The rich are hoarding economic growth • Hacker News Board

Re: The rich are hoarding economic growth

#121

Post by rubicon33 » Mon, Aug 21, 2017, 4:13 AM UTC

Camillo wrote: post #66

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.

Wealth concentration was the goal, globalization was the means. The rich saw a great arbitrage opportunity in the fact that the price of labor (and its legal rights) in the developing world was much lower than in the first world. In the late 90s, there was a big political struggle over globalization. The pro-globalists (the economic establishment and the Clinton administration) argued that it would (A) grow the econo…

Fascinating points you make, thank you for posting this.

Can you elaborate on what you mean when you say

"This should give pause to those who put trust in the media, even (especially?) the self-proclaimed progressive ones, like Vox"

Why does the media's lack of memory, and lack of pursuit of the anti-globalists, mean we should not have trust that what they report now is accurate? (Genuine question not trying to make a point with my question).

Re: The rich are hoarding economic growth

#122

Post by MrBingley » Mon, Aug 21, 2017, 4:26 AM UTC

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…

What about the Panama Papers?

Re: The rich are hoarding economic growth

#123

Post by cs702 » Mon, Aug 21, 2017, 4:29 AM UTC

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…

> ...the rich hoard their money in Scrooge McDuck cash vaults, keeping it out of the economy.

I did NOT say that. Please don't attack a straw man!

> 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).

It's a little more complicated than that. Since the Global Financial Crisis, many central banks around the world, including the Federal Reserve, have been doing EVERYTHING and ANYTHING they can to get banks to lend more, and to get businesses and individuals to borrow more and invest more.

Yet no matter what central banks have tried, individuals and businesses are not yet investing at historical rates, as evidenced by historically high liquidity[1], historically low money velocity[2], and even negative nominal interest rates in some countries[3], which are historically unique.[4] Keynes's argument that depressionary depressions/recessions may be caused by increased 'preference' for liquidity and lack of aggregate demand could actually be right, for all I know.

Meanwhile, the evidence I've seen suggests that redistributionist policies don't seem to have an impact on economic growth. For example, see: http://www.imf.org/external/pubs/ft/sdn/2014/sdn1402.pdf

So, why not try it, e.g., in the form of UBI or works programs, say, in controlled regional experiments? If it turns out that it works, great; if it doesn't work, then let's try something else.

NOTES:

[1] https://fred.stlouisfed.org/series/AMBNS -- look at that jump in 2008!

[2] https://fred.stlouisfed.org/series/M2V

[3] Example: https://www.reuters.com/article/us-snb-results-banks-idUSKBN...

[4] http://www.businessinsider.com/chart-5000-years-of-interest-...

Re: The rich are hoarding economic growth

#124

Post by mempko » Mon, Aug 21, 2017, 4:36 AM UTC

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…

Banks don't loan deposits, this is a common myth.

Re: The rich are hoarding economic growth

#125

Post by zaptheimpaler » Mon, Aug 21, 2017, 4:37 AM UTC

WalterBright wrote: post #120

zaptheimpaler wrote: post #118

Earlier quoted context omitted.

A large part of Gates' money goes to preventing common disease, providing education etc. Buying mosquito nets was the latest one I saw. These aren't investments and they aren't going to generate a monetary return for Gates. Under traditional economic dogma, no one should ever do this. Its not an investment, its donation. Money set out purely for generating return can be hoarded when theres no good use for it. Money l…

> These aren't investments and they aren't going to generate a monetary return for Gates. That's correct, but it isn't hoarded, either. It's spent. > Under traditional economic dogma, no one should ever do this. Its not an investment, its donation. There's no such dogma. > Money lying in an investment fund or an investors bank account is useless while not invested It's always invested. Investment accounts/funds do no…

My simple point is there are many cases where money better serves society as charity (no return on investment) rather than as an investment. There are cases where the free market fails to solve societal problems - all those charity companies and problems like healthcare/education.

