Sometimes I wonder if the word inflation has two meanings. There's what we typically mean by the word -- a lingering phenomenon which feeds on itself. And then there's the short-term "situational" thing which lasts X number of months.
I think part of the problem is we're using the same word to describe two different things...
"Russell Price, chief economist at Ameriprise, expects inflation to peak at 7.1% in December and January, for example. After that, he expects the inflation rate to fall toward 4% by the summer and below 3% by the end of the year."
The rate can fall to negative, i.e. deflation can happen. It probably won't overtake inflation overall but it will be expected in areas like used cars. It isn't a one way ratchet.
It is largely because of the power imbalance between capital and labor. Capital sets the prices of goods and also sets the price it pays for labor. The solution is strong and broad based labor unions, but capital has labor convinced that it is against their interest to organize. I hope this boils over and we start hanging capital from the street lights.
Why does the US, a society with low union membership rates have much higher median salaries both before and after taxes and government benefits than in Europe where there are lots of powerful unions?
We’re better at preserving the threat of new entrants. Truckers routinely start their own businesses here. That’s tougher in most of Europe, where labor laws making hiring and firing strikingly expensive.
> That’s tougher in most of Europe, where labor laws making hiring and firing strikingly expensive.
That is true. Personally and anecdotally I find that to be a good thing. I feel much more comfortable with 35h work week, 35 days of paid vacation making €60k without living in the fear of getting fired the next day.
Even if I could get more money in the US, I highly doubt that my standard of living would increase enough to justify the uncertainty that would come with this move. And I think that difference is even more extreme with jobs that don’t require years of education beforehand.
Are you subtracting wages lost to both employer AND employee contributions to health insurance, co-pays and the like? That's the only way it's a fair comparison. Hell, even if we do earn more after accounting for that, living in a society with universal healthcare is worth something all it's own.
"Information is also presented including social transfers in kind, such as health or education provided for free or at reduced prices by governments and not-for-profit organisations."
Medians don’t tell the whole story. Incomes for high wage earners in the US have increased disproportionately compared to European countries, while wages for middle and low income groups stagnated in comparison.
The value of benefits isn’t takin into account. Health care is a huge driver of inequality in the US. Tens of millions of you get minimal health care, and even many on health care plans only qualify for a fraction of the treatments Europeans take for granted. Education is another example. Overall the US system is fine, but the funding model is appallingly uneven with the majority of public funds ending up going to schools in wealthy areas. The national funding and provision models in Europe are far more egalitarian and, as with health care, much more efficient.
Even so, there’s still a legitimate gap in the US favour here. That can’t be denied. Arguably what Europeans get in return is peace of mind and a society that has their back. They know that whatever happens to them, they will get decent health care, their kids will get a decent education, and they’re more likely to get fair treatment from their employer.
> They know that whatever happens to them, they will get decent health care, their kids will get a decent education, and they’re more likely to get fair treatment from their employer.
And as a former manager once told me, 'one needs the constant fear of homelessness to keep workers in line'. That is the real engine of innovation /s
I don’t see how that can work. People in fear are going to be more risk averse, surely, and innovation is always risky.
I mean clearly the US is still a very innovative economy, it’s not like everyone is constantly in fear of starvation any second. But still, I don’t see how fear promotes innovation. There are many economic and societal factors in the US that promote risk taking and innovation, but fear of hunger in oppressed workers isn’t one of them.
> A median figure is not skewed by high earners at the top.
That’s exactly my point. For “not skewed by” read “reveal the fact that”. Neither averages nor medians tell you much about the shape of the distribution, but the shape does matter.
Also you’re missing my point about education and health care completely. Yes the OECD accounts for their value overall, but that value is very unevenly distributed in the US. Much more so than in Europe. I also made a point about quality as against just spending.
Anecdotally I will say that my union has doubled the wages of its members in the last 10 years. There are also twice yearly cost of living raises.
As another commenter has pointed out, median doesn’t tell the story accurately when it’s being pushed largely by incredibly disproportionate growth in top 10% of earners.
I love my Union, and I’ll grant you that Unions aren’t universally good due to people being shitty but I wholly believe in Unions and hope more people organize. It is the only meaningful way for labor to get what they deserve.
Bull.. ahem.. shit. If you want a fair comparison, compare the incomes of union workers vs non-union workers within the same country or COL area doing similar jobs. If unions would bring wages down, corporations would be all over that and will sign you up on the first day. Use your head, damn it.
There is this 40% or so of the population that will not switch jobs. I don't know why you would ever give them a raise because as their reaction to it is just going be to complain and go back to work.
It's worth noting that switching jobs for pay raises is mainly a white collar thing. If you work in trucking for instance, where productivity is capped, worker differentiation is minimal (meaning two different truckers perform essentially identical work unlike engineers or salespeople), and where industry margins are thin, you'll top out relatively quickly. After that, switching companies isn't going to do all that much good for them.
This is not true in the Phoenix or Tennessee areas, two places I know folks in the trucking business. Competition for drivers is fierce, and that leads to better offers from firms who have found a niche where they can charge more.
This mindset seems common but is far from the truth. Even with blue-collar jobs pay varies widely especially now. Employers want you to think everyone pays the same and you can't do better elsewhere.
Does this turnover mean that the truckers get better paid? If not, then it's an even better example, because the turnover would highlight that they have topped out.
It never does. This is just accelerating the pandemic-era wealth transfer that started with the rich getting trillions to prop up their assets while everyone else got $600.
Well yeah. From the government, for rich people. I don't know any poor people who can directly profit from corporate bailouts, tax cuts or has access to loans with such low interest rates. Even though as you say it comes from the population at large.
I'm the last person to defend welfare for the wealthy. I'm saying you're blaming the player rather than the game, which is an understandable feeling but is not productive to your goals.
- Powell held between $1.25 million and $2.5 million of municipal bonds. They were just a small portion of his total reported assets. While the bonds were purchased before 2019, they were held while the Fed last year bought more than $5 billion in munis, including one from the state of Illinois purchased by his family trust in 2016.
- Boston Fed President Eric Rosengren held between $151,000 and $800,000 worth of real estate investment trusts that owned mortgage-backed securities. He made as many as 37 separate trades in the four REITS while the Fed purchased almost $700 billion in MBS.
- Richmond Fed President Thomas Barkin held $1.35 million to $3 million in individual corporate bonds purchased before 2020. They include bonds of Pepsi, Home Depot and Eli Lilly. The Fed last year opened a corporate bond-buying facility and purchased $46.5 billion of corporate bonds.
...you'd still be among the top 20% of earners across the earth. Let's take another step down to simple minimum wage. over 7$/hr in the US puts you at... https://en.wikipedia.org/wiki/List_of_countries_by_minimum_w... - in the top 20, which doesn't even include countries without a minimum wage.
Your statement about "among the world's poorest" requires revision.
"Never" doesn't only refer to the period from the 1970s to now. You'd be making a lot less than $23 per hour if wage growth never kept up with inflation.
Maybe we need a better definition of “never”. Are we going back 11 years, or 50 years, or 255 years? If wages truly never keep up with inflation in this country, then we’d be living like they did prior to the industrial revolution. You can’t argue that technology hasn’t had in impact on everyone’s quality of life over longer timespans, which doesn’t get taken fully into account in the data.
Also, your cherry picked date range has a complex story behind it. It’s a story of falling inequality, not rising inequality. Chinese workers (among others) ate our lunch…by climbing out of abject poverty. They’ve become much more competitive and have seen their real wages skyrocket. If semi-skilled American workers were making $23/hr and equivalent Chinese workers were making $.23/hr (idk making something up), and now American workers are still making the same but Chinese workers are making $12/hr, is that a bad outcome?
The guy panhandling two streets away from me is not far from 'the top 20% of earners across the Earth'.
I can't say his situation is entirely enviable, and I would not suggest using that statistic to tell him that he ought to be happy with his lot in life.
It's the consumer price index. Rent is consumed. A house is an asset. You can sell it at a profit. Your intuition is correct in that it's not quite that simple in the real world. Housing is already the least liquid asset, and people get an emotional attachment to their homes, so they often die without cashing out on their homes. As a result, they feel poorer than they should as suggested by CPI.
IMO, the problem isn't the CPI. The market is just fundamentally distorted because the government pumps money into real estate into subsidized loans.
A. Here's a wildly understated measure (like for like equivalent cost of housing systematically under-estimates inflation as defined as the increase in what you have to spend). This other accurately measured thing (wages) is not keeping up even with that biased measure.
Argument: It sort of is keeping up with the real thing (what you have to spend because we'll just take cpi) if you squint at a particular period? Actually it isn't, it's still being systematically underestimated.
CPI is a crap measure of what people actually face in increase of what they have to spend. What you can actually buy, the purchasing power of wages has not been going up. People aren't being fooled into be angry and bitter. Talk to them. Listen to what they say about their constraints in life. Ideally find some people you like for whom you can feel empathy with their situation.
I assume you are complaining about house prices not being directly included in the CPI?
I don't know about the exact methodology, but the concept makes sense to me. "Everyone" is buying food "everyday", so it's sensible to have, say, the price of bread included directly. On the other hand, "no one" is buying houses "everyday"; what people are buying everyday is housing, i.e. how much do you spend to have a roof over your head. This is correlated to house prices, but not that strongly. If you bought your house 30 years ago and the mortgage is paid, it doesn't matter whether houses next to you are suddenly worth 50% more, you're still going to pay the same for housing (except maybe due to taxes). If you're renting, it is going to track house prices, but not perfectly. Apparently, in the SF area, the average rent has actually slightly decreased since 2019, while the average house price has increased.
All of this means that while the average house price might have increased by x%, the average person (as in, if you aggregate those already owning a house, those renting, those buying houses now, ...) is not spending x% more on housing, so it makes sense to use a metric that follows the latter and not the former. Yes, if you're looking at buying a house, it means CPI is not very accurate for you, but then a single number is never going to perfectly fit everyone.
The chart doesn't say anything: It looks like a mean-reverting walk focused on way too small a section to be able to draw any strong conclusions about what the actual mean is.
I've worked for a few companies where all staff had their salary increase by CPI each year, you could negotiate a better base rate sure, but the accepted principle in agreements was inline with inflation. Maybe it's just an Australian thing.
Whether you believe CPI is an accurate representation of cost for the average person is another matter altogether.
To the first question, both. Many developed countries that did not practice QE are also seeing rising inflation. Having said that inflation in the US is particularly high, but then again there’s historical precedent for that. So it’s a messy picture, but a large chunk of current inflation seems global and systemic.
As for where is the money going? The rising costs are due to increasing demand and simultaneous reductions in supply. A lot of pent up demand deferred by the pandemic has been released. Meanwhile suppliers have lost capacity due to shutting down factories, slimming down work forces and not maintaining or replacing equipment.
A lot of the money from increased costs is invested in ramping up production again. This is pulling people back into employment and kickstarting businesses that were suffering in the lockdowns. It’s funding necessary work. But some of it is being taken by suppliers who find they can ramp up prices and people will still pay.
The current price changes are due to a lack of supply, which the market is rationing.
Remember firms will always try to charge a fortune for their stuff. It's only competition that stops that happening. Competition is excess supply, or at least excess supply capacity.
When competition stops being effective, prices go up.
There is a shortage because the oil producers have realised they can ride the OPEC supply restrictions and make more money. US oil producers are not part of the cartel, but they might as well be. As always, someone does well out of inflation.
Likely some of both. Many of the costs are going to the supply-chain bottlenecks, IE: meat packing plants, lumber mills, container ports, chip manufacturers. Demand is high and it's hard for new supply to be brought online so those in the right position benefit significantly. For example AMD and NVDA revenue up 50%+, income 100%+
Eventually these high margins will attract competitors and bring down the margins but it takes quite awhile to get a chip fab up and running, and similar with meat-packing, lumber mills, etc.
>For example AMD and NVDA revenue up 50%+, income 100%+
Eventually these high margins will attract competitors and bring down the margins
For those examples that is false hope. You can't just spring up a new competitor in the GPU filed out of thin air and expect it to work; Nvidia and AMD duopolies are so far ahead into the game experience wise that no startup could ever catch up no matter how much money you throw at it (even AMD is having a hard time keeping up with Nvidia and they've been at it for 30 years).
Not to mention the insane patent minefield that protects them from competition. Even Intel, a trilion dollar company with experience, patents and fabs can't catch up with the other two.
It is, but performance/value remains to be seen, which brings me back to my point that even the Intel juggernaut faces un uphill battle in this space vs Nvidia and AMD.
Granted, during the current shortage, basically any GPU will sell regardless of performance/value proposition which makes it very easy for Intel to enter the market right now, however, 2-3 years ago, when Nvidia and AMD GPUs were affordable and available everywhere, nobody would have ever considered buying Intel discrete GPUs as even their integrated ones were not well received.
This isn’t exactly great news, but it’s probably not as bad as you think. It means that inflation is a tractable problem. The Fed as a lot of tools at its disposal (first of which is to take its foot off the gas). If we were in a situation where workers were demanding higher wages because they were expecting prices to go up, and businesses were raising prices to pay workers who were demanding higher wages, then we’d be in a much tougher spot. Wages not keeping up with prices means that’s not happening yet. By the end of next year, the narrative will shift away from rising inflation as the Fed tightens up, which will in turn cause inflation to fall.
This is wrong IMO - the fed has NO tools in its hands. Its last tool was inflation rates, and it burned that during the great recession. It is now caught in a pickle: raise interest rates, causing a mass exodus of wealth from securities to savings accounts and CDs and causing the stock market to tumble (like it arguably always should have done since 2008), or let inflation take its course.
I am not an economist, and I'd love to be proven wrong. I just don't see how this ends in a good way for the economy.
That the fed has no tools is correct to the best of my understanding. The central banks are tasked with solving problems they have no mandate to solve.
Inflation is, among other things, a problem of the market having too low a demand for money compared to the supply. One obvious way to fix that is by taxing money out of existence faster, decreasing the supply and thus increasing its value assuming demand stays fixed. (And there's reason to think it will; demand for money is a relatively unflexible parameter.)
But of course, central banks do not control taxation, so there's not much they can do.
It's not good or bad, it just is. We're at the bottom right now, we'll stay here for a bit then experience inflation. Allocate assets accordingly. There isn't a good way up from zero interest rates besides printing money.
Yeah, if you’re interested in this stuff, you should do some research. The Fed’s options aren’t 0% rates vs 15% rates. It’s going to raise rates .25% at a time. .25% is not much of a difference. It’ll move slowly and act cautiously.
