So... What did happen in the 70's...?

[Whiskeytide]

This chart was recently posted by Xchrome:



Here's the link to this excellent post:
http://www.democraticunderground.com/10023911945#post1


I'm re-posting it because I think this deserves some discussion. And I'm going to get the movie "Inequality for All" - maybe it will help answer this question:

What exactly did happen in the 70's that turned this around?

Was it the "anti-union, anti-US worker" mantra? I remember as a teenager in the 70's hearing about how US auto workers were "pricing themselves out of the labor market" and the Japanese car makers were taking advantage of it.

Was it cheap labor available overseas? Outsourcing American jobs was a problem long before anyone noticed, right? I remember that for a while you could buy a "Craftsman" hammer made in the US $X and it would likely last you a lifetime, or you could buy a "Crossmen's" hammer made in Taiwan for half that price, and the head fell off after a year. There was, for a while, a very real difference in the quality. Now, they're all pieces of shit made overseas for as little as possible, and most of us expect to replace a hammer every couple of years or so.

Was it the extension of easy credit to Americans, so everyone could now afford the G.I.Joe with the kung-fu grip on a credit card plan regardless of whether they could actually "afford" it? Who needs to advocate for a "raise" when you can "charge it" and pay for it later? It seems the "company store" - to which you quickly found yourself owing your soul to - just re-invented itself as CitiBank (or whatever it was back then). It was easy to "feel" like you had made it, when in reality you were just borrowing yourself into a deeper and deeper hole.

Was it a shift to a consumer based economy? We don't MAKE shit, we BUY shit!!! - on CREDIT!!

Was it rampant narcissism nurtured by the advent of sophisticated advertising campaigns? - having two chickens in every oven wasn't enough anymore - I want a BIGGER chicken than my neighbor... I think advertising came of age in the 70's - TV had been around for a couple of decades, and was reaching more and more consumers. The retail industry suddenly discovered they could "manufacture" demand with good advertising, rather than create a product people actually needed and wanted - you know, actual demand.

Disco, maybe? I don't know how, but DAMN - it was evil!!!

I have to go for a while - meetings for work. But I'd love to hear the input and insight from the big brains here when I check back in.

[antiquie]

1. I blame Nixon, OPEC and wage freezes.

Then we had stagflation also known as The Rich Get Richer and The Poor...

[sinkingfeeling]

2. Bad economic times in late 70's. Doesn't anybody remember mortgage

rates of 17%?

[leftynyc]

21. And gas lines

Waiting for up to an hour to fill up your tank - and only if your had the right number on your license plate (even/odd days). It was an unpleasant time.

[zipplewrath]

3. Ronald Reagan

The easy answer is Reagan happened.

The more complex answer is that the industrialization of other parts of the world reduced the amount of middle income jobs here. Post WW II, huge portions of the world were incapable of producing very much and the US produced alot of goods for export. But the first pangs were probably felt in the steel industry where international competition began to undermine the steel industry here. The garmet industry was also an early victim. By the '70s, most of the world had "recovered" from WWII and that's when the industrial decline of the US took off, along with the jobs.

We were all watching it happen, and the constant explanation was that these jobs would be "replace" by higher skilled jobs. Those jobs never appeared. We're actually seeing some of these industries returning, in part due to our lower energy costs here in the US (mainly from natural gas). However, as they come back, the vast majority of the industries are being built in highly automated factories with a fraction of the workers they used to have.

[Skidmore]

26. Yes. Reagan happened.

[SharonAnn]

34. Reagan wasn't elected until 1980. Decline started before then.

[Capt. Obvious]

4. K.I.S.S. happened

[CANDO]

17. Religious right said their name was

Knights In Satan's Service! I swear to Dog! LMAO!

[haele]

5. 1) Nixon went to China. 2) SInflation. 3) The New Deal opponents win most of 70's, all 80's.

Three body blows to the average American citizen.
Globalization, a recession that caused income losses for the working American, and the Chicago School boys grabbing the bit and turning the course of American business theory economics ("Let's divorce Labor from Capital again...it worked sooo well before - for the Rich!&quot .

Haele

[Brother Buzz]

6. Jimmy Hoffa mysteriously disappeared then

Coincidence?

[tosh]

7. Yeah, I was thinking that this was around the time

that labor unions started to be so villified. I found this Wiki timeline http://en.wikipedia.org/wiki/Timeline_of_labor_issues_and_events
and saw that Hoffa's disappearance was not the only strangeness from the 70's.

"5 January 1970 (United States)
Joseph Yablonski, unsuccessful reform candidate to unseat W. A. Boyle as President of the United Mine Workers, was murdered, along with his wife and daughter, in their Clarksville, Pennsylvania home by assassins acting on Boyle's orders. Boyle was later convicted of the killing.

West Virginia miners went on strike the following day in protest. "

I had to stop my research there because of this stupid day job.

