how the end of bretton-woods pummeled the lower-income segments of society.
As for how the end of b-w benefits capital owners, inflation makes the cost of long-term borrowing lower, which means that the market price of risk is decreased; and folks with greater means are more effective at capturing arbitrage between the real cost of risk and the price of risk. For example, high finance instruments (like options, shorts, FOREX, etc) have a higher cost to execute in an environment with higher interest rates. If you go to, say, hunter's point/bayview you will not find people taking advantage of these instruments.
Some will claim "the poor are in debt so they will benefit from inflation" but in reality those debts are typically short-term, high interest rate instruments (sometimes even inflation-adjusted as in the case of some low-end home loans), and so the benefit to diminishing the real value of nominal debt is lower for them than it is for the truly wealthy.
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
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.
Peter Thiel (who I don't agree with on everything) had a really great take on this once (can't find it at the moment), and basically laid out a strong case on how we haven't really recovered from the oil shocks of the 1970s.
I do think that the early 1970s was the culmination of a bunch of different cultural, political, economic, and social trends meeting together and creating a very different global consensus.
BTW, the Gold Standard was already out the window with original Bretton Woods. Only certain actors (governments and certain NGOs) were allowed to redeem money for Gold. Gradually lots of caveats and weird rules were added to the system because of various structural inefficiencies. The oil shocks just toppled the system, but the financial system of the world was already untenable.
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.
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.
> 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.
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.
> 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 really think we're constrained by it (or by manufacturing in general) right now...
Or it could be that the stats are cherry-picked and there is no decoupling.
The concept of household income is fuzzy and not necessarily related to rewards to labor. Measuring by hours is the appropriate way to measure. Among other issues.
If the basic stuff that runs the world (energy and chemical feed stock) doubles in price two separate times in the space of 7 years, you just might expect tough times.
Interest rates lower than inflation, gold and silver not keeping pace with inflation either, general economic stagnation.
I don't buy this because we could have easily kept on building nuclear power plants. There was temporarily an energy shock, but the long-term issue is insufficient demand not (energy) supply.
hmmm... dropping energy isn't going to help with the big costs families face in terms of health insurance and costs, day care, college costs, or housing.
The removal of the gold standard removed partial value of gold as a world standard for credit. It makes sense that "something else" would take over that hierarchy — in this case oil (as a surrogate for energy as a higher concept).
They're not wholly unrelated and pretty obviously has driven economic policy and world relations (modern colonialism at the extreme) to some degree.
...and also legislative reforms that wound up being bad for the regular people, like electronic voting and removing secret votes in Congress. Some of the issues might have been corrected, but the lack of a secret vote meant legislators became less inclined to vote against their backers to the benefit of their constituents.
...and the re-emergence of corporate consolidation and the rise of the conglomerate in the 1960s, which reduced the power of labor to negotiate for a fair share of the gains.
> Some do blame the loss of the gold standard, but the leading theory is the OPEC oil crisis.
The latter is a consequence of the former. The US defaulting on its gold obligation is equivalent to trading oil in exchange for paper rather than gold. Of course the OPEC countries were reluctant to sell their oil for irredeemable pieces of paper rather than something redeemable in gold.
Talking about the “oil price” as one thing before and after 1971 doesn’t even make sense, as the US gold default constituted a change in the unit of measurement for USD-denominated prices (gold versus irredeemable paper notes).
Didn't the OPEC oil crisis drive the price of oil higher? But then you say that the problem is that oil prices saw a massive decline. So which is it?
When I look at the graph of oil prices between 1970 and 2020, I see it jumping around between $20 and $160, but they are always higher than they were in 1970. What exactly are you saying is the problem with oil prices? Are they too high or too low?
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.
A coworker and I were recently indulging in dark humor about pandemics being due to load shedding required on account of unexpected simulator platform downtime.
- "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 flights between Dallas, Houston, and San Antonio."
- "American President Richard Nixon announces his 1972 visit to China."
- "President Richard Nixon announces that the United States will no longer convert dollars to gold at a fixed value, effectively ending the Bretton Woods system. He also imposes a 90-day freeze on wages, prices and rents."
- "The United Nations General Assembly admits the People's Republic of China and expels the Republic of China (or Taiwan)."
- "Ray Tomlinson sends the first ARPANET e-mail between host computers.["
- "The People's Republic of China takes the Republic of China's seat on the United Nations Security Council (see China and the United Nations)."
