Comment by apatters | Hacker News Reader

Comment by apatters | Hacker News Reader

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I don't mean to suggest there are no problems with cost of living. In broad strokes here's what happened since '65, or let's go back a little further to the start of the post-WW2 world.

1. Millions of women entered the workforce (started when all the men were overseas fighting)

2. The government went off the gold standard

3. Millions of people in other countries replaced the workforce via globalization

Those are the three biggies. Expanding the number of available workers kicked off the pressure on wages. Going off the gold standard kicked off massive inflation. Globalization shrunk the number of jobs available and was the nail in the coffin.

So that's why we don't have the same economics as a nuclear family in the 60s.

Now in practice a lot of essentials in the US CPI have stayed pretty cheap. Technology enabled a lot of things to stay or become cheap. But a few big ones are a train wreck. Home ownership, health care, education, all skyrocketed.

So when I see someone on the median income say "Man I'm getting older and I don't know how you can afford to settle down and buy a house and start a family" yeah that's a very real problem which is grounded in facts.

But when someone says "life sucks for the 24 year old who has the resume to work in the Valley and pulls down almost a quarter mil," here's what that is: horse shit.

Your premise needs a reality check.

> 1. Millions of women entered the workforce (started when all the men were overseas fighting)

The rate of women in the workplace ticked up slightly during WW1 and WW2, but by no means was it a sea change. That's a narrative pushed by "traditionalist" thinkers that found a simple thing to pin social upheaval on

The real change was accelerated industrialization during the first half of the 20th century. Millions moved from farms to factories, men and women alike.

> 2. The government went off the gold standard

So what?

> Going off the gold standard kicked off massive inflation.

If you call a steady 1-2%/year "massive".

The real effect has been to stabilize the economy. I guess people who like gold standards don't know their economic history. The 19th century, which is arguably a recognizable modern economy (in the West), was punctuated by panics and strong recessions that made the "Great Depression" look tame. (which itself makes the Great Recession look pretty tame.). Getting of the gold standard was key to fixing that.

> 3. Millions of people in other countries replaced the workforce via globalization

I agree with you here, but again I think you overstate the impact. The US was once in the position of SE Asia today: (relatively) educated workforce, cheap labor, lax standards compared to Europe. In it's time, the American South was the jobs-export market for the North. These trends have been happening basically forever.

More importantly, the remaining manufacturing jobs, and there are many, are high wage and high skill. They're also high productivity, so there are fewer.

That leads to another force at work, which is a bigger threat than exported jobs: automation. Most manufacturing jobs didn't leave, they disappeared.

> The rate of women in the workplace ticked up slightly during WW1 and WW2, but by no means was it a sea change.

WW2 is just where it started, it went from 28% around then to 47% as a percent of labor force, a huge change.

The male labor force doubled in absolute number since then, but the female one increased almost 4X.

How much of that is child care switching from not counted to being counted? Women were working before that, just in an uncounted way

If it went from 1 provider on 2-3 child care to 1 on 20 daycare, the effect is similar to if it had been counted anyway.

One significant source of uncounted labor was removed with the washing machine. Enormous amounts of time were spent manually washing clothes. But automating this likewise had a similar effect to making child care more efficient and increased downward wage pressure elsewhere by allowing more to enter other parts of the workforce.

If you call a steady 1-2%/year "massive".

The real effect has been to stabilize the economy. I guess people who like gold standards don't know their economic history. The 19th century, which is arguably a recognizable modern economy (in the West), was punctuated by panics and strong recessions that made the "Great Depression" look tame. (which itself makes the Great Recession look pretty tame.). Getting of the gold standard was key to fixing that.

I have literally never seen this argument before, and I've been reading economics books for 10 years.

I'm more curious than anything. Please tell me where I can find more.

The US was never a low-wage economy. Sure, there was crippling poverty in places, like the Dust Bowl, but labor has always been the bottleneck in a nation richly endowed with natural resources, which is why American logging practices are much more wasteful than European ones, they are designed to maximize the productivity of the workforce. When the International Watch Company was set up, it was by an American looking for cheap labor in Switzerland.

