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

Re: The rich world needs higher real wage growth

#201

Post by dahauns » Mon, Jul 02, 2018, 12:19 AM UTC

bovine3dom wrote: post #174

CPAhem wrote: post #167

Earlier quoted context omitted.

>Yes. Unemployment is very low. Actually it is not that low, especially out of the tech sector. Real unemployment and under-employment are high because of the way unemployment is now measured. The definition of being unemployed has changed since the GFC to manipulate the statistics. Some tricks to manipulate the numbers are: - If you have been unemployed for more than 6 months you are no longer classified as unemploy…

The employment rate covers point 1 and 3: it is simply the number of people in work divided by the working age population. I think you might be confusing cyclical and structural unemployment with your first point. I think it is valid to talk about the two numbers separately as they deal with pretty different problems (labour market liquidity/efficiency versus skills shortages). The employment rate is at an all time h…

>it is simply the number of people in work divided by the working age population.

Nah, this would be the labor force participation rate - and that one took a plunge since 2008 and never recovered since.

https://data.bls.gov/timeseries/LNS11300000

Re: The rich world needs higher real wage growth

#202

Post by JumpCrisscross » Mon, Jul 02, 2018, 12:23 AM UTC

freeflight wrote: post #190

JumpCrisscross wrote: post #119

Earlier quoted context omitted.

> The bulk of economics is about how these small components interact as a large dynamic If I’m setting pricing and volumes at a firm, I don’t give a rat’s ass about the larger dynamics. I want to know how production variables will impact sales. For this, I can A/B test and rely on a deep corpus of research on queueing theory, supply and demand network and latency models, and logistical models.

> I don’t give a rat’s ass about the larger dynamics But just because you don't, doesn't mean they don't exist/matter. You can do a lot on your individual micro-scale, but you will have a very hard time understanding how these changes affect the overall economy on a macro scale. For all we know, "the market" is pretty much just a giant black box. It's not totally black, but we have a very hard time properly defining,…

> you will have a very hard time understanding how these changes affect the overall economy on a macro scale

We understand the relationship between the temperature and pressure of ideal gasses without a precise presentation of quantum mechanics. Similarly, we can produce useful production functions without comprehending the complexity of the bulk.

Re: The rich world needs higher real wage growth

#203

Post by JumpCrisscross » Mon, Jul 02, 2018, 12:27 AM UTC

AnthonyMouse wrote: post #200

JumpCrisscross wrote: post #166

Earlier quoted context omitted.

> If you reallocate money without creating new currency, what you get isn't really inflation You’re forgetting about velocity. A dollar in a middle class earner’s hands gets spent faster than a dollar in a billionaire’s. That faster spending stokes both growth and inflation.

> You’re forgetting about velocity. A dollar in a middle class earner’s hands gets spent faster than a dollar in a billionaire’s. That faster spending stokes both growth and inflation. At a fixed money supply, growth causes deflation . People want to engage in more transactions and they need money to do it, which increases demand for currency. You often see inflation during periods of growth because when there are hi…

> At a fixed money supply, growth causes deflation

True. This is the problem with fixed money supplies.

We moved past fixed money supplies several decades ago. My statement stands true in any modern context. Rich households spend slower than poor households.

Re: The rich world needs higher real wage growth

#204

Post by derf_ » Mon, Jul 02, 2018, 12:44 AM UTC

JumpCrisscross wrote: post #188

derf_ wrote: post #177

Earlier quoted context omitted.

> Is it telling me that when unemployment is low, central bank policy is to raise interest rates? You may dimly recall from your undergraduate Macro courses a relationship between unemployment and inflation called the Phillips Curve [0], which is used to evaluate one of the "dual mandates" the Fed tries to fulfill with its interest rate setting policy. The problem, of course, is that there is evidence from the Fed's…

> central banks (including the Fed) from pretending it's still true I can’t recall a major central bank basing a policy decision on the Philip’s Curve since the 1970s.

http://blogs.marketwatch.com/capitolreport/2016/03/16/live-b...

12:29 pm

The Philips Curve is alive, [Federal Reserve Chair Janet] Yellen says.

Re: The rich world needs higher real wage growth

#205

Post by Synaesthesia » Mon, Jul 02, 2018, 12:54 AM UTC

rdlecler1 wrote: post #170

The rich world needs cheaper housing. Fix that and the average family can allocate more resources to other things like health and education instead of diverting more resources to rent seekers.

Economist Michael Hudson often writes about this. The housing bubble is mostly beneficial to banks, as they get more interest. They know that house prices will go as high as they are willing to lend out.