The Fed, and other central banks have dealt with inflation many times before. And very effectively at that. Stocks could fall, but the stock market is not the economy, and the Fed has no mandate to prop up stocks.
Not true in the least anymore - retirement savings for a large percentage of our population are tied up in stocks thanks to the death of the pension. Asset and securities prices as a whole are a large concern for the fed when changing policy, as a result.
The requirement to pursue moderate long-term interest rates is usually seen as part of price stability, since the level of long-term interest rates is determined by inflation expectations.
You ask others to do some research, which implies that you have good sources on how "The Fed, and other central banks have dealt with inflation many times before. And very effectively at that"
I'd be interested to see them, especially any from the last 40 years (i.e. post-Volker).
For pre-Volker, I'm interested in your sources from the early-mid 70s, and the way inflation was "controlled" in the years immediately surrounding the release of the gold standard.
That narrative makes sense, except for one thing: why wouldn't the Fed have taken their foot off the gas once inflation hit, say, 4%? Why wait until we're at 6.8%?
The other mandate of the Fed is getting full employment. Pumping money into the economy helps increase employment and there is a long way to go to get back to pre-pandemic levels on that metric.
They believed the inflation was transitory, and were going to wait it out. Now it's very clearly not transitory, so they are taking action
Ah, the Phillips curve. I recommend you make some charts for yourself comparing US unemployment figures with CPI inflation and see if you can spot the curve.
spoiler: " there is in fact no strong "tradeoff" between unemployment and general price inflation, and almost certainly not an exploitable one. The Phillips Curve is essentially a statement that lower unemployment is associated with higher inflation in real wages. The strategy of accepting higher inflation in hopes of achieving lower unemployment (which is the basis of Bernanke's policy efforts) not only drops the phrase "real wages" but reverses the direction of cause and effect. "
Also, it has clearly not been transitory for most of 2021. The "transitory" claim was backed partly by the pandemic, but relied on a 1-year lag. If, however, you used a 2-year lag (thus eliminating pandemic effects...
Inflation has been well below goal levels in recent years. Their goal this year was to have it well above average to make up for the past and keep unemployment low.
Average and poor Americans would be better off with a simple formula to set money expansion. Then fire the private 'Federal Reserve' banksters and let someone else have the contract to clear checks.
Except for their role as referee. Forcing banks to implement their real time payments system FedNow seems like a good thing, but I’m just learning about it.
How well did they do as referee in 2008? Did they take prompt corrective action when it was obvious banks and rating agencies were mispricing their balance sheet items, or mostly wait for explosion and then bail out their buddies?
The FED has tools to affect monetary base (physical currency + bank reserves). But inflation is mostly a function of money supply (physical currency + deposits), not monetary base. All tools at FED's disposal are very indirect, leading to frequent "pushing on a string" situations
Looking at the chart it's pretty obvious that wages aren't pegged to inflation in any way. You will always be paid based on the conditions of the labor market, not the price of an arbitrary basket of goods.
Heck you can see that wage growth outpaced inflation in ~10 of the last 12 years. Isn't that a good thing?
growth of what? Purchase of shoddy goods that are made by countries that imprison minorities and political dissidents and force them to work for state-run companies?
the productivity growth required capital investments (either as upfront research/development, or as capital expenditure on plant and equipment). The owners of this capital require a return on such an investment, and thus, they get first dibs on the excess productivity (aka, profit).
In general, prices are not pegged to inflation. Inflation is a change in the price level, but prices also change for reasons that have nothing to do with changes in the price level, e.g. in the case of wages, the supply and demand for labour.
We had an all-hands meeting recently where we got to submit anonymous questions. One of the questions was 'with inflation rising at 6%, will the company reconsider their 'standard' 2% raise?' The lady answering looks dead in the camera and goes 'Honestly? No' and goes on to talk about how we're reasonably competitive with the local market. Hey, credit where credit is due, at least she was a refreshingly straight shooter. It pretty much let everyone on the call know what they needed to do if they wanted a good raise.
Depends on whether we're talking about real or nominal wages. Regardless, my main point is that most people must switch jobs to see the increase. Wages grew 6.6% for job switchers so it is keeping up with inflation.
IT and professional services was 10.5%+ but again only for job switchers.
So, the economically rational thing for everyone to do is to engage in this gigantic game of musical chairs, if they care about the number at the bottom of their paystub? That's silly, and a great way to throw away a lot of specialized domain knowledge.
There's a lot of value in playing musical chairs. The market is pretty good at allocating human labor. Some companies get left without people in the seats and others, often the more innovative companies end up with more than they had before.
A labor market with high liquidity leaves most people better off.
The labor market can go fuck itself if it doesn't serve the people, IMO. People aren't just for creating "value." They have lives. If the economy doesn't work for people, it just plain doesn't work. Not everybody wants to change jobs all the time. Those people don't deserve pay cuts for providing the same "value" they provided a year ago.
It's worse.
Many people could see their fractional tax burden increasing as their nominal wage rises and crosses higher tax bandings.
Inflating is a slow theft, and the description of "financial oppression" is apt.
The best thing you can do is organize your workplace. Job hopping allows businesses to eat the market at the edges and eventually squeeze those demands out of the labor pool.
Inflation doesn't - fundamentally - change the power balance between employers and employees. Market forces will cause the situation to find a fair market price. If job hopping can't get you better wages, then you probably don't have enough market power to resist if an employer flat-out cuts your pay.
Though to try and prevent misunderstandings - I do think inflation is bad for people who are paid wages. Market forces aren't perfect and "market price" is really a band of prices. Inflation pushes all workers to the low end of the band and means if anyone doesn't feel like negotiating they will be pushed in to a bad deal by default.
Late last century inflation and then wages keeping up with that inflation enabled a generation of folks to pay off their first mortgages quite quickly.
Absolutely but this also assumes a fairly "elastic" housing market able to absorb the demand. I am not sure the market is still able to do that with the NYMBYsm and malthusianism around new housing. In high tension area, the price could quickly increase faster than general inflation. I believe CPI does not include house prices.
Risk is that rising inflation raises mortgage rates which makes housing unaffordable. You might be able to continue paying your mortgage because you locked in a low rate, so not see this as a problem (free house!)-- but if for some reason you want or need to sell you might find it more financially challenging than anticipated.
It allowed a very small slice of the population to do that. You basically had to take on a loan prior to the run up in interest rates. If you were born in 1950 you were fucked since rates had skyrocketed by the time you were 20.
Just like millennials love to claim boomers had it easy, it was a small slice of the pie that benefited.
That is saying a lot less than you might think. Again, consider that the banks employ actuaries - they understand inflation a lot better than the people borrowing the money. They didn't let themselves be the losers here.
Inflation doesn't change the actual power balance between different actors, it does make the situation more complex and harder to keep up with. It doesn't create real wealth and it is not responsible for a wealth transfer to wage earners. The idea just lacks a mechanism - for the wealth to come from employers or businesses they have to be ignorant, altruistic and disinterested in money. That seems unlikely. Ditto most other actors. Changing value of money favours people who can continuously adjust to it which isn't a typical wage earner.
If a generation gets something for free, they got it from somewhere else. Who lost out here? Why did it need to be inflation to make that happen? If they didn't get it for free, it is unclear why inflation would be necessary in the story instead of incidental.
I've never seen a pay increase above ~2% here in Sweden. Some union agreements allow larger (and lower) changes if the average increase is still the decided upon percentage.
Eh, I'm unionized and had a 13% pay raise. To be fair, they motivated that by saying that I should get up to speed with other engineer's raises instead of staying at a junior level (yes, I'm bragging).
Not unionized[1], but this is something I'd accuse unions of.
[1]: because no uninon ever manages to not try to meddle in international politics. Gandalf in LOTR had it right: he did not want power because he knew he would be tempted to try to do a lot of good things.
Nah, I was straight out of uni so taken on as a junior by the company and then given a raise as they didn't consider me junior after having me work there for 8 months or so. The union is probably involved in standard pay levels, but not much more than that.
Unions in Nordic countries don't stop employers from paying more, they just set minimum pay level. And usually the normal raise level. They can always pay more and usually do with fields like software engineering.
? I've had a raise above 2% every year since I've come to Sweden in 2016. Our raises are determined on a scale based on performance. IIRC the average raise is negotiated by the union, but where on that scale you sit is determined by negotiation between you and your manager.
Edit: Sorry I might have misread your comment. I should say that our average increase was also above 2% several of those years.
Most of the collective bargaining agreements I've heard about here in the Netherlands involve an automatic inflation correction at the end of the year.
Actually, this is false. This used to be the case in the 70s, but after the Wassenaar Agreement[1], this was removed from nearly all collective bargaining agreements[2]. Some have salary grades that increase automatically by year of experience, but this isn’t the same, because it won’t increase the wages for people starting their career. In general, the stronger unions are able to negotiate salary raises above inflation[3], but this of course depends on the percentage of employees that actually join a union.
I've never gotten a raise from organizing my workforce but I've gotten many by hopping jobs. Can you tell me more about the workplaces you've organized? How did you start to go about it?
Unions are overwhelmingly unpopular in tech, for good reason. Nobody wants to work with that incompetent unfireable employee who's protected, or getting paid the same as someone who produces half the results you do at the same level.
Unfortunately unions protect the incompetent and punish the successful (by refusing them the ability to negotiate). It's most pronounced in the heavy unionized industries like teaching and auto manufacturing.
There will always be developers who produce the results of 10, 100 or 500 developers single-handedly. Unions kneecap them, like they kneecap outstanding teachers by paying them the same as the teachers phoning it in every day.
From the other side, whenever a member of my team has come to me asking to match an offer I've always refused and wished them well in their new role.
If someone is unhappy enough to start job hunting rather than talking to me then it's a clear sign that they'll leave soon regardless of any pay rise. Psychologically, every pay increase makes someone happy for a short time, and then they get used to it and they start to wonder if they should have asked for more, or they focus on other reasons why they don't like the role they're in and wonder if the other one would have been more fulfilling. If you match an offer, or even beat it, the person is likely to have left in a year anyway.
Practically always, but never just more money for the same work. People dont ask very often because I've been lucky enough to be able to give people decent cost-of-living raises, recognition-of-effort raises, and promotions quite regularly. When someone asks for more money it's pretty much always the first step to a promotion, or at least some sort of additional responsibility that comes with a pay increase.
The irony is that the main reason people get paid more when they change job is because they move up at the same time.
I think the reasonable good-faith assumption in this discussion about inflation is that people are asking for a raise not to make more money but just to keep up with prices. So in reality, they are asking for the same amount of purchasing power.
So giving the same purchasing power for more responsibility would probably not look like a good deal for most (unless responsibility is your thing which is the case for some people).
Depending on the situation, it might make sense to keep them for that extra year. There's a lot of specialist roles where you're really dependent on some particular person and it's nice to have a year to find a replacement.
And implicitly tell all your other employees that they better go searching for new jobs or else they won't get a raise, ever? The result is that going out to do interviews has effectively become part of their job description, because apparently that's what you pay them for.
It's all game theory, in a minefield of unintended consequences. I take the opposite approach: an unspoken but clear attitude of "you know you won't be able to buy me when I excuse myself with a better offer, so better ask yourself now than later how much you actually want to pay me". And no, that certainly does not make me fabously rich (but there actually was a time when it worked much less bad than I would expect, quite amusing in hindsight)
That's certainly one way to look at it. Another is that people who work on my team build the skills and confidence that enables them to move up in their careers, and at some point they outgrow what I can offer. I'm usually quite happy that they've been able to do that.
If someone has a chance to take another step up in their career that's a good thing. If I offer them more money to stay at the same level they'd be silly to accept that.
> If someone is unhappy enough to start job hunting
What makes you think people only go job hunting when they're unhappy? I consider it a moral obligation to seek out the best pay (after staying at a job long enough to justify my original hire and for the sake of my own resume) in order to do my small part to increase worker wages.
Interesting, as a manager I encourage my team to apply and bring me other offers. I will even help with some minor prep. If they come to me with a better offer I’ll take it to my leadership and show their worth.
If they fail, they know I cared enough to assist and trust me and are happy for their job. If they succeed they get a raise, but are more likely to stay and work harder knowing they can trust me and can collaborate.
I don’t see the downside in engaging in this manner.
I have a manager with a similar attitude to you and I have to say — thanks for being that way. I don’t even care to go get other offers. I get double-digit raises annually and have an amazing team. As long as this manager is around, I feel happy about my work. You sound just as great! :)
If someone on my team comes to me asking for help getting a new role, either in my team or externally, I've always been very happy to do what I can for them.
If someone believes they're underpaid they can talk to me about that without needing to prove it by getting another offer. If they do get another offer it's unlikely that it'll be for exactly the same role, so it doesn't really show they're undervalued anyway.
I honestly believe its unlikely that you have an employee for, say, 5 years, then they come to talk to you without getting any counter-offers because they've gotten an average raise of 2% per year, have developed skills, and have market value of 25% greater than their current salary, and you say "ok, I'll give you a 25% raise."
In other words, unless you can contradict me with a straight face, you're basically just saying you underpay as long as you can get away with it and nothing can stop or change that.
You’re taking a lot of flak for this so I’ll try and back you up a bit.
Not all workers are equivalent, and not all roles that seem the same even in the same team, actually are. Let’s say we have a team of 10 people, each with slightly different experience and skills. One of them finds another job with higher pay and asks for it to be matched. What do you do?
It’s quite possible this other role actually matches their skills better than the one with you does. Maybe they are actually worth more to this other company than they are to you. Maybe they had other reasons for looking for a job aside from pay, maybe they’re tired of the job or want a fresh challenge. Maybe it’s a combination of all sorts of factors. Pay is only one.
If you do increase their salary, what about the rest of the team, do you pay them more too? Do they all have the attributes this other company valued in the person they made the offer to? Would they have all got the same offer? Probably not, but now you’ve upped the going rate for a member of your team. They will want the same.
It’s just a really messy situation to get into. If staff retention and recruitment is a problem or you don’t want it to become a problem then sure, of course you should make sure your compensation rates are fair. Of course under paying your team will cause problems. But one person getting one job offer doesn’t necessarily mean anything, except for them.
You're starting from the false assumption that everyone on the team is paid the same.
It's not like everyone performs at the same level or gets the same pay in almost any team I've seen.
If someone gets a job offer, you should consider it a new data point. Some teams don't aim to retain top talent and if that's the case absolutely encourage them to move on. But if you want a high-performing team, you need to pay top of market and a job offer is new signal about the market price.
