First state to legalise no-fault divorce was in 1969 and in the late 1960's was when birth control was becoming widely available.
I suspect a lot of this is to do with the effective doubling of the full-time workforce.
To be clear, I'm NOT saying women being able to work full-time is a bad thing. But I DO think that average people have been totally fucked by the transition to 2 person incomes economically.
Prior to the 1970's, one middle class partner could bring in enough money to support a family, own a home, pay all the bills etc. Whilst at the same time having one person at home meant cost of living was lower and everyone had SIGNIFICANT amounts more free time.
Now, the average middle class family struggles to survive on two incomes and once mum and dad have both completed their 40hrs a week each at work, they both have another 20hrs a week of domestic responsibilities to complete in "their own time" that originally would have been done by the stay at home partner.
Every time this is posted there’s people arguing that this is all caused be social issues. But if you look at the charts it’s pretty highly correlated with the timing of the Nixon shocks, plus the discontinuations (or discontinuation in the derivative) are pretty immediate. My point being something social like the death of the single income two parent family unit didn’t just suddenly happen one day. Hundreds of millions of women weren’t hired on the same day. The gold standard went from there to gone in effectively a day.
This is so strange to me. The workforce doubled, twice as much is being produced. You would think that means the average family would be twice as well off. Instead they have to work twice as long for the exact same amount. This makes no sense at all, until you realize that a tiny percentage at the top took all that extra value.
For the exact same amount? The amount of stuff people have today has absolutely exploded. The amount of content, products, quality and sophistication of these products has skyrocketed as well.
Things like an overseas holiday was described as once in a lifetime because it would literally only be affordable to do once. Modern computers would be impossible without the boost to the workforce.
Peoples expected standards of living has skyrocketed which has kept them working the same amount. And scarce things like land has gone up because you are bidding against other groups who will work two full time jobs.
Because the cost of housing isn’t really based on productivity. It’s based on having more money than everyone else who wants to live in that area. Housing is very cheap in undesirable areas.
Higher density property is the only way to put more housing in the same desirable spaces.
Detaxing land (e.g. prop 13) deliberately created incentives to inhibit higher density housing. This plus growing wealth inequality kicked off the NIMBY revolution.
Housing is by it's very nature exclusive; every building with a roof and at least four walls is put up to keep out animals, the elements, and other people. Exclusivity on it's own has little to do with price. Desirability, mainly in terms of easy access to/production of vittles and lack of crime, is what influences the latter.
> The workforce doubled, twice as much is being produced
The labor force doubled, productive capital did not, and there are declining production gains to additional labor when existing capital is already well employed. Also, the labor force isn't just the force actually producing; unemployment also went up initially (it came down later, as falling real labor prices made it economical to employ less-productive labor.)
> a tiny percentage at the top took all that extra value.
This is true, but increasing competition for some (especially low-skill) labor played a role in concentrating the gains (within the workforce.) Tax policy also played a role.
Eroding the 'natural' i.e. market rate of interest made inefficient activities relatively more valuable. The more we interfered, the more valuable financial holdings became, regardless whether or not they actually contribute to society. IMO we hardly have any idea right now what's worthwhile business activity and what's not, because we destroyed the measuring stick.
The female employment was not nearly at zero back then - in 1970 male employment rates were 80% and female 43%. There was huge amount of women working, just not at well paid jobs. (In 1950 it was 86% to 34%).
Moreover, house work now requires significantly less time and effort then back then. The tech did improved it a lot. Just about the only exception is childcare, in 1970 you could have your 6 years old walk to school alone and play unsupervised whole day. No one would expect you to drive him/her to fifteen activities per week or regularly spend hours on homework projects with the kid.
Elizabeth Warren basically sold her soul to the DNC to become senator. Don't be surprised when she parrots party platform BS even when she should know better. That's literally part of her job now. Thanks Obama (no really, he should have made her head of the CFPB, she'd have done far more good in that role than she will ever do being a mediocre senator).
