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Comment by ZacharyPitts | Hacker News Reader

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.

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That theory would explain financial gains going up faster (eg the pie getting bigger, more return to capital), but not a stall in wages for workers. Worker productivity went up, but wages for workers did not.

~1970 is about when the % of workers in unions really started to fall in the US.

~1970 was the beginning of the rapid growth of commercial intermodal containerization. A couple of WTO charts in this[1] document show the trend. The US military pioneered standardized containers (for shipping supplies to S. Vietnam) in the late 1960's and the commercial world caught on very quickly.

Since then the captains of industry in the West have been able to arbitrage labor world wide. Thus labor unions in developed nations, a symptom of labor scarcity, lost their leverage.

[1] http://minotusa.com/uploads/40/NorthDakotaIntermodalInitiati...

The shipping container was the self driving truck of the 20th century. That one invention eventually put so many people out of work, it’s difficult to fathom.

We live in Brooklyn near the water. The entire coastline from Red Hook to Greenpoint was once dedicated to the loading, unloading, and storage of pre-shipping container cargo. This industry employed many thousands of people. It was a dangerous job but it sustained families, and it was a bootstrap to a career in the shipping industry. (There are analogies in textiles and meatpacking, in this same city).

Now, the warehouses have been converted into housing, coffee shops, art centers, and the like. The working class job is the service industry (waiting, serving coffee, delivering food), and it’s a very different culture from the working class job of the 60s.

I’m not at all saying the technological innovation was a bad thing. But it did have a huge impact on the local economies of every seaport in the world (Bay Area included, for those that live there).

If you’re interested in learning more, there’s an 8-part audio documentary on shipping containers. You can listen to episode 7 about automation here: https://soundcloud.app.goo.gl/AfzxGaUKuceh4W9W7

> ~1970 was the beginning of the rapid growth of commercial intermodal containerization. A couple of WTO charts in this[1] document show the trend. The US military pioneered standardized containers (for shipping supplies to S. Vietnam) in the late 1960's and the commercial world caught on very quickly.

I have a feeling that use of expanded polystyrene foam (colloquially styrofoam, which is actually a brand name for a different material), as a packing material had a great deal to do with the trend as well. Loose foam packing peanuts were patented in 1965, I'm not sure when foam cushioning blocks were introduced.

I think we need to look at the bigger picture though. Working class wages haven't kept pace but interest rates have gotten much lower making it "easier" to borrow money. In addition, because of increased productivity (in part because of out sourcing work which unions can't easily defend against), consumer goods are far cheaper than they used to be.

We've also seen a great domestic expansion in the upper middle class and a reduction in the lower class since then. More people are "middle class" than ever before with a larger percentage being "upper middle class". However, the middle class feels further away from the upper middle class in large part because there are simply many more upper middle class people than ever before (and more upper class for that matter).

I'm not trying to make a counter argument or anything but just trying to make an argument that we can't do an apples-to-apples comparison between today and 1971. Relative wages are less for a group of people, but consumer goods are relatively cheaper as well. Home prices are relatively higher but interest rates are far, far lower. The middle class has grown and poverty has been shrunk to record low levels (people often forget how many people were impoverished in this country not too long ago) but a lot of that growth has been in new upper middle class people.

We've seen union participation fall, yes - but have we asked "why" it has fallen?

You can blame Milton Friedman’s Shareholder Theory of Value, proposed in ... 1970

Proof: look at stock returns when management pays more wages vs cuts wages/jobs

> but not a stall in wages for workers

see: https://news.ycombinator.com/reply?id=25189476&goto=item%3Fi...

Productivity went up, but not necessarily worker productivity. If the machine is automated, or partially automated to the point where you just need someone to push a button, then the skill required by the worker falls and so does the wage.

That’s the point of the site. It doesn’t say it explicitly but leaving the gold standard is the answer to the question in the URL

Ya, I recognized that it guides you to the conclusion:

- read first three graphs... "oh, yes, that looks like a problem"

- scroll next 5 graphs... "oh, looks like lots of evidence correlates to that year... what happened that year?"

- scroll next 5 graphs ... "oh, wasn't it the gold standard that year?"

- scroll to the end.. read quote .. "is this a bitcoin quote? No, someone else... wait, but who is River Financial and why do they want me to care"

Trade with China also opened at around the same time. A plausible explanation for the decoupling of wage growth is competition or the threat of competition with international labor.

Alternatively, whatever forces led to the government taking as major a step as leaving the gold standard is responsible.

Not alternatively. Leaving the gold standard may have been one proximate cause, while the desire of the government to have simple tools to provide short term economic relief in the face of complex socio-economic problems is one ultimate goal.

While I'm sympathetic to strong money and therefore explanations like that, it could just as well be that another factor has more explanatory power -- i.e. something else put the US into such dire straits that officials didn't find it feasible to honor the peg.

So, what about the (perhaps too simple) explanation that 1971 is when the developed world finally caught up from the destruction of WWII and investors recognized this? That would mean an end to free wealth for the US, as factor productivity is no longer the highest in the world.

I'm curious about the mechanism. It seems important, but can you elaborate on the effects?

The mechanism for U.S. currency creation and management is constantly evolving, and its effects are as well.

Effectively what we're talking about are central bank operations, which is a dry and boring subject within economics, that is both misunderstood by mainstream economists and misused (for political reasons) by heterodox economists (many of whom are charlatans).

Generally speaking though, everyone tends to agree that central bank policies became looser over the 20th century, and IMHO that's really the only relevant kernel of truth in the OP link, who seems to be a promoter of fringe economic theories.

The best place to read about the topic is at the Federal Reserve Bank's website. Alternatively, I would recommend reading any of this :

https://orcamgroup.com/understanding-money/

If you are curious for the theory behind this mechanism, a good source is “what has government done to our money“ by Murray Rothbard.

It’s freely available here:

https://mises.org/library/what-has-government-done-our-money

Not only that, but the war on drugs was started in 1971 as well.

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