USA slides down further into more extreme forms of inequality with ever growing gap between the haves and have nots. Realistically there aren't many incentives for the ones on the haves side of the gap to work towards a more equal system.
Specifically? The US federal reserve maintains low interest rates, allowing oligarchs to borrow against their pre-existing conditions of prosperity. This in turn allows them to inflate USD and buy an alternate currency with higher interest rates, things like gold, bitcoin (stores of value that are hard to take via force, but are ultimately functionally useless). USD simultaneously inflates and deflates, leading to a near-useless currency. As a result the US balkanizes into 2 nations, one allied with Russia, Christianity, & Gazprom, one allied with China & Europe. The oligarchs will misjudge the transition and the world will be thrown into war & chaos. Understanding the enormity of the mistake, the world will be forced to either unite or die. It's unfortunately where we really, really seem to like to move ourselves, not as a whole, but as individuals, and we like to pretend like our daily decisions aren't causing this. If yours must be the glory, then mine must be the shame; you want it darker? We kill the flame.
I personally believe it would help a lot if we reinvented money to be a high technology. Not saying it's easy. We might need to reinvent government also.
>...even he was surprised by RAND’s findings. In fact, he says that before the report was completed, he had done his own “back-of-the-envelope math” and wound up underestimating by a good 40% the degree to which workers’ incomes have failed to keep pace with GDP. “It’s startling,” he says...
...except this [0] graph has been floating around for years, and the 40% failure to keep pace is visible plain as day on it. I'm glad there's more comprehensive research about it, but come on - this isn't even remotely groundbreaking. You'd basically have to be living under a rock for any of this to come as a surprise. There were even protests about it a few years back - what were they called? "Occupy Main Street" or something?
Money creation favors people closer to the the printer. People that can take a loan at 2% - which are generally wealthy people already. In the meantime working class has to compete with cheaper labor from poorer countries, while the capital owning class is pocketing the difference and enjoys cheaper goods.
Before capital owners had to pay a decent wage to workers in USA. The products made in US were more expensive, but the workers were compensated well so generally could afford it.
Now manufactured goods are cheaper, so people can still afford TVs and phones, but their purchasing power is lower in respect to things like services, housing.
This BTW. benefits software engineers that can plug themselves into high margin, low-labor operating capital, enjoy higher wages and rather easily join the capital class themselves.
Fundamentally labor increases profits linearly and capital increases profits exponentially. Without something to bridge the gap, exponential function will always eventually overtake the linear one. This happened many times before, and unfortunately the bridging was usually very destructive (wars & revolutions).
And usually the bridging was not that the linear graph became an exponential one. The wars and revolutions caused a down fall in the exponential graph to bring it back to the same point the linear graphs were at. Equality by destruction.
> Rognlie finds that when you account for depreciation properly, the capital share's increase has been entirely about housing.
The part that you’re forgetting is that capital accumulates, returns to capital go down. There is a ton of capital sloshing around the economy right now looking for marginal returns.
The chart in the middle shows that top 1% incomes would drop by half in the counter-factual scenario. If you redistribute that to 130 million full-time workers, that adds $7,650 per worker across the board. So how can you get $30,000 more at the 25th percentile and $40,000 more at the median?
The basic problem seems to be that the study assumes that taxable income should scale with per capita gdp growth. But it ignores that there are a bunch of other things in GDP besides personal income, and the proportions of each component can change over time: http://lmi.mt.gov/Portals/193/xBlog/uploads/2016/10/26/GDPvs...
There are a lot of things included in GDP that are not taxable personal income: social security contributions, net government transfers, etc. The RAND study looks at just taxable personal income. So if nothing else changes other than the fact that the government prints a bunch of money to pay for welfare benefits, or if the income from rents skyrockets, or if benefits grow faster than wages, or if corporate profits sit undistributed (all of which are true) the share of total GDP going to median income earners will go down. (Note they do include investment income and distributed corporate profits.)
The study’s problem isn’t methodology, per say. It’s overlooking that there are other things in GDP besides taxable income to the bottom 99% versus the top 1%. The article draws the conclusion that reductions in the percentage of the economy going to the median earner means that they instead went to the top 1%. Obviously that’s false because the money could go somewhere else. Under the RAND model, both shares could even go down, because a larger share of the economy is comprised of GDP components that aren’t taxable personal income.