My recollection is that her state was held by a republican Governor at the time, so putting her on the CFPB would have reduced the Democratic senator count by enough to threaten other legislative priorities. But I might be misremembering
Women entered the workforce in large numbers almost doubling the labor pool across the 1970s. This instantly stagnated wages. Meanwhile, all the things those women were doing at home weren't free, so cost of living also skyrockets. Pretty soon the reasonable "right to work from home" becomes "go to work or go broke"
Welfare state kicked off in earnest and corporate taxes were increased to compensate while it was removed from your pay via wages not keeping up with inflation.
Related to welfare, 60% of people pay ZERO or NEGATIVE income taxes. Rich people are paying for all those negative taxes and taking it out of YOUR paycheck. Then, because they are paying most of the taxes, they are the people politicians actually listen to.
You are outright lied to about inflation. The calculations were changed in 1980 by the incoming Reagan administration to make it look like their policies were more effective than they actually were. CPI indicates that inflation from 2000 to 2020 was right at 50%, but if you look at price comparisons for stuff in 2000 and stuff now, they've generally gone up 100% or more. You can see these shenanigans represented in things like how the wholesale inflation index is currently 2-3% higher than the CPI rate. When your employer says "we're giving you a 2% cost of living because that's the CPI" and real inflation is actually 4%, this adds up over the years.
Finally, even after accounting for everything, almost everyone is STILL getting screwed relative to inflation. We as devs think we have "the good life", but we're generally making LESS than median salary adjusted for inflation compared to programmers 30-50 years ago despite being massively more productive.
> Related to welfare, 60% of people pay ZERO or NEGATIVE income taxes
57% of people paid no federal income tax last year, not 60%. Also, this percentage is much higher than the pre-Covid period, so this percentage means nothing outside that context.
First, you are quibbling over 3%. Even on the low end before COVID, we're still talking 47% of people.
Second, to my knowledge, those statistics relate to filing and don't include people who may pay X in taxes, but receive X+Y back in other benefits. If you pay $2000 in taxes, but receive $10,000 in benefits, then you are paying net -$8000 into the system.
I'm not strictly against the idea, but progressive tax rates are NEVER progressive. The rich just suppress wages and use that money to pay the extra amount they're charged. They use TONS of games to hide money or claim losses where none exist.
Even worse, the money they keep from your paycheck that doesn't stay in their pocket due to tax loopholes gets them even more influence with politicians.
No matter how you slice that, the poor see ZERO benefit from this type of progressive tax.
Sales taxes are MUCH better. If the poor need a break, then cut sales taxes on food, medicine, and other subsistence items. Now everyone pays for exactly what they use. Because it is upfront, there are fewer games to be played. Because it is exchanged for an immediate good or service, all the crazy "losses" claims also go away.
You trading stocks? Tax time for you (this will also cut down on day trading and stabilize the stock market). You trying to move your money into something to hedge? Tax time for you. Taking out a massive loan backed by your stocks? Maybe we should tax that too. Getting a huge house with lots of stuff driving up your carbon footprint? Tax all that stuff too.
This tax seems like it's ACTUALLY progressive. It punishes extravagant spending and (through inflation) it taxes leaving your liquid assets sitting around. People don't have to spend billions every year on personal income tax filing either.
> The rich just suppress wages and use that money to pay the extra amount they're charge
Implausible. If “the rich” have the unconstrained power to set wages that this requires, they aren't going to refrain from fully using it depending on tax rates. All that changes is that with higher taxes on them, more of what they squeeze is taken from them and used for other purposes.
> Progressive tax rate implies that taxes actually being paid at some rate. That’s not the case here.
Yes it is. Both zero and negative numbers have been recognized as actual values for...quite a long time.
Progressive taxation means that the first derivative of taxes is on average decreasing with increasing income, it does not imply that taxes (or, a fortiori, as the upthread comment is actually referring to, the net of taxes less transfers) is always positive.
What rate should the people paying 0 in federal income tax (roughly half of the population) actually pay in order to make the progressive tax system work better?
Follow up question: what rate should the 25% of the population who are minors[1] and the half of older adults who are retired[2] pay? Combined, these groups are ~40% of the US population as far as I can tell.
