Real pay going up 1% per year for 18 years means that it has gone up 19.61% since the year 2000. Another great example of statistics being framed to elicit a certain response.
But how much have home prices increased since 2000? How much has rent increased? How much has food prices?
19.61% increase in wages seems like a lot but if you factor in housing prices increased 100%+, prices of steaks increased 200%, etc, then that 19.61% doesn't look too good.
I don’t know which calculations are you talking about precisely, but usually (US,EU,OECD) the hosing costs are included in the form of actaul rents, imputed rents, and maintenance costs.
The real lesson is statistics used in political discussion are ALWAYS manipulated into meaninglessness. If you can hear an axe grinding in the background you know the numbers are have been carefully and methodically rendered meaningless. The trick is to find statistics that aren't used (or aren't used as much) in political discussion. What is the ... divorce rate, or percentage of psychologically medicated people, or suicide rate, or addiction rate or average children per women, crime rates, immigration in or out of an area, job market trends by occupation and pay rate, ratio of local school academic spending to athletic spending, or similar non-headline metrics of success (or not success).
2. Property prices have multiple other factors affecting them than just GDP. For instance, if you have a large increase in population without enough new housing to account for it, then property prices naturally go up. I think that describes 21st century Britain quite well, don't you?
3. The economic dogma of blaming all problems on the rich is no different than blaming all problems on a certain ethnic group. It's just that it's not as easy to immediately recognize it as intellectually dishonest.
Are most of those 7m moving to Brockenhurst? No, they're piling into London, and new domiciles aren't keeping up, so prices are skyrocketing and pushing up the "national average".
I'd argue that the over-centralisation of the UK economy is a big part of the problem there; there should be as much investment in public transport in Manchester and Birmingham as there is in London.
It’s extremely intellectually dishonest to compare people who live in extreme comfort and can afford tremendous amounts of power because of their money to people who are historically oppressed by law and culture because of their ethnicity.
Edit: Also, who has said they hate the rich? Stop propping up silly YouTube strawmen for you to take down with your logic lording.
> people who live in extreme comfort and can afford tremendous amounts of power because of their money
You do realize that the first half of your sentence is identical to a extreme nationalist argument against an ethnic group, don't you? All you would have to do is start it off with "The [insert ethnic group] are people who live in extreme comfort..."
Money objectively provides the means to purchase health services, legal services, investments, decent living spaces, etc. [Insert Ethnic Group] group does not objectively mean [insert stereotype].
I think you are most likely confusing the petite bourgeoisie (the vast majority of programmers) with the haute bourgeoisie (the monopolistic owners of our means of production, think Bezos).
The petty bourgeoisie are well off, and look to emulate and think of themselves as similar to a haute bourgeoisie like Elon Musk, but they are not, your 200,000 a year salary is closer to your porters 30k salary and you often work alongside your workers/coworkers. Our owners of the means of production, such as Tim Cooke cornering the high end hardware market, do not work alongside their employees. They view workers in the abstract, as literal numbers on paper.
It is much easier for say people like Zuckerberg and Schmidt to collude, because it’s a lot fewer people to coordinate. And this in fact happened with wage fixing in Silicon Valley between tech companies until they were caught.
I don’t know what the answer is, and it’s especially fraught in a world economy where unionizing in the USA may mean that Google simply highers programmers in Eastern Europe instead. But I do know that government should be leveraged for the people and not for big business, that’s its point and that’s currently not the case.
Note, it's at most 1% per year. The HN headline is actually a quote from the body of the article:
> In most rich countries, real pay has grown by at most 1% per year, on average, since 2000.
The next sentence breaks out one piece of that average:
> For low-wage workers the stagnation has been more severe and prolonged: between 1979 and 2016, pay adjusted for inflation for the bottom fifth of American earners barely rose at all.
The glass is half full. In other words: high standard of living has been preserved in the western world over the last three decades, despite a rising population and the rise of Chinese manufacturing.
"Adjusted for inflation" is an opaque term and doesn't actually explain which costs they controlled for. I doubt they controlled for both healthcare and housing.
Housing in desirable areas with potential for growth is offset by depressed housing in most of the rest of the US, so for the desirable portions of the country, housing, and higher education and healthcare have outpaced wage growth considerably.
I'm not sure... is this a roundabout way of saying that the expensive things are the ones you prefer, or is there something more substantive behind the statement?
It means that there is a widening wealth and income gap, and that affects people's day to day lives. It's a more risky winner take all situation, where if you're not in the right place at the right time, you risk getting left behind, and that does affect people's psyche.
People in rural areas where housing costs are not increasing might be experiencing a little wage growth, but there are fewer and fewer future work opportunities.
People in urban areas where housing costs are increasing rapidly, but wages are not increasing rapidly enough to make them feel secure...but they need to stay there in case they're laid off or need to find another employer.
Either situation isn't what's wanted, but the overall statistic is that real wage growth is positive.
The article is about real pay growth of 1% per year. You are commenting as if it were about nominal pay growth of 1% per year.
Accepting that housing and healthcare costs have outpaced wage growth, that mathematically implies that costs of other goods and services were outpaced by wages by an even larger (appropriately weighted) margin.
Exactly. The west has experienced "Baumol cost disease", where things that can be outsourced or automated have got a lot cheaper and things that can't have got a lot more expensive.
First no, it was "at most 1%" which means it could be negative.
> costs of other goods and services where outpaced by wages
You're implying that all people consume the same basket of goods as calculated by the article. Wage growth and spending is not even across society, so most people could be worse off while all of the above math holds true. labour productivity rose by 75% in America from 1973 to 2016, while average pay rose by less than 50% and median pay by just over 10%. which is largely because between 1979 and 2016, pay adjusted for inflation for the bottom fifth of American earners barely rose at all.
Further, many goods like computing power have gotten vastly cheaper, but that savings mostly end up with people who have disposable income. Spend a lower percentage of your income on such goods and the benifit decreases. This means the the bottom half of the work force is worse off than you might think.
Except that standard of living has been propped up by debt. Meanwhile productivity has skyrocketed during that time, and it's not like there aren't financial gains coming along with that increase in productivity - there are. They're just being vacuumed up by the top 1% -- the executives and major share holders.
So really, that's a bit of a strawman. The issue isn't that there isn't enough to go around and we should be thankful that we haven't become China. The issue is that a small proportion of the population has manipulated law and the markets to allow them to make off with the wealth, while the rest of us have been screwed over.
...and that's a dangerous thing to allow for many, many reasons.
> a small proportion of the population has manipulated law and the markets to allow them to make off with the wealth
I was with you up to that point. Do you have a reference for this? My reading was that centralization of wealth was a relatively natural consequence of our economic model and not something that was manipulated into being. Hence the discussions on UBI and other ways to fix it.
Globalization, free trade deals, and illegal immigration only benefit corporations and shareholders. Jobs are outsourced to the country willing to take the worst deal, immigrants with no federal labor protection flood in lowering wages and living standards. Corporations pocket the labor saving rather than passing it on to consumers.
End result is increasing income inequality. If nothing is done we will return to the historical norm of peasants and wealthy nobles with nothing in between.
There are 5 billion impoverished people who would move to a first world country and depress natives' wages to nil if given a chance. Those who haven't done so yet shouldn't be discounted either.
>Globalization, free trade deals, and illegal immigration only benefit corporations and shareholders
I'm sorry, but that is obviously not true.
In the case of illegal immigration, the illegal immigrant is definitely better off by finding a higher wage and safer life than in his/her home country. The average Central American working illegally in the US, while not afforded employment rights like a legal worker, is still unequivocally better off than his/her options in his/her home country.
Similarly globalization has been a major benefit to the poor in many developing countries. If you compare the median per capita GDP in countries like China, Vietnam, or any African country, it is immediately obvious that economic development and globalization has been good for them.
I think what you are referring to is the it has not been good for the average American while it has been good to elite/wealthy Americans.
But please don't misrepresent that it has only been a benefit to the few simply bc it hasn't helped the majority of people in developed countries. People in developing countries have been benefitted immensely.
Technically, we're already there—in a world where iPhones are made about as easily and cheaply as they used to make pewter teapots.
Or worse. The amount of control and capital on that 'wealthy noble' side is way more than it's ever been at any time in history, and we are watching the kinds of damage they inflict when they're capable of that much more than just 'buying fancy tulip bulbs'. All it takes is a few crazy ones deciding the best thing to do is kill all the serfs, and their real power will show. We're already seeing it.
Are you not familiar with the rampant regulatory capture in the US? Changing law and manipulating markets often go hand in hand. Corporations exist to benefit the wealthy mostly. Schools are absurdly expensive and result in something like indentured servitude.
What about high frequency trading?
Things work the way they do by the choice of those in power, not by some economic imperative. That's an excuse, IMO.
This doesn't square with my experience. HFT reduces transaction costs for market participants. You can see this in the narrowing of bid/ask spreads from the early 2000s on. Corporations exist for many reasons, but I wouldn't say benefiting the wealthy is the primary reason. More important reasons seem to be: limiting liability for owners, formalizing ownership structures so that owners can benefit in proportion to their role in the business, and simplifying tax and accounting issues.
I agree that the growth in regulation has negative consequences and that the education system is largely ineffective, but I think these are unintended consequences rather than the result of conscious manipulation by powerful people and organizations.
They go to dark pools because they are less transparent and it's easier to sell large blocks of shares without making a large price impact (in theory at least).
Capitalism primarily benefits capital holders, and you don't think one of its central constructs serves that purpose? You don't think people with [absurdly concentrated] power exercise it to help themselves, as rational actors?
My understanding isn't without nuance, nor am I trying to claim I have a replacement system. I'm just being intellectually honest about these elephants in the room.
If you look at the economic graphs[1][2][3], something nasty and drastic happened virtually overnight, around 1973. None of the growth since then has "trickled down". Our history books don't say anything about a radical overhaul of the economic system in 1973, nor does America have a massively different system than other first world capitalist countries, which do have inequality problems but not on the scale the US does. There's something uniquely bad going on, and since a very small group of people is getting enormously wealthy off of it while the rest get nothing at all, it's reasonable to assume that it's on purpose.
Incidentally another thing happened around 1973 - the incarceration rate began a meteroic rise[4] that did not abate until Obama's presidency. Connecting these facts is left as an exercise for the reader.
>But there is a theme that threads through and ties together all the strands: many of the most talented, driven Americans used what makes America great–the First Amendment, due process, financial and legal ingenuity, free markets and free trade, meritocracy, even democracy itself–to chase the American Dream. And they won it, for themselves. Then, in a way unprecedented in history, they were able to consolidate their winnings, outsmart and co-opt the forces that might have reined them in, and pull up the ladder so more could not share in their success or challenge their primacy.
It depends on what you mean by "our economic model."
That you frame that as a "natural truth" and not a cultural artefact is part and parcel of the manipulation. Our "economic model" is something that has been arrived at by centuries of manipulation and is constantly being contested and changed in ways large and small.
I think it's a combination. It's a natural consequence of both our economic and political model.
Markets that allow unregulated investment of private capital have a natural tendency to concentrate wealth through multiplier effects. Basically the more money you have, the easier it is to make money from your money, and the more money you get.
But wealth is power. As you get more money, you have more money you can use to manipulate the political system in any of a myriad of ways. Everything from donating to campaigns, to hiring lobbyists, to funding ads, to the revolving door and regulatory capture, to just straight up bribes.
So I do think there are natural concentrating tendencies that we can introduce policies, like UBI, to counter-act. But there is also pretty clear evidence of those with wealth manipulating the system to grant themselves more of both wealth and power.
Just look at the lobbying the wealthy have done over the past few decades that have taken America's formerly very progressive taxation system down to where it is today. That didn't just happen. People with wealth pushed for it. The same can be said of any number of other changes to the regulatory and economic infrastructure that primarily benefited those with wealth and harmed those with out (weakening of unions and collective bargaining, the weakening of financial regulations, weakening of environment regulations, and so forth). That stuff didn't just happen. It wasn't a natural outgrowth of the system. People made it happen.
One of the premises of your argument is based on a very egoistic opinion: that you get to decide what is "enough" for an individual in the western world. Productivity has grown far more than real wages, so somehow that must have been distributed rather unfairly.
Yes, living standard is high, but that doesn't mean that it can't be better.
In other words: Either poor people are still poor and rich people are still rich, or rich people are becoming poorer and poor people are becoming richer. But the second possibility contradicts statistics on widening income gap. So it is likely the first case.
My point is, not everyone has the same high standard of living to begin with.
The majority are a lot poorer and the rich have gotten a LOT richer. We've seen what happens before when we don't redistribute opportunity effectively haven't we.
EDIT: Seriously the down voting! Here are some resources for you to think about:
I suggest the rise of populism is caused by increases in wealth going to the very richest while in real terms the majority of people are poorer than ever.
Russia 1918, France in the revolution for example. Also what happens all over Europe with right wing parties tearing apart the EU based on fear created in part by inequality
over Europe with right wing parties tearing apart the EU based on fear created in part by inequality
that is due to concerns over immigration , not wealth inequality
Russia 1918
this had to do with famine and massive unemployment as a consequence of ww1, not merely wealth inequality. America is a long way from being as bad as Russia was in 1918. The Great Depression is far worse than anything now, yet there was no civil unrest in America.
French revolution
Wealth inequality was just a single factor, all. France was in financial crisis due to debt from various wars, causing high taxes and food shortages, again, which are problems America does not have.
> that is due to concerns over immigration , not wealth inequality
I don't think that's true, at least not in France, the regions voting massively far right are the old industrial regions abandoned by the globalisation, not the ones where the immigration is actually going.
Literally repeating past failures (and successes!) is rare throughout history so direct comparisons are not necessarily going to be useful for determining likelihoods of future events.
In modern America, we don’t have food shortages but we do have housing shortages resulting in high living costs, different health problems than the early 20th century folks, lack of jobs for the lesser / inappropriately educated, high consumer debt, student loans, etc. that contribute to the misery index. The misery, however, gets offset by the sheer glut of passive entertainment leisure options the world has never seen before in history. After all, who cares if we’re living longer if we’re feeling worse throughout it?
Not saying things are worse than the Depression at all, just saying we’re always going to be comparing apples to oranges as we go from different historical periods so looking at primarily economic factors may have limited utility even in looking at sociopolitical problems.
> most of the increases in wealth since the 70s have gone to rich people.
That itself isn't enough to state poor people became poorer, only in comparison to an ever increasing moving goalpost of what poor means is that statement enough to say poor get poorer.
Median personal real income has grown by about 35% or so in the past few decades. The average is quite a bit higher, I'm just talking about the median.
Household income usually isn't as good an indicator because household size has shrunk.
That is not what has been stated though. They said the majority have become poorer, not the poor.
Whether that's true or not, to me, seems to depend on your definition of individual wealth, it either being relative to total wealth or rather quality of life -- but it's certainly not the same thing.
Bezos becoming richer through stock gains costs me nothing, because his wealth increase is purely speculative. He didn't take that billions out of the economy, or from the poor, or from anyone.
So I think this is not a good measurement of whether or not the majority have become richer or poorer. A much better measurement is do they have more stuff, or better stuff, or a higher quality of life than before. This is the level I think most people care about. Not whether some rich people got richer (mostly from stock growth) faster than I did.
Why did they go out of business? Probably because they offered worse prices and worse service. By taking less money from his customers, Bezos makes his customers richer than if they shopped somewhere else. The few business owners who are affected and are made worse off are rounding error and do not change the fact that the median person is better off.
> Someone else becoming richer does not require me to become poorer.
Oh but it does.
Systemic inequality engenders winner-take-all dynamics. We see this very clearly in the data: as capital becomes more concentrated the rich grab more and more of the surplus. Eventually all growth will be captured by a few large enterprises.
Now, even if you don't go all in on Piketty and you give fuck-all about the poor, it should be clear there's an issue here. We don't live in a static world. Someone else becoming richer doesn't make you poorer... until new players join the game. The rich capture all the economic surplus but it's the poor keep having all the babies. So now you've got no choice but to commence with the somewhat unpleasant business of liquidating the poor. Get them hooked on opiods, send them off to wars, drive up the cost of housing and schooling -- do whatever it takes to drive down birth rates and increase mortality. There's no money for these new mouths to feed because it's literally all going to the rich.
And long term this becomes problematic. Again, even if you give fuck all about economic justice, history has proven such systems to be woefully unstable. Humans aren't like rabbits -- they just don't and lie down in a hole and starve to death quietly. Unlike natural systems that tend to course correct smoothly human systems tend to just collapse.
Additionally we are learning more that psychological effects of poverty translate to material outcomes, like higher mortality rates, even after controlling for baseline access to material benefits like health care or nutrition or education.
For example, Last Place Aversion is a real psychological effect that motivates people in their voting habits, e.g. minimum wage laws. Status signalling effects in medical outcomes are also an area of active research (e.g. the richest person in a poor neighborhood can end up having significantly better longevity outcomes than a wealthier person who happens to be the poorest person in a rich neighborhood).
Relative wealth has material effects on health, mortality, etc., which look to be driven by psychological effects and persist even when controlling for material benefits.
In other words, if you're in the middle class and your perspective is that you have to work harder to be less relatively well off, this psychological factor can be a cause for genuine material harm.
I think we are only just beginning to understand these types of inequality effects.
The data is that the rich don't stay rich , which is why the majority of the rich for any reasonable level of rich are first generation, and have been so for a long, long time.
And the majority of the poor don't stay poor, as FRED data shows.
This is, of course, yet another lie that must be told to justify what is a deeply evil system. Dig a little deeper [1] and you'll find capital concentrations are extremely enduring, particularly those tied to fixed assets like real estate.
The thread is full of all sorts of highly motivated reasoning and half truths to try to avoid what is a very simple and very obvious truth: all the economic surplus is being captured by the rich. Not most, not the majority, absolutely all of it [2]. In such an environment it should be obvious -- even if difficult to admit it -- that the poor can't do anything but fuck off and die. Or did you think the falling life expectancy and falling birth rates were just blind luck?
The difference between my data and yours is that yours post-selects one or a few families that were rich at time X and remained so at later time Y, while mine takes all people of wealth Z at time X and shows that the majority are below Z at time Y. The Italian paper admits they are not tracking families, but surnames. Read the actual paper, not the pop recount of it. The second link doesn't address that the top 1% varies wildly over time, which my data does. Static snapshots miss lifetime and intergenerational mobility, both of which are not insignificant in the US.
Your paper is about Florence, and does not apply to the wider world. Instead of reading a pop account, read a more direct account [3]. They explicitly state their account does not match the same research or outcomes from other places and times. They reach an elasticity for this group of around 0.02, and note this varied "from under 0.2 in the Scandinavian countries to almost 0.5 in Italy, UK, and the US". The only reason their account got widespread coverage and the others didn't is because the others don't reach a conclusion that sells as well.
But that result is not applicable to modern US. They state this directly.
For example, here's [1] a more recent paper on a more relevant dataset - intergenerational mobility in the US, UK, and Germany. It doesn't reach the same conclusion as your Italian paper.
Probably the most comprehensive look at mobility is the Chetty et al paper [2] that looked at all tax records for several generations and found mobility in the US is consistent with what it has been for decades stretching back into the 1900s.
Most interestingly, they compute transition probabilities over time to move from one quntile to another by generation. Put this into a markov chain, and you'll find that it takes very few generations for nearly perfect mixing of incomes. (I've done this years ago - try it). These transition probabilities match ones from the FRED research which are only for recent people.
So, in short, the rich don't stay rich as a group. Post selecting the few that did is simply bad statistics and misleading.
A simple experiment you can do yourself is take the lists of Forbes 400 riches over time, and see how many are first generation, and how many drop off the list over time. You'll find that the top in general do not remain so very long.
It's easy - try it.
>This is, of course, yet another lie that must be told to justify what is a deeply evil system
Yours is, of course, a misleading statement cherry picked from all available data to spread unfounded beliefs.
> A simple experiment you can do yourself is take the lists of Forbes 400 riches over time
I'm not sure what you imagine this proves. Social mobility is something that has been well studied in America. It is well-known that social mobility is over in the United States. A simple visit to Wikipedia will set this straight -- see https://en.wikipedia.org/wiki/Socioeconomic_mobility_in_the_....
> Yours is, of course, a misleading statement cherry picked from all available data to spread unfounded beliefs.
Frankly this entire thread is you leaping from one myth to another. Now you seem to be clinging to this myth that there is high firm competition and social mobility in the US. This is not supported by any of recent research. All of the recent research shows that there is far less competitiveness across firms and that net social mobility has collapsed.
>Frankly this entire thread is you leaping from one myth to another.
You claimed a paper about Florence had wider applicability than it does, by ignoring what the authors specifically wrote to make your claim. I quoted the statement from your own paper contradicting your claims and I presented more recent papers on the US that show you're incorrect.
So I don't think I'm the one making mythical leaps.
>All of the recent research shows that there is far less competitiveness across firms and that net social mobility has collapsed.
I just cited one of the most cited paper in this area, the Raj Chetty one, and it directly contradicts your statement. Did you look at it? They had unprecedented access to all US taxpayer records, making their study vastly more comprehensive than anything before (and since as far as I can tell). They analyzed every single person in the US income for the period in question. You're not going to get a much better dataset than that.
>I'm not sure what you imagine this proves.
It is evidence for the claim this started with: the rich get poorer, where you take some definition of wealth, take all people in that group, and see what happens to them over time. One such metric is the top X people, and demonstrating that they do not remain is one data point showing this statement true. I've yet to see a dataset for which you can answer this statement that does not support. The Forbes 400 is a particularly easy one for anyone to check.
Or simply google what percentage of millionaires or billionaires are first gen, and again you'll see most wealthy are new, not inherited.
So, do you have any dataset showing for everyone of some level of wealth in the US, that over time that same set of people don't regress to mean? I've just given several places showing exactly this.
>net social mobility has collapsed
FRED, Raj, BLS, and Census disagree. Even your Wiki link states "A large academic study released in 2014 found US mobility overall has not changed appreciably in the last 25 years ".
I don't think the word "collapsed" means "has remained fairly constant".
That's because it's nonsense. In the past 20 years, more people have been lifted out of poverty than at any other point in human history. Look up the UN's millenium development goals.
Some people just want you to believe that the world is always getting worse.
You're talking about poverty in terms of absolute wealth. Yes, fewer people live in extreme poverty now. Most people on Earth have access to phones, washing machines, healthcare and transport. This is undoubtedly great.
In terms of relative wealth though, comparing the average to people at the top, the 1%'s wealth has grown much faster than everyone else. It's true to say that we are all relatively less well off than we were in 2000. This is bad because wealth begets more wealth, so the inequality grows. That could lead to all sorts of problems (societal breakdown, revolution, civil war at the extremes...).
Why do you care how much somebody else has? People often refer to things like the French revolution as a warning of what can happen when wealth inequality gets out of control, but that comparison is completely absurd. People were not upset that the aristocracy had great feasts, liquor, and lavish lifestyles. They were upset that they could not afford even bread.
In modern times this is not even remotely comparable where ever more people have ever more access to ever more things. But the richest of the rich have even more things. For comparison if we break this down into an anecdotes of toddler the French revolution would have been Joe having 0 toys while Jane had 10. In modern times Joe has 500 toys while Jane has 5000. By most of any metric, except in comparison to Jane, Joe has a ton of toys. And so his complaint seems more petulant than justified.
Let's put this another way. Imagine I told you that in 100 years somebody of the lowest social class would have what would be equivalent to 10 million dollars today in terms of spending power. That sounds unbelievably amazing. Would that somehow suddenly change if somebody at the top had a quadrillion dollars of spending power? Taken to extremes wealth at the top can decrease the value of wealth at the bottom (largely due to inflation), but that's not really the case to a significant degree today - people just seem upset that other people have more than them.
> Imagine I told you that in 100 years somebody of the lowest social class would have what would be equivalent to 10 million dollars today in terms of spending power. That sounds unbelievably amazing
That depends, will surgery for a broken leg cost 20 million dollars in 100 years?
You are talking as if poverty doesn't exist any more, which it very clearly does. A startling number of people in the US live paycheck to paycheck and are at risk of extreme poverty if they lose their job or face an unexpected expense like medical care. People in Flint had to drink water that literally poisoned them. Teachers are walking out of schools because their textbooks are falling apart. On the other hand, you have Jeff Bezos who literally said in an interview that he can't think of any worthwhile use for his money other than exploring space.
You can't exactly blame people for being angry about that. "But things used to be so much worse!" isn't really a counter-argument. Why can't things continue to get better?
I specifically said spending power, and that is what I meant.
Did you know that in the early 20th century feed and flour bags used to come with vibrant floral designs. Know why? Since nobody could really afford to buy clothes, people would regularly fashion their own clothes out of whatever they could get - which included these large bags. Companies saw an opportunity and started creating lovely designs on them. This is a time we can hardly even imagine. Now a days even the poor can easily afford many of the things that only the most elite of society could previously. It wasn't even that long ago that a toaster was an extreme luxury. And of course they also have luxuries that those of times past could only dream of as they literally did not exist. In terms of what we have, people have more than ever today. And people want even more. And I think that's a good thing! The never ending drive for more more more is probably an evolutionary imperative which has paid rich dividends for our development as a species.
But let's hit on the Bezos thing. Some of what I said above is conflating technological progress with economic progress. After all one of the reasons many things became cheaper, or available, is not strictly because the poor have more money (though they do!) but because technology enabled things to become much cheaper, and to introduce entirely new things. Bezos is, by far, the richest person in the world. On an individual level his wealth, $135.5 billion, is hard to even imagine. But now let's imagine his level on a social level. What if we, or he, decided to just 'benevolently' share his wealth with everybody in the world. That $135.5 billion is worth a little less than $18 per person. Even at the bottom of the world, that's hardly life changing money.
However, technology does change lives. And while $135.5 billion is nothing in terms of the world, it's an enormous amount in terms of advancing space technology. Can you imagine how much the world will change once we begin to colonize other planets, or when we are able to effectively extract resources from celestial bodies, and so on? Or think of all of the tangential technological developments will inadvertently be discovered in the process of this all. The world has basically been playing on fast forward since the colonization of the new world, and space will open a door like something we can hardly even imagine. I too want things to get better and I think what Bezos is planning to do with his money is vastly more likely to, in the longrun, improve life for all of us far more than, for instance, what Gates is doing with his money.
I've read your two posts here, and agree with you about Bezos/space to an extent. I don't think his focusing on the space industry though does anything to help the rising amount of wealth inequality in the world right now though. What use is there focusing on space, something that will the the realm of the rich and elite for quite some time before more universal access is given (I don't have anything to back that up, but I think it's true enough), when society continues to destabilize from wealth inequality (I know one can probably theorize multiple "why do X when Y is happening?" scenarios, but rising wealth inequality is of especial importance; this is what incites civil wars and can topple empires)?
(Rhetorical questions incoming) At what point do the Bezos/Gates of the world step in to help this problem? Do they even have any kind of moral/societal/civilization-wide obligation to help tackle a worsening system that they got rich off of? Should they have this obligation? If not, who does?
