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Many months ago I came across the website wtfhappenedin1971.com. The website is a collection of around 60 charts. All of the charts show some aspect of the modern world going haywire in 1971.

Some of the charts show that certain things were tightly connected for many decades before suddenly decoupling in 1971, with one thing continuing to go up while something else flatlined. An example of this would be compensation and productivity. Productivity continued to rise while compensation flattened off. Other charts show a single line that was trending more and more positive, up until 1971 when suddenly the trend flattened out. An example of this would be black income as a percentage of white income. Still other charts just show that things worked one way before 1971 and afterwards they started working another way. Examples in this category include global currency crashes but also incarceration, obesity and divorce rates.

As the last set of examples illustrates, while most of the charts deal with economic concerns, with particular emphasis on inequality and inflation, 1971 is also the inflection point for many of the other things we worry about, like political extremism. The two parties had been in pretty tight agreement for several decades, but in 1971 you see both start to veer off towards the extremes. After seeing dozens of inflection points, all occurring at the same point in time, one has no choice but to join the website in asking WTF happened in 1971?!?! 

Unfortunately rather than just coming out and offering an explanation the website prefers to use something of a socratic method. They hope that the graphs will generate questions which will lead people to reach the correct conclusion on their own, and that the conclusion will have a better foundation because they arrived at it independently. However, if you make it all the way through the graphs there’s a link to a “Discussions” page which features some videos and podcast appearances by the guys behind the site. If you follow one of these links you’ll find that they blame it all on the end of the Bretton Woods system under Nixon. The biggest effect of this change was to end the gold standard. The 1971 guys think we should go back to a non-fiat currency system and in place of the gold standard we should have the bitcoin standard. I’m not sure what all or even most of the effects would be if the U.S. switched to backing their currency with bitcoin, but I can guarantee at least one effect. It would be very lucrative for early bitcoin investors, which is to say I’m not entirely sure we can count on these guys to be objective.

As I mentioned I came across the website several months ago, and at the time I made it the subject of one of my rare tweets (or perhaps I retweeted it, I forget which). In response some of my readers asked me to take a stab at answering the question. Of explaining what exactly did happen in 1971. Was it the end of the gold standard/Bretton Woods or was it something else? My curiosity had been piqued, and it seemed like something that might be in my wheelhouse. Accordingly in the months that followed I’ve been keeping my eyes open, on the lookout for evidence of big changes in the late 60’s early 70’s. Some grand explanation for WTF happened in 1971? Since that time here are the potential explanations I’ve come across:

1. I Was Born

It would be irresponsible of me to write a whole post on what happened in 1971, and not disclose that I was born in 1971. Perhaps the answer to: “WTF happened in 1971?” Is: “Jeremiah was born.” And of course if you’re going to have a Jeremiah he needs subjects for his jeremiads, so everything started going wrong the moment I was born.

Consider also that from a position of extreme solipsism I can’t even be sure that anyone other than me exists. Perhaps this reality is just my simulation and when I was born the creator of the simulation changed a bunch of the settings in order to craft the precise reality he wanted me to experience. 

I’m not sure of a lot, but I am sure that we can’t rule out the possibility that it’s entirely my fault.

2. Nixon Ended the Bretton Woods System and the Ability to Convert Dollars to Gold 

Next we might as well get the preferred explanation of the 1971 guys out of the way. For those that still aren’t sure exactly what happened, I don’t have the space to get into all the implications (and believe me, depending on who you listen to there are thousands of interpretations). But here’s the short description from Wikipedia:

On 15 August 1971, the United States unilaterally terminated convertibility of the US dollar to gold, effectively bringing the Bretton Woods system to an end and rendering the dollar a fiat currency. At the same time, many fixed currencies (such as the pound sterling) also became free-floating.

Certainly this is a big change to the way both the U.S. and the world economy operated. Also the timing does seem suspicious. Finally this is the explanation the website wants you to arrive at, which has to carry some weight.