- "The U.S. dollar is devalued for the second time in history."
These events can be grouped into categories:
- pro-deflationary (e.g., China rising, the first email message, Southwest)
- anti-working-class (War on Drugs)
- increasing financial speculation (NASDAQ)
- financial (end of Bretton Woods, US dollar devaluation)
- consumerism (Starbucks makes coffee cool and diverts billions from working-class savings)
I know that the site advocates the end of Bretton Woods as the main cause, but that event is just one in a spectrum of major arcs that had major emergences in the early 1970s after slow burns in the 50s and 60s.
As with any economic question, it's usually not due to one reason. The combination of energy price and workforce age comes into play. But the biggest trigger of all was the trade with China. That put a serious pressure to job competition, and led to significant wage stagnation in the US. On the other hand the 1% benefited a lot from the trade.
As containers became adopted, shipping ports specializing as container ports came to dominate world trade in terms of shipping volume. These ports were designed to bring the port, rail, and highway together. Crane operators efficiently loaded and unloaded containers. There was a flywheel effect as, more efficient container ports were expanded to accomodate larger container ships, which in turn, had port cities investing in more container port capabilities. Traditional ports died, with shipping consolidating into a much smaller group of container ports. As long as there were sufficient rail and highway access to those ports, goods could still be distributed inland.
Along with the rise of the minicomputer (https://en.wikipedia.org/wiki/Minicomputer) to handle logistics, what we got was a world-wide logistics network that enabled things like just-in-time manufacturing.
The late 1960s and early 1970s was also about the time ecological consciousness became more prominent. I hear from the old permacuturists and ecologists living through those times when large swaths of ecosystems were destroyed to expand things commercially. With healthy natural ecosystems, you could live land-rich, cash-poor. But with the ability to ship things easily and cheaply all throughout the world, local ecosystems became exploited and overharvested (the end-consumers had no personal stake in the ecosystem from which those resources were extracted from).
As productization and monetization of ... everything, including basic essentials of living, is it any surprise that real wages have not risen?
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.
Some of these graphs are laughable and are candidates for "Spurious Correlations" [1]. Childhood obesity is not due to the US getting rid of the gold standard.
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 communities and other stakeholders without shares. Externalize all the costs you can get away with fobbing off on others.
The Hayek / Friedman / Chicago School fanbois need to address the biggest externalized cost of all: disposal of CO2, methane, and other greenhouse gases. If the social responsibility of business were to increase its profits a century from now, maybe the Friedman Doctrine would be helpful. But, yeah, no. As it is, the Friedman Doctrine means "take all the money and run."
Lots of plutocrats argue for a guaranteed basic income. Why? if Amazon / FB / Doordash / Uber impoverish everybody, nobody will have any money to spend on Amazon / FB / Doordash / Uber.
That's all a consequence of the Friedman Doctrine.
Business managed to exploit a number of crises to break the power of labor unions. The gold standard had nothing to do with it: sticking with gold would not force management to share productivity gains with labor.
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.
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..
Graphs like these serve to suggest to people that there's a single, operative reason at their core instead of it being a complex, multivariate issue.
They also tend to cause people to over-attribute the effects of the story told in the graph(s) to the majority of the population instead of a minority with disproportionate impact.
Regardless, taken together the graphs are compelling. The real cause will likely remain forever elusive, but here's a few hypotheses.
* The rise of globalisation and the outsourcing of low skilled jobs to other countries.
* The abandonment of the gold standard.
* The oil crisis.
* The disarmament of labor union power.
* The concentration of a highly educated 'creative class' in fewer urban areas.
* Women entering the work force en masse.
It's a solid back-to-the-basics refresher. Without making causal guesses, the stats clearly show that demand stopped absorbing increasing supply, the Keynesian feedback loop was broken, and everything went to shit since.
The causes seem numerous and intricate but a few observations:
- As pointed out in https://phenomenalworld.org/interviews/trade-wars-are-class-..., everyone trying to be exporters in general leads to a glut. Here is sort of the origins of that, with the US "overproducing" as it exports to a post-WWII destroyed world, then Japan and Germany coming back to try to export more, and then everyone else thereafter.
- From the perspective That 1930-1970 is the anomaly, cycles of destruction and rebuilding are a hack to help create enough labor scarcity for society to function better.
- We'd be better of making labor scare and compelling investment in physical capital by shrinking the workday than starting world wars!!
