“As the US economy was becoming increasingly globalized, the gap widened between the wages paid to more-skilled and less-skilled workers as measured by educational level. In 1979, for example, male college-educated workers earned 30 percent more than their high school-educated counterparts. By 1995 the premium for college-educated workers had risen to about 70 percent.

“The effect of this increasing wage disparity among American workers has been compounded since 1973 by a fall in average real wages. US average real weekly earnings peaked in 1973 at nearly $320. They then fell to under $260 by the mid-1990s and recovered to only $280 last year [2000]”
http://www.iie.com/publications/papers/paper.cfm?ResearchID=408

By some lights, the 1950s and 1960s comprised a Golden Age of Capitalism which finally came to an end either with Nixon’s announcement of the decision to sever the link between the Dollar and gold on 15 August 1971 or (more credibly) the oil price hike of 1973, after the Yom Kippur war that year, and the downstream consequences that followed from the oil price hike.

“The golden age, from 1950 to 1973, saw a degree of convergence between the US and other advanced capitalist countries (western Europe and Japan) coinciding with a new liberal international order. Indeed, Japan, despite just having emerged from a decade of economic stagnation, has had the fastest growth, its per capita income growth increasing sixfold during the golden age, at 8% per year compared with 4% in western Europe.”
http://www.oecdobserver.org/news/fullstory.php/aid/1295/Golden_age.html

What followed the oil price hike in America and Europe during the rest of the 1970s was dubbed “stagflation” by economists – an apt tag to describe a combination of markedly higher inflation rates and stagnant GDP growth. It was a time when the limits came to be recognised of the conventional Keynesian prescriptions for cutting unemployment. Callaghan, Britain’s prime minister 1976-79, officially rang the death knell on Keynesianism:

“We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that that option no longer exists….”
http://www.wsws.org/articles/2005/jun2005/call-j10.shtml

The prevailing official orthodoxy of the early 1980s in many countries with advanced market economies became monetarism. In 1995, the IMF officially wrote off monetarism with this:

“…instability of monetary demand, especially in the context of supply shocks and declines in potential output growth, complicated the task of monetary authorities. As a result, during the 1980s most central banks – with some notable exceptions – either abandoned or downplayed the role of monetary targets”.
IMF World Economic Outlook, October 1996, p.106.

And by accounts, it seems that Milton Friedman agrees:

“In an interview with Milton Friedman (published in the Financial Times 6 Jun 2003) Milton Friedman even seems to repudiate the monetary policy of monetarism and is quoted as saying ‘The use of quantity of money as a target has not been a success,’ … ‘I’m not sure I would as of today push it as hard as I once did.’”
http://en.wikipedia.org/wiki/Monetarism

Steve – Where in the post does Chris say that the world in 1973 was better than today? Or is your objection that he wrote about it at all without including a ritual denunciation of Yoorpean Commienism?

The good old days-before the ‘indicators’ starting going in the wrong direction…

Sheesh

Steve