7 ms·

Also note this rebuttal: https://singlelunch.com/2023/09/13/the-bad-economics-of-wtfhappenedin1971/ https://singlelunch.com/2023/09/13/the-bad-economics-of-wtf

Also note this rebuttal: https://singlelunch.com/2023/09/13/the-bad-economics-of-wtfhappenedin1971/ https://singlelunch.com/2023/09/13/the-bad-economics-of-wtfh... With related discussion here: https://news.ycombinator.com/item?id=39144867 https://news.ycombinator.com/item?id=39144867

keybored 2y ago
Websites that want to push a narrative should spell out their narrative (the WTF one). This website cannot have been up for this long without having a narrative.
- khaki54 2y ago
  I think it's clear they aren't really sure; putting up a bunch of quasi related charts points to a desire to facilitate a discussion.
  - bryanlarsen 2y ago
    They are very sure. There are lots of different things that happened in the late 60s and early 70s through to the early 80s that substantially affected the economy. Focussing on 1971 makes it clear that they think only one of those is significant. It's much more effective to let a reader make their own conclusion from cherry-picked data than it is to state the conclusion outright.
    - ginko 2y ago
      > Focussing on 1971 makes it clear that they think only one of those is significant. Yeah it's clear the authors are talking about the War on Drugs.
  - jcranmer 2y ago
    The site is titled as a question specifically asking about a particular year. If you have rudimentary financial history knowledge, then you would be aware that 1971 was the year Nixon took the US off of the gold standard. At the same time, if you have rudimentary economic history knowledge, then you would be aware that 1973 was the Arab Oil Embargo, and that the 1970s were an era of economic stagnation and inflation whose principal cause was that economic event. If you reevaluate many of these graphs knowing that the 1970s were a period of high inflation, and that there was a significant economic event in 1973, you end up finding that 1971 wasn't actually all that special: indeed, most of the time, when 1971 looks to be a key inflation point, it's because the graph isn't indexed for inflation and so the beginning of high inflation being around 1971 stands out. Where the graphs are indexed for inflation, there's no obvious inflection point around 1971, instead the inflection point shifts a lot more towards 1980. Putting that together, the only reason you have to make an argument for a monocausal economic event that happens in 1971 is if you want to emphasize the importance of the gold standard, and the only reason you'd have to believe it is if you don't have the economic literacy to understand why the evidence just isn't there at all. Put that together, and the reasonable assumption is that the people who made these charts are goldbugs who want to convince you that we need to return to the gold standard.
    - nradov 2y ago
      Stagflation in the 1970s was primarily caused by unforced domestic economic policy errors, not by the Arab Oil Embargo. There was never an actual shortage of crude oil. Those errors were largely related to failed attempts at economic central planning; the gold standard or lack thereof had little to do with it.
- segasaturn 2y ago
  My understanding is that it's meant to push the gold standard/anti-fiat currency, judging by the quote at the end of the website + link to Bitcoin whitepaper.
- p_l 2y ago
  It's a classic way of pushing narrative without actually spelling it out - it's supposed to set up biases so you can later find out that Bretton Woods system reached it's inevitable collapse in 1971 and the bias will make you accept the narrative of "sound money" proponents so that you'll believe in bitcoin and similar "digital gold" (that term dates me, doesn't it?) systems as solutions for toot cause of all the woes around you.
whatever1 2y ago
So the rebuttal is basically agreeing to everything except from exact timing. Cool.
- s17n 2y ago
  The timing is the whole point - original website is trying to blame everything bad on dropping the gold standard, which happened in 1971.
  - khaki54 2y ago
    Are they really blaming it on that or is that what the typical (inferred) explanation is? Clearly things started going wrong economically around that timeframe.
    - bryanlarsen 2y ago
      Yes, they are really blaming that. If they wanted to blame energy prices, they would have said "WTF happened in 1973?" There are a bunch of potential explanations for "WTF happened in the early 70s", but only one for "WTF happened in 1971".
      - unyttigfjelltol 2y ago
        Something forced the US off the gold standard. We can all have a sensible discussion about that without getting hung up on the wisdom of collecting pretty rocks.
        poincaredisk 2y ago
        I think you're talking past each other. Yes, something happened. The website has a particular vision about what the root cause was (moving off the gold standard), and some people here disagree with it. That website is often quoted by gold and (even more often) bitcoin enthusiasts. In this context the exact year is important because it's fundamental to the thesis the website is trying to make. Btw. if you don't believe this is what the site is about, check the quote at the bottom of a logo of the merch store.
throw0101c 2y ago