"No, Social Security payments are not included in the U.S. definition of the gross domestic product (GDP). Social Security payments are transfer payments, which are not included"
"For the purpose of calculating gross domestic product (GDP), government spending does not include transfer payments, which are the reallocation of money from one party to another rather than expenditure on newly produced goods and services"
The main difference between GDP and Gross National Income, is that GDP doesn't include income from foreign sources, and going to foreign destinations. But this doesn't make a significant difference in USA.
"For instance, the U.S. GNI for 2018 was about 20.7 trillion, according to the World Bank. The GDP in that same year was $20.5 trillion, according to the U.S. Bureau of Economic Affairs"
RAND has produced some very high quality research over the course of its existence.
Unfortunately this study, if Fast Company's clickbait article bears at all on the actual research, is not part of that canon.
The phenomenon that the study talks about, rising productivity with stagnating wages for the great majority of people since about 1975, has been discussed at length in academic economics for at least the past decade.
In the early days, of course, there were the usual attempts to say "nothing to see here": faulty methodology (no), confounders (yes, mainly a bigger percentage of women in the workforce, but adjusted for), it's a business cycle effect and will correct itself, there's no such thing as income/it's too hard to measure precisely, but-but-but "stable income shares" is one of the great Kaldor's stylized facts, blah blah blah.
The objections got increasingly more feeble and desperate as time went on, you will note.
TLDR: RAND has discovered something everyone else has known for decades.
I think it's good to see them bringing it to light in as dramatic a way to get as much attention as possible, especially among those who are not too aware.
It's just fine for people to think the trend is newly discovered, it would acually help if it got viral attention.
I think a good effort was made to only include solid representative figures for comparison, nothing nebulous or significantly questionable.
At least these are some new good baseline numbers and qualified experts even if they had originally underestimated the magnitude of the cascading wealth removal.
Since the mid 1970's this has been forseen.
You could sketch it out on the chalkboard with mathematically minded associates.
America was never going to be the same.
21st Century wasn't going to be pretty.
This was across the board.
>RAND crunched the data in all sorts of ways, and the basic pattern held true for part-time workers, entire families, men and women, Blacks and whites, urban dwellers and rural residents, and those with high school degrees and those with college diplomas.
“There is no way of slicing the numbers where people come out ahead,”
The damage is much worse than it looks numerically.
It had to be for them to even do a study.
In hind sight they are now _adjusting_ for inflation as usual, but there is no accurate accounting for currency devaluation, internationalization, commodity flow, and resulting after-tax purchasing power. These are more nebulous, but if they were factored in it would look way worse not better.
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[ 4.5 ms ] story [ 49.7 ms ] threadUSA slides down further into more extreme forms of inequality with ever growing gap between the haves and have nots. Realistically there aren't many incentives for the ones on the haves side of the gap to work towards a more equal system.
>...even he was surprised by RAND’s findings. In fact, he says that before the report was completed, he had done his own “back-of-the-envelope math” and wound up underestimating by a good 40% the degree to which workers’ incomes have failed to keep pace with GDP. “It’s startling,” he says...
...except this [0] graph has been floating around for years, and the 40% failure to keep pace is visible plain as day on it. I'm glad there's more comprehensive research about it, but come on - this isn't even remotely groundbreaking. You'd basically have to be living under a rock for any of this to come as a surprise. There were even protests about it a few years back - what were they called? "Occupy Main Street" or something?
[0] https://i.redd.it/szwd5045fzl51.png
Money creation favors people closer to the the printer. People that can take a loan at 2% - which are generally wealthy people already. In the meantime working class has to compete with cheaper labor from poorer countries, while the capital owning class is pocketing the difference and enjoys cheaper goods.
Before capital owners had to pay a decent wage to workers in USA. The products made in US were more expensive, but the workers were compensated well so generally could afford it.
Now manufactured goods are cheaper, so people can still afford TVs and phones, but their purchasing power is lower in respect to things like services, housing.
This BTW. benefits software engineers that can plug themselves into high margin, low-labor operating capital, enjoy higher wages and rather easily join the capital class themselves.
Fundamentally labor increases profits linearly and capital increases profits exponentially. Without something to bridge the gap, exponential function will always eventually overtake the linear one. This happened many times before, and unfortunately the bridging was usually very destructive (wars & revolutions).
https://www.vox.com/2015/4/1/8320937/this-26-year-old-grad-s...
> Rognlie finds that when you account for depreciation properly, the capital share's increase has been entirely about housing.
The part that you’re forgetting is that capital accumulates, returns to capital go down. There is a ton of capital sloshing around the economy right now looking for marginal returns.
How does that help labour?
Housing is capital.