> Probably not, but now you’ve upped the going rate for a member of your team. They will want the same.
I have never once wanted to be paid the same as everyone on my team. Some people are more experienced than me and should be paid more. Others are less skilled and should be paid less.
> You're starting from the false assumption that everyone on the team is paid the same.
It doesn’t matter. Even if they are different, one person getting a raise changes the relative dynamic. Maybe I was being paid more than this team member and now we’re the same, and maybe I still think I’m worth more. It elevates the basis of comparison.
Also, to expand on my post, it creates the impression in the team that the way to get a raise is to get a competing offer. It says that person was being under paid. Maybe that means you are too? It’s just bad all round.
In a heavily inflationary environment this practice could turn out to be entirely maladaptive. What percentage of inflation year on year will you change your mind at? Do you even have a line?
I’m not sure why this is getting so much negative attention. I’ve been both in and around high level management in the Danish public sector for decades and I’ve never matched or sparred with another manager who would these sort of things.
No one, and I do mean no one, is irreplaceable. Maybe you’ll have to throw away an entire IT system because you’ve lost the know how to keep the business case for the system a net positive, but that means a lot less to an organisation (especially enterprise) that we tend to fool ourselves into believing myself included.
I’m guessing Denmark and the public sector is very different than other countries and industries.
When a key contributor asks for a 20% raise (or say $50,000 more per year) and them leaving put millions of dollars of revenue at risk, or more importantly, reflects poorly on a manager and threatens their advancement (why can’t you keep your team happy?) then the math is actually quite simple.
But in a highly siloed and compartmentalized organization where blame for bad decisions never filters down to the ones making them I could see your point.
them leaving put millions of dollars of revenue at risk
Every team should fight against this. Writing simple, understandable, documented code that doesn't need some key person to maintain it is a very good thing. For a start, failing to do that locks people in to their job. Not being able to move on, and up, is a very bad thing. Secondly, people leave for reasons other than money. What if someone's husband gets a cool job in another state and they move for that? No amount of money would keep them, so you still lose those millions. Thirdly, there's the bus factor - what if that person is run over by a bus? How do you keep going?
Paying someone more and more to keep them is only patching the underlying problem that your team isn't resilient enough to catastrophic change. Fix that problem.
I’d question how good your people are if the best of them leaving wouldn’t impact your revenue. It sounds like an assembly line punching widgets, so maybe the work is neither urgent nor requiring dynamic thinking and responding quickly to changing market conditions? In that case I could see it not mattering if someone leaves.
My experience is on teams of 2-3 working towards a product launch that has to happen in 6 months and sure we can always replace someone if they die. The cost of that if not in revenue, but team efficiency, sacrifice of other work, is way more than a few tens of thousands per year.
And of course, everyone is replaceable. But replacing them may cost more than just paying them more, even if it keeps them around for another 6 months.
You have to look at it from a bigger perspective. From your and my perspective changing jobs is a big deal, it only happens a few time in our lives and it has a massive impact. The management perspective is quite different, you’ll get to not only hire but also interview hundreds of not thousands in your career.
If you’re a good manager you’ll want to keep your employees for 5-7 years. This is because you want to help your employees develop their talents and grow their career, and when you do that, they’ll eventually outgrow the role you hired them to do and how far it was possibly to extend it to accommodate their growth. By that point, you kind of want your employees to move on. Maybe to a new position within your own organisation or to a different place. It’s not because you don’t like them or don’t want them to stay, but it’s because good employees tend to outgrow you. A select few people can stay in the same functions their entire lives and never lose enjoyment or motivation, but most of us aren’t like that and you have to keep that in mind when it comes to “pay me more, or I’m leaving” negotiating.
More than that though, you have to see how relying too much on individual employees is actually what is the management mistake in these type of situations. The issue isn’t “why couldn’t you keep x”, it’s “why did you let x become irreplaceable” because any good manager should know better.
Maybe the public sector in Denmark is different than other places, maybe not. I don’t think that it is. What typically happens when you have IT systems that rely too much on an employee is that they leave you and then you end up paying them a lot more money to consult for 6 months until someone else has redesigned the systems to no longer be too dependent on a single person and your former employee finally gets to really move on.
> Maybe you’ll have to throw away an entire IT system because you’ve lost the know how to keep the business case for the system a net positive, but that means a lot less to an organisation (especially enterprise) that we tend to fool ourselves into believing myself included.
You are comparing throwing away an entire IT system to increasing the salary of _one_ employee.
Well not exactly. You have to look at it from an organisational perspective, and not from an employee perspective.
If you have systems (and that is any function, also cutting onions in the kitchen) that relies so heavily on one employee that you can not continue to operate them without that person then you have a serious issue.
Because you don’t retain employees, and your goal isn’t to keep them forever either. Even if they are happy and stay for 40 years they will eventually retire and then the system tend to break down anyway, and that’s with planned departure. What if your vital employee gets run over by a truck on the way to work?
So from an organisational perspective, it’s not an entire IT system vs one employee. It’s removing a flawed and dangerous system from your organisation.
Some people will argue that employees who design such systems aren’t worth keeping to begin with. I would agree, if the world was perfect, but it’s not.
>"If someone is unhappy enough to start job hunting rather than talking to me then it's a clear sign that they'll leave soon regardless of any pay rise."
Long time ago when I was employed I liked my job but felt that I am being paid less than what I could get. So I went searching and after a while got a really nice offer. With that offer I came to the company owner and ask him to give me a reason why should not I take the offer. He did give me a reason - matched the offer and put bonus on top. The end result - I stayed. Well until I went on my own and never looked back.
Look at it from this point of view; if your employer is so unhappy with you that, even when you’ve shown your skill, he’s unwilling to pay you a competitive amount then it’s clear you don’t really have a future at your current job.
A new company is willing to risk it on you, while paying more than your current job where you have experience. No surprise they leave in a year anyway.
if your employer is so unhappy with you that, even when you’ve shown your skill, he’s unwilling to pay you a competitive amount then it’s clear you don’t really have a future at your current job
This is the crux of the problem - people assume that anyone going to their boss asking for a raise is underpaid. That isn't always true.
When someone goes and finds a new role on more money it's almost always at a higher level. People move upwards when they move on. Matching an offer usually means paying someone the salary for the higher level role to do the work of the lower level role.
If someone wants to move up a level to earn more I've always been happy to talk to them about that. That's not what we're talking about here though.
I disagree with that. If you go into somewhere as a senior for example, it is not unheard of that a year later you can make a lateral move for 20%+ payrises. I've seen it happen many times in my career (obvious caveat that anecdote != data).
If I think some has reached the next level then I'll promote them anyway. No one should need to prove that they deserve a promotion by finding another company willing to offer them that role.
>If someone is unhappy enough to start job hunting rather than talking to me then it's a clear sign that they'll leave soon regardless of any pay rise.
so you mean if a recruiter contacts your workers and says we can offer you X amount and they check it out they should have talked to you beforehand?
Let me ask you this from a different perspective. If you are responsible for purchasing, will you ask competitors for quotes? And use those quotes for negotiating your current contract with a supplier? Isn't what the employee is doing exactly the same thing?
If you would be a supplier you stance would translate to, I never make a new offer if a customer comes with a better offer from a competitor. I suspect one would loose a lot of customers this way.
We are talking contracts, not goods. Contracts are with companies which are made up of people. So why wouldn't psychology apply?
Edit: I also find the argument that employment is not a an economic transaction a really weird argument. Employers don't give raises just so that the employee feels better for example.
The OP talked about people, then your reply was about goods. Unless "contract with a supplier" was about humans as goods, that term obviously means purchasing stuff, not purchasing humans. Who uses "purchasing" when it's about humans/employees?
Goods don't have a brain and no state of mind which was at the center of the OP's comment.
Okay, back to your original reply then:
> If you are responsible for purchasing, will you ask competitors for quotes?
The OP talked about the people themselves. If we follow your line then you don't talk about the employee at all any more. You are talking about something else than the OP.
If a employee comes to you asking for more money, how fo you respond? How much do you give? How much have you given in the past?
I’ve tried your approach and it’s usually a token amount or “sorry there isn’t a budget”. When I have an another offer then suddenly they find “flexibility”. But that said, I don’t even ask for more if I’m so unhappy I see myself leaving anyways.
I expect that my line manager would know if I am happy or unhappy and he would have done something. HonesI think my boss knows that I am looking, but we have a great time, he has the chance to go in my direction: salary, external training or more responsibility or I leave… thats the game.
I understand mot everybody can move up the ladder or get more money, but if as I line manager you can’t provide incentives or growth opportunities I would look at you first. If you don’t know the aspirations of your people and you match this with the strategy and goal of the company, are really made for your role?
Every manager should be more like - I know you can leave anytime lets find the best solution for all…
The context here is getting an inflation matching pay adjustment. Matching inflation is not a pay rise, it's 'avoiding a real terms pay cut'.
So, you give an inflation matching pay adjustment automatically?
I've gone back to exactly the same job as I started 20 years ago. Pay has doubled, house prices have increased 3-4 times in my small ex-industrial, high-crime, UK city.
> it's a clear sign that they'll leave soon regardless
The first thing my father told me when I started working was "never accept a counter offer. Don't put in your notice unless you're ready to leave - because even if they give you a counter-offer, they'll start looking for your replacement once they know you're looking."
Of course, anecdotes are anecdotal, but it worked for a coworker of mine.
He announced he was leaving our company for Amazon (which paid substantially more), and we even had a whole Friday goodbye party with cake and balloons. The next Monday we came into the office, surprised to see him still working for us. It turns out that over the weekend he somehow convinced management to match and exceed Amazon's offer.
His "trick" for getting a raise is that our whole dev-ops setup was unworkable without him. Management hadn't come up with contingencies for his inevitable departure, and thus he held all the leverage in salary negotiations.
I did this this year. My old employer admitted they had probably fallen behind the market and that "those numbers were definitely reachable here, after a few years, and further significant impactful contributions to projects like X, Y, Z". By my reckoning they were a good 3-4 years away.
They expressed that they wanted me to stay but at the end of the day it was crocodile tears.
Unions are mainly good in monopolies and government companies which sucks money out of trapped tax payers. It is not so good when it is a private fast paced company that need to compete against the world and where the employees themselves need to compete against people from all over the world. A software company is not a port.
HR does not decide pay raises. HR is in charge of anything. At most they collect data from market surveys to advise management and they advise management on ways to reduce attrition.
> If you want a raise the best thing you can do is find a new job.
It is true, but i am not sure it is a good long term strategy, i suspect that too much job hopping doesn't look good on the resume.
Also changing jobs becomes harder with age, i am fifty one years old, and last time around, when forced to look for a new job, I found that it was quite a bit of a challenge (being said that, i need to feed my family, so that i really need a raise :-( )
we're reasonably competitive with the local market
One of the best things Covid has done for my salary is make remote work far more common so I could get a job outside of the local market without having to move.
The principle of inflation is to dynamically adjust:
- Available products in the world,
- Number of people who can afford them.
With Covid, we didn’t produce for 2 months in 2020 and we’ve produced slower in 2021. And all governments distributed free money. So, in theory there is clearly not enough goods produced for everyone in the world. Prices should rise dynamically until 10% fewer people can afford them than in 2019.
Where are the people who can’t afford buying things? There should be a diminution of 10% global consumption, where is it? Where are the people whose company won’t be able to match inflation, even if they unionize?
Expressed in goods. The role of an economic system, communist capitalist or any other, is to organize the delivery of goods. We’ve produced 10% fewer goods in 2020, someone must deprive themselves.
The inflated currency doesn’t matter, who’s the people who are depriving themselves while I’ve made a fortune and bought a house? I see we’re a whole lot who won the jackpot with Covid, who are the losers and why aren’t they already revolting?
No. Ignore currencies, which are just our best approximation of a reasonable measure of wealth. The problem is that over the course of pandemic the world has produced less actual wealth. Unless we somehow reduced waste, we should now be able _on average_ to afford less.
> Where are the people who can’t afford buying things?
The already-marginalized? "The Trussell Trust reported a 33 per cent increase in the number of three-day emergency food parcels in 2020-21 compared to 2019-20,"
Take the EU, as you go down the GDP/capita list, prices for everything including basic goods have risen massively, wages have not.
All the best stuff goes to the richer regions, the leftovers (if any) are overpriced for locals, everyone is materially poorer, not even land/housing is cheaper because foreign investors gobble it up. It's rather serious in some places.
I just went through this. They gave a one percent raise, last year, because COVID. (The company was fine.) Inflation around five. I talked to recruiters and got a new job, with nearly forty percent increase. Prior employer offered me a large increase to stay. I did not. A raise below inflation is a pay cut. That’s enough.
A couple years ago my previous company cut the standard yearly raise from 3% to 2%. When inflation went crazy during the pandemic I started casually dropping the quoted line into every conversation with coworkers I could. I even threw out some feelers around organizing but I was always laughed off by someone or other.
Facebook HR also got the same question (with the same answer) in the company-wide forum this week. Did I miss some big news story that’s causing this to be on everybody’s mind recently?
It isn't one specific thing. It is just an entire year of shortages and higher prices with no end in sight. I was promoted and received a decent raise this year. With previous raises outside the standard yearly raise, there was a difference. With this one, just treading water.
If that's truly the case then they would pay the same salary regardless of location. Do they? A lot of big employers have proudly said no, they'd pay remote workers less if they're in cheaper locations.
I'm not sure that's currently the case, what with the move to long term remote work. Do you have data showing workers demanding less pay after moving to cheaper areas while retaining the same position in the same organization?
And if they say "No" you can ask them if this means you will earn less in 5 years than you start with now, at which point they probably realize that this isn't an attractive offer and either change the conditions for you, or don't take you.
What I don’t get is this: this person is also an employee who would benefit from that raise ratio.
So why is she feeling like her job is to defend the competitiveness of the company in front of other coworkers?
The incentives are completely messed up in corporate
> So why is she feeling like her job is to defend the competitiveness of the company in front of other coworkers?
Because that is literally HR’s job description?
(If you’re looking for a group similar to an HR department, but flipped so that their job description is “defend the workers in front of the company”, that’s a union)
I suspect the GP is interpreting "Honestly?" as an expression of incredulity at being asked the question - as though the asker did not know their place as an employee.
I can see how such an attitude would be offputting, but I do not believe that is the correct interpretation of the HR spokesperson's meaning.