I’m an economist and have noticed a lot of the trends identified by WTF 1971. But the thing is the date “1971” is not specific in any of the trends. They start somewhere between 1970 and 1990 or so. Also, the gold standard had been abandoned prior to 1971, it was only in 1971 that it could stop being denied by the legal system.
My best hypotheses for the origins of the trends are (1) the change to how the US nominates presidents following the 1968 presidential election, (2) the aging of people who went through WWII together and felt a debt to the working-class people who fought the war, or (3) the SAT test, which allows smart working-class children to move into the professional class, rather than having them running unions and working-class social organizations.
My best guess is #1. The nominees for higher office are now chosen by popular primaries rather than by the party machine in a “smoke-filled room”. The party machine wasn’t perfect by a long shot, but it nominated qualified centrist candidates who could win the general election. Now, we have a “popular” election where only a small segment of the population votes, It is easier for special interests to influence. (Listen to the “No Compromise” podcast for how they do it.)
Theory #1 doesn’t explain everything, but it does explain how the US’s unfair healthcare system can cost almost twice as much as other developed countries and we struggle to fix it. The lack of a gold standard does not.
You're blaming... Jimmy Carter, the first president to be nominated under the new system? What specifically did he do, and why did the trends start before his presidency?
Presidents don't change frequently enough, or have enough effect on things, to have such a profound and immediate broad-spectrum impact.
> The nominees for higher office are now chosen by popular primaries rather than by the party machine in a “smoke-filled room”
for the Republican Party perhaps (assuming you trust the integrity of their primaries)—the Democratic Party (highly ironically, given their name) has a "superdelegates" system that means in practice that the nominees for President are in fact chosen by "the party machine in a 'smoke-filled room'".
Most of these graphs can be explained by the Nixon shock as other people have mentioned. This also factored into what is considered backing a currency, in this case the global reserve currency. Leading up to the “Nixon shock” there was a decades long move away from direct gold to dollar conversion. The replacement was the petrodollar combined with the move to more of a fiat reserve currency. Then you had a geopolitical struggle over the 1970s with oil producing countries that exists to this day. By 1979, Iran’s revolutipn happened which pushed the U.S. closer to the Saudis, cementing the defense agreement that had been in place for decades, itself mirroring one the British had with the House of Saud. The petrodollar concept underpinned much of the next few decades and we have only begun moving away from it.
Since the debate at the end of WW2 that led to Bretton Woods, which currency or the Bancor would handle reserve currency functions, in addition to the petrodollar, the U.S. bond and treasuries specifically have been closely tied to this system. Also during the 70s, you had China begin opening up, then as a way to kind of solve the trifflin dilemma, the U.S. would grow the world economy being an importer, so long as the money found its way back with treasuries and other foreign investments. Japan began playing a bigger role here too and as everyone continued industrualizing and globalizing, the U.S. economy grew along with it because of this system. It was also a great way to sort of export inflation along the way too. A big problem in the 70s that we are seeing again today.
So if a big crash is coming, expect another Bretton Woods type agreement first with an attempt to control the strength of the dollar.
The difference this time is that there really isn’t another China to bring into this system, and in fact, many foreign countries have looked to avoid using USD all together. Just ask Russia about that.
Of course, these are just a few reasons for all of this. There are many factors, like the increase in productivity from computing, and advances in other industries that increased productivity and output.
Historically you will see patterns like this, similar ones exist between 1929-1945, 1864-1918, and so on.
Unfortunately, everytime this system is challenged, a sort of global reordering, there are economic crashes, and often large wars. We might be seeing another example of this now…
Because their productivity hasn’t increased as much as that of people with higher incomes. The productivity of surgeons and software developers increased significantly, and so their incomes, while cleaners and factory workers are not much more productive than 60 years ago.
How much more productive surgeons are? As in patients operated per working day or week? Outcomes surely have improved, but I'm wondering about speed in operation it self, not recovery.
Actually I think you should when that work is not scalable. Surgeons can very well be measured by how many patients they operate on. And quality improvements are a thing, but how much more productive is there? 1,1x or 2x or 3x? Probably not magnitude more. So really their pay should only be that much more...
