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The rich are hoarding economic growth

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Re: The rich are hoarding economic growth

#71

Post by AlexandrB »

eikenberry wrote: post #58
AlexandrB wrote: post #48

Earlier quoted context omitted.

> It makes sense from an economic standpoint that the price of labor would not rise when the supply is increased and is likely the cause of income inequality in the US. So why are CEO salaries still going up? Is there not increased competition for C-level positions in companies from globalization? If not, why not?

One explanation would be because of the cheaper labor and favorable legal frameworks the corporation can grow much larger today. Pushing the pay of the top level positions to rise even higher. You could look at C-level positions 50 years ago as a mid-level manager today in terms of managed organization size and economic impact.

> One explanation would be because of the cheaper labor and favorable legal frameworks the corporation can grow much larger today.

But that means there are fewer C-level positions/capita today. So:

* supply of C-level candidates has gone up (more MBA graduates, larger supply of candidates from overseas)

* demand for C-level candidates has gone down (fewer, larger corporations, so fewer C-level jobs overall)

And yet C-level compensation is going up. Doesn't this contradict all the supply/demand theories I keep hearing about lower/middle class employees?

Re: The rich are hoarding economic growth

#72

Post by atlih »

viridian wrote: post #56
atlih wrote: post #22

Earlier quoted context omitted.

Financialization of the economy. The fall of Bretton-Woods. The fall of the gold standard. The repeal of Glass-Steagall.

>The fall of the gold standard. >The fall of Bretton-Woods. 1971, not 1973 >The repeal of Glass-Steagall. 1999, not 1973

Macroeconomic changes take longer than just a few hours to have an impact. I included Glass-Steagall repeal because merely focusing on 1970's and nothing that happened there after is myopic

Re: The rich are hoarding economic growth

#73

Post by johnnyb9 »

enraged_camel wrote: post #45
ams6110 wrote: post #20

Earlier quoted context omitted.

The problem is that if you set a minimum wage that is higher than the real value of the work performed, it means those jobs just simply won't exist anymore.

As far as I'm aware, none of the studies on increasing minimum wage have shown this.

http://www.seattletimes.com/business/uw-study-finds-seattles...

Re: The rich are hoarding economic growth

#74

Post by pg_bot »

AlexandrB wrote: post #48
pg_bot wrote: post #35

Why is there no talk about the dramatic increase in the supply of workers over the last 40 years? Globalization has brought millions out of poverty and those people are now competing with Americans when they wouldn't before. It makes sense from an economic standpoint that the price of labor would not rise when the supply is increased and is likely the cause of income inequality in the US.

> It makes sense from an economic standpoint that the price of labor would not rise when the supply is increased and is likely the cause of income inequality in the US. So why are CEO salaries still going up? Is there not increased competition for C-level positions in companies from globalization? If not, why not?

There are likely a variety of factors that contribute to CEO salaries increasing.

The increase in the labor supply has mostly affected the low end of the spectrum. You don't usually go from subsistence farming directly to the board room. This will change but it takes a long time to percolate up.

Large corporations are usually conservative with their C level executives. Even if someone else could do a 10x better job you are not going to replace an executive if they are outperforming the market. The threshold for being removed is fairly high.

If you started your own company and own a controlling stake it is highly unlikely that you will be removed, even if you are terrible at your job.

The scale of some of the biggest companies is profoundly larger than in the past forty years. For example McDonalds has 375,000 employees worldwide. Their CEO makes around 15.5 million a year. If you were to distribute his salary to each worker in the company (assuming each works 40 hours a week) you could afford to give a 2 cent raise per hour to each employee.

Re: The rich are hoarding economic growth

#75

Post by closeparen »

AlexandrB wrote: post #55
DanielBMarkham wrote: post #39

Earlier quoted context omitted.