Re: The rich world needs higher real wage growth

#206

Post by dragonwriter » Mon, Jul 02, 2018, 1:01 AM UTC

derf_ wrote: post #204

JumpCrisscross wrote: post #188

Earlier quoted context omitted.

> central banks (including the Fed) from pretending it's still true I can’t recall a major central bank basing a policy decision on the Philip’s Curve since the 1970s.

http://blogs.marketwatch.com/capitolreport/2016/03/16/live-b... 12:29 pm The Philips Curve is alive, [Federal Reserve Chair Janet] Yellen says.

That's not a quote, it's a, well, headline-level interpretation. Followed by a more exact (but still not exact) interpretation, which states the existence of an inverse relationship; there's considerable support for the idea that an inverse relationship between unemployment and inflation exists at least in the short run, but that it is more complex than the original extension of the Phillips curve to unemployment and general inflation (it originally addressed unemployment and wage inflation) would suggest.

Re: The rich world needs higher real wage growth

#207

Post by nunb » Mon, Jul 02, 2018, 1:27 AM UTC

dalbasal wrote: post #91

abhiminator wrote: post #83

Earlier quoted context omitted.

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

I think it might be worse than superficial. They're trying to trick readers into thinking that it contains more information than it does. Not cricket, Economist.

It's been working fine for decades! Even through enormous bad calls like their early noughties call on oil.

Re: The rich world needs higher real wage growth

#208

Post by derf_ » Mon, Jul 02, 2018, 1:41 AM UTC

dragonwriter wrote: post #206

derf_ wrote: post #204

Earlier quoted context omitted.

http://blogs.marketwatch.com/capitolreport/2016/03/16/live-b... 12:29 pm The Philips Curve is alive, [Federal Reserve Chair Janet] Yellen says.

That's not a quote, it's a, well, headline-level interpretation. Followed by a more exact (but still not exact) interpretation, which states the existence of an inverse relationship; there's considerable support for the idea that an inverse relationship between unemployment and inflation exists at least in the short run, but that it is more complex than the original extension of the Phillips curve to unemployment and…

You are right, of course. Here's the exact quote:

So the Philips Curve posits that there is a relationship between the degree of slack in the labor market and inflation, and it is an empirical relationship that, while not absolutely tight, has been a consistent relationship over time, and I believe that relationship still holds.

https://www.c-span.org/video/?406675-1/federal-reserve-chair...

> there's considerable support for the idea that an inverse relationship between unemployment and inflation exists at least in the short run

Would you care to cite some? I'm certainly familiar with the post-70's forms of Phillips Curve theory (it's discussed in the very Wikipedia article I linked). But I also cited a 2017 paper from the Philadelphia Fed that looked very hard for such a relationship and couldn't find one, and which itself cites prior research going back to 2001 that agrees.

Re: The rich world needs higher real wage growth

#209

Post by auntienomen » Mon, Jul 02, 2018, 2:28 AM UTC

WalterBright wrote: post #195

JumpCrisscross wrote: post #187

Earlier quoted context omitted.

> Billionaire's don't hoard cash Velocity’s relationship with income is well documented. (Note, too, that velocity most properly measures the purchase of goods and services. Transaction velocity also includes investment. Even that goes down as income goes up.)

I'd like to see some documentation that rich people hoard cash. Note that money stuffed into a checking account is still invested - the bank loans it out to people who spend it. Even so, I seriously doubt wealthy people have non-trivial amounts of money in checking accounts, because the interest paid on them is nearly non-existent. Wealthy people know how to manage their money, and investing it in 0% checking account…

A fun aside: Banks don't loan out deposits.

https://www.investopedia.com/articles/investing/022416/why-b...

Re: The rich world needs higher real wage growth

#210

Post by knuththetruth » Mon, Jul 02, 2018, 3:07 AM UTC

randomdata wrote: post #163

knuththetruth wrote: post #50

Earlier quoted context omitted.

The destruction of unions and other forms of organized labor. Without any strong, organized resistance to Capital owners, they were free to redirect more and more of the profits from productivity gains to themselves. The resulting disparity created a kind of feedback loop that further entrenched the power of Capital owners, as some of the excess wealth they now possessed could be put to use subverting the American po…

Why did Canada's wages stop growing at the same time, even though unions continued to strengthen until the mid-1980s, when it peaked at nearly 40% of the workforce?

Because by the 1970s, Capital was a fully globalized force whose political projects exceeded the power of individual nation state’s ability to resist them. Only transnational labor solidarity has comparable power, which is something that Capital owners had specifically sought to (and succeeded at) undermining in the context of the Cold War.