So why *did* U.S. wages stagnate for 20 years?

Nothing against allowing lot splits, but this is the wrong reason to be for it. The reasoning in the previous to replies reaks of "homeownership is more virtuous than renting" which is not true. And besides, if you really want more homeownership, the most important path forward is condos, and thus condo defect liability reform.

Secure shelter is a necessary pre-requisite to having and raising children. The low birth-rate is a direct result of disadvantaged capital formation, selection interference, and the chaotic and growingly insecure future economically.

Housing is a great and tax favored investment if you know what you are doing. Cash flow is king. That said, rent-seeking behavior is non-productive, and vile in a lot of ways, and equally regulation to address issues is so poorly written that it ends up destroying the market wholesale.

If you take a look at the demographics and trends, we may actually end up having a housing surplus within a decade.

Without a robust social safety net, only the rich and well-connected can afford to take economic risks. Eventually, this just results in a flat-out oligarchy.

The dominant business philosophy from the late 40s to the 70s was stakeholder capitalism, then this asshat came along and said quite specifically: greed is not just a force we'll co-opt for pro-social purposes, it is not a mitigable downside of economic growth, it is actually the entire purpose of any commercial enterprise. https://en.wikipedia.org/wiki/Friedman_doctrine

It is shamefully antisocial and un-American. Today it's so baked-in that many young entrepreneurs don't even realize it's a goofy ass meme that only a moron could expect to yield good outcomes.

Something to consider in your thought process - take two relatively recent stimulus efforts - 2008 and 2020 - the first was primarily quantitative easing - a classic trickle down effort since all the money went to bank balance sheets and trickled down to individuals, the QE stimulus had almost no impact on inflation. Vs Covid which was direct household stimulus and immediately led to inflationary pressure.

A link I don't see mentioned often is most central banks didn't start an inflation targeting policy until the 90s. Prior to that it was still an objective but managed much worse. https://www.richmondfed.org/publications/research/econ_focus.... this link contains a chart that looks at the inflation volatility over time.

I happen to think that a consequence of managed inflation, balanced against aggregate employment is consistent wage pressure. In essence, wage growth in my mental model on this is a consequence where upward inflation swings drive wage gains, while downward ones drive more unemployment. If inflation is managed closely to avoid volatility, then redistributive effects of volatility are limited.

Yup, because you can't have very extensive globalization without bigger ships than you had beforehand, and more of them.

And historically the ships have always needed to be welcome in ports around the globe more so than not.

When you think about it, the USA was founded by multi-national corporations for the benefit of multi-national corporations. They were the ones who could best afford to send ships this way consistently enough.

>maybe that's not the right unit when measuring jobs.

Yeah I think you still need to first measure cargo by the tonne. And then some. The jobs required are already completed by the time the vessel is loaded. What you really have is different cargoes in different amounts at different values in different currencies in disparate locations. The value earned by the manufacturer and trader may represent the work of a wildly different number of jobs or "equivalent" "man"-"hours" exchanged between global operators, even when the balance of trade is considered neutral by one party or another. Then further in some type of job-number terms, different numbers of jobs have different impact on different locations and at different times, even if the currency involved is agreeable to all parties over the long term. So there are a number of moving-target variables other than just dollars or any one currency, and beyond jobs or even absolute tonnage. One thing's sure, any one currency alone is not a very realistic measure of trade balance by long shot.

And different amounts of tonnage may benefit some locations more than others, while also not capable of being well-correlated with any currency value assigned, therefore difficult to account for using financial balance. You do have to also consider that all kinds of trades are made where at least one party is not actually getting their money's worth, sometimes all parties, and trades are still made willingly because they will all still make money in the end anyway, just maybe not as much as they had originally hoped for. Then how do you compare ship after ship of things that may be cheap and fly off the shelf in one currency but still not be worth the money and/or any hidden exchange deficit by far? Against return vessels of a full-value commodity at fair market prices, where everyone gets their money's worth almost every voyage? Time after time different things are bound to add up in different ways.

Now by 1973 the opportunities for prosperity were receding noticeably faster than the previous couple years and it looked like the dollar would be down to half its purchasing power like nobody ever dreamed and there was nothing that could be done about it. There did turn out to be no avoiding that milestone which was reached by about 1976, because basically under Nixon the fox had been in the henhouse longer than people were led to believe.

This set millions of working people back a decade or two, quite a few of them back a few generations. Plain & simple, if you could almost afford a car in 1971, by the time 1976 came around, you could almost afford half a car. If you were among the lucky ones to still have a job. Things were not only stagnant with fewer jobs for workers of all types, but there was no end in sight for anybody.

