That '70s Show

by Don Boudreaux on December 30, 2007

in History, Myths and Fallacies, Standard of Living

Joel Kotkin, always thoughtful and provocative, does a nice job in today’s Washington Post advising us denizens of the first decade of the 21st century not to take our fears too seriously.  Here are his opening paragraphs:

The country is in a funk. Oil prices are at record highs, and the
dollar is plummeting. Foreigners are buying out leading U.S. business
assets. Environmentalists say the world is headed toward an ecological
crackup of biblical proportions.

Today’s headlines? Well, yes. But for those of us old enough to
remember, they could just as easily be bulletins from one of the
grimmest decades in recent U.S. history: the ’70s.

That decade, when all the promise of the 1960s fizzled into
disappointment, holds up a mirror to our contemporary pessimism. Then
as now, Americans felt uncertain about the present and insecure about
the future. But we found a way out of the gloom — and if that decade
is our guide, we’re likely to do it again.

I came of age in the 1970s, and I agree with Kotkin.

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{ 50 comments }

Ward December 30, 2007 at 3:41 pm

I was looking for a job in 1982 and now I have a career and happy family. My personal misery index is way below the horrible carterite malaise days. I don't think we're in anything like it. Markets are better now than in '01 to '03 bear. Challenges abound but they always have.

muirgeo December 30, 2007 at 5:31 pm

"But we found a way out of the gloom"

And the way out wasn't to continue doing more of the same.

Whether these last 30 years are truly reflective of a push towards more free markets is debatable. For those who support less regulation rightly or wrongly your economic philosophy has a black eye based on peoples perceptions of the current economy and how we got here. The results, the push will now be decidedly away from less regulated markets.

For focusing too strongly only on over regulation while mostly ignoring corporate welfare and monied politics libertarian economic and political policies will take a big step backward from ever really getting a chance to show their own true faults.

doc December 30, 2007 at 5:33 pm

I just found this old post here and wish you would expand on it please!

Re: Over the past decade the cpi home owners equivalent rent has averaged a 3.3% rate of gain. But over the same time the OFHEO House Price Index, of repeat sales showed a 11% average annual increase.

Give that home owners equivalent rent accounts for 22% of the CPI this implies this factor alone has caused the CPI to understate inflation by 1.8% percentage points each year.

By comparison Mark Bils outside estimate is that inadequate quality adjustments have caused the CPI to overstate inflation by 0.6
percentage points annually.

Maurice Sonnenwirth December 30, 2007 at 7:05 pm

I would agree were it not for the backwardness of the voting public, and the chance we might get a socialist-leaning President AND Legislature. I fully expect these idiots to do all the same things that were done in the 30's, from protectionism to raising taxes to monkeying with socialist programs like FDR did. And then we're going over the falls without a barrel.

I would LOVE to think you were right and I was wrong, but it seems to be the tenor of the day; more "big government" and all the problems it causes and will cause.

John V December 30, 2007 at 7:32 pm

For focusing too strongly only on over regulation while mostly ignoring corporate welfare and monied politics libertarian economic and political policies will take a big step backward from ever really getting a chance to show their own true faults.

Do you have evidence of this? I'm pretty sure you won't find any.

Python December 30, 2007 at 7:36 pm

John V.

The lady who posted what you quoted never has any evidence to support her claims. Don't bother asking for it now. She'll just change the subject repeatedly until you can't figure out what her point is.

John V December 30, 2007 at 8:10 pm

Python,

I'm quite aware of that. But I'm asking anyway. It's a pretty simple question. We'll see.

The other Eric December 30, 2007 at 8:53 pm

I was in Iowa over the weekend and happened to hear several thousand political ads on tv, radio, attached to car bumpers, plastered on billboards, and anywhere else they've been excreting their messages. Iowans are good people, but they opted to begin the primary season which makes them the prime stomping ground for every type of propaganda. It amazed me, and I'm pretty jaded about these things. (That's amazed in a bad way…).

Almost every message was brutally simple with overwhelming negativity– and not really even about other candidates. The trial lawyer is going to save us from a corrupt politicians with regulations and save the "shrinking middle class." The first lady, one-term senator says she has the experience over and over (seriously, it's the same phrase said like an automaton.). Another two have God on their side and warn their potential supporters about dire consequences for electing someone less god-fearing. Biden is there but just seems pissed off at everyone. Rudy's going to make us safer…

Only Thompson seemed like he wasn't on the Titanic. Every candidate is playing the 'dire' card.

brotio December 30, 2007 at 9:08 pm

John V,

I'll try and help a bit. Murthaduck ("the children they've killed in cold blood") believes that any time a candidate other than the one he/she/it likes wins an election it's due to 'monied politics'.