See also this analysis that brings up trends that (e.g.) started in the 1960s: * https://www.yesigiveafig.com/p/what-really-happened-in-1971 https://www.yesigiveafig.com/p/what-really-happened-in-1971 Also: * https://old.reddit.com/r/badeconomics/comments/i9ycy9/the_brutalist_housing_block_sticky_come_shoot_the/g1qr7z6/ https://old.reddit.com/r/badeconomics/comments/i9ycy9/the_br... Updated by the same author a few years later: * https://old.reddit.com/r/AskEconomics/comments/sccs74/so_wtf_happened_in_1971/hu64fkd/ https://old.reddit.com/r/AskEconomics/comments/sccs74/so_wtf...
- readyplayernull 2y ago
  Unix epoch, everything before that is pre-cyberhistory.
lordnacho 2y ago
So, if the productivity-wage divergence is simply a reflection of US healthcare costs, how does that chart look for other countries where healthcare doesn't glue itself to employment?
- deleted 2y ago
  [deleted]
- deleted 2y ago
  [deleted]
- bko 2y ago
  Yeah, I got up to here and stopped reading. Not really an honest attempt at debunking this data, just handwavey "it's all health care costs and its stupid". Does it explain some of the divergence? Sure, but it doesn't even come close to making up the wage / productivity gap. I imagine much of the other "debunkings" are similarly naive A cursory search of how much of wages healthcare costs as a percentage of total compensation is in the US comes out to 7.6% in 2022. In 1971 it was 2.9% > For employee-benefit plans in 1971, health insurance contributions equaled 2.9% of all wages and salaries. > Insurance benefit costs accounted for 7.6 percent of total compensation and 26.8 percent of total benefits among private workers in September 2022. The component breakdown can be seen in table 1. Health insurance accounted for 7.1 percent of total compensation, with 0.2 percent for short-term disability insurance, 0.1 percent for life insurance, and 0.1 percent for long-term disability insurance. (See chart 1.) https://www.bls.gov/ecec/factsheets/ecec-insurance-benefits-factsheet.htm https://www.bls.gov/ecec/factsheets/ecec-insurance-benefits-... https://www.ssa.gov/policy/docs/ssb/v36n4/v36n4p27.pdf https://www.ssa.gov/policy/docs/ssb/v36n4/v36n4p27.pdf
  - Cpoll 2y ago
    I don't have the background to properly evaluate either the site or the rebuttal. My only feeling is that the rebuttal makes a good general point about "bullshit asymmetry" and cherry-picking statistics. Why is the rebuttal 'naive' but the site not?
    - 2y ago
netbioserror 2y ago
Another "inflation good, deflation bad" repeater robot. Opinions, meet garbage.
- asdasdsddd 2y ago
  No you don't get it, its totally cool to let the government unilaterally expand and contract the money supply by trillions of dollars with a single lever.
  - JumpCrisscross 2y ago
    > its totally cool to let the government unilaterally expand and contract the money supply by trillions of dollars with a single lever Governments were doing that before 1971. Hell, the reason we had to give up the gold standard in '71 was we'd printed too many dollars compared to the gold. We've been trying to solve inflation for millenia. As frustrating as it sounds, we haven't found the solution. In the 19th century, British central bankers firmly on the gold standard were trying to find ways to deal with inflation, bank runs and credit crises, all amidst a burgeoning military-industrial complex and rising income inequality [1]. [1] https://en.wikipedia.org/wiki/Lombard_Street:_A_Description_of_the_Money_Market https://en.wikipedia.org/wiki/Lombard_Street:_A_Description_...
    - matheusmoreira 2y ago
      > inflation, bank runs and credit crises The root causes of the problem are right there in your sentence. Of course the banks were facing bank runs, they literally accepted that risk when they lent out the deposited money. When people came and tried to withdraw, they didn't have the liquid funds. Coming off the gold standard just made it a little easier for the government to bail out the banks by literally printing money and giving it to them so that people can withdraw their funds. "Liquidity injection" they call it. Credit and fractional reserve banking are the true origins of inflation. A thousand dollars can baloon up into tens of thousands, even hundreds of thousands of dollars through the magic of repeatedly loaning money. You can run a money printer 24/7 and you will never inflate the money supply more than banks do with their loans. Credit is made up money. It just appears out of thin air when people get loans. It's not real until it's paid back. If too many people start defaulting on debts the whole thing comes crashing down.
xg15 2y ago
I agree with the rebuttal that the site seems to conflate economical developments with changes to social norms without any reasonable connection. E.g. apart from the end of Bretton Woods, the beginning of the 70s also had the ongoing civil rights movement and the protests against the Vietnam war, both events that caused large-scale change of social norms. ...but I also had to stop reading the rebuttal when he got to the wage growth chart: He argues that inequality was rising (no objection) which causes the average income, pulled up by a small number of extremely high earners, to be overestimated vs the median income (no objection), which means... we should ditch the median and rely only on the average (wtf). Because I guess then the wage stagnation doesn't look as striking as it does otherwise? It also doesn't debunk the "what happened in 1971?" question: If he doesn't want to talk about wage growth, fine, let's talk about inequality. Why did that increase so much after 1971 then that it starts to affect other statistics?