If you can completely fix a hernia with 99% success at the first try without a hospital stay, you are significantly more productive than somebody that has a 50% success rate and that requires patients to stay in hospital for a week, even if you operate on the same number of patients.
Speed of operation or lumps of labor per second is not the only applicable metric and, outside of certain cases, it's not a very good one. Average patient health (arguably an ill-defined term) has many ways of being assessed:
* Fewer deaths from preventable diseases
* Breakthroughs in pharmaceutical research production
* New and improved medical devices to counter chronically debilitating sicknesses
* An increase in elective surgeries with fewer long-term effects
1971, I remember it well. It was plain to see Nixon had always been unsuitably too dishonest for any position of leadership or trust.
Modern civilization was built on the transition from barbarism during which the gold standard had been established for centuries.
Remember modern man adopted the precious metals standard in pre-historic times. i.e. Prehistoric Man. So it's been around a long time.
Investors just as shrewd as today recognized that all wealth arises from natural resources to begin with, and their scientists and geologists had millennia to identify and procure the most universally rare long-lasting element that could be accumulated and passed down the most reliably that people would actually pay for. But of course they would need to pay in some other way.
Different regimes over the millennia, both the few that are historically recorded and the remaining majority of advanced civilizations that will never be known, have had greater or lesser degrees of barbaric greed that were still endemic because of their cultural traditions, and this has always had a disparate effect on their relationship with precious metals, especially gold in particular.
It was not unique in different parts of the world for the doctrine to become all gold belongs to the king, whether gradually over time or by occasional edict.
In 1913 circulating legal tender US dollar bank notes were centralized & privatized, separated in a way from the government mint which remained the sole source of gold dollars.
The complementary silver standard had been removed politically in earlier decades. Silver dollars were therefore theoretically backed by gold. Just act like silver is not the other precious metal that civilization was built on, nobody will notice.
In 1933 began the recall of all gold & gold dollars to the king. No more circulation under penalty of law.
In exchange, the substitute bank notes were given a curated strength & stability for the remaining lifetime of the victims. Still tied to gold.
After 1960, silver moved up in price relative to stable gold, so the mint had a reason to remove silver from US coins by 1964, with even copper soon to follow.
This seemed to be a precautionary effort in case a cold war might need to be waged using currency salvos.
But once oil skyrocketed even more threatingly there was pressure to devalue the currency to pay for it, so the dollar was going to need to be debased beforehand. The misfortunates of 1933 were no longer a strong force and inflation was run up the flagpole without as much skepticism as there should have been. So inflation it was.
In exchange Americans would be once again allowed to own gold, but only if they could afford to purchase it after it had skyrocketed which almost no average American could even consider with the pricing pressures everywhere else.
Going forward from 1971 we're just going to act like gold had not been the standard of wealth and commerce since civilization began, if not since the dawn of modern man.
I would estimate that's a serious break with tradition.
As we can see, the other shoe dropped and the recall was completed.
It wouldn’t generally, but productivity increases are not even across the entire population/workforce and, furthe, some of the productivity gains may be captured by organized groups.
Let’s say you have a population of software developers and cleaners and that the productivity of software developers doubles while the productivity of cleaners remains the same. Developers may demand higher salaries and increase the demand for some goods or services, say housing, whose price may increase, leaving the cleaners worse off. Providers of such services may organise (explicitly or otherwise) to capture part of this productivity increase (say blocking the construction of new apartment blocks), making the situation for cleaners even worse.
If the economy doesn't grow at the rate of productivity growth and the most productive people don't work less then some people will become unemployed and won't find a job.
Because people aren’t literally worse off. Just different-off. Housing is more expensive, but as others have said, there’s a growth in 2 income households so if you account for “percent household spend” instead of per capita spend it’s a more reasonable number. At the same time, a lot of that productivity has gone into leisure activités that weren’t available before. Growth in games and movies and travel etc.
No, absolutely not. House prices have grown much faster than inflation even if you introduce a fudge factor 2.
> Growth in games and movies and travel etc.