As for the rest of Murthaduck's mindless rambling… you're on your own! :P

muirgeo December 30, 2007 at 10:17 pm

Do you have evidence of this? I'm pretty sure you won't find any.

Posted by: John V

Well. just look at the Republican presidential debates. The Republicans are held up as "libertarian" leaning on economic issues. Which I'd agree they aren't but that's their claim and the general belief. Yet all (except Paul and maybe Huckabee) have little to say about corporate welfare and political corruption.

The rest is not so much as evidence but a prediction of the outcome of the next elections based on peoples sentiments with regards to the economy. They'll only believe this trickle down economics will work for so long until they realize the party they've been supporting is giving their money away to those who already have a lot.

Liberal economists make a lot of sense in an essay or a book but the people out their are living the economy. There's is an education based on experience far from the ivory towers.

muirgeo December 30, 2007 at 10:20 pm

Do you have evidence of this? I'm pretty sure you won't find any.

Posted by: John V

Oh and also look at the pubic opinion polls on health care issues. People are seeing the massive market failure that is are nations health care. They ain't leaning libertarian over this issue that compromises ~15% of our economy.

Sam Grove December 30, 2007 at 11:57 pm

but how much better off would we be had it not been for all of the wealth we produced which has been wasted on maintaining the U.S. empire (bases and soldiers in 130 countries), foreign aid, corporate subsidies, etc.?

Does no one respond to my question simply because they are unable to? Or is this outside the purview of economics?

Hey you, Don and/or Russ. do you think that's a worthwhile question or not?

John V December 31, 2007 at 12:06 am

Muirgeo,

So, the answer is "NO" to my question?

It seems that way. I know your trying to offer your conjecture as possible evidence but even you know it's not true.

I do not accept the offer. We're back to the beginning:

The answer is "NO".

Thanks.

John V December 31, 2007 at 12:10 am

Murgeo,

One more thing,

If you want to know what libertarians generally think, try a few things:

1. Disregard the terms "Republican" and "Conservative". They only confuse you.

2. Look HERE, The Austrian Economists, Marginal Revolution and EconLog and Reason and Mises to see what libertarians are thinking or advocating.

If you stick to that, you'll stop coming here to fight battles that don't apply.and wasting time and space.

brotio December 31, 2007 at 12:30 am

John V,

Murthaduck is a mindless troll. The troll occasionally posts things which will allow you to make a point that might sway someone else's opinion away from socialism. But trying to reason with a troll is a waste of your valuable resources.

John V December 31, 2007 at 12:35 am

Brotio,

thanks for the concern. I'm familiar with Muirgeo. I actually wrote more than I planned to but I couldn't resist.

I simply wanted a simple question answered and I got the answer I was looking for…

"NO"….despite her best attempts to obfuscate which I wasn't going to accept.

John V December 31, 2007 at 12:37 am

Sam,

we'd be much better off without all those resources being consumed by empire.

We're you somehow expecting a different answer from them?

If they support MIC, it's news to me.

Gil December 31, 2007 at 12:59 am

I too will give a few cents towards poor Sam's question.

Well depending on the various scenarios it may have been worth the money. After all, the modern world was built by Mercantilism not Libertarianism. The unpleasantries of Western Imperialism could shown to nothing more than a few broken eggs in a large omelette.

brotio December 31, 2007 at 1:07 am

John V,

I didn't recognize your handle, so I was thinking you might be new to the blog. I can definitely relate to writing more than planned when responding to trolls :p

Best Wishes,
bro

muirgeo December 31, 2007 at 1:36 am

Hey you, Don and/or Russ. do you think that's a worthwhile question or not?

Posted by: Sam Grove

Sam,

I know it's not much but myself and Ron Paul are on your side. Indeed its a very good question. These people complain they want free markets yet the war in Iraq is all about using the government and peoples taxes (i.e. hard earned money) to get some one else's product to the market in complete opposition to fair, free or competitive markets. When I bring up such points all I get is called names.

Python December 31, 2007 at 3:18 am

I wouldn't trust any answer to Sam's question from anyone. No one has any clue how much of the money spent on "empire" was wasted or was a stabilizing factor in the economic improvements of the 20th century.

My answer (which you shouldn't trust) is that a lot of money/resources were wasted, but the 800 pound gorilla is that we prevented the USSR, Nazi Germany, Imperial Japan, and Islamic warriors from gumming up the works.