[Cleita]

8. Nixon, who brought corruption and greed to our government.

It started a gravy train for the elite that has continued up until today. We thought we had stopped "I am not a crook" Nixon by forcing him to resign, but it never stopped the Republican Party from finishing his work.

[CK_John]

9. It was the even/odd days for buying gas. Its was a cold shower for the US, a realization that

we were not the masters of the world. It was a brutal shocking wakeup
that we were on a short leash by Saudi oil and they knew the world was about to change but no one had a plan.

[FarCenter]

10. US oil production peaked; we became dependent on imports; two oil crises happened.

After that, the Arabs, the Germans, the Japanese, and now the Chinese have eaten our lunch.

[elehhhhna]

11. Cheney got a job in government, and it all went to shit exponentially since then

[malthaussen]

12. Obviously more than one cause.

But the most significant, I have always maintained, is simple supply and demand. The early 70's saw a huge influx of young workers into the labor pool as the Baby Boomers started looking for jobs. Concurrently, women were entering the workplace in greater numbers than had been customary. When supply goes up, demand goes down. When demand goes down, so does the price. The 50's were fuelled by a labor shortage; since the 70's we've had 'way more people than we can usefully employ. We've been able to partially offset this by under-employing a large percentage of the workforce, because it is a given in our society that Everyone Must Work. But now we're even running out of the scut jobs, because it is cheaper to outsource them.

-- Mal

[Xolodno]

13. In a single word...Stagflation...

...but its not that simple.

OPEC shot the price of energy through the roof causing increased costs of production thereby forcing producers to to pass cost to the consumer at the same time having them to control costs...and since the price of labor is usually your biggest cost, it was easy to hold back on wages. Energy efficient methods of production were still in their infancy and gains from that would not be realized for a long time. Plus OPEC recognized energy efficiencies could reduce demand for oil and thereby price, so they pulled the price of oil back just enough to discourage growth of energy efficiency while still transferring wealth back to them.

Then of course, other nations by this point had sufficiently rebuilt themselves from World War 2 and began exporting steel and other important goods to other countries and a lower price and/or dumping goods into markets that were traditionally US importers. As a result you had US companies going out of business (increasing unemployment) while tariffs kept cheaper goods out and coupled with higher costs of energy...prices rose.

Nixon tried to reduce government consumption (increasing supply in the private market place) and increase taxes (force more efficiencies) but Congress resisted. So he took us off the gold standard which devalued our currency...it made our exports more attractive (decreasing unemployment) but also made raw material imports more expensive (again forcing companies to reduce wages). He tried price controls (never a really good idea) but that didn't work either. Because these were new problems the US never faced before (little understanding of how the international marketplace worked at the time) they spent too much time trying to solve immediate problems such as inflation. Had he been able to serve out his full term, I think they would have figured it out and given he didn't need to win re-election...would have went through with a painful but necessary economic policy....which didn't occur unfortunately until the early 80's...which only made the wage problem even worse.

It took a Fed generated recession in the early 80's to overhaul the economy (accepting the fact that certain industries the US could no longer compete, due to cheaper labor overseas and focus on industries it had a comparative advantage).

Once the economy realigned to its core strengths, the tax incentives designed to encourage the economic overhaul should have been removed and higher taxes should have been instituted to discourage rampant consumerism and encourage wage equality. However, people got used to having more "stuff" by then and raising taxes meant they would have less "stuff" (such as having a new car every 2-3 years instead of 5-6, etc.). The rampant consumerism increased the flow of money to the upper class and low tax rates allowed them to keep more of it rather than transfer it to government in the form of higher taxes or transfer it to higher wages for employees (higher production costs = lower tax brackets).

Due to the 70's and self inflicted 80's recession, people got used to slower wage growth and given their consumer appetite, more women entered the work force to supplement income (one wage earner wasn't enough anymore)...which increased the labor pool and encouraged even slower growth of wages....which forced more into the labor pool...creating a vicious cycle. Eventually the easing of credit was needed to continue the unsustainable cycle...which ironically stripped more income away in the long term for short term gains.

Also, people don't quite understand income inequality. Yes you may have more income if the transfer of wealth was more equitable, however, the costs of goods and services will be higher as well (as you are paying for a real wage and not wage slave). So yes, you will have more money in your pocket but but won't be able to afford the latest iPhone every year. But you can easily afford basic and needed necessities. You will just have to treat that older cell phone or car as more of a durable good rather than a one use good.

[polichick]

14. The music was so great we got distracted?

Pre-disco of course.

[CANDO]

15. Deregulation

And it's been down hill ever since.

[legcramp]

35. Absolutly, and the whole trend started when Bert Lance pushed through

deregulating the S&L industry leading to it's complete collapse in the 80's.

[Bigmack]

16. Disco... clearly disco. nt

[randome]

20. And everything was so...colorful.

[hr][font color="blue"][center]You should never stop having childhood dreams.[/center][/font][hr]

[Make7]

18. Bretton Woods died. ( n/t )

[Paulie]

23. Meaning the US gold standard

http://en.m.wikipedia.org/wiki/Nixon_Shock

[deutsey]

19. I think one thing was the large right-wing/corporate reaction

against the New Deal/Great Society/Counterculture.

