The rich world needs higher real wage growth • Hacker News Board

Re: The rich world needs higher real wage growth

#61

Post by JumpCrisscross » Sun, Jul 01, 2018, 4:40 PM UTC

dalbasal wrote: post #56

This article really demonstrates how meaningless most economics reporting is, it's nearly as bad as markets/finance reporting. Oil is $75, about average over the last decade. It has almost nothing to do with employment, wage growth or GDP except inasmuch as all major economic measures affect eachother. A year ago oil prices were low, did that mean the opposite of this article (whatever that is) was true? This kind of…

> Are "labour market running hot" or "central bank tightening" references to actual things

Yes. Unemployment is very low. That means if you need ten people, you may have to pay more or wait longer than you expected. That is what “labour market running hot” refers to. “Eliminating slack” means encouraging employers to raise wages (which can cause inflation) to fill productive jobs.

“Central bank tightening” refers to the Federal Reserve reducing its balance sheet and raising rates. There is a Fed meeting later this year when target rates are expected to be raised, partly in reaction to said labour market.

I agree that the financial press could afford to be less jargon heavy.

Re: The rich world needs higher real wage growth

#62

Post by dominotw » Sun, Jul 01, 2018, 4:40 PM UTC

gedy wrote: post #52

dominotw wrote: post #46

Earlier quoted context omitted.

> I'm not richer because I have better technology today than before. Why not though?

Probably because it does not translate into food, health, and shelter security for the vast majority of people.

sure if you don't have those already, I am sure gp does have food, healthcare. I was curious if better tech makes your richer if you already have food, healthcare, security covered. Richer doesn't necessarily mean we have more food than before.

Re: The rich world needs higher real wage growth

#63

Post by walshemj » Sun, Jul 01, 2018, 4:40 PM UTC

Nokinside wrote: post #51

adpirz wrote: post #26

Linked elsewhere in the comments, but this is an interesting read regarding the increasing gap between productivity and labor: https://www.epi.org/publication/understanding-the-historic-d... . The interesting fact is that the loss of labor's share of GDP to capital is less than you'd imagine, and a much bigger reason for stagnant real wage growth has to do with inequality regarding compensation. Automation is real an…

When you are really rich, consumption becomes tedious. If someone has $100M income after taxes, they might invest $50M reducing the ROI of the capital in economy during the economic boom when there is enough capital and cheap credit already. What to do with the remaining $50 million? It's hard to eat, travel or use services to spend $50 million per year. It's possible, but it takes some real effort. Helicopter ride e…

They are tanking about the rich middle class west (ie you and me) not euro trash millionaires and trustafarians on made in Chelsea :-)

Also if you did suddenly get 50mil say you invest for the long term 50% the balance gives you an income And that's not assuming you don't spend 10-15 mill or so on a really nice house or two one in London and one in the country.

Re: The rich world needs higher real wage growth

#64

Post by lifty » Sun, Jul 01, 2018, 4:41 PM UTC

platz wrote: post #24

pknopf wrote: post #9

What exactly (as if anyone can know) caused the wage growth and productivity to split in the 1970s? Was Nixon's complete split from the gold standard a factor at all?

The investor class saw inflation marginalizing their endeavors, and they got us to target price stability as the goal instead of full employment. The controls, liquidity of global capital, and action of the central banks that maintain price stability, end up suppressing wage growth. So we have a world in which rather than the debtor’s paradise we had in the 70s, we have a creditor’s paradise now. https://youtu.be/X5J…

I am not sure I follow your reasoning. Taking into account the low interest environment that we have gone through in the last 10 years how can it be a creditor’s paradise?

Re: The rich world needs higher real wage growth

#65

Post by GatorD42 » Sun, Jul 01, 2018, 4:42 PM UTC

tfehring wrote: post #14

GatorD42 wrote: post #2

I think there are many reasons to be skeptical of inflation and productivity statistics because they don’t seem to capture the rate of innovation in consumer goods such as smartphones and related areas like wireless plans. I wrote a piece on inflation statistics showing how U.S. inflation statistics fail to account for the quality improvement in iPhones: https://medium.com/@vince.pavlish/using-iphone-prices-to-che...

Interesting take, but I'm not sure I buy it. I certainly don't feel like I get ~2.5x more utility from my current iPhone than I did from the smartphone I purchased in 2012, which was just as fast (on the software of the time) and had most of the same functionality. I'd also be curious as to how you were able to conclude that the so-called "fashion effect" is not supported by evidence.

How much would you pay for a brand new iPhone 5 (the iPhone new in 2012) that looked exactly like an iPhone X and was indistinguishable by anyone else? If it's less than the price you would pay for a real iPhone X that price difference is because of quality improvement and not fashion.

There are more rigorous ways to account for the fashion effect, but this thought experiment shouldshow that a significant part of the price difference is because of quality improvements.

Re: The rich world needs higher real wage growth

#66

Post by [deleted] » Sun, Jul 01, 2018, 4:46 PM UTC

mlthoughts2018 wrote: post #49

bigmanwalter wrote: post #39

Earlier quoted context omitted.