> The real effect has been to stabilize the economy.

The economy only needed stabilization because it was running on usury. If you ban usury, as Islam does, then you wouldn't need fake money that can be printed at will, and these crazy periodic cycles won't happen. It's not like today is stable anyway, I've spoken to several people in finance and they admitted to me these things.

Those people are quite wrong. An unstable unit of value like the gold standard makes bans on usury even less meaningful because you can get into deep debt-deflation even with 0% nominal rates (see "liquidity trap" for what that looks like). Investment cycles can be driven purely by equity investment, although there might be an argument that debt-driven cycles are worse. Anyway, the well-known workarounds that spring up when 'usury' is banned - basically ways of rephrasing 'interest-bearing debt' as 'senior equity'- leave you with practically no advantage over simply having well-designed bankruptcy laws.

The fallacy you're committing is not looking at how the Islamic world was run before the Western banks took over post WWI/II, as interest is prohibited in Islam. It is well documented that in Iraq during the Ummayyad period, there were no more people left to accept Zakat because everyone truly paid their fair share (not the trite slogans we hear today).

There can be cycles due to issues beyond our control, however, the cycles we see today are built into the system because of usury and printing fake money to fuel it. As I said, financial folks I spoke with admitted it.

Just to be clear you’re suggesting high/predatory interest rates are the reason that the economy needs stabilization?

If so, my frame of reference for predatory is like 15%, 27%, etc. numbers like that.

Is that what you’re saying? If so can you expand on your thoughts here and link these two elements together better? I generally associate high interest rates with high risk. I’d loan my friend $500 for 0% interest. But some person I’ve never met who is sketchy? That would be a 25% rate with collateral. Ya know?

Are you tying this into the Federal Reserve somehow? Is it interest rates for mortgages that you view as predatory? Small business loans?

I'm suggesting that any non zero rates are predatory. Loans should be reserved as acts of charity, as Islam dictates. Otherwise, it will open up to running the economy on debt, which is exactly what we see today. Debt fuels more debt, more inflation, it's a rolling snowball. It's no wonder we're in the mess we see today. Of course dissociating the currency from gold or other precious metals allows them to print more money to pay off their ever growing debts. This is how all these factors are connected. Not to mention immoral acts like gambling (aka put and call options) and selling what you don't own (shorting), all of which are prohibited in Islam, are contributing causes as well.

Trying to roll back the clock to the golden age of Islam is not something you’d expect to find in HN’s comments section.

Liquidity fits into your world view how? In its most simple form: A business or person needs money to buy resources to make things to earn money. Do they go to the Sultan and beg for a loan based on charity?

> Trying to roll back the clock to the golden age of Islam is not something you’d expect to find in HN’s comments section.

Why, because most people are not familiar with Islamic history? :)

> A business or person needs money to buy resources to make things to earn money.

Engage in a fundrise not dissimilar to what people do today with VCs and startups. The investor(s) contribute money in exchange for a portion of the business. If it succeeds, both parties make money, if it doesn't, the investor loses money, and the business owner loses money and effort he put into it. It's true risk sharing.

> If you call a steady 1-2%/year "massive".

It compounds. Over the course of 50 years this is ~100% inflation.

I'd add that the decades after WW2 were boom times for the Unites States. So many other industrialized nations were reduced to rubble. The effects of having to rebuild lasted decades. Post-WW2 the U.S. made up about half the world's GDP - equal to all other countries and the planet combined.

Things are quite different now. The Unites States makes up less than a quarter of the world's GDP. Those great factory jobs with pensions and benefits are long gone. That dovetails with your #3, globalization.

If you're considering just after WW2, you also have to consider that most industrial countries were in ruins

The apparent "pressure on wages" is broadly a matter of technical change favoring highly skilled occupations over lower-skilled ones. Wages for the former are still comparatively quite high, as we ought to know well here at HN. Of course this is a major source of income inequality, and arguably a social problem because retraining people for these newer jobs only gets harder and harder. UBI can be an elegant approach.

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