What if we've entered an era where this is the new normal? Where the kind of growth we've seen in the past isn't something we can expect anymore?
I'm asking because I'm genuinely curious and I have no idea whether this is a reasonable hypothesis or not. I'm hoping others here can point me toward what I should be reading to learn more.
>What if we've entered an era where this is the new normal? Where the kind of growth we've seen in the past isn't something we can expect anymore?
You're not allowed to ever think that.
Growth will keep on forever, boosted by magic yet uninvented technology if it ever stalls, bypassing all physical resource limits, and at an exponential rate preferably. /s
If you really want to learn more, though, avoid all mainstream economists and pundits paid to promote state and business interests.
But it really said the same thing that many other economics books said. If you read Thomas Piketty, you know that inequality basically comes down to the end of growth. He starts with the mostly-factual premises that growth will remain stalled while capital returns will continue at their historical rates. I'm still unsure about the latter premise myself, but the former is undeniable.
But we also need to distinguish economic growth from quality of life improvements. Quality of life, necessarily, has to come from productivity improvements (not in the dictionary sense of those words, but in the macro economic sense). The US GDP could be partially buoyant due to immigration, and partially due to demographics.
To some of the points of the article - companies would invest more if there was an expectation that new technologies were fundamentally transformative. I don't get that sense.
Without speaking for the validity of it, there’s a lot of material in the book, which provides lots to “shoot at”. I’d expect anything which presents an ideological challenge like this book to draw a high volume of criticism from multiple angles.
The only way to sort it out (if you happen to care) is to actually wade through the various arguments.
I didn't really recommend it, and the reason I borrowed from it in my comment was for an economic point which was not its main focus.
To borrow from your own link:
> Lawrence Summers criticizes Piketty for underestimating the diminishing returns on capital, which he believes will offset the return on capital and hence set an upper limit to inequality.
We are moving further away from the original point, but this is very close to what I said. Sometimes a complex topic doesn't need to be complex. What Pikkety argued was simple math - almost high school level math. He still spent decades doing the research groundwork (very very complex), but the take-away for the rest of us is very simple.
If we return to a low-growth world, then it's very very hard for me to accept that returns on capital will remain high. From where will these returns come from?
Pikkety only has 1 real reference point for the high-inequality world, and that was the 1800s.
One very very major unanswered question for Pikkety is this - if capital returns hold strong indefinitely, where will the negative feedback come from?
I could never tell if the book was literally apocalyptic. If you mathematically describe something which multiplies infinitely, then either you're making the point that some negative feedback is missing, or you're predicting collapse for any real world system where that model applies (also a negative feedback, just a very jerky one).
I think he thought that in the 1800s, the rich found a way to balance their expenses with their income. This is silly. Perhaps there was no means of re-investment due to the illiquidity of land. This is also silly. Anyway, I can still accept that some negative feedback from people's behavior existed in the 1800s, but even if I do, I don't accept that such a feedback would exist today. Rich people today have no natural limit to how rich they want to be, and no neo-feudalistic system that prevents further expansion. This all argues for the apocalyptic interpretation.
My take - I don't think we can be at low growth for long. If we are, things will start to change Perhaps climate change, perhaps war. We're not going to just hang out in that state. Maybe we can then stay at low-growth, but low-growth with capital destruction. However, the more disruptive historical events tend to bring back growth. I think potential for technological productivity growth is still very very possible, but with a restructured way of life. Right now, the incentives just don't work. That's all.
Actually, there's still massive growth in countries like India, China, but also Ethiopia. As other countries start improving their economy, the economic boom of post WW2 America seems to finally wear off while at the same time the computer revolution is making short work of old-fashioned manual labor.
That's great for humanity in general, as more people can have better lives, but it comes at the cost of luxuries to the already rich countries.
I expect the economy in the west to decline in the next 20 or 30 years as more developing countries are getting their economies in line. With China investing massively in the African continent and with the enormous natural wealth Africa possesses, we can probably expect Africa to turn into a major economic power somewhere in the next 50-100 years.
It's reasonable (at least in the US and most other developed countries).