We are social beings. We live in a society. Being close to others is not a status symbol, it is what makes us, us. I eat at nice restaurants because the food is delicious. I enjoy the culture. I enjoy a wide variety live music. These are not status symbols, these are the essence of a joie de vivre. I enjoy walking to my local shops and boutiques, not for the status but because it is genuinely enjoyable of its own mer…

Your reply sounds like an absolutely classic reply of someone driven very much by social status signalling. Especially the whole “I don’t buy into status-seeking; I just like ‘quality’ experiences” thing — which just begs the question, where does your notion of quality come from? “I enjoy walking to my local shops...” is the same as saying you like being high-status and commanding the existence of a local bazaar that…

[deleted]

Re: The rich world needs higher real wage growth

#67

Post by qmalzp » Sun, Jul 01, 2018, 4:48 PM UTC

mlthoughts2018 wrote: post #28

mozumder wrote: post #6

Or better yet, reduce prices all around. Think of all your expenses and look at ways to systematically reduce them for everyone. Start with food, get a meal down to less than a dollar. Rent is high because everyone wants to move to certain dense areas, while moving away from more spacious/rural areas. This is unsustainable. Offer incentives for people to move elsewhere, including jobs programs and subsidizing mass tr…

But why does everyone want to move to dense urban areas? You assume that there’s some small, easy-to-offset group of factors, like public transit or “jobs programs,” and that if the government just did something with these things, it would equilibrate population dynamics appropriately. I’m not convinced. I think people are more driven by status symbols and glamor. Living in a city is considered relatively more “high…

Google doesn't open a 500-engineer research lab in Grand Rapids, MI because there are not 500 Google-caliber engineers already living in Grand Rapids, MI. This is not a statement about the average talent there, but simply that the starting pool is not sufficiently large; hence the need to build offices in high density urban areas.

Google doesn't open an office in Denver so that Bay Area engineers have a slightly cheaper place to work, they do it to tap into the talent of folks who already live there.

Edit: I am basing these claims off of my own experience. I work at a satellite office of one of the big tech co's, and the vast majority of my coworkers are people who are either fresh out of a local university, or already lived here for many years before joining the company.

Re: The rich world needs higher real wage growth

#68

Post by dalbasal » Sun, Jul 01, 2018, 4:51 PM UTC

JumpCrisscross wrote: post #61

dalbasal wrote: post #56

This article really demonstrates how meaningless most economics reporting is, it's nearly as bad as markets/finance reporting. Oil is $75, about average over the last decade. It has almost nothing to do with employment, wage growth or GDP except inasmuch as all major economic measures affect eachother. A year ago oil prices were low, did that mean the opposite of this article (whatever that is) was true? This kind of…

> Are "labour market running hot" or "central bank tightening" references to actual things Yes. Unemployment is very low. That means if you need ten people, you may have to pay more or wait longer than you expected. That is what “labour market running hot” refers to. “Eliminating slack” means encouraging employers to raise wages (which can cause inflation) to fill productive jobs. “Central bank tightening” refers to…

I have (more than a little dusty) degree in economics, and I still don't understand what this article is trying to tell me.

Is it telling me that when unemployment is low, central bank policy is to raise interest rates? If so, why not say that? What I meant is that generally I don't see how the sentences in this article add up to .. an article. It's a bunch of metrics, chosen by convention, expressed in cliche. It kind of sounds like it's telling us a theory or opinion about something, but it isn't really.

Re: The rich world needs higher real wage growth

#69

Post by harryh » Sun, Jul 01, 2018, 4:51 PM UTC

dalbasal wrote: post #60

dalbasal wrote: post #56

This article really demonstrates how meaningless most economics reporting is, it's nearly as bad as markets/finance reporting. Oil is $75, about average over the last decade. It has almost nothing to do with employment, wage growth or GDP except inasmuch as all major economic measures affect eachother. A year ago oil prices were low, did that mean the opposite of this article (whatever that is) was true? This kind of…

..extra point. This is the most ridiculous part: Continued tightening in labour markets might yet boost workers’ bargaining power enough for that to happen, as was the case during the late 1990s and late 2000s, two unusual periods in which labour’s share of GDP rose across the rich world. Labour’s share of GDP is a fraction. labour/gdp. you can make it bigger by having higher wages or lower gdp. Anyone remember 1999…

GDP was still increasing in the late 90s in the US. The recession didn't start until March 2001.

Re: The rich world needs higher real wage growth

#70

Post by ryanstorm » Sun, Jul 01, 2018, 4:52 PM UTC

dalbasal wrote: post #56

This article really demonstrates how meaningless most economics reporting is, it's nearly as bad as markets/finance reporting. Oil is $75, about average over the last decade. It has almost nothing to do with employment, wage growth or GDP except inasmuch as all major economic measures affect eachother. A year ago oil prices were low, did that mean the opposite of this article (whatever that is) was true? This kind of…

The Economist just went through a month-long series on the faults of economists and the field. I'm sure they'd be able to go into more detail, but this seems to be one of their more simplified articles.