Saw a post about this at !history@hexbear.net and was a bit confused by exactly how badly the people there were going at each others throats in the comments. Nobody seemed able to agree on what precisely happened in 1971. Suggested explanations included:
- Neoliberalism being declared the state religion by Grand Moff Richard Nixon
- The gold standard being abolished
- The oil crisis
- The Republican and Democrat parties becoming increasingly divided
- Declining birthrates
- Institutional Racism
If any of you could give some explanations with, like, sources that aren’t just 10 pages of graphs with arrows pointing at 1971, that would be pretty great.
I don’t think that anything significant happened in that particular year to produce an long-term difference, but computers were becoming a lot more common around that time.
As countries develop economically, they start out with a large primary sector, sometimes called the “agricultural sector”. That deals with agriculture, mining, fishing. Extracting raw resources from the land.
As they develop, the size of the primary sector declines relative to the secondary sector, sometimes called the “manufacturing sector”. It takes in raw resources, and converts them into processed goods.
As they develop still further, the size of the secondary sector declines relative to the tertiary sector, sometimes called the “service sector”… These are services – people do work that doesn’t involve processing resources.
https://en.wikipedia.org/wiki/Three-sector_model
The US underwent a good bit of that secondary-tertiary transition in vaguely the timeline that you’re looking at.
The way a market allocates labor in the economy is via wages. If there is a lot of demand for labor for a given job relative to supply, wages for that job rise. This causes more workers to shift into that job. If there is little demand for labor for a given job relative to supply, wages fall. This causes workers to shift out of that job.
The US used to do a lot of low-skill assembly-line production, a lot like China does today. It used workers who were coming off farms – just like China has. Forged a lot of the practices involved, in fact:
https://en.wikipedia.org/wiki/American_system_of_manufacturing
So when that transition happens, what you’re gonna see is manufacturing industry going into relative decline. That’s gonna mean reduced relative demand for labor, and it’ll put downwards pressure on wages.
The US still manufactures a fair bit of stuff in dollar value – more than in the past in dollar terms, though the manufacturing sector is smaller as a relative percentage of the economy. However, the manufacturing processes it uses today tend to rely a lot on computerized automation, so that you don’t require a lot of low-skill labor on an assembly line, which employ comparatively-few people to manufacture a lot of stuff – they have high productivity, produce a lot in dollar terms per person employed.