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Our Broken Economy, in One Simple Chart

nytimes.com

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Re: Our Broken Economy, in One Simple Chart

#31

Post by api »

sharemywin wrote: post #29
sokoloff wrote: post #19

Earlier quoted context omitted.

> Wages are stagnant but the cost of housing, education, and health care can only go up and up and up. Wages are not stagnant. From the article: The news regarding the American middle class is not all bad. Although the middle class has not kept pace with upper-income households, its median income, adjusted for household size, has risen over the long haul, increasing 34% since 1970. That is not as strong as the 47% in…

median home values: 1970: $17,000. 1980: $47,200. 1990: $79,100. 2000: $119,600. a lot more than 34%.

Of the factors I mentioned housing is the worst. I recently heard someone call real estate the "great Satan" of the economy.

Re: Our Broken Economy, in One Simple Chart

#32

Post by utexaspunk »

anovikov wrote: post #2

Why is this a problem, as long as everyone is not worse off? Growth should go to the people who make it possible - in 1960s it were highly qualified, unionized industrial plant workers. Now these are people like us. Not some imaginary predatory capitalists.

>Now these are people like us

The top 0.01% has an income over $8m/year. I dunno about you or anyone else here, but I'm in the top 5% and that is still light years away from being "like me".

The problem is that people making that much can see their income grow without even lifting a finger while real wages remain stagnant for the bulk of the working population. Profits paid to investors are wages denied from those actually creating the value.

Re: Our Broken Economy, in One Simple Chart

#33

Post by toss1 »

anovikov wrote: post #2

Why is this a problem, as long as everyone is not worse off? Growth should go to the people who make it possible - in 1960s it were highly qualified, unionized industrial plant workers. Now these are people like us. Not some imaginary predatory capitalists.

No, sort of, No, and No.

Most of the population IS worse off. Just look at the chart - you need to go to about the 96th percentile to find people who aren't worse off.

Yes the growth should go to the people who make it possible, but it is NOT actually doing so (and if you think that the founder/ceo is solely responsible for the growth and we can safely ignore the contribution of all the people who actually do the work, well, you're beyond help).

While there are some true innovators in the tech industry, vastly more capital goes to extractive, rent-seeking corporations that are actually ANTI-innovative, and merely exploit their position to extract maximum rent dollars from customers. Examples: Cable/ISPs who get anti-competitive laws passed to eliminate potential competition, even from towns themselves who want to install cable, MPAA fighting new distribution models, fossil-fuel power providers getting anti-solar legislation passed, high-frequency trading shops that extract money by quasi-legally front-running the market, providing no extra value, auto-dealer associations attempting to prevent Tesla's direct sales business model from coming to their state, real estate agents trying to prevent innovation from changing their commission structure, etc, etc., etc...

Although some of them do actual work, their protectionist anti-innovation behavior puts them all in the "predatory capitalist" class -- they actively prevent the very improved productivity and growth that you cite as deserving of the income, and in doing so they take money out of the economy.

Re: Our Broken Economy, in One Simple Chart

#34

Post by sharemywin »

sokoloff wrote: post #19
api wrote: post #3

Earlier quoted context omitted.

It would be significantly less of a problem if it weren't for massive inflation in real estate, tuition, and health care. There are other gravity-defying areas but these three are the real killers. Wages are stagnant but the cost of housing, education, and health care can only go up and up and up. There's a cause and effect connection too. All that wealth at the top increasingly has nowhere to go. Stagnant wages resu…

> Wages are stagnant but the cost of housing, education, and health care can only go up and up and up. Wages are not stagnant. From the article: The news regarding the American middle class is not all bad. Although the middle class has not kept pace with upper-income households, its median income, adjusted for household size, has risen over the long haul, increasing 34% since 1970. That is not as strong as the 47% in…

n 1970, total health care spending was about $75 billion, or only $356 per person (Figure 1). In less than 40 years these costs have grown to $2.6 trillion, or $8,402 per person. ... By the year 2020, the Centers for Medicare and Medicaid Services (CMS) projects that health spending will be nearly one-fifth of GDP (19.8).

Re: Our Broken Economy, in One Simple Chart

#35

Post by X86BSD »

TheAdamAndChe wrote: post #15
anovikov wrote: post #2

Why is this a problem, as long as everyone is not worse off? Growth should go to the people who make it possible - in 1960s it were highly qualified, unionized industrial plant workers. Now these are people like us. Not some imaginary predatory capitalists.

> Why is this a problem, as long as everyone is not worse off? That's the thing that many don't seem to realize, large swaths of the country _are_ worse off. There is a very large chunk of the population that has multiple wage earners and are still barely scraping by. Younger people are being required to go tens of thousands of dollars into debt to start a career that makes significantly less than it did 20 years ago…

Ill reiterate on yet another thread that the reason people are worse off, is the purchasing power of the worthless fiat dollar.

Take a quarter from pre-1965 when we still made constitutionally sound money made with gold or silver. The silver contained in it if melted down is as of today almost $3.00 of worthless paper fiat dollars.

If you made a $1 an hour paid in four silver quarters you would be making $12/hr of paper fiat dollars. Think about that. Let that sink in. The problem is the money is WORTHLESS. It's been devalued to the point of buying next to nothing. So when people are screaming to make $15/hr flipping burgers and dunking fries because they can't live on anything else, it's the money that is the problem. Blue collar workers making $20+/hr welding or milling are still struggling because the money doesn't buy anything. The money is the problem. You are being paid in a worthless paper dollar that barely buys anything so you have to make gobs and gobs of it to obtain anything of value.

Fix the currency and a lot of these related problems disappear.