keybored 2y ago

Websites that want to push a narrative should spell out their narrative (the WTF one). This website cannot have been up for this long without having a narrative.

khaki54 2y ago
I think it's clear they aren't really sure; putting up a bunch of quasi related charts points to a desire to facilitate a discussion.
- bryanlarsen 2y ago
  They are very sure. There are lots of different things that happened in the late 60s and early 70s through to the early 80s that substantially affected the economy. Focussing on 1971 makes it clear that they think only one of those is significant. It's much more effective to let a reader make their own conclusion from cherry-picked data than it is to state the conclusion outright.
  - ginko 2y ago
    > Focussing on 1971 makes it clear that they think only one of those is significant. Yeah it's clear the authors are talking about the War on Drugs.
- jcranmer 2y ago
  The site is titled as a question specifically asking about a particular year. If you have rudimentary financial history knowledge, then you would be aware that 1971 was the year Nixon took the US off of the gold standard. At the same time, if you have rudimentary economic history knowledge, then you would be aware that 1973 was the Arab Oil Embargo, and that the 1970s were an era of economic stagnation and inflation whose principal cause was that economic event. If you reevaluate many of these graphs knowing that the 1970s were a period of high inflation, and that there was a significant economic event in 1973, you end up finding that 1971 wasn't actually all that special: indeed, most of the time, when 1971 looks to be a key inflation point, it's because the graph isn't indexed for inflation and so the beginning of high inflation being around 1971 stands out. Where the graphs are indexed for inflation, there's no obvious inflection point around 1971, instead the inflection point shifts a lot more towards 1980. Putting that together, the only reason you have to make an argument for a monocausal economic event that happens in 1971 is if you want to emphasize the importance of the gold standard, and the only reason you'd have to believe it is if you don't have the economic literacy to understand why the evidence just isn't there at all. Put that together, and the reasonable assumption is that the people who made these charts are goldbugs who want to convince you that we need to return to the gold standard.
  - nradov 2y ago
    Stagflation in the 1970s was primarily caused by unforced domestic economic policy errors, not by the Arab Oil Embargo. There was never an actual shortage of crude oil. Those errors were largely related to failed attempts at economic central planning; the gold standard or lack thereof had little to do with it.
segasaturn 2y ago
My understanding is that it's meant to push the gold standard/anti-fiat currency, judging by the quote at the end of the website + link to Bitcoin whitepaper.
p_l 2y ago
It's a classic way of pushing narrative without actually spelling it out - it's supposed to set up biases so you can later find out that Bretton Woods system reached it's inevitable collapse in 1971 and the bias will make you accept the narrative of "sound money" proponents so that you'll believe in bitcoin and similar "digital gold" (that term dates me, doesn't it?) systems as solutions for toot cause of all the woes around you.

whatever1 2y ago

So the rebuttal is basically agreeing to everything except from exact timing. Cool.

s17n 2y ago
The timing is the whole point - original website is trying to blame everything bad on dropping the gold standard, which happened in 1971.
- khaki54 2y ago
  Are they really blaming it on that or is that what the typical (inferred) explanation is? Clearly things started going wrong economically around that timeframe.
  - bryanlarsen 2y ago
    Yes, they are really blaming that. If they wanted to blame energy prices, they would have said "WTF happened in 1973?" There are a bunch of potential explanations for "WTF happened in the early 70s", but only one for "WTF happened in 1971".
    - unyttigfjelltol 2y ago
      Something forced the US off the gold standard. We can all have a sensible discussion about that without getting hung up on the wisdom of collecting pretty rocks.
      - poincaredisk 2y ago
        I think you're talking past each other. Yes, something happened. The website has a particular vision about what the root cause was (moving off the gold standard), and some people here disagree with it. That website is often quoted by gold and (even more often) bitcoin enthusiasts. In this context the exact year is important because it's fundamental to the thesis the website is trying to make. Btw. if you don't believe this is what the site is about, check the quote at the bottom of a logo of the merch store.

throw0101c 2y ago

See also this analysis that brings up trends that (e.g.) started in the 1960s: * https://www.yesigiveafig.com/p/what-really-happened-in-1971 https://www.yesigiveafig.com/p/what-really-happened-in-1971 Also: * https://old.reddit.com/r/badeconomics/comments/i9ycy9/the_brutalist_housing_block_sticky_come_shoot_the/g1qr7z6/ https://old.reddit.com/r/badeconomics/comments/i9ycy9/the_br... Updated by the same author a few years later: * https://old.reddit.com/r/AskEconomics/comments/sccs74/so_wtf_happened_in_1971/hu64fkd/ https://old.reddit.com/r/AskEconomics/comments/sccs74/so_wtf...