Is that like "eat cake"? Housing is incredibly more expensive, education is incredibly expensive, but don't worry movies are cheap and that more than makes up for it, right?
> House prices have grown much faster than inflation even if you introduce a fudge factor 2.
No prices have grown a lot in major metros where Software people work. I’m sure SF is insane. But also NYC according to the article has “only” grown by 200% - so it’s literally cheaper on a household level if you include wage growth (assuming you go from single income to double income), and I’m sure Cleveland has a lot less growth. According to (1) housing has only grown 150% nationwide.
It’s not “eat cake”. Houses have grown bigger over time. They gained electricity and running water and 2 car garages and high efficiency water heaters. But people also replace their now 2 car often and buy new iPhones and stream high qualitymovies from their large high def TVs. At some point houses don’t need to get bigger and theirs no more room in Silicon Valley for single family homes but there’s always room for more consumerism delivered faster priced cheaper and plenty of businesses who will deliver. Proof is that housing is becoming a smaller part of the GDP (0) despite becoming “unaffordable expensive”.
As a bonus, according to this article (2), houses are 150% larger and rentals are 200% larger since 1970s. So I guess you get what you pay for?
Maybe you should stop with the hypocrisy. The people that complain about expensive housing are the most annoying because they are the ones who least care about making housing affordable, they just pretend that they care to strike up some virtue points. The moment you mention land value taxes people are going to argue how evil it is to give everyone enough housing and how the rights of a single family owner are more important than the rights of renters and how multi family homes are ghettos and how nobody should suffer the disgrace of living in one.
Probably related to this was US domestic Peak Oil was predicted to occur in 1970. Peak Oil merely means that 50% of a finite reserve has been used: there's another 50% still left but production will get more expensive and eratic. That was the year we largely switched to Saudi oil and the Arab Oil Embargo came only 3 years later. Before 1970, the US modulated the US dollar value with increasing or decreasing oil production/exports. In 1970 that strategy ended. Some believe that Saudi Arab and the countries that became OPEC realized they were now in control of the US dollar as reserve currency. Both the Six Day War and the Yom Kippur war combined with Arab nationalism led to flexing this power by OPEC doing the oil control the US had.
This is also related to how bread prices never changed FOR CENTURIES until the 20th century with the big rise happening in 1970.
A lot of this also came from having no effective industrial competitors after WW2 and then being lazy through the 1950s and then screwing up with a very expensive wars in Korea, Vietnam and other places that were NOT funded by war bonds as in WW2 but were funded with deficit spending with no equivalent back-stop. In the 1950s and 1960s we were still using industrial technologies from the 1920s in terms of fundamentals like steel, aluminum, cars, etc. Germany and Japan had lost all their legacy infrastructure and had the advantage of starting from scratch.
Basically a lack of monetary and fiscal self-discipline.
> Well, we went entirely off the gold standard and starting printing money.
Germany had a similar dynamic actually speaking about proportionally less money in employees' bank accounts. And the explanation is simple and I think already mentioned, due to the reconstruction efforts after the war the economy expanded a lot and many people could raise their standards of living easily. Surely that couldn't continue until forever.
At the same time this paved the way for more hawkish politics both in the US and in Europe. IMHO this doesn't have much to do with decoupling from Gold. I think only the Money supplies M0 and MB were coupled to it but the others M1-M3 which are larger by several orders of magnitude can even be created by commercial banks.
The curve of M2 isn't changing much in direction during 1970:
Interesting to note that Nixon essentially did nothing more than come clean by making official what the US had already been doing for years, printing money they didn’t have gold for.
Reaganomics reminds me of that line from Wolf of Wall Street: "Meanwhile he thinks he's getting ... rich, which he is on paper, meanwhile we're taking home cold hard cash in the form of commissions ...!"
What I believe your saying is the price of bread in terms of gold was standard for centuries. Does that relationship still hold?
The thing is that money doesn’t matter. It’s just a unit for the transactions does in the short term. The relationship of real things, like bread and gold, matter.