Sometimes it something like "I know you won't want to hear this" or "I suspect you won't like the answer". It is prefacing something like I know you don't want to hear this but I would rather be honest than lie about it.
My employers automatically corrects for inflation at the end of each year. Of course it's still 'behind the curve', since inflation happening this year is only compensated next year, but it's still something.
Pro-tip, if you have yearly performance/raise/bonus discussions, let your manager tell you all of the nice things to justify why they are giving you a raise. Dig into it, be super grateful and receptive. Then ask "oh of course this is in addition to an inflation compensation, right?"
If not, it's appropriate to be genuinely confused about why you're actually not getting a raise at all given his/her stated reasons why you are deserving of one.
I just had the opposite happen to me where I asked for a raise and my manager asks if I've considered annual inflation compensation. It was both funny and depressing
Why compare the “standard raise” with inflation when you could compare it with the CEO’s total comp? Is the ratio of CEO-to-employee pay competitive? Has the company’s pandemic response increased or decreased this ratio? How about comparing employees versus the comp awarded to the board or other investors?
Tell HR and the C-levels that the employees are making a big investment of themselves at the company. Shape the dialog such that the leadership has to recognize the employees as investors, not cogs.
I worked for a midsize tech company until recently. At the end of 2020, I did well on my annual performance review but did not see a compensation increase. In the 2021 mid cycle review, I got a promotion to the next level and saw about a 7% compensation increase.
At every all-hands since late 2020, the topic of attrition and comp comes up. Every time, the response was that they're keeping an eye on local market conditions and attrition, and if it looks like we're falling behind we'll make adjustments.
Anyways, I left for big tech and got a 70% raise (despite a downlevel)
You know what sucks is that I'm currently with a similar midsize tech company. Love the work, the company and the people; but, I also know that I'm probably only getting a 2-5% bump at the end of this year and if I want anything more I have to go looking for another gig.
It sucks that every job has a "lifespan" of only 2-3 years before it would be foolish not to go get another job for a massive pay bump. As much as I love my current employer I'll probably leave sometime in 22"
yeah when they say they're "keeping an eye..." they're probably just waiting for attrition to get bad enough. You did the right thing for your old coworkers. Perhaps your departure and others will lead them to reconsider their position.
It pretty much let everyone on the call know what they needed to do if they wanted a good raise.
What is needed? I mean, if she's a straight shooter and your salaries are competitive locally, does that mean you'll have to up up and move elsewhere? That costs time and money, and to be honest, wages are low nation-wide.
This does highlight the fact that wages are kept low almost by a concerted effort among employers. They aren't going to change out of the goodness of their hearts. Change has to come from the government (don't hold your breath), or from workers acting collectively.
To be fair, the company's goal is to pay enough to attract and retain the right talent, not to keep up with inflation. e.g. if everyone else in the market is giving 0%, why would they give 6%?
Also, I assume employees would be pretty upset (I would be) if they got -2% if there is deflation happening, so seems a bit of a double standard there.
Long way of saying I think tying increase to inflation is kinda silly.
That's because this is Keynesian 'semi-inflation', which is a reallocation and rationing of increasingly scarce resources by price. Markets are doing what markets do.
Those with the power to match prices with wage demands stay where they are, and the cost is transferred to those who cannot push wages, and those who lose their jobs.
That's actually how inflation is actually controlled - via the threat of unemployment and wage suppression.
Interest rate changes are the Wizard of Oz. Wage suppression and unemployment are the man behind the curtain.
The end result of unregulated capitalism is feudalism/slavery.
Just think:
What is more competitive than a company where its employees work for free?
Should we be surprised that this is exactly where things are going? Not literally for free, but to its modern equivalent - the minimum people accept before they get to the streets with pitchforks. The modern day version of working for free is working for a salary where you basically don't get much of it except for basic necessities required for said job. Putting kids in debt out of college has been "perfect" for this. The revolting house prices idem. So workers are forced to be in debt for their whole life, and get to enjoy 2 weeks of holidays out of 52 in a year, while the rest spending on surviving. How far is that from working for free, in the modern day, really? What is the alternative, be a social outcast and go live in the woods? Risk it all and be entrepreneur?
Unregulated capitalism is working as intended. And that's exactly the problem.
I wish we had more systems thinking around these problems.
From my perspective it seems some are quick to want to change to another system on any signs of problems in the initial system; where the new system fails to have any good feedback loops built in.
I also see a lot of one off solutions that don’t fully understand the systems problem that only introduces more complexity to the system usually without solving the initial problem.
"in the long run, it’s really, really hard to cut nominal wages. Yet when you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts. So having a somewhat higher inflation rate would lead to lower unemployment, not just temporarily, but on a sustained basis."
Worker pay not keeping up with inflation is not merely an effect of inflation. It is the policy goal.
This is how you get a labor shortage when a large portion of jobs are literally not worth doing. It was already a joke to work at minumum wage before this.
In favor of business and also government who has a great degree of control over inflation. The government also benefits a lot from inflation of course, the tax brackets don't change and they have trillions of dollars to spend. Labor doesn't have even a fighting chance.
Honestly, I am profoundly in disagreement with Krugman about everything, but that's because he's right about everything, but in wrong ways, usually due to a huge, huge, blind spot at the root. And it's frustrating that he can take people in with his analysis because it's easy to accept his arguments thinking "just hard enough" (which is catnip for lazy intellectuals).
Like for example with the Babysitter's coop. His analysis IS correct, but his remedy is presented as the absolute solution while being oblivious to the fact that the monetary system is based on a total fiction -- that hours are fungible, (e.g. one hour on christmas is equivalent to one hour on September 19, or even that on hour at midnight on a boring day is equilvalent to one hour at 7pm on a boring day). In general, all monetary and social systems are based on fictions, and they will eventually leak their bad abstractions. But I am not sure that Krugman would accept that iron statement.
I'll give him more credit than that (And I don't think Malcolm Gladwell is horrible, either). But their sins are categorically different: Gladwell is a perfectly good summarizer, he just needs to do be a bit less lazy and do a bit more deep research (to avoid detail errors like igonvalues e.g.) Krugman is not by any means lazy, he just expends a lot of intellectual resources without really thinking deeply. Subtle, but different. Actually kind of in a way going into Gladwell it's good to know that he is a shallow generalist, picking and choose lessons from his work and apply critical thinking as appropriate seems to be the natural default mode, it's much easier to take Krugman 'as an authority' and not bother to do the critical work.
Is it not rather that the inflation of the past 6-12 months has taken everyone by surprise, including employers, and the wages haven’t had time to adapt yet? What we don’t see in the article’s graph is that inflation used to be somewhat consistent but has risen sharply starting in March 2021: https://tradingeconomics.com/united-states/inflation-cpi
I have been traveling abroad in situations where the local currency devalued significantly overnight. It took a few days for shopkeepers to adjust. Nobody knows what the spot rate of inflation is; by definition you need historical data.
Pretty sure that's because it's yearly inflation and March 2021 on that graph means inflation between March 2020 and March 2021, and corona "started" then.
That’s an interesting point re/ yearly but on march 2020 yearly inflation dropped to 0% so I assume at the start of the pandemic many prices were down, not up
As someone who does OK, but lives in reality (not the bay area), I feel a revolution coming. I hope it's not a violent one, but who knows at this point. Hopefully it's just a politician with big policy changes.
People feel completely disenfranchised. You keep hanging housing over their head but just out of reach like some baby toy, then inflation spikes everything else. What's the point of working even?
I don't know the solution, but I don't have a good feeling about the next 10 years.
Past Performance Is Not Indicative Of Future Results. You see many of the same trends in history, yes, but also many surprises. History repeats itself, the second time as farce.
I wonder how much time we have left for a real citizen revolution. Is is not difficult to imagine a near future with an automated and mechanized military and police with equipment that cannot go rogue. People in the US like to talk about guns as protections against state tyranny but not many have automated laser point defence for drone attacks.
I miss the days when people were better educated in civics.
You are right, people talk about guns as protection against state tyrany, but they forget that the reason it works as protection against the state is because the person bringing violence against the state is willing to become a martyr.
The more the state pays in blood, the more it looses it legitimacy.
Tyranny doesn’t happen by force. Tyranny doesn’t look like a burglar breaking into your house, and defeating tyranny doesn’t look like you gunning them down.
Tyranny is invited. It happens when you willingly open the door to someone who says they are going to solve all your problems, yet they never do.
They will always blame someone else when the problems aren’t solved, and you will believe them because you believed them once before. You won’t even recognize this as tyranny because you will be so outraged at the people the tyrant tells you are to blame for your problems. Slowly these people disappear, yet the problems remain.
Until one day the tyrant blames you for the problems of the world. And suddenly you recognize the tyranny for what it is. You reach for your gun but it does you no good. At this point the tyrant has turned everyone against you, just as he had turned you against others.
The process continues until there’s no one left to blame, and the tyrant at this point usually ends up hanging from a tree, or hiding in a hole in the ground.
But at no point in this process is a gun useful for preventing tyranny, unless you’re willing to actually be a martyr and kill the tyrant before anyone recognizes him as such. You’ll be labeled a murderer and sentenced to life in prison, but you will have prevented tyranny.
> People in the US like to talk about guns as protections against state tyranny
They do, but you can ignore it -- it's mostly lies and bluster. If they insist, ask them the last time they participated in (or even saw) an uprising due to government theft by civil asset forfeiture.
You may already be a listener, but I've found great joy in listening to Mike Duncan's Revolutions[1]. It makes it easier to pick out what structures, people, and events today might make their way into history books(or podcasts of the future) one hundred years from now should things go pear-shaped.
There are many points to be made, but one that tends to go less appreciated is that in the period leading up to the dramatic revolutionary events there isn't a constant increase in tension. There are flare ups of course, but they punctuate years of relative peace. Just because tensions die down for a bit does not mean things are getting fixed. Quite the opposite, it lulls people into complacency. That is, until the systemic deficiencies paired with personalities unable to address them collide and everything falls apart.
Another reminder: food was far more expensive then, they had food shortages, and a significant portion of the population could barely afford to eat. It is certainly not worse right now.
I don't know, if you hang out in certain parts of the internet, it feels like a revolution is coming, but it reality Bernie still can't win the primaries, so I don't think the numbers are actually there. But I also won't be surprised if the next generation of voters is more socialist-leaning.
The revolution will not come from the left. The "left" elites have forgotten the people, and the left in general is talking more about identity issues than class issues.
The revolution will be more Trump than Bernie. Like in the early 1900, where more revolutions where fascist than communist.
What does being a multi millionaire allow one to do? An old couple with a few million saved up for the rest of their life is protected against health risks and some inflation, but they are not likely going to be able to spend sufficiently to influence others.
>annual income of 1,100,000 U.S. dollars for a household of 2 is equivalent to $1,309/day per person in 2011 in purchasing power parity dollars, putting you in the high income group worldwide, along with 39.8% of people in advanced economies.
Sanders does not have recurring annual income of $1M+. It was for a couple years due to selling a book at the height of his popularity. Having $1M+ in reliable, recurring income would allow a “multi millionaire” to have influence.
Certainly his position as US Senator and accompanying benefits is significant, but I was just commenting that being a “multi millionaire” is not indicative of much sway assuming multi millionaire also means having a few million in total net worth at retirement age.
Anyway, my point is, I would not qualify him as “elite” in the sense of being able to affect federal policy just by his regular income / net worth if he was not already a US senator. He would get outbid by many others with deeper pockets vying for political influence.
He doesn't quite have a million dollar income. He made a million dollars from selling a book, which is a one-off. His normal annual income is more like 250 000$, which is still a lot.
I came to the same conclusion. However my thinking was more along the lines of examining where the most evocative, incisive, accurate, renderings of culture & critique were being created. I'll tell you, the revolution will not be televised. And it's not coming from America's liberals (and of course not from the Silent gen. type conservatives either.) but it is more often than not coming from the right. Thought not the right that is in power now...
What people in the US call left elites, is being called slightly rightwing in the EU. When I hear comments like „state-funded housing is socialism“ I have to chuckle. That’s just how you make sure people won’t starve if they don’t resort to shady business.
Bernie‘s ideas would be called leftist here, but not extremely so.
It's hard to debunk this since if we declare all democrat party to be "left", then yes, some democrats will be slightly rightwing. But there are definitely some "left" currents that started in US universities and are spreading to the rest of the world. The kind of stuff that Jordan Peterson is preaching against is definitely not considered "slightly rightwing" in the EU.
The EU have tried to introduce it a bunch of times. Normally it got fought back by the UK, who are no longer in the EU. I could definitely see this happening in the next five to ten years.
As sibling poster mentioned, financial transaction taxes are being openly discussed in the EU. I haven't heard anyone call them socialist at least. Politicians in the US seem to use communism/socialism as a strawman to attack anything that would harm their puppeteers' wallets.
Antisemitism is on the rise to. Before comments were removed, the recent movie Santa Inc had tens of thousands of comments abut elves. It's full on Gab, and even on Twitter from the left.
I'm sure there were some bad comments, but IMO this is a marketing ploy. Remember Ghostbusters 2016? The film-makers made a huge deal about the trailer being downvoted heavily, claiming it was all about sexism. When in reality the trailer and the movie were pretty mediocre. Seems like the same thing with Santa Inc. Have you watched the trailer? It looks terrible.
I don't know much about the actual reality in the US outside of what we see on the net, but I feel the revolution you are talking about would come from outside of traditional voting circus.
It don't mean it would bypass election in all cases, but I'd expect a completely different mechanism interfering with who gets to power, instead of the usual "let's min-max campaigns based on declared party allegiance like we did for decades now"
This year, the price of the type of place I want to buy rose so fast, that the downpayment increased by more than what I could save this year. I'm top 30% income bracket and save more then a third of my net.
Watch Ray Dalio's videos on the long term debt cycle and how the economy works in general. Another interesting topic is what is called the "fourth turning" which sort of says that major changes happen around once a human lifecycle. We are going to have some major economic changes in the next decade, but no one knows how that will look. I think it's 50/50 whether it's violent or not.
I read the fourth turning book. I couldn't finish it just because how tenuous the argument was. It was also debunked by experts. I find it absolutely not interesting at all.
What is far more interesting is people seeing through the bullshit. Large parts of our lives have been bureaucratized and oozes with an arrogant and paternalistic ideology that tells us how much we’re worth as if it was a law of nature.
Workers find solidarity, meaning and community among peers and realize that we have real power and can have a say in our lives.