If you're invoking the early 20th century you're looking too far back. You might as well look back to serfs working 6 days a week dawn until dusk year-round for their lord and say "look how good we have it, our modern problems are insignificant" even if people are legitimately suffering today. Or go back 20,000 years and talk about how hard it was to be a nomadic hunter/gatherer. Standards go up over time.
There was an incredible period of American prosperity starting after World War 2. Good work was plentiful, wages were high, and the middle class prospered- the American dream was alive. That's slipped away from a huge segment of the population. Cost of living shoots up while real wages remain stagnant. We have cheap luxuries that previous generations couldn't dream of but that doesn't mean that many people aren't living paycheck-to-paycheck or fighting to keep their house or running up credit card debt to stay afloat. Outside of our tech bubble, Americans are struggling when they didn't before.
Meanwhile, capital compounds exponentially. People see their quality of life decrease relative to the average person while they work harder than ever, and they see the rich's quality of life increase relative to the average person while their money works for them. It's hard to live every day in that system and not think that there's a problem.
Your perception here does not really match the data [1]. In particular since 1979 all of America has been moving sharply upward.
And in fact I think this could be part of the 'problem'. In 1979 a total of 0.1% of the country qualified as rich, and 12.9% as upper middle class. Those numbers have skyrocketed to 1.8% and 29.4% (!!) as of 2014. The percent of people that qualify as below middle class has decreased substantially, but those that remain there are indeed going to see the rest of society doing better than ever - and that's true.
It's what I'd like to call the 'generous king effect.' Imagine a feudal nation with a king and 100 peasants. In spite of the king's absurd wealth, the nation would feel more or less equal. But imagine one day the king feels maybe he's been wrong to hoard everything to himself, so he decides to run a competition and grant the winners vast tracts of land and wealth. Well now society feels a bit less equal with some 10% having great wealth, but things are still mostly fair.
However, our king notices the increasing discontent and so again tries to resolve society. He doesn't have as much left though but wants to still help raise up society. So now he grants the 10 even greater tracts of land with some degree of autonomy, but now also runs another competition granting 30 new individuals wealth and land comparable to what only the 10 had before. We've seen a massive improvement in society. We went from a nation where the 100 had nothing to where 10 have enormous wealth, the 30 have great wealth, and now only 60 are left with nothing. Yet ironically, society is going to be more discontent than ever as suddenly 40% of people have great wealth while the 60% have nothing. What makes those 40% so special after all!?!?
In an effort to improve the lives of the people, those that experience the upward push last become less and less content. And even though their situation is likely even better than it was when all 100 people had nothing, it's probably not going to feel that way. We obviously don't have a king. But we do have an economic system that's making these changes, and it does indeed seem to be succeeding in increasing the economic power of everybody over time, and the social response seems similar - probably driven by a media who seems to love triggering anger and discontent.
Inequalities of wealth mean more than the number of toys someone can afford. Wealth equals power, in a very real sense. Just a few examples:
If you own a company, or a TV station, or a news source, or a large number of shares in a company, your ability to influence the world is very much greater than someone who doesn't. Your relative influence over society is a zero-sum game. And your relative influence over society reduces when a small number of people get hugely rich.
There are also resources that are drawn from a fixed-size pot. Land ownership for example. If a tiny number of people assume possession of vast amounts of land, the amount left for everyone else is reduced.
It's a very good thing that people are being lifted out of poverty in the sense that they can afford food and shelter, basic sanitation and so on. But this is really the minimum we should aim for.
Access to more toys can be a good thing in many cases, though I'm not convinced it's a good measure of how well society is doing. But being able to afford more electronic items or whatever does not really eliminate the problems caused by extreme wealth inequality.
> If you own a company, or a TV station, or a news source, or a large number of shares in a company, your ability to influence the world is very much greater than someone who doesn't.
Taken to the extreme, the logical conclusion here is no one can own a company, therefore one cannot own a part of a company lest they be able to buy up the whole company, and therefore one cannot own property lest they collect it and have more than others (inequality). To your last sentence, what problems are caused by inequality that aren't simply because of envy?
> There are also resources that are drawn from a fixed-size pot. Land ownership for example. If a tiny number of people assume possession of vast amounts of land, the amount left for everyone else is reduced.
Excellent point. Similarly, the pool of doctors is fixed in the short term, because it takes time for new doctors to go through medical school so that supply increases to meet demand.
This means in the short term, rising inequality can drive up the price of medical costs (at least the part of these costs that goes to doctors' wages).
But it's not just food, shelter, and sanitation that people can afford. Even the poorest of households now a days often has television, electronic toys of various sorts, a microwave, air conditioning, and much more. Let's hit on land ownership because it's something constantly discussed, but I think there to reality and perception come into deep conflict.
Right now the vast majority of land in the US is available incredibly cheap. In fact various areas are literally giving away land for free if you promise to put a home on it - some even allowing mobile homes. There's even things like Cuyahoga National Park in Ohio. You can get a government for the least ranging from $500-$1000 month for a house along with 9+ acres of land for those that would like to setup a farm. Not free, but probably still beats the pants off 40 acres and a mule! But people don't want just any land. They want to live in the most elite and desirable areas in the entire country. Yet those elite and desirable areas were at one time no name backwoods that somebody else decided to develop - same as is likely happening today for what will be the 'elite and desirable' areas of tomorrow.
Because they buy houses to rent back to me, they get the opportunities to invest in businesses before me, and they use their money to influence politics to ensure they hold on to their position. They push governments to privatise healthcare making me pay more for it, which they profit from, and that means I'll never have any sort of financial security. I have to live my entire life hoping I never get seriously ill. They buy laws to break the power of unions and collectives. They hoard money in offshore accounts which starves the government of tax revenues so I live in a society with underfunded police, unfixed potholes, and failing education while they* get all those things because capitalism provides those things to those who can pay.
Would that somehow suddenly change if somebody at the top had a quadrillion dollars of spending power?
If they used that wealth to influence the way society works, it would mean I live in the world they want. I don't want to do that.
* Actually I don't, because I live in a country with universal healthcare, but you might have that worry.
> It's true to say that we are all relatively less well off than we were in 2000. This is bad because wealth begets more wealth, so the inequality grows.
Remember one of the last times you went for listening to your favourite band or purchasing their latest album. At that moment, something bad had happened - they got relatively wealthier while you became poorer. Given you were not the only one who paid them for their performance that day, those bastards could actually become rich, while a lot more people became poorer. So the inequality gap grew bigger and, according to your reasoning, you had become relatively less well off that day. But did you? And should we do something with that band regarding them becoming closer to the top 1% (maybe we should redistribute their income among visitors of the venue?) Or, how about measuring the value of your emotional/spiritual state of mind before and after that event? Does it account for a relative/absolute well-being?
The point is, while economic stats are good at showing you the monetary part of your wealth, they are insufficient for drawing a wast conclusion on people's wealth and well-being. So is the "relative to TopN" argument.
It's demonstrable from many datasets that the rich get richer and the poor get poorer. Look at FRED mobility data. Look at Forbes 400 richest. Look at what percent of the richest x% are first generation. Look at FRED data on intergenerational wealth.There are ample datasets showing that wealth regresses to the mean.
Pick a definition of wealth (income, or ownership, or whatever), and pick a dataset for which you can capture all in that bracket for some reasonable timeframe, and for which you can see what percent moves out. For every such dataset I've found over years of looking at this, every one backs the claim that the rich do not stay rich.
Most rich people are newly rich. Most rich families drop year over year in total wealth.
Check out the recent book The Great Leveler. It basically postulates that over the course of human history, the only things that cause rising wealth inequality to decrease is natural disasters or warfare. Pretty scary stuff if that's all to be believed...
so, I'd have said the exact same thing about the millennium development goals (MDGs) until a few months ago when I attended a talk by the former secretary of the UN, Ban Ki-Moon.
Ban had many wonderful things to say, but one thing really shook me. he said that as a leader of the UN, he had failed in fostering the world's development, as had his recent predecessors.
he then went on to say that accomplishing the MDGs and specifically slashing severe poverty was largely an illusion if you approach it from the perspective of international collaboration. he said that nearly all of the MDGs which were met were met because china had reinvested in its own country to the extent that its massive population's standard of living had substantially improved.
that's it. not international collaboration. not the west's efforts to pull others out of poverty. just china doing the best that it could for itself over a long period of time, with the amazing conclusion of those efforts coinciding with the deadlines for the MDGs.
so yeah, the world is getting better -- but it isn't necessarily the whole world, and it isn't necessarily because of our efforts to improve things, and we definitely can't relax.
I'm not the person you're asking, but I did coincidentally read this book last night.
It's main message is that:
1) The averages person's knowledge of the world is extremely outdated and in most cases blatantly incorrect. It's not that people don't know the answers to questions like "what percentage of the world's population live in extreme poverty", it's that they think they know and their answer is incorrect.
2) Human's have a lot of instincts that work against them when trying to evaluate data. For example, implicitly assuming that straight line graphs will continue in a straight line, focusing far more on negative things than positive things, categorizing things incorrectly, and misunderstanding large numbers.
3) Positive change tends to happen very slowly and therefore isn't consider newsworthy, so we don't hear about it even though it's happening every day.
The book really made me question my view of the world and I would highly recommend it to everyone. It's short, easy to read, enjoyable, and very insightful.
That said, the author focused more in the differences between what he calls the four levels of poverty, and to be on level 4 (the level almost everyone on this site is on) you only need to make $64 or more a day. He doesn't talk much about the inequality between the people at the bottom of level 4 and those at the top.
I would attempt to apply the authors thoughts to this specific situation, but I only finished the book a few hours ago and haven't really finished processing the information yet so I will leave that task to someone else for now.
Hope this information helps, and I really think the book is a good read for everyone. Bill Gates is giving a free .epub copy away to all college grads in the US this year, and I don't think his website actually verifies that you are graduating, so I think anyone that signs up can download it here. [1]
This is a controversial comment because, despite dropping some cute wikipedia links, this is poorly sourced (and btw I have read some of the income inequality books and sympathetic to the underlying idea)
"in real terms the majority of people are poorer than ever"
Wealth inequality is related/similar to income inequality but they are not the same thing, which the "cute" Wikipedia article would have informed you if you had read it.
The pie is growing, so it's possible for the rich to have a larger percentage but everyone still see gains. This is manifested by rising standards of living, more purchasing power, and so on.
The US dollar has also gained a lot relative to foreign currencies since 2008, which makes imports cheaper and further boosts American standards of living and purchasing relative to the rest of the world.
The emphasis should be on boosting living standards than trying to enforce equality.
What about the amount of time you own for yourself?
Purchasing power is cool, but necessary goods (food, housing) prices* are raising much faster than wages. Yes, you can buy a new fablet and yet another pair of jeans for cheaper than ever, but what for exactly?
* Please do your own research as these facts are highly location-dependent.
Regarding necessities such as healthcare and education, yes, sticker costs are rising faster than inflation and wages, but one must also take into account that:
Individuals seldom pay the stick price. A $10k/month drug does not mean one pays $10k/month out of his or her own pocket. Same for a $1,000 emergency room visit. Or college tuition, due to generous financial aid and payment deferment programs (some universities have huge discounts for low and middle-class students).
So one must adjust prices for what one actually pays, not the MSRP.
Second, although people are spending a lot on healthcare, they are getting more healthcare and better healthcare, which is the key distinction. This means cutting-edge treatments for diseases that decades ago would have been fatal (a notable example is CML, which used to be fatal within 3-6 years of diagnosis but can now be managed as a chronic condition like diabetes).
Healthcare would be very cheap if drugs were limited to Advil and Aspirin, but also very bad. People would be irate if those were their only options. Not saying the system is perfect or that drugs are not overpriced, but one must take into account quality and quantity than just the price.
Rent, however, is an example of a cost that has exceeded inflation, but where there is no notable improvement in quality, and there are no payment deferment programs. People are paying more and more for the same 2-bedroom apartment. I suspect part of the problem is due to the difficulty of evincing deadbeat renters and due to regulation, so landlords pass the costs to renters both in the form of high rents and huge, upfront, multi-month down-payments. But also, the housing bust in 2008 created a construction shortage, so people who lost their homes in 2005-2010 found themselves with no option but to rent, and this created more demand, but also due to less housing constitution. Housing starts plunged in 2008 and never really recovered: https://www.census.gov/construction/img/c20_curr.gif
I spent $9k out of pocket (hospital stay and doctors) for my son’s birth in April after insurance. My friend paid 5£ in the UK. No, I am not getting substantially better care for what was paid.
It has been proven fact that we (Americans) pay more than every other developed country for healthcare with poorer outcomes. It’s a racket, plain and simple.
Women with insurance pay out of pocket an average of $3,400, according to a survey by Childbirth Connection, one of the groups behind the maternity costs report. Two decades ago, women typically paid nothing other than a small fee if they opted for a private hospital room or television.
But one must take into account the risk of complications; if something were to go really wrong, would you rather be in the US hospital or the UK one? I suspect the NHS is more affordable, but does not handle complications and individual patient cases as well as the US system.
I’d rather be in the UK one. I refuse to be held hostage by the medical industrial complex.
The hospital charges my wife for her stay, my newborn son for his “stay”, her OB charged for the procedure, and the neonatologist charged. Whatever isn’t paid by insurance automatically becomes our responsibility, with no recourse to dispute.
Don't mind in the least! But the ball's in your court since I don't see contact info for you in your profile.
Germany is, by all accounts, amazing. It's where my wife and I holiday and we've contemplated opening a B and B there a few years down the road. If I were coming to the EU fresh I'd be looking closely at Germany, Denmark, or the Netherlands.
The problem with infant mortality figures is that different countries measure them differently. There are cases (e.g. very premature births) that the US considers a live birth (with a high risk of mortality) while other countries consider them miscarriages and hence don't count them in infant mortality.
There have been attempts made to correct for these discrepancies. They end up accounting for a large fraction (but not all) of the difference in infant mortality rates, if I recall correctly.
Most of the rest of the effect is that premature births that everyone considers "births" have a higher prevalence in the US (for various reasons, not all of which are clear). Premature births have higher mortality, obviously.
1) Birth defects. I wonder how much of this has to do with differences in abortion availability and again differences in definition of "birth". Many other countries count a child that dies within some number of days after birth from birth defects as a stillbirth, not an infant mortality event.
2) SUID (aka SIDS) is a huge contributor in the US. In the US this is highly concentrated in ehthnic groups that are largely missing in the comparison countries. Why that is is a good question, but makes this comparison less apples-to-apples.
To know where you'd want to be you want to know the outcomes for your specific demographic in the different countries, which is not something that gets reported very much...
The bit you quoted does not negate my two points about the data in that article.
But just to be very clear, Connecticut is cited as having an infant mortality rate that is slightly above the comparison country rates. Note that those countries were picked for a comparison because they have the 6 lowest mortality rates in Europe. [1]
Anyway, Connecticut is maybe somewhat similar to the comparison countries in terms of ethnic group demographics (mostly negating my point (2)) and has a more expansive definition of "infant mortality" than those countries last I checked, which is part of my point (1).
Mississippi, at the other end of the spectrum, has a vastly different ethnic makeup, has much worse abortion availability (increasing the number of babies with birth defects carried to term). And still has the more expansive definition of "infant mortality".
Now I'm not saying that it's a good thing that Mississippi has higher rates of SUID/SIDS. And I'm not saying limited abortion availability for cases when the child wouldn't survive is good. But I am saying that drawing conclusions about US healthcare here, as opposed to other societal factors, requires apples-to-apples comparison. And drawing conclusions about outcomes for a specific case (specific family) requires understanding whether those societal factors apply to it.
Or to put it another way, families that are willing to do an abortion when told their child, if carried to term, would not live more than a few months will have a lower infant mortality rate than families that are not willing to do said abortion.
One other thing which _is_ mentioned in the study itself but not in the article: "survival rates among preterm infants in the US were found to be very similar to those of the same European countries". Please model that with the "the US just sucks" model.
[1] The numbers in the actual study: Connecticut has an estimated FTIMR of 1.29 with a 95% confidence interval of 1.08 - 1.53; note that they don't have an actual hard number for reasons I haven't figured out yet. The six European countries involved are Austria, Denmark, Finland, Norway, Sweden, and Switzerland. Their numbers range from 0.97 to 1.24 according to the study.
Actually, it does. The other commenter gave credible child mortality figures, here's the other half from the reputable US CIA.
Heck most EU countries rate better than the UK but USA is even further behind.
I've see that figure many times. One must take into account premature births and how stillbirths are reported. And also due to the racial makeup of America. Blacks have higher rates of infant mortality than whites.
Premature births correlate directly to advanced neonatal care, that thing you were arguing the US is the best in the world at. Now you're saying "oh, you can't count that"?
> [You] must take into account ... the racial makeup of America
Oh? Are black people not really counted for the purposes of birth stats? Why? Poorer genetics? Poorer healthcare access? Again, how would poorer healthcare access jibe with your "best in world" medical care?
Ah, the old "American exceptionalism" argument. Don't make that one, it's a bad argument.
How about this? Would you rather be in the US, or Japan, for such an emergency? Japan costs half as much as the US per capita (with even lower out of pocket costs), and beats us by every other measure. I'd rather be in the Japanese system than the American one for anything.
edit: The Japanese system, structurally, is very similar to the American system. It's not socialized, by and large. Private insurance through employers to private providers. Yet it costs half as much and works better. This points to something broken in the US system at a deeper level. Expanding on this, every civilized nation in the world has health care more or less on par with the US (fuck exceptionalism), for more or less half our cost. To the chagrin of liberals, "socialized medicine" isn't the obvious solution, because a lot of systems no more socialist than ours work well. And to the chagrin of conservatives, a lot of highly socialized systems also work better. The American system is uniquely fucked up.
Back to Japan. The key difference I can see between the two systems is that Japan has strict price controls. A government commission sets the prices for all medical products and services covered by insurance, with an eye to controlling costs while maintaining profitability. Insurers and providers have to control their costs internally, rather than jacking prices or doing many-to-many negotiations. Is this the key?
Centralized planning and standards sound like a non-free market to me; and also exactly what an inflexible demand market for critical utility services needs.
As Peter Thiel pointed out in Zero to One, in an idealized free market, profit is impossible. Pure competition drives profit margins to zero. This can be easily observed in highly competitive industries, like groceries or gas stations. They operate on razor-thin margins. The only way to make big money in competitive markets is huge scale, which explains consolidation and the drive of money to the top. All substantial profitability comes from friction or monopoly (including localized monopoly, like not having a full range of choices for your employee-based insurance).
But I digress.
At any rate, the Japanese system clearly works, while the American system is clearly broken. One is selling the same product for half the price of the other. Assuming I'm right about the key differentiator being the Japanese price controls (I could be wrong), then it really makes me wonder why we aren't trying that. Seems like a great way to get costs under control (even shrinking), while preserving much of the complex market and avoiding radical change to almost 20% of the economy.
I think "critical utility services" touches on the importance, but doesn't go far enough. I believe a health care system that denies care purely out of poverty is immoral. A health care system that is the primary cause of bankruptcy for the middle class is immoral. A system that traps employees in jobs they hate, for fear of losing (or even changing) their insurance is both immoral and un-American - what's more American than quitting your job to get a better one, or start your own business? So our system is not just an economic failure, it's a moral failure. It's a stain on our honor and an insult to our values.
In conclusion, I do not give a fuck about "free market" here. I am not putting economic ideology ahead of moral imperatives, and I'm not choosing ideology over observable facts. If I wanted to choose ideology over economic reality, I'd be a communist.
> maternity costs ... complications ... if something were to go really wrong, would you rather be in the US hospital or the UK one? I suspect the NHS is more affordable, but does not handle complications and individual patient cases as well as the US system.
As someone who has lived in the UK, Australia, and the US, probably not the US?
Also, "Infant Mortality Rates of Countries, deaths per 1,000 live births[1]":
* Australia - 4.7
* United Kingdom - 4.8
* United States - 6.2
Apparently the statistics say we're not as good at "[handling] complications and individual patient cases" as you believe we are.
The skyrocketing sticker price of healthcare absolutely has led directly to skyrocketing insurance premiums and out of pocket costs are still high for many people depending on their insurance plans.
The vast majority of the 'generous' college financial aid is loans with partially subsidized interest rates. Default rates on these loans are high and keep rising.
regarding drugs, I suspect a reason why sticker prices are high because drugs are expensive to develop, and drug companies must recoup costs and make a profit before the patent expires. A couple years ago Scott Alexander did a bunch of posts about healthcare cost,s but I don;t think anyone reached a conclusions as to why prices keep rising so much. It's more like a bunch of possible factors, but no definitive pinpoint cause.
Americans have the worst Health outcomes while spending the most by far out of all developed nations. Your libertarian shtick can't get you out of that one.
Also the US develops most of the drugs used by those other countries. IF Drug companies charged UK prices in America, they would not be profitable. Someone has to pay the bill for drug development. In this case, it's the US.
>The US has higher cancer survival rates than Europe
First of all that source is from a pseudo-intellectual religious journal and carries little to no weight in my opinion, even if it did they admit that those numbers are differentiated by early screening in the US and this has little to do with treatment quality, such a statement on quality would need to control for this difference in screening.
>Also the US develops most of the drugs used by those other countries. IF Drug companies charged UK prices in America, they would not be profitable. Someone has to pay the bill for drug development. In this case, it's the US.
Only 5 of the top 10 largest Pharmaceutical companies are American and 3 of the top 5 are European so this statement is just not true.
Your quaint views on Economics are obviously libertarian, in the failed American political party sense, and frankly the data is not on your side.
"Asian-Americans" in the US have a greater life expectancy than Japanese in Japan. "Latinos" in the US have a greater life expectancy than Swiss in Switzerland. "Whites" in Minnesota have a greater life expectancy than Canadians in Canada. It's not that simple.
My country (Uruguay) is the total opposite, it has some nasty warts, but socialized basic medicine + the option of purchasing better healthcare if wanted seems like a much better system.
The downvote brigade is out in force today. Truly disgusting how the vast majority of those SV are either left wing SJW types or "da free market cures all ills" nuts. Diversity of ideas is nonexistent.
"Individuals seldom pay the stick price." - Sadly, many do. I have many times over the years.
On top of paying premium prices for things, I also avoid emergency care on occasion that I would rush to if I had affordable insurance.
I wonder where you find ER visits for $1,000 ? I'm pretty sure in our mid size city with 5 or so big hospitals, the cost is much higher than that. I was treated some years ago with antibiotics and pain meds, given a bill over $4,000 - and I had refused the mris and xrays the doc wanted to order.
8 weeks later I got a notice from the hospital that they knew the address of the property I owned and suggested I pay.
"$10k/month" - some meds are $10k for one day. Sometimes one of the drug companies will donate a two day supply in an emergency, however I routinely shudder at the thought of going to the ER and getting hit with a $15k bill for a day and needing meds beyond that.
College tuition has been interesting in our state, they say it's free now, but previously I found that a lottery sold to people as a method to pay for college was only available to those under 25 and whatever other stipulations. I've heard of programs for women, for minorities, etc. There was one college in town supposedly offering scholarships to white people, and they had a great program I was interested in, but it was way across town and the expenses for travel and books was enough to make it a nice thought only.
"they are getting more healthcare and better healthcare"
No, I am not getting better healthcare. Certainly there are others who find paying the retail cost of doctor visits and drug prices ridiculous. Certainly I am not the only one that has had a doc or nurse practitioner suggest tests that I cant afford and deny to provide comfort in the name of stopping a possible opiod crisis.
Funny, you say "would be very cheap if drugs were limited to Advil and Aspirin" - Advil and Tylenol are the main line of defense for health issues where I am, it's relatively cheap, certainly not as effective as some prescription drugs, but the cost of the doc visit alone puts them out of reach mos weeks.
Part of the rent / housing costs problems are indeed from the slow down of building some years ago, but there are many other factors putting pressure there, many of those factors have people profiting at the pain of others in a similar way.
I think the housing thing will level out, this is something where capitalism can work. Hospitals having impenetrable territory protected by regulations and drug companies being sneaky with patents however, I don't think that's as fair of a set of guidelines for capitalism to work it magic well.
You're right that these facts are highly location-dependent, but can you please cite your claim that food prices are rising faster than wages somewhere? I am rather doubtful.
Making bankers and other politically connected people pay for their schemes is not the same as taxing the hell out of people who produce a lot of value. Let's focus on the ways of getting rich and eliminate those which are unethical or based on monopolizing resources belonging to everyone instead of just taxing away of someone's work just because they are productive hard workers (the ones growing the pie)
In a sense you can think of money as a way of measuring influence, since it is an abstract way you can compel people to labor on your behalf or give you resources.
Personally, I do not, because they make decisions like "I should have to pay less taxes so I can have even more money and I do not particularly care that the trains are barely running and constantly late, since I never take them anyway."
The pie is growing slower than it ever has. Per capita GDP growth in the US has been close to 1% over the past 20 years. The majority of GDP growth has come from population growth rather than increased personal wealth. The purchasing power gains made by US consumers, as cited in the article you linked, have been a result of an unsustainable current account deficit and growing national debt. Dollar strength is great for people who have a bunch of dollars, but for the working class it can be difficult because it hurts the competitiveness of US exports (and eventually domestic employment opportunities).
The rich are consuming an increasingly large percentage of a very slowly growing pie, so while you are technically correct, you seem to be unfairly dismissing a real issue here.
They are consuming an increasing percentage of a much slower growing pie. This is a problem. Nobody is talking about enforcing equality but about avoid inequality growing even more.
I am not sure what you mean with equality. Not too many people want equality in the sense that no one makes more money than others. What a lot of people see is that the top x percent of population is taking larger and larger shares of economic growth for themselves and the rest doesn't really benefit much from growth. Traditionally this can be controlled with progressive taxation and distribution of that tax to lower incomes.
We could also tax capital gains at the same interest rate as regular income or get rid of the mortgage deduction. These mainly benefit higher incomes and I believe the mortgage deduction drives up home prices.
Mortgage deduction makes housing affordable for working class.
Rich people get richer through dividend payments or capital gains. But if they keep reinvesting the capital in their business then they'll be able to defer tax forever..
You can reduce inequality by limiting the wealth you can generate from a corporation.
"Mortgage deduction makes housing affordable for working class."
In some places. And the new tax bill placed caps on those, so living in high cost of living areas, because that's where the jobs are, means you're probably not going to be able to afford a house.
"Mortgage deduction makes housing affordable for working class."
I don't believe this. People tend to max out what they pay for their mortgage so if they have a tax deduction they just will pay more for houses. Which then benefits the owning class.
I don't believe this. People tend to max out what they pay for their mortgage so if they have a tax deduction they just will pay more for houses. Which then benefits the owning class.
If you remove mortgage deduction, I'll buy 10 houses just because others can't use their deductions to offset the mortgage.
There are all cash buyers sitting around the corners.
I advocate for capping the total mortgage deduction.
"I advocate for capping the total mortgage deduction"
I agree about capping. Same for capital gains. Put a cap on it that lower income have an incentive to invest.
Capping mortgage deductions would also make real estate "investing" less interesting so the money would go to other purposes than driving up house prices.
>We could also tax capital gains at the same interest rate as regular income
Do we then drop corporate income taxes? One reason capital gains is lower than income is because the value was also taxed on the corporate profit side. In order to make investment more appealing capital gains is thus set lower to offset the double taxation on the growth.