Well, the PDP-8E was introduced in 1970 and by 1971 it was probably present in a significant portion of us high schools. This, coupled with commercial time-sharing service access started training the second generation of hackers who are responsible for spreading the MIT spirit and inventing all sorts of things done with computers. This has created a staggering amount of wealth since then, which might be reflected in the wall of charts cited in this article. Probably more wealth in a single segment than the looting of precious metals and gems due to colonization.
Edit: games, process control, the follow-on PDP—11 which redid the phone system, and enabled Unix to explode. The need to follow DEC which brought forth the minicomputer business, …
Go ahead, explain 44B being spent for Twitter to somebody from 1971.
>, the PDP-8E was introduced in 1970 and by 1971 it was probably present in a significant portion of us high schools.
Was there a special program to support a roll-out of this era's PDP-8 boxes to U.S. high schools? Or some other reason how/why this is? (I recall access to a PDP-8I in high school circa the same time).
It was not staggeringly expensive. Google says 6-7k and I vaguely recall a trustee ponying up 15k so that the (private) school had a computer. Time sharing services were probably a manageable expense.
While not cheap it’s way less than “real” computers and tended to be open for the hackers not the staff.
>by 1971 it was probably present in a significant portion of us high schools.
That would surprise me. In 1979, right in Silicon Valley, the biggest high school district (East Side Union) had one computer in the entire district, housed at the largest school (Independence). It was a PDP 11/04 (IIRC).
Any schools that wanted to offer a BASIC programming class had to rely on Mark Sense cards submitted through daily intra-district courier runs.
I didn’t see any discussion of the beginning of globalization, the decline of American manufacturing jobs, the decline of union jobs. The 70s were the beginning of the end for heavy industries in Pittsburgh.
Also, the US was one of a handful of countries not bombed during WWII and had to be very profitable from 1945 to 1960s. We were shipping cars and factory parts everywhere. By the 1970s, that advantage was disappearing.
> The Nixon shock was a series of economic measures undertaken by United States President Richard Nixon in 1971, in response to increasing inflation, the most significant of which were wage and price freezes, surcharges on imports, and the unilateral cancellation of the direct international convertibility of the United States dollar to gold.
See also: "An Interim Report to the President and the Congress from the Commission on Population Growth and the American Future" (1970). Copy and paste this link or it won't load properly: https://files.eric.ed.gov/fulltext/ED050960.pdf#page=10
"The time has come to ask what level of population growth is good for the United States. There was a period when rapid growth made better sense as we sought to settle a continent and build a modern industrial Nation. And there was a period, in the 1930's, when a low birth rate was cause for concern. But these are new times and we have to question old assumptions and make new choices based on what population growth means for the Nation today. Despite the pervasive impact of population growth on every facet of American life, the United States has never developed a deliberate policy on the subject. There is a need today for the Nation to consider population growth explicitly and to formulate policy for the future."
"The difference [between two-child and three-child American families] is important not simply because of the numbers but because it bears vitally upon a fundamental question about the Nation's future: Do we wish to continue to invest even more of our resources and those of much of the rest of the world in meeting demands for more services, more classrooms, more hospitals, and more housing as population continues to grow?"
Around that time Hunter S. Thompson was writing for a magazine and had just attended an oil industry conference where the attendees were terrified that the United States was about to experience an "oil peak" for domestic production.
His editor killed the story because it seemed too alarmist.
We know the story now that the whole world economy was reorganized around this event
> Since the collapse of the Bretton Woods system, IMF members have been free to choose any form of exchange arrangement they wish (except pegging their currency to gold)
I had no idea gold-backed currencies were actually forbidden. Seems suspicious - why should the IMF use its vast influence to prevent countries from trying out gold-backed currency? Can such attempts somehow unfairly damage other currencies?
Certainly before the managed Bretton Woods standard the US economy had "the panic of XXXX" every few years. Price stability might have been better but unemployment, investment, and everything else was unsteady.
