tag:blogger.com,1999:blog-7330069370445586585.post1267382421458240186..comments2023-08-17T04:17:18.470-07:00Comments on Schrodinger's Blog: Part 1 - Why Tyler Cowen is (probably) wrongSchrodinger1http://www.blogger.com/profile/00983962780899187957noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-7330069370445586585.post-42899243342802787872011-03-27T21:52:59.763-07:002011-03-27T21:52:59.763-07:00"...every new technology had to devour ever-i..."...every new technology had to devour ever-increasing amounts of cheap energy, mainly in the form of petroleum products. "<br /><br />This was very true from 1920 through to the 1960s, as things like cars, tractors, trucks and airplanes were fueled by large increases in oil production. Since 1970 growth has tended to shift towards semiconductor based technologies, and things like finance and healthcare, which don't use a lot of oil.<br /><br />Now it is true that oil imports suck wealth out of America and are bad for the trade deficit. The oil crisis was in 1973, so the timing is about right for it to have played a role in America's growth slowdown.<br /><br />My current opinion is that oil is not to blame for slowing growth and stagnating median incomes. However, this is an important topic which I hope to someday (but not soon) write a proper post on.Schrodinger1https://www.blogger.com/profile/00983962780899187957noreply@blogger.comtag:blogger.com,1999:blog-7330069370445586585.post-90531312151908169342011-03-27T03:16:29.573-07:002011-03-27T03:16:29.573-07:00"Professor Cowen argues that a slowdown in te..."Professor Cowen argues that a slowdown in technological progress was the reason."<br /><br />Technological progress did not stop, but in order to actually contribute goods and services to the economy, every new technology had to devour ever-increasing amounts of cheap energy, mainly in the form of petroleum products. <br /><br />Unfortunately, U.S. production of crude oil, measured in barrels per day of crude oil drawn from wells, peaked in 1971, then began a slow decline, while America's minimum daily requirement of energy continued to rise. <br /><br />The unfortunate response to this discrepancy was the quick ramp-up of large-scale importation of oil and petroleum products. The U.S. began gorging on oil from the Persian Gulf. <br /><br />Within 2 years of the U.S. extraction peak, OPEC organized its members to sharply raise oil prices, resulting in a series of oil-price shocks which, continuing in very irregular form up to the present day, have gradually drained the health of the U.S. economy and drawn our country into a series of catastrophic oil wars.<br /><br />What happened, then, isn't really much of a mystery. The key U.S. mistake was continuing to use ever more oil per day while extraction of domestic crude oil went into decline. <br /><br />Since Jimmy Carter's loss to Ronald Reagan in 1980, as rising petroleum-related costs led the country into an inflationary wage spiral, neither political party has had the courage to make a significant effort to limit consumption of the aptly-named "black gold."Ralph Dratmanhttps://www.blogger.com/profile/00426433134164984467noreply@blogger.comtag:blogger.com,1999:blog-7330069370445586585.post-2729689923792556762011-03-26T14:01:13.924-07:002011-03-26T14:01:13.924-07:00Real wages (ie inflation adjusted wages) did not d...Real wages (ie inflation adjusted wages) did not do particularly well in the 1970s. See the chart posted at: <br /><br />http://economix.blogs.nytimes.com/2011/03/04/the-struggles-of-men/?scp=1&sq=economix%20male%20median%20wage&st=cse<br /><br /><br />I don't accept that debt has reduced the demand for higher wages. People are going into debt in an attempt to maintain living standards. Because fees and interest have to be paid on that debt, people end up being with less money to spend in the long run.Schrodinger1https://www.blogger.com/profile/00983962780899187957noreply@blogger.comtag:blogger.com,1999:blog-7330069370445586585.post-47069794267004610322011-03-26T09:02:21.518-07:002011-03-26T09:02:21.518-07:00Actually, wages rose dramatically in the 1970s, ca...Actually, wages rose dramatically in the 1970s, causing a wage-driven inflation spiral that was ultimately crushed by Paul Volcker at the Federal Reserve. Wages have stagnated since that time. Why? The low-interest, low-inflation economy we've operated under since 1982 has made it much easier to underwrite debt, and the free availability of cheap debt to households has suppressed worker demands for higher wages. Debt has made up where wages left off.Zakhttps://www.blogger.com/profile/18164476599267736937noreply@blogger.com