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Joseph Stiglitz Says American Inequality Didn’t Just Happen

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Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#161

Post by stevenwoo »

WalterBright wrote: post #153
ScottBurson wrote: post #108

Something came up yesterday, in the discussion about business schools, that I think is also relevant here. A lot of people — as in, practically everyone — has been persuaded over the last half-century or so that the board of directors of a public corporation have a legal responsibility to maximize shareholder value. The general acceptance of that fiction is resulting in a tremendous amount of wealth transfer from the…

> as the long-term performance of firms is sacrificed to making the next quarter's numbers. If that were true, the S&P 500 would have terrible long term performance.

The S&P 500 is rebalanced periodically, meaning companies are removed and added. That makes it not a good assessment of the hypothesis, one needs to find something that is pinned to the S&P 500 one year, then tracks the same 500 companies over a given period of time, including those that drop out and excluding those that grow to be included in the time period of interest.

Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#162

Post by WalterBright »

return1 wrote: post #148
ScottBurson wrote: post #108

Something came up yesterday, in the discussion about business schools, that I think is also relevant here. A lot of people — as in, practically everyone — has been persuaded over the last half-century or so that the board of directors of a public corporation have a legal responsibility to maximize shareholder value. The general acceptance of that fiction is resulting in a tremendous amount of wealth transfer from the…

How could that problem be solved? Is it something that market forces could somehow self-correct? It is in a sense a general cultural issue, but how does one go about correcting the culture?

Companies that mismanage their long term prospects fail in the long term. It's self-correcting. If you're worried about investing in a company that sacrifices the long term for short term gain, don't invest in companies less than 5 years old.

Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#163

Post by WalterBright »

ComradeTaco wrote: post #123
pitaj wrote: post #120

Earlier quoted context omitted.

> unregulated capitalism Ah yes, the unbridled laissez-faire capitalist markets throughout the world. It couldn't possibly be that our markets are more regulated than ever before, or that the very regulations and bureaucracy meant to protect us have caused these failures. No no no, it's capitalism's fault. It's certainly not that government power has for decades been exploited by the incumbents to kill competition. T…

The US has allowed complete unbridled capitalism during the gilded age. Quoting Wikpedia "From 1860 to 1900, the wealthiest 2% of American households owned more than a third of the nation's wealth, while the top 10% owned roughly three fourths of it.[61] The bottom 40% had no wealth at all.[59] In terms of property, the wealthiest 1% owned 51%, while the bottom 44% claimed 1.1%" So pure, unregulated capitalism, lead…

And yet there was explosive growth in the middle class in that era, the poor moving up into the middle class, and the US moving into a superpower economy. The standard of living went up, way up.

Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#164

Post by WalterBright »

RodericDay wrote: post #97
fallingfrog wrote: post #66

Favorite quote: "Those at the top have learned how to suck out money from the rest in ways that the rest are hardly aware of—that is their true innovation." Rings true to me. That's why labor markets are purely competitive but the markets for products are dominated by price fixing. It's why you get more jail time for stealing a car than cheating your employees or customers to the tune of millions of dollars. And so o…

Labor markets are extremely uncompetitive, because prices (salaries) are not public information.

A few google searches will provide lots of statistical information on salaries in all sorts of categories.

Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#165

Post by WalterBright »

specialist wrote: post #87

Also true: Creating the middle class was a deliberate, hard fought policy choice. The USA has done it (massive redistribution of wealth) three times. We're overdue for the fourth cycle. Wealth and Democracy: A Political History of the American Rich [2003] http://a.co/6rMyoc1 "The Second Gilded Age has been staggering enough in its concentration of wealth to dwarf the original Gilded Age a hundred years earlier. Howev…

> Creating the middle class was a deliberate, hard fought policy choice.

The middle class appeared in the US right along with industrialization. You can see it in paintings of towns and such before the Civil War. All sorts of businesses and middle class homes. A few years ago a pre-war Mississippi steamboat wreck was dug up and it was stuffed full of trade goods for middle class people.

Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#166

Post by WalterBright »

jonathanyc wrote: post #121
pitaj wrote: post #118

Earlier quoted context omitted.

The middle class was not created via redistribution of wealth. It came about through wealth creation . It existed long before the New Deal and WWII.

If you’re going to make a drive-by comment whose content is just “the GP is wrong,” you should at least back it up with some evidence, especially when the GP has provided a source.

Take a look at that famous 1906 movie of market street in San Francisco. It's full of throngs of middle class people wearing middle class clothes dodging middle class vehicles on a street lined with middle class businesses.

Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#167

Post by WalterBright »

stevenwoo wrote: post #161
WalterBright wrote: post #153

Earlier quoted context omitted.

> as the long-term performance of firms is sacrificed to making the next quarter's numbers. If that were true, the S&P 500 would have terrible long term performance.

The S&P 500 is rebalanced periodically, meaning companies are removed and added. That makes it not a good assessment of the hypothesis, one needs to find something that is pinned to the S&P 500 one year, then tracks the same 500 companies over a given period of time, including those that drop out and excluding those that grow to be included in the time period of interest.

If the theory was correct, you'd see companies join the stock market with high valuations, and then trend downwards to oblivion as those long term chickens come to roost.

But this is just not happening.

Look how richly rewarded AMZN is for long term choices.

Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#168

Post by rizwank »

JamesBarney wrote: post #154
mjfl wrote: post #136

Earlier quoted context omitted.

Even if most corporate stock is owned by the wealthy, in terms of relative wealth changes all that matters is a person's personal percentage investment in the stock market. For example, if you have a middle class person who has 80% of their retirement savings (wealth) in stocks and a rich person who has 50% of their wealth in stock (because of liquidity concerns for example - and this is common) then if the stock mar…

The wealthy tend to have more wealth invested in the stock market. Most middle class wealth is invested in real estate, specifically the house they are living in.

Citation?

While this is true for many, the extent of 401(k) might signal differently. Also, most of the wealthy I know have far less in the stock market than you might imagine. Real Estate, development and private placements. Stock Market is too tax inefficient.

Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#169

Post by specialist »

true_religion wrote: post #126
jonathanyc wrote: post #121

Earlier quoted context omitted.

If you’re going to make a drive-by comment whose content is just “the GP is wrong,” you should at least back it up with some evidence, especially when the GP has provided a source.

The "source" is just inane fluff. It reads like a book review. It hints at topics, but never declares what is to be said about them. It was such an imposing wall of text, that I read it thrice hoping to fine anything that I could reply to in argument, but there's simply nothing there. It's not evidence. It's not a source. It's not even an argument. It's a teaser to buy the book and find out if the book has an argumen…

Kevin Phillips is an economist that served multiple administrations and teaches. He has no shortage of published works, interviews, reviews, criticisms.

I encourage you start your quest by clicking the handy link provided.

Re: Joseph Stiglitz Says American Inequality Didn’t Just Happen

#170

Post by specialist »

pitaj wrote: post #118
specialist wrote: post #87

Also true: Creating the middle class was a deliberate, hard fought policy choice. The USA has done it (massive redistribution of wealth) three times. We're overdue for the fourth cycle. Wealth and Democracy: A Political History of the American Rich [2003] http://a.co/6rMyoc1 "The Second Gilded Age has been staggering enough in its concentration of wealth to dwarf the original Gilded Age a hundred years earlier. Howev…

The middle class was not created via redistribution of wealth. It came about through wealth creation . It existed long before the New Deal and WWII.

Had you read Philips' book, even just the synopsis, you'd find that you're repeating his thesis.

So blame me, not the esteemed economist.

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