Apologies for being ludicrously off-topic, but the typesetting of your comment on my iPhone created a nearly perfect 7-line typographical river (starting after "blame"), and it seemed a shame to not share: https://imgur.com/0w5rWqI
Of course it’s suspicious. A floating fiat based system is a great tool to enslave the global population. Backing a currency by gold erodes this tool by constraining the ability to grow and manage debt
The American populists thought that the gold standard was a great tool to enslave the American population. Back then it was unthinkable that farmers would be able to invest to say, buy fertilizer:
The "goldfinger scenario" that goldbugs dream of is the collapse of the global economy which is orders of magnitude too big to be served by the amount of gold we have, they hope that they'll get to live like French aristocrats before the revolution.
What? Having debt in a gold standard is worse because your debt grows every year without your agreement just from the price of gold going up. Inflation is basically a crude continuous debt jubilee which is good for debtors.
I'd say it was two things: the gold standard was dropped, as many other commentators have already remarked.
But Milton Friedman's editorial about the primacy of the shareholder's interest in business decisions -- what has become known as the Friedman Doctrine -- was published in The New York Times in September 1970 and immediately had an impact in the first quarter of 1971 and eventually lead to the rise of 1980s-style venture capitalism and the plundering/asset-stripping of successful companies by private equity firms after sweetheart buy-outs or hostile takeovers that continue to this day.
When we place the value of a business purely on the amount of money it can make for the shareholders/stakeholders/owners, all other considerations -- including fair and livable wages, environmental concerns, and even the well-being of the communities in which the businesses are located -- go out the window.
The 26th amendment to the US constitution was ratified in 1971, giving 18 year olds the right to vote. why not that instead of some obscure monetary change?
You will see, that approx in 1975 was finished trend of exponential grow of world population.
Why this is important - from ~1920s, Western countries conduct politics of use Poncy scheme to feed governments budgets and because of rapid grow of population, it was possible to fulfill promises.
But in 1970s, with end of exponential grow, this bubble collapses, and now next generations of politics have to work in new world, where they cannot fully avoid to pay for their predecessors claims, but have much more limited resources.
Corresponds pretty well to the 1969 Tax Reform Act reducing the drag taxes put on compounding of inequality from differences in labor income (1971 is the first year all the cuts were in effect for the full year, though the cap gains increases, which had less impact on labor-income-driven inequality, weren’t fully phased in.)
For starters, US dollar was taken off gold standard in 1971, which unlocks printing money and the corresponding inflation and unnatural wealth reallocation.
There many theories in other comments that essentially boil down to “it was no one’s fault”, but I’d first like to see the data for other countries, particularly those not too interdependent with US.
The first is absurd on its face, and I will prove it to you with counterexample: ridiculous as it sounds, imagine there were no women, only men, and procreation occurred by some other means, and instead of women entering the workforce in 1971 and toppling the economy, it was just a previous population boom coming to age, a bunch of men, the exact same number of men as there were women in reality, entering the work force. I'm not even going to spell it out, but it should be obvious that women entering the workforce only benefitted the US economy and GDP.
The second reason given is more complicated, but it is offered like it is a simple fact, like "duh! It was the gold standard!" But it really is not so simple and I strongly suspect there is a lot of bias. I'm not an MBA, so I'm just going to paste some of the wiki article, only to show that it really is not at all as simple as those claiming such, and I also suspect leaving the Gold Standards is not a boogyman, as some of its advantages are really disadvantages, and some of its disadvantages are somewhat compelling. But my only point here is it is not as simple as that.
Advantages
According to Michael D. Bordo, the gold standard has three benefits: "its record as a stable nominal anchor; its automaticity; and its role as a credible commitment mechanism."
A gold standard does not allow some types of financial repression. Financial repression acts as a mechanism to transfer wealth from creditors to debtors, particularly the governments that practice it. Financial repression is most successful in reducing debt when accompanied by inflation and can be considered a form of taxation. In 1966 Alan Greenspan wrote "Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard."
Long-term price stability has been described as one of the virtues of the gold standard, but historical data shows that the magnitude of short run swings in prices were far higher under the gold standard.
Currency crises were less frequent under the gold standard than in periods without the gold standard. However, banking crises were more frequent.