That's what the Powell Memo helped to ignite: http://reclaimdemocracy.org/powell_memo_lewis/

Walter Karp in Liberty Under Siege gives an overview of how the DC political establishment (Democrat and Republican) circled the wagons against post-Watergate egalitarian reforms as part of this reaction: http://www.amazon.com/Liberty-Under-Siege-American-1976-1988/dp/0805008594/ref=sr_1_1?ie=UTF8&qid=1382636657&sr=8-1&keywords=liberty+under+siege

In Part I Jimmy Carter is described as the candidate of the democratic awakening, marked for systematic destruction by Reaction and losing one battle after another as the press grows "more stupidly cruel as Oligarchy grows more brazenly vile and Carter more stupidly weak." In Park II Karp turns his baleful eye on Ronald Reagan, whom he characterizes as "an ignorant, truthless demagogue." The story of the 1980s, in Karp's view, has been "the exaltation of a tyrant and the degradation of a republic."

Simultaneously, I think the assassinations and violent state crackdowns of the '60s and early '70s along with the growing fragmentation and self-indulgence of the counterculture ended up weakening left activism.

There are other factors (like the energy crisis), but these are my main reasons.

[polichick]

22. Yes - they really scrambled to put together their think tanks then...

and the rest is history.

[BumRushDaShow]

24. "White Flight" and the creation of the so-called "Rust Belt"

a downturn of manufacturing and the depopulation of many cities as those who had not already escaped to the suburbs, made a beeline for them (blacks were still "not allowed" in the suburban developments despite the changes in the law). This a period when NYC was about to file for bankruptcy.

Seems we're almost setting up for the same environment (with some alterations like having gas prices up now not due to an embargo against us but due to rampant speculation). The neglect of the cities is similar though.

[DevonRex]

25. The 70s were a blast.

We didn't do anything we were supposed to do after high school . We partied. We wore really cool clothes. Not like you see on TV. We were all skinny. We traveled all over the place. We went to concerts. We rode motorcycles. I had a '68 VW bug, navy blue. I ironed my hair. It was long and blonde - down to my waste. We tie-dyed our own clothes.

It was a lot more fun than your graph. But we were either broke or rich and didn't much care which as long as somebody bought the gas, tickets and beer. Somebody always did.

[Little Star]

27. +1

[Squinch]

28. That is an amazing graph. And I think you are right in your guess that it's the

beginning of the demise of unions.

[blm]

29. GHWBush/Jackson Stephens made deals with Chinese industrialists to move US manufacturing

base to China. Stephens put Walmart on the table. Global fascism took its first giant step.

[Myrina]

30. This: We don't MAKE shit, we BUY shit!!! - on CREDIT!!

IMHO.

[Hissyspit]

31. A drop that could be a momentary adjustment never recovers. It became permanent during the REAGAN

years.

[RebelOne]

32. I was doing fairly well in the mid-'70s, as I was working full time

and also doing a lot of free-lance work.

[starroute]

33. "Gino's gives you freedom of choice"

I agree with most of the other answers (has anybody mentioned the 1973-74 oil shock?), but what really struck me at the time was when the 1976 bicentennial stirred up advertising slogans like the one I quote above. That was when I realized we had ceased to be a nation of citizens and had become a nation of consumers.

[warrprayer]

36. Raygun

Was the beginning of the end

[Ishoutandscream2]

37. I wish I could remember

It was a lot of fun. I think.

[Spider Jerusalem]

38. The US stopped being able to supply domestic oil demand with domestic supply after 1970.

See here (total oil imports per year in thousands of barrels): http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRIMUS1&f=A

Total oil imports went from 483 million barrels in 1970 to 1.1 billion in 1973 and 2.3 billion by the end of the decade. This leads to an imbalance of payments with large currency outflows to pay for energy imports--Nixon ended convertibility of the dollar to gold, why? In part because of this balance of payments issue brought on by oil imports. The US went from a manufacturing economy to a service economy, why? In part because the economics of importing oil for raw materials for petrochemicals and plastics and a hundred other things combined with inflation in wages made it uneconomic to manufacture in the US, and the oil price shocks of the '70's meant less discretionary spending on manufactured goods for a lot of people, less discretionary spending means more layoffs in manufacturing industries producing those goods which leads to offshoring of production to low-wage countries by manufacturers in order to be able to sell to a market with less purchasing power.

[Octafish]

39. Nixon got let go.

He showed such promise only a few years earlier.

“Did Richard Nixon—then Citizen Nixon—jump-start the Vietnam War on a secret mission to Saigon in 1964? The following piece by Jim Hougan suggests that he may have. The following story originally appeared in the anthology, Nixon: An Oliver Stone Film, edited by Eric Hamburg (Hyperion, New York, 1995).”

http://jimhougan.com/wordpress/?tag=oplan-34-a