ᴅᴀᴠɪᴅ ᴘᴇʀᴇʟʟ ✌ @david_perell "The Writing Guy" | Host of the North Star Podcast: perell.com/podcast | Writing at perell.com/ | Teaching at writeofpassage.school/ Jan. 23, 2020 2 min read

THREAD

Let's explore a mystery.

What happened to the American economy in the 1970s?

People have theories, but nobody is sure about what happened.

I don't have answers, but I have some thought-starters.

What do you think happened?

1. Stagnating Median Wages

The relationship between pay and productivity growth ended in the 1970s.

Between 1979 and 2009, average hourly compensation only grew by 8 percent, while average hourly wages grew by 7 percent (according to one measurement).

Important caveat from the previous tweet.

Stephen Rose at the Urban Institute studied six scholarly estimates of U.S. real median income growth between 1979-2014 and found a huge range in the median income growth calculations.

2. We Stopped Dreaming

In 1961, John F. Kennedy called upon America to send an astronaut to the moon by 1970.

The moon landing changed humanity, for better and for worse. But since then, we de-funded @NASA and lowered the ambitions of the space program.

 https://www.youtube.com/watch?v=CbIZU8cQWXc 

3. Slowing Airplane Speeds

Airplanes sped faster and faster until the early 70s. Since then, the fastest airplanes have slowed down — catalyzed by the United States' ban of over-land supersonic flight in 1973.

4. The Gold Standard

President Nixon announced the end of the Gold Standard on August 15, 1971.

5. Rising Infrastructure Cost

It became easier to veto new projects.

According to a @BrookingsInst paper, "It cost roughly three times to build one mile of highway in the 1990s than it did in the early 1960s. The cost increased from $8 million per mile to roughly $25 million."

6. Manufacturing Employment Stagnated:

According to FRED data, the number of people working in manufacturing peaked at almost 20 million in 1979. Today, that number has fallen to slightly more than 12 million.

7. Dystopian Science Fiction

@Danwwang noted a correlation between falling science fiction and productivity growth. Turns out, the popularity of utopian science fiction lags in productivity rates by roughly ten years.

8. Moore's Law

The cost to finance computer chip research has increased by a factor of 25 since 1970.

The exponential growth rate of Moore's Law has been paralleled by a steep rise in the number of researchers required to sustain Moore's Law.

9. Frozen Cities

Construction has slowed in major cities because of restrictive zoning policies.

In 1970, Los Angeles was zoned for 10 million people. By 2010, the city was zoned for only 4.3 million people.

The rate of new housing developments has fallen since the 1970s.

10. Rise in Debt

Two graphs from this excellent source, where many of these charts are pulled from.

 https://wtfhappenedin1971.com/ 

Changes in the economy lead to changes in human behavior.

I originally shared these ideas in my weekly newsletter.

You can subscribe here.

 https://www.perell.com/join 

Physicists and engineers made stellar progress in the first half of the 20th century.

For example, the Wright Brothers first flew in 1903, and by 1969, there was a man on the moon.

But in the past 50 years, we haven't maintained the pace of progress.

Globalization began.

You can credit air travel, communications technologies, and Malcolm McLean — the man who invented the shipping container.


You can follow @david_perell.



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