AFAIK many (if not most) do this for this reason (and a few others, like capital gains not taking into account inflation, etc.).
It's also why the rich have an effective tax rate about 10% higher than their income tax since they're paying the corporate tax. Here's [1] a CBO report on effective tax rates by income distribution showing this.
Basic utilities/services being improved and increased such as education, healthcare, vocational training.
Investment in public resources such as public transit, roads, and public parks.
Increased low-income housing availability.
Higher (not absolute equality) taxation rates.
These aren't hard fixes and have relatively widespread support. They are just unpopular when it comes to those in power of our political system currently.
And before someone says it, making things closer to equality is not enforcing full equality. We already have basic services that would qualify under that and the only way you can be consistent under that argument is to go full libertarian, which hasn't seem to have worked out practically for populations at large.
> The emphasis should be on boosting living standards than trying to enforce equality.
Why? Because you say so, and because supporting the status-quo and the will of the powerful requires no further argument?
> If machines produce everything we need, the outcome will depend on how things are distributed. Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution. So far, the trend seems to be toward the second option, with technology driving ever-increasing inequality.
-- Stephen Hawking
Money in politics does matter. A money differential is just a means for people to have power over others -- without which they would have to convince them, which would force them to think and other such fancy things. Verily, money enables people to have a pretend narrative where there's really just garbled BS underneath. Having to witness that every day, on every street corner, on every website, lowers my living standards by so much I cannot make up for that with nicer clothes or a bigger house.
Keep your change, I want change.
A "growing pie" doesn't mean anything if the ability of a few to seize all of it is growing even faster, and if that's just a little bump of fast food, branded clothing and mobile devices, before billions get murdered in a flash, for example. And it doesn't have to be that drastic, just constant manipulation by massive PR campaigns is bad enough, effective slavery is bad enough. A few shouldn't be able to mold and use the many that way, doubly so not considering how deeply sick they themselves tend to be.
It's like we're talking about two different people, who would make a better babysitter, and I point out that one person has blood on their clothes and is awfully interested in how many neighbors live in shouting range -- and you say "yeah, but they have slightly nicer clothes and brought candy for the baby", and I'm like, I want to get a divorce.
The Economist article cites the fact that since 1976 real wages have not increased for the lower fifth of earners. So, no, they have not seen gains despite the growing pie.
This is exactly what we should expect to happen while computers make former tasks obsolete and while China and other formerly third world countries enter the global workforce.
In countries like Canada and the EU, where opportunity is more equality distributed, we still have the problem of increasing gains going to the rich. I sold a company at 27 for fucks sakes, the vicious and virtuous circles that the internet enables are stratifying wealth. We need more regulation to stop the vicious circles from forming and we need more redistributive taxes with global coordination to stop region shopping. Also, we need to delink mortgage interest rates from general interest rates to stop bubbles from forming in housing. If housing wasn't 5x as expensive in real terms much fewer people would care about the rich getting richer. The problem is that, in some respects, housing is an arms race so even though society is getting richer the poor and middle class can't ever stop struggling.
What happened is that all the manufacturing jobs that used to supply middle class lifestyles for the unskilled got shipped to China (or otherwise overseas). Mass immigration has expanded the labor poor diluting earnings for all, and massively increasing competition at the lower ends of the wage scale. "The rich got richer" because there is less competition than ever. Housing will only ever get MORE expensive as more and more people take up more and more space making single family homes pricing more resemble the luxury that they actually are. You could reverse all these trends and fix inequality but I can all but guarantee that you wouldn't employ any of the policy tools necessary to make it happen. Such as restricting immigration for the unskilled and enforcing border controls, thus reducing competition at the lower end of the wage scale and directly improving the lot of poor people in the US. The reduced competition might even incentivize employers to raise wages.
At the end of the day this devolves into tariffs, because the worlds workforce truly is competitive. If you want fat, state protected corporations then fine, but I'd rather have specialization. Though I do think we need to be harsher on some actors that steal IP, like some Chinese corporations.
"At the end of the day this devolves into tariffs"
No not really, you boil it down to that, but that's simply your framing nothing more. There's also the regulatory environment, so no it's not all about tariffs. There are almost no environmental controls or labor laws in China. So that is a huge factor. There is equal or more possibility that companies wish to avoid the responsibility of ensuring compliance as they do with merely avoiding taxes.
"If you want fat, state protected corporations then fine"
How does restricting the supply of unskilled labor from illegal immigrants and border crossers, visa holders of various stripes have anything to do wit fat protected corporations?
I agree that we need to harmonize regulations for trade, but guess what? We're already doing that and the Chinese are responding by getting cleaner so they can compete in more areas. In fact the US is one of the most pollution-heavy developed countries, so if anything the US is exploiting our shared global environment.
The reality is that, globally, there is a low skill labour glut because most countries are only now developing advanced education systems. If you want to stop competition from low skill labour you ultimately need high tariffs or extreme mechanization / automation, neither of which are good in the long run for poor people here.
If your argument were true, we'd see increased unemployment. But employment is near effective maximum, and has been for most of the post-1980 period where wages have stagnated relative to productivity.
Try again, this time taking observed facts into account.
Employment is a rather weak term. The fact that you are working 10 hours a week makes you employed but doesn't say a word about the quality of the job (uber driver?) or if you can support / nourish a family
I'm not talking about the quality of the job. I'm talking about the idea that sending jobs overseas + illegal immigration explains the current situation. It does not.
No, not necessarily. We would see wage depression as supply of applicants depresses wages because the demand remains relatively constant. Which might explain why wages stagnated but productivity simultaneously went up.
Right now, millions and millions of the poorest people around the globe are being lifted out of poverty by expanding industrialization and capitalism. If you look at the "elephant curve" (ref. below), the only people that did not have rapid increases of income from 1998 to 2008 are about the 70% to 90% range, coinciding with the middle class of wealthy countries.
A common interpretation of this is that globalization has resulted in the middle class of wealthy countries now competing with the hungrier, more desperate residents of poor countries. This suppresses the former's wages and raises the latter's.
Capitalism will always have a "race to the bottom" to find the cheapest way to complete a product or service at the lowest possible cost. It can be exploitative, but it is not a zero sum game. With every passing year human society bootstraps itself into more wealth that is used to solve our daily problems.
To me, this is net positive to the world. The global poorest are in the most need of more income, and stand the most to benefit. Efforts at redistribution and charity, while well-meaning, pale in comparison to individuals working hard to better their lot in life. The middle classes are not suffering too greatly on net from globalization (their income did not shrink, it merely stagnated or rose less quickly).
It is easy to weave and popularize a story of middle class deprivation and suffering, because this story provides an interesting tale of the demise of bourgeois values- and who doesn't like that story? But in reality the economy is more nuanced than that. Maybe in some number of decades, the elephant curve will begin to flatten out as enough people rise to relative wealth, or cheap energy will boost the economy with gusto. Until then the middle class can wait.
It is actually great that many people will be lifted out of poverty. What is unfortunate is that this can be funded a number of ways: Reduction in corporate profit, reduction in personal profit, a reduction in work hours, etc. So many ways that the benefit of moving this work offshore could benefit the broad economy.
The way that has been selected, at least in the United States, is that we detached wages from productivity. This means that the benefits from offshoring production (which is good, get more people involved in the economy) is enjoyed by those that receive those jobs, and by those who own capital, while the costs are carried by the middle class of the US.
You say it isn't a zero sum game, but then why in the hell is the middle class in the US getting wiped out, while we produce more and more billionaires?
Populism itself is not necessarily a bad thing if it is in the great American tradition of distrusting elitism and authority. However what we have instead is manufactured populism funded by very wealthy people.
The urge to populism is natural, a result of a sense of getting screwed over (which is actually happening). The focusing of that populist urge, on the other hand, is subject to exploitation by certain powerful elements.
The perception of "getting screwed over" is largely just that, perception. Subjective and easily persuaded. You can have a US population with record low unemployment, record high stock market, and even if their personal income has increased, can still feel like they're "getting screwed over" due to Persuasion.
The problem is the sort of "elitism" they oppose. It isn't "the works of one who grew up poor's ideas should be considered on their own merit just like one who was born wealthy". It is "What do biologists know about vaccines? Numbers are soulless lets go with what feels right." Plus even if the populism is 100% natural it may still be exploited by any willing to use it as a ladder. Being "for the people" has made no difference vs "for religion" or "for our geopolitical grouping".
Not helping matters is anti-elitism as a crab bucket mentality where they complain about the geographically near comfortable instead of the actual powers. Blaming the miller for their problems instead of their lord.
Even when not hijacked populism often fails to actually fix anything, it may be its refusal to acknowledge reality in its groupthink and search for easy solutions, dislike of nuance and not wanting to hear that the things they had just aren't sustainable or what they would need to do to make it so.
This used to be called demagoguery, and is very popular in dictatorships.
Not only have physical and financial poverty increased in the West - the UK and US have non-trivial numbers of people literally starving to death - but so have poverty of education and poverty of opportunity.
"The poor are lazy and deserve it" arguments are naive, irrational, self-serving - and a populist oversimplification themselves.
The reality is that when education improves, nepotism and corruption are constrained, and wealth becomes more widely distributed and accessible, economies boom and the poor do much better - unless the growth is sabotaged by external influences, as it sometimes is.
Populism is 'supporting the concerns of ordinary people', demagoguery is 'apealing to popular desires and prejudices at the expense of rational argument'. Distrust of populism itself is misplaced distrust, since while these two concepts do appear at the same time on occasion, I'm not sure of a causal or even correlated relationship.
I think it is more a matter of how populism is defined: the policies or the stated goal?
Look at the USSR and the way they treated their workers. Taken for granted and undersupplied, given grandiose mandates to live up to from the uninvolved above to deliberately gives lung cancer to union leaders via minutes long xray. The USSR was "for the workers". The Technocrats weren't really scientific or engineering based, just a moronic faschiod cult which called for a power based currency and no interest or accumulation - ignoring the value of other inputs or accumulation of growth. And then there is all of the violence committed in the name of religions calling for peace....
The point is never trust the pretense. Populist movements/groups are untrustworthy by defining themselves by the pretense instead of the policy. This does not apply to some policies called populist.
Moving up the bonus payment dates in the Great Depression,
safer working conditions, raising the minimium wage, shorter hours, Roman land reform after the farmland had been illicitly shifted past the legal limits per owner, even more radical goals like Georgist "only the value of the land itself is taxed - scaled appropriately", shifting to direct democracy are all fine - a given policy may or may not work as intended but they are not an easy direct road for some megalomaniac to power.
Populist groups are untrustworthy for the same reason as theocracies. It isn't operating upon the basis of say treating fellow man as a brother that is bad but the actual practices.
The concepts of populism and demagoguery are also being cynically used to target those movements that do prize nuanced, strategic planning for the future that happen to also conflict with wealthy interests. The whole horseshoe theory is an attempt to overly conflate the group of "people who want significant change" with "angry, ignorant people". It's a counter-simplification that's just as pernicious as someone blaming an immigrant for their problems instead of much bigger systemic processes. As you mention, education is critical and much of it has been steadily stripped of crucial, system-challenging concepts, much like food has been stripped of nutrients and replaced with empty calories. Getting more of such anemic education isn't any better for social health than Big Macs are for bodily health. We criticize "useless" degrees or fields, but have also severely unbalanced dissemination of knowledge to favor just what businesses desire and not necessarily what is good for a society.
On a global level, the rich have gotten richer, but the poor have gotten a LOT richer. Three decades ago, as a kid in Eastern Europe, I could taste oranges once a year, at Christmas time, with some skipped years here and there. Now everybody can eat as much as they can, and obesity is a growing problem. Maybe you don’t care that much about the world outside the US or Western Europe, but literally billions of people have seen their living standards rise from the subsistence level to a decent level.
I think there are a couple of intertwined ideas in your comment. I wonder if your observations could be explained by decreases in the cost of food / increased food distribution.
Secondly, it's not clear whether wealth has improved for poor people (something I should take a look at...).
Is a that very useful way of understanding growth? Without any change in the income distribution, everyone getting 1% richer would increase the absolute gap by 1%.
That seems about right. "Getting 1% richer" would imply something completely different for a billionaire than for a worker, so I don't see why it would be a useful measure.
Because economies growing or shrinking generally affects people proportional to their wealth (including human capital). To me, Gini curves seem far more effective for understanding the dynamics of inequality than looking at absolute differences, which largely change due to economic growth.
Yes, that's true when talking about causes of a wealth gap, but this thread was about effects.
A growing absolute wealth gap can still lead to reduced quality of life for lower-wealth groups - e.g. because prices rise faster than their incomes and so they effectively lose access to certain goods. It will also increase inequality and makes other economic measures (that rely on the mean) less reliable.
Just because an effect is always present, doesn't mean you can ignore it, especially if doing so would flip the conclusion. Posting the elephant graph as an argument that all is going well would do exactly that.
I'm not sure I understand this rebuttal, do you want to expand a bit? Everyone getting 1% richer would not affect the Gini nor the absolute gap, or at least not as much as you imply. So I must be missing something.
In any case, you are not necessarily addressing my rebuttal of the elephant graph. What I'm saying is that the elephant graph is an interesting conversation starter, but, by itself, it does not convey enough information to make a conclusion about fairness. To make an extreme example, if I have literally $0 last year and I have $1 now, my growth rate in the elephant graph is infinitely higher than the richer 1%. I'm still going to starve to death, though. Absolutes matter.
But it would affect the absolute gap - everyone is proportionally richer, so the absolute gap is proportionally larger.
My point is that knowing only the fact that "absolute inequality has increased" doesn't tell you anything about whether that's good or bad for the world.
I agree that absolutes matter to the individual - but I personally think percentages are a better way of understanding and interpreting growth over time for most populations, because growth has historically been very consistently exponential.
If I understand the graph correctly, the gap in absolute terms reduces, when the derivative of the (original) Elephant graph is negative, that is the gap between the lower half of the income distribution and the P50-60 (6th decile, something like $2k - $4k [0]) increases. And the gap between P80-90 ($8k-$14k, that's the lower third of the US population) and the top increases, while the gap between P50-60 and P80-90 decreases.
In terms of poverty, is there a difference between getting more wealth vs everything becoming cheaper? I don't think there is - your life has improved just the same either way.
Fixating on silly numbers that ultimately mean nothing doesn't seem like a good way to make the world better. We should look at concrete things - and how often you can eat an orange is the kind of concrete thing that really matters.
You can go to a place like Mauritius where the delta is enormous, but everyone is pretty happy and the rich and poor mingle freely. Or you can have a place like France where the delta is far smaller, but the rich and poor detest each other and very rarely mingle.
In 2014 The Gini coefficient for Mauritas was 30 and for France it was 40.
The top 1% in France has about 20% of the total income as of 2014.
For Mauritas no suitable data was found for wealth inequality or dispersion of earnings.
The lack of good data for Mauritas makes a comparison between the two questionable.
Plus even after looking at the numbers for these countries I would want to check out money laundering - if I recall, based on the Panama papers, a nontrivial amount of the 1% (probably more like the 0.1%s) wealth is laundered/hidden/dark. I don’t know if the studies here attempt to account for that or not. I would imagine money laundering is prevalent in France (or any major economy for that matter), possibly in Mauritas
As of 2018 the population of Mauritas is 1.26 million (via google search). The 2018 population of France is 65.23 million (via google search). The 2014 population probably was not radically different.
I wonder if the size of the society in question matters here - is comparing a country to one 65 times larger than it useful?
I did not look for data to validate the hypothesis that everyone is pretty happy in Mauritas as opposed to France.
Back in the 90's I saw the same thing when living in Brazil. A friend in his 70's who owned real estate in Rio owned a Rolls recently returned from NYC. He said he was shocked at seeing the hatred in the eyes of people in NYC. He countered how he could stop for a coffee or beer or anything else and just talk to anyone who was there regardless of the socio-economic status. I had to agree. I always wondered why there was not more discontent.
Oranges may have become cheaper in relative terms, but property sure hasn't. In many parts of the world property is more inaccessible than ever before for similar social economic groups.
That's just artificial scarcity, right? Rural property out in the woods is just as cheap as its ever been, in my experience. Cities just have a lot of laws preventing a lot of things, but I think most people who choose to live in cities prefer it like that.
Maybe.But Germany has cities but they created a political system(after ww2) optimized for cheap real-estate , and they do have fine cities, while their real-estate prices has Rose neglibly over the last few decades.
I'm not sure the relevance of it being artificial or not is here. The reality is that many people in their 20s and 30s can't buy a house, while their parents could, even if their parents were less affluent by many measures, say in orange purchasing power.
That's also partly because you can't hardly buy a newly constructed house unless it's 3000+ sq feet, whereas houses from decades ago were substantially smaller, leading to more affordability. The lack of these houses does not imply that people currently in their 20s and 30s are less affluent, just that there is less affordable housing.
Leaving NYC, even after taking a pay cut, was one of the best decisions I ever made. I don't have data, but I suspect that for young folks outside of the largest 20 American cities, if they didn't have on average 40k in student loan debt, they would have more purchasing power then previous generations even including real estate.
Cities also have jobs. I don't see many postings for positions out in the middle of the woods. Certainly not enough to sustain all the people who would be needing to go there in order to have property.
This is really the question that throw’s people for loops in my experience. Not contextually what you were addressing but in comparison to my parents in the US.
Many things are much more inexpensive jeans, shoes (functional not trendiest), entry-level tools, computers, media, etc.
Whats not more inexpensive and what imho really actually matters are things like education, housing, and the barrier to entry to careers (require licensing, certfications etc.)
> Maybe you don’t care that much about the world outside the US or Western Europe
I don't think that's a fair reaction. It's possible to care about the rest of the world and recognise context. Workers looking for greater bargaining power in the US shouldn't accept "but things are much better in Eastern Europe these days" as a reason for them to not organise - the two are entirely separate issues, and can happen independent of each other.
They're not entirely separate issues. One of the big reasons for rising living standards in the rest of the world has been the offshoring of work from the US and Western Europe, which is also one of the things reducing worker bargaining power.
It's easier to get away with worker hostile policies for an employer when the employer's option if workers object is not "no workers" but "I guess I have ti shift production to China".
You're right that it's not directly related to the decimation of unions. That has other things going on, and different things in different sectors.
I think they are related. If a factory is in the US, and unions drive cost of employment higher, then the factory owners look to move the factory overseas to be more competitive. Now it's important that we also recognize that the factory owners also have to be competitive in a global landscape and against new entrants into the market, new entrants that can spring up from countries where the cost of employment is much less, so they have a strong incentive to move factories when costs rise.
Now at its disposal, a government can implement tariffs and protectionism to level the playing field, but those can have disastrous long term effects (see the history of India's protectionism).
So, an excellent way for wages to rise is to make employees extremely efficient, and to increase the demand in labor. Make no mistake though, the gains in other countries have effected US and European workers.
That's another way of transfering wealth from richer to poorer
They are strictly correlated
Poverty is globally going down because poorer countries are becoming less poor, meanwhile richer countries are not becoming richer at the same speed as before
Just like CPUs
They're becoming faster but the difference between each generation is smaller
So yes, aknwoledging that eastern Europe used to be so much worse than actual US is a tool to put things in perspective
>>The absolute improvement is great. The accelerated concentration of Wealth is not.
Yes, exactly. The reason actually is very simple: wealth inequality results in inequality in political (not to mention legal) representation, as the wealthy always carry more influence in society and use that influence to stack the odds in their own favor.
I definitely agree that it’s a red herring - the majority of people are going to judge their position relative to the world around them, not to some time 30-40 years ago.
It’s pretty much the same line parents use on their children - I don’t think it works for them, much less adults.
That's more to do with a better food distribution network. The fact that you ate mostly locally grown food and not imported from far away places didn't make you poor. You had to really try to be poor and hungry in USSR.
The collapse of communism and diminished threat of proletariat revolution in western countries is what driving the inequality in the past 30 years ("the rich are getting bolder").
That's controversial who caused what, the wikipedia link actually discusses it. It's like saying the Wall Street bankers caused the famine in USA in 30's.
Too much propaganda and subversion on this topic.
The millions of deaths (irrespective of the famines ultimate cause) in the USSR and especially in the Ukraine in 1932 / 1933 are well documented (2-4 million deaths estimated):
There is a Wikipedia article on “hunger in the United States”, but a google search for “United States Great Depression famine” did not return any Wikipedia articles documenting a famine in the US at that time, only the above Stack Exchange discussion (which appears to reject the hypothesis).
Without data to back up the claim of a famine killing millions in the US during the Great Depression the comparison used here is nonsense, although there may be other evidence for the point the author was attempting to support.
We are discussing economic systems. What is the point of listing selective list of famines at certain times of Russian history to the discussion about communism vs capitalism. Much worse famines occurred when the Russia was capitalistic. Famines occurred in any type of economic system. Are you implying that communist Russia was more susceptible to food shocks?
> The fact that you ate mostly locally grown food and not imported from far away places didn't make you poor.
The "locally grown food" in many cases was little more besides white flour and mincemeat. (A situation that still exists in parts of rural Russia.) The only tea that could be drunk was usually a single variety of black tea. I think "poverty" is a reasonable adjective for that state of affairs. The fact that people in urban Russia today do have access to a vastly wider choice of food is a significant advance.
Nope, that's called a richer diet. Also having an option to buy 50 different varieties of black tea doesn't make someone better off. In the end you are going to drink a tea. I'm not whitewashing history which is quite bleak in that region but too many things are distorted by propaganda. It's all subjective but Russians today are not better than they were 50 years ago despite having the ability to buy iPhones, drive BMWs and eat sushi...
I can't agree that healthy food is necessarily expensive from the perspective of someone in the US. Chicken breast is regularly 1.99 a pound and thighs even cheaper. Canned food is ridiculously cheap, and frozen vegetables don't go bad and are no worse than fresh ones.
It is healthy in comparison to the average thing people eat. It's hard to get obese eating just chicken breast (you will get full pretty quick). We aren't going to get everyone drinking kale smoothies.
I don't mean to say you are wrong or I am right. But what do you suppose is a better healthier solution? Everyone growing their own food? Or everyone starving?
Obviously, no one food is healthy, note that I named a couple different "healthy" foods. Having a balanced diet is important. Nothing about your article seems to point to chicken being unhealthy to eat. I don't even know if you read the article.
> Why are people trotting out chicken as an example of healthy food?
Are you kidding me? If you're vegan, just come out and say it, or make an actual point. Part of my response was related to affordability, which is hard to beat when it comes to chicken as a source of protein. What healthy alternatives do you have?
I started watching the second link. Interesting stuff. Maybe chicken isn't the most healthy option, but I don't think it's evil.
People in Medieval Europe did not think that torturing animals to death for entertainment was evil. It is obviously evil to people in Europe today, just like breeding and enslaving animals in horrific conditions only to slaughter them for food is obviously evil if you take a moment to think about it.
Unhealthy food is only cheaper if you can't be bothered to take 30 minutes to cook. It has been a long time, but the last time I went to McD's it was ~$5 for a meal. The expensive grocery store up the street sells chicken breast on a permanent sale for $1.99/pound.
If you're thinking the unhealthy food in the grocery store is cheap, that's also not true. Chips are $3-$5/bag while 3 pounds of onions is $2. I could go on.
I will be sure to immediately replace my bag of chips with a bag of onions?
Poor people are likely to be both cash-poor and time-poor: it's not a question of "being bothered". If you have the available time to fully consider, process, and follow this advice, then you may not realistically be poor at all.
And, if you did manage to follow this advice, you would likely still be poor - saving pennies on food is not any way out of poverty.
I was poor growing up. Both parents worked, a lot. My mom had tons of ways to quickly prepare ground beef or chicken into something that tasted good. When she had time she bought whole chickens and broken them down because it was cheaper. Maybe once/month she would buy a 2 liter of soda as a treat for my sister and me. So I've been there and done that.
And lets get off of this no time argument. Why do all these people with no time still have TVs? The average American watches ~5 hours of TV per day. Watch 4 hours instead and cook a healthier and cheaper meal.
"And lets get off of this no time argument. Why do all these people with no time still have TVs? The average American watches ~5 hours of TV per day. Watch 4 hours instead and cook a healthier and cheaper meal."
That's a complete non-sequitor. You're going to have to provide evidence that those who are poor are the ones watching tv so much, and don't have the time because they're working multiple jobs.
Yes, I recall my mother (single mother, high school education, in the rust belt of the Ohio Valley) saying to me, in between shifts of her 2nd and 3rd part time jobs, that she would love to spend 30 minutes cooking a delightful meal from scratch and then another 30 minutes eating followed by another 30 minutes cleaning up, but she just can't be bothered.
She kept the house stocked with canned soup and lunch meat because a 6 year old (me) and a 12 year old (my brother) could manage to make a meal out of it while she was working.
Sandwiches are dirt cheap, filling, nutritious, and quick to make and clean up. Sure, they aren't delightful, which is sad, but that's not the barrier to nutrition.
Switching from rye to white bread is a whole lot less bad for you than switching from water to soda. At some level we have to make a decision about what an acceptable level of "bad for you" is and I think white vs wheat is way below that line.
The research done concluded that differences in Gut Microbiome meant that "The glycemic response to the two types of bread varies greatly across people".
I have complete respect for single parents and how hard their job(s) are. It sounds like for your situation growing up that even 30 minutes would have been too much time to spend to make a meal.
I do think in the general case though, that people usually have 1/2 hour to cook if they wanted to. Are there going to be exceptions like yours? Absolutely.
Healthy life style is not only how much money you have, that's just the American way
My parents worked in hospital, had shifts of 12 hours, sometimes for 6 days in a row, with two little kids, while studying to be professional nurses (so not even on doctors salaries)
My mom worked in infective disease, my dad worked in oncology
Me and my sister never had a room, we couldn't afford a house with private rooms for us
How did they manage?
They bought a house just on the other side of the street, so they saved a lot of time avoiding commute
They never missed a meal with us, my mom used to buy fresh food everyday and cooked for us
She still does when I visit, 40 years later
"I don't have time" it's the lame excuse you tell to your friends when you don't want to go out, not to your kids
I cook my own food from fresh vegetables, meat, etc. for about $10/day. It's not organic-branded, but I can't see how it's any less healthy, and it seems pretty inexpensive to me.
By my understanding, global income inequality is improving but global wealth inequality is worsening:
The conclusion that I draw is that while people broadly in this position might accurately perceive that they are now in a more comfortable short-term position than they were, they are at high risk in the medium-term and long-term.
"Maybe you don’t care that much about the world outside the US or Western Europe, but literally billions of people have seen their living standards rise from the subsistence level to a decent level."
That's very uncivil of you. There is lots of poverty in the US, and despite popular opinion, there is lots of hunger here too.
Can this be attributed to advances in genetically modified plants yielding more fruit in less favorable conditions along with advances in logistics to get the fruit shipped from all over the world. I'm eating mangoes grown in Peru that I got off the shelf at my local grocery store.
I'm pretty sure that, even in the west, it is incorrect to say that the "majority are a lot poorer." The article itself points out that real wages have grown, albeit slowly.