I expect this to grow and I hope it creates a counterbalance to centralized power structures that are quite frankly often severely detached from reality.
You are being overly dramatic. A hundred years ago, workers were treated so bad and had such bad living conditions it makes you sick just to hear about it. THAT lead to some violent revolutions in some countries, most of them young, undemocratic, or unstable. Some of them migrated 2,000 km from their home.
its not only about food, shelter and entertainment, its about perspective. if you have to slave away for another 40 years, living paycheck to paycheck, can barely afford a family, a revolution in whatever form it comes might sound good. Check out the Strike at Kellogs, 80h/week, 16h Shifts for barely any money and the Company just wants to fire the striking employees. You can only press so much productivity out of people until they push back and i think we can see that this pushback is starting...
Yeah this is the reality disconnect, if you call modern work slaving away you're probably not the kind of person that's going to join a violent revolt, it's easy to write that shit on forums.
If you truly believe in all those stories and that they are indicative of society as a whole, I'm sorry, but consider getting of the internet (in a non rude way)
The only oncoming revolution is the status quo. The Democrats aren't going to pass any voting rights legislation while they have the chance, and are going to allow the GOP to enshrine minority rule for the foreseeable future starting in 2022. A minority of the voting electorate is perfectly fine with this, and are situated such that their votes matter more than the majority to let this happen. There's a reason why the rightwing in the USA have embraced Putin and Eastern European soft dictators within the last 10 years, as it allows for massive government/friends of government grifting and minority suppression as a governing platform with public support.
It was represented by Donald Trump, the rise of the right in Europe and the alignment of Russia and China for short term push back on the west.
DT would never have been elected if _any_ of the architects of the GFC had gone to jail. Imho that was Obama’s biggest mistake. Bailouts could be justifiable and understood by the population, no one going to jail was a betrayal.
It caused a tipping point in the erosion of trust in the established political class and in the American democracy.
The vitriol directed against Hilary was a symptom of that distrust
I'm surprised to find this level of shallow take on HN. No, the rise of the populist right is not the natural reaction, it's just was convenient at the time for various plutocrats to direct energy towards.
If that dog caught the metaphorical car, it wouldn't result in an outcome any reasonable person would agree with.
Yup, and the worse part? Nothing changed. Trump didn't didn't do a single fucking thing of material value to ameliorate the positions of those who voted for him, or the middle class for that matter. And yet he's almost sure to win again in 2024.
I think in an astonishingly short amount of time, people in the West forgot what revolution is.
He hasn't declared yet, but that's mainly only because being a declared candidate would put restrictions on how he can fundraise and what he can spend those funds on. He'll either run, or he'll anoint a successor and guarantee them a primary win.
Not to dismiss your point -- because it maybe true -- but don't Americans say this like pretty much all the time? Between survivalists to qAnon supporters it's always about revolution in the country. I'm not saying you are part of any of those, but it seems to me that in reality people in the US just adapt and life goes on...
I feel the same way. I hope I'm wrong, but my prediction is that we will have another civil war in the US within the next 10 years. We cannot continue our current cancel culture and political hatred indefinitely. It will come to a head and people will start killing each other. Again, I hope I'm wrong, but unless we get off our current trajectory, I fear I'm not.
I sincerely hope this comment ages more poorly than any comment ever made.
Culturally, the average person here in India is absolutely clueless about what freedom is. The idea of small government is non-existent in the minds of people.
Based on hundreds of conversations with my red state friends, attitudes are very different. You may be right, but the comparison is missing many key details.
People who are obese enough to not take take stairs but elevators cant fight revolutions by definition.
That is why they have elections, and one way or other democracy fixes most of these problems. Even if the fix is not perfect, or entirely acceptable to everyone.
Revolutions are just totally a different thing altogether and you need way more than milk and egg prices going up, or your favorite politician not getting elected to happen.
Workers in India have it rough, the concept of releasing letters[0] is quite offensive to my western ear. You give me permission to leave?
With H1B it's not much better in the US, lets say your job is taking advantage of you, working you 80 hour weeks, one day you decide that you want to go to your daughters big soccer game and they fire you for it. Find a new job in 30 days (?) or move out of the country. Children in the workhouses during industrial revolution had more mobility. Absolutely bonkers. Clearly designed to be explotative.
My Indian peers have been as good as my western ones on average. I understand the motivations, but you guys really don't have to put up with this. If anyone should revolt it's them.
Yeah, on that violent revolution thing. I've been thinking about it alot for the last few years, and then it dawned on me.
6 Jan 2021.
The violent revolution will always need a leader. In a democracy, that leader will establish some level of political success. These statements derive directly from the definitions.
So what we need to be on the lookout for is a political leader who normalizes mobs and violence, and quasi-political groups/associations which further encourage it.
Jan 6 2021
Proud Boys
QAnon
If you forgive the Goodwin, the example is developments originating in Germany prior to WWII.
See for example Kristallnacht, Nov 1938, Vienna, Austria, and the "spontaneous" mobs responsible for large amounts of the violence
Yes and many state houses were attacked on Jan 6 the weeks leading up to that, people closed a state legislature. Combine those and public schools with rising violence at private-sector workplaces (YouTube, VTA, clerks shot dead over masks)
The revolution is here in the form of workplace violence. Big employers are actually afraid to comment for fear of looking biased against the GOP
Jan 6th could have been so much worse if the President had merely asked, that's how close we got. The pieces were in place and one word, perhaps "go" or "now", would have been enough to cause substantially more injuries and deaths.
I don't think the conditions are close to a large scale revolution in the U.S., especially if you mean a violent revolution. First, there is not a high level of discord in society. Upheavals in the 70s were much more significant than those now. Second, most people blame one or the other political party for our problems, rather than the established order generally, making it more likely people will fight within the bounds of the existing political system.
> making it more likely people will fight within the bounds of the existing political system.
You are aware there was a violent disruption to the peaceful transfer of power last year, right? Since then, predicated on lies, partisans have changed the system to give political parties full control of election results; and the January 6th Committee has essentially uncovered and extensive coup plot that spans the White House, DOJ, and DoD.
We are so far outside of the bounds of the system as we know it that it’s scary people don’t recognize it yet.
EDIT: I'm going to expand upon this because of the dead comment to me, which calls Jan 6 a "riot". It's clear that there is an effort afoot to minimize the events of Jan 6. This needs to end asap because of what the Jan 6 Committee is uncovering.
Jan 6 was not a riot, it was the last stage of a coup plot that started at least the day of the election, before the final results had even been tallied. It's detailed most clearly in the Eastman Memo, authored by John Eastman [0]. The coup plot spanned the White House, Department of Defense, Department of Justice, state legislatures, various members of Congress and the Senate, various lawyers, and of course various paramilitary groups.
The plan was:
1) Pence must declare Arizona invalid when counting certificates of the vote. Specifically Arizona because of the closest states, it comes first alphabetically, and so is counted the soonest.
2) Democrats object, so the matter is taken to the House
3) Voting is done by State Delegation according to the Constitution. Republicans control a majority of delegations, so they would vote in Trump, thus ending democracy in America.
The problem with this plan was that there was no reason to reject any certificate. There was no fraud on the scale Trump claimed. So they tried to litigate, but that failed because they couldn't prove their allegations. Then they tried to strong-arm state election officials by threatening them with jailtime if they didn't manufacture fraudulent votes. That failed as well. They also tried to convince friendly Republican state legislatures to send an alternate slate of electors. That failed as well. They even went so far as to put pressure on state elections boards and county elections officials. This came in the form of threats and intimidation. Trump put pressure on AG Bill Barr to declare the results suspicious but Barr did the opposite, claimed there was no proof of fraud, and he quit because he was smart enough to realize what was going on.
All of this failed because people were just doing their job of running elections in an apolitical matter.
After those efforts, Pence was still wavering on whether to declare Arizona invalid. He needed more pretext so Trump leaned on the Justice department. No one there would open the demanded pretextual investigation except Jeffrey Clark , who was several rungs down the order of succession for acting AG after Barr left. Trump wanted to make him acting AG to open the investigation, but essentially every senior member of the DOJ threatened to quit if he did that, thus ruining the pretext of the investigation, so that failed.
So how do you execute the Eastman memo without Pence? Disrupt the proceedings. The Jan 6. counting of electoral votes is the last stop in the Presidential selection process. If you delay that, you're in extraconstitutional territory. Think of it like a buffer overflow. You're in undefined space where the rules are made by those in power. And guess who had power at the time?
Thus the plan became to hold the Capitol as long as possible in the event that Pence failed to do what Trump wanted. The plan was to generate a great crowd at the ellipse, whip them to a frenzy, point them at the capitol, and if Pence certified Arizona, to then call him out on twitter. Within the crowd they threaded several paramilitary groups including the Prod Boys, Oath Keepers, and 3%ers. While the vast majority of people were not there with...
The above information is not from "media" but from official government proceedings of the bipartisan Jan 6 Committee. I suppose when your elected leaders tell you that the previous government tried to overthrow the current government, one response is to go camping. You do you.
But in the end there is actual physical evidence in front of us. We all have a choice to accept it, or to sweep it under the rug. To deny what it is telling us. To equivocate and prevaricate. To whatabout or to even outright lie to ourselves.
But the actual physical evidence is pointing to a large autocratic force in our government that intends to take away your vote, in favor of Russian-style one-party rule. It already tried once, and it continues unabated today.
Say what you want about the America electoral system, and by God there's a lot to say about it, but at the end of the day there was a transfer of power last year because the old government lost the election fair and square. Elections do matter. Voting does matter. So if you appreciate your right to vote, don't look away. Go on your camping trip, but when you get back, take a long hard look at the evidence presented by the Jan 6th Committee.
Your statement is ambiguous. Are you saying some of the covid restrictions were silly, and should be removed, or are you saying all the restrictions were silly and should be removed?
Most of the people here are from the professional class. Not real hurt as much by Covid restrictions. Some even benefitted by being able to work from home, they benefitted from election rule changes, from online censorship, and so on.
So they don't really understand how much the restrictions are loathed by the working poor, who were already on the brink of bankruptcy pre covid restrictions.
Personally I didn’t benefit but my position allowed me to absorb the destruction of investment wealth and surprise child care expenses when schools closed. I also saw inflation coming as inputs and building materials shot up during the trade war. During the last president, I can’t imagine a company raising consumer costs and bragging about their pricing like they do now. They’d have a militia busting in with a gallows the very next day.
It might be argued that this was the preferred outcome as a healthcare collapse would be worse. Of course they are connected but I'm afraid that it's impossible to debate it without getting political and the priests are eager to call heresy when you go against their dogma.
If you want to make good pay, you have to make it happen. You have to change jobs occasionally (every 2 years). You have to suck up a bit to managers. You have to be at least average at your job. You have to manage your CV. And you have to negotiate.
I'm not saying this is right or fair or nice.
I'm just saying the vast majority of people I've worked with don't do any of those things (except for being at least average at their jobs). Then they're surprised when it's been 10 years, they haven't gotten a raise or a promotion and they don't have a CV that can get them one.
If you don't play the game, you will lose. We all know the game isn't fair. But you have only those options.
I've played it for the last few years and I'm very well paid. Playing does work. People just don't, in part because no one tells them to.
Well you bought into the myth of competition and you have done well in your particular segment of the economy, good for you. But most jobs in this world are just not challenging. Most of the meaningful work in this world is not particularly challenging or competitive, it just needs to be done. Rooms need to be vacuumed, children need to be washed and trucks need to be driven from A to B. So your message to the people who scrub your toilet is "If you don't want to a lower salary than last year, just scrub my toilet harder and faster than the other guy"? Maybe that other guy is a bit older and slower. Have you considered that 10 or 20 years from now you will also be older and slower? Most people are not interested in "gaming" the system, nor are they particularly good at it. Most people are content with comfortable lives in which they play some meaningful/useful role.
To be clear, I never said no one should be a cleaner and I didn't say the way for a cleaner to do better is to worker harder.
Quite the opposite: cleaners don't make much money. But managers do. So if you're a cleaner and you want more money, have a plan to become a manager. Move companies to somewhere that pays better. Start your own cleaning company. Just don't spend 40 years cleaning, never ask for raise, never change jobs, work for minimum wage and wonder why you never became a millionaire...
Of course, if you're content being a cleaner then good luck to you! Just don't say "capitalism cheated me" when you got exactly what you said you were content with...
But but but the MMT fanatics here were telling me that first - no inflation will come, second - its temporary and last - its happening but its good for the workers.
Worker pay hasn't been keeping track with inflation for decades - this isn't new. Politicians are only concerned now because it is impacting the cash (and equivalent) banks of the super rich.
In the US at least it's fairly telling that wages and similar for normal people aren't legally tied to any real measurement and require explicit corrections by lawmakers, whereas everything that benefits law makers and their donors is tied to inflation.
Salary increase rate with matching that of inflation is not a good practice, for anyone. Companies should discuss raises on a case by case basis once a year. That gives more realistic edge to both part of the equation.
I, for one, could care less about 2-3% increase (kinda sweet spot for the inflation rate) in my salary. If I think I’m worth more I’m probably thinking about 25-30%more at the minimum.
Surely a naive question, but is there a reason it isn’t standard practice to index salaries on inflation? That would make sense to me. But I know very little about the topic.
I've read that this mainly happens in periods of hyperinflation. But that would mean 50% inflation month-over-month, so way more than what we're seeing or will likely see in the near future for developed countries. Not sure why it's not standard outside of that, probably because companies don't want or need to.
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[ 3.3 ms ] story [ 388 ms ] threadI think part of the problem is we're using the same word to describe two different things...
"Russell Price, chief economist at Ameriprise, expects inflation to peak at 7.1% in December and January, for example. After that, he expects the inflation rate to fall toward 4% by the summer and below 3% by the end of the year."
https://abcnews.go.com/US/wireStory/inflation-painfully-high...
https://data.oecd.org/hha/household-disposable-income.htm
Americans are still making 25% more than Western European counterparts.
That is true. Personally and anecdotally I find that to be a good thing. I feel much more comfortable with 35h work week, 35 days of paid vacation making €60k without living in the fear of getting fired the next day.
Even if I could get more money in the US, I highly doubt that my standard of living would increase enough to justify the uncertainty that would come with this move. And I think that difference is even more extreme with jobs that don’t require years of education beforehand.
"Information is also presented including social transfers in kind, such as health or education provided for free or at reduced prices by governments and not-for-profit organisations."