And in response to the overload of cheap labor, the central banks have been printing currency -- which means that people who own lots of equity end up with more money than they had before. (more money with the same assets means suddenly your assets are worth much more money) Also "hoarding" implies intent and capability. From all I can see, what's happening is the natural consequences of lifting billions of people ou…

> From all I can see, what's happening is the natural consequences of lifting billions of people out of poverty. Ah yes, billionaire CEOs and investors have lifted millions out of poverty and so the market has rewarded them with steadily increasing incomes. But wait! I thought the market only cared about profits!? Why would it reward them for lifting millions out of poverty?? Is it possible that the modern American p…

>Why would it reward them for lifting millions out of poverty?

Because a worker and consumer with high productivity and high standard of living is more valuable to everyone involved (creates more value, buys more stuff) than a subsistence farmer? [0]

Really the only people totally losing out here are environmentalists, as the newly minted middle class overwhelmingly buys cars and air conditioning.

[0] https://en.wikipedia.org/wiki/Human_capital

Re: The rich are hoarding economic growth

#76

Post by skybrian »

prostoalex wrote: post #44
cs702 wrote: post #25

The title and the tone of the OP are a bit inflammatory for my taste, but the data and graphs from the research paper are eye-opening: most economic growth in the US over the past three decades has indeed gone to the top 1%, and particularly to the top 0.01%, leaving everyone else behind.[1] Here's the money shot: https://cdn.vox-cdn.com/uploads/chorus_asset/file/9013427/Sc... However, rather than debate the causes o…

Current government policies penalize income (39.6% at the top bracket) and subsidize company-sponsored non-monetary benefits (health, dental, vision, meals, commuter benefits, ESPP, 401k matching, ISOs, NSOs), so not all that surprising that workers see less income and more of non-monetary benefits as a result. The workable solution through a tax policy might include reducing the number of brackets for personal incom…

It seems likely that consumer confidence has a lot to do with willingness to take on debt? So the liming factor wouldn't be availability of credit, it's what payments you think you'll be able to afford later.

In the case of student loans, that amounts to confidence in being able to find a good job to pay them off.

Re: The rich are hoarding economic growth

#77

Post by tmnvix »

cs702 wrote: post #25

The title and the tone of the OP are a bit inflammatory for my taste, but the data and graphs from the research paper are eye-opening: most economic growth in the US over the past three decades has indeed gone to the top 1%, and particularly to the top 0.01%, leaving everyone else behind.[1] Here's the money shot: https://cdn.vox-cdn.com/uploads/chorus_asset/file/9013427/Sc... However, rather than debate the causes o…

We should be taxing productive activity less and income earned through simply owning things more. The balance has moved too far in the opposite direction.

Re: The rich are hoarding economic growth

#78

Post by baobrain »

derping69 wrote: post #28
gscott wrote: post #2

This is why I appreciate the $15 an hour minimum wage movement. Paying people more is better then taxing the rich more. The super-rich own congress but at the city and State level there is depending upon the state some room to grow wages. Higher wages equals fewer people on public subsidies which is good for cities and states.

Why stop there? Just make it 100$ and hour and everyone will be rich! Oh wait, arbitrary wage increases don't really work out in real life. https://fivethirtyeight.com/features/seattles-minimum-wage-h... Seattle's socialist member of the city council fired the Unversity of Washington team after the results came out and hired an anti-capitalist professor from berkeley to ensure the study finds the right results. http:…

Note that your fivethirtyeight article even mentions a caveat to the study:

> The paper’s findings are preliminary and have not yet been subjected to peer review. And the authors stressed that even if their results hold up, their research leaves important questions unanswered, particularly about how the minimum wage has affected individual workers and businesses.