Incorrect. "Real wages" are "wages adjusted for inflation", or "wages relative to the cost of living" in economics parlance. If real wages are growing, then wage growth is outpacing the growth of the cost of living.
its great to see comments that dont contribute anything useful get downvoted -- it keeps the signal:noise raio high.
but lately im seeing comments downvoted seemingly because users just dont agree with the author or their point of view. thats not helpful. meaningful discussion and debate must embrace alternative points of view. please dont downvote to censor.
Ya it's been happing here for a while now. I just stay away from politicized discussion on issues where people have already made up their mind and are repulsed by contrary opinions. Unfortunately that's a lot of topics. If it's an important issue to me, I'll still state my opinion, downvotes be damned.
Its going to eventually impact the rich severely. Once no working person can afford to live in California at all they will have no 911 services, no doctors or hospitals, not even any trash pickup services because even if these are privatized they will never find employees because a salary is not enough to live here. When a rich person falls and gets a compound fracture they will have to do their best to fix it with duct tape because in another 5-10 years at this rate if you make less than 1 million a year in income you won't be able to reside in this state.
Can we stop with the hyperbole? Even at current rates with a bit of rise, the lowest livable salary is doubtful to go over 100K - heck I can budget right now to live in California (with no savings) at 50K.
The rich aren't that dumb. The most important things (like medical, fire, etc) will rise accordingly with demand. Restaurants may shift more towards the high end, but that will mean matching tips (for the few that can get a job there). I dislike the unregulated free market a good deal but even I can admit it will adjust before any critical situation affects the rich. Again, those most affected by these dynamics the most will be at the bottom of the pecking order. Should we fix this? Of course. Are we all on the verge of not being able to live in California? No way.
Anything even slight center-left on this site will immediately get inundated with broken, inordinary American right+ talking points. We're not hackers here, just American middle class programmers.
This thread is full of justifications completely ignoring the fact that we almost had a full blown financial meltdown just 8-9 years ago, at the expense of the middle class, and the only thing that stopped it was extreme government intervention and then lowering the absolutely hell out of interest rates. How did the middle class survive and maintain its perceived wealth? It's not because they had the purchasing power to do so, quite the opposite. It turns out that lowering interest rates across the board implicitly creates a credit bubble (because low interest money isn't used for assets, it's used for loans). A lot of middle class Americans have maintained their standard of living (or just survived in general) off credit and they're propping up other middle class workers with that debt (notably the service industry).
>Why would Americans be struggling when unemployment is so low? Well, having a job and having a well-paying job are two different things. And wages have largely remained stagnant in the 21st century.
We're letting a time bomb tick and tock if wages do not significantly rise over the next decade.
The government intervention was akin to privatizing gains and socializing the losses, though. It was welfare for billionaires. Had we allowed the banks to fail, the middle class would be better off today. Instead, it all got swept under the rug, making everything worse except for the few who had the connections to receive the bailouts.
If the risk takers who blew those bubbles had only suffered for their actions.
Americans are struggling even though unemployment is low because most jobs pay like $10-15/hr.
> I suggest the rise of populism is caused by increases in wealth going to the very richest while in real terms the majority of people are poorer than ever.
That's my working thesis as well. the increased in real poverty rate in the USA is causing the previously hidden tensions to be exposed and flexed. When the pie was large, it was easy to be easy. When the pie is small, ya gotta watch out for the neighbors taking your slice.
Note, I've lived in the poor(er) white areas of rural America, and I've lived & worked in the rich(er) urban America. It's very hard to have genuine communication. The difference verges on the incommensurable.... from both sides.
Not if employers aren't perfectly rational, and would rather hold out for that unicorn amazing employee who works for peanuts, as appears that many are doing.
A supercomputer in your pocket doesn't put food on the table, or fix the car, or reduce crime in your neighborhood, or make sure there isn't lead in your water...
Really? You start navigation and go straight to your place. You do not get lost and do not waste fuel. Here you saved some money for food, fixing your car (oh yes, you are driving less so less to fix), you maybe even have avoided shady area with help of navigation and BTW you have reduced lead in your water by driving less most probably.
And I have covered only one minor thing supercomputer in your pocket does.
Perhaps not, but it does allow you to learn to grow your own food and fix your own car, and all manner of other things.
Most people use it for entertainment but we really are spoiled with the amount of information at our fingertips. The good will of professionals sharing their know-how online has helped my career grow and made me much more self-sufficient in other areas.
Tangentially regarding wage growth, sure growing some of my food or fixing my car is a net-loss in terms of potential earnings because of the invested time, it's well worth it in other respects. Also, developed countries have a pretty good standard of living already. Needless consumption is a greater problem IMO.
"grow your own food" If you believe in commonly accepted economic thinking like efficiency of large scale production and comparative advantage and specialization, then you must conclude growing your own food does not make economic sense.
Food and water are pretty cheap these days in advanced countries. Very few people have trouble getting enough of them. Similarly, crime has been plummeting in most areas during the measured period. Lead in water is also a rare problem to have these days, Flint MI notwithstanding.
The main cost issues today are healthcare, education, and housing.
- People on average have less disposable incoming due to rising costs of housing, education and healthcare.
- Some goods (e.g. computers) have gotten dramatically cheaper in the last 20 years.
So you can save a little by not having the latest products and services, but it is insignificant compared to the overall financial challenges people face. [1]
PSA: "Real pay" means nominal pay adjusted for inflation. So if pay went up by 3%, and inflation was 2%, you'd get something like a 1% "real" pay increase. Please reserve comment about the "cost of living" or inflation, as those are (technically) accounted for in this number.
Yes, although it's always worth asking what measure of inflation is being used. Whoever makes the statistic usually picks the measure most favourable to their point, the most common wheeze is not including housing costs where they should be included.
I agree that housing costs should be included in some way, but this is hard to do correctly because – at least if you buy – housing is an investment good, not an expense. In the US the bureau of labor tries to calculate the "owners' equivalent rent"; the EU on the other hand considers the cost of housing and inflation to be strictly separate measures. Rents are generally included, though.
Or you don't because you literally default on the mortgage. Or perhaps you rent and it's really hard to consider housing an investment. It's more like some hybrid of necessary living expense optionally coupled to a consumer investment not amenable to being written off as a tax loss.
That's true at the EU level for the inflation measure of the European Central Bank. But national governments tend to have their own (modified) versions of the HCIP which do include things like owner-equivalent rent or mortgage rates.
Not trying to argue semantics here, your point is completely correct but it may be confusing to say 'the EU (as if, as a whole) considers housing and inflation as separate measures'.
Technically correct, but there are huge regional differences for real wage increase and cost increases in many countries, so what people experience is different than what a national statistic confers.
I'm of the opinion that economic statistics become almost worthless from the perspective of politics and policy once you get to a certain sample size.
A cost of living statistic that averages out cost of living between say Michigan and coastal California is quite wrong in both places. It will grossly underestimate cost of living in California and overestimate it in Michigan.
I think this is one of the major problems with politics and economic policy setting at the national and global level. National and global leaders look at big aggregate statistics, which completely blinds them to the street level realities everywhere except those places that happen to coincide with the statistical median. Most places do not coincide with the statistical median. I think this largely explains the recent global populist uprising as well as the fact that global leaders were surprised by it.
Large scale macro statistics might be useful for setting things like Fed interest rates, but they're nearly worthless for addressing local problems.
This is exactly correct. Additionally, qualitative data needs to be factored into policy decisions as well.
If a city looks and feels unsafe, dirty, deserted, and so on, then it probably is those things. No amount of statistics can explain away the experience of any unbiased, reasonable observer.
Park your car in the center of town somewhere. Hang out and eat a sandwich with your windows open in your car. See who walks by, hear the noises, the beeps, the sirens, the shouting kids or quiet wind.
Not sure I agree there. There are plenty of historical examples of people seeing things in bizarre ways that simply weren't true. We see this recently with crime statistics dropping across the board, terrorism being less dangerous than bees, and people feeling less safe than ever.
I'd say plenty of people aren't fully aware of ways in which their lives get cheaper or better. That's just 'normal'. Whereas growing up and paying $2 for a coffee, and now 15 years later it's $3, is just a sign of you getting squeezed, and people are very much aware of that.
One cognitive / measurement issue here is hedonic inflation.
For example, the average new home was 1000 square feet in the 20th century and 2500 square feet today. Meanwhile, average household sizes decreased. We all got bigger houses with fewer people to share them with. We also got universal central heating, hot piped water, flush toilets.
Similarly, our computers have gotten faster. I don't need to explain the implications of moore's law to anyone here.
Suppose the average $1000 computer gets twice as fast previous year. Is that to be measured as inflation or no change? No change? Perhaps, average prices remained constant. But inflation is, among other things, a purchasing power kind of metric. 'How much computing power can I purchase with this money'. In that sense, prices halved. In short, there was deflation, on a hedonic basis.
This is something a lot of people don't realise. Inflation figures are sometimes suppressed by such improvements (which halved computing prices, even if sticker prices didn't change). Homes got more than twice as big, computers a thousand times as fast, these things can't simply be ignored by stating 'average homes and computers are more expensive', which is the reality that people experience in real life when looking at sticker prices of computers and rental properties. The reality that people often omit is that the product itself has massively improved.
Same with healthcare. Yes, costs increased. So did outcomes. Try surviving cancer today vs 50 years ago. Try living till 80 years old on average, 50 years ago, when life expectancy was sub 70.
You see this a lot in machine learning. Reward a neural network or evolutionary algorithm for identifying squirrels vs. cats and you'll get one that compares one pixel of the usually beige wall color in mostly indoor shots of cats vs. the non-beige pixel found in mostly outdoor shots of squirrels.
Fortunately we have exactly such local and sector level inflation statistics. They just don't get published in the media much because who wants to read tables for all states and provinces of tens of different countries. (e.g. https://www.bls.gov/regions/subjects/consumer-price-indexes....)
The national government looks at national figures, that's not worthless. The state looks at state figures. And the municipality looks at local figures. This idea that politicians are completely blind and have no idea of street level realities, only exist at the national level, or have no data or policy instruments beyond the national level is a joke, but it seems almost like you're implying just that.
housing cost, health insurance, and college tuition aren't counted in inflation. Economists and politicians can lie all they want but there's a reason people are angry enough to vote Trump or Bernie Sanders and it's because they can tell their standard of living is dropping. Don't piss on my boot and tell me it's raining
If the establishment was doing it's job people wouldn't vote anti-establishment.
Indeed. My rent has gone up in 50% from 5 years, 100% total from 10 years ago. My salary is up just 20% over that 10 years and still well below what i was rocking pre 2008.
> housing cost and health insurance aren't counted in inflation.
Generally, that's simply not true. There are infinite different measures of inflation and it's up to the synthesizer of the inflation metric to include or exclude things, but generally housing and medical care are part of the equation.
I am not an economist, so anyone more familiar with this please educate me on this matter, but surely a single number like inflation can't capture difficult issues like rent going up very quickly, or any other issue that basically affects specific subsections of society disproportionately? (and I'm not even mentioning the issue of housing shortage)
EDIT: I probably should have used "express" rather than "capture", apologies.
Rising rent will absolutely be in the inflation number. Sure, it might not be correct if you live in a big city where rents have risen way beyond inflation numbers, but it's good on average.
Every European capital / big city has seen absolutely massive increases in rent and house prises since the ECB started printing money. (Housing sector if very 'close' to the banking sector and so more directly affected by the availability of cheap credit). Not causes by the ECB 100%, but accelerated by it nonetheless.
But if the cost of all other goods has stayed the same, plus the rent and house prises in rural areas has been normal or even dropped, inflation on average will be ok.
(And then the ECB says: inflation is less than 2% _on average_ so no problem here. print. print.. print...)
> Every European capital / big city has seen absolutely massive increases in rent and house prises since the ECB started printing money.
For Brussels at least, that is simply not true. See the graph in section 'Brussels Hoofdstedelijk Gewest' of [1] for the evolution of real estate prices in the Brussels region since 2008. There are also strict rent controls in Belgium: if you are renting your landlord can increase the rent with inflation, but not more. Every three years the landlord can theoretically increase the price, if he has made improvements to the property or he can prove that the rental value has objectively increased by more than 20% (which is hard, if there are disputes courts tend to side with tenants).
> Rising rent will absolutely be in the inflation number. Sure, it might not be correct if you live in a big city where rents have risen way beyond inflation numbers, but it's good on average.
This assumes the numbers accurately represent reality. Here in Canada, the shelter component of our CPI numbers do not reflect at all the massive price inflation that has been occurring in both buying and renting shelter.
If one was to take their numbers at face value, you would conclude that shelter price inflation is generally consistent with all other goods, and that it has been consistent across all regions, neither of which is true.
Printing money is what central banks do. It's what every Eurozone nation used to do with their own money as well before switching to the Euro. So unless you can explain what the ECB does differently that makes this worse than the central banks before it, you don't really have much of an argument.
Is it printing money faster than the central banks before it did? If so, give some numbers and sources please.
And in general, be explicit about your claims, because as written you're practically suggesting that the Eurozone is acting like the Weimar Republic.
ECB, FED and the Swiss National Bank have been "printing" money but not the same as before. They're only using it to buy securities, first bonds, and now even stocks/index ETFs.
Well of course such a number can. You just calculate average price increases, weighed by their share of spending (a 1% increase in healthcare has more implications than a 1% increase in telephone bills) to the best of your ability.
The question is, how good is the approximation and how meaningful is an average statistic?
The statistic is useful and meaningful, but doesn't say everything. Fortunately we have hundreds of inflation metrics, for different groups (urban, rural), age groups, countries, states, regions and sectors.
Virtually none of these are published in media outside the general CPI measure, but all can be found on government/centralbank/consultants etc websites, typically with methodological sections explaining how they came to their conclusions.
Not to get sidetracked into a semantic argument, but as a non-native speaker of English: isn't that exactly what "capture" in "capture difficult issues" is supposed to mean?
Indeed (as you edited), the national inflation figure can 'capture' it in the statistic sense, but cannot capture it in the sense that the number expresses individual paint points that different subsections of the population experiences, like rent in a HCOL urban area, or the inability for wages to catch up with an ever increasing downpayment requirement.
This seems clearly true for highly regional things like rent but probably not true for non-regional things like the price of a camera on Amazon. Those are likely to be well-described by inflation numbers.
From an economics standpoint, inflation is an increase in the money supply.
What we see in our everyday lives is sometimes called "price inflation", i.e. prices rising, and that can happen disproportionally.
As a US-centric example, computer prices have been gradually decreasing, while healthcare and housing costs have skyrocketed.
So an increase in the supply of money is separate from an increase in "a concentration" of money in a "market area" like healthcare, and productivity and material costs and whatever else factors into prices at any given time.
Of course, an increase in the supply of money factors into prices where ever the money goes.
> From an economics standpoint, inflation is an increase in the money supply.
This is not true unless you live in early 1900's or only surf some crackpot websites.
In the language of economics inflation without specifics
means price inflation. If you mean monetary inflation, you must use two words.
Increasing money supply is not going to prices if
1) economy grows and demand for money matches the supply or
2) velocity of money decreases. https://fred.stlouisfed.org/series/M2V As a thought experiment: If you mint a trillion dollar coin but are not using it, monetary supply increases radically but it has no effect on price inflation because it has zero velocity.
I imagine you're referring to Austrian economics here, but much more mainstream economists believe inflation to be fundamentally about money supply as well. Here's (nobel prize winner) Milton Friedman, from Wikiquote:
"Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output. … A steady rate of monetary growth at a moderate level can provide a framework under which a country can have little inflation and much growth. It will not produce perfect stability; it will not produce heaven on earth; but it can make an important contribution to a stable economic society."
That's not so say that many don't hold the belief you have (i.e. that inflation should be understood primarily as price inflation, and monetary inflation is a secondary consideration). But it's not the only mainstream opinion.
> I imagine you're referring to Austrian economics here
Probably. It's strange how the only school of economic thought that actually corresponds to reality is the one shunned as "pseudoscience" or something.
>I think the Austrian business-cycle theory has done the world a great deal of harm. If you go back to the 1930s, which is a key point, here you had the Austrians sitting in London, Hayek and Lionel Robbins, and saying you just have to let the bottom drop out of the world. You’ve just got to let it cure itself. You can’t do anything about it. You will only make it worse. You have Rothbard saying it was a great mistake not to let the whole banking system collapse. I think by encouraging that kind of do-nothing policy both in Britain and in the United States, they did harm.
And Milton was right about that just because he's Milton?
Can you come up with an argument against Austrian Economics in your own words, or are you content trying to discredit it with an appeal to Milton's authority?
I could argue against the quoted passage but I don't want to bother doing any more work than you have.
You linked to some junk website as an appeal to authority.
I'll throw you a bone: Deflationary policy is idiocy. Belief that monetary policy can be neither inflationary nor deflationary is anti-empirical and wishful thinking.
And yet, somehow I still think you're not even trolling!
But if not.. Once again, I have to wonder what the hell is wrong with you people.
By the way, that wasn't an appeal to authority. It was a link to a website where you can educate yourself, without having to take my word for anything.
As for monetary policy, it shouldn't even be a thing.
It really doesn't take much at all to see that the Austrian School is right and others are wrong.
For starters, if you understand that value is subjective, you'll also understand that there's no way to put a number on how much you want something, or precisely how much you'd be willing to pay for it, etc.
You'll also understand that you can't base calculations on something you can't actually quantify, and have no way of accurately measuring..
So yeah, you'll understand that most of what you've been taught is just garbage-in-garbage-out.
As for monetary policy, it's essentially just "a plan for forcefully intervening in an economy", and it doesn't actually happen for the greater good - it's done to benefit the government and their buddies.
As a prime example, who gets access to newly printed thin-air-money at zero interest? Do you want him to buy real assets with "free money", and have you suffer the consequences (of the resulting decrease in your currency's purchasing power)?
> no way to put a number on how much you want something
Counter-example: I do it all the time. Ever heard of "revealed preference"? Sure there are weird human things like preferring A to B, B to C, and C to A, but I'm OK with a map not being the territory.
> a plan for forcefully intervening in an economy
All government choices are forceful interventions, whether a choice to act or not act.
I can estimate the amount of money I'm willing to pay for something. I can observe some evidence of what other people are willing to pay and from that proxy make an estimate.
If that's pulling something out of my ass, well, I guess you're not a fan of statistics or the scientific method? Oh, actually, I forgot that's a central tenet of the Austrian School -- science is bogus when contradicted by philosophy.
> can't parse the latter part
If a government creates money, then it must have a monetary policy. Do you think government-backed money is not "for the greater good"?
When quoting Milton Friedman we are discussing in past tense. Monetary theory has moved on. Friedman’s ideas were revolutionary and they corrected many mistakes of that time, but only some parts of Friedman's monetary theory have survived. He was one of the greatest minds in economics but things are not true just because Friedman said so.
Friedman simple quantity-of-money rule policy didn't withstood the test of time.
His idea that flexible exchange rates make inflation purely domestic issue is the cornerstone of economics. No good economist today believes that unemployment and deflation should be preferred for currency devaluation thanks to Friedman.
Friedman spend his life trying to prove that there had never been
in history a monetary supply growth without being followed by inflation. What he didn't try to prove was that monetary supply growth always is followed by inflation.
You may be right and I might be out of touch with what is mainstream these days. But to be clear, I wasn't claiming Friedman's ideas were the only ones in Monetarism. Obviously a lot has happened since the 70s (or even 10 years ago when I was more in touch with people in economics).
But I think 10 years ago there were definitely mainstream people who at least claimed to believe the "inflation is always a monetary phenomenon". Still, it sounds like you are more up to date on this than I am so I appreciate the clarification.
> 10 years ago there were definitely mainstream people who at least claimed to believe
This is correct even today. Among politicians and pundits there is completely different economic discussion and it's really confusing.
You know, if you would give top 1000 dry academics in any field a way to flag news media or opinion pieces in their specialty with visible [extraordinary or surprising claim] -flag if they do it with 4/5 majority it would be really helpful public service (startup someone?)
Inflation is typically calculated via two indexes in the United States. The consumer price index (CPI) and the producer price index (PPI). The consumer price index does its best to calculate difficult issues such as improvements in technology, changes in shelter and prices for other goods and services urban consumers use across the country. Each report is calculated monthly I will link to the most recent versions of each report below:
Correct, but I think it is very understandable that I was misinterpretated. Luckily, the replies to the misinterpretation are still very informative in a different way! :)
You're saying that a single statistic, like a "mean" or "average" is only one representation of a distribution. Many other aspects of the distribution are important, such as the variance or the mean conditional on some other factor.
Inflation is a vague concept. When people try to measure inflation, they're using filters and aggregates. Criticism that those filters and aggregations are distorting the view (for political purposes) is valid and a frequent motivation to publish academic papers.
Note as well that the increase in pay for the average individual will be higher than the average increase. Older, better-payed people are exiting the workforce while younger, less-well-paid people enter the system.
I’m not sure why housing and fuel were juxtaposed; most “core” inflation indexes I’m familiar with remove fuel and FOOD, because the short term volatility for those two are very high.
[A national estimate of] housing generally is included.
I don’t agree with the root poster of this thread, though, because real wages are generally indexed to national consumption, whereas housing specifically (and to a lesser extent, food and services) are local markets, so you can have real wage growth but if you live in a high COL area, you really do have to look at real income and deflate (slightly! People often do COL deflation on gross salary, which is silly) for COL.
>Please reserve comment about the "cost of living" or inflation, as those are (technically) accounted for in this number.
But all of them or missing some? In Canada there are various inflation calculators: CPI, CPIX, SHS, MEANSTD, CPIW, price-level targeting, all including or excluding various things like gasoline, transit, mortgages, some taxes, tobacco.
>all including or excluding various things like gasoline, transit, mortgages, some taxes, tobacco.
You can critique inflation measures, but there is good critique and bad critique.
Including some items can introduce unnecessary noise or make the measurement less accurate over long term. Some prices can be safely left out from the price basket because their prices are know to get into the index indirectly.
In US CPI used to overestimate inflation mostly because slow adjustments. CPI is modified to correct to this. Most developed nations use good modern CPI measures that take into account things like product substitution etc.
> "Real pay" means nominal pay adjusted for inflation. So if pay went up by 3%, and inflation was 2%, you'd get something like a 1% "real" pay increase.
Wow, if you're right about the meaning of "real pay" (and I do think you're correct[1]), then The Economist is being pretty dishonest in their reporting by not explaining that important point. It makes a huge difference in how anyone interprets the story. How many people reading The Economist are actually economists? I for one assumed that The Economist was saying that people on average are massively worse off since 2000 -- which is the obvious conclusion if (nominal) pay increased 1% a year but inflation was 2-3% a year.
EDIT: I'd like to mention that "real" meaning "adjusted for inflation" is easily misinterpreted when used in normal English sentences. The article says, "In most rich countries, real pay has grown by at most 1% per year." That sounds a lot like, "In most rich countries, your actual paycheck has grown by at most 1% per year." Or, "In most rich countries, the pay you get after taxes has grown by at most 1% per year." Or other senses in which "real" has a normal English meaning rather than "adjusted for inflation".
'Real pay' is a very well established term, The Economist will assume that its audience understands that kind of jargon. It's really not at all dishonest.
The Economist writes for an audience which is assumed to know these things, or at least be able to look them up. Just as the average HN article is not expected to explain what React is.
I'm surprised that you feel that the Economist was being dishonest. "Real value" is such a basic term that virtually everyone in finance, economics, and politics should know. It was taught in my high school economics classes, one certainly need not be an economist to understand.
Defining real vs nominal in this article would be like defining "variable" and "recursion" in an article about deep learning implementation at Google. Completely annoying and useless to those who subscribe.
You're right! That's a term of art that can easily be misinterpreted by an uneducated reader.
Rather than doing what the Eonomist tends to do and assume an educated readership, they should have defined any term not daily used by someone possessed of an education past that of the 8th grade or so. This would ensure that every single reader, every single time, without any exceptions, would attain full, proper, and correct understanding. No saying "real wages" - define it as nominal wage growth less inflation. And don't just say "nominal" or "inflation", define them. Immediately and in context, so that anyone can understand.
Alternately, readers could put forth the minimal amount of effort required to Google any jargon (and "real pay" is pretty clearly jargon) they did not immediately know the definition of. I understand if some readers consider this work they should not be expected to do or otherwise an undue burden to which they refuse to rise.
I don't think cost of living is accounted in relation. For instance most wealthy people live in houses. Costs for that have risen, but "value" has risen too. At the same time rents have risen as well, additionally to the utility costs etc. So for the rich this point might be net zero or small loss, while for the poor it's a double loss.
The same applies to food. If you can afford eating in a restuarant for $20+ twice a day, you probably haven't seen any significant prise rises. But if you have trouble not spending more than $100 to feed four mouths a week, you probably a big decline in quality of your food since 2000. E.g. this requirement is hard to come by when you try to include fresh fruits.
Thus I'd say it's still an important point to consider.
I think their point is that CPI calculations use a single basket of goods for 'everyone' while in reality different people
So their example was that if restaurant food hasn't increased in price by much, but basic groceries have then the 'inflation' seen by different groups may be very different.
Another example may be that if average housing costs increase just a bit, but the lowest rents have increased the most then cost of living changes could be significantly different between mid and low income families.
I'm not saying either of those examples accurately reflect how things are changing in the US (as I don't have the data to hand), but they are realistic scenarios.
For most goods, it's the opposite -- over the last decades, luxury goods have inflated faster than staples. Similarly, real incomes have increased faster for higher incomes. At least, that's what the last paper I read on the topic said, which was published about 8 years ago.
I think I've shown some examples that are really tough to represent in the statistics. Please read them again and reply how you think they are considered. E.g. how is it considered that cost of owning a house has increased together with the sell value, while the rent has increased without increasing the quality/value/size of the apartments?
My whole point is that adding things and then dividing by the sum of things is not a way to represent the reality that people face. You need to argue against that if you want to make a counter point. Just repeating what the person said that I responded to (after reading what he wrote) doesn't provide anything to the discussion.
Are you saying that inflation is unevenly distributed across the "quality" spectrum of products? Yes, this has been studied. Perhaps it deserves more research, but the results I remember demonstrated that price inflation rates are higher among more expensive products. One might hypothesize that greater wage inflation and other income gains among wealthier people is causing the corresponding higher inflation for the products they buy.
When home-values inflate, it's a wealth transfer from first-time buyers to retirees that are downsizing, selling a large home for a smaller one, putting the profits into stocks and bonds. To your point, that's not a net loss, just a wealth transfer. Note, it's not a net gain either. Building homes is a gain (usually), inflating asset prices are not.
As for the rising rent, that's part of inflation ... Anyway, you seem distressed that things are "really tough to represent in the statistics" but I assure you many of your concerns have been considered.
> Are you saying that inflation is unevenly distributed across the "quality" spectrum of products? Yes, this has been studied. Perhaps it deserves more research, but the results I remember demonstrated that price inflation rates are higher among more expensive products.
Doesn't technological progress complicate this question even further?
When I think of more expensive products, I think of computers, smartphones, etc. Yes, the new flagship products stay expensive, but that also represents new possibilities that weren't possible a decade ago (let alone a few decades ago).