I'm tired of seeing the same trope of "the free market solves all problems" when there are clear counterexamples. Its clear as day to me that $1B spent on malaria is better than $1B spent on the next advertising startup. The ad company may have been a great investment and many employees would be recipients of the money like you say. Doesn't change the fact that there are better uses for the money - uses not served by the incentive structure of free markets.

Re: The rich are hoarding economic growth

#126

Post by WalterBright » Mon, Aug 21, 2017, 5:02 AM UTC

zaptheimpaler wrote: post #125

WalterBright wrote: post #120

Earlier quoted context omitted.

> These aren't investments and they aren't going to generate a monetary return for Gates. That's correct, but it isn't hoarded, either. It's spent. > Under traditional economic dogma, no one should ever do this. Its not an investment, its donation. There's no such dogma. > Money lying in an investment fund or an investors bank account is useless while not invested It's always invested. Investment accounts/funds do no…

My simple point is there are many cases where money better serves society as charity (no return on investment) rather than as an investment. There are cases where the free market fails to solve societal problems - all those charity companies and problems like healthcare/education. I'm tired of seeing the same trope of "the free market solves all problems" when there are clear counterexamples. Its clear as day to me t…

Charity and the free market are not antiethical to each other. Charity is part of the free market.

Also, you're arguing that you know better how to spend money than others. Probably about 90% of people feel that way about it, too, and they all have different ideas than you.

Re: The rich are hoarding economic growth

#127

Post by jaggederest » Mon, Aug 21, 2017, 5:44 AM UTC

cs702 wrote: post #123

WalterBright wrote: post #98

Earlier quoted context omitted.

> 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…

> ...the rich hoard their money in Scrooge McDuck cash vaults, keeping it out of the economy. I did NOT say that. Please don't attack a straw man! > 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). It's a little more complicated than that. Since the Global Financial Crisis, many central banks around the world, including the Fed…

Seignorage or negative interest rates might be a fun one too. Charge fees on stagnant cash.

Re: The rich are hoarding economic growth

#128

Post by jaggederest » Mon, Aug 21, 2017, 5:50 AM UTC

WalterBright wrote: post #99

sooheon wrote: post #94

Earlier quoted context omitted.

I agree, and so do many economists: https://en.wikipedia.org/wiki/Georgism The distinction is that mere ownership of capital, especially common goods (such as land and natural resources) excludes other members of society from access to that resource. It does not create value, but merely holds claim to existing value, seeking rent for allowing others access to it. This should be taxed. OTOH, productive activity takes…

I'd go further and tax destructive activities, such as polluting or consumption of finite resources, instead of productive activities.

This is why I'm disappointed with the current-era Republican party. There are so many things that could be solved with true market-based solutions - for example, carbon markets and other major externalities. But nearly everyone would rather ignore evidence-based solutions for ideologically correct ones.

Re: The rich are hoarding economic growth

#129

Post by kgwgk » Mon, Aug 21, 2017, 6:48 AM UTC

prostoalex wrote: post #84

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?

Are they though? Most of executive compensation plans nowadays are strongly tied to stock performance with a generous options package but a nominal $1 salary. Brings its own set of problems and a tunnel vision that's focused on next quarterly results, but at least it's aligned with large shareholders.

Do you really think that the fixed compensation of most executives is $1?

Re: The rich are hoarding economic growth

#130

Post by kgwgk » Mon, Aug 21, 2017, 6:59 AM UTC

chipotle_coyote wrote: post #90

derping69 wrote: post #28

Earlier quoted context omitted.

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:…

Why stop there? Just make it 100$ and hour and everyone will be rich! This argument -- "well, if you think a little increase in the minimum wage is good, then you must think any increase in the minimum wage is good, or you're not being consistent!" -- gets trotted out by somebody on HN every time the subject comes up. And c'mon. If I believe that San Francisco's minimum wage hikes to $14 and $15 an hour are not going…

> Real life is full of examples, from salt in your soup to water behind a dam, where we understand that's good to increase the level to a point, but only to a point.

And somehow this point is lost on many proponents of raising the minimum wage, who find obvious that any increase in minimum wage can only be good and anyone saying otherwise is evil. Sometimes the soup would be better with less salt, minimum wages could be too high already!