> The part that you’re forgetting is that capital accumulates, returns to capital go down.
Still, it accumulates.
> There is a ton of capital sloshing around the economy right now looking for marginal returns.
That's true. I actually keep thinking about the nature of this a lot, since it's very interesting.
The total income of the top 1% is $2 trillion: https://taxfoundation.org/summary-latest-federal-income-tax-...
Meanwhile, there are 130 million full time workers: https://www.statista.com/statistics/192356/number-of-full-ti...
The chart in the middle shows that top 1% incomes would drop by half in the counter-factual scenario. If you redistribute that to 130 million full-time workers, that adds $7,650 per worker across the board. So how can you get $30,000 more at the 25th percentile and $40,000 more at the median?
The basic problem seems to be that the study assumes that taxable income should scale with per capita gdp growth. But it ignores that there are a bunch of other things in GDP besides personal income, and the proportions of each component can change over time: http://lmi.mt.gov/Portals/193/xBlog/uploads/2016/10/26/GDPvs...
There are a lot of things included in GDP that are not taxable personal income: social security contributions, net government transfers, etc. The RAND study looks at just taxable personal income. So if nothing else changes other than the fact that the government prints a bunch of money to pay for welfare benefits, or if the income from rents skyrockets, or if benefits grow faster than wages, or if corporate profits sit undistributed (all of which are true) the share of total GDP going to median income earners will go down. (Note they do include investment income and distributed corporate profits.)
The study’s problem isn’t methodology, per say. It’s overlooking that there are other things in GDP besides taxable income to the bottom 99% versus the top 1%. The article draws the conclusion that reductions in the percentage of the economy going to the median earner means that they instead went to the top 1%. Obviously that’s false because the money could go somewhere else. Under the RAND model, both shares could even go down, because a larger share of the economy is comprised of GDP components that aren’t taxable personal income.
This is not true. The GDP numbers specifically exclude social security and other money transfers, specifically to avoid the problems you've stated.
https://www.investopedia.com/ask/answers/082415/are-social-s...
"No, Social Security payments are not included in the U.S. definition of the gross domestic product (GDP). Social Security payments are transfer payments, which are not included"
https://en.m.wikipedia.org/wiki/Transfer_payment
"For the purpose of calculating gross domestic product (GDP), government spending does not include transfer payments, which are the reallocation of money from one party to another rather than expenditure on newly produced goods and services"
The main difference between GDP and Gross National Income, is that GDP doesn't include income from foreign sources, and going to foreign destinations. But this doesn't make a significant difference in USA.
"For instance, the U.S. GNI for 2018 was about 20.7 trillion, according to the World Bank. The GDP in that same year was $20.5 trillion, according to the U.S. Bureau of Economic Affairs"
Unfortunately this study, if Fast Company's clickbait article bears at all on the actual research, is not part of that canon.
The phenomenon that the study talks about, rising productivity with stagnating wages for the great majority of people since about 1975, has been discussed at length in academic economics for at least the past decade.
In the early days, of course, there were the usual attempts to say "nothing to see here": faulty methodology (no), confounders (yes, mainly a bigger percentage of women in the workforce, but adjusted for), it's a business cycle effect and will correct itself, there's no such thing as income/it's too hard to measure precisely, but-but-but "stable income shares" is one of the great Kaldor's stylized facts, blah blah blah.
The objections got increasingly more feeble and desperate as time went on, you will note.
TLDR: RAND has discovered something everyone else has known for decades.
It's just fine for people to think the trend is newly discovered, it would acually help if it got viral attention.
I think a good effort was made to only include solid representative figures for comparison, nothing nebulous or significantly questionable.
At least these are some new good baseline numbers and qualified experts even if they had originally underestimated the magnitude of the cascading wealth removal.
Since the mid 1970's this has been forseen.
You could sketch it out on the chalkboard with mathematically minded associates.
America was never going to be the same.
21st Century wasn't going to be pretty.
This was across the board.
>RAND crunched the data in all sorts of ways, and the basic pattern held true for part-time workers, entire families, men and women, Blacks and whites, urban dwellers and rural residents, and those with high school degrees and those with college diplomas. “There is no way of slicing the numbers where people come out ahead,”
The damage is much worse than it looks numerically.
It had to be for them to even do a study.
In hind sight they are now _adjusting_ for inflation as usual, but there is no accurate accounting for currency devaluation, internationalization, commodity flow, and resulting after-tax purchasing power. These are more nebulous, but if they were factored in it would look way worse not better.
That's what we found shocking.