But nowadays you can get a functioning computer that lets you browse the Internet, watch videos and do your emails for the price of a Raspberry Pi (and the investment of a separate keyboard, mouse, charger, SD card and TV - but those can be gotten for cheap as well).
Similarly, a lot of things that used to be expensive are now cheap.
So basically: technological progress is shifting the "quality" spectrum itself, in some cases very quickly, in some cases barely.
(I'm not saying you're wrong, I'm just curious how economists deal with questions like this)
Computing is the extreme example of this phenomenon. Economists don't in general have a great way to handle this issue, because it varies so greatly across industries. A loaf of bread is just about the same as it's always been. Oh wait, maybe wonderbread is worse and artisinal ciabatta is better?
Sometimes economists like to create some aggregate measure of increasing consumer choice by counting the number of SKUs available in a store. Big box stores pushing out Mom & Pop made that awkward. Now Amazon makes it tougher still.
Back in grad school, I was not aware of any consensus on the topic. I haven't kept up with it since.
One technique is to focus your research on products that are largely stable in quality. For example, wine glasses. Not plastic ones, but glass or crystal. They've got a fairly large distribution in "quality" or at least in price and yet had a fairly stable range of quality since the 1950s.
Macro voices (the best macro podcast in the world right now) recent guest mentioned in passing that inflation would be a lot higher if measured differently implying that the 2% number has been gamed. (Goodhart's law: "When a measure becomes a target, it ceases to be a good measure")
Not really - the inflation is currently reported on a "reference consumer basket", which doesn't really represent different segments of society.
In other terms, if you are spending on health care of education you are in a really bad place - prices for those services have risen at about 8x the inflation rate over the last 40 years. IF you are purchasing or building a house you will face prices 3x inflation price. However, if you are mostly buying electronics and software, the prices have actually fallen by about 50-80% over the same period.
> The reason, economists reckon, is power. New hires generate a surplus, reflecting the fact that both worker and firm expect to gain from the transaction. Wage bargaining is a negotiation over how to split this surplus.
Hello Marx.
> If firms have the upper hand, because a new job is harder to find than a new worker, employers capture most of the surplus, creating a gap between the value created by workers and what they are paid.
US has full employment, so this explanation does not take into account that finding a job is super easy. Im skeptical.
The plea for unions is so unique coming from The economist.
"Surplus" is a respectable concept in mainstream economics, e.g. "consumer surplus": https://www.britannica.com/topic/consumer-surplus ; it's not intrinsically linked to labour theory of value, and the statement as written is true.
> The plea for unions is so unique coming from The economist.
The Economist and the FT often say things which are considered "radical" by popular economic discourse standards, because their readers are interested in what's actually happening while the popular discourse is extremely dogmatic and driven by the right.
Yes, but the idea that labor and company are splitting a same pie and that with organized labor you will increase that pie is a veiled labor theory of value. It goes contrary to other concepts like increasing profits , increasing capital investment, increasing wages, etc.
> The Economist and the FT often say things which are considered "radical" by popular economic discourse standards, because their readers are interested in what's actually happening while the popular discourse is extremely dogmatic and driven by the right.
I do not mind, but the economist is an economically liberal news source and Unions(as they are known by the public) are enemies of liberal economics.
> but the idea that labor and company are splitting a same pie and that with organized labor you will increase that pie is a veiled labor theory of value. It goes contrary to other concepts like increasing profits , increasing capital investment, increasing wages,
Eh? Increasing wages is exactly what we're talking about here.
For any given firm, after accounting for external costs there is a quantity of money left over which may be re-invested, given out as wages in some distribution (how much to the CEO?), or returned to investors. Some re-investment may also be in the employees in the form of training or retention perks. Exactly how this is distributed is up for questioning.
> Unions(as they are known by the public) are enemies of liberal economics
I think the point of the Economist is that this is a political view, and that it needn't be this way: Germany is always cited as a country where it works differently. Having adversarial relations with the union is a choice. A leader can also choose to consult them on mutually beneficial changes in working practice.
> A leader can also choose to consult them on mutually beneficial changes in working practice.
For sure, I believe people should unionize if they want to, but should be given no special benefits for doing so.
Argentina has constitutional level protections for unions, they cant be jailed, etc. They own soccer clubs, and threaten politicians families and cant be incarcerated, while also having highest and increasing poverty and lower employment.
The equivalent legal protection of a union for a company would be monopoly licenses, and mandatory consumption of services and goods of a specific company.
They are not comparable sets of protections. Plus, unions can also incorporate, but the legal protections asked by unions are not of legal organization, but of protection from other workers or coercion to employers.
Great that you mentioned workers and customers as the same group. They arent! Unions work against consumers. For example, by asking for tariffs.
So if you care for consumers, you have to again be against the objectives of unions, that increase the cost of goods and favor restriction.
Nobody needs to care for the profits of private businesses, and that is both in positive and negative terms: trying to enhance them by artificial and opressive laws will lead to bad outcomes, and trying to punish them and take away from them will also do so .
There are lots of people who don't participate in the workforce, for various reasons. You have to decide how many of them are doing so because they can't find a job, and how many of them are for other reasons (retired, student, stay at home parent, disabled, etc).
> The plea for unions is so unique coming from The economist.
They've slightly changed their discourse in the last couple of years (not sure if it coincides with their change of editor). My guess is that the sort of people that work at newspapers/magazines like the Economist started to realize that the "working classes" (in which I include most of the actual middle-class) need a bigger share of the economic pie, otherwise they (the working classes) will keep voting into power more and more populist leaders, and that's very bad for business.
A similar thing happened in the 1870s and especially after the Bolshevik conquest of power in 1917, the capitalists in the West realized that they need to better take care of their workers otherwise they and their families might end up in a common grave, their properties nationalized.
yeah, this is my takeaway here as well. their fundamental view is always that stability is preferable to chaos -- and they prioritize that higher than maintaining their economic views.
capitalism has become so exaggerated that it threatens stability thanks to its inequality. the economist recognizes that and is trying to do some thought leadership to course-correct.
Yes, obviously. This is why protestations of 'there is full employment and a job being offered for every jobless person!' are disingenuous, manipulative garbage.
If you cannot afford to work and live, it doesn't count as a job. And that's where things are, for most people, so the 'jobs' are lies.
I don't follow. Evidently, people could "afford to live" in 2000--almost all are still around to collect a paycheck. And now, they can live 19.6% (1.01^18 - 1) better than that! Real, not nominal. So why are the jobs "lies?"
During that time, something like a sixth of the population will have retired and now be collecting a pension (ie living off asset wealth). Another sixth will have come of age (roughly "millenials") and entered the workforce. The latter group also starts with an increased educational debt (in the US and UK) and faces a steep cliff of affording housing.
A lot of the jobs are "lies" - the famous zero-hour contracts, where people are technically employed but not guaranteed to be given any shifts at all during a week. There are also a lot of people who are technically self-employed but not able to earn a reasonable income. Is sitting in an Uber waiting for a job "employed"?
18.9% income increase is not living better if it's matched by >=19% cost increase. "Inflation" as usually reported is less than the "cost of living increase"
I believe this is because the domestic markets of most rich countries are saturated for stuff non-technical workers can supply. We have transportation, we have food, we have energy, we have sanitation, we have retail stores all within our grasp. The stuff we still will always need more of, such as automation and better health care, require highly specialized and skilled individuals and that's something very hard to adjust to.
Meanwhile, the other economies of the world has a huge demand for the basic services and goods and thus their economies have risen dramatically.
I think we are seeing a levelling off of the world's richest economies because a lot of our growth has been from capital investments into broadening international trade and leveraging. I have actually moved my investments away from Europe for now because the interest rates are so low, the innovation is so low and the political climate is becoming more and more polarized that I just think it's too risky for now.
What happened in Flint was a scandal because that's not supposed to happen in a rich country, that sort of water supply is an eye sore that someone should've done something about years ago. The sentiment that things like these can and should be dealt with swiftly is so engrained in us because of all the benefits we enjoy.
Meanwhile, in some places where millions of people live cholera in the main water supply is Tuesday. You can make boatloads of cash if you satisfy that market demand.
Yes, a horrifically mismanaged city that collapsed into corruption when it's tentpole heavy industry packed up and left makes a great example. That's not necessarily representative of anything, though.
And I believe, though recognise this has counter arguments, if we kept (or implemented depending on region) better tax redistribution and worker wage support the first world economies would be growing at a better rate. The trickle down policy we see in most western countries has been disproven time and time again yet the politicians still rebrand and implement it as its good for short term gains for the people funding their political careers.
You do have a point that developing economies have a advantage in they have more upside to gain and this lets countries have those 10%+ per annum growth rates. But also its worth noting, and this may be 'causation does not equal correlation' type scenario, but no country has become developed as we consider it now without having a significant improvement in financial equality.
A lot of that growth comes from broadening their customer base outside the Western world (Apple's largest market is China, not the US) and through leverage (the interest rates are near 0%, in Sweden it's even negative, so it's good times to borrow money).
And, some sectors are also showing growth because the middle class is becoming more narrow in the West. Budget chains like Wal Mart are going strong and luxury brands too, it's the middle class restaurants and retail stores (Game Stop is a good example of a middle class retailer) that are taking a big pounding right now. So, a lot of growth is just market shifts while the previous caterers to the middle class are leveraging to stay afloat.
Real wages increasing means that living standards aren't just steady, but growing in real terms - ie, people have more stuff and services than they did last year.
Now, picking on the US, primary energy production has risen by less than 1% /edit: per annum/ since the year 2000 [1]. I suspect manufacturing growth is of a similar magnitude [2]. There was a report making the rounds a while ago saying that US infrastructure isn't in a great place. It isn't obvious how you could generate real increases without an increased real production to back it up, no matter how good your strongarm negotiating.
I don't see how the Economist came up with a position of the problem being disorganised labour. The issues in America are that whatever people are doing isn't creating real wealth. Maybe they're finally hitting resource limits, maybe there are capital allocation issues.
Isn't that assuming that production remains as energy inefficient over time as it used to be? If production over the time period became more efficient by X% than that X% generates economic growth that is not visible in energy production.
Given that energy/GDP has been steadily decreasing, both in the US and worldwide, this indicates that efficiency of production definitely needs to be taken into account.
(eg https://www.eia.gov/todayinenergy/detail.php?id=10491)
Inflation only measures price for certain products but it doesn't cover quality or quantity decrease which decreased considerably for most products over the years.
What matters most is economic mobility, and my definition of that is what percent of poverty level 20 somethings end up in the top income (and savings) brackets by their 30s and 40s. Because it's kind of OK if the bottom fifth of earners is just college baristas and bartenders, or financially independent people just picking up side jobs. I'm pretty sure that's not what is occurring in the US though, because pensions are now nonexistent and our average savings rate has always been horrible.
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Interesting. Could you suggest a good source that would explain why houses aren't included in inflation, and what the inflation figure might really look like if they were?
I'm just going to interject here. Havn't read the article but this study by Yakovenko https://arxiv.org/pdf/1612.01624.
Would give a more complete understanding of income.
As far as bargaining power goes, a UBI that fully covers subsistence would definitely be the most effective thing. Because then it would be possible to say "no". Whole sectors of the economy would have to actually present a value proposition to employees.
I haven't studied UBI a ton, but it seems to me like prices on non-discretionary goods would increase to absorb the additional income and the people who set those prices would be the ones benefiting i.e. the people already benefiting now. Rent seems like it would be a big one. I bet if you just up and gave everyone an extra $500/month then rents would rise by $500/month and house prices would increase commensurately, which is great if you're a homeowner but not so great if you're a renter (and many of the people who we are trying to help with this are renters).
It would probably need to be linked to rent controls.
Or honestly, rent nationalization. I do not feel that private landlords for residential property are a thing that should exist. They really are nothing more than accumulating a sufficient pile of money to exclude people from a human necessity, and then using the leverage to squeeze people.
> prices on non-discretionary goods would increase
Only if those are demand-priced, not commodities. That's a problem whether UBI exists or not, and therefore needs to be addressed in conjunction, not instead. Anyone who saves any money at all would benefit from increased income.
There are multiple studies of Alaska's Permanent Fund which supplies much less than you are quoting, only around a thousand to a couple of thousand a year per resident, and it's making a slight increase in people seeking work, counterintuitively it causes no increase of people working less than before which some opponents hypothesized. Obviously Alaska is special case compared to lower 48:low population/hard to get certain goods/not a lot of immigrants.
Whether it results in seeking work is different from how prices respond, in fact, an increase in those seeking work may be a direct result of the cost of living increasing.
The subsidy in Alaska is per person, thus two families in identical apartments may receive different levels of subsidy. If at any point the management company observes that their tenants are receiving more subsidies (say the average family size per apartment increases) then they could choose to raise rental rates to try to capture this. But it raises the rates on all family sizes, so a 2-person family is now paying more as a % basis than a 4-person family, so it would make it more likely that someone from the 2-person family may need to work more/get a part-time job.
Obviously that's a drastic simplification, but I think it illustrates the problem with stimulating demand without trying to control supply or pricing directly.
Yes, those are all true and the per person thing is pointed out in the article. However, we do not see a big negative from Alaska level UBI so it seems it's worth experimenting with it in other places and at other levels.
A great bargaining chip for unskilled workers would be the viable alternative of unemployment backed by universal health care and basic income.
EDIT: this idea is in the article:
More radical ideas like a universal basic income—a welfare payment made to everyone regardless of work status—or a jobs guarantee, which extends the right to a government job paying a decent wage to everyone, would shift power to workers and force firms to work harder to retain employees.
Wouldn't any publicly financeable UBI be around $10k per year? Plus it would replace many other welfare programs? That doesn't seem like it provides much better quality of life for unskilled workers.
Speaking as a full time lead maintenance mechanic at a local auto repair shop, The tradecrafts have kept a pretty reasonable grip on bargaining power. The shop owners understand that if its not an honest days work for an honest days pay, I will leave. strong unions in the past have worked hard to ensure I could, if i chose to, open my own shop in about 3 days time. My local automotive mechanics union would even cover the cost of shipping new tools to my shop, and maybe run an ad or two in the paper.
Mr H. if you're reading this, im certainly not quitting anytime soon! :)
Ive worked in aerospace as well, where tradesmen are frequently paid more than managers. hassling an engine tech here, or casually second guessing one, is unthinkable and has gotten good managers demoted or fired. I was basically on-par with a surgeon as far as my respect and authority was concerned.
Im not saying ive never been part of a strike. Most of my union jobs have been rewarding and fulfilling, with a level of transparency rarely seen in big shops. Ive had C level accountants sit down in a hanger with us to go over why we need to trim down on expenses, and make sure we understand it in plain english. To me, that speaks a lot.
As for people in the Amazon shipping trenches, all you need to do is be brave, stay motivated, and push for a union. You regional and long haul amazon truckers also have a lot more bargaining power than you realize.
There will continue to be rising wages and trucker shortages as no one sees a great future in that line of work.
Sure, jobs will remain. People will be paid to sit on trucks while they drive themselves across the country. People will be paid to sit in air conditioned offices and watch trucks as little dots as they travel across the country.
They will have to find people to do those as well. The whole industry is boring unless you are management/executive level. Truckers today will have first dibs on all those positions, also, leaving new truckers completely screwed as their relatively new high paying trucking job leaves them with nothing.
There was a story on the trucker's shortage recently, that went into reasons for the shortage. A large part of what's causing it is that, for one, it's a crappy job, but for two, companies are not raising the wages, especially as one would expect if there's a shortage.
I know a lot of people who own or work for small businesses doing blue collar stuff. The crux of the issue seems to be local competition. So long as employees have other options that don't involve uprooting their life the bargaining power dynamics are fine as far as I can tell (as much as some of the business owners who are stuck in the past may hate it). When employees can get a job somewhere else without employers can't get away with giving them the shaft of they'll do just that. Even in jobs where labor is basically a commodity (e.g. entry level welders) the situation is the same as long as local competition exists.
People who do unskilled or close to unskilled jobs for big companies that aren't pressured by competition still get the shaft though.
I think there is a balance when it comes to unions - a point where they are very much necessary, and a point where they are a burden upon society.
If workers in general are being underpaid, I think they are justified. But then you have other industries where they have a good grip on it and then take things a bit too far.
I always though of this as unions being very important for safety and quality of work. That is what is often touted as the benefits of unions, the 40 hour week, OSHA, minimum wage, the end of child labor, etc...
But once an industry is generally pretty safe and relatively fairly structured, unions begin to lack a certain sense of purpose. Union leadership is elected and "keeping us safe and fairly paid" won't get you re-elected. Promising to extract better compensation for your members (even beyond just 'safe' and 'fair') will get you votes, so that is naturally what happens.
There's just no objective way to tell a union that they have accomplished their goals and aren't really needed until/unless there is a threat to those goals, but nor is there a way to tell a company that they are operating unfairly and their workers need a union...
"sellers of labour" is almost exactly what "society" is. You can't leech rent from yourself.
It's always interesting to see free marketeers sing the praises of monopsonist buyers of labor and (corporate) sellers of products, but suddenly change their tune when sellers of labor gain market power.
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[ 4.9 ms ] story [ 342 ms ] threadThat's what real pay growth means: Nominal minus inflation.
https://www.statista.com/statistics/188105/annual-gdp-of-the...
In fact it was voted as one of the most trustworthy sources.
You make it sound like some sensationalist rag.
19.61% increase in wages seems like a lot but if you factor in housing prices increased 100%+, prices of steaks increased 200%, etc, then that 19.61% doesn't look too good.
2. Property prices have multiple other factors affecting them than just GDP. For instance, if you have a large increase in population without enough new housing to account for it, then property prices naturally go up. I think that describes 21st century Britain quite well, don't you?
3. The economic dogma of blaming all problems on the rich is no different than blaming all problems on a certain ethnic group. It's just that it's not as easy to immediately recognize it as intellectually dishonest.
I'd argue that the over-centralisation of the UK economy is a big part of the problem there; there should be as much investment in public transport in Manchester and Birmingham as there is in London.
Edit: Also, who has said they hate the rich? Stop propping up silly YouTube strawmen for you to take down with your logic lording.
You do realize that the first half of your sentence is identical to a extreme nationalist argument against an ethnic group, don't you? All you would have to do is start it off with "The [insert ethnic group] are people who live in extreme comfort..."
It's the metric by which you stereotype people. You're just making my point for me.
I think you are most likely confusing the petite bourgeoisie (the vast majority of programmers) with the haute bourgeoisie (the monopolistic owners of our means of production, think Bezos).
The petty bourgeoisie are well off, and look to emulate and think of themselves as similar to a haute bourgeoisie like Elon Musk, but they are not, your 200,000 a year salary is closer to your porters 30k salary and you often work alongside your workers/coworkers. Our owners of the means of production, such as Tim Cooke cornering the high end hardware market, do not work alongside their employees. They view workers in the abstract, as literal numbers on paper.
It is much easier for say people like Zuckerberg and Schmidt to collude, because it’s a lot fewer people to coordinate. And this in fact happened with wage fixing in Silicon Valley between tech companies until they were caught.
I don’t know what the answer is, and it’s especially fraught in a world economy where unionizing in the USA may mean that Google simply highers programmers in Eastern Europe instead. But I do know that government should be leveraged for the people and not for big business, that’s its point and that’s currently not the case.
> In most rich countries, real pay has grown by at most 1% per year, on average, since 2000.
The next sentence breaks out one piece of that average:
> For low-wage workers the stagnation has been more severe and prolonged: between 1979 and 2016, pay adjusted for inflation for the bottom fifth of American earners barely rose at all.
Or do you mean that wage rises should be compared against only a part of inflation?
People in rural areas where housing costs are not increasing might be experiencing a little wage growth, but there are fewer and fewer future work opportunities.
People in urban areas where housing costs are increasing rapidly, but wages are not increasing rapidly enough to make them feel secure...but they need to stay there in case they're laid off or need to find another employer.
Either situation isn't what's wanted, but the overall statistic is that real wage growth is positive.
Accepting that housing and healthcare costs have outpaced wage growth, that mathematically implies that costs of other goods and services were outpaced by wages by an even larger (appropriately weighted) margin.
See https://medium.com/@6pranavk/insight-of-the-day-cost-disease... especially the graph.
> costs of other goods and services where outpaced by wages
You're implying that all people consume the same basket of goods as calculated by the article. Wage growth and spending is not even across society, so most people could be worse off while all of the above math holds true. labour productivity rose by 75% in America from 1973 to 2016, while average pay rose by less than 50% and median pay by just over 10%. which is largely because between 1979 and 2016, pay adjusted for inflation for the bottom fifth of American earners barely rose at all.
Further, many goods like computing power have gotten vastly cheaper, but that savings mostly end up with people who have disposable income. Spend a lower percentage of your income on such goods and the benifit decreases. This means the the bottom half of the work force is worse off than you might think.
So really, that's a bit of a strawman. The issue isn't that there isn't enough to go around and we should be thankful that we haven't become China. The issue is that a small proportion of the population has manipulated law and the markets to allow them to make off with the wealth, while the rest of us have been screwed over.
...and that's a dangerous thing to allow for many, many reasons.
I was with you up to that point. Do you have a reference for this? My reading was that centralization of wealth was a relatively natural consequence of our economic model and not something that was manipulated into being. Hence the discussions on UBI and other ways to fix it.
End result is increasing income inequality. If nothing is done we will return to the historical norm of peasants and wealthy nobles with nothing in between.
I'm sorry, but that is obviously not true.
In the case of illegal immigration, the illegal immigrant is definitely better off by finding a higher wage and safer life than in his/her home country. The average Central American working illegally in the US, while not afforded employment rights like a legal worker, is still unequivocally better off than his/her options in his/her home country.
Similarly globalization has been a major benefit to the poor in many developing countries. If you compare the median per capita GDP in countries like China, Vietnam, or any African country, it is immediately obvious that economic development and globalization has been good for them.
I think what you are referring to is the it has not been good for the average American while it has been good to elite/wealthy Americans.
But please don't misrepresent that it has only been a benefit to the few simply bc it hasn't helped the majority of people in developed countries. People in developing countries have been benefitted immensely.
Or worse. The amount of control and capital on that 'wealthy noble' side is way more than it's ever been at any time in history, and we are watching the kinds of damage they inflict when they're capable of that much more than just 'buying fancy tulip bulbs'. All it takes is a few crazy ones deciding the best thing to do is kill all the serfs, and their real power will show. We're already seeing it.
I agree that the growth in regulation has negative consequences and that the education system is largely ineffective, but I think these are unintended consequences rather than the result of conscious manipulation by powerful people and organizations.
If HFT were a net positive for market participants then those same participants wouldn't be fleeing to dark pools in an attempt to avoid them.
My understanding isn't without nuance, nor am I trying to claim I have a replacement system. I'm just being intellectually honest about these elephants in the room.
Incidentally another thing happened around 1973 - the incarceration rate began a meteroic rise[4] that did not abate until Obama's presidency. Connecting these facts is left as an exercise for the reader.
[1]https://stephenpruis.files.wordpress.com/2012/12/chart-wages... [2]http://www.mybudget360.com/wp-content/uploads/2013/07/us-deb... [3]https://upload.wikimedia.org/wikipedia/commons/d/d7/2008_Top... [4]https://www.lexisnexis.com/legalnewsroom/cfs-file.ashx/__key...
They don't?
https://en.wikipedia.org/wiki/Nixon_shock
It depends on what you mean by "our economic model."
http://time.com/5280446/baby-boomer-generation-america-steve...
That you frame that as a "natural truth" and not a cultural artefact is part and parcel of the manipulation. Our "economic model" is something that has been arrived at by centuries of manipulation and is constantly being contested and changed in ways large and small.
Markets that allow unregulated investment of private capital have a natural tendency to concentrate wealth through multiplier effects. Basically the more money you have, the easier it is to make money from your money, and the more money you get.
But wealth is power. As you get more money, you have more money you can use to manipulate the political system in any of a myriad of ways. Everything from donating to campaigns, to hiring lobbyists, to funding ads, to the revolving door and regulatory capture, to just straight up bribes.
So I do think there are natural concentrating tendencies that we can introduce policies, like UBI, to counter-act. But there is also pretty clear evidence of those with wealth manipulating the system to grant themselves more of both wealth and power.
Just look at the lobbying the wealthy have done over the past few decades that have taken America's formerly very progressive taxation system down to where it is today. That didn't just happen. People with wealth pushed for it. The same can be said of any number of other changes to the regulatory and economic infrastructure that primarily benefited those with wealth and harmed those with out (weakening of unions and collective bargaining, the weakening of financial regulations, weakening of environment regulations, and so forth). That stuff didn't just happen. It wasn't a natural outgrowth of the system. People made it happen.
Yes, living standard is high, but that doesn't mean that it can't be better.
My point is, not everyone has the same high standard of living to begin with.
EDIT: Seriously the down voting! Here are some resources for you to think about:
[1] https://en.wikipedia.org/wiki/Wealth_inequality_in_the_Unite...
[2] https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...
[3] https://en.wikipedia.org/wiki/The_Spirit_Level_(book)
I suggest the rise of populism is caused by increases in wealth going to the very richest while in real terms the majority of people are poorer than ever.
Where? When?
that is due to concerns over immigration , not wealth inequality
Russia 1918
this had to do with famine and massive unemployment as a consequence of ww1, not merely wealth inequality. America is a long way from being as bad as Russia was in 1918. The Great Depression is far worse than anything now, yet there was no civil unrest in America.
French revolution
Wealth inequality was just a single factor, all. France was in financial crisis due to debt from various wars, causing high taxes and food shortages, again, which are problems America does not have.
I don't think that's true, at least not in France, the regions voting massively far right are the old industrial regions abandoned by the globalisation, not the ones where the immigration is actually going.
Did Hitler come to power because the innate hatred of jews the Germans had or because of a garbage economy?
In modern America, we don’t have food shortages but we do have housing shortages resulting in high living costs, different health problems than the early 20th century folks, lack of jobs for the lesser / inappropriately educated, high consumer debt, student loans, etc. that contribute to the misery index. The misery, however, gets offset by the sheer glut of passive entertainment leisure options the world has never seen before in history. After all, who cares if we’re living longer if we’re feeling worse throughout it?
Not saying things are worse than the Depression at all, just saying we’re always going to be comparing apples to oranges as we go from different historical periods so looking at primarily economic factors may have limited utility even in looking at sociopolitical problems.
Source with data? This doesn't match any place I've seen such as BLS data or Census data or FRED data.
That itself isn't enough to state poor people became poorer, only in comparison to an ever increasing moving goalpost of what poor means is that statement enough to say poor get poorer.
Median personal real income has grown by about 35% or so in the past few decades. The average is quite a bit higher, I'm just talking about the median.
Household income usually isn't as good an indicator because household size has shrunk.
Whether that's true or not, to me, seems to depend on your definition of individual wealth, it either being relative to total wealth or rather quality of life -- but it's certainly not the same thing.
So I think this is not a good measurement of whether or not the majority have become richer or poorer. A much better measurement is do they have more stuff, or better stuff, or a higher quality of life than before. This is the level I think most people care about. Not whether some rich people got richer (mostly from stock growth) faster than I did.
Oh but it does.