Economic output is the product of the number of workers and their productivity. The US population is aging (so Baby Boomers are retiring) and its fertility is low relative to previous generations (though higher than other developed countries). This means there US won't get the GDP tailwind from population growth that it used to.
The other place to look is productivity. This is, in large part, a function of technology innovation (and adoption) though there are over ways to make the workforce more efficient as well. Productivity growth has been below historical norms since 2008 and nobody really knows why. Whether this is a anomaly or a trend is an open question, and makes up most the game of predicting long-term economic growth.
Personally, I suspect overall technological progress follows an S-curve and will slow at some point. I can't claim to know where we are on the S-curve, but I'm skeptical that Big Data and AI will lead to the same productivity gains as computers, electricity, etc (I'm an ML engineer fwiw). I wouldn't be surprised if US growth stays is low relative to historical standards for the foreseeable future.
It seems to me that the primary way that average people can get ahead (at least in America, I'm less familiar with other countries) is by investing; which requires growth. If that went away, I'd be afraid that new generations or people who aren't from rich families would be stuck.
I wonder if there are any thinkers that have developed a plan for prosperity without growth that doesn't rely on utopianism?
It's not an unreasonable hypothesis, but it's certainly not new, either. The same hypothesis was made five, ten, twenty, and more years ago. And it was wrong every time.
That doesn't mean it's wrong now, but it does invite further retrospection why people thought it might be the case then, why they ended up being wrong, and what potential blind spots might lead to this perspective today.
We're leaving capitalism to enter into a new type of society. Rentierism. Everything is already owned. Even things you currently own, or don't even exist, are being taken back from you so you can be charged rent for it. It's like feudalism, but you can have as many feudal lords as you want to live under--as a service.
Isn't this just the same as sales forecasts inside a company or software development project schedule estimates? Nobody gets promoted for saying "it's very hard to predict how long it will take to develop software, but it'll probably take a long time, much longer than you'd like". Similarly nobody gets a promotion from forecasting that we're doomed. So there's a built in optimism bias.
The best forecasts are always provided by market indicators. And these indicators seem to be agreeing that we are in stagnation territory, though we might still manage to achieve a nice "soft landing" that doesn't lead to slipping into an outright recession.
> Beside a lack of competition, the investment slump stems from what Summers calls the de-massification of the economy. Developers aren’t building as many malls and stores, because goods now go straight from warehouses to homes. Offices don’t need as much storage space. Cellphones have replaced not just desktop computers but also cameras, stereos, books and more. Many young people have decided they’re happy living in small apartments, without cars.
My reaction to that is LOL. Those changes represent forward progress, we can have more and better stuff easier than before, and/or our preferences have changed. If that somehow is “the cause” of our “economic suffering,” then maybe it’s time to change the way we measure.
Some of those are good for moving towards an ecologically sustainable economy... but consumer "preferences" changing due to stagnating wages in the face of rising costs of living is not a good thing. Labor liquidity is vital for a fast adaptive economy.
The metrics show economic suffering because that's the reality, this complex dynamic system is still adapting to the internet revolution and many are being left behind thanks to the anti-competitive effects of QE.
Measurement is, of course, a key issue, but it's less clear than you think that these changes represent forward progress.
Device convergence is pretty handy, and the shift towards spacial minimalism suits me nicely.
Is having less time in shared physical space, fewer "third places" really good? Do virtual replacements -- and their tendency toward sorted-ness -- really replace them effectively?
But most of all, a narrower demand profile leads to people who are left out of the labor market (and an even larger number of people who may be included but are poorly rewarded).
Make sure any alternatie measure you suggest keeps an eye on these issues.
I think you (and me and our extended social bubble) have less time in a shared physical space. People living in the village where I have a cottage all spend more time together outside thanks to technological progress. Back when I was young (and there was no mobile phone signal - just 10 years ago!), people from other villages didn't even interact with them [people from my village], today it is normal to just hit each other up on Messenger and go hang out.
Those changes only represent progress if they represent preference choice. However I very much doubt that most people are preferring to have living standards lower than their parents.
In order to evaluate preferences you need to observer Choice.