And who said that the modern world was built by mercantilists? That's a pretty loose interpretation of the words "modern" and "mercantilist". Unless you consider the Quakers modern.

Gil December 31, 2007 at 5:21 am

"And who said that the modern world was built by mercantilists?"

Me! Yep I used that term because the expanse of the Old World into the New World wouldn't qualify as laissez-faire Capitalism by Libertarians.

The Dirty Mac December 31, 2007 at 8:09 am

"When I bring up such points all I get is called names."

It is a given that the maintenance of a worldwide military presence has been very costly. There is of course a trade-off, but none of us can precisely quantify the benfit. But Muigeo's point is valid IMHO. There are many reasons to call Muirgeo names, but that is not one of them.

"For focusing too strongly only on over regulation while mostly ignoring corporate welfare and monied politics libertarian economic and political policies…"

You may want to resolve to read this site more closely in 2008.

jp December 31, 2007 at 8:32 am

I remember the 1970s well. (I graduated college in 1981.) Today's problems are almost nothing by comparison. My macroeconomics professor lectured about stagflation as if we were helpless to mitigate it. Another of my professors claimed that the oil supply would run out in 20 years (i.e., 8 years ago).

vidyohs December 31, 2007 at 9:31 am

"There's is an education based on experience far from the ivory towers.

Posted by: muirgeo | Dec 30, 2007 10:17:13 PM"

Go yee forth and seek it, young lady. And, I would begin with remedial English so something like this (There's is an edu….)will not show up in your efforts again.

Once you have conquered the art of writing and talking, proceed to studying other worthwhile pursuits such as those you like to pontificate on while being thoroughly ignorant of such.

vidyohs December 31, 2007 at 9:33 am

"People are seeing the massive market failure that is are nations health care."
Posted by: muirgeo | Dec 30, 2007 10:20:02 PM"

Young lady, you really really need to follow my previous suggestion.

"….failure that is are nati….." tsk tsk.

Randy December 31, 2007 at 9:39 am

Muirgeo,

Re; "…your economic philosophy has a black eye based on peoples perceptions of the current economy…"

Perception is important – and usually accurate. Those whose perception of the economy is that it is bad and getting worse are probably right, and they should take appropriate action on the basis of that perception. The economy doesn't suck for everyone, and the ones who perceive that the economy is good are probably doing something right. Its the folks who perceive the economy as bad that have a problem – they're probably doing something wrong. The important point is that the economy isn't going to change for them, they are going to have to realign their efforts to match the needs of the changing economy.

vidyohs December 31, 2007 at 9:46 am

Sam Grove,
While I agree with your sentiments expressed above, as a matter of fact I often discuss with my brother the potential of mankind had not all those millenniums of accumulated wealth not been seized by a government and wasted on egotistical projects such as pyramids, temples, and West Virginia super-highways, you encourage me to ask this question.

Do you know of, or are you aware of, a list of those 130 countries that we "have military bases" in? I'd very much like to see that list.

I have seen this number bandied about before on other discussion lists. Knowing somewhat of our past worldwide military posture I have to suspect someone is fudging on the numbers and including places a man such as myself would never think of as a military base. For instance each USA Embassy has a staff of marines doing guard and ceremonial duty, are they considered a military base in that 130 number? And, I also know that we do not have an Embassy in each foreign sovereign nation, some are just too small and others too hostile.

I have no definitive answer and I am looking to learn, but I am skeptical.

vidyohs December 31, 2007 at 9:55 am

Randy,
I was going to say that but in my words relating personal experience and relationships founded since 1998. But you made such good points in good clear concise terms that I can just say..

I agree. Thanks.

Randy December 31, 2007 at 9:56 am

Vidyohs,

Believe it or not, I used to maintain that list back in the late 80s. Sorry, you can't see it – its classified. I can tell you that you would be amazed at some of the places we have forces stationed.

Randy December 31, 2007 at 9:59 am

Vidyohs,

Looks like we're out of synch :)

The list is the one you referred to in your post to Sam Grove. And thanks for the comments.

Paul December 31, 2007 at 10:03 am

Is the point of this article that we should listen to more glam rock and do more coke? Because I'm already doing that as much as I can, and it's not working.