Systemic inequality engenders winner-take-all dynamics. We see this very clearly in the data: as capital becomes more concentrated the rich grab more and more of the surplus. Eventually all growth will be captured by a few large enterprises.
Now, even if you don't go all in on Piketty and you give fuck-all about the poor, it should be clear there's an issue here. We don't live in a static world. Someone else becoming richer doesn't make you poorer... until new players join the game. The rich capture all the economic surplus but it's the poor keep having all the babies. So now you've got no choice but to commence with the somewhat unpleasant business of liquidating the poor. Get them hooked on opiods, send them off to wars, drive up the cost of housing and schooling -- do whatever it takes to drive down birth rates and increase mortality. There's no money for these new mouths to feed because it's literally all going to the rich.
And long term this becomes problematic. Again, even if you give fuck all about economic justice, history has proven such systems to be woefully unstable. Humans aren't like rabbits -- they just don't and lie down in a hole and starve to death quietly. Unlike natural systems that tend to course correct smoothly human systems tend to just collapse.
For example, Last Place Aversion is a real psychological effect that motivates people in their voting habits, e.g. minimum wage laws. Status signalling effects in medical outcomes are also an area of active research (e.g. the richest person in a poor neighborhood can end up having significantly better longevity outcomes than a wealthier person who happens to be the poorest person in a rich neighborhood).
Relative wealth has material effects on health, mortality, etc., which look to be driven by psychological effects and persist even when controlling for material benefits.
In other words, if you're in the middle class and your perspective is that you have to work harder to be less relatively well off, this psychological factor can be a cause for genuine material harm.
I think we are only just beginning to understand these types of inequality effects.
You can't just assume that a trend will continue in a linear manner forever.
The data is that the rich don't stay rich , which is why the majority of the rich for any reasonable level of rich are first generation, and have been so for a long, long time.
And the majority of the poor don't stay poor, as FRED data shows.
This is, of course, yet another lie that must be told to justify what is a deeply evil system. Dig a little deeper [1] and you'll find capital concentrations are extremely enduring, particularly those tied to fixed assets like real estate.
The thread is full of all sorts of highly motivated reasoning and half truths to try to avoid what is a very simple and very obvious truth: all the economic surplus is being captured by the rich. Not most, not the majority, absolutely all of it [2]. In such an environment it should be obvious -- even if difficult to admit it -- that the poor can't do anything but fuck off and die. Or did you think the falling life expectancy and falling birth rates were just blind luck?
[1] https://qz.com/694340/the-richest-families-in-florence-in-14...
[2] https://www.nytimes.com/2014/09/27/upshot/the-benefits-of-ec...
Your paper is about Florence, and does not apply to the wider world. Instead of reading a pop account, read a more direct account [3]. They explicitly state their account does not match the same research or outcomes from other places and times. They reach an elasticity for this group of around 0.02, and note this varied "from under 0.2 in the Scandinavian countries to almost 0.5 in Italy, UK, and the US". The only reason their account got widespread coverage and the others didn't is because the others don't reach a conclusion that sells as well.
But that result is not applicable to modern US. They state this directly.
For example, here's [1] a more recent paper on a more relevant dataset - intergenerational mobility in the US, UK, and Germany. It doesn't reach the same conclusion as your Italian paper.
Probably the most comprehensive look at mobility is the Chetty et al paper [2] that looked at all tax records for several generations and found mobility in the US is consistent with what it has been for decades stretching back into the 1900s.
Most interestingly, they compute transition probabilities over time to move from one quntile to another by generation. Put this into a markov chain, and you'll find that it takes very few generations for nearly perfect mixing of incomes. (I've done this years ago - try it). These transition probabilities match ones from the FRED research which are only for recent people.
So, in short, the rich don't stay rich as a group. Post selecting the few that did is simply bad statistics and misleading.
A simple experiment you can do yourself is take the lists of Forbes 400 riches over time, and see how many are first generation, and how many drop off the list over time. You'll find that the top in general do not remain so very long.
It's easy - try it.
>This is, of course, yet another lie that must be told to justify what is a deeply evil system
Yours is, of course, a misleading statement cherry picked from all available data to spread unfounded beliefs.
[1] https://onlinelibrary.wiley.com/doi/pdf/10.1111/roiw.12364
[2] http://www.rajchetty.com/chettyfiles/mobility_trends_publish...
[3] https://voxeu.org/article/what-s-your-surname-intergeneratio...
I'm not sure what you imagine this proves. Social mobility is something that has been well studied in America. It is well-known that social mobility is over in the United States. A simple visit to Wikipedia will set this straight -- see https://en.wikipedia.org/wiki/Socioeconomic_mobility_in_the_....
> Yours is, of course, a misleading statement cherry picked from all available data to spread unfounded beliefs.
Frankly this entire thread is you leaping from one myth to another. Now you seem to be clinging to this myth that there is high firm competition and social mobility in the US. This is not supported by any of recent research. All of the recent research shows that there is far less competitiveness across firms and that net social mobility has collapsed.
You claimed a paper about Florence had wider applicability than it does, by ignoring what the authors specifically wrote to make your claim. I quoted the statement from your own paper contradicting your claims and I presented more recent papers on the US that show you're incorrect.
So I don't think I'm the one making mythical leaps.
>All of the recent research shows that there is far less competitiveness across firms and that net social mobility has collapsed.
I just cited one of the most cited paper in this area, the Raj Chetty one, and it directly contradicts your statement. Did you look at it? They had unprecedented access to all US taxpayer records, making their study vastly more comprehensive than anything before (and since as far as I can tell). They analyzed every single person in the US income for the period in question. You're not going to get a much better dataset than that.
>I'm not sure what you imagine this proves.
It is evidence for the claim this started with: the rich get poorer, where you take some definition of wealth, take all people in that group, and see what happens to them over time. One such metric is the top X people, and demonstrating that they do not remain is one data point showing this statement true. I've yet to see a dataset for which you can answer this statement that does not support. The Forbes 400 is a particularly easy one for anyone to check.
Or simply google what percentage of millionaires or billionaires are first gen, and again you'll see most wealthy are new, not inherited.
So, do you have any dataset showing for everyone of some level of wealth in the US, that over time that same set of people don't regress to mean? I've just given several places showing exactly this.
>net social mobility has collapsed
FRED, Raj, BLS, and Census disagree. Even your Wiki link states "A large academic study released in 2014 found US mobility overall has not changed appreciably in the last 25 years ".
I don't think the word "collapsed" means "has remained fairly constant".
Some people just want you to believe that the world is always getting worse.
In terms of relative wealth though, comparing the average to people at the top, the 1%'s wealth has grown much faster than everyone else. It's true to say that we are all relatively less well off than we were in 2000. This is bad because wealth begets more wealth, so the inequality grows. That could lead to all sorts of problems (societal breakdown, revolution, civil war at the extremes...).
In modern times this is not even remotely comparable where ever more people have ever more access to ever more things. But the richest of the rich have even more things. For comparison if we break this down into an anecdotes of toddler the French revolution would have been Joe having 0 toys while Jane had 10. In modern times Joe has 500 toys while Jane has 5000. By most of any metric, except in comparison to Jane, Joe has a ton of toys. And so his complaint seems more petulant than justified.
Let's put this another way. Imagine I told you that in 100 years somebody of the lowest social class would have what would be equivalent to 10 million dollars today in terms of spending power. That sounds unbelievably amazing. Would that somehow suddenly change if somebody at the top had a quadrillion dollars of spending power? Taken to extremes wealth at the top can decrease the value of wealth at the bottom (largely due to inflation), but that's not really the case to a significant degree today - people just seem upset that other people have more than them.
That depends, will surgery for a broken leg cost 20 million dollars in 100 years?
You are talking as if poverty doesn't exist any more, which it very clearly does. A startling number of people in the US live paycheck to paycheck and are at risk of extreme poverty if they lose their job or face an unexpected expense like medical care. People in Flint had to drink water that literally poisoned them. Teachers are walking out of schools because their textbooks are falling apart. On the other hand, you have Jeff Bezos who literally said in an interview that he can't think of any worthwhile use for his money other than exploring space.
You can't exactly blame people for being angry about that. "But things used to be so much worse!" isn't really a counter-argument. Why can't things continue to get better?
It will if we don't get government out of healthcare!
Did you know that in the early 20th century feed and flour bags used to come with vibrant floral designs. Know why? Since nobody could really afford to buy clothes, people would regularly fashion their own clothes out of whatever they could get - which included these large bags. Companies saw an opportunity and started creating lovely designs on them. This is a time we can hardly even imagine. Now a days even the poor can easily afford many of the things that only the most elite of society could previously. It wasn't even that long ago that a toaster was an extreme luxury. And of course they also have luxuries that those of times past could only dream of as they literally did not exist. In terms of what we have, people have more than ever today. And people want even more. And I think that's a good thing! The never ending drive for more more more is probably an evolutionary imperative which has paid rich dividends for our development as a species.
But let's hit on the Bezos thing. Some of what I said above is conflating technological progress with economic progress. After all one of the reasons many things became cheaper, or available, is not strictly because the poor have more money (though they do!) but because technology enabled things to become much cheaper, and to introduce entirely new things. Bezos is, by far, the richest person in the world. On an individual level his wealth, $135.5 billion, is hard to even imagine. But now let's imagine his level on a social level. What if we, or he, decided to just 'benevolently' share his wealth with everybody in the world. That $135.5 billion is worth a little less than $18 per person. Even at the bottom of the world, that's hardly life changing money.
However, technology does change lives. And while $135.5 billion is nothing in terms of the world, it's an enormous amount in terms of advancing space technology. Can you imagine how much the world will change once we begin to colonize other planets, or when we are able to effectively extract resources from celestial bodies, and so on? Or think of all of the tangential technological developments will inadvertently be discovered in the process of this all. The world has basically been playing on fast forward since the colonization of the new world, and space will open a door like something we can hardly even imagine. I too want things to get better and I think what Bezos is planning to do with his money is vastly more likely to, in the longrun, improve life for all of us far more than, for instance, what Gates is doing with his money.
(Rhetorical questions incoming) At what point do the Bezos/Gates of the world step in to help this problem? Do they even have any kind of moral/societal/civilization-wide obligation to help tackle a worsening system that they got rich off of? Should they have this obligation? If not, who does?
There was an incredible period of American prosperity starting after World War 2. Good work was plentiful, wages were high, and the middle class prospered- the American dream was alive. That's slipped away from a huge segment of the population. Cost of living shoots up while real wages remain stagnant. We have cheap luxuries that previous generations couldn't dream of but that doesn't mean that many people aren't living paycheck-to-paycheck or fighting to keep their house or running up credit card debt to stay afloat. Outside of our tech bubble, Americans are struggling when they didn't before.
Meanwhile, capital compounds exponentially. People see their quality of life decrease relative to the average person while they work harder than ever, and they see the rich's quality of life increase relative to the average person while their money works for them. It's hard to live every day in that system and not think that there's a problem.
And in fact I think this could be part of the 'problem'. In 1979 a total of 0.1% of the country qualified as rich, and 12.9% as upper middle class. Those numbers have skyrocketed to 1.8% and 29.4% (!!) as of 2014. The percent of people that qualify as below middle class has decreased substantially, but those that remain there are indeed going to see the rest of society doing better than ever - and that's true.
It's what I'd like to call the 'generous king effect.' Imagine a feudal nation with a king and 100 peasants. In spite of the king's absurd wealth, the nation would feel more or less equal. But imagine one day the king feels maybe he's been wrong to hoard everything to himself, so he decides to run a competition and grant the winners vast tracts of land and wealth. Well now society feels a bit less equal with some 10% having great wealth, but things are still mostly fair.
However, our king notices the increasing discontent and so again tries to resolve society. He doesn't have as much left though but wants to still help raise up society. So now he grants the 10 even greater tracts of land with some degree of autonomy, but now also runs another competition granting 30 new individuals wealth and land comparable to what only the 10 had before. We've seen a massive improvement in society. We went from a nation where the 100 had nothing to where 10 have enormous wealth, the 30 have great wealth, and now only 60 are left with nothing. Yet ironically, society is going to be more discontent than ever as suddenly 40% of people have great wealth while the 60% have nothing. What makes those 40% so special after all!?!?
In an effort to improve the lives of the people, those that experience the upward push last become less and less content. And even though their situation is likely even better than it was when all 100 people had nothing, it's probably not going to feel that way. We obviously don't have a king. But we do have an economic system that's making these changes, and it does indeed seem to be succeeding in increasing the economic power of everybody over time, and the social response seems similar - probably driven by a media who seems to love triggering anger and discontent.
[1] - https://news.ycombinator.com/item?id=17247283
If you own a company, or a TV station, or a news source, or a large number of shares in a company, your ability to influence the world is very much greater than someone who doesn't. Your relative influence over society is a zero-sum game. And your relative influence over society reduces when a small number of people get hugely rich.
There are also resources that are drawn from a fixed-size pot. Land ownership for example. If a tiny number of people assume possession of vast amounts of land, the amount left for everyone else is reduced.
It's a very good thing that people are being lifted out of poverty in the sense that they can afford food and shelter, basic sanitation and so on. But this is really the minimum we should aim for.
Access to more toys can be a good thing in many cases, though I'm not convinced it's a good measure of how well society is doing. But being able to afford more electronic items or whatever does not really eliminate the problems caused by extreme wealth inequality.
Taken to the extreme, the logical conclusion here is no one can own a company, therefore one cannot own a part of a company lest they be able to buy up the whole company, and therefore one cannot own property lest they collect it and have more than others (inequality). To your last sentence, what problems are caused by inequality that aren't simply because of envy?
That's usually a poor place to leap to.
Excellent point. Similarly, the pool of doctors is fixed in the short term, because it takes time for new doctors to go through medical school so that supply increases to meet demand.
This means in the short term, rising inequality can drive up the price of medical costs (at least the part of these costs that goes to doctors' wages).
Right now the vast majority of land in the US is available incredibly cheap. In fact various areas are literally giving away land for free if you promise to put a home on it - some even allowing mobile homes. There's even things like Cuyahoga National Park in Ohio. You can get a government for the least ranging from $500-$1000 month for a house along with 9+ acres of land for those that would like to setup a farm. Not free, but probably still beats the pants off 40 acres and a mule! But people don't want just any land. They want to live in the most elite and desirable areas in the entire country. Yet those elite and desirable areas were at one time no name backwoods that somebody else decided to develop - same as is likely happening today for what will be the 'elite and desirable' areas of tomorrow.
Because they buy houses to rent back to me, they get the opportunities to invest in businesses before me, and they use their money to influence politics to ensure they hold on to their position. They push governments to privatise healthcare making me pay more for it, which they profit from, and that means I'll never have any sort of financial security. I have to live my entire life hoping I never get seriously ill. They buy laws to break the power of unions and collectives. They hoard money in offshore accounts which starves the government of tax revenues so I live in a society with underfunded police, unfixed potholes, and failing education while they* get all those things because capitalism provides those things to those who can pay.
Would that somehow suddenly change if somebody at the top had a quadrillion dollars of spending power?
If they used that wealth to influence the way society works, it would mean I live in the world they want. I don't want to do that.
* Actually I don't, because I live in a country with universal healthcare, but you might have that worry.
Remember one of the last times you went for listening to your favourite band or purchasing their latest album. At that moment, something bad had happened - they got relatively wealthier while you became poorer. Given you were not the only one who paid them for their performance that day, those bastards could actually become rich, while a lot more people became poorer. So the inequality gap grew bigger and, according to your reasoning, you had become relatively less well off that day. But did you? And should we do something with that band regarding them becoming closer to the top 1% (maybe we should redistribute their income among visitors of the venue?) Or, how about measuring the value of your emotional/spiritual state of mind before and after that event? Does it account for a relative/absolute well-being?
The point is, while economic stats are good at showing you the monetary part of your wealth, they are insufficient for drawing a wast conclusion on people's wealth and well-being. So is the "relative to TopN" argument.
Pick a definition of wealth (income, or ownership, or whatever), and pick a dataset for which you can capture all in that bracket for some reasonable timeframe, and for which you can see what percent moves out. For every such dataset I've found over years of looking at this, every one backs the claim that the rich do not stay rich.
Most rich people are newly rich. Most rich families drop year over year in total wealth.
Ban had many wonderful things to say, but one thing really shook me. he said that as a leader of the UN, he had failed in fostering the world's development, as had his recent predecessors.
he then went on to say that accomplishing the MDGs and specifically slashing severe poverty was largely an illusion if you approach it from the perspective of international collaboration. he said that nearly all of the MDGs which were met were met because china had reinvested in its own country to the extent that its massive population's standard of living had substantially improved.
that's it. not international collaboration. not the west's efforts to pull others out of poverty. just china doing the best that it could for itself over a long period of time, with the amazing conclusion of those efforts coinciding with the deadlines for the MDGs.
so yeah, the world is getting better -- but it isn't necessarily the whole world, and it isn't necessarily because of our efforts to improve things, and we definitely can't relax.
China couldn't possibly bring all those people out of poverty without massive demand for their manufactered goods in foreign market.
You can possibly argue all this has happened at expense of west.
Disclaimer: I am not rich and dev salaries here are about 30K to 60K (rent is 1.5K per month). Tax is 40%+ (i.e. thrifty SV-people make a lot more)
[1] https://www.ted.com/talks/hans_rosling_shows_the_best_stats_...
It's main message is that:
1) The averages person's knowledge of the world is extremely outdated and in most cases blatantly incorrect. It's not that people don't know the answers to questions like "what percentage of the world's population live in extreme poverty", it's that they think they know and their answer is incorrect.
2) Human's have a lot of instincts that work against them when trying to evaluate data. For example, implicitly assuming that straight line graphs will continue in a straight line, focusing far more on negative things than positive things, categorizing things incorrectly, and misunderstanding large numbers.
3) Positive change tends to happen very slowly and therefore isn't consider newsworthy, so we don't hear about it even though it's happening every day.
The book really made me question my view of the world and I would highly recommend it to everyone. It's short, easy to read, enjoyable, and very insightful.
That said, the author focused more in the differences between what he calls the four levels of poverty, and to be on level 4 (the level almost everyone on this site is on) you only need to make $64 or more a day. He doesn't talk much about the inequality between the people at the bottom of level 4 and those at the top.
I would attempt to apply the authors thoughts to this specific situation, but I only finished the book a few hours ago and haven't really finished processing the information yet so I will leave that task to someone else for now.
Hope this information helps, and I really think the book is a good read for everyone. Bill Gates is giving a free .epub copy away to all college grads in the US this year, and I don't think his website actually verifies that you are graduating, so I think anyone that signs up can download it here. [1]
[1] https://www.gatesnotes.com/About-Bill-Gates/My-gift-to-colle...
As someone who isn't where here is, this kind of comment isn't as hugely insightful as you may think.
"in real terms the majority of people are poorer than ever"
The pie is growing, so it's possible for the rich to have a larger percentage but everyone still see gains. This is manifested by rising standards of living, more purchasing power, and so on.
The US dollar has also gained a lot relative to foreign currencies since 2008, which makes imports cheaper and further boosts American standards of living and purchasing relative to the rest of the world.
The emphasis should be on boosting living standards than trying to enforce equality.
Purchasing power is cool, but necessary goods (food, housing) prices* are raising much faster than wages. Yes, you can buy a new fablet and yet another pair of jeans for cheaper than ever, but what for exactly?
* Please do your own research as these facts are highly location-dependent.
Individuals seldom pay the stick price. A $10k/month drug does not mean one pays $10k/month out of his or her own pocket. Same for a $1,000 emergency room visit. Or college tuition, due to generous financial aid and payment deferment programs (some universities have huge discounts for low and middle-class students).
So one must adjust prices for what one actually pays, not the MSRP.
Second, although people are spending a lot on healthcare, they are getting more healthcare and better healthcare, which is the key distinction. This means cutting-edge treatments for diseases that decades ago would have been fatal (a notable example is CML, which used to be fatal within 3-6 years of diagnosis but can now be managed as a chronic condition like diabetes).
Healthcare would be very cheap if drugs were limited to Advil and Aspirin, but also very bad. People would be irate if those were their only options. Not saying the system is perfect or that drugs are not overpriced, but one must take into account quality and quantity than just the price.
Rent, however, is an example of a cost that has exceeded inflation, but where there is no notable improvement in quality, and there are no payment deferment programs. People are paying more and more for the same 2-bedroom apartment. I suspect part of the problem is due to the difficulty of evincing deadbeat renters and due to regulation, so landlords pass the costs to renters both in the form of high rents and huge, upfront, multi-month down-payments. But also, the housing bust in 2008 created a construction shortage, so people who lost their homes in 2005-2010 found themselves with no option but to rent, and this created more demand, but also due to less housing constitution. Housing starts plunged in 2008 and never really recovered: https://www.census.gov/construction/img/c20_curr.gif
It has been proven fact that we (Americans) pay more than every other developed country for healthcare with poorer outcomes. It’s a racket, plain and simple.
https://news.harvard.edu/gazette/story/2018/03/u-s-pays-more...
Women with insurance pay out of pocket an average of $3,400, according to a survey by Childbirth Connection, one of the groups behind the maternity costs report. Two decades ago, women typically paid nothing other than a small fee if they opted for a private hospital room or television.
But one must take into account the risk of complications; if something were to go really wrong, would you rather be in the US hospital or the UK one? I suspect the NHS is more affordable, but does not handle complications and individual patient cases as well as the US system.
The hospital charges my wife for her stay, my newborn son for his “stay”, her OB charged for the procedure, and the neonatologist charged. Whatever isn’t paid by insurance automatically becomes our responsibility, with no recourse to dispute.
We are actively working to leave this country.
Germany is, by all accounts, amazing. It's where my wife and I holiday and we've contemplated opening a B and B there a few years down the road. If I were coming to the EU fresh I'd be looking closely at Germany, Denmark, or the Netherlands.
http://www.bluecard-eu.de/eu-blue-card-germany/ is very relevant for a skilled migrant interested in Germany.
I can't comment on Colombia though.
There have been attempts made to correct for these discrepancies. They end up accounting for a large fraction (but not all) of the difference in infant mortality rates, if I recall correctly.
Most of the rest of the effect is that premature births that everyone considers "births" have a higher prevalence in the US (for various reasons, not all of which are clear). Premature births have higher mortality, obviously.
https://uk.reuters.com/article/us-health-infants-mortality/u... is actually trying to look at an apples-to-apples comparison, and a few things jump out at me:
1) Birth defects. I wonder how much of this has to do with differences in abortion availability and again differences in definition of "birth". Many other countries count a child that dies within some number of days after birth from birth defects as a stillbirth, not an infant mortality event.
2) SUID (aka SIDS) is a huge contributor in the US. In the US this is highly concentrated in ehthnic groups that are largely missing in the comparison countries. Why that is is a good question, but makes this comparison less apples-to-apples.
To know where you'd want to be you want to know the outcomes for your specific demographic in the different countries, which is not something that gets reported very much...
From your own source, literally doesn't help your case at all.
The bit you quoted does not negate my two points about the data in that article.
But just to be very clear, Connecticut is cited as having an infant mortality rate that is slightly above the comparison country rates. Note that those countries were picked for a comparison because they have the 6 lowest mortality rates in Europe. [1]
Anyway, Connecticut is maybe somewhat similar to the comparison countries in terms of ethnic group demographics (mostly negating my point (2)) and has a more expansive definition of "infant mortality" than those countries last I checked, which is part of my point (1).
Mississippi, at the other end of the spectrum, has a vastly different ethnic makeup, has much worse abortion availability (increasing the number of babies with birth defects carried to term). And still has the more expansive definition of "infant mortality".
Now I'm not saying that it's a good thing that Mississippi has higher rates of SUID/SIDS. And I'm not saying limited abortion availability for cases when the child wouldn't survive is good. But I am saying that drawing conclusions about US healthcare here, as opposed to other societal factors, requires apples-to-apples comparison. And drawing conclusions about outcomes for a specific case (specific family) requires understanding whether those societal factors apply to it.
Or to put it another way, families that are willing to do an abortion when told their child, if carried to term, would not live more than a few months will have a lower infant mortality rate than families that are not willing to do said abortion.
One other thing which _is_ mentioned in the study itself but not in the article: "survival rates among preterm infants in the US were found to be very similar to those of the same European countries". Please model that with the "the US just sucks" model.
[1] The numbers in the actual study: Connecticut has an estimated FTIMR of 1.29 with a 95% confidence interval of 1.08 - 1.53; note that they don't have an actual hard number for reasons I haven't figured out yet. The six European countries involved are Austria, Denmark, Finland, Norway, Sweden, and Switzerland. Their numbers range from 0.97 to 1.24 according to the study.
https://www.cia.gov/library/publications/the-world-factbook/...
I would love to see a good study that tries to disentangle the various correlations here...
> [You] must take into account ... the racial makeup of America
Oh? Are black people not really counted for the purposes of birth stats? Why? Poorer genetics? Poorer healthcare access? Again, how would poorer healthcare access jibe with your "best in world" medical care?
How about this? Would you rather be in the US, or Japan, for such an emergency? Japan costs half as much as the US per capita (with even lower out of pocket costs), and beats us by every other measure. I'd rather be in the Japanese system than the American one for anything.
edit: The Japanese system, structurally, is very similar to the American system. It's not socialized, by and large. Private insurance through employers to private providers. Yet it costs half as much and works better. This points to something broken in the US system at a deeper level. Expanding on this, every civilized nation in the world has health care more or less on par with the US (fuck exceptionalism), for more or less half our cost. To the chagrin of liberals, "socialized medicine" isn't the obvious solution, because a lot of systems no more socialist than ours work well. And to the chagrin of conservatives, a lot of highly socialized systems also work better. The American system is uniquely fucked up.
Back to Japan. The key difference I can see between the two systems is that Japan has strict price controls. A government commission sets the prices for all medical products and services covered by insurance, with an eye to controlling costs while maintaining profitability. Insurers and providers have to control their costs internally, rather than jacking prices or doing many-to-many negotiations. Is this the key?
But I digress.
At any rate, the Japanese system clearly works, while the American system is clearly broken. One is selling the same product for half the price of the other. Assuming I'm right about the key differentiator being the Japanese price controls (I could be wrong), then it really makes me wonder why we aren't trying that. Seems like a great way to get costs under control (even shrinking), while preserving much of the complex market and avoiding radical change to almost 20% of the economy.
I think "critical utility services" touches on the importance, but doesn't go far enough. I believe a health care system that denies care purely out of poverty is immoral. A health care system that is the primary cause of bankruptcy for the middle class is immoral. A system that traps employees in jobs they hate, for fear of losing (or even changing) their insurance is both immoral and un-American - what's more American than quitting your job to get a better one, or start your own business? So our system is not just an economic failure, it's a moral failure. It's a stain on our honor and an insult to our values.
In conclusion, I do not give a fuck about "free market" here. I am not putting economic ideology ahead of moral imperatives, and I'm not choosing ideology over observable facts. If I wanted to choose ideology over economic reality, I'd be a communist.
Again, if you've got great health cover you can probably do better in the US. If you haven't, then you might not.
As someone who has lived in the UK, Australia, and the US, probably not the US?