While I only recently dived into the discussion section of the website and uncovered their fascination with bitcoin, the Bretton Woods angle was obvious just by looking at their charts, and one of the reasons I delayed writing about it is I wanted to better understand the linkage between going off of the gold standard and all of the things that had happened since then. And while I came across many other explanations for what happened in 1971 the “leaving Bretton Woods” explanation didn’t really get any clearer to me. And yes I understand that when you allow your currency to float freely ungrounded from any hard reality that it seems only logical that it would be easier to spend (government debt has exploded since 1971) and hard to keep the value stable (inflation has also skyrocketed). But despite this it’s rare to find even defenders of the gold standard claiming that we could ever go back to it. (Though such advocacy is becoming more common.)

I certainly understand the argument that the answer to “WTF happened in 1971?” Is, “We went off the gold standard”, but it feels too pat. It doesn’t explain everything else that inflected in 1971. It’s hard to find anyone arguing we should go back to the gold standard and even harder to find people saying we shouldn’t have left it in 1971. (Though if you have come across any great arguments please forward them.) 

As far as moving to a bitcoin standard, tackling that would be a separate post, one I’m in no position to write just yet.

3. Nothing, there Was No Inflection Point in 1971

One of the big problems with the previous explanation and indeed all of the explanations is that there exists a reasonable possibility that despite all the charts nothing really changed in 1971. One of the points I’ve made before in this space is that anytime we talk about modern trends, we’re almost always dealing with very limited data. We didn’t really come up with the idea of tracking societal statistics until pretty recently. So when you’re looking at a graph charting the rise of real GDP per capita compared against median male income, the data for that graph was only collected starting after World War II. We don’t know what the comparison looks like before then.

This turns out to be a big issue. If we review the charts on the website, nearly half of them (27) only show data after World War II (with many not starting until 1960, and a few actually starting in 1970). If we were to divide the time since 1945 into two parts, the part before 1971 and the part after, two-thirds of that time has come after 1971. This makes it difficult to argue that the time before 1971 should act as some sort of “normal”, or control on our experiment, while the post 1971 period is the aberration. It seems just as, if not more likely, that the immediate postwar period — when the US stood alone as the only nation unscathed by the war, and furthermore at the peak of its power — was the aberration, and that the post 1971 period represents a return to normal. 

Of course there is the other half of the graphs, the ones that go back farther than World War II, what about those? 

Well the rest of the graphs are a mixed bag. There’s a fair amount of duplication particularly in the graphs showing the growth of federal spending and the debt. Of those that do go back farther back than World War II, most only go back as far as 1900 or maybe 1880. And some of those, particularly the ones dealing with inequality show that World War II and its immediate aftermath really did represent an aberration, that from 1900 to 1940 inequality was similar to what we’re seeing now. That 1971 wasn’t when things broke, it’s when things were “restored”. When inequality returned back to its usual level.

Related to the foregoing I should include a comment made in response to a post over at Astral Codex Ten. The post asserted, “Around 1970, something went wrong.” In response the commenter said: 

This is semimythology. The richer the region within the U.S. you look at, the less growth there was between 1930 and 1970. The 1930s-early 1970s was mostly a process of poor regions catching up with the rich, not faster growth in the richest regions, which is what matters.

Combining these two explanations together I think we’ve gone a long way towards explaining what happened in 1971. But I don’t think they explain everything, and even if the postwar period was an aberration, it was apparently a particularly nice one, and it’s entirely reasonable to ask how we could return to those conditions, now that we know that it’s possible. Nevertheless I think it’s clear that at least in some respects the answer to the question of “WTF happened in 1971?” is that the auspicious conditions the U.S. had been enjoying since the end of the war finally came to an end.