Gil December 31, 2007 at 10:40 am

I do the occasional Coke but prefer Pepsi. :|

muirgeo December 31, 2007 at 10:44 am

vidyohs,

Yep name calling while using good grammar and being a supreme hypocrite. Yep I can't keep up with one as wise and civil as yourself. Did you get your monthly government check yet? You know I think there are blogs out their that discuss grammar if that's what you're interested in. You might want to check it out. I've also seen other boards that allow for unlimited name calling and personal attacks… might be good for you as well. I just take comfort in knowing plenty of people like you and how truly miserable they are. You have a Happy New Year grumpy lil feller…. if that's possible.

vidyohs December 31, 2007 at 11:06 am

Poor muirduck,
perhaps you missed this part of my post:

Once you have conquered the art of writing and talking, proceed to studying other worthwhile pursuits such as those you like to pontificate on while being thoroughly ignorant of such.

Posted by: vidyohs | Dec 31, 2007 9:31:11 AM

The ideas you so ineptly attempt to express have been proven disasterously wrong over and over and over and over in group after group after group after group and in nation after nation after nation after nation, yet you still try to advance them.

Once a socialist evangelical, always a socialist evangelical.

To paraphrase the illustrious scumbag Bill Clinton, "It's your English and your ideas, stupid."

As for name calling, honesty compels me to quote myself, "If it writes like a 14 year old girl, expresses itself like a fourteen year old girl, has the emotional driven ideas of a 14 year old girl, and refuses to listen and learn like a 14 year old girl, it's a duck."

muirduck, you are received as you are here on this blog because of what and who you are, not because of what and who I suggest you are.

vidyohs December 31, 2007 at 11:07 am

Randy,

Let me look at the list and then you can kill me. :-)

tiger December 31, 2007 at 11:18 am

The difference between today and the 1970's is really night and day. We felt bad because things were bad. A middle class family had one car, a small house, a mortgage they could barely pay, tough credit restrictions, high unemployment, inflation, taxes and energy prices, the minimum wage was commonly paid for any entry level job and it was less than $2.00 per hour (so you had to work about an hour to pay for one gallon of gas), the cars and other products we owned (particularly American made) were of low quality and the only folks getting anywhere were the filthy rich elites (like George Soros) who liked the system the way it was. On top of that we just got our a$$ kicked in Vietnam, found out our president was a crook, inhereted a push over of a Vice President, and got stuck at the end of the decade with the worst president ever (even worse than Nixon) Jimmy Carter.

You can't even compare then to now-it is some much better, so many more opportunities, better goods, services, homes, cars, boats, travel, insurance, investments for the little guy, etc.

So, to all naysayers and comparison freaks: SNAP OUT OF IT!

Randy December 31, 2007 at 11:43 am

Vidyohs,

Sorry, I don't have access to it anymore. Got my DD 214. They don't let me play with M-16s anymore either – so no worries :)

Actually, most of the list is easily available on the web – nearly all the major bases you were referring to are listed on the services web sites and other sites. But TRANSCOM had to be able to get stuff to folks in a few less well known places – that was the classified part.

Maurice December 31, 2007 at 11:53 am

"People are seeing the massive market failure that is are nations health care."

What "market" failure? When was the last time we had a free market in health care? We have massive government and quasi-government (state insurance boards, unelected officials who tell insurance companies what they must offer) intervention in health care, and that's been going on at least since the 60's…really, since the government decided to link health care insurance issuance with employment by large corporations.

The "market" in medicine, even that which is nominally "free", is not even remotely free. It is completely entwined with and dependent upon the intervention of the government.

One can argue whether we should have a market-based system, or a government-based system…or some unholy mixture, as we do now, but to say what we have is in any way, shape or form, a "market" failure is just plain stupid and ignorant of the facts.

Randy December 31, 2007 at 12:14 pm

Maurice,

True. Also, people not being able to afford something is not a market failure. The market for health care has resulted in the availability of a very high level of medical care, some of which is only available for a very high price – but that's a market success, not a failure. The only failure is that of the people who think that high quality care should be available to all at little or no cost. But dreamers often fail. The dreaming is easy – its the doing that's hard.

muirgeo December 31, 2007 at 12:18 pm

Maurice,

That's fair enough. Is it fair for me to claim the same with regards to the oil markets. Do you really believe prices are market driven? Or is the product enormously subsidized by the government and tax payers?

vidyohs December 31, 2007 at 12:22 pm

Okay Randy,
I narrowly escape death once more though my curiosity goes unsatisfied.

Retired USN here, Top Secret Cryptograhic with six compartments tacked on to that. Everyone communicates, so that alone brought me info most folks will never ever see.

The reason I question the numbers is simply my definition of a military base is an area nominally ceded by a host government to the USA and controled and protected by US forces for the purpose of conducting operations of some sort.

Detachments of personnel hosted by a foreign military who are aiding and abetting our operationas by allowing us facilities and useage of their bases in my view do not count. And, as I said detachments of marines who guard Embassies do not count in my book.