Consolidation, optimization, and related vertical integration in manufacturing leaves people out of the value chain. Many roles will eventually evaporate without competition and/or new advancements. In general, growth follows an S-curve with market saturation and consolidation eventually inhibiting growth. I beleive it will get harder and harder to afford "more and better stuff" over the long term with the way our economic system is set up. I encourage people to take a look at the concept of binary economics which was fathered by Louise Kelso; his ideas gave rise to employee stock ownership programs. My ultimate point is: Labor will eventually evaporate and we, as individuals, should look towards ownership and invest our wealth in companies who will ultimately own production and services.
I think the weird part is that as large successful companies are turning to vertical integration, at least many western societies are going the other way.
The author, in my reading, isn’t claiming these are bad changes. They are just saying that the changes require adjustments of how we manage the economy.
It might be good for you and me say, because we can order stuff easily and cheaply ship it to us, but the economy is hurt because a whole lot of local jobs were eliminated without many replacement jobs - there's an hourly amazon delivery worker plus a truck driver to the center maybe. Before there were retail workers, managers, mall security and janitors, trucks taking stuff to the mall.
We don't have as good a jobs for a lot of those people.
Fewer jobs is also progress. That's what the development of civilization and technology is all about.
Anyway, there is still plenty of work for people to do. (There's no upper limit on the number of mathematicians society can use, for example.) It just isn't work that society is yet willing to pay a living wage for, and perhaps that's a problem.
I agree with you, but mathematicians aren't a good example when replying to a concern about job replacement for truck drivers. Training middle aged truck drivers to be mathematicians would be extremely difficult, expensive, and their math career would last 10-20years at best.
Even if we do this right, we will face a lag where we have to deal with millions of middle-aged workers losing their jobs and not being able to participate in the very-high-level knowledge economy (eg. Mathematicans, Physicists, Philosphers)
>Training middle aged truck drivers to be mathematicians would be extremely difficult, expensive, and their math career would last 10-20years at best.
I don't think these kinds of inefficiencies are as big of a problem when we're already talking about how their current jobs are so efficient we don't need human input anymore. In effect, they are so efficient at being truck drivers that they don't even need to be present, so we should pay them to do that job as well as they are, with the expectation that they put the extra time/effort into things we otherwise wouldn't pay for.
Mathematics is just one example. Pretty much any volunteer work would do, or any creative/intellectual pursuit.
Sorry but that's just naive from an american perspective. In the US if you get seriously hurt without health insurance you might just die. Politically it's not conceivable that we'll have UBI or pay people for not working. It's at the least a little controversial to pay UBI in most western countries. I see UBI as different than basic adequate social services so people don't live on the street or can get health insurance without it being tied to their job - the us is ridiculous in that way of course.
Every year the GDP grows while inequality gets worse. This is going to come home when most Americans look at the topline stats (GDP and unemployment) getting better while their own lives get worse. Are we optimizing the wrong thing?
Their lives aren't getting worse. Income grew last year.
A couple of things need serious addressing: cost of housing (almost entirely due to protectionist zoning laws), cost of education (starting to think boot camps and trade schools aren't such a bad idea after all) and cost of healthcare.
Income growth doesn’t mean equity. It is still getting harder for poor people and easier for rich people.
Housing isn’t just, or even primarily, protectionist zoning laws. Many places really are space constrained, and even going for density doesn’t always reduce costs (many of the densest cities are the most expensive).
As for education and healthcare, these are problems that other developed countries have solved and so are uniquely American.
For sake of argument: Might NIMBY sentiment actually be due to insufficient regulations? I'd be a lot more comfortable with someone building near me if I was confident that they weren't going to build some soulless concrete eyesore.
Maybe this is just perception, but it seems like even if income is going up, quality is going down. Most people cannot own a home with a decent commute in a major city anymore and most of the things we own are mass produced, throw away crap.
It varies. There is certainly a lot of single-use throwaway stuff. A lot of things that used to be made out of wood or metal are now plastic, and are so inexpensive that it is cheaper to throw away and buy new than to repair stuff. Most furniture now is composites, because they are way cheaper than real wood. You aren't going to hand any of this stuff down to your grandkids.
Other things are much better, though. Automobiles and Electronics are much better than they were 20 years ago.