A lot of charts with no context, but my main takeaways are that the US is not in record debt, in fact it was well over 100% GDP in WWII and under that now. Based on the news you'd think US is over spending by records numbers. The numbers are records but as a percentage of GDP they are not. Another surprise is the S&P PE ratio. I thought it was really high now, but actually 2008 was the high point by about twice as much. Again, no context in the article, but these were my takeaways. All the other charts are saddening. Maybe the point is sow fear uncertainly and despair to pump bitcoin?
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.
[+] [-] bryanlarsen|5 years ago|reply
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 passed in 1970; the late 60s and early 70s saw many financial and environmental regulations passed.
I like the oil price theory. The period of growth was a period of massive decline in the price of energy. We've since had 50 years of stagnation in energy prices. But that looks to be breaking now. If solar energy & battery prices continue to decline the way they have been, we could see energy prices decline at a rate reminiscent of Moore's law.
And energy is a massive component in the price of almost everything we consume.
[+] [-] AndrewKemendo|5 years ago|reply
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 1972 Nixon visited - effectively opening China as an actual labor market.
Edit: I think one of the major takeaways should be that, changes in worldwide monetary policy allowed for pent up demand for globalization to be realized and that accelerated shifts from onshore to offshore manufacturing. Basically it allowed the US to stop building, and start buying.
[1] https://dash.harvard.edu/bitstream/handle/1/2624453/Goldin_P...
[+] [-] crazygringo|5 years ago|reply
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 reaped anything.
> ...I certainly do not believe that r > g is a useful tool for the discussion of rising inequality of labor income: other mechanisms and policies are much more relevant here, e.g., supply and demand of skills and education. 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, which can itself be explained by a mixture of two groups of factors: rising inequality in access to skills and to higher education over this time period in the United States, an evolution which might have been exacerbated by rising tuition fees and insufficient public investment; and exploding top managerial compensation, itself probably stimulated by changing incentives and norms, and by large cuts in top tax rates...
[1] http://webcache.googleusercontent.com/search?q=cache:x918MB5...
[+] [-] pjc50|5 years ago|reply
[+] [-] dnautics|5 years ago|reply
It's baffling that mainstream economists don't believe this (of course a single event with explanatory power diminishes the utility of the economist profession, and the Upton Sinclair quote comes to mind). In the words of a VERY mainstream economist:
https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hi...
"when you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts. So having a somewhat higher inflation rate would lead to lower unemployment"
In short: as a policy, we should reduce the real returns to labor in order to "keep the labor class employed". This policy choice (enabled by the end of bretton-woods) is quite well-captured in all of these graphs. This is how the end of bretton-woods pummeled the lower-income segments of society.
As for how the end of b-w benefits capital owners, inflation makes the cost of long-term borrowing lower, which means that the market price of risk is decreased; and folks with greater means are more effective at capturing arbitrage between the real cost of risk and the price of risk. For example, high finance instruments (like options, shorts, FOREX, etc) have a higher cost to execute in an environment with higher interest rates. If you go to, say, hunter's point/bayview you will not find people taking advantage of these instruments.
Some will claim "the poor are in debt so they will benefit from inflation" but in reality those debts are typically short-term, high interest rate instruments (sometimes even inflation-adjusted as in the case of some low-end home loans), and so the benefit to diminishing the real value of nominal debt is lower for them than it is for the truly wealthy.
[+] [-] raiflip|5 years ago|reply
[+] [-] coward8675309|5 years ago|reply
[+] [-] hacknat|5 years ago|reply
I do think that the early 1970s was the culmination of a bunch of different cultural, political, economic, and social trends meeting together and creating a very different global consensus.
BTW, the Gold Standard was already out the window with original Bretton Woods. Only certain actors (governments and certain NGOs) were allowed to redeem money for Gold. Gradually lots of caveats and weird rules were added to the system because of various structural inefficiencies. The oil shocks just toppled the system, but the financial system of the world was already untenable.
[+] [-] dgb23|5 years ago|reply
The 70s and 80s mark a political shift to privatization of public service/infrastructure and deregulation of and trade-agreements for the investor market.
[+] [-] throwaway-8c93|5 years ago|reply
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.
[+] [-] lisper|5 years ago|reply
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.
[+] [-] dehrmann|5 years ago|reply
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
[+] [-] tomp|5 years ago|reply
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 really think we're constrained by it (or by manufacturing in general) right now...