The value of benefits isn’t takin into account. Health care is a huge driver of inequality in the US. Tens of millions of you get minimal health care, and even many on health care plans only qualify for a fraction of the treatments Europeans take for granted. Education is another example. Overall the US system is fine, but the funding model is appallingly uneven with the majority of public funds ending up going to schools in wealthy areas. The national funding and provision models in Europe are far more egalitarian and, as with health care, much more efficient.
Even so, there’s still a legitimate gap in the US favour here. That can’t be denied. Arguably what Europeans get in return is peace of mind and a society that has their back. They know that whatever happens to them, they will get decent health care, their kids will get a decent education, and they’re more likely to get fair treatment from their employer.
And as a former manager once told me, 'one needs the constant fear of homelessness to keep workers in line'. That is the real engine of innovation /s
I mean clearly the US is still a very innovative economy, it’s not like everyone is constantly in fear of starvation any second. But still, I don’t see how fear promotes innovation. There are many economic and societal factors in the US that promote risk taking and innovation, but fear of hunger in oppressed workers isn’t one of them.
Second, the OECD adjusts for differences in government transfers like healthcare and education.
That’s exactly my point. For “not skewed by” read “reveal the fact that”. Neither averages nor medians tell you much about the shape of the distribution, but the shape does matter.
Also you’re missing my point about education and health care completely. Yes the OECD accounts for their value overall, but that value is very unevenly distributed in the US. Much more so than in Europe. I also made a point about quality as against just spending.
As another commenter has pointed out, median doesn’t tell the story accurately when it’s being pushed largely by incredibly disproportionate growth in top 10% of earners.
I love my Union, and I’ll grant you that Unions aren’t universally good due to people being shitty but I wholly believe in Unions and hope more people organize. It is the only meaningful way for labor to get what they deserve.
Capital also does not set the prices. The market does.
You know what would be a good first step? Voting Democrat. Even if you're a communist who wants to murder rich people.
This is not true in the Phoenix or Tennessee areas, two places I know folks in the trucking business. Competition for drivers is fierce, and that leads to better offers from firms who have found a niche where they can charge more.
The rich: https://www.cnbc.com/2021/09/17/fed-officials-owned-securiti...
- Powell held between $1.25 million and $2.5 million of municipal bonds. They were just a small portion of his total reported assets. While the bonds were purchased before 2019, they were held while the Fed last year bought more than $5 billion in munis, including one from the state of Illinois purchased by his family trust in 2016.
- Boston Fed President Eric Rosengren held between $151,000 and $800,000 worth of real estate investment trusts that owned mortgage-backed securities. He made as many as 37 separate trades in the four REITS while the Fed purchased almost $700 billion in MBS.
- Richmond Fed President Thomas Barkin held $1.35 million to $3 million in individual corporate bonds purchased before 2020. They include bonds of Pepsi, Home Depot and Eli Lilly. The Fed last year opened a corporate bond-buying facility and purchased $46.5 billion of corporate bonds.
The first thing in the article is a graph where 7 our of the 11 years shown have positive real wage growth.
If worker pay never kept up with inflation, the country would be among the world’s poorest.
https://apps.urban.org/features/wealth-inequality-charts/
The "distribution of family income" chart has been inflation adjusted. Note that for the bottom 10th and 50th percentiles, income has flatlined.
The 90th percentile income earners have seen their wages nearly double, after inflation adjustment.
> If worker pay never kept up with inflation, the country would be among the world’s poorest.
That is flat wrong. Even if you were still making 23$ an hour as you did in the 70's:
https://www.weforum.org/agenda/2019/04/50-years-of-us-wages-... https://www.factcheck.org/2019/06/are-wages-rising-or-flat/
...you'd still be among the top 20% of earners across the earth. Let's take another step down to simple minimum wage. over 7$/hr in the US puts you at... https://en.wikipedia.org/wiki/List_of_countries_by_minimum_w... - in the top 20, which doesn't even include countries without a minimum wage.
Your statement about "among the world's poorest" requires revision.
I can't say his situation is entirely enviable, and I would not suggest using that statistic to tell him that he ought to be happy with his lot in life.
Except in 10 of the last 12 years, as you can clearly see in the same chart
Numbers are bad - "See everyone, things are fucked. I told you so." (which is what this post is about)
Numbers are good - "Meh, I never trust the underlying data anyways. It is all meaningless."
IMO, the problem isn't the CPI. The market is just fundamentally distorted because the government pumps money into real estate into subsidized loans.
Argument: It sort of is keeping up with the real thing (what you have to spend because we'll just take cpi) if you squint at a particular period? Actually it isn't, it's still being systematically underestimated.
CPI is a crap measure of what people actually face in increase of what they have to spend. What you can actually buy, the purchasing power of wages has not been going up. People aren't being fooled into be angry and bitter. Talk to them. Listen to what they say about their constraints in life. Ideally find some people you like for whom you can feel empathy with their situation.
I don't know about the exact methodology, but the concept makes sense to me. "Everyone" is buying food "everyday", so it's sensible to have, say, the price of bread included directly. On the other hand, "no one" is buying houses "everyday"; what people are buying everyday is housing, i.e. how much do you spend to have a roof over your head. This is correlated to house prices, but not that strongly. If you bought your house 30 years ago and the mortgage is paid, it doesn't matter whether houses next to you are suddenly worth 50% more, you're still going to pay the same for housing (except maybe due to taxes). If you're renting, it is going to track house prices, but not perfectly. Apparently, in the SF area, the average rent has actually slightly decreased since 2019, while the average house price has increased.
All of this means that while the average house price might have increased by x%, the average person (as in, if you aggregate those already owning a house, those renting, those buying houses now, ...) is not spending x% more on housing, so it makes sense to use a metric that follows the latter and not the former. Yes, if you're looking at buying a house, it means CPI is not very accurate for you, but then a single number is never going to perfectly fit everyone.
Zoom out a bit and you get something slightly more useful, which does support your argument, too: wages seem, in general, to keep up with inflation – though with lot of variation. https://si.wsj.net/public/resources/images/BN-MA272_wages4_G...
Whether you believe CPI is an accurate representation of cost for the average person is another matter altogether.
If the second one, there where is all that money going? Who is that "cost" that is benefiting?
As for where is the money going? The rising costs are due to increasing demand and simultaneous reductions in supply. A lot of pent up demand deferred by the pandemic has been released. Meanwhile suppliers have lost capacity due to shutting down factories, slimming down work forces and not maintaining or replacing equipment.
A lot of the money from increased costs is invested in ramping up production again. This is pulling people back into employment and kickstarting businesses that were suffering in the lockdowns. It’s funding necessary work. But some of it is being taken by suppliers who find they can ramp up prices and people will still pay.
Remember firms will always try to charge a fortune for their stuff. It's only competition that stops that happening. Competition is excess supply, or at least excess supply capacity.
When competition stops being effective, prices go up.
https://www.theguardian.com/commentisfree/2021/nov/11/us-inf...
Eventually these high margins will attract competitors and bring down the margins but it takes quite awhile to get a chip fab up and running, and similar with meat-packing, lumber mills, etc.
For those examples that is false hope. You can't just spring up a new competitor in the GPU filed out of thin air and expect it to work; Nvidia and AMD duopolies are so far ahead into the game experience wise that no startup could ever catch up no matter how much money you throw at it (even AMD is having a hard time keeping up with Nvidia and they've been at it for 30 years).
Not to mention the insane patent minefield that protects them from competition. Even Intel, a trilion dollar company with experience, patents and fabs can't catch up with the other two.
Granted, during the current shortage, basically any GPU will sell regardless of performance/value proposition which makes it very easy for Intel to enter the market right now, however, 2-3 years ago, when Nvidia and AMD GPUs were affordable and available everywhere, nobody would have ever considered buying Intel discrete GPUs as even their integrated ones were not well received.
Haven't they always been in the GPU market? Sure, they don't compete on top-end GPUs, but almost all their previous builtin/onboard GPUs:
a) Shipped more than NVidia or AMD
b) Were performant enough to satisfy 90%+ or PC or laptop owners.
I am not an economist, and I'd love to be proven wrong. I just don't see how this ends in a good way for the economy.
Inflation is, among other things, a problem of the market having too low a demand for money compared to the supply. One obvious way to fix that is by taxing money out of existence faster, decreasing the supply and thus increasing its value assuming demand stays fixed. (And there's reason to think it will; demand for money is a relatively unflexible parameter.)
But of course, central banks do not control taxation, so there's not much they can do.
Yeah, if you’re interested in this stuff, you should do some research. The Fed’s options aren’t 0% rates vs 15% rates. It’s going to raise rates .25% at a time. .25% is not much of a difference. It’ll move slowly and act cautiously.
The Fed, and other central banks have dealt with inflation many times before. And very effectively at that. Stocks could fall, but the stock market is not the economy, and the Fed has no mandate to prop up stocks.
Not true in the least anymore - retirement savings for a large percentage of our population are tied up in stocks thanks to the death of the pension. Asset and securities prices as a whole are a large concern for the fed when changing policy, as a result.
https://www.chicagofed.org/research/dual-mandate/dual-mandat...
* employment
* price level
* moderate long term interest rates
Cf. https://www.federalreserve.gov/faqs/what-economic-goals-does...
I'd be interested to see them, especially any from the last 40 years (i.e. post-Volker).
For pre-Volker, I'm interested in your sources from the early-mid 70s, and the way inflation was "controlled" in the years immediately surrounding the release of the gold standard.
People who don't know shit about economics sure love to bust out their ignorant opinions.
They believed the inflation was transitory, and were going to wait it out. Now it's very clearly not transitory, so they are taking action
hint: https://www.hussmanfunds.com/wmc/wmc110404.htm
spoiler: " there is in fact no strong "tradeoff" between unemployment and general price inflation, and almost certainly not an exploitable one. The Phillips Curve is essentially a statement that lower unemployment is associated with higher inflation in real wages. The strategy of accepting higher inflation in hopes of achieving lower unemployment (which is the basis of Bernanke's policy efforts) not only drops the phrase "real wages" but reverses the direction of cause and effect. "
Also, it has clearly not been transitory for most of 2021. The "transitory" claim was backed partly by the pandemic, but relied on a 1-year lag. If, however, you used a 2-year lag (thus eliminating pandemic effects...
Average and poor Americans would be better off with a simple formula to set money expansion. Then fire the private 'Federal Reserve' banksters and let someone else have the contract to clear checks.
It is long past time to end the 3rd central bank.
Heck you can see that wage growth outpaced inflation in ~10 of the last 12 years. Isn't that a good thing?
In 1998 Alan Greenspan testified to Congress that central banks lease paper gold to suppress the gold price. '... central banks stand ready to lease gold in increasing quantities ...' https://www.federalreserve.gov/boarddocs/testimony/1998/1998...
It is law that Treasury is allowed to secretly manipulate prices of cuurencies, stocks, bonds, and commodities. https://home.treasury.gov/policy-issues/international/exchan...
It's rigged and the chance of the insiders not trading for their own personal accounts is approximately zero.
Occasionally the commoners get a few scraps like WSB on gamestonk in early 2021.
Whether or not employees are actually worth 6% more they should not have a problem finding a new job in this market (that will pay 6% more).
IT and professional services was 10.5%+ but again only for job switchers.
https://www.valuepenguin.com/news/ADP-wage-growth-report
A labor market with high liquidity leaves most people better off.
wing-_-nuts said 'with inflation rising at 6%, will the company reconsider their 'standard' 2% raise?'
It wouldn't make any sense to say that if the 2% raise was real.
I mean, aren't people resigning in droves these days?
Though to try and prevent misunderstandings - I do think inflation is bad for people who are paid wages. Market forces aren't perfect and "market price" is really a band of prices. Inflation pushes all workers to the low end of the band and means if anyone doesn't feel like negotiating they will be pushed in to a bad deal by default.
Just like millennials love to claim boomers had it easy, it was a small slice of the pie that benefited.
Inflation doesn't change the actual power balance between different actors, it does make the situation more complex and harder to keep up with. It doesn't create real wealth and it is not responsible for a wealth transfer to wage earners. The idea just lacks a mechanism - for the wealth to come from employers or businesses they have to be ignorant, altruistic and disinterested in money. That seems unlikely. Ditto most other actors. Changing value of money favours people who can continuously adjust to it which isn't a typical wage earner.
If a generation gets something for free, they got it from somewhere else. Who lost out here? Why did it need to be inflation to make that happen? If they didn't get it for free, it is unclear why inflation would be necessary in the story instead of incidental.
You should unionize for many reasons but I wouldn't trust it as an efficient tool for pay negotiations.
[1]: because no uninon ever manages to not try to meddle in international politics. Gandalf in LOTR had it right: he did not want power because he knew he would be tempted to try to do a lot of good things.
The way it stands the downvotes are deserved.
I'm personally not unionized but this is not something I would accuse the union of ;-)
Edit: Sorry I might have misread your comment. I should say that our average increase was also above 2% several of those years.
[1] https://en.wikipedia.org/wiki/Wassenaar_Agreement [2] https://www.volkskrant.nl/nieuws-achtergrond/koopkrachtrepar... [3] I recently verified it for my own collective bargaining agreement, and on average, the raises were about 1% point higher than the inflation
Unfortunately unions protect the incompetent and punish the successful (by refusing them the ability to negotiate). It's most pronounced in the heavy unionized industries like teaching and auto manufacturing.
There will always be developers who produce the results of 10, 100 or 500 developers single-handedly. Unions kneecap them, like they kneecap outstanding teachers by paying them the same as the teachers phoning it in every day.
Note that this doesn't always even involve taking it.
Go get a job offer that pays better and bring it to your boss. If they want to match it, great. If they don't, bye.
If someone is unhappy enough to start job hunting rather than talking to me then it's a clear sign that they'll leave soon regardless of any pay rise. Psychologically, every pay increase makes someone happy for a short time, and then they get used to it and they start to wonder if they should have asked for more, or they focus on other reasons why they don't like the role they're in and wonder if the other one would have been more fulfilling. If you match an offer, or even beat it, the person is likely to have left in a year anyway.
The irony is that the main reason people get paid more when they change job is because they move up at the same time.
So giving the same purchasing power for more responsibility would probably not look like a good deal for most (unless responsibility is your thing which is the case for some people).
It's all game theory, in a minefield of unintended consequences. I take the opposite approach: an unspoken but clear attitude of "you know you won't be able to buy me when I excuse myself with a better offer, so better ask yourself now than later how much you actually want to pay me". And no, that certainly does not make me fabously rich (but there actually was a time when it worked much less bad than I would expect, quite amusing in hindsight)
If someone has a chance to take another step up in their career that's a good thing. If I offer them more money to stay at the same level they'd be silly to accept that.