4. The Long Peace Happened

As I mentioned many of the charts on wtfhappenedin1971.com concern rising inequality. This reminded me of the book The Great Leveler by Walter Scheidel, which I read and reviewed several years ago. Scheidel’s contention is that in normal times inequality is constantly increasing, that it’s only during times of great disruption that we get drops in inequality. Quoting from the book:

Thousands of years of history boil down to a simple truth: ever since the dawn of civilization, ongoing advances in economic capacity and state building favored growing inequality but did little if anything to bring it under control. Up to and including the Great Compression of 1914 to 1950, we are hard pressed to identify reasonably well attested and nontrivial reductions in material inequality that were not associated, one way or another, with violent shocks.

Scheidel then goes on to say:

State collapse served as a more reliable means of leveling, destroying disparities as hierarchies of wealth and power were swept away. Just as with mass mobilization wars and transformative revolutions, equalization was accompanied by great human misery and devastation, and the same applies to the most catastrophic epidemics: although the biggest pandemics leveled mightily, it is hard to think of a remedy to inequality that was dramatically worse than the disease. To a great extent, the scale of leveling used to be a function of the scale of violence: the more force was expended, the more leveling occured. Even though this is not an iron law—not all communist revolutions were particularly violent, for example, and not all mass warfare leveled—it may be as close as we can hope to get to a general premise. This is without any doubt an exceedingly bleak conclusion. (Emphasis mine)

This conclusion fits the data that shows that inequality was bad up until World War II and then started to get bad again a few decades later. But what about the rest of the charts? What about the other things that changed starting in 1971? To answer that, let’s turn to another book, The Worth of War by Benjamin Ginsberg, which I also reviewed several years ago. In this book Ginsberg points out that war is the ultimate test of rationality. When you’re experiencing a time of peace and prosperity, as we obviously are, then you can get away with doing things which are suboptimal. This is not the case when you’re involved in a fight to the death. In that case every dumb thing you do has a chance of opening you to the punishment of it being the last dumb thing you do. To put it in a milder form, we’re more tolerant of inefficiencies during times of peace than we are during times of war, and we have accumulated a lot of inefficiencies since 1971. 

At best this would represent a partial explanation, and I know a lot of people would be inclined to deny that it should be extended even that far. Also the cure of re-engaging in existential warfare is almost guaranteed to be worse than whatever our post 1971 disease happens to be. Nevertheless this all touches on a larger point. One that I’ve made repeatedly in the past and which will come up again in this post. We’re in historically uncharted territory. 

5. It’s All Part of a Historical Cycle

Peter Turchin, the leading proponent of historical cycles has gotten a lot of attention for predicting the unrest we’re currently seeing. His cycles have a period of 50 years, meaning the last period of unrest was in the late 60’s early 70’s but as I understand it spikes of unrest and violence bookend the different periods of expansion, stagflation, crisis and depression. 

I am not a Turchin expert. I’ve read one book of his so far and it was entirely concerned with identifying historical cycles. It had nothing to say about what period we’re currently in, but if 2020 marks the transition between the stagflation period and the crisis period, and 1970 marked the transition from the period of expansion to the period of stagflation that would certainly seem to explain WTF happened in 1971. As I mentioned when I reviewed the last book, I do intend to read more Turchin. Perhaps I should start by following his blog? If anyone out there has been following it and can recommend any posts which bear on this as a potential explanation I’d be grateful.

6. We Broke The Country

As I’ve already alluded to, the late 60’s early 70’s certainly represented a political inflection point. Among the things that happened we have:

Extreme Violence: I’ve used this quote from FBI agent Max Noel before, “People have completely forgotten that in 1972 we had over nineteen hundred domestic bombings in the United States.” This is also suspicious timing, and while the violence itself might not have inaugurated the long standing trends we’re still seeing today, you could certainly imagine that in the face of that violence you might be willing to implement all sorts of changes. And while they might be in response to something which later goes away, the changes could prove harder to reverse. 

Watergate: While Nixon didn’t resign until 1974 the actual break-in and the ensuing political circus happened in 1972. And since that time the ability of the government to get things done, particularly across party lines has steadily decreased. In particular while it’s easy to continue to spend money and kick the can down the road, it’s much harder and requires more coordination to exercise fiscal discipline. It’s hard to keep the train from driving off the cliff if you’re still fighting over the controls.