And fees/fines. The poor are being hammered with high fees/fines. Personally I think it's time to tie all fees (including governmental fees(like Patent fees),and fines to income.
Yes, it's because of central bank policy since '08, which are equivalent to price controls of assets (bonds and mortgages aren't allowed to be too cheap). This directly benefits asset-holders in general and punishes everyone else.
In the past, central banks in this sort of situation might have actually printed money instead. Actual printing of money is good for inequality—it distributes liquidity throughout the economy, encourages inflation, which effectively transfers wealth from current nominal asset-holders to debtors, and depending on how the money gets printed (e.g. use it to pay for a progressive tax credit), it can directly reverse inequality.
Why didn't central banks print money? A main reason is because the way printing money works is it has to happen through well-capitalized banks, which didn't exist in the post-crisis era, and it was hugely politically unpopular to bail them out.
Also, most people don't understand the Rube Goldberg machine of central bank policy and would've opposed money printing or inflation, even if it would've been the key to a real, broad-based economic recovery.
Lol. Venezuela made its own bed, its currency lost 99.99% of its value without any interference from foreign actors. Chavez's open friendship with Castro and harsh criticism of multiple US administrations was his own choice and set up the disastrous Maduro reign. However you interpret the actions in the past few months, it is in response to two decades of failed policies, resulting in unprecedented chaos, unemployment, scarcity and poverty.
I think your response just proves my point, which is that people have a strong knee-jerk reaction to any level of inflation.
There's quite a difference between a 3-5% level of inflation, which helps smooth shocks in the economy and forces the rich to participate in the real economy to keep the value of their money, vs. hyperinflation, which nobody is advocating for.
The difference is between inflation as a by-product of a powerful, growing, economic engine with healthy wage growth (unfortunate but acceptable) and deliberately generating inflation, via money-printing, as the means to stimulate a stagnant economy (pure foolishness).
This is in the context of the Great Recession which saw the largest sudden liquidity withdrawal from our monetary system in recent history. The point of printing money (which I'd like to emphasize did not happen, easily verified by the lack of broad price inflation in the last decade) is to get back closer to your baseline, not to goose an economy already at full employment (that just gets you the 1970s).
> Would you, or 'smallnamespace,' like to provide counter-examples where high inflation and printing money led to prosperity?
Define high inflation. Generally people like you think anything over 2% wage and price inflation[1] will result in utter doom. However the post war period up to the neoliberal revolution had inflation around 5% with peaks over 10%. And yet total growth and prosperity was higher then today. Even the maligned 1970's had significantly faster growth and shared prosperity than post 2000.
[1] I say wage and price inflation because that's all people like you care about. Vs assets inflation which is running at 5-10% for the last ten years. Which is something people who don't believe in cargo cult economics do care about.
You do understand that in your post-ww2 example, inflation was the result of a booming economy, not the cause of it? It's like noticing that most Lamborghini owners are wealthy, and then absurdly buying a Lamborghini expecting to somehow become rich.
The rest of your post, from the "shared prosperity" of the 1970s, to the idea that an infusion of cash would slow asset inflation, to using the pejorative "people like you" (twice) is both insulting and utterly nonsensical.
Venezuela’s economy was cracking even before their “oil crisis” (aka overspending in a non diversify). Even the countries in South America didn’t want to do business with them or be forced to take massive price cuts in order to serve their market under ridiculous top down price controls.
Money printing is a symptom of imposing banking controls while trying to keep appearances that the ruinous financial situation is not the fault of the current regime. International banking restrictions are the core reason Venezuela is in the position it is in.
Essentially all of the money created by central banks since 2008 has gone into the hands of speculators to drive up the price of existing assets (paper and real estate). Except for China which built out couple of trillion worth of infrastructure instead.
The inequality in the US is growing but not as fast as you might think from listening to the media: [1]. The real median household income has grown faster since 2010: [2] (the mean household size went from 2.59 to 2.53 during this time [3]) and I think that matters more to an average person than the GDP (as does unemployment like you said).
Just imagine for a moment how different this article would be if the US had a democrat administration. I dare say it would read with a near utopian glow.
This makes so little sense in relation to the actual content of the article and even the very clear title, I almost wonder if Russian troll farms now trying to infect Hacker News.
