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The rich world needs higher real wage growth

economist.com

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Re: The rich world needs higher real wage growth

#81
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…

That's certainly part of it. I worked at a company a few years ago in which, come Christmas, the MD (British company) told everyone that it had been a good year and that he'd rather see the profits go to the workers than the shareholders, so here's a nice bonus (over a month's pay as a bonus). I genuinely believe some would see that as heresy, and some will think that is (or should be) illegal. I'm sure there was a time when a principal point of a company was for the people in it to band together and earn money.

Re: The rich world needs higher real wage growth

#82

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.

IDK... The economist has a lot of great reporting on diplomacy, politics, threats to "free society.." I can't remember the last time I read a good economist article on economics.

When Thomas Pickety won the nobel, and got so much coverage, the economist ran some article structured pretty much like this one. All jargonized, cliched & euphamised language.

I'm not upset at the economist's positions, political orientation or such. I'm upset with the "Quantum Healing" style of pseudo-argument that is now dominant in their economic writing. They are using economic terms. They are saying sentences that are true, just not meaningful in the context. Then they flavour this with vaguer, more abstract sentences which sound more meaningful while being less meaningful.

Re: The rich world needs higher real wage growth

#83

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…

I absolutely agree with you. This is a perfect example of superficial reporting. Surprised to see this from The Economist.

Re: The rich world needs higher real wage growth

#84
I think the root cause of most of these problems, is that most people don't add economic value. That isn't to say they are bad people (of course not!), but that we have reached a stage in technology driven capitalism where only a small percentage of people can gain large pieces of the pie (software engineers and CEOs), while middle income jobs are too inefficient to survive (lawyers displaced by discovery software, accountants with TurboTax, truck drivers etc.). The jobs that are left available are all low skill and pay accordingly (it is hard to automate burger flippers, but people are trying).

All of this is being greatly exacerbated by climate change. As people consume more things and the worlds' resources are reduced there is a greater incentive to automate as once previous costs in production become too much. As fewer people are hired because of automation, there is less money to buy quality long lasting goods, so manufacturers aim to make cheap disposable products at scale to sell to the poor, thus exacerbating climate change.

All of this I think is pretty obvious. What I've just shown is only one of any number of negative feedback loops that are growing worse and will probably cause huge social conflicts and war. The interaction between poverty, populist governments, tariffs which increase in trade wars and more poverty is another good example.

Most people in the first world (>50%) by my estimation, will be net economic drains on society within 20-30 years because of technological advancement and globalization. We will also start to see mass starvation in the third world as climate change makes potable water rare and changes to regional climates disrupts food supply chains. We could very well see mass migration and conflict that will appear similar to what happened around the time of the Mongol invasion of Rome (again, migrants searching for food are obviously not bad people).

The issue is that in order to solve these problems we need to address root causes that are impossible to stop. Knowing the solution does not make enacting that solution any easier. The only steps that I can see that would solve these problems would be the following:

- People voluntarily stop having (as many or any) children worldwide.

- People stop eating meat. It is the number one greenhouse contributor, and it shameful that people eat meat (which requires farm animals to consume food in order to be made), while any other people go hungry.

- There is a basic needs allowance. We have enough resources to feed, cloth, and shelter everyone in the world and the lack of these resources is what causes the poor to take up arms. Show me a conflict and I'll find the people going hungry.

- The benefits of capital and technological automation have to be widely distributed. That means the profits as well.

But these are hard problems to solve, because it means convincing people to share. I don't think most people ever really learn how. The alternative to doing the hard work of sharing is to keep going down the path we're on now. Eventually there will be enough reports that all the increases to productivity only go to the rich for people to stop believing that hard work matters.

I don't know man. When I was younger I thought knowing the solution was enough, but as I get older I'm more and more convinced the world is a bad place because some people just suck.

Re: The rich world needs higher real wage growth

#85

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…

This article really demonstrates how meaningless most economics reporting is, it's nearly as bad as markets/finance reporting.

The problem is not with the reporting, it’s with the field. Economics is pseudoscience. It has all the trappings but none of the explanatory or predictive abilities. So you get articles like these that use a lot of jargon pretending like they’re making a strong case, but there’s no strong consensus position reached here beyond the bare observables.

Economics can’t be a science yet. It is a branch of sociology, modelling the economic behavior of people, and we lack the sociological insight to do that currently.

Re: The rich world needs higher real wage growth

#86

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…

I absolutely agree with you. This is a perfect example of superficial reporting. Surprised to see this from The Economist.

As a subscriber, I’d say this is very standard for the Economist.

Re: The rich world needs higher real wage growth

#87

Earlier quoted context omitted.

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 ki…

> Is it telling me that when unemployment is low, central bank policy is to raise interest rates? If so, why not say that? Raising rates aren’t the only way to solve the problem of (a) people who could be in the labour market but aren’t and (b) insufficient labour in the places it needs to be. Whatever it’s trying to do, it got me thinking about barriers to hiring in New York City. Are there steps we could eliminate…

You probably lost a great bartender and taco server. Honestly, I’m sorry to hear that. But her victory is very refreshing. What do you think?

Why not discuss it with her?

Re: The rich world needs higher real wage growth

#88

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…

I absolutely agree with you. This is a perfect example of superficial reporting. Surprised to see this from The Economist.

No, this is entirely typical of The Economist. Everything I ever read there is amateurish and superficial.

Re: The rich world needs higher real wage growth

#89
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...

My phone has the capability of a billion dollars worth of super computers back in the 1980s. Its not sensible to assign any economic value to that. I'm not richer because I have better technology today than before. Trasistors have just suffered massive commoditization and their prices reflect that.

It isn't just tech like phones and laptops. Cars for example are one of the biggest purchases that people make and increased quality has resulted in them staying on the road 50% longer than they did a couple decades ago. In that case, looking at the nominal cost of the car doesn't tell you nearly enough about inflation. The actual cost measured by miles driven or years owned has dropped drastically. You might not be richer because your car is more reliable. But you are certainly richer because you only have to buy a new car every 12 years instead of every 8. Things like that need to be considered.

Re: The rich world needs higher real wage growth

#90

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…

Someone's gotta explain to me what "structural changes in the economy" means. Does it mean that the economy is like a big building and we added another floor? Is the economy now like one of those whacky nu-architecture prizewinning buildings that are shaped like giant globs of play-do?

Or is it one of those phrases that can be used to mean absolutely anything at all?

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