Also, "Infant Mortality Rates of Countries, deaths per 1,000 live births[1]":
* Australia - 4.7
* United Kingdom - 4.8
* United States - 6.2
Apparently the statistics say we're not as good at "[handling] complications and individual patient cases" as you believe we are.
[1] https://www.infoplease.com/world/health-and-social-statistic...
Provide evidence for this claim, or stop trying to disparage an entire nation's healthcare system.
The vast majority of the 'generous' college financial aid is loans with partially subsidized interest rates. Default rates on these loans are high and keep rising.
http://www.chicagotribune.com/business/ct-drug-price-sofosbu...
Costs $1000 in the US and $4 in India.
https://www.firstthings.com/blogs/firstthoughts/2009/07/most...
Also the US develops most of the drugs used by those other countries. IF Drug companies charged UK prices in America, they would not be profitable. Someone has to pay the bill for drug development. In this case, it's the US.
https://qph.fs.quoracdn.net/main-qimg-90fb34d138bbf4ebc946ca...
it's not a libertarian view, just the data.
First of all that source is from a pseudo-intellectual religious journal and carries little to no weight in my opinion, even if it did they admit that those numbers are differentiated by early screening in the US and this has little to do with treatment quality, such a statement on quality would need to control for this difference in screening.
>Also the US develops most of the drugs used by those other countries. IF Drug companies charged UK prices in America, they would not be profitable. Someone has to pay the bill for drug development. In this case, it's the US.
Only 5 of the top 10 largest Pharmaceutical companies are American and 3 of the top 5 are European so this statement is just not true.
Your quaint views on Economics are obviously libertarian, in the failed American political party sense, and frankly the data is not on your side.
https://www.kff.org/other/state-indicator/life-expectancy-by...
https://mises.org/wire/how-government-regulations-made-healt...
My country (Uruguay) is the total opposite, it has some nasty warts, but socialized basic medicine + the option of purchasing better healthcare if wanted seems like a much better system.
On top of paying premium prices for things, I also avoid emergency care on occasion that I would rush to if I had affordable insurance.
I wonder where you find ER visits for $1,000 ? I'm pretty sure in our mid size city with 5 or so big hospitals, the cost is much higher than that. I was treated some years ago with antibiotics and pain meds, given a bill over $4,000 - and I had refused the mris and xrays the doc wanted to order.
8 weeks later I got a notice from the hospital that they knew the address of the property I owned and suggested I pay.
"$10k/month" - some meds are $10k for one day. Sometimes one of the drug companies will donate a two day supply in an emergency, however I routinely shudder at the thought of going to the ER and getting hit with a $15k bill for a day and needing meds beyond that.
College tuition has been interesting in our state, they say it's free now, but previously I found that a lottery sold to people as a method to pay for college was only available to those under 25 and whatever other stipulations. I've heard of programs for women, for minorities, etc. There was one college in town supposedly offering scholarships to white people, and they had a great program I was interested in, but it was way across town and the expenses for travel and books was enough to make it a nice thought only.
"they are getting more healthcare and better healthcare" No, I am not getting better healthcare. Certainly there are others who find paying the retail cost of doctor visits and drug prices ridiculous. Certainly I am not the only one that has had a doc or nurse practitioner suggest tests that I cant afford and deny to provide comfort in the name of stopping a possible opiod crisis.
Funny, you say "would be very cheap if drugs were limited to Advil and Aspirin" - Advil and Tylenol are the main line of defense for health issues where I am, it's relatively cheap, certainly not as effective as some prescription drugs, but the cost of the doc visit alone puts them out of reach mos weeks.
Part of the rent / housing costs problems are indeed from the slow down of building some years ago, but there are many other factors putting pressure there, many of those factors have people profiting at the pain of others in a similar way.
I think the housing thing will level out, this is something where capitalism can work. Hospitals having impenetrable territory protected by regulations and drug companies being sneaky with patents however, I don't think that's as fair of a set of guidelines for capitalism to work it magic well.
Housing is an entirely different matter.
The rich are consuming an increasingly large percentage of a very slowly growing pie, so while you are technically correct, you seem to be unfairly dismissing a real issue here.
They are consuming an increasing percentage of a much slower growing pie. This is a problem. Nobody is talking about enforcing equality but about avoid inequality growing even more.
How do you pull that off without enforcing equality in some way?
We could also tax capital gains at the same interest rate as regular income or get rid of the mortgage deduction. These mainly benefit higher incomes and I believe the mortgage deduction drives up home prices.
Rich people get richer through dividend payments or capital gains. But if they keep reinvesting the capital in their business then they'll be able to defer tax forever..
You can reduce inequality by limiting the wealth you can generate from a corporation.
In some places. And the new tax bill placed caps on those, so living in high cost of living areas, because that's where the jobs are, means you're probably not going to be able to afford a house.
I don't believe this. People tend to max out what they pay for their mortgage so if they have a tax deduction they just will pay more for houses. Which then benefits the owning class.
If you remove mortgage deduction, I'll buy 10 houses just because others can't use their deductions to offset the mortgage.
There are all cash buyers sitting around the corners.
I advocate for capping the total mortgage deduction.
I agree about capping. Same for capital gains. Put a cap on it that lower income have an incentive to invest.
Capping mortgage deductions would also make real estate "investing" less interesting so the money would go to other purposes than driving up house prices.
Do we then drop corporate income taxes? One reason capital gains is lower than income is because the value was also taxed on the corporate profit side. In order to make investment more appealing capital gains is thus set lower to offset the double taxation on the growth.
AFAIK many (if not most) do this for this reason (and a few others, like capital gains not taking into account inflation, etc.).
It's also why the rich have an effective tax rate about 10% higher than their income tax since they're paying the corporate tax. Here's [1] a CBO report on effective tax rates by income distribution showing this.
[1] https://www.cbo.gov/sites/default/files/cbofiles/attachments...
Basic utilities/services being improved and increased such as education, healthcare, vocational training.
Investment in public resources such as public transit, roads, and public parks.
Increased low-income housing availability.
Higher (not absolute equality) taxation rates.
These aren't hard fixes and have relatively widespread support. They are just unpopular when it comes to those in power of our political system currently.
And before someone says it, making things closer to equality is not enforcing full equality. We already have basic services that would qualify under that and the only way you can be consistent under that argument is to go full libertarian, which hasn't seem to have worked out practically for populations at large.
Why? Because you say so, and because supporting the status-quo and the will of the powerful requires no further argument?
> If machines produce everything we need, the outcome will depend on how things are distributed. Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution. So far, the trend seems to be toward the second option, with technology driving ever-increasing inequality.
-- Stephen Hawking
Money in politics does matter. A money differential is just a means for people to have power over others -- without which they would have to convince them, which would force them to think and other such fancy things. Verily, money enables people to have a pretend narrative where there's really just garbled BS underneath. Having to witness that every day, on every street corner, on every website, lowers my living standards by so much I cannot make up for that with nicer clothes or a bigger house.
Keep your change, I want change.
A "growing pie" doesn't mean anything if the ability of a few to seize all of it is growing even faster, and if that's just a little bump of fast food, branded clothing and mobile devices, before billions get murdered in a flash, for example. And it doesn't have to be that drastic, just constant manipulation by massive PR campaigns is bad enough, effective slavery is bad enough. A few shouldn't be able to mold and use the many that way, doubly so not considering how deeply sick they themselves tend to be.
It's like we're talking about two different people, who would make a better babysitter, and I point out that one person has blood on their clothes and is awfully interested in how many neighbors live in shouting range -- and you say "yeah, but they have slightly nicer clothes and brought candy for the baby", and I'm like, I want to get a divorce.
In countries like Canada and the EU, where opportunity is more equality distributed, we still have the problem of increasing gains going to the rich. I sold a company at 27 for fucks sakes, the vicious and virtuous circles that the internet enables are stratifying wealth. We need more regulation to stop the vicious circles from forming and we need more redistributive taxes with global coordination to stop region shopping. Also, we need to delink mortgage interest rates from general interest rates to stop bubbles from forming in housing. If housing wasn't 5x as expensive in real terms much fewer people would care about the rich getting richer. The problem is that, in some respects, housing is an arms race so even though society is getting richer the poor and middle class can't ever stop struggling.
No not really, you boil it down to that, but that's simply your framing nothing more. There's also the regulatory environment, so no it's not all about tariffs. There are almost no environmental controls or labor laws in China. So that is a huge factor. There is equal or more possibility that companies wish to avoid the responsibility of ensuring compliance as they do with merely avoiding taxes.
"If you want fat, state protected corporations then fine"
How does restricting the supply of unskilled labor from illegal immigrants and border crossers, visa holders of various stripes have anything to do wit fat protected corporations?
The reality is that, globally, there is a low skill labour glut because most countries are only now developing advanced education systems. If you want to stop competition from low skill labour you ultimately need high tariffs or extreme mechanization / automation, neither of which are good in the long run for poor people here.
Try again, this time taking observed facts into account.
https://www.economist.com/finance-and-economics/2016/09/17/s...
A common interpretation of this is that globalization has resulted in the middle class of wealthy countries now competing with the hungrier, more desperate residents of poor countries. This suppresses the former's wages and raises the latter's.
Capitalism will always have a "race to the bottom" to find the cheapest way to complete a product or service at the lowest possible cost. It can be exploitative, but it is not a zero sum game. With every passing year human society bootstraps itself into more wealth that is used to solve our daily problems.
To me, this is net positive to the world. The global poorest are in the most need of more income, and stand the most to benefit. Efforts at redistribution and charity, while well-meaning, pale in comparison to individuals working hard to better their lot in life. The middle classes are not suffering too greatly on net from globalization (their income did not shrink, it merely stagnated or rose less quickly).
It is easy to weave and popularize a story of middle class deprivation and suffering, because this story provides an interesting tale of the demise of bourgeois values- and who doesn't like that story? But in reality the economy is more nuanced than that. Maybe in some number of decades, the elephant curve will begin to flatten out as enough people rise to relative wealth, or cheap energy will boost the economy with gusto. Until then the middle class can wait.
The way that has been selected, at least in the United States, is that we detached wages from productivity. This means that the benefits from offshoring production (which is good, get more people involved in the economy) is enjoyed by those that receive those jobs, and by those who own capital, while the costs are carried by the middle class of the US.
You say it isn't a zero sum game, but then why in the hell is the middle class in the US getting wiped out, while we produce more and more billionaires?
Julius Caesar, after all, was far from poor.
Don't confuse the two.
Not helping matters is anti-elitism as a crab bucket mentality where they complain about the geographically near comfortable instead of the actual powers. Blaming the miller for their problems instead of their lord.
Even when not hijacked populism often fails to actually fix anything, it may be its refusal to acknowledge reality in its groupthink and search for easy solutions, dislike of nuance and not wanting to hear that the things they had just aren't sustainable or what they would need to do to make it so.
Not only have physical and financial poverty increased in the West - the UK and US have non-trivial numbers of people literally starving to death - but so have poverty of education and poverty of opportunity.
"The poor are lazy and deserve it" arguments are naive, irrational, self-serving - and a populist oversimplification themselves.
The reality is that when education improves, nepotism and corruption are constrained, and wealth becomes more widely distributed and accessible, economies boom and the poor do much better - unless the growth is sabotaged by external influences, as it sometimes is.
Look at the USSR and the way they treated their workers. Taken for granted and undersupplied, given grandiose mandates to live up to from the uninvolved above to deliberately gives lung cancer to union leaders via minutes long xray. The USSR was "for the workers". The Technocrats weren't really scientific or engineering based, just a moronic faschiod cult which called for a power based currency and no interest or accumulation - ignoring the value of other inputs or accumulation of growth. And then there is all of the violence committed in the name of religions calling for peace....
The point is never trust the pretense. Populist movements/groups are untrustworthy by defining themselves by the pretense instead of the policy. This does not apply to some policies called populist.
Moving up the bonus payment dates in the Great Depression, safer working conditions, raising the minimium wage, shorter hours, Roman land reform after the farmland had been illicitly shifted past the legal limits per owner, even more radical goals like Georgist "only the value of the land itself is taxed - scaled appropriately", shifting to direct democracy are all fine - a given policy may or may not work as intended but they are not an easy direct road for some megalomaniac to power.
Populist groups are untrustworthy for the same reason as theocracies. It isn't operating upon the basis of say treating fellow man as a brother that is bad but the actual practices.
Secondly, it's not clear whether wealth has improved for poor people (something I should take a look at...).
https://avc.com/2016/08/elephant-chart/
The chart, as I understand it (in limited reading), tracks three phenomenon:
1. Increasing wealth formation by more disadvantaged groups in non-first world countries (the "body" of the elephant).
2. Wealth stagnation for middle classes in first-world countries (the "dip" in the elephant's trunk).
3. Increasing returns to capital held by upper classes in first-world countries (the "trunk" of the elephant).
I found this version [1] showing that, in absolute terms, the gaps are actually increasing.
[1] https://patternsofmeaning.files.wordpress.com/2018/05/elepha...
A growing absolute wealth gap can still lead to reduced quality of life for lower-wealth groups - e.g. because prices rise faster than their incomes and so they effectively lose access to certain goods. It will also increase inequality and makes other economic measures (that rely on the mean) less reliable.
Just because an effect is always present, doesn't mean you can ignore it, especially if doing so would flip the conclusion. Posting the elephant graph as an argument that all is going well would do exactly that.
In any case, you are not necessarily addressing my rebuttal of the elephant graph. What I'm saying is that the elephant graph is an interesting conversation starter, but, by itself, it does not convey enough information to make a conclusion about fairness. To make an extreme example, if I have literally $0 last year and I have $1 now, my growth rate in the elephant graph is infinitely higher than the richer 1%. I'm still going to starve to death, though. Absolutes matter.
My point is that knowing only the fact that "absolute inequality has increased" doesn't tell you anything about whether that's good or bad for the world.
I agree that absolutes matter to the individual - but I personally think percentages are a better way of understanding and interpreting growth over time for most populations, because growth has historically been very consistently exponential.
[0] https://ourworldindata.org/global-economic-inequality
specifically from eyeballing
https://ourworldindata.org/wp-content/uploads/2013/11/Global...
Fixating on silly numbers that ultimately mean nothing doesn't seem like a good way to make the world better. We should look at concrete things - and how often you can eat an orange is the kind of concrete thing that really matters.
Yes. The delta between the richest and poorest indicates a lot of things about a society.
You can go to a place like Mauritius where the delta is enormous, but everyone is pretty happy and the rich and poor mingle freely. Or you can have a place like France where the delta is far smaller, but the rich and poor detest each other and very rarely mingle.
The top 1% in France has about 20% of the total income as of 2014.
For Mauritas no suitable data was found for wealth inequality or dispersion of earnings.
The lack of good data for Mauritas makes a comparison between the two questionable.
Plus even after looking at the numbers for these countries I would want to check out money laundering - if I recall, based on the Panama papers, a nontrivial amount of the 1% (probably more like the 0.1%s) wealth is laundered/hidden/dark. I don’t know if the studies here attempt to account for that or not. I would imagine money laundering is prevalent in France (or any major economy for that matter), possibly in Mauritas
https://www.chartbookofeconomicinequality.com/inequality-by-...
https://www.chartbookofeconomicinequality.com/inequality-by-...
Information on data sources here - https://www.chartbookofeconomicinequality.com/about/
As of 2018 the population of Mauritas is 1.26 million (via google search). The 2018 population of France is 65.23 million (via google search). The 2014 population probably was not radically different.
I wonder if the size of the society in question matters here - is comparing a country to one 65 times larger than it useful?
I did not look for data to validate the hypothesis that everyone is pretty happy in Mauritas as opposed to France.
There are factories in villages too.
Those days are over. Germany has a huge real estate problem right now.
1) The percentage of people living in cities as compared to living in rural areas has increased dramatically (https://www.census.gov/library/visualizations/2016/comm/acs-...)
2) Large cities (NYC, San Francisco, etc), have lots of regulations to building more housing
3) Demand for housing in large cities has exceeded supply for decades
4) Student loan debt has destroyed purchasing power for folks in their 20s and 30s, the average student loan is almost 40k (https://studentloanhero.com/student-loan-debt-statistics/)
Leaving NYC, even after taking a pay cut, was one of the best decisions I ever made. I don't have data, but I suspect that for young folks outside of the largest 20 American cities, if they didn't have on average 40k in student loan debt, they would have more purchasing power then previous generations even including real estate.
Many things are much more inexpensive jeans, shoes (functional not trendiest), entry-level tools, computers, media, etc.
Whats not more inexpensive and what imho really actually matters are things like education, housing, and the barrier to entry to careers (require licensing, certfications etc.)
I don't think that's a fair reaction. It's possible to care about the rest of the world and recognise context. Workers looking for greater bargaining power in the US shouldn't accept "but things are much better in Eastern Europe these days" as a reason for them to not organise - the two are entirely separate issues, and can happen independent of each other.
It's easier to get away with worker hostile policies for an employer when the employer's option if workers object is not "no workers" but "I guess I have ti shift production to China".
You're right that it's not directly related to the decimation of unions. That has other things going on, and different things in different sectors.
Now at its disposal, a government can implement tariffs and protectionism to level the playing field, but those can have disastrous long term effects (see the history of India's protectionism).
So, an excellent way for wages to rise is to make employees extremely efficient, and to increase the demand in labor. Make no mistake though, the gains in other countries have effected US and European workers.
They are strictly correlated
Poverty is globally going down because poorer countries are becoming less poor, meanwhile richer countries are not becoming richer at the same speed as before
Just like CPUs
They're becoming faster but the difference between each generation is smaller
So yes, aknwoledging that eastern Europe used to be so much worse than actual US is a tool to put things in perspective
The absolute improvement is great.
The accelerated concentration of Wealth is not.
The term economists have now settled on and are considering is the very mundane “lack of social mobility”
It’s a problem.
Yes, exactly. The reason actually is very simple: wealth inequality results in inequality in political (not to mention legal) representation, as the wealthy always carry more influence in society and use that influence to stack the odds in their own favor.
It’s pretty much the same line parents use on their children - I don’t think it works for them, much less adults.
[1] https://en.m.wikipedia.org/wiki/Soviet_famine_of_1932–33
[1] https://wiki.lesswrong.com/wiki/Fallacy_of_gray
The millions of deaths (irrespective of the famines ultimate cause) in the USSR and especially in the Ukraine in 1932 / 1933 are well documented (2-4 million deaths estimated):
https://en.m.wikipedia.org/wiki/Soviet_famine_of_1932%E2%80%...
There was also a Russian famine in 1922 where an estimated 5 million people died:
https://en.m.wikipedia.org/wiki/Russian_famine_of_1921%E2%80...
There is a Wikipedia article on “hunger in the United States”, but a google search for “United States Great Depression famine” did not return any Wikipedia articles documenting a famine in the US at that time, only the above Stack Exchange discussion (which appears to reject the hypothesis).
FYI: https://en.m.wikipedia.org/wiki/Hunger_in_the_United_States
Without data to back up the claim of a famine killing millions in the US during the Great Depression the comparison used here is nonsense, although there may be other evidence for the point the author was attempting to support.
The "locally grown food" in many cases was little more besides white flour and mincemeat. (A situation that still exists in parts of rural Russia.) The only tea that could be drunk was usually a single variety of black tea. I think "poverty" is a reasonable adjective for that state of affairs. The fact that people in urban Russia today do have access to a vastly wider choice of food is a significant advance.
It is amusing that use the term "richer" to dispute my claim above that Russians are less poor.
https://www.webmd.com/hypertension-high-blood-pressure/news/...
Why are people trotting out chicken as an example of healthy food? It is anything but:
https://www.huffingtonpost.com/2014/09/15/poultry-farms-anti...
https://www.youtube.com/watch?v=7rNY7xKyGCQ
Obviously, no one food is healthy, note that I named a couple different "healthy" foods. Having a balanced diet is important. Nothing about your article seems to point to chicken being unhealthy to eat. I don't even know if you read the article.
> Why are people trotting out chicken as an example of healthy food?
Are you kidding me? If you're vegan, just come out and say it, or make an actual point. Part of my response was related to affordability, which is hard to beat when it comes to chicken as a source of protein. What healthy alternatives do you have?
I started watching the second link. Interesting stuff. Maybe chicken isn't the most healthy option, but I don't think it's evil.
How can getting antibiotic resistant E. coli from eating chicken be healthy?
https://www.nytimes.com/2018/05/25/opinion/sunday/meat-antib...
> What healthy alternatives do you have?
Beans are pretty great.
> but I don't think it's evil.
People in Medieval Europe did not think that torturing animals to death for entertainment was evil. It is obviously evil to people in Europe today, just like breeding and enslaving animals in horrific conditions only to slaughter them for food is obviously evil if you take a moment to think about it.
If you're thinking the unhealthy food in the grocery store is cheap, that's also not true. Chips are $3-$5/bag while 3 pounds of onions is $2. I could go on.
Poor people are likely to be both cash-poor and time-poor: it's not a question of "being bothered". If you have the available time to fully consider, process, and follow this advice, then you may not realistically be poor at all.
And, if you did manage to follow this advice, you would likely still be poor - saving pennies on food is not any way out of poverty.
And lets get off of this no time argument. Why do all these people with no time still have TVs? The average American watches ~5 hours of TV per day. Watch 4 hours instead and cook a healthier and cheaper meal.
That's a complete non-sequitor. You're going to have to provide evidence that those who are poor are the ones watching tv so much, and don't have the time because they're working multiple jobs.
She kept the house stocked with canned soup and lunch meat because a 6 year old (me) and a 12 year old (my brother) could manage to make a meal out of it while she was working.
https://www.cell.com/cell-metabolism/fulltext/S1550-4131(17)...
The research done concluded that differences in Gut Microbiome meant that "The glycemic response to the two types of bread varies greatly across people".
More food for thought (Pun intended :p )
I do think in the general case though, that people usually have 1/2 hour to cook if they wanted to. Are there going to be exceptions like yours? Absolutely.
Which, if you're working 2 jobs, you very well might not have.
"If you're thinking the unhealthy food in the grocery store is cheap, that's also not true."
Time is also a cost. So is the ability to store food.
My parents worked in hospital, had shifts of 12 hours, sometimes for 6 days in a row, with two little kids, while studying to be professional nurses (so not even on doctors salaries)
My mom worked in infective disease, my dad worked in oncology
Me and my sister never had a room, we couldn't afford a house with private rooms for us
How did they manage?
They bought a house just on the other side of the street, so they saved a lot of time avoiding commute
They never missed a meal with us, my mom used to buy fresh food everyday and cooked for us
She still does when I visit, 40 years later
"I don't have time" it's the lame excuse you tell to your friends when you don't want to go out, not to your kids
The conclusion that I draw is that while people broadly in this position might accurately perceive that they are now in a more comfortable short-term position than they were, they are at high risk in the medium-term and long-term.
Not everywhere.
"Maybe you don’t care that much about the world outside the US or Western Europe, but literally billions of people have seen their living standards rise from the subsistence level to a decent level."
That's very uncivil of you. There is lots of poverty in the US, and despite popular opinion, there is lots of hunger here too.
Doesn't do a single thing to address the point made.
(1) relative deprivation is a substantial source of disutility, and
(2) additional wealth/income has declining marginal utility.
It's quite easy for a situation where the rich/poor gap grows and everyone gets richer in absolute terms to actually have negative net utility.
but lately im seeing comments downvoted seemingly because users just dont agree with the author or their point of view. thats not helpful. meaningful discussion and debate must embrace alternative points of view. please dont downvote to censor.
I think it's been proven time-and-time again that HN can't handle politics. It just turns in to low-effort garbage.
The rich aren't that dumb. The most important things (like medical, fire, etc) will rise accordingly with demand. Restaurants may shift more towards the high end, but that will mean matching tips (for the few that can get a job there). I dislike the unregulated free market a good deal but even I can admit it will adjust before any critical situation affects the rich. Again, those most affected by these dynamics the most will be at the bottom of the pecking order. Should we fix this? Of course. Are we all on the verge of not being able to live in California? No way.
Anything even slight center-left on this site will immediately get inundated with broken, inordinary American right+ talking points. We're not hackers here, just American middle class programmers.
This thread is full of justifications completely ignoring the fact that we almost had a full blown financial meltdown just 8-9 years ago, at the expense of the middle class, and the only thing that stopped it was extreme government intervention and then lowering the absolutely hell out of interest rates. How did the middle class survive and maintain its perceived wealth? It's not because they had the purchasing power to do so, quite the opposite. It turns out that lowering interest rates across the board implicitly creates a credit bubble (because low interest money isn't used for assets, it's used for loans). A lot of middle class Americans have maintained their standard of living (or just survived in general) off credit and they're propping up other middle class workers with that debt (notably the service industry).
Here's a quick little stat to satiate anyone who wants to go "citation pls": http://www.businessinsider.com/american-credit-card-debt-nea...
>Why would Americans be struggling when unemployment is so low? Well, having a job and having a well-paying job are two different things. And wages have largely remained stagnant in the 21st century.
We're letting a time bomb tick and tock if wages do not significantly rise over the next decade.
If the risk takers who blew those bubbles had only suffered for their actions.
Americans are struggling even though unemployment is low because most jobs pay like $10-15/hr.
That's my working thesis as well. the increased in real poverty rate in the USA is causing the previously hidden tensions to be exposed and flexed. When the pie was large, it was easy to be easy. When the pie is small, ya gotta watch out for the neighbors taking your slice.
Note, I've lived in the poor(er) white areas of rural America, and I've lived & worked in the rich(er) urban America. It's very hard to have genuine communication. The difference verges on the incommensurable.... from both sides.
A good explanation of neo liberalism here: https://americanaffairsjournal.org/2017/11/progressive-neoli...
People have same salaries but can afford supercomputer with a great camera in their pocket. I could only dream about it in 2000.
And I have covered only one minor thing supercomputer in your pocket does.
Most people use it for entertainment but we really are spoiled with the amount of information at our fingertips. The good will of professionals sharing their know-how online has helped my career grow and made me much more self-sufficient in other areas.
Tangentially regarding wage growth, sure growing some of my food or fixing my car is a net-loss in terms of potential earnings because of the invested time, it's well worth it in other respects. Also, developed countries have a pretty good standard of living already. Needless consumption is a greater problem IMO.
The main cost issues today are healthcare, education, and housing.
- People on average have less disposable incoming due to rising costs of housing, education and healthcare.
- Some goods (e.g. computers) have gotten dramatically cheaper in the last 20 years.
So you can save a little by not having the latest products and services, but it is insignificant compared to the overall financial challenges people face. [1]
[1] https://www.theguardian.com/commentisfree/2017/may/16/avocad...
> ...
Exactly, thank you :)
Only if you realize the appreciation somehow.
Not trying to argue semantics here, your point is completely correct but it may be confusing to say 'the EU (as if, as a whole) considers housing and inflation as separate measures'.
A cost of living statistic that averages out cost of living between say Michigan and coastal California is quite wrong in both places. It will grossly underestimate cost of living in California and overestimate it in Michigan.
I think this is one of the major problems with politics and economic policy setting at the national and global level. National and global leaders look at big aggregate statistics, which completely blinds them to the street level realities everywhere except those places that happen to coincide with the statistical median. Most places do not coincide with the statistical median. I think this largely explains the recent global populist uprising as well as the fact that global leaders were surprised by it.