> Last week, while attending an economics conference in Washington, I discovered one particularly clear sign of the economy’s struggles — namely, that it keeps performing worse than the experts have predicted.
Sounds like the "experts" aren't that good at their jobs and so are blaming "the economy" for making them look like fools.
What do you call an expert poker player who loses every hand? A loser. Money talks, bullshit walks.
Economics is a hack field, no matter how many Krugmans pretend they're gods.
"Discussing growth without concern for fragility: like studying construction without thinking of collapses. Think like engineer not economist." -- Taleb
Warning this is a very difficult subject. Please consider responding before voting me down.
Economics is plagued by three major problems.
- History
- Momentum
- Incentives
I do not believe it is reasonable to believe that economics is a tool of elite bankers even though they are clearly the most well supported humanity subject in colleges. What I do think what happened was after ww2 we solidified on a ya reserve currency (vs bancor) and an economic model which assumes a loanable funds model. Because so much of central banking is about stability and predictability, the fed has mostly acted along the same framework since the 40s. However, we are starting to see a change in the policy of the english and german central banks. This is probably due to the super toxic italian Euro -> German Euro arb and brexit. Europe is going to deploy australian style relief in the upcoming european economic disaster
Why is the income of the 0.01% rising so drastically? Because it is based on assets like stock and real estate, which are inflating at a rate completely detached from the actual economy.
Why are asset prices inflating? Because of a policy of easy and cheap money, worldwide.
Why is there a policy of easy and cheap money? To "boost" the zombie economies.
Why boost the zombie economies? To maintain zombie jobs and prevent unemployment.
Why not just take a shortcut and hand out cash directly to the people? Because then all prices, including consumer goods, will inflate.
The "solution" isn't tax cuts, it's a massive re-pricing and it'll happen on its own. Something like what happened to Japan in the nineties.
It's missing the fact that the 0.01% are so ridiculously wealthy already because they control fabulously profitable enterprises, and they keep the produced value of those enterprises with insufficient distribution to everyone else.
Absent cheap-money, they'd still be in a inequitable position that wouldn't correct itself on its own.
> It's missing the fact that the 0.01% are so ridiculously wealthy already because they control fabulously profitable enterprises, and they keep the produced value of those enterprises with insufficient distribution to everyone else.
What do you consider "fabulously profitable"? Take a peek here for a reality check:
A "record high" average profit margin only equals to around 10% and at least theoretically that needs to balance out the bad years.
> Absent cheap-money, they'd still be in a inequitable position that wouldn't correct itself on its own.
Of course inequity will remain, even if everyone lost 90% of their paper wealth, the ratios remain the same. However, you're implying there is a problem with inequity, I submit to you that you need inequity.
If all the money were to be expropriated and spread out to all the people, there is nothing left for investment. Individually, the money just doesn't amount to much and it would likely be consumed right away, or used to pay off debt. Over time, that money would accumulate at the top again, but in the meantime, you would have an economic disaster.
Of course you could have the government do all the investment, but that just means you shifted all that inequity from private individuals (who at least in theory will use their money somewhat wisely) to a bureaucracy which has no incentive to be efficient.
The real problem is that we have a monetary policy that protects poor investment. There is no need for private individuals to manage their wealth properly, to make informed investments, etc. All they need to do is put their money into diversified stocks and real estate, because they can rely on the governments bailing them out if things go south.
"There are two main culprits. The first is a savings glut."
Aaand, this is where they always go off the rails. Still selling that old trope, eh? Looks like we found another "expert" about to "get the economy wrong."
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[ 4.8 ms ] story [ 158 ms ] threadI'm asking because I'm genuinely curious and I have no idea whether this is a reasonable hypothesis or not. I'm hoping others here can point me toward what I should be reading to learn more.
You're not allowed to ever think that.
Growth will keep on forever, boosted by magic yet uninvented technology if it ever stalls, bypassing all physical resource limits, and at an exponential rate preferably. /s
If you really want to learn more, though, avoid all mainstream economists and pundits paid to promote state and business interests.
https://www.amazon.com/Rise-Fall-American-Growth-Princeton/d...