[+] [-] mepian|5 years ago|reply
[+] [-] nwah1|5 years ago|reply
The concept of household income is fuzzy and not necessarily related to rewards to labor. Measuring by hours is the appropriate way to measure. Among other issues.
https://www.forbes.com/sites/scottwinship/2014/10/20/has-ine...
[+] [-] JJMcJ|5 years ago|reply
If the basic stuff that runs the world (energy and chemical feed stock) doubles in price two separate times in the space of 7 years, you just might expect tough times.
Interest rates lower than inflation, gold and silver not keeping pace with inflation either, general economic stagnation.
Not a good time, no it wasn't.
[+] [-] Ericson2314|5 years ago|reply
[+] [-] bwb|5 years ago|reply
Am i wrong :)?
[+] [-] spandrew|5 years ago|reply
They're not wholly unrelated and pretty obviously has driven economic policy and world relations (modern colonialism at the extreme) to some degree.
[+] [-] arrosenberg|5 years ago|reply
https://en.wikipedia.org/wiki/Legislative_Reorganization_Act...
...and the re-emergence of corporate consolidation and the rise of the conglomerate in the 1960s, which reduced the power of labor to negotiate for a fair share of the gains.
[+] [-] treeman79|5 years ago|reply
Even when good, the cost is big.
Health care is a good example. Keeping patient data private is a good thing.
However it’s also absolutely crushing in its impact in the industry.
Tiny projects can take months or years.
HIPPA terrifies so many IT people. Driving away top developers.
[+] [-] runeks|5 years ago|reply
The latter is a consequence of the former. The US defaulting on its gold obligation is equivalent to trading oil in exchange for paper rather than gold. Of course the OPEC countries were reluctant to sell their oil for irredeemable pieces of paper rather than something redeemable in gold.
Talking about the “oil price” as one thing before and after 1971 doesn’t even make sense, as the US gold default constituted a change in the unit of measurement for USD-denominated prices (gold versus irredeemable paper notes).
[+] [-] tboyd47|5 years ago|reply
When I look at the graph of oil prices between 1970 and 2020, I see it jumping around between $20 and $160, but they are always higher than they were in 1970. What exactly are you saying is the problem with oil prices? Are they too high or too low?
[+] [-] mymythisisthis|5 years ago|reply
WWII ends, you get 26 - 30 years, of a work force. The WWII generation starts to retire. Also, the factories at that point need retooling.
Boomers start to enter their 20s, and start entering the workforce.
[+] [-] faet|5 years ago|reply
https://imgur.com/Juc8FMn
[+] [-] neutronicus|5 years ago|reply
Please do not base your vision of the future on exponentially-growing energy consumption
[+] [-] ohyes|5 years ago|reply
[+] [-] RhysU|5 years ago|reply
[+] [-] davidkuhta|5 years ago|reply
[+] [-] qsort|5 years ago|reply
[+] [-] ehnto|5 years ago|reply
[+] [-] Nition|5 years ago|reply
[+] [-] aazaa|5 years ago|reply
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 flights between Dallas, Houston, and San Antonio."
- "American President Richard Nixon announces his 1972 visit to China."
- "President Richard Nixon announces that the United States will no longer convert dollars to gold at a fixed value, effectively ending the Bretton Woods system. He also imposes a 90-day freeze on wages, prices and rents."
- "The United Nations General Assembly admits the People's Republic of China and expels the Republic of China (or Taiwan)."
- "Ray Tomlinson sends the first ARPANET e-mail between host computers.["
- "The People's Republic of China takes the Republic of China's seat on the United Nations Security Council (see China and the United Nations)."
- "The U.S. dollar is devalued for the second time in history."
These events can be grouped into categories:
- pro-deflationary (e.g., China rising, the first email message, Southwest)
- anti-working-class (War on Drugs)
- increasing financial speculation (NASDAQ)
- financial (end of Bretton Woods, US dollar devaluation)
- consumerism (Starbucks makes coffee cool and diverts billions from working-class savings)
I know that the site advocates the end of Bretton Woods as the main cause, but that event is just one in a spectrum of major arcs that had major emergences in the early 1970s after slow burns in the 50s and 60s.
[+] [-] thanhhaimai|5 years ago|reply
As with any economic question, it's usually not due to one reason. The combination of energy price and workforce age comes into play. But the biggest trigger of all was the trade with China. That put a serious pressure to job competition, and led to significant wage stagnation in the US. On the other hand the 1% benefited a lot from the trade.
https://en.m.wikipedia.org/wiki/China%E2%80%93United_States_...