Roe v. Wade: Closely related to the above, this is when many people feel like the Supreme Court broke. And when I say many people I’m including Ruth Bader Ginsburg, who felt the decision represented judicial overreach and subsequently caused a lot of problems further down the road. Roe wasn’t decided until 1973, but it was argued in 1971.

The Age of Entitlement: In his book of the same name, which I reviewed last year, Christopher Caldwell makes the argument that the U.S. has two constitutions. The first, created in 1787, is the one we all think of when someone mentions the US Constitution. The second, created in 1964, and commonly called the Civil Rights Act, is not generally viewed as a constitution, but one of Caldwell’s central arguments is that it is, and that from this much of the current political landscape follows as a conflict between the original, de jure constitution, and the new de facto constitution. That, rather than being a natural extension of the original constitution, the Civil Rights Act is in fact a rival constitution, not complementary but actually opposed in most respects to the values of the original. 

You may wonder how something which seems primarily cultural works to explain a phenomenon that’s largely financial, and moreover how something which happened in 1964 didn’t actually break things until 1971, but for Caldwell this is largely a financial argument. His claim is that passage of the Civil Rights Act opened up the floodgates of entitlement spending. While this spending was still in its infancy it was possible to imagine that things could be stopped or reversed, and indeed, that appeared to be the way things might be headed under Johnson, and even more so under Nixon, but Nixon ended up getting impeached. (I’m only now noticing the parallels between this description and the arc of Obamacare.)

This basically put the issue in the hands of Carter. Who actually tried to cut entitlements, and furthermore proposed lean and tight budgets. Whether his efforts contributed to the stagflation of the 70s or not, the timing of that was against him. All of this meant that by the time it got to Reagan entitlements were too entrenched to do anything about, and there was really only one thing he could do: Spend like crazy, cut taxes, and shift the burden of entitlements to future generations. 

One could argue that 1971 comes into play because that’s basically the point at which entitlement spending passes from being contentious to part of the landscape. Which seems kind of a stretch, but at the same time it’s easy to imagine that a sense of entitlement combined with massive spending on entitlements could lead to many of the trends documented on the website. Similarly it’s also clear that we have been entirely unable to slow spending on entitlements, (indeed recently such spending has skyrocketed, see my last newsletter) which is why these trends have continued for so long.

Taken together these four political inflection points seem at least as much a symptom of an underlying disease rather than the disease itself, but it is interesting how many such inflection points were clustered right around 1971.

7. Decadence and the Twilight of America

Closely related to the previous point is the idea of decadence. This argument was recently put into book length form by Ross Douthat in his book The Decadent Society. I did a review of it back in March of last year, and I would direct you there for the full discussion. In this space I just want to see how well his arguments map to our 1971 timeline.

As is the case nearly every time someone makes an argument for modern decadence Douthat begins his tale with the moon landing. This is his very first paragraph:

The peak of human accomplishment and daring, the greatest single triumph of modern science and government and industry, the most extraordinary endeavor of the American age in modern history, occurred in late July in the year 1969, when a trio of human beings were catapulted up from the earth’s surface, where their fragile, sinful species had spent all its long millennia of conscious history, to stand and walk and leap upon the moon.

After that first historic landing we did it five more times. The last of those was December of 1972. If the moon landing represents peak America, then there’s a credible argument that 1971 was the summit of that peak. By 1973 we had withdrawn from Vietnam in embarrassing fashion. Which was also the year OPEC announced their oil embargo. Oil prices didn’t make it onto wtfhappenedin1971.com, but I found another site which pointed out that the early 70s was also when oil prices went from “stable to unstable and never looked back”. We also suffered blows to our prestige in areas like car manufacturing. By 1970 foreign car makers had started to flood the U.S. market with cheaper, more reliable cars. The big three responded by introducing more compact models, but none of them was very well regarded and to the extent people remember Gremlins, Pintos and Vegas it’s as punchlines to jokes. Compounding their problems they had to deal with numerous union/labor issues.