Re: Our Broken Economy, in One Simple Chart

#36

Post by sokoloff »

sharemywin wrote: post #29
sokoloff wrote: post #19

Earlier quoted context omitted.

> Wages are stagnant but the cost of housing, education, and health care can only go up and up and up. Wages are not stagnant. From the article: The news regarding the American middle class is not all bad. Although the middle class has not kept pace with upper-income households, its median income, adjusted for household size, has risen over the long haul, increasing 34% since 1970. That is not as strong as the 47% in…

median home values: 1970: $17,000. 1980: $47,200. 1990: $79,100. 2000: $119,600. a lot more than 34%.

CAGR of median house prices:

1970-1980 - 11%, 1980-1990 - 5.3%, 1990-2000 - 4.2%, 1970-2000 - 6.7%, 1980-2000 - 4.8%

Median household incomes (US census source I found only goes back to 1975): https://www2.census.gov/programs-surveys/cps/tables/time-ser...

1975 - 11800, 1980 - 17710, 1990 - 29943, 2000 - 41990

CAGRs: 1975-1980 - 8.4%, 1980-1990 - 5.4%, 1990-2000 - 3.4%, 1975-2000 - 5.2%, 1980-2000 - 4.4%

For like period to like period (1980-2000), the tracking error is a cumulative 16% over a 20-year period, or about 0.4% per year.

Re: Our Broken Economy, in One Simple Chart

#37

Post by CalChris »

sharemywin wrote: post #29
sokoloff wrote: post #19

Earlier quoted context omitted.

> Wages are stagnant but the cost of housing, education, and health care can only go up and up and up. Wages are not stagnant. From the article: The news regarding the American middle class is not all bad. Although the middle class has not kept pace with upper-income households, its median income, adjusted for household size, has risen over the long haul, increasing 34% since 1970. That is not as strong as the 47% in…

median home values: 1970: $17,000. 1980: $47,200. 1990: $79,100. 2000: $119,600. a lot more than 34%.

You need to adjust those numbers for inflation [1]. The result for inflating $17,000 from 1970 to 2000 is $75,448.45. So $119,600 is about a 37% increase which is not a lot more than 34%.

[1] http://www.usinflationcalculator.com/

Re: Our Broken Economy, in One Simple Chart

#38

Post by Theodores »

anovikov wrote: post #2

Why is this a problem, as long as everyone is not worse off? Growth should go to the people who make it possible - in 1960s it were highly qualified, unionized industrial plant workers. Now these are people like us. Not some imaginary predatory capitalists.

There is also the matter of debt. If a company pays the bosses millions and takes on debt to cover it then there is a shareholders protest. Why as a country is the US racking up the debt when the bosses of USA inc. are lining their pockets? Shouldn't they get their bonuses when the bills are paid? If nobody got a raise due to war debts or earthquake damage but the bosses got bonuses when times were debt free then I could live with that.

My company has a founder with all the trappings of wealth: the cars, boats, houses etc. However he did bring a product to market that many people find extremely valuable. He also built a company that hires 200 or so directly with many more jobs relying on his company. Nobody grumbles about pay. Some day I hope to emulate his success in a downsized way.

My boss struck gold with a hit record that everyone wants. Although there have been patent trolls to deal with none of that success has been due to a tax anomaly or bribes paid. Also the product is green although could always be greener.

So why tax my boss so he only gets a fraction of what he earns? I understand higher rates of tax, that all makes sense, however there will be a small minority of hard working bright people able to be phenomenonally successful. Are these the bad guys we dispense with come the revolution?

Re: Our Broken Economy, in One Simple Chart

#39

Post by api »

sokoloff wrote: post #36
sharemywin wrote: post #29

Earlier quoted context omitted.

median home values: 1970: $17,000. 1980: $47,200. 1990: $79,100. 2000: $119,600. a lot more than 34%.

CAGR of median house prices: 1970-1980 - 11%, 1980-1990 - 5.3%, 1990-2000 - 4.2%, 1970-2000 - 6.7%, 1980-2000 - 4.8% Median household incomes (US census source I found only goes back to 1975): https://www2.census.gov/programs-surveys/cps/tables/time-ser... 1975 - 11800, 1980 - 17710, 1990 - 29943, 2000 - 41990 CAGRs: 1975-1980 - 8.4%, 1980-1990 - 5.4%, 1990-2000 - 3.4%, 1975-2000 - 5.2%, 1980-2000 - 4.4% For like per…

Real estate markets are local. This analysis only works if you do it for every local metro region and then aggregate. What you'd find is "jobs or affordable housing, pick one." Metro areas with hot job markets have inflated massively, while metro areas with bad job markets have seen little real estate inflation or even deflation. The end result is that you can't get ahead. Good jobs mean you're just shoveling it all into real estate.

This is actually a well established economic principle known as the "law of rent." I've wondered if maybe the middle class explosion of the mid century was driven by the automobile since it allowed cities to physically expand. This allowed people to temporarily escape the law of rent. But now we've hit the limit of that, so the law of rent has re-asserted itself.

Re: Our Broken Economy, in One Simple Chart

#40

Post by sharemywin »

CalChris wrote: post #37
sharemywin wrote: post #29

Earlier quoted context omitted.

median home values: 1970: $17,000. 1980: $47,200. 1990: $79,100. 2000: $119,600. a lot more than 34%.

You need to adjust those numbers for inflation [1]. The result for inflating $17,000 from 1970 to 2000 is $75,448.45. So $119,600 is about a 37% increase which is not a lot more than 34%. [1] http://www.usinflationcalculator.com/

here are better numbers: https://www.census.gov/construction/nrs/pdf/uspricemon.pdf

Jan 1970 $23,600(adjusted for inflation 148,993.25)

Jan 2017 $317,400

The other one stopped at 2000.

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