But it really said the same thing that many other economics books said. If you read Thomas Piketty, you know that inequality basically comes down to the end of growth. He starts with the mostly-factual premises that growth will remain stalled while capital returns will continue at their historical rates. I'm still unsure about the latter premise myself, but the former is undeniable.
But we also need to distinguish economic growth from quality of life improvements. Quality of life, necessarily, has to come from productivity improvements (not in the dictionary sense of those words, but in the macro economic sense). The US GDP could be partially buoyant due to immigration, and partially due to demographics.
To some of the points of the article - companies would invest more if there was an expectation that new technologies were fundamentally transformative. I don't get that sense.
The only way to sort it out (if you happen to care) is to actually wade through the various arguments.
To borrow from your own link:
> Lawrence Summers criticizes Piketty for underestimating the diminishing returns on capital, which he believes will offset the return on capital and hence set an upper limit to inequality.
We are moving further away from the original point, but this is very close to what I said. Sometimes a complex topic doesn't need to be complex. What Pikkety argued was simple math - almost high school level math. He still spent decades doing the research groundwork (very very complex), but the take-away for the rest of us is very simple.
If we return to a low-growth world, then it's very very hard for me to accept that returns on capital will remain high. From where will these returns come from?
Pikkety only has 1 real reference point for the high-inequality world, and that was the 1800s.
One very very major unanswered question for Pikkety is this - if capital returns hold strong indefinitely, where will the negative feedback come from?
I could never tell if the book was literally apocalyptic. If you mathematically describe something which multiplies infinitely, then either you're making the point that some negative feedback is missing, or you're predicting collapse for any real world system where that model applies (also a negative feedback, just a very jerky one).
I think he thought that in the 1800s, the rich found a way to balance their expenses with their income. This is silly. Perhaps there was no means of re-investment due to the illiquidity of land. This is also silly. Anyway, I can still accept that some negative feedback from people's behavior existed in the 1800s, but even if I do, I don't accept that such a feedback would exist today. Rich people today have no natural limit to how rich they want to be, and no neo-feudalistic system that prevents further expansion. This all argues for the apocalyptic interpretation.
My take - I don't think we can be at low growth for long. If we are, things will start to change Perhaps climate change, perhaps war. We're not going to just hang out in that state. Maybe we can then stay at low-growth, but low-growth with capital destruction. However, the more disruptive historical events tend to bring back growth. I think potential for technological productivity growth is still very very possible, but with a restructured way of life. Right now, the incentives just don't work. That's all.
That's great for humanity in general, as more people can have better lives, but it comes at the cost of luxuries to the already rich countries.
I expect the economy in the west to decline in the next 20 or 30 years as more developing countries are getting their economies in line. With China investing massively in the African continent and with the enormous natural wealth Africa possesses, we can probably expect Africa to turn into a major economic power somewhere in the next 50-100 years.
Economic output is the product of the number of workers and their productivity. The US population is aging (so Baby Boomers are retiring) and its fertility is low relative to previous generations (though higher than other developed countries). This means there US won't get the GDP tailwind from population growth that it used to.
The other place to look is productivity. This is, in large part, a function of technology innovation (and adoption) though there are over ways to make the workforce more efficient as well. Productivity growth has been below historical norms since 2008 and nobody really knows why. Whether this is a anomaly or a trend is an open question, and makes up most the game of predicting long-term economic growth.
Personally, I suspect overall technological progress follows an S-curve and will slow at some point. I can't claim to know where we are on the S-curve, but I'm skeptical that Big Data and AI will lead to the same productivity gains as computers, electricity, etc (I'm an ML engineer fwiw). I wouldn't be surprised if US growth stays is low relative to historical standards for the foreseeable future.
I wonder if there are any thinkers that have developed a plan for prosperity without growth that doesn't rely on utopianism?
That doesn't mean it's wrong now, but it does invite further retrospection why people thought it might be the case then, why they ended up being wrong, and what potential blind spots might lead to this perspective today.
> Beside a lack of competition, the investment slump stems from what Summers calls the de-massification of the economy. Developers aren’t building as many malls and stores, because goods now go straight from warehouses to homes. Offices don’t need as much storage space. Cellphones have replaced not just desktop computers but also cameras, stereos, books and more. Many young people have decided they’re happy living in small apartments, without cars.