readyplayernull 2y ago
Unix epoch, everything before that is pre-cyberhistory.

lordnacho 2y ago

So, if the productivity-wage divergence is simply a reflection of US healthcare costs, how does that chart look for other countries where healthcare doesn't glue itself to employment?

deleted 2y ago
[deleted]
deleted 2y ago
[deleted]
bko 2y ago
Yeah, I got up to here and stopped reading. Not really an honest attempt at debunking this data, just handwavey "it's all health care costs and its stupid". Does it explain some of the divergence? Sure, but it doesn't even come close to making up the wage / productivity gap. I imagine much of the other "debunkings" are similarly naive A cursory search of how much of wages healthcare costs as a percentage of total compensation is in the US comes out to 7.6% in 2022. In 1971 it was 2.9% > For employee-benefit plans in 1971, health insurance contributions equaled 2.9% of all wages and salaries. > Insurance benefit costs accounted for 7.6 percent of total compensation and 26.8 percent of total benefits among private workers in September 2022. The component breakdown can be seen in table 1. Health insurance accounted for 7.1 percent of total compensation, with 0.2 percent for short-term disability insurance, 0.1 percent for life insurance, and 0.1 percent for long-term disability insurance. (See chart 1.) https://www.bls.gov/ecec/factsheets/ecec-insurance-benefits-factsheet.htm https://www.bls.gov/ecec/factsheets/ecec-insurance-benefits-... https://www.ssa.gov/policy/docs/ssb/v36n4/v36n4p27.pdf https://www.ssa.gov/policy/docs/ssb/v36n4/v36n4p27.pdf
- Cpoll 2y ago
  I don't have the background to properly evaluate either the site or the rebuttal. My only feeling is that the rebuttal makes a good general point about "bullshit asymmetry" and cherry-picking statistics. Why is the rebuttal 'naive' but the site not?
  - 2y ago

netbioserror 2y ago

Another "inflation good, deflation bad" repeater robot. Opinions, meet garbage.

asdasdsddd 2y ago
No you don't get it, its totally cool to let the government unilaterally expand and contract the money supply by trillions of dollars with a single lever.
- JumpCrisscross 2y ago
  > its totally cool to let the government unilaterally expand and contract the money supply by trillions of dollars with a single lever Governments were doing that before 1971. Hell, the reason we had to give up the gold standard in '71 was we'd printed too many dollars compared to the gold. We've been trying to solve inflation for millenia. As frustrating as it sounds, we haven't found the solution. In the 19th century, British central bankers firmly on the gold standard were trying to find ways to deal with inflation, bank runs and credit crises, all amidst a burgeoning military-industrial complex and rising income inequality [1]. [1] https://en.wikipedia.org/wiki/Lombard_Street:_A_Description_of_the_Money_Market https://en.wikipedia.org/wiki/Lombard_Street:_A_Description_...
  - matheusmoreira 2y ago
    > inflation, bank runs and credit crises The root causes of the problem are right there in your sentence. Of course the banks were facing bank runs, they literally accepted that risk when they lent out the deposited money. When people came and tried to withdraw, they didn't have the liquid funds. Coming off the gold standard just made it a little easier for the government to bail out the banks by literally printing money and giving it to them so that people can withdraw their funds. "Liquidity injection" they call it. Credit and fractional reserve banking are the true origins of inflation. A thousand dollars can baloon up into tens of thousands, even hundreds of thousands of dollars through the magic of repeatedly loaning money. You can run a money printer 24/7 and you will never inflate the money supply more than banks do with their loans. Credit is made up money. It just appears out of thin air when people get loans. It's not real until it's paid back. If too many people start defaulting on debts the whole thing comes crashing down.

xg15 2y ago

I agree with the rebuttal that the site seems to conflate economical developments with changes to social norms without any reasonable connection. E.g. apart from the end of Bretton Woods, the beginning of the 70s also had the ongoing civil rights movement and the protests against the Vietnam war, both events that caused large-scale change of social norms. ...but I also had to stop reading the rebuttal when he got to the wage growth chart: He argues that inequality was rising (no objection) which causes the average income, pulled up by a small number of extremely high earners, to be overestimated vs the median income (no objection), which means... we should ditch the median and rely only on the average (wtf). Because I guess then the wage stagnation doesn't look as striking as it does otherwise? It also doesn't debunk the "what happened in 1971?" question: If he doesn't want to talk about wage growth, fine, let's talk about inequality. Why did that increase so much after 1971 then that it starts to affect other statistics?