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

Re: The rich world needs higher real wage growth

#141

Post by crdoconnor » Sun, Jul 01, 2018, 7:15 PM UTC

pembrook wrote: post #123

Joeri wrote: post #85

Earlier quoted context omitted.

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 con…

Economics is not pseudoscience. Pseudoscience is essential oils being marketed as medicine. Economics is a social science, just like anthropology, archaeology, history, linguistics, political science, psychology, sociology, etc. etc. It's never going to be something with Laws of Gravity or the like, because humans are never wholly predictable or rational creatures. But that doesn't mean we can't come up with models t…

>Economics is a social science, just like anthropology, archaeology, history, linguistics

Unlike those sciences there's a lot of money in economics invested in certain conclusions, though.

It does not help Walmart's bottom line, for instance, if everybody stops believing that raising the minimum wage causes unemployment.

There aren't equivalent controversies with money behind them like in other social sciences (and other social sciences don't get paid as much).

Re: The rich world needs higher real wage growth

#142

Post by _9vpl » Sun, Jul 01, 2018, 7:17 PM UTC

baursak wrote: post #96

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…

Relevant: https://www.theatlantic.com/technology/archive/1991/10/-quot... "The magazine is written by young people pretending to be old people... If American readers got a look at the pimply complexions of their economic gurus, they would cancel their subscriptions in droves."

This article is nearly 30 years old.

Re: The rich world needs higher real wage growth

#143

Post by tcbawo » Sun, Jul 01, 2018, 7:19 PM UTC

pembrook wrote: post #123

Joeri wrote: post #85

Earlier quoted context omitted.

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 con…

Economics is not pseudoscience. Pseudoscience is essential oils being marketed as medicine. Economics is a social science, just like anthropology, archaeology, history, linguistics, political science, psychology, sociology, etc. etc. It's never going to be something with Laws of Gravity or the like, because humans are never wholly predictable or rational creatures. But that doesn't mean we can't come up with models t…

We've avoided a major depression so far, but our institutional knowledge only spans a couple generations. There are very few people left who lived through the Great Depression. That there is active debate regarding policies that will prevent future depressions is not encouraging. Those who learn history are cursed to watch as history repeats.

Re: The rich world needs higher real wage growth

#144

Post by jxub » Sun, Jul 01, 2018, 7:24 PM UTC

_fol8 wrote: post #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, a…

I may not add much in the discussion, but thanks for the holistic point of view in the comment, I quite needed it.

Re: The rich world needs higher real wage growth

#145

Post by slg » Sun, Jul 01, 2018, 7:26 PM UTC

AngryData wrote: post #132

slg wrote: post #89

Earlier quoted context omitted.

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…

A bit of a tangent but I don't think cars last any longer than a decade or two ago, certain models sure but 90s cars can hit 300K+ miles with normal maintenance. A car from 2010 or newer isn't going to be any better off at 300K miles though and would likely be even more costly to maintain because of all the added and unnecessary features combined with penny pinching parts and materials until they are just barely adeq…

You have to factor survivorship bias into that argument. There are obviously some well built cars from the 90s that are doing great at 300k+ miles, but those are the outliers. The poorly built cars from the 90s simply aren't on the road anymore to compare against. Therefore the 90s cars you still see all seem incredibly well built.

Meanwhile a higher percentage of new cars are lasting to those higher mileage ranges. Here[1] is the first Google result on the issue from 2015 that says that average age of cars on the road is up despite new cars sales also being up. Those stats would also seem to dispute your last point about repair costs. For repair costs to really be up enough to counteract the savings from longer lifespans, the entire auto market would have to be functioning irrationally to keep cars on the road past the break even point. That is certainly possible, but it is unlikely that could sustain itself as long as this older car trend has been occurring.

[1] - https://www.usatoday.com/story/money/2015/07/29/new-car-sale...

Re: The rich world needs higher real wage growth

#146

Post by GatorD42 » Sun, Jul 01, 2018, 7:28 PM UTC

tfehring wrote: post #112

GatorD42 wrote: post #65

Earlier quoted context omitted.