What makes you think people only go job hunting when they're unhappy? I consider it a moral obligation to seek out the best pay (after staying at a job long enough to justify my original hire and for the sake of my own resume) in order to do my small part to increase worker wages.
If they fail, they know I cared enough to assist and trust me and are happy for their job. If they succeed they get a raise, but are more likely to stay and work harder knowing they can trust me and can collaborate.
I don’t see the downside in engaging in this manner.
In other words, unless you can contradict me with a straight face, you're basically just saying you underpay as long as you can get away with it and nothing can stop or change that.
Not all workers are equivalent, and not all roles that seem the same even in the same team, actually are. Let’s say we have a team of 10 people, each with slightly different experience and skills. One of them finds another job with higher pay and asks for it to be matched. What do you do?
It’s quite possible this other role actually matches their skills better than the one with you does. Maybe they are actually worth more to this other company than they are to you. Maybe they had other reasons for looking for a job aside from pay, maybe they’re tired of the job or want a fresh challenge. Maybe it’s a combination of all sorts of factors. Pay is only one.
If you do increase their salary, what about the rest of the team, do you pay them more too? Do they all have the attributes this other company valued in the person they made the offer to? Would they have all got the same offer? Probably not, but now you’ve upped the going rate for a member of your team. They will want the same.
It’s just a really messy situation to get into. If staff retention and recruitment is a problem or you don’t want it to become a problem then sure, of course you should make sure your compensation rates are fair. Of course under paying your team will cause problems. But one person getting one job offer doesn’t necessarily mean anything, except for them.
It's not like everyone performs at the same level or gets the same pay in almost any team I've seen.
If someone gets a job offer, you should consider it a new data point. Some teams don't aim to retain top talent and if that's the case absolutely encourage them to move on. But if you want a high-performing team, you need to pay top of market and a job offer is new signal about the market price.
> Probably not, but now you’ve upped the going rate for a member of your team. They will want the same.
I have never once wanted to be paid the same as everyone on my team. Some people are more experienced than me and should be paid more. Others are less skilled and should be paid less.
It doesn’t matter. Even if they are different, one person getting a raise changes the relative dynamic. Maybe I was being paid more than this team member and now we’re the same, and maybe I still think I’m worth more. It elevates the basis of comparison.
Also, to expand on my post, it creates the impression in the team that the way to get a raise is to get a competing offer. It says that person was being under paid. Maybe that means you are too? It’s just bad all round.
No one, and I do mean no one, is irreplaceable. Maybe you’ll have to throw away an entire IT system because you’ve lost the know how to keep the business case for the system a net positive, but that means a lot less to an organisation (especially enterprise) that we tend to fool ourselves into believing myself included.
When a key contributor asks for a 20% raise (or say $50,000 more per year) and them leaving put millions of dollars of revenue at risk, or more importantly, reflects poorly on a manager and threatens their advancement (why can’t you keep your team happy?) then the math is actually quite simple.
But in a highly siloed and compartmentalized organization where blame for bad decisions never filters down to the ones making them I could see your point.
Every team should fight against this. Writing simple, understandable, documented code that doesn't need some key person to maintain it is a very good thing. For a start, failing to do that locks people in to their job. Not being able to move on, and up, is a very bad thing. Secondly, people leave for reasons other than money. What if someone's husband gets a cool job in another state and they move for that? No amount of money would keep them, so you still lose those millions. Thirdly, there's the bus factor - what if that person is run over by a bus? How do you keep going?
Paying someone more and more to keep them is only patching the underlying problem that your team isn't resilient enough to catastrophic change. Fix that problem.
My experience is on teams of 2-3 working towards a product launch that has to happen in 6 months and sure we can always replace someone if they die. The cost of that if not in revenue, but team efficiency, sacrifice of other work, is way more than a few tens of thousands per year.
And of course, everyone is replaceable. But replacing them may cost more than just paying them more, even if it keeps them around for another 6 months.
If you’re a good manager you’ll want to keep your employees for 5-7 years. This is because you want to help your employees develop their talents and grow their career, and when you do that, they’ll eventually outgrow the role you hired them to do and how far it was possibly to extend it to accommodate their growth. By that point, you kind of want your employees to move on. Maybe to a new position within your own organisation or to a different place. It’s not because you don’t like them or don’t want them to stay, but it’s because good employees tend to outgrow you. A select few people can stay in the same functions their entire lives and never lose enjoyment or motivation, but most of us aren’t like that and you have to keep that in mind when it comes to “pay me more, or I’m leaving” negotiating.
More than that though, you have to see how relying too much on individual employees is actually what is the management mistake in these type of situations. The issue isn’t “why couldn’t you keep x”, it’s “why did you let x become irreplaceable” because any good manager should know better.
Maybe the public sector in Denmark is different than other places, maybe not. I don’t think that it is. What typically happens when you have IT systems that rely too much on an employee is that they leave you and then you end up paying them a lot more money to consult for 6 months until someone else has redesigned the systems to no longer be too dependent on a single person and your former employee finally gets to really move on.
You are comparing throwing away an entire IT system to increasing the salary of _one_ employee.
If you have systems (and that is any function, also cutting onions in the kitchen) that relies so heavily on one employee that you can not continue to operate them without that person then you have a serious issue.
Because you don’t retain employees, and your goal isn’t to keep them forever either. Even if they are happy and stay for 40 years they will eventually retire and then the system tend to break down anyway, and that’s with planned departure. What if your vital employee gets run over by a truck on the way to work?
So from an organisational perspective, it’s not an entire IT system vs one employee. It’s removing a flawed and dangerous system from your organisation.
Some people will argue that employees who design such systems aren’t worth keeping to begin with. I would agree, if the world was perfect, but it’s not.
Long time ago when I was employed I liked my job but felt that I am being paid less than what I could get. So I went searching and after a while got a really nice offer. With that offer I came to the company owner and ask him to give me a reason why should not I take the offer. He did give me a reason - matched the offer and put bonus on top. The end result - I stayed. Well until I went on my own and never looked back.
A new company is willing to risk it on you, while paying more than your current job where you have experience. No surprise they leave in a year anyway.
This is the crux of the problem - people assume that anyone going to their boss asking for a raise is underpaid. That isn't always true.
When someone goes and finds a new role on more money it's almost always at a higher level. People move upwards when they move on. Matching an offer usually means paying someone the salary for the higher level role to do the work of the lower level role.
If someone wants to move up a level to earn more I've always been happy to talk to them about that. That's not what we're talking about here though.
so you mean if a recruiter contacts your workers and says we can offer you X amount and they check it out they should have talked to you beforehand?
If you would be a supplier you stance would translate to, I never make a new offer if a customer comes with a better offer from a competitor. I suspect one would loose a lot of customers this way.
I have no opinion on if the negotiating tactic is good or not, only that the comparison of goods and people isn't quite right IMO.
Edit: I also find the argument that employment is not a an economic transaction a really weird argument. Employers don't give raises just so that the employee feels better for example.
The OP talked about people, then your reply was about goods. Unless "contract with a supplier" was about humans as goods, that term obviously means purchasing stuff, not purchasing humans. Who uses "purchasing" when it's about humans/employees?
Goods don't have a brain and no state of mind which was at the center of the OP's comment.
Okay, back to your original reply then:
> If you are responsible for purchasing, will you ask competitors for quotes?
The OP talked about the people themselves. If we follow your line then you don't talk about the employee at all any more. You are talking about something else than the OP.
What if salary is the only thing they are unhappy about?
https://allthingsd.com/20110108/twitter-courts-googles-sunda...
I’ve tried your approach and it’s usually a token amount or “sorry there isn’t a budget”. When I have an another offer then suddenly they find “flexibility”. But that said, I don’t even ask for more if I’m so unhappy I see myself leaving anyways.
I understand mot everybody can move up the ladder or get more money, but if as I line manager you can’t provide incentives or growth opportunities I would look at you first. If you don’t know the aspirations of your people and you match this with the strategy and goal of the company, are really made for your role? Every manager should be more like - I know you can leave anytime lets find the best solution for all…
So, you give an inflation matching pay adjustment automatically?
I've gone back to exactly the same job as I started 20 years ago. Pay has doubled, house prices have increased 3-4 times in my small ex-industrial, high-crime, UK city.
The first thing my father told me when I started working was "never accept a counter offer. Don't put in your notice unless you're ready to leave - because even if they give you a counter-offer, they'll start looking for your replacement once they know you're looking."
He announced he was leaving our company for Amazon (which paid substantially more), and we even had a whole Friday goodbye party with cake and balloons. The next Monday we came into the office, surprised to see him still working for us. It turns out that over the weekend he somehow convinced management to match and exceed Amazon's offer.
His "trick" for getting a raise is that our whole dev-ops setup was unworkable without him. Management hadn't come up with contingencies for his inevitable departure, and thus he held all the leverage in salary negotiations.
They expressed that they wanted me to stay but at the end of the day it was crocodile tears.
It is true, but i am not sure it is a good long term strategy, i suspect that too much job hopping doesn't look good on the resume.
Also changing jobs becomes harder with age, i am fifty one years old, and last time around, when forced to look for a new job, I found that it was quite a bit of a challenge (being said that, i need to feed my family, so that i really need a raise :-( )
One of the best things Covid has done for my salary is make remote work far more common so I could get a job outside of the local market without having to move.
- Available products in the world,
- Number of people who can afford them.
With Covid, we didn’t produce for 2 months in 2020 and we’ve produced slower in 2021. And all governments distributed free money. So, in theory there is clearly not enough goods produced for everyone in the world. Prices should rise dynamically until 10% fewer people can afford them than in 2019.
Where are the people who can’t afford buying things? There should be a diminution of 10% global consumption, where is it? Where are the people whose company won’t be able to match inflation, even if they unionize?
The inflated currency doesn’t matter, who’s the people who are depriving themselves while I’ve made a fortune and bought a house? I see we’re a whole lot who won the jackpot with Covid, who are the losers and why aren’t they already revolting?
The already-marginalized? "The Trussell Trust reported a 33 per cent increase in the number of three-day emergency food parcels in 2020-21 compared to 2019-20,"
https://commonslibrary.parliament.uk/research-briefings/cbp-...
> There should be a diminution of 10% global consumption, where is it?
Hospitality and travel.
Take the EU, as you go down the GDP/capita list, prices for everything including basic goods have risen massively, wages have not.
All the best stuff goes to the richer regions, the leftovers (if any) are overpriced for locals, everyone is materially poorer, not even land/housing is cheaper because foreign investors gobble it up. It's rather serious in some places.
A couple years ago my previous company cut the standard yearly raise from 3% to 2%. When inflation went crazy during the pandemic I started casually dropping the quoted line into every conversation with coworkers I could. I even threw out some feelers around organizing but I was always laughed off by someone or other.
It is mostly the market (e.g. the other company pay high, so we do too). The living cost doesn't really matter.
I appreciate the honesty though.
Most companies are still requiring onsite. Even apple (one of the most innovative companies) still wants employees onsite.
Not all companies are run by idiots.
What did you tell them?
Because that is literally HR’s job description?
(If you’re looking for a group similar to an HR department, but flipped so that their job description is “defend the workers in front of the company”, that’s a union)
The 'No' alone would be enough, but the 'Honestly?' would me want to look for other jobs right away.
>
> The 'No' alone would be enough, but the 'Honestly?' would me want to look for other jobs right away.
Can you explain why one is worse than the other?
(I'm not being facetious, I'd really rather like to know).
I can see how such an attitude would be offputting, but I do not believe that is the correct interpretation of the HR spokesperson's meaning.
Pro-tip, if you have yearly performance/raise/bonus discussions, let your manager tell you all of the nice things to justify why they are giving you a raise. Dig into it, be super grateful and receptive. Then ask "oh of course this is in addition to an inflation compensation, right?"
If not, it's appropriate to be genuinely confused about why you're actually not getting a raise at all given his/her stated reasons why you are deserving of one.
Tell HR and the C-levels that the employees are making a big investment of themselves at the company. Shape the dialog such that the leadership has to recognize the employees as investors, not cogs.
At every all-hands since late 2020, the topic of attrition and comp comes up. Every time, the response was that they're keeping an eye on local market conditions and attrition, and if it looks like we're falling behind we'll make adjustments.
Anyways, I left for big tech and got a 70% raise (despite a downlevel)
It sucks that every job has a "lifespan" of only 2-3 years before it would be foolish not to go get another job for a massive pay bump. As much as I love my current employer I'll probably leave sometime in 22"
What is needed? I mean, if she's a straight shooter and your salaries are competitive locally, does that mean you'll have to up up and move elsewhere? That costs time and money, and to be honest, wages are low nation-wide.
This does highlight the fact that wages are kept low almost by a concerted effort among employers. They aren't going to change out of the goodness of their hearts. Change has to come from the government (don't hold your breath), or from workers acting collectively.
Also, I assume employees would be pretty upset (I would be) if they got -2% if there is deflation happening, so seems a bit of a double standard there.
Long way of saying I think tying increase to inflation is kinda silly.
What I'm seeing is a chart of real gains over the last decade. That's great!
Those with the power to match prices with wage demands stay where they are, and the cost is transferred to those who cannot push wages, and those who lose their jobs.
That's actually how inflation is actually controlled - via the threat of unemployment and wage suppression.
Interest rate changes are the Wizard of Oz. Wage suppression and unemployment are the man behind the curtain.
Just think:
What is more competitive than a company where its employees work for free?
Should we be surprised that this is exactly where things are going? Not literally for free, but to its modern equivalent - the minimum people accept before they get to the streets with pitchforks. The modern day version of working for free is working for a salary where you basically don't get much of it except for basic necessities required for said job. Putting kids in debt out of college has been "perfect" for this. The revolting house prices idem. So workers are forced to be in debt for their whole life, and get to enjoy 2 weeks of holidays out of 52 in a year, while the rest spending on surviving. How far is that from working for free, in the modern day, really? What is the alternative, be a social outcast and go live in the woods? Risk it all and be entrepreneur?
Unregulated capitalism is working as intended. And that's exactly the problem.
From my perspective it seems some are quick to want to change to another system on any signs of problems in the initial system; where the new system fails to have any good feedback loops built in.
I also see a lot of one off solutions that don’t fully understand the systems problem that only introduces more complexity to the system usually without solving the initial problem.
https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hi...
