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The rich are hoarding economic growth

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Re: The rich are hoarding economic growth

#101

Post by WalterBright »

victor106 wrote: post #18

This quote by the fed chairman during the Great Depression, Marriner S. Eccles, seems apt "As mass production has to be accompanied by mass consumption, mass consumption, in turn, implies a distribution of wealth -- not of existing wealth, but of wealth as it is currently produced -- to provide men with buying power equal to the amount of goods and services offered by the nation's economic machinery. Instead of achie…

The GD was caused in large part by the Fed's poor understanding of economics. I wouldn't take what the chairman of the time said too seriously.

Re: The rich are hoarding economic growth

#102

Post by WalterBright »

zaptheimpaler wrote: post #70
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.

Because the rich are getting richer, and hoarded money is useless to the rest of society. Regardless of why they get richer, the economy exists to serve society. Large amounts of money lying in investments hoping to outpace inflation is not useful to society - there are practical limits on how much money can be invested usefully at all, determined by how many capital intensive tasks businesses take on as a whole. Per…

> hoarded money is useless to the rest of society.

There is no hoarded money. It's all invested. Where do you think Gates' money is, for example?

Re: The rich are hoarding economic growth

#103

Post by lordCarbonFiber »

closeparen wrote: post #81
lordCarbonFiber wrote: post #61

Earlier quoted context omitted.

>If someone is not capable That mindset continues to be disgusting to me. Humans are some of the most impressive creatures on Earth; baring actual disability, you can teach them to do all sorts of things. I'm going to love watching the tech scene's existential panic over the next 2 decades as the population increasingly realizes that making CRUD apps and junk SAS is a job many Americans are more than capable of doing…

"Capable" isn't a binary, lifelong condition. The remedy for incapability is generally considered to be education.

The dirty secret is that there's a whole class of jobs, mostly decently paying white collar jobs, that have most of the training on the job.

Hell most of the jobs that only require an undergraduate degree involve extensive on the job training; college is used as a weak signal for aptitude, interest, and class not really capability (this is the entire business model around coding boot-camps).

Re: The rich are hoarding economic growth

#104

Post by WalterBright »

WalterBright wrote: post #98
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…

> would be unleashed That's the theory that the rich hoard their money in Scrooge McDuck cash vaults, keeping it out of the economy. That's false - all of it is in the economy, via investments. Even money kept in a checking account is invested in the economy (banks loan out that money). The only cash kept in cash vaults is the reserve that the government requires banks to keep to provide a buffer against runs on the…

There's a good explanation in the movie "It's A Wonderful Life" about what happens to the money deposited in a bank, and where it goes.

Re: The rich are hoarding economic growth

#105

Post by sooheon »

abhi3 wrote: post #96
tmnvix wrote: post #77

Earlier quoted context omitted.

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.

Allocating ones capital (simply owning things as you say) is a productive activity in itself. Without people competing to allocate capital for higher returns, a lot of things we all love wouldn't exist.

You're correct, but I think capital may still be distinguished by the degree of value added by labor. Ownership of land and natural resources is a different form of capital than ownership of shares in an company or a factory building, but both would be considered "capital" broadly. I think the distinction is in how much labor and human ingenuity has been added to create that capital.

People should own what they create (organizations, buildings, goods, and services), but the natural geography of the world should belong to all. If one wishes to lay claim to a stretch of land, and prevent all other equally born humans from entering or making use of that land and its resources, one should pay a tax to society for that privilege.

As you say, "people competing to allocate capital for higher returns" is a great thing. However, I dispute the fact that some people should even have the right to decide how to invest their land without first paying a societal price for it (much higher than current land tax levels--high enough to cover a corresponding decrease in most other taxes on labor or production).

Re: The rich are hoarding economic growth

#106

Post by jgalt212 »

I don't want obfuscate correlation and causality but over the same time period we have seen the greatest bond bull market in history.

The upshot is that the rich, more specifically the super rich, benefit disproportionately from lower/lowering interest rates.

Re: The rich are hoarding economic growth

#107

Post by chrisgd »

WalterBright wrote: post #98
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…

> would be unleashed That's the theory that the rich hoard their money in Scrooge McDuck cash vaults, keeping it out of the economy. That's false - all of it is in the economy, via investments. Even money kept in a checking account is invested in the economy (banks loan out that money). The only cash kept in cash vaults is the reserve that the government requires banks to keep to provide a buffer against runs on the…

Loans create deposits. Banks are not constrained to make loans based on how much is on deposit.

Re: The rich are hoarding economic growth

#108

Post by mrep »

AlexandrB wrote: post #71
eikenberry wrote: post #58

Earlier quoted context omitted.

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…

In the big 5 that I work for, MBA's become product managers and make less than programmers (per years in industry). They then have to compete for more than a decade (with programmers going into management), for a shot at even VP level.

Guess what, there are some VP's that have 5 more layers of VP, Senior VP's... before C suite.

You want to incentive people to work hard at their jobs to get promoted to the next level so you need to constantly pay them more. When you have 10 layers in your company and people at the bottom are making 6 figures (for software engineers, easily the case), the top level employees are going to make a lot of money.

Re: The rich are hoarding economic growth

#109

Post by sooheon »

taneq wrote: post #47
mdorazio wrote: post #15

Earlier quoted context omitted.

While I agree in principle, the counter-argument is that you're just going to end up with that job going overseas or getting automated. Basically, if you need something done and it's only worth $10/hour to you to have it done, but no one near you will do it for less than $15/hour, either 1) it won't get done and that $10/hour economic input is lost, or 2) you'll find a way to get it done for $10/hour or less via mean…

Actually you get 3) the cost of the output of that process goes up, leading to a small price rise to the end user.

Unless that cost was "digestible" by the system, but had simply been previously going to C-level and board members' salaries. Then companies which continue to pay execs exorbitantly, and companies which give their execs a 0.001% pay cut or otherwise reduce inefficiencies to absorb the cost increase will compete.

Re: The rich are hoarding economic growth

#110

Post by aoeuasdf1 »

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 not an earned income tax credit instead of an arbitrary cutoff at which point labor becomes worthless and illegal to sell?
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