My reaction to that is LOL. Those changes represent forward progress, we can have more and better stuff easier than before, and/or our preferences have changed. If that somehow is “the cause” of our “economic suffering,” then maybe it’s time to change the way we measure.
The metrics show economic suffering because that's the reality, this complex dynamic system is still adapting to the internet revolution and many are being left behind thanks to the anti-competitive effects of QE.
Device convergence is pretty handy, and the shift towards spacial minimalism suits me nicely.
Is having less time in shared physical space, fewer "third places" really good? Do virtual replacements -- and their tendency toward sorted-ness -- really replace them effectively?
But most of all, a narrower demand profile leads to people who are left out of the labor market (and an even larger number of people who may be included but are poorly rewarded).
Make sure any alternatie measure you suggest keeps an eye on these issues.
It hasn't for me. Rent has gone in the opposite direction as I've downsized.
We haven't optimized low-cost, small, quality homes despite all of technological progress and I'm pretty sure it's intentional.
In order to evaluate preferences you need to observer Choice.
We don't have as good a jobs for a lot of those people.
Anyway, there is still plenty of work for people to do. (There's no upper limit on the number of mathematicians society can use, for example.) It just isn't work that society is yet willing to pay a living wage for, and perhaps that's a problem.
Even if we do this right, we will face a lag where we have to deal with millions of middle-aged workers losing their jobs and not being able to participate in the very-high-level knowledge economy (eg. Mathematicans, Physicists, Philosphers)
I don't think these kinds of inefficiencies are as big of a problem when we're already talking about how their current jobs are so efficient we don't need human input anymore. In effect, they are so efficient at being truck drivers that they don't even need to be present, so we should pay them to do that job as well as they are, with the expectation that they put the extra time/effort into things we otherwise wouldn't pay for.
Mathematics is just one example. Pretty much any volunteer work would do, or any creative/intellectual pursuit.
A couple of things need serious addressing: cost of housing (almost entirely due to protectionist zoning laws), cost of education (starting to think boot camps and trade schools aren't such a bad idea after all) and cost of healthcare.
I think there's solutions for those three.
Housing isn’t just, or even primarily, protectionist zoning laws. Many places really are space constrained, and even going for density doesn’t always reduce costs (many of the densest cities are the most expensive).
As for education and healthcare, these are problems that other developed countries have solved and so are uniquely American.
I don't think the causation runs from dense to expensive. It's desirability that is causing both density and expensiveness.
What do you think has a larger influence on housing prices than protectionist zoning and other regulations that severly restrict supply?
World Bank shows 1980=34.6 and 2016=41.5 for United States.
Other things are much better, though. Automobiles and Electronics are much better than they were 20 years ago.
(I still don't know if I'm still Shadowbanned?)
In the past, central banks in this sort of situation might have actually printed money instead. Actual printing of money is good for inequality—it distributes liquidity throughout the economy, encourages inflation, which effectively transfers wealth from current nominal asset-holders to debtors, and depending on how the money gets printed (e.g. use it to pay for a progressive tax credit), it can directly reverse inequality.
Why didn't central banks print money? A main reason is because the way printing money works is it has to happen through well-capitalized banks, which didn't exist in the post-crisis era, and it was hugely politically unpopular to bail them out.
Also, most people don't understand the Rube Goldberg machine of central bank policy and would've opposed money printing or inflation, even if it would've been the key to a real, broad-based economic recovery.
and you sir, most certainly don't understand economics if you believe money printing and inflation are paths to prosperity. go check out venezuela
>> By November 2015, a multi university study found that about 73% of households and 76% of Venezuelans were living in poverty.[213] https://en.wikipedia.org/wiki/Economic_policy_of_the_Nicol%C...
Would you, or 'smallnamespace,' like to provide counter-examples where high inflation and printing money led to prosperity?
There's quite a difference between a 3-5% level of inflation, which helps smooth shocks in the economy and forces the rich to participate in the real economy to keep the value of their money, vs. hyperinflation, which nobody is advocating for.