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…

I'd probably be willing to pay more than 41% (the 16%/year discount taken from your article, compounded for 6 years) but less than 100%, which implies that your conclusion overstates the value (to me in particular) of quality improvements during that time. Of course, I don't actually have the option to get the same experience from an iPhone 5 today that I could have 6 years ago. As an alternative, consider a budget A…

I didn’t word the hypothetical that well. A better way to think about it would be a brand new iPhone 5 that to you looked and felt like an iPhone 5, but magically appeared like an iPhone X to everyone else. The “fashion effect” is the zero sum feeling someone has from having the latest version of a product. The actually dimensions / screen size and screen to body ratio of the iPhone X are actually technical improvements.

My argument is people would not pay that much for an iPhone 5 that looked like an X to other people and hence conferred its status. If people really were willing to pay close to the price of the X in such a situation it would be an argument that the fashion effect plays a significant role. I don’t deny it has some influence, only that technical improvements are the main influence of prices.

If you are still willing to pay more than 41% of the price of an iPhone X for an iPhone 5 that everyone thought was a X, I think that would make you pretty unusual. Used versions of the iPhone 5 seem to be going for under $100 on eBay. Even assuming a discount for new vs used, that would mean you value the iPhone 5 about $200-300 more than a typical eBay buyer.

In response to your Android hypothetical I would argue that Android phones have advanced more rapidly than iPhones over the past 5+ years, and that there is some system lock in. Also I don’t really want to get into the quality debate in this area, though I would note that Android phones exhibit year over year price depreciation similar to iPhones.

Re: The rich world needs higher real wage growth

#147

Post by JumpCrisscross » Sun, Jul 01, 2018, 7:34 PM UTC

mc32 wrote: post #140

JumpCrisscross wrote: post #73

Earlier quoted context omitted.

> 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…

I'm curious to see how far she goes with her esposal of Chavista policies and if she does, what its impact will be on the community.

> her esposal of Chavista policies

Source? (Genuinely curious.)

Re: The rich world needs higher real wage growth

#148

Post by GatorD42 » Sun, Jul 01, 2018, 7:35 PM UTC

mdorazio wrote: post #3

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...

While that might be true, it seems like incorrectly accounting for quality improvements in a subset of goods is a rather small nitpick in comparison to things like poor accounting for rapid changes in housing, healthcare, education, and child care costs in many locations. PCE is a better measure of inflation than CPI in my opinion, and even that is lacking.

The CPI shows higher inflation than the PCE, which would seem to contradict your claim that PCE is better measure for capturing those categories.

Given the large errors I have observed in measurement of electronics and wireless plans (biased towards overstating inflation) it wouldn’t necessarily surprise me if the CPI or PCE erred in measuring the prices of housing, healthcare etc in the opposite direction (biased towards understating inflation). That said, the whole point of such measures is to record the prices of these services over time, and the measurement seems much more straightforward than for personal electronic devices(no need to account for large quality changes or changing product categories except in medicine). So if the CPI were mismeasuring such areas, it would be a fairly embarrassing mistake.

Re: The rich world needs higher real wage growth

#149

Post by slg » Sun, Jul 01, 2018, 7:40 PM UTC

phkahler wrote: post #134

slg wrote: post #89

Earlier quoted context omitted.

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…

That just means I spend less money cars. All thing else being equal I should have more disposable income. Just like the phone example I can say cars are cheaper now. No sense trying to assign mythical extra value to them outside real dollar transactions.

Isn't that the entire purpose of measuring inflation?

Re: The rich world needs higher real wage growth

#150

Post by AnthonyMouse » Sun, Jul 01, 2018, 7:41 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…

> “Eliminating slack” means encouraging employers to raise wages (which can cause inflation) to fill productive jobs.

If you reallocate money without creating new currency, what you get isn't really inflation. Prices may adjust because the demand for things lower income people buy increases and the demand for things higher income people buy decreases, and prices follow demand. But supply and demand isn't inflation.

And that effect is present for any method of reducing wealth inequality. If we had less inequality, people who are currently poor would then have more money and use it to buy things. If those things are scarce then their prices will increase.

It's like saying we shouldn't decrease homelessness because it may increase energy prices when the new homeowners have to heat their new homes. Even if it's nominally true, the implication that the cost outweighs the benefit is ridiculous.

And if you're really worried about high prices, the way to combat them isn't to denigrate efforts to increase middle class wages, it's to address artificial scarcity in markets like housing.