People just had to accept that nobody would be able to afford anything like they did before, especially employers offering decent-paying jobs, until things returned to normal. But years went by and there was still no sign that things would improve even for those who retained employment. Every year for the rest of the 1970's and well into the "belt-tightening of the '80's" people had to become accustomed to the fact that if "normal" was ever going to come back, it was so many years beyond the horizon that it would be difficult to know if you were really moving in that direction or not any more.

You think that was bad for working people? If you had a decent-paying career underway at the time earning about $40,000, and had to start over at entry-level of $20,000 that's only a $20,000 setback per year. Basically for the rest of your life but who's keeping score? However on a different scale if you had $100 million in liquid assets (regardless of whether there was any excess that was illiquid or not) you likely could barely make the purchases that merely cost $50 million only a few years earlier. That kind of $50 million loss of purchasing power as it nosedived along with everybody else was way beyond the scale suffered by average working people. So the very rich were "devastated" in a league of their own after much bigger dreams had been dashed than a working person can realistically muster no matter what. But at least they were still rich.

And realistically some of them were so well-heeled and so powerfully connected that they might be able to recover their lost purchasing power, if they pulled out all the stops in the most selfish and greedy way possible, most likely if it was at the expense of the greatest number of the financially weakest workers possible, and it still might not happen during the rich patriarch's remaining lifetime. But if everything went well, and if the earnings of capital from labor could be made more disproportionate, better in line with the mid-19th century for instance, they ought to be back at the top of their game by the 21st century at the latest. By that time it would surely require a significant multiple of what the "lost" $50 million would buy in 1971, which was already made impossible to calculate very realistically before the end of the '70's. Due to all the manipulation of sentiment over the years trying to stoke a consumer recovery which ended up existing only in the statistics but not on the ground. So the most financially powerful really had to pull out all the stops and not hold back ever since.

Anyway that's the vibe I got from the yachting community at the time.

And here we are.

Clean out your desk, you're fired!

The Nixon adinistration had recently effected more serious decoupling of the labor supply to wages anyway, by their deep anti-union actions in so many ways not even well-recognized then.

Nixon "opened up" China but in the 1970's they had still never yet had enough dollars to impact the balance of US trade in any significant way.

It took years after investment was allowed to be made in China by Americans, by many on Wall Street who started out reaping much more benefit than their Chinese counterparts, before there started to be the downward effect on US wages. Big financial giants were making actual bank(s) just from the growth in dollars transferred to China, not to mention the absolute total amount of dollars which was "instinctively" not intended to grow less than exponentially. After a few decades though, it was impossible not to consider the Chinese "better armed" with more ammunition than ever in case any kind of a currency war were to come along. Trade war could almost be considered a currency war denominated in physical assets instead, allowing opposing parties to arrive at a status quo regarding how much of each other's currency they possess once it quits fluctuating wildly. And be retained in case it escalates to actual currency war, where it might be a more damaging salvo. Notwithstanding that with the same dollar amounts one nation may be a "richer" country than another in other ways or currencies. Sometimes more rich from past progressive moves in aggregate, other times expected to be richer in the future from aggregate moves being made now or even momentum building under the surface in non-transparent situations.

In some imaginary world of perfect equations and other ideal assumptions, if an overseas nation had the same population as the USA, and actually held the same number of dollars as the USA still had remaining domestically, the wages would tend toward the lowest of the two locations.

Plus the women who were working full-time before things cratered were doing it for prosperity and relative independence to a very large extent, even though they were still paid much poorer and always had been, that's very much what filled the female ranks. The increase in numbers of working women after that point were more often for desperation after a single income could no longer support a family. When you watch prosperity disappear as an option first hand, it's a little more difficult to deny. At least there was eventually enough critical mass to make strides reducing the wage gap, but realistically things had been bungled so bad that there just wasn't enough to go around any more so men really were often paid less so women could be paid more fairly by comparison. Regardless, more opportunity had been lost than was often remaining for so many.

But it wasn't yet due to China, even though their exponential growth had been initiated, it was still far too few dollars to make a difference. But that's where all the manufacturing investment started going when it came to an abrupt halt domestically.

Even by 1979 and a bit beyond about the only thing in the US that I ever saw from China was their ginseng and you had to seek it out. It was like other specialty products not available anywhere else which was one of the main reasons for some imports from other countries a lot of times. Before they went through the roof from everywhere. American companies were still rarely going through the trouble of importing from a communist country at the time for any other reason, which was still no picnic. Reagan, like so many others from many political parties, always hated Communists. People even asked me if I was getting it legally :0 There was just nothing yet like a constant stream of low-cost consumer products from China, the lead-up to that had been handled by other Asian countries for over a decade by then though, their products were everywhere.

There used to be a high $ hurdle to opening investment accounts.

Edit: Also looking for how this market theory explains absurd CEO compensation packages in a world where they quite obviously are not worth the price tag.