[+] [-] hosh|5 years ago|reply
As containers became adopted, shipping ports specializing as container ports came to dominate world trade in terms of shipping volume. These ports were designed to bring the port, rail, and highway together. Crane operators efficiently loaded and unloaded containers. There was a flywheel effect as, more efficient container ports were expanded to accomodate larger container ships, which in turn, had port cities investing in more container port capabilities. Traditional ports died, with shipping consolidating into a much smaller group of container ports. As long as there were sufficient rail and highway access to those ports, goods could still be distributed inland.
Along with the rise of the minicomputer (https://en.wikipedia.org/wiki/Minicomputer) to handle logistics, what we got was a world-wide logistics network that enabled things like just-in-time manufacturing.
The late 1960s and early 1970s was also about the time ecological consciousness became more prominent. I hear from the old permacuturists and ecologists living through those times when large swaths of ecosystems were destroyed to expand things commercially. With healthy natural ecosystems, you could live land-rich, cash-poor. But with the ability to ship things easily and cheaply all throughout the world, local ecosystems became exploited and overharvested (the end-consumers had no personal stake in the ecosystem from which those resources were extracted from).
As productization and monetization of ... everything, including basic essentials of living, is it any surprise that real wages have not risen?
[+] [-] wffurr|5 years ago|reply
[+] [-] wyldfire|5 years ago|reply
[1] http://archive.is/9VFmh
[+] [-] OliverJones|5 years ago|reply
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 communities and other stakeholders without shares. Externalize all the costs you can get away with fobbing off on others.
The Hayek / Friedman / Chicago School fanbois need to address the biggest externalized cost of all: disposal of CO2, methane, and other greenhouse gases. If the social responsibility of business were to increase its profits a century from now, maybe the Friedman Doctrine would be helpful. But, yeah, no. As it is, the Friedman Doctrine means "take all the money and run."
Lots of plutocrats argue for a guaranteed basic income. Why? if Amazon / FB / Doordash / Uber impoverish everybody, nobody will have any money to spend on Amazon / FB / Doordash / Uber.
That's all a consequence of the Friedman Doctrine.
[+] [-] not2b|5 years ago|reply
[+] [-] ZacharyPitts|5 years ago|reply
[+] [-] triangleman|5 years ago|reply
Sorry but there are other ways. Did you know that the Balanced Budget Amendment (proposal) failed by a single vote in 1995?
[+] [-] wheelie_boy|5 years ago|reply
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..
[+] [-] fumblebee|5 years ago|reply
They also tend to cause people to over-attribute the effects of the story told in the graph(s) to the majority of the population instead of a minority with disproportionate impact.
Regardless, taken together the graphs are compelling. The real cause will likely remain forever elusive, but here's a few hypotheses. * The rise of globalisation and the outsourcing of low skilled jobs to other countries. * The abandonment of the gold standard. * The oil crisis. * The disarmament of labor union power. * The concentration of a highly educated 'creative class' in fewer urban areas. * Women entering the work force en masse.
[+] [-] vortico|5 years ago|reply
[+] [-] driverdan|5 years ago|reply
[+] [-] Ericson2314|5 years ago|reply
It's a solid back-to-the-basics refresher. Without making causal guesses, the stats clearly show that demand stopped absorbing increasing supply, the Keynesian feedback loop was broken, and everything went to shit since.
The causes seem numerous and intricate but a few observations:
- As pointed out in https://phenomenalworld.org/interviews/trade-wars-are-class-..., everyone trying to be exporters in general leads to a glut. Here is sort of the origins of that, with the US "overproducing" as it exports to a post-WWII destroyed world, then Japan and Germany coming back to try to export more, and then everyone else thereafter.
- From the perspective That 1930-1970 is the anomaly, cycles of destruction and rebuilding are a hack to help create enough labor scarcity for society to function better.
- We'd be better of making labor scare and compelling investment in physical capital by shrinking the workday than starting world wars!!
[+] [-] jeffbee|5 years ago|reply
[+] [-] icameron|5 years ago|reply
[+] [-] bluedino|5 years ago|reply
And have wages really gone down? As a whole, we're richer than ever. We own more possessions, have bigger houses, spend more money on luxuries, etc.
[+] [-] csomar|5 years ago|reply
- 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.