The difference is between inflation as a by-product of a powerful, growing, economic engine with healthy wage growth (unfortunate but acceptable) and deliberately generating inflation, via money-printing, as the means to stimulate a stagnant economy (pure foolishness).
Define high inflation. Generally people like you think anything over 2% wage and price inflation[1] will result in utter doom. However the post war period up to the neoliberal revolution had inflation around 5% with peaks over 10%. And yet total growth and prosperity was higher then today. Even the maligned 1970's had significantly faster growth and shared prosperity than post 2000.
[1] I say wage and price inflation because that's all people like you care about. Vs assets inflation which is running at 5-10% for the last ten years. Which is something people who don't believe in cargo cult economics do care about.
The rest of your post, from the "shared prosperity" of the 1970s, to the idea that an infusion of cash would slow asset inflation, to using the pejorative "people like you" (twice) is both insulting and utterly nonsensical.
Venezuela created their own mess.
[1] https://fred.stlouisfed.org/series/SIPOVGINIUSA
[2] https://fred.stlouisfed.org/series/MEHOINUSA672N
[3] https://www2.census.gov/programs-surveys/demo/tables/familie...
If you review the site guidelines, you'll see how your comment breaks them.
https://news.ycombinator.com/newsguidelines.html
The author wrote a similar piece during Obama's tenure with the same thesis that economic experts are routinely underestimating economic weakness.
Sounds like the "experts" aren't that good at their jobs and so are blaming "the economy" for making them look like fools.
What do you call an expert poker player who loses every hand? A loser. Money talks, bullshit walks.
Economics is a hack field, no matter how many Krugmans pretend they're gods.
"Discussing growth without concern for fragility: like studying construction without thinking of collapses. Think like engineer not economist." -- Taleb
Economics is plagued by three major problems.
- History - Momentum - Incentives
I do not believe it is reasonable to believe that economics is a tool of elite bankers even though they are clearly the most well supported humanity subject in colleges. What I do think what happened was after ww2 we solidified on a ya reserve currency (vs bancor) and an economic model which assumes a loanable funds model. Because so much of central banking is about stability and predictability, the fed has mostly acted along the same framework since the 40s. However, we are starting to see a change in the policy of the english and german central banks. This is probably due to the super toxic italian Euro -> German Euro arb and brexit. Europe is going to deploy australian style relief in the upcoming european economic disaster
Why are asset prices inflating? Because of a policy of easy and cheap money, worldwide.
Why is there a policy of easy and cheap money? To "boost" the zombie economies.
Why boost the zombie economies? To maintain zombie jobs and prevent unemployment.
Why not just take a shortcut and hand out cash directly to the people? Because then all prices, including consumer goods, will inflate.
The "solution" isn't tax cuts, it's a massive re-pricing and it'll happen on its own. Something like what happened to Japan in the nineties.
Absent cheap-money, they'd still be in a inequitable position that wouldn't correct itself on its own.
What do you consider "fabulously profitable"? Take a peek here for a reality check:
https://insight.factset.com/sp-500-reporting-record-high-net...
A "record high" average profit margin only equals to around 10% and at least theoretically that needs to balance out the bad years.
> Absent cheap-money, they'd still be in a inequitable position that wouldn't correct itself on its own.
Of course inequity will remain, even if everyone lost 90% of their paper wealth, the ratios remain the same. However, you're implying there is a problem with inequity, I submit to you that you need inequity.
If all the money were to be expropriated and spread out to all the people, there is nothing left for investment. Individually, the money just doesn't amount to much and it would likely be consumed right away, or used to pay off debt. Over time, that money would accumulate at the top again, but in the meantime, you would have an economic disaster.
Of course you could have the government do all the investment, but that just means you shifted all that inequity from private individuals (who at least in theory will use their money somewhat wisely) to a bureaucracy which has no incentive to be efficient.
The real problem is that we have a monetary policy that protects poor investment. There is no need for private individuals to manage their wealth properly, to make informed investments, etc. All they need to do is put their money into diversified stocks and real estate, because they can rely on the governments bailing them out if things go south.
Aaand, this is where they always go off the rails. Still selling that old trope, eh? Looks like we found another "expert" about to "get the economy wrong."