To put things in more general terms Douthat argues that decadence can be broken down into four different components:

The first is stagnation. In the book Douthat borrows a thought experiment from economist Robert Gordon. Where he asks people to choose between having no technology invented since 2002 or all current technology except indoor plumbing and toilets. Everyone always chooses the former. When I reviewed the book I speculated you could go back farther than 2002, and I wonder at what point you’d get 50 percent of the people saying I’d give up indoor plumbing rather than give up all the technology after year X. Is that year 1971? Almost certainly not, but I would bet that it’s in that general neighborhood if not actually earlier than 1971.

The second component of decadence according to Douthat is sterility. As in the fact that we’re literally not having kids. You want to take any guesses as to the last year the USA’s birthrate was above the replacement level of 2.1? Did you guess 1971? If so you get a gold star, because in yet another example of the 1971 inflection that is precisely the case. And it’s an inflection point I haven’t seen mentioned anywhere else. 

The third component is sclerosis which Douthat mostly uses to cover political inaction. For most of us the filibuster has become emblematic of this inaction and indeed we see an inflection point in the early 70’s there as well. It got so bad so fast that in 1975 it was reduced from a 2/3rds majority to the current 60 votes we see today. 

Finally there’s repetition, the stagnation of art and culture. Where, for example, a 2010’s movie looks like a 2000’s movie looks like a 1990’s movie. I think it would be very hard to pin the beginning of this to a specific year, and perhaps it’s the exception that proves the rule.

Once again we may be describing the symptom more than the disease, but taken in its entirety you can certainly see a narrative where around 1971 the US went from being vibrant and expansive to tentative and self-absorbed. Where we accomplished one final amazing thing — landing a man on the moon — and then there were no other frontiers left. Probably because I just read that book, it puts me in mind of Shackleton and the great British explorers, which of course coincided with the heights of the British Empire. I think to be vibrant a country needs a frontier or an enemy or something to strive for and perhaps in the early 70s after the moon landing and our defeat in Vietnam we had run out of both. 

8. Less Likely but still Interesting contenders
So what’s my favorite explanation? It’s actually none of the above. And because it’s my favorite, it won’t appear here. I’m going to devote the whole of my next post to it. But before I end this post here are a few miscellaneous contenders:

Healthcare: Another area that looks more like a symptom than a disease, but it’s easy enough to find graphs that show not only that we spent next to nothing on healthcare in 1971, but that we spent the same amount as other developed countries. That 1971 is when spending started to go up and to diverge from other developed nations.

Sexual Revolution: The timing is more or less right, and there are books that have made this case like Sex and Culture and Primal Screams. I doubt that it’s at the top of anyone’s list, but I suspect that the sexual revolution and other cultural changes have had a much greater impact than most people suspect. 

Science broke: With the Wuhan lab leak hypothesis getting lots of attention, along with all of the things science did right and wrong over the last 18 months, added on top of the replication crisis, and the fight over climate change. Lots of people are asking if science is broken. If for the moment we assume that it is, then the next question would be when did it break? I haven’t dug into this as much as some other stuff, but one potential answer is 1971. That’s when peer review really took off, and it couldn’t have been too long after that that “publish or perish” became the law of professorship. 

End of the Malthusian Cycle: If birthrates flatten and agriculture becomes more productive then we have reached a state in human development we very rarely see, a state where population is not limited by the food supply. This is not the first time this has happened, but previously it’s always been because of horrible catastrophes like the Black Death. The reason I didn’t give more space to the explanation is that it appears to have happened closer to 1960 than 1971, and other people have already spent quite a bit of time on it. But in essence one possible answer to the question of what happened is that after thousands and thousands of years humanity finally escaped the Malthusian trap.

Tune back next week when I cover my favorite explanation (hint: I’ll once again be talking about nuclear power.) There’s very little chance I won’t be back next week, but if you’re concerned at all, the best thing to do is to donate.