Another possibility is the creation of the EPA and OSHA in 1970. With that, the administrative/regulatory power of the government increased greatly. Throw in the OPEC oil embargo in 1973 and poor management at many major US corporations and you saw in very short order whole regions of the country turning into tge Rust Belt. That wiped out countless jobs, often high paying blue collar jobs. Many of those places have never recovered.
Don’t get me wrong, I remember the pollution of the time. Just don’t pretend the remedies for those problems came without cost, mostly felt by working class people.
Don’t get me wrong, I remember the pollution of the time. Just don’t pretend the remedies for those problems came without cost, mostly felt by working class people.
Same for the ‘Green Raw Deal’.
In parallel with Mao’s Great Leap Forward, I call it the Green Leap Forward. The Great Leap Forward was a disaster that resulted in 40-60 million deaths. The Green Leap Forward is also a disaster, hopefully without all the murders.
I’m sure the wage and price controls imposed in August and all the subsequent “Phases” didn’t help, either.
I’d look at health care first and foremost. Consider chart 1 from this article. It shows little deviation between total compensation (which is mostly wages and health insurance benefits) and productivity until after 2001.
In other words, until you get to 2001, you can fully explain that gap between wages and productivity with the growing cost of employer health insurance plans.
Actually, this looks pretty simple to me (studying for my economics phd…)
It is summed up in the graph somewhat near the bottom of the page: America has become a nation of dual-income working couples.
In most economic models, you have capital, and you have labor. A firm needs both somewhat, but can substitute one for the other. The firm has to buy both on the open market.
So, when you double the amount of labor available and hold capital about the same, the price of labor will fall dramatically relative to capital. All the other graphs seem to follow pretty easily from that (with hysteresis and other complications, of course)
This was noted in the mid-80’s by several “radical RW economists” in trying to convince readers/listeners that the penetration of the job market by women was killing the wage hikes their husbands, brothers, fathers, sons were all scrambling for – with the simple solution being that women should stay home and raise their children.
Boy, that didn’t go over well.
BTW, this effect is even more obvious if you don’t start “post war” (which is typical, but in this case makes the cause a little harder to see).
Look at the graph of income inequality, which goes back to 1913. In 1928, it is about as high as it is now. But then a war happens, and labor is really hard to get. So the return to capital goes lower suddenly, and the rich stop getting richer. Then after the war women enter the workforce and labor becomes “cheap” again.
That said, these reports are kind of disingenuous anyway. They are saying that “real median weekly earnings of full time workers” are a little less now than they were in 1970.
OK, so how many of you want to trade your current life for what people (or you) had in 1970? Anyone? No cell phones, no computers, limited medicine, etc? If not, then your real income is higher now, when measured in the only thing that matters.
I could do without my Smart Phone. In fact, when I retire I will probably ditch it for a flip phone. One that I leave the ringer off.
Oh, I do remember the days of 6 & 2 meter ham radio with the POTS repeaters… Even tho Morse Code was too steep a barrier to entry for me. I didn’t own a computer but I had a programmable calculator! And in that area, what I really wanted was a word processor mainly. Text formatting was available using a mainframe over a dial-up modem, if you could afford the rental charges. On the whole, not so bad 70’s, but yes give me the 80s, and just add flat screens. That’s good enuf….
I’m currently reading “Where Is My Flying Car?” by J. Storrs Hall, and an alternate title could well have been “WTF Happened in 1971?”
Well, there’s this. Very awesome, but at $92,000, just a bit outside of my comfort zone.
Can’t wait for the government to impose price controls on gasoline. Followed by the inevitable rationing to overcome shortages.
We have shortages now; if we didn’t, the price would be 20% less.
Yes that’s true. But there are shortages and then there are shortages. I can still get gas at every gas station I try, if I want to pay $4.59/gal (as of this week). But I’m old enough to remember the days when that wasn’t so. I remember when gas stations would fly a green flag (had gas) or red flag (no gas for sale). I also remember rationing schemes based on license plates ending in odd or even numbers determining which days you could gas up. And lines at gas stations and $ amount limits on the amount of gas you could buy. So been there done that. We are far from that so far. But I’m guessing it’s just a matter of time until Dems fix that, given the status quo.