Large scale macro statistics might be useful for setting things like Fed interest rates, but they're nearly worthless for addressing local problems.
If a city looks and feels unsafe, dirty, deserted, and so on, then it probably is those things. No amount of statistics can explain away the experience of any unbiased, reasonable observer.
Park your car in the center of town somewhere. Hang out and eat a sandwich with your windows open in your car. See who walks by, hear the noises, the beeps, the sirens, the shouting kids or quiet wind.
Then you'll know what a town is really like.
I'd say plenty of people aren't fully aware of ways in which their lives get cheaper or better. That's just 'normal'. Whereas growing up and paying $2 for a coffee, and now 15 years later it's $3, is just a sign of you getting squeezed, and people are very much aware of that.
One cognitive / measurement issue here is hedonic inflation.
For example, the average new home was 1000 square feet in the 20th century and 2500 square feet today. Meanwhile, average household sizes decreased. We all got bigger houses with fewer people to share them with. We also got universal central heating, hot piped water, flush toilets.
Similarly, our computers have gotten faster. I don't need to explain the implications of moore's law to anyone here.
Suppose the average $1000 computer gets twice as fast previous year. Is that to be measured as inflation or no change? No change? Perhaps, average prices remained constant. But inflation is, among other things, a purchasing power kind of metric. 'How much computing power can I purchase with this money'. In that sense, prices halved. In short, there was deflation, on a hedonic basis.
This is something a lot of people don't realise. Inflation figures are sometimes suppressed by such improvements (which halved computing prices, even if sticker prices didn't change). Homes got more than twice as big, computers a thousand times as fast, these things can't simply be ignored by stating 'average homes and computers are more expensive', which is the reality that people experience in real life when looking at sticker prices of computers and rental properties. The reality that people often omit is that the product itself has massively improved.
Same with healthcare. Yes, costs increased. So did outcomes. Try surviving cancer today vs 50 years ago. Try living till 80 years old on average, 50 years ago, when life expectancy was sub 70.
https://ourworldindata.org/grapher/life-expectancy?tab=chart...
The national government looks at national figures, that's not worthless. The state looks at state figures. And the municipality looks at local figures. This idea that politicians are completely blind and have no idea of street level realities, only exist at the national level, or have no data or policy instruments beyond the national level is a joke, but it seems almost like you're implying just that.
If the establishment was doing it's job people wouldn't vote anti-establishment.
Generally, that's simply not true. There are infinite different measures of inflation and it's up to the synthesizer of the inflation metric to include or exclude things, but generally housing and medical care are part of the equation.
EDIT: I probably should have used "express" rather than "capture", apologies.
Every European capital / big city has seen absolutely massive increases in rent and house prises since the ECB started printing money. (Housing sector if very 'close' to the banking sector and so more directly affected by the availability of cheap credit). Not causes by the ECB 100%, but accelerated by it nonetheless.
But if the cost of all other goods has stayed the same, plus the rent and house prises in rural areas has been normal or even dropped, inflation on average will be ok.
(And then the ECB says: inflation is less than 2% _on average_ so no problem here. print. print.. print...)
For Brussels at least, that is simply not true. See the graph in section 'Brussels Hoofdstedelijk Gewest' of [1] for the evolution of real estate prices in the Brussels region since 2008. There are also strict rent controls in Belgium: if you are renting your landlord can increase the rent with inflation, but not more. Every three years the landlord can theoretically increase the price, if he has made improvements to the property or he can prove that the rental value has objectively increased by more than 20% (which is hard, if there are disputes courts tend to side with tenants).
[1] https://statbel.fgov.be/nl/themas/bouwen-wonen/vastgoedprijz...
This assumes the numbers accurately represent reality. Here in Canada, the shelter component of our CPI numbers do not reflect at all the massive price inflation that has been occurring in both buying and renting shelter.
https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=181000...
If one was to take their numbers at face value, you would conclude that shelter price inflation is generally consistent with all other goods, and that it has been consistent across all regions, neither of which is true.
Printing money is what central banks do. It's what every Eurozone nation used to do with their own money as well before switching to the Euro. So unless you can explain what the ECB does differently that makes this worse than the central banks before it, you don't really have much of an argument.
Is it printing money faster than the central banks before it did? If so, give some numbers and sources please.
And in general, be explicit about your claims, because as written you're practically suggesting that the Eurozone is acting like the Weimar Republic.
Search "FED balance sheet vs S&P" or something similar. E.g. http://whattheythink.com/data/84893-feds-balance-sheet/
The question is, how good is the approximation and how meaningful is an average statistic?
The statistic is useful and meaningful, but doesn't say everything. Fortunately we have hundreds of inflation metrics, for different groups (urban, rural), age groups, countries, states, regions and sectors.
Virtually none of these are published in media outside the general CPI measure, but all can be found on government/centralbank/consultants etc websites, typically with methodological sections explaining how they came to their conclusions.
For example: https://www.bls.gov/cpi/home.htm
Here you can find various inflation figures, methodology and data.
Indeed (as you edited), the national inflation figure can 'capture' it in the statistic sense, but cannot capture it in the sense that the number expresses individual paint points that different subsections of the population experiences, like rent in a HCOL urban area, or the inability for wages to catch up with an ever increasing downpayment requirement.
What we see in our everyday lives is sometimes called "price inflation", i.e. prices rising, and that can happen disproportionally.
As a US-centric example, computer prices have been gradually decreasing, while healthcare and housing costs have skyrocketed.
So an increase in the supply of money is separate from an increase in "a concentration" of money in a "market area" like healthcare, and productivity and material costs and whatever else factors into prices at any given time.
Of course, an increase in the supply of money factors into prices where ever the money goes.
This is not true unless you live in early 1900's or only surf some crackpot websites.
In the language of economics inflation without specifics means price inflation. If you mean monetary inflation, you must use two words.
Increasing money supply is not going to prices if
1) economy grows and demand for money matches the supply or
2) velocity of money decreases. https://fred.stlouisfed.org/series/M2V As a thought experiment: If you mint a trillion dollar coin but are not using it, monetary supply increases radically but it has no effect on price inflation because it has zero velocity.
"Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output. … A steady rate of monetary growth at a moderate level can provide a framework under which a country can have little inflation and much growth. It will not produce perfect stability; it will not produce heaven on earth; but it can make an important contribution to a stable economic society."
That's not so say that many don't hold the belief you have (i.e. that inflation should be understood primarily as price inflation, and monetary inflation is a secondary consideration). But it's not the only mainstream opinion.
Probably. It's strange how the only school of economic thought that actually corresponds to reality is the one shunned as "pseudoscience" or something.
Go see for yourselves: http://mises.org
>I think the Austrian business-cycle theory has done the world a great deal of harm. If you go back to the 1930s, which is a key point, here you had the Austrians sitting in London, Hayek and Lionel Robbins, and saying you just have to let the bottom drop out of the world. You’ve just got to let it cure itself. You can’t do anything about it. You will only make it worse. You have Rothbard saying it was a great mistake not to let the whole banking system collapse. I think by encouraging that kind of do-nothing policy both in Britain and in the United States, they did harm.
Can you come up with an argument against Austrian Economics in your own words, or are you content trying to discredit it with an appeal to Milton's authority?
I could argue against the quoted passage but I don't want to bother doing any more work than you have.
I'll throw you a bone: Deflationary policy is idiocy. Belief that monetary policy can be neither inflationary nor deflationary is anti-empirical and wishful thinking.
And yet, somehow I still think you're not even trolling!
But if not.. Once again, I have to wonder what the hell is wrong with you people.
By the way, that wasn't an appeal to authority. It was a link to a website where you can educate yourself, without having to take my word for anything.
As for monetary policy, it shouldn't even be a thing.
Don't worry, I've spent plenty of time educating myself. Grad school was pretty good for that. It even says Economics on my diploma, heyyy.
I'm not sure what you mean by "monetary policy shouldn't even be a thing." That's like saying, "guns shouldn't even be a thing."
For starters, if you understand that value is subjective, you'll also understand that there's no way to put a number on how much you want something, or precisely how much you'd be willing to pay for it, etc.
You'll also understand that you can't base calculations on something you can't actually quantify, and have no way of accurately measuring..
So yeah, you'll understand that most of what you've been taught is just garbage-in-garbage-out.
As for monetary policy, it's essentially just "a plan for forcefully intervening in an economy", and it doesn't actually happen for the greater good - it's done to benefit the government and their buddies.
As a prime example, who gets access to newly printed thin-air-money at zero interest? Do you want him to buy real assets with "free money", and have you suffer the consequences (of the resulting decrease in your currency's purchasing power)?
Counter-example: I do it all the time. Ever heard of "revealed preference"? Sure there are weird human things like preferring A to B, B to C, and C to A, but I'm OK with a map not being the territory.
> a plan for forcefully intervening in an economy
All government choices are forceful interventions, whether a choice to act or not act.
> Counter-example: I do it all the time.
No you don't. I mean, sure you can pull numbers out of your ass and pretend to calculate something based on them.
Or you can even explicitly set out to calculate garbage results with garbage inputs, if you insist.
But you're not putting accurate numbers on how much anyone wants anything, because it's all subjective.
> All government choices are forceful interventions, whether a choice to act or not act.
Indeed. That's how ruling over subjects works. I can't parse the latter part though, but whatever.
If that's pulling something out of my ass, well, I guess you're not a fan of statistics or the scientific method? Oh, actually, I forgot that's a central tenet of the Austrian School -- science is bogus when contradicted by philosophy.
> can't parse the latter part
If a government creates money, then it must have a monetary policy. Do you think government-backed money is not "for the greater good"?
Do you think 2% is a good rate for you to be losing your savings' purchasing power? How fast would you like gangrene to spread through your body?
> 2%
The correct rate varies according to the behavior of the economy.
> gangrene
What a strange and shifting conversation.
I doubt you're actually stupid enough not to get the point that there's no good rate for a bad thing to be happening.
You've essentially studied to become a government cheerleader. If you want to make a career out of that, I don't know what to tell you..
Friedman simple quantity-of-money rule policy didn't withstood the test of time.
His idea that flexible exchange rates make inflation purely domestic issue is the cornerstone of economics. No good economist today believes that unemployment and deflation should be preferred for currency devaluation thanks to Friedman.
Friedman spend his life trying to prove that there had never been in history a monetary supply growth without being followed by inflation. What he didn't try to prove was that monetary supply growth always is followed by inflation.
But I think 10 years ago there were definitely mainstream people who at least claimed to believe the "inflation is always a monetary phenomenon". Still, it sounds like you are more up to date on this than I am so I appreciate the clarification.
This is correct even today. Among politicians and pundits there is completely different economic discussion and it's really confusing.
You know, if you would give top 1000 dry academics in any field a way to flag news media or opinion pieces in their specialty with visible [extraordinary or surprising claim] -flag if they do it with 4/5 majority it would be really helpful public service (startup someone?)
tl;dr Of course it can.
[0]: CPI https://www.bls.gov/opub/hom/pdf/homch17.pdf
[1]: PPI https://www.bls.gov/ppi/ppidr201804.pdf
Inflation is a vague concept. When people try to measure inflation, they're using filters and aggregates. Criticism that those filters and aggregations are distorting the view (for political purposes) is valid and a frequent motivation to publish academic papers.
Cost of living is a variety of factors, moreover, inflation tends to not include housing and fuel. Though there are many measure of inflation ...
Fuel is not included sometimes because of it's inherent volatility, it jams the numbers up and does not give a clear picture.
Housing - I think they might include rent but not mortgages as the later reflects consumption over times other than for when inflation is calculated.
[A national estimate of] housing generally is included.
I don’t agree with the root poster of this thread, though, because real wages are generally indexed to national consumption, whereas housing specifically (and to a lesser extent, food and services) are local markets, so you can have real wage growth but if you live in a high COL area, you really do have to look at real income and deflate (slightly! People often do COL deflation on gross salary, which is silly) for COL.
But all of them or missing some? In Canada there are various inflation calculators: CPI, CPIX, SHS, MEANSTD, CPIW, price-level targeting, all including or excluding various things like gasoline, transit, mortgages, some taxes, tobacco.
>all including or excluding various things like gasoline, transit, mortgages, some taxes, tobacco.
You can critique inflation measures, but there is good critique and bad critique.
Including some items can introduce unnecessary noise or make the measurement less accurate over long term. Some prices can be safely left out from the price basket because their prices are know to get into the index indirectly.
In US CPI used to overestimate inflation mostly because slow adjustments. CPI is modified to correct to this. Most developed nations use good modern CPI measures that take into account things like product substitution etc.
Wow, if you're right about the meaning of "real pay" (and I do think you're correct[1]), then The Economist is being pretty dishonest in their reporting by not explaining that important point. It makes a huge difference in how anyone interprets the story. How many people reading The Economist are actually economists? I for one assumed that The Economist was saying that people on average are massively worse off since 2000 -- which is the obvious conclusion if (nominal) pay increased 1% a year but inflation was 2-3% a year.
[1] https://en.wikipedia.org/wiki/Real_versus_nominal_value_(eco...
EDIT: I'd like to mention that "real" meaning "adjusted for inflation" is easily misinterpreted when used in normal English sentences. The article says, "In most rich countries, real pay has grown by at most 1% per year." That sounds a lot like, "In most rich countries, your actual paycheck has grown by at most 1% per year." Or, "In most rich countries, the pay you get after taxes has grown by at most 1% per year." Or other senses in which "real" has a normal English meaning rather than "adjusted for inflation".
Defining real vs nominal in this article would be like defining "variable" and "recursion" in an article about deep learning implementation at Google. Completely annoying and useless to those who subscribe.
Rather than doing what the Eonomist tends to do and assume an educated readership, they should have defined any term not daily used by someone possessed of an education past that of the 8th grade or so. This would ensure that every single reader, every single time, without any exceptions, would attain full, proper, and correct understanding. No saying "real wages" - define it as nominal wage growth less inflation. And don't just say "nominal" or "inflation", define them. Immediately and in context, so that anyone can understand.
Alternately, readers could put forth the minimal amount of effort required to Google any jargon (and "real pay" is pretty clearly jargon) they did not immediately know the definition of. I understand if some readers consider this work they should not be expected to do or otherwise an undue burden to which they refuse to rise.
The same applies to food. If you can afford eating in a restuarant for $20+ twice a day, you probably haven't seen any significant prise rises. But if you have trouble not spending more than $100 to feed four mouths a week, you probably a big decline in quality of your food since 2000. E.g. this requirement is hard to come by when you try to include fresh fruits.
Thus I'd say it's still an important point to consider.
So their example was that if restaurant food hasn't increased in price by much, but basic groceries have then the 'inflation' seen by different groups may be very different.
Another example may be that if average housing costs increase just a bit, but the lowest rents have increased the most then cost of living changes could be significantly different between mid and low income families.
I'm not saying either of those examples accurately reflect how things are changing in the US (as I don't have the data to hand), but they are realistic scenarios.
My whole point is that adding things and then dividing by the sum of things is not a way to represent the reality that people face. You need to argue against that if you want to make a counter point. Just repeating what the person said that I responded to (after reading what he wrote) doesn't provide anything to the discussion.
When home-values inflate, it's a wealth transfer from first-time buyers to retirees that are downsizing, selling a large home for a smaller one, putting the profits into stocks and bonds. To your point, that's not a net loss, just a wealth transfer. Note, it's not a net gain either. Building homes is a gain (usually), inflating asset prices are not.
As for the rising rent, that's part of inflation ... Anyway, you seem distressed that things are "really tough to represent in the statistics" but I assure you many of your concerns have been considered.
Doesn't technological progress complicate this question even further?
When I think of more expensive products, I think of computers, smartphones, etc. Yes, the new flagship products stay expensive, but that also represents new possibilities that weren't possible a decade ago (let alone a few decades ago).
But nowadays you can get a functioning computer that lets you browse the Internet, watch videos and do your emails for the price of a Raspberry Pi (and the investment of a separate keyboard, mouse, charger, SD card and TV - but those can be gotten for cheap as well).
Similarly, a lot of things that used to be expensive are now cheap.
So basically: technological progress is shifting the "quality" spectrum itself, in some cases very quickly, in some cases barely.
(I'm not saying you're wrong, I'm just curious how economists deal with questions like this)
Sometimes economists like to create some aggregate measure of increasing consumer choice by counting the number of SKUs available in a store. Big box stores pushing out Mom & Pop made that awkward. Now Amazon makes it tougher still.
Back in grad school, I was not aware of any consensus on the topic. I haven't kept up with it since.
One technique is to focus your research on products that are largely stable in quality. For example, wine glasses. Not plastic ones, but glass or crystal. They've got a fairly large distribution in "quality" or at least in price and yet had a fairly stable range of quality since the 1950s.
In other terms, if you are spending on health care of education you are in a really bad place - prices for those services have risen at about 8x the inflation rate over the last 40 years. IF you are purchasing or building a house you will face prices 3x inflation price. However, if you are mostly buying electronics and software, the prices have actually fallen by about 50-80% over the same period.
Hello Marx.
> If firms have the upper hand, because a new job is harder to find than a new worker, employers capture most of the surplus, creating a gap between the value created by workers and what they are paid.
US has full employment, so this explanation does not take into account that finding a job is super easy. Im skeptical.
The plea for unions is so unique coming from The economist.
> The plea for unions is so unique coming from The economist.
The Economist and the FT often say things which are considered "radical" by popular economic discourse standards, because their readers are interested in what's actually happening while the popular discourse is extremely dogmatic and driven by the right.
> The Economist and the FT often say things which are considered "radical" by popular economic discourse standards, because their readers are interested in what's actually happening while the popular discourse is extremely dogmatic and driven by the right.
I do not mind, but the economist is an economically liberal news source and Unions(as they are known by the public) are enemies of liberal economics.
I hope Unions don't make a comeback.
Eh? Increasing wages is exactly what we're talking about here.
For any given firm, after accounting for external costs there is a quantity of money left over which may be re-invested, given out as wages in some distribution (how much to the CEO?), or returned to investors. Some re-investment may also be in the employees in the form of training or retention perks. Exactly how this is distributed is up for questioning.
> Unions(as they are known by the public) are enemies of liberal economics
I think the point of the Economist is that this is a political view, and that it needn't be this way: Germany is always cited as a country where it works differently. Having adversarial relations with the union is a choice. A leader can also choose to consult them on mutually beneficial changes in working practice.
For sure, I believe people should unionize if they want to, but should be given no special benefits for doing so.
Argentina has constitutional level protections for unions, they cant be jailed, etc. They own soccer clubs, and threaten politicians families and cant be incarcerated, while also having highest and increasing poverty and lower employment.
Why is it fair for the company to be given special benefits for incorporating, but not for labor?
They are not comparable sets of protections. Plus, unions can also incorporate, but the legal protections asked by unions are not of legal organization, but of protection from other workers or coercion to employers.
Again, asking for unions to not have their protections is equivalent to saying that you don't want labor to have any protections.
How is "increasing wages" contrary to splitting the pie?
So if you care for consumers, you have to again be against the objectives of unions, that increase the cost of goods and favor restriction.
Nobody needs to care for the profits of private businesses, and that is both in positive and negative terms: trying to enhance them by artificial and opressive laws will lead to bad outcomes, and trying to punish them and take away from them will also do so .
They've slightly changed their discourse in the last couple of years (not sure if it coincides with their change of editor). My guess is that the sort of people that work at newspapers/magazines like the Economist started to realize that the "working classes" (in which I include most of the actual middle-class) need a bigger share of the economic pie, otherwise they (the working classes) will keep voting into power more and more populist leaders, and that's very bad for business.
A similar thing happened in the 1870s and especially after the Bolshevik conquest of power in 1917, the capitalists in the West realized that they need to better take care of their workers otherwise they and their families might end up in a common grave, their properties nationalized.
capitalism has become so exaggerated that it threatens stability thanks to its inequality. the economist recognizes that and is trying to do some thought leadership to course-correct.
Just wondering if the real pay growth was evenly distributed.
> In most rich countries, real pay has grown by at most 1% per year, on average, since 2000.
Later:
> Thus labour productivity rose by 75% in America from 1973 to 2016, while average pay rose by less than 50% and median pay by just over 10%.
But the article is largely an opinion piece; the statistics are not completely fleshed out.
If you cannot afford to work and live, it doesn't count as a job. And that's where things are, for most people, so the 'jobs' are lies.
During that time, something like a sixth of the population will have retired and now be collecting a pension (ie living off asset wealth). Another sixth will have come of age (roughly "millenials") and entered the workforce. The latter group also starts with an increased educational debt (in the US and UK) and faces a steep cliff of affording housing.
A lot of the jobs are "lies" - the famous zero-hour contracts, where people are technically employed but not guaranteed to be given any shifts at all during a week. There are also a lot of people who are technically self-employed but not able to earn a reasonable income. Is sitting in an Uber waiting for a job "employed"?
Meanwhile, the other economies of the world has a huge demand for the basic services and goods and thus their economies have risen dramatically.
I think we are seeing a levelling off of the world's richest economies because a lot of our growth has been from capital investments into broadening international trade and leveraging. I have actually moved my investments away from Europe for now because the interest rates are so low, the innovation is so low and the political climate is becoming more and more polarized that I just think it's too risky for now.
Meanwhile, in some places where millions of people live cholera in the main water supply is Tuesday. You can make boatloads of cash if you satisfy that market demand.
https://tradingeconomics.com/united-states/corporate-profits
And I believe, though recognise this has counter arguments, if we kept (or implemented depending on region) better tax redistribution and worker wage support the first world economies would be growing at a better rate. The trickle down policy we see in most western countries has been disproven time and time again yet the politicians still rebrand and implement it as its good for short term gains for the people funding their political careers.
You do have a point that developing economies have a advantage in they have more upside to gain and this lets countries have those 10%+ per annum growth rates. But also its worth noting, and this may be 'causation does not equal correlation' type scenario, but no country has become developed as we consider it now without having a significant improvement in financial equality.
See this graph: https://ourworldindata.org/wp-content/uploads/2013/12/Top-In...
Article here: https://ourworldindata.org/income-inequality
And while its not as simple as one variable, its going to be interesting to see what happens if we continue to allow inequality to grow.
And, some sectors are also showing growth because the middle class is becoming more narrow in the West. Budget chains like Wal Mart are going strong and luxury brands too, it's the middle class restaurants and retail stores (Game Stop is a good example of a middle class retailer) that are taking a big pounding right now. So, a lot of growth is just market shifts while the previous caterers to the middle class are leveraging to stay afloat.
Now, picking on the US, primary energy production has risen by less than 1% /edit: per annum/ since the year 2000 [1]. I suspect manufacturing growth is of a similar magnitude [2]. There was a report making the rounds a while ago saying that US infrastructure isn't in a great place. It isn't obvious how you could generate real increases without an increased real production to back it up, no matter how good your strongarm negotiating.
I don't see how the Economist came up with a position of the problem being disorganised labour. The issues in America are that whatever people are doing isn't creating real wealth. Maybe they're finally hitting resource limits, maybe there are capital allocation issues.
[1] https://www.eia.gov/totalenergy/data/annual/#summary [2] https://fred.stlouisfed.org/series/OUTMS
Btw, this thread only reminds me why I believe in Bitcoin.
Government money is only as responsible as the government behind it. After decades of American politics and corruption, I'll take BTC>USD long.
Most people don't stockpile USD; they use it for transactions...salary, rent, groceries, stock etc.
the only thing I pay in USD is my mortgage. I DCA my salary into BTC and pay for groceries with BTC.
By excluding these things, the inflation figure is smaller. This smaller figure is then used by your employer to justify your small pay rises.
E.g. "real pay has grown by 1%" when in reality it might be "real pay has fallen by 5%"
Or honestly, rent nationalization. I do not feel that private landlords for residential property are a thing that should exist. They really are nothing more than accumulating a sufficient pile of money to exclude people from a human necessity, and then using the leverage to squeeze people.
Only if those are demand-priced, not commodities. That's a problem whether UBI exists or not, and therefore needs to be addressed in conjunction, not instead. Anyone who saves any money at all would benefit from increased income.
I don't think there are many good and services typically purchased by low-income individuals that are not demand-priced.
https://news.uchicago.edu/article/2018/02/14/universal-basic...
Also, there appears to be no effect comparable to any of the overheated lower 48 coastal housing markets as well.
https://www.zillow.com/ak/home-values/
The subsidy in Alaska is per person, thus two families in identical apartments may receive different levels of subsidy. If at any point the management company observes that their tenants are receiving more subsidies (say the average family size per apartment increases) then they could choose to raise rental rates to try to capture this. But it raises the rates on all family sizes, so a 2-person family is now paying more as a % basis than a 4-person family, so it would make it more likely that someone from the 2-person family may need to work more/get a part-time job.
Obviously that's a drastic simplification, but I think it illustrates the problem with stimulating demand without trying to control supply or pricing directly.
EDIT: this idea is in the article:
More radical ideas like a universal basic income—a welfare payment made to everyone regardless of work status—or a jobs guarantee, which extends the right to a government job paying a decent wage to everyone, would shift power to workers and force firms to work harder to retain employees.
Mr H. if you're reading this, im certainly not quitting anytime soon! :)
Ive worked in aerospace as well, where tradesmen are frequently paid more than managers. hassling an engine tech here, or casually second guessing one, is unthinkable and has gotten good managers demoted or fired. I was basically on-par with a surgeon as far as my respect and authority was concerned.
Im not saying ive never been part of a strike. Most of my union jobs have been rewarding and fulfilling, with a level of transparency rarely seen in big shops. Ive had C level accountants sit down in a hanger with us to go over why we need to trim down on expenses, and make sure we understand it in plain english. To me, that speaks a lot.
As for people in the Amazon shipping trenches, all you need to do is be brave, stay motivated, and push for a union. You regional and long haul amazon truckers also have a lot more bargaining power than you realize.
Sure, jobs will remain. People will be paid to sit on trucks while they drive themselves across the country. People will be paid to sit in air conditioned offices and watch trucks as little dots as they travel across the country.
They will have to find people to do those as well. The whole industry is boring unless you are management/executive level. Truckers today will have first dibs on all those positions, also, leaving new truckers completely screwed as their relatively new high paying trucking job leaves them with nothing.
People who do unskilled or close to unskilled jobs for big companies that aren't pressured by competition still get the shaft though.
Jim will be happy to hear that.
That's what they are.
If workers in general are being underpaid, I think they are justified. But then you have other industries where they have a good grip on it and then take things a bit too far.
But once an industry is generally pretty safe and relatively fairly structured, unions begin to lack a certain sense of purpose. Union leadership is elected and "keeping us safe and fairly paid" won't get you re-elected. Promising to extract better compensation for your members (even beyond just 'safe' and 'fair') will get you votes, so that is naturally what happens.
There's just no objective way to tell a union that they have accomplished their goals and aren't really needed until/unless there is a threat to those goals, but nor is there a way to tell a company that they are operating unfairly and their workers need a union...
Union membership is the lowest ever, and so is wage growth.
Too much kool-aid, I think.
It's always interesting to see free marketeers sing the praises of monopsonist buyers of labor and (corporate) sellers of products, but suddenly change their tune when sellers of labor gain market power.