> Many economists, meanwhile, have acknowledged substantial uncertainty over the likely effects of the recent wage hikes. Most — though by no means all — past research has found that modest increases to the minimum wage have little impact on employment, and that if employers do eliminate jobs or cut back hours, those losses are dwarfed by the income gains enjoyed by the majority of workers who keep their jobs. But those studies were mostly based on minimum wages that were much lower than the ones beginning to take effect now. Even some liberal economists have expressed concern, often privately, that employers might respond differently to a minimum wage of $12 or $15, which would affect a far broader swath of workers than the part-time fast-food and retail employees who typically dominate the ranks of minimum-wage earners. Other economists said there simply wasn’t enough evidence to predict the impact of minimum wages that high. The new laws in Seattle and other cities, then, could provide an ideal testing ground.

Additionally, here is a post by Jared Bernstein related to the minimum wage hike[0]. Here is the book mentioned in the aforementioned post [1].

Another analysis[2] finding that "Once this publication selection is corrected, little or no evidence of a negative association between minimum wages and employment remains."

While I also do not know for certain the effects of a minimum wage, one of your sources fairly lists caveats and uncertainty for the study it mentions, and the other is fox news.

[0] http://jaredbernsteinblog.com/the-minimum-wage-increase-and-...

[1] http://www.upjohn.org/publications/upjohn-institute-press/wh...

[2] http://onlinelibrary.wiley.com/doi/10.1111/j.1467-8543.2009....

Re: The rich are hoarding economic growth

#79

Post by btown »

manicdee wrote: post #43
cs702 wrote: post #25

The title and the tone of the OP are a bit inflammatory for my taste, but the data and graphs from the research paper are eye-opening: most economic growth in the US over the past three decades has indeed gone to the top 1%, and particularly to the top 0.01%, leaving everyone else behind.[1] Here's the money shot: https://cdn.vox-cdn.com/uploads/chorus_asset/file/9013427/Sc... However, rather than debate the causes o…

For every problem there is a solution which is simple, elegant, and completely wrong. So here's my attempt: 1. Remove subsidies including tax writeoffs like depreciation. Either an asset brings value or it doesn't. 2. Tax revenue not profits. Either you make a profit selling a thing or you don't. Fancy tricks like buying an item from a fully owned subsidiary and selling it at a loss to compensate for profits from ser…

For a detailed counterpoint to your #2, see this analysis: https://www.cbpp.org/research/illinois-proposed-gross-receip...

> One potential problem with a GRT is its impact on high-volume, low-profit margin businesses, for which the tax can represent a high percentage of potential profits. Another potential problem is that a GRT favors businesses that conduct most operations in-house over businesses that purchase intermediate goods and services from other firms, since the tax is imposed each time a business purchases inputs from an outside firm. (This latter problem is called “pyramiding.”) Illinois can address both of these problems, however, by allowing businesses to subtract the cost of goods purchased from other companies from the gross receipts subject to the tax.

Which, whether you call it a deduction or a simplification of the way corporate income tax is currently based on profits now, brings us back to square one.

Re: The rich are hoarding economic growth

#80

Post by jaredklewis »

loserboss wrote: post #63
manicdee wrote: post #43

Earlier quoted context omitted.

For every problem there is a solution which is simple, elegant, and completely wrong. So here's my attempt: 1. Remove subsidies including tax writeoffs like depreciation. Either an asset brings value or it doesn't. 2. Tax revenue not profits. Either you make a profit selling a thing or you don't. Fancy tricks like buying an item from a fully owned subsidiary and selling it at a loss to compensate for profits from ser…

Meat industry would collapse due to 1. Daily foods like steak, bacon, eggs, milk would get extremely expensive leaving the population to lousy unsatisfying vegetables. Might solve the obesity epidemic :) Might also cause riots because people are not used to eating yucky foods like vegetabables.

Vegetables in the sense of wheat, peanuts, and such? Sure (but since these things will get processed, so I wouldn't hold out that it helps with our obesity).

Vegetables like kale and broccoli? No way. The ratio of labor and land required per produced calorie for these kinds vegetables is far too high. In addition to existing farmland, we would need to convert large amoutns of existing natural environments areas like forests into farms.

But back to your point, why would the industry collapse? Wouldn't prices just increase?

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