The gold standard provides fixed international exchange rates between participating countries and thus reduces uncertainty in international trade. Historically, imbalances between price levels were offset by a balance-of-payment adjustment mechanism called the "price–specie flow mechanism".Gold used to pay for imports reduces the money supply of importing nations, causing deflation, which makes them more competitive, while the importation of gold by net exporters serves to increase their money supply, causing inflation, making them less competitive.
Disadvantages
The unequal distribution of gold deposits makes the gold standard more advantageous for those countries that produce gold. In 2010 the largest producers of gold, in order, were China, Australia, the U.S., South Africa, and Russia. The country with the largest unmined gold deposits is Australia.
Some economists believe that the gold standard acts as a limit on economic growth. According to David Mayer, "As an economy's productive capacity grows, then so should its money supply. Because a gold standard requires that money be backed in the metal, then the scarcity of the metal constrains the ability of the economy to produce more capital and grow."
Mainstream economists believe that economic recessions can be largely mitigated by increasing the money supply during economic downturns. A gold standard means that the money supply would be determined by the gold supply and hence monetary policy could no longer be used to stabilize the economy.
Although the gold standard brings long-run price stability, it is historically associated with high short-run price volatility. It has been argued by Schwartz, among others, that instability in short-term price levels can lead to financial instability as lenders and borrowers become uncertain about the value of debt. Historically, discoveries of gold and rapid increases in gold production have caused volatility.
Deflation punishes debtors. Real debt burdens therefore rise, causing borrowers to cut spending to service their debts or to default. Lenders become wealthier, but may choose to save some of the additional wealth, reducing GDP.
The money supply would essentially be determined by the rate of gold production. When gold stocks increase more rapidly than the economy, there is inflation and the reverse is also true. The consensus view is that the gold standard contributed to the severity and length of the Great Depression, as under the gold standard central banks could not expand credit at a fast enough rate to offset deflationary forces.
Hamilton contended that the gold standard is susceptible to speculative attacks when a government's financial position appears weak. Conversely, this threat discourages governments from engaging in risky policy (see moral hazard). For example, the U.S. was forced to contract the money supply and raise interest rates in September 1931 to defend the dollar after speculators forced the UK off the gold standard.
Devaluing a currency under a gold standard would generally produce sharper changes than the smooth declines seen in fiat currencies, depending on the method of devaluation.
Most economists favor a low, positive rate of inflation of around 2%. This reflects fear of deflationary shocks and the belief that active monetary policy can dampen fluctuations in output and unemployment. Inflation gives them room to tighten policy without inducing deflation.
A gold standard provides practical constraints against the measures that central banks might otherwise use to respond to economic crises. Creation of new money reduces interest rates and thereby increases demand for new lower cost debt, raising the demand for money.
The late emergence of the gold standard may in part have been a consequence of its higher value than other metals, which made it unpractical for most laborers to use in everyday transactions (relative to less valuable silver coins). [1]
The dynamics of nearly-doubling average household income by having 2 adults working are likely to be different from those of doubling the population but holding average household income steady.
Yea a lot of the inflation increases across the board are pretty easily attributed to depegging the dollar from $35 an ounce.
If that never happened then you could still buy an ounce of gold today for $35 instead of $2,000. The dollar has lost so much value in the last 50 years..
Allowing the government to have control of the currency has allowed them to low key flat tax us with most people not realizing it.
Maybe crypto can save us, but it will take probably 1000x the adoption for it to begin to stabilize it.
I suspect a lot of this is to do with the effective doubling of the full-time workforce.
To be clear, I'm NOT saying women being able to work full-time is a bad thing. But I DO think that average people have been totally fucked by the transition to 2 person incomes economically.
Prior to the 1970's, one middle class partner could bring in enough money to support a family, own a home, pay all the bills etc. Whilst at the same time having one person at home meant cost of living was lower and everyone had SIGNIFICANT amounts more free time.
Now, the average middle class family struggles to survive on two incomes and once mum and dad have both completed their 40hrs a week each at work, they both have another 20hrs a week of domestic responsibilities to complete in "their own time" that originally would have been done by the stay at home partner.