So, I'd still have to see and verify with my own eyes that there are 130 countries where my definition is in play.

Sorry, not trying to pick an argument, just being skeptical.

vidyohs December 31, 2007 at 12:25 pm

Word in fourth paragraph should read
operations not operationas. that must have been my latin finger that typed that.

Randy December 31, 2007 at 12:32 pm

Vidyohs,

I don't disagree. 130 countries sounds like a bit of a stretch, and the flow of cash into many of the operations is a significantly greater expense than the cost of a few specials ops guys hanging around the airport. USAF, by the way. Never got a Top Secret clearance – I was one of those guys who had to get a "waiver" to get in – if you know what I mean :)

Romantic Realist December 31, 2007 at 12:35 pm

People are NOT out there "living the economy".

They are out there living their complaining, lobbying, demanding-ever-more-entitlements, pathetic little lives (not everyone, needless to say, but the vast majority).

There is nothing at all ivory tower about libertarian economic views, or what are better called "Masononimics". It's the ivory tower slavery mongers who deceptively call themselves liberals who fuck up the economy.

People are getting just what they deserve.

John V December 31, 2007 at 12:35 pm

muirgeo,

I see another concession followed by misdirection in your last post.

Your oil question is also a false paradigm, BTW.

muirgeo December 31, 2007 at 12:37 pm

Murgeo,

2. Look HERE, The Austrian Economists, Marginal Revolution and EconLog and Reason and Mises to see what libertarians are thinking or advocating.

Posted by: John V

John I went to the Mises site. They have a thread on who is the worst president of all time. FDR was pretty much on top of the heap.

My point…. the current economy is going to bring us another FDR-like president and eventually universal health care.

Or to restate my point we will get out of the gloom but NOT by going on in the same path of the neocons have directed us. Also not by going in the Libertarian direction but by heading more in the modern liberal/progressive direction…. towards a stronger social democracy basically.

So basically my point is one of conjecture. And you are right that I can't provide any evidence for it. But I think I can provide lots more evidence for the success of pluralistic democracy over anything the libertarian can find to support the success of his ideology.

Further, for what it is worth if I had to choose a Republican candidate for president it would be Ron Paul.

Randy December 31, 2007 at 1:01 pm

Muirgeo,

I don't think you're wrong. I think the progressives have been running this country with only token opposition for over a century now, and I don't see any reason for that to end. Its an adaptive ideology. It takes the credit when things go well and assigns the blame to someone else when things go bad. But that doesn't mean it works well – and I don't think it does work well (at least, not for anyone other than the progressive elite) – so I for one won't be jumping on the bandwagon any time soon.

John V December 31, 2007 at 1:34 pm

Muirgeo,

that's all fine and good in your last post. You're entitled to your opinion. But none of that speaks to defending the statement you made that I took issue with. That was my issue, that was why I addressed you in the first place. Your "horseshoes and hand grendades" way of describing everything you disagree with as pretty much the same thing is something I do not tolerate.

You can be a liberal or socialist or both. I really don't care, but try not to be a lazy one that doesn't speak accurately. It makes you look bad.

john dewey December 31, 2007 at 1:55 pm

Maurice: " since the government decided to link health care insurance issuance with employment by large corporations"

By "the government" I assume you mean the federal government. Was it actually the federal government that linked insurance to employment?

First, employee provided fringe benefits have always been deductible expenses for companies, for several decades before companies began offerring group insurance.

During World War II, large companies used fringe benefits to get around wage freezes imposed by the National War Labor Board. Group health benefits began to increase, as good old fashioned competition for workers forced many companies to offer health insurance.

By the late 1940's, unions had recognized that group-negotiated health insurance was a good deal. Unions petitioned the government to make fringe benefits subject to collective bargaining, which the Supreme Court finally okayed in 1949.

Finally, after competition and union negotiating started the ball rolling, the tax laws for health benefits were changed. Starting in 1954, the federal government encouraged employers to provide health insurance by allowing individuals to not pay taxes on employer-provided health insurance. That exclusion was first allowed in 1943, but conflicting rulings by the Federal Reserve prevented corporations from taking advantage of it until 1954.

It is a mistake to overemphasize the role of government tax policy on employer-provided health insurance:

"Firms began to offer health insurance before taxes were a principal concern of employers and workers, and they did so despite persistent uncertainty about the tax treatment of group health insurance, uncertainty that was not resolved until 1954"
The battle over private and public benefits in the U.S.

Here's a timeline of group health insurance development in the U.S.:

History of health insurance benefits"

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