When we went off the gold standard, I wanted the US Mint to issue a new Treasury Note with Nixon’s picture on it. To be called the US Promissory Note. Instead of being backed up by gold in Fort Knox, it was to be backed up by members of the federal government showing up at your door to perform services gratis in exchange for redemption of the note. Like mowing your lawn, or digging a ditch, paving your driveway, painting your house, delivering groceries, whatever. New motto, “In Dick We Trust”. Wage/price controls were the biggest mistake of the Nixon years. As they say, “worse than Watergate”. Barry Goldwater needed to take them back behind the woodshed.
David S are you sure you are not conflating cause and effect? All women did not enter the workforce in the course of a few years. Seems more likely that women entering the workforce was an effect of the lower price of labor rather than a cause.
Also, you can buy a lot of expensive smartphones if you only need to pay 3x salary for a home, pay for college w a part time job, and health care is almost an afterthought in your budget. Oh, and you can earn 6-8% on cash in savings. There’s always deflation somewhere.
I remember when Nixon announced the price controls. At 13 I already knew it was going to bring nothing but trouble redoubled. My grandfather had explained to me long before how stupid they would be. I used to watch “Firing Line” (the original!) with him, and always looked forward to the new issues of “NR”…
There’s very little that I’d miss if we went back to 1971-world (although if I could go back to being 21 as well, with what I know now, where do I sign up!?). I wrote my first few books long hand, then made a submission copy with a Smith-Corona manual portable I got in 1968. I wrote one book longhand in 1982, then typed it into WordStar. After which I came my senses and started composing at the keyboard. I’d miss my laptops. But I wouldn’t mind having my brand new 1972 Buick Electra 225!
As for “limited medicine,” I haven’t really needed it. The meds I take mostly existed in 1971, or had earlier versions (Armour Thyroid wasn’t as good as Synthroid, but it did work). The only bad/expensive thing that’s happened to me was skin cancer. I paid $10,000 for Mohs surgery, invented in 1939. Most years my gap coverage costs more than my medical bills would have. On the other hand, my wife’s medical bills last year alone topped $3 million dollars. So I’d be fine in 1971, but she’d be long dead.
Ultimately, the health insurance compensation theory is probably true. In the late 1990s, I applied for a job that paid $55K plus benefits. I traded it all for a 1099 deal and benefits payout that added $20/hr to my pay. It more or less doubled my salary.
Another possibility is the creation of the EPA and OSHA in 1970. With that, the administrative/regulatory power of the government increased greatly. Throw in the OPEC oil embargo in 1973 and poor management at many major US corporations and you saw in very short order whole regions of the country turning into tge Rust Belt. That wiped out countless jobs, often high paying blue collar jobs. Many of those places have never recovered.
Don’t get me wrong, I remember the pollution of the time. Just don’t pretend the remedies for those problems came without cost, mostly felt by working class people.
Don’t get me wrong, I remember the pollution of the time. Just don’t pretend the remedies for those problems came without cost, mostly felt by working class people.
Same for the ‘Green Raw Deal’.
In parallel with Mao’s Great Leap Forward, I call it the Green Leap Forward. The Great Leap Forward was a disaster that resulted in 40-60 million deaths. The Green Leap Forward is also a disaster, hopefully without all the murders.
I’m sure the wage and price controls imposed in August and all the subsequent “Phases” didn’t help, either.
I’d look at health care first and foremost. Consider chart 1 from this article. It shows little deviation between total compensation (which is mostly wages and health insurance benefits) and productivity until after 2001.
In other words, until you get to 2001, you can fully explain that gap between wages and productivity with the growing cost of employer health insurance plans.
Actually, this looks pretty simple to me (studying for my economics phd…)
It is summed up in the graph somewhat near the bottom of the page: America has become a nation of dual-income working couples.
In most economic models, you have capital, and you have labor. A firm needs both somewhat, but can substitute one for the other. The firm has to buy both on the open market.
So, when you double the amount of labor available and hold capital about the same, the price of labor will fall dramatically relative to capital. All the other graphs seem to follow pretty easily from that (with hysteresis and other complications, of course)
This was noted in the mid-80’s by several “radical RW economists” in trying to convince readers/listeners that the penetration of the job market by women was killing the wage hikes their husbands, brothers, fathers, sons were all scrambling for – with the simple solution being that women should stay home and raise their children.
Boy, that didn’t go over well.
BTW, this effect is even more obvious if you don’t start “post war” (which is typical, but in this case makes the cause a little harder to see).
Look at the graph of income inequality, which goes back to 1913. In 1928, it is about as high as it is now. But then a war happens, and labor is really hard to get. So the return to capital goes lower suddenly, and the rich stop getting richer. Then after the war women enter the workforce and labor becomes “cheap” again.