"in the long run, it’s really, really hard to cut nominal wages. Yet when you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts. So having a somewhat higher inflation rate would lead to lower unemployment, not just temporarily, but on a sustained basis."
Worker pay not keeping up with inflation is not merely an effect of inflation. It is the policy goal.
Spoiler: it's not
What is all that employment for if people can't pay their bills from it?
Like for example with the Babysitter's coop. His analysis IS correct, but his remedy is presented as the absolute solution while being oblivious to the fact that the monetary system is based on a total fiction -- that hours are fungible, (e.g. one hour on christmas is equivalent to one hour on September 19, or even that on hour at midnight on a boring day is equilvalent to one hour at 7pm on a boring day). In general, all monetary and social systems are based on fictions, and they will eventually leak their bad abstractions. But I am not sure that Krugman would accept that iron statement.
Relatedly, do you have on Taleb? Given that Taleb and Krugman seem to have beef.
Should we really expect wage gains to march inflation within six months?
I have been traveling abroad in situations where the local currency devalued significantly overnight. It took a few days for shopkeepers to adjust. Nobody knows what the spot rate of inflation is; by definition you need historical data.
Feels like I no longer to make money twice - once to get paid, twice to invest it such to beat inflation.
People feel completely disenfranchised. You keep hanging housing over their head but just out of reach like some baby toy, then inflation spikes everything else. What's the point of working even?
I don't know the solution, but I don't have a good feeling about the next 10 years.
https://en.m.wikipedia.org/wiki/French_Revolution
For example, with the way supply chains are right now, how much leverage do transportation/logistics workers have to force a change?
https://en.wikipedia.org/wiki/Tang_ping https://fred.stlouisfed.org/graph/?g=JXII
You are right, people talk about guns as protection against state tyrany, but they forget that the reason it works as protection against the state is because the person bringing violence against the state is willing to become a martyr.
The more the state pays in blood, the more it looses it legitimacy.
Tyranny is invited. It happens when you willingly open the door to someone who says they are going to solve all your problems, yet they never do.
They will always blame someone else when the problems aren’t solved, and you will believe them because you believed them once before. You won’t even recognize this as tyranny because you will be so outraged at the people the tyrant tells you are to blame for your problems. Slowly these people disappear, yet the problems remain.
Until one day the tyrant blames you for the problems of the world. And suddenly you recognize the tyranny for what it is. You reach for your gun but it does you no good. At this point the tyrant has turned everyone against you, just as he had turned you against others.
The process continues until there’s no one left to blame, and the tyrant at this point usually ends up hanging from a tree, or hiding in a hole in the ground.
But at no point in this process is a gun useful for preventing tyranny, unless you’re willing to actually be a martyr and kill the tyrant before anyone recognizes him as such. You’ll be labeled a murderer and sentenced to life in prison, but you will have prevented tyranny.
They do, but you can ignore it -- it's mostly lies and bluster. If they insist, ask them the last time they participated in (or even saw) an uprising due to government theft by civil asset forfeiture.
There are many points to be made, but one that tends to go less appreciated is that in the period leading up to the dramatic revolutionary events there isn't a constant increase in tension. There are flare ups of course, but they punctuate years of relative peace. Just because tensions die down for a bit does not mean things are getting fixed. Quite the opposite, it lulls people into complacency. That is, until the systemic deficiencies paired with personalities unable to address them collide and everything falls apart.
1. https://thehistoryofrome.typepad.com/revolutions_podcast/
https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_R...
The revolution will be more Trump than Bernie. Like in the early 1900, where more revolutions where fascist than communist.
You mention this in a discussion about Bernie Sanders? Probably the politician with the most single-minded focus on class politics in the country
Bernie isn't elite and not close to any power circle.
>annual income of 1,100,000 U.S. dollars for a household of 2 is equivalent to $1,309/day per person in 2011 in purchasing power parity dollars, putting you in the high income group worldwide, along with 39.8% of people in advanced economies.
*2 since he has a wife.
And he doesn't have to pay much for insurance as per this [3](https://www.cnbc.com/2017/07/25/heres-how-much-members-of-co...)
He is a part of the "elite" class as per his income. And being a senator he does have a lot of influence over policy.
I don't hate Bernie but seeing the discourse regarding him, that often deifies him feels disingenuous to me.
Certainly his position as US Senator and accompanying benefits is significant, but I was just commenting that being a “multi millionaire” is not indicative of much sway assuming multi millionaire also means having a few million in total net worth at retirement age.
Anyway, my point is, I would not qualify him as “elite” in the sense of being able to affect federal policy just by his regular income / net worth if he was not already a US senator. He would get outbid by many others with deeper pockets vying for political influence.
And to be perfectly honest, the fall of communism, kind of coincides with when the balance of rich vs the rest started to go off rails.
Communism is dead, but that doesn't mean something else cant come and replace it (and probably be just as bad)
Bernie‘s ideas would be called leftist here, but not extremely so.
That's simply not true.
> Bernie‘s ideas would be called leftist here
Where is "here"? How is "financial transaction tax" a mainstream idea in europe?
It don't mean it would bypass election in all cases, but I'd expect a completely different mechanism interfering with who gets to power, instead of the usual "let's min-max campaigns based on declared party allegiance like we did for decades now"
Workers find solidarity, meaning and community among peers and realize that we have real power and can have a say in our lives.
I expect this to grow and I hope it creates a counterbalance to centralized power structures that are quite frankly often severely detached from reality.
People have food, shelter, entertainment.
Yeah this is the reality disconnect, if you call modern work slaving away you're probably not the kind of person that's going to join a violent revolt, it's easy to write that shit on forums.
If you call "Amazon workers not being allowed to leave or shelter when there is a tornado warning" not slaving away i dont know what is...
What about all those "Gig Economy" Workers that get paid the bare minimum without benefits?
You might not see it from your cozy office because this development hasn't impacted you yet ... but it will sooner or later.
It's not a light switch, but we can try paving the roads at the bare minimum so that the societal wagon train can transition.
I do what I can, and you might do as well, but there needs a fundamental ideological shift in how we perceive those cornerstone workers.
https://news.ycombinator.com/item?id=29581125
It was represented by Donald Trump, the rise of the right in Europe and the alignment of Russia and China for short term push back on the west.
DT would never have been elected if _any_ of the architects of the GFC had gone to jail. Imho that was Obama’s biggest mistake. Bailouts could be justifiable and understood by the population, no one going to jail was a betrayal.
It caused a tipping point in the erosion of trust in the established political class and in the American democracy.
The vitriol directed against Hilary was a symptom of that distrust
People are sick of status quo. That's why more and more are willing to try anything that will shake things up.
If that dog caught the metaphorical car, it wouldn't result in an outcome any reasonable person would agree with.
Yup, and the worse part? Nothing changed. Trump didn't didn't do a single fucking thing of material value to ameliorate the positions of those who voted for him, or the middle class for that matter. And yet he's almost sure to win again in 2024.
I think in an astonishingly short amount of time, people in the West forgot what revolution is.
Wait, what? He's running again?
I sincerely hope this comment ages more poorly than any comment ever made.
As some one who lives in India, where inflation is perennially high. I can assure you revolution is not coming, in fact not even a protest march.
Revolutions needs a lot of hunger and suffering, its not things like milk going from being $9 to $12 a unit.
The common man delays things like fighting for almost as long as they can, its only when things just go too far do things like revolution happen.
USA is not even remotely close to any such situation.
Based on hundreds of conversations with my red state friends, attitudes are very different. You may be right, but the comparison is missing many key details.
That is why they have elections, and one way or other democracy fixes most of these problems. Even if the fix is not perfect, or entirely acceptable to everyone.
Revolutions are just totally a different thing altogether and you need way more than milk and egg prices going up, or your favorite politician not getting elected to happen.
With H1B it's not much better in the US, lets say your job is taking advantage of you, working you 80 hour weeks, one day you decide that you want to go to your daughters big soccer game and they fire you for it. Find a new job in 30 days (?) or move out of the country. Children in the workhouses during industrial revolution had more mobility. Absolutely bonkers. Clearly designed to be explotative.
My Indian peers have been as good as my western ones on average. I understand the motivations, but you guys really don't have to put up with this. If anyone should revolt it's them.
[0]https://resume.naukri.com/relieving-letter-format
6 Jan 2021.
The violent revolution will always need a leader. In a democracy, that leader will establish some level of political success. These statements derive directly from the definitions.
So what we need to be on the lookout for is a political leader who normalizes mobs and violence, and quasi-political groups/associations which further encourage it.
Jan 6 2021 Proud Boys QAnon
If you forgive the Goodwin, the example is developments originating in Germany prior to WWII.
See for example Kristallnacht, Nov 1938, Vienna, Austria, and the "spontaneous" mobs responsible for large amounts of the violence
The revolution is here in the form of workplace violence. Big employers are actually afraid to comment for fear of looking biased against the GOP
You are aware there was a violent disruption to the peaceful transfer of power last year, right? Since then, predicated on lies, partisans have changed the system to give political parties full control of election results; and the January 6th Committee has essentially uncovered and extensive coup plot that spans the White House, DOJ, and DoD.
We are so far outside of the bounds of the system as we know it that it’s scary people don’t recognize it yet.
EDIT: I'm going to expand upon this because of the dead comment to me, which calls Jan 6 a "riot". It's clear that there is an effort afoot to minimize the events of Jan 6. This needs to end asap because of what the Jan 6 Committee is uncovering.
Jan 6 was not a riot, it was the last stage of a coup plot that started at least the day of the election, before the final results had even been tallied. It's detailed most clearly in the Eastman Memo, authored by John Eastman [0]. The coup plot spanned the White House, Department of Defense, Department of Justice, state legislatures, various members of Congress and the Senate, various lawyers, and of course various paramilitary groups.
The plan was:
1) Pence must declare Arizona invalid when counting certificates of the vote. Specifically Arizona because of the closest states, it comes first alphabetically, and so is counted the soonest.
2) Democrats object, so the matter is taken to the House
3) Voting is done by State Delegation according to the Constitution. Republicans control a majority of delegations, so they would vote in Trump, thus ending democracy in America.
The problem with this plan was that there was no reason to reject any certificate. There was no fraud on the scale Trump claimed. So they tried to litigate, but that failed because they couldn't prove their allegations. Then they tried to strong-arm state election officials by threatening them with jailtime if they didn't manufacture fraudulent votes. That failed as well. They also tried to convince friendly Republican state legislatures to send an alternate slate of electors. That failed as well. They even went so far as to put pressure on state elections boards and county elections officials. This came in the form of threats and intimidation. Trump put pressure on AG Bill Barr to declare the results suspicious but Barr did the opposite, claimed there was no proof of fraud, and he quit because he was smart enough to realize what was going on.
All of this failed because people were just doing their job of running elections in an apolitical matter.
After those efforts, Pence was still wavering on whether to declare Arizona invalid. He needed more pretext so Trump leaned on the Justice department. No one there would open the demanded pretextual investigation except Jeffrey Clark , who was several rungs down the order of succession for acting AG after Barr left. Trump wanted to make him acting AG to open the investigation, but essentially every senior member of the DOJ threatened to quit if he did that, thus ruining the pretext of the investigation, so that failed.
So how do you execute the Eastman memo without Pence? Disrupt the proceedings. The Jan 6. counting of electoral votes is the last stop in the Presidential selection process. If you delay that, you're in extraconstitutional territory. Think of it like a buffer overflow. You're in undefined space where the rules are made by those in power. And guess who had power at the time?
Thus the plan became to hold the Capitol as long as possible in the event that Pence failed to do what Trump wanted. The plan was to generate a great crowd at the ellipse, whip them to a frenzy, point them at the capitol, and if Pence certified Arizona, to then call him out on twitter. Within the crowd they threaded several paramilitary groups including the Prod Boys, Oath Keepers, and 3%ers. While the vast majority of people were not there with...
A bunch of rioters doesn't really say much about the whole country erupting into revolution.
Uhm...
>> the January 6th Committee has essentially uncovered and extensive coup plot that spans the White House, DOJ, and DoD
That's a bit more than just "a bunch of rioters"..
But in the end there is actual physical evidence in front of us. We all have a choice to accept it, or to sweep it under the rug. To deny what it is telling us. To equivocate and prevaricate. To whatabout or to even outright lie to ourselves.
But the actual physical evidence is pointing to a large autocratic force in our government that intends to take away your vote, in favor of Russian-style one-party rule. It already tried once, and it continues unabated today.
Say what you want about the America electoral system, and by God there's a lot to say about it, but at the end of the day there was a transfer of power last year because the old government lost the election fair and square. Elections do matter. Voting does matter. So if you appreciate your right to vote, don't look away. Go on your camping trip, but when you get back, take a long hard look at the evidence presented by the Jan 6th Committee.
I keep telling people something has to give soon. The pressures at the fault line are rising.
So they don't really understand how much the restrictions are loathed by the working poor, who were already on the brink of bankruptcy pre covid restrictions.
If you want to make good pay, you have to make it happen. You have to change jobs occasionally (every 2 years). You have to suck up a bit to managers. You have to be at least average at your job. You have to manage your CV. And you have to negotiate.
I'm not saying this is right or fair or nice.
I'm just saying the vast majority of people I've worked with don't do any of those things (except for being at least average at their jobs). Then they're surprised when it's been 10 years, they haven't gotten a raise or a promotion and they don't have a CV that can get them one.
If you don't play the game, you will lose. We all know the game isn't fair. But you have only those options.
I've played it for the last few years and I'm very well paid. Playing does work. People just don't, in part because no one tells them to.
Average doesn't mean great. It might not even mean good tbh.
I've worked with a few terrible people who pull the average down so that helps.
That is complete garbage.
What you mean is that you have to change jobs if you don't see the potential for growth and growth opportunities.
https://www.forbes.com/sites/cameronkeng/2014/06/22/employee...
Quite the opposite: cleaners don't make much money. But managers do. So if you're a cleaner and you want more money, have a plan to become a manager. Move companies to somewhere that pays better. Start your own cleaning company. Just don't spend 40 years cleaning, never ask for raise, never change jobs, work for minimum wage and wonder why you never became a millionaire...
Of course, if you're content being a cleaner then good luck to you! Just don't say "capitalism cheated me" when you got exactly what you said you were content with...
In the US at least it's fairly telling that wages and similar for normal people aren't legally tied to any real measurement and require explicit corrections by lawmakers, whereas everything that benefits law makers and their donors is tied to inflation.