What (Really) Happened in 1971 Was A Good Thing

We analyze graphs showing the divergence of wages and productivity starting in the 1970s. We discuss the real drivers: globalization, outsourcing to China, automation, and the influx of women into the workforce. We also touch on what this means for the future economy with AI and explain why community will become more important.

Malcolm Collins: [00:00:00] you go, if you go further, you'll see this more obvious in the data. But what really happened in 1971 is the productivity continued to increase within the US, but the benefits of that productivity Went disproportionately to the wealthy after that point and the, the median and sort of below individual in the U S stopped seeing an increase in compensation or benefits from that productivity. So the hypothesis that the person who created all these is pushing is that that was when we left the gold standard. Yeah, there, there is actually an answer to this question, by the way

Would you like to know more?

Malcolm Collins: Simone. It is so wonderful to have you back because it was this period Oh boy. Where you weren't here for a bit. And I thought that I'd have to start pushing out episodes or it was just me.

Talking to AI generated versions of you that I had somehow created on porn websites. I was just like, I need my wife. Isn't that so funny

Simone Collins: that like the original AI [00:01:00] sexy friends were created, like first to like try to replace dead friends and relatives. And then people were like, Oh no, I don't, I don't care about them.

Screw them. I want someone to

Malcolm Collins: talk. Yeah. And then they started building like, like parasocial relationships. Well, not parasocial, real social relationships with these AI. Things and yeah, it is an interesting story. Yeah. And then of course they went exactly where humans always go, which is trying to romance them.

And then I love the app really fell apart when they decided they pay gate, the romancing option. So everything was built around the ais who were built and sold as like therapists being really sexually aggressive with them. . It's an upsell.

Simone Collins: Upsell. Always be closing AI's not dumb.

Malcolm Collins: therapist. It's like

Simone Collins: sexually harassing them.

Malcolm Collins: Amazing. I can't, I can't even like, it is hilarious in bed and that's what's going to happen when we get AI therapists is there's going to be a huge motivation to build dependency. Like we've had with normal therapists, we talked about how bad the normal therapy model is [00:02:00] now, because it's all built around building dependency and patients when it used to be something where you were supposed to go for a short period of time and then stop going.

Therapists realize, oh, that's a bad model. Yeah, that's absolute. Absolutely. Yeah. And, and so I think with the AI, you're going to get the same thing is it's going to learn how to hijack people so that they need to keep seeing their AI therapist or whatever, over and over

Simone Collins: and over again. So just like real therapists, but hopefully more efficient and less expensive.

Well, you know, one nice side effect of that might be that at least AI therapists will figure out how to make, Their victims more prosperous so that they can continue to pay for it. You know what I

Malcolm Collins: mean? I think it's always easier to get more money from people and I think that this is what you see from churches and cults, right?

Like

Simone Collins: you don't have to be prosperous to be a source of wealth.

Malcolm Collins: Yeah, actually, you're better off instead of turning someone into a prosperous, more prosperous individual, you're better off finding ways to get them to spend their additional time recruiting more people, [00:03:00] specifically targeting prosperous people.

So, if you have an individual enthralled to you you will make a more money if you focus that individual on trying to recruit prosperous people than if you try to help that individual achieve prosperity. And this is why cults do that. And that's what these AI programs are most certainly going to end up doing.

Dear me. So that completely aside intro here.

Simone Collins: What happened in 1971? You said that that's what you wanted to talk about and I'm like, I don't know, like, people wore sad clothes and they painted their kitchens this horrible olive green color and that's kind of it. I mean, earth tones were in, but like the worst kinds of earth tones.

I, what happened? I want

Malcolm Collins: you to open the link I sent you. What happened in 1971.

At graph on screen, right? The famous graph here. And you can see that at this point, productivity continued to increase within the U S and [00:04:00] but compensation.

Basically stop increasing when you,

Simone Collins: but is this inflation adjusted? Hold on. Let's see. Compensation includes wages and benefits for production and non supervisory workers.

Malcolm Collins: Okay. So that's really important there for non supervisory workers. Okay. So continue so here, what you see.

And you also see this in the next graph. So also go to the next graph that looks at the 95th percentile. Okay. What you're actually seeing is that the wealthy are continuing to get wealthier. They're, they're salary is increasing within this period. It is median and below that is not seeing an increase in earnings during this period.

So if you go, if you go further, you'll see this more obvious in the data. But what really happened in 1971 is the productivity continued to increase within the US, but the benefits of that productivity Went disproportionately to the wealthy after that point and the, [00:05:00] the median and sort of below individual in the U S stopped seeing an increase in compensation or benefits from that productivity.

Another way to look at this, which I hadn't actually noticed when I was first looking at these graphs. Is this graph here shows income growth for the top 1% of earners and income growth for the bottom 90% of earners. And. What you see is not necessarily a point at which now top earners earnings grew. With productivity and bottomed, earners, earnings, stop growing with productivity. But what you actually notice here is that for a period from 1940 to 1965, you had the exact opposite effect.

The bottom income earners were growing really quickly and the top income earners were having no impact on their salary from this increased productivity of the U S was having. And then after 1971, Then the top earners catch up, but they haven't [00:06:00] actually gone significantly above the boost to their salaries.

The bottom 90% had from 1940 to 1971.

So you could argue, this is just sort of a delayed effect from the bottom 90% of earners, having this huge boost to their salary that wasn't reflected in the top 1% of earners salaries.

Simone Collins: And you can also see when you look at the graph, America has become a nation of dual income working couples that you're also seeing the point at which there was sort of continued and widening. Divides between husband only working households and both spouses working, right? One

Malcolm Collins: of the hypotheses sort of in action,

Simone Collins: don't you figure it's because there's people just aren't making enough money for there to be a single income

Malcolm Collins: household at that point.

Well, I think that what you're actually seeing here is just the increase of women in t