That said, these reports are kind of disingenuous anyway. They are saying that “real median weekly earnings of full time workers” are a little less now than they were in 1970.
OK, so how many of you want to trade your current life for what people (or you) had in 1970? Anyone? No cell phones, no computers, limited medicine, etc? If not, then your real income is higher now, when measured in the only thing that matters.
I could do without my Smart Phone. In fact, when I retire I will probably ditch it for a flip phone. One that I leave the ringer off.
Oh, I do remember the days of 6 & 2 meter ham radio with the POTS repeaters… Even tho Morse Code was too steep a barrier to entry for me. I didn’t own a computer but I had a programmable calculator! And in that area, what I really wanted was a word processor mainly. Text formatting was available using a mainframe over a dial-up modem, if you could afford the rental charges. On the whole, not so bad 70’s, but yes give me the 80s, and just add flat screens. That’s good enuf….
I’m currently reading “Where Is My Flying Car?” by J. Storrs Hall, and an alternate title could well have been “WTF Happened in 1971?”
Well, there’s this. Very awesome, but at $92,000, just a bit outside of my comfort zone.
Of course, there’s an alternative history.
Can’t wait for the government to impose price controls on gasoline. Followed by the inevitable rationing to overcome shortages.
We have shortages now; if we didn’t, the price would be 20% less.
Yes that’s true. But there are shortages and then there are shortages. I can still get gas at every gas station I try, if I want to pay $4.59/gal (as of this week). But I’m old enough to remember the days when that wasn’t so. I remember when gas stations would fly a green flag (had gas) or red flag (no gas for sale). I also remember rationing schemes based on license plates ending in odd or even numbers determining which days you could gas up. And lines at gas stations and $ amount limits on the amount of gas you could buy. So been there done that. We are far from that so far. But I’m guessing it’s just a matter of time until Dems fix that, given the status quo.
Biden’s new press secretary knows.
https://mobile.twitter.com/thejcoop/status/1526289490377158657
When we went off the gold standard, I wanted the US Mint to issue a new Treasury Note with Nixon’s picture on it. To be called the US Promissory Note. Instead of being backed up by gold in Fort Knox, it was to be backed up by members of the federal government showing up at your door to perform services gratis in exchange for redemption of the note. Like mowing your lawn, or digging a ditch, paving your driveway, painting your house, delivering groceries, whatever. New motto, “In Dick We Trust”. Wage/price controls were the biggest mistake of the Nixon years. As they say, “worse than Watergate”. Barry Goldwater needed to take them back behind the woodshed.
David S are you sure you are not conflating cause and effect? All women did not enter the workforce in the course of a few years. Seems more likely that women entering the workforce was an effect of the lower price of labor rather than a cause.
Also, you can buy a lot of expensive smartphones if you only need to pay 3x salary for a home, pay for college w a part time job, and health care is almost an afterthought in your budget. Oh, and you can earn 6-8% on cash in savings. There’s always deflation somewhere.
I remember when Nixon announced the price controls. At 13 I already knew it was going to bring nothing but trouble redoubled. My grandfather had explained to me long before how stupid they would be. I used to watch “Firing Line” (the original!) with him, and always looked forward to the new issues of “NR”…
There’s very little that I’d miss if we went back to 1971-world (although if I could go back to being 21 as well, with what I know now, where do I sign up!?). I wrote my first few books long hand, then made a submission copy with a Smith-Corona manual portable I got in 1968. I wrote one book longhand in 1982, then typed it into WordStar. After which I came my senses and started composing at the keyboard. I’d miss my laptops. But I wouldn’t mind having my brand new 1972 Buick Electra 225!
As for “limited medicine,” I haven’t really needed it. The meds I take mostly existed in 1971, or had earlier versions (Armour Thyroid wasn’t as good as Synthroid, but it did work). The only bad/expensive thing that’s happened to me was skin cancer. I paid $10,000 for Mohs surgery, invented in 1939. Most years my gap coverage costs more than my medical bills would have. On the other hand, my wife’s medical bills last year alone topped $3 million dollars. So I’d be fine in 1971, but she’d be long dead.
Ultimately, the health insurance compensation theory is probably true. In the late 1990s, I applied for a job that paid $55K plus benefits. I traded it all for a 1099 deal and benefits payout that added $20/hr to my pay. It more or less doubled my salary.