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

Re: The rich world needs higher real wage growth

#261

Post by bigmanwalter » Tue, Jul 03, 2018, 5:50 PM UTC

IkmoIkmo wrote: post #252

bigmanwalter wrote: post #245

Earlier quoted context omitted.

You most definitely can separate the fashionable, and status-seeking aspects out from urban culture. I live in Canada. The traditional cuisine is bland, and fresh produce grows only a few months of the year. I see my love of sushi as a product of globalization and urbanization as much as is my ability to get decent fruit from the grocery store in the heart of winter. Sure I could have a root cellar and eat potatoes a…

Somehow this reminds me of the history of lobster as cheap food for the poor and imprisoned. People detested it. Until of course the status of lobster changed. Or the fact aluminium used to be extremely expensive and thus used for the most precious cutlery, ornaments etc. Until of course it became dirt cheap to produce. Some things really are related to the ideas we hold, not reality itself. You can see this in blind…

It is easier to taste the fruit of globalization and interact with a larger slice of society by living in the city.

Status plays a part but is not the primary driver behind satisfaction from urban life.

Re: The rich world needs higher real wage growth

#262

Post by stale2002 » Tue, Jul 03, 2018, 6:28 PM UTC

mozumder wrote: post #257

stale2002 wrote: post #256

Earlier quoted context omitted.

No, we don't need only a singular city. But the status quo of what we are currently in is way way to far on the wrong end of thing. So once San Francisco and new york rent prices aren't literally 5 time larger than rent prices in the countryside THEN we can worry about the issues you bring up. But as long as rent prices ARE 5 times larger in the city, I will not worry a single ounce about the issues you brought up. Y…

Yah but you're raising prices on everything anyways by making everyone live in the city where they are unneeded instead of more efficiently where the jobs are.

But the problem right now is the opposite. The problem is that we MAKING them live in the countryside instead of allowing those that want to to live in the city.

Let's very much make it so living in the city is just as cheap as living in the countryside. That way everyone can decide for themselves which life is better, instead of being forced to live in the countryside, because the city is unaffordable.

Re: The rich world needs higher real wage growth

#263

Post by randomdata » Tue, Jul 03, 2018, 11:43 PM UTC

knuththetruth wrote: post #253

randomdata wrote: post #236

Earlier quoted context omitted.

By transnational you mean American? There are plenty of countries where unionization and labour solidarity remains strong even today. And, if so, what is special about the American workforce in particular that they have such an effect on the entire world?

It’s not what’s so special about the American workforce, but what’s so special about American Capital. And the answer to that is that standing behind their demands is a massive, belligerent, military empire, with a long history of toppling or refusing to defend countries that don’t play along.

How, then, was the, relatively insignificant in the grand scheme of things, unionization movement in the USA able to stand up to that powerful capital?

Re: The rich world needs higher real wage growth

#264

Post by lsiebert » Tue, Jul 03, 2018, 11:48 PM UTC

WalterBright wrote: post #226

lsiebert wrote: post #225

Earlier quoted context omitted.

Federal Reserve Bank of San Francisco, even after massaging the numbers by suggesting measurement issues may account for differences, shows a 30% difference between poor and rich in terms of average propensity to consume. https://www.frbsf.org/economic-research/publications/economi...

That paper makes the fundamental error I am talking about. It assumes that if rich people aren't spending on consumption, they are hoarding cash. It then makes economic sense to redistribute that hoarded cash in order to put the money to use. But the rich aren't hoarding cash. They're investing it. The money is put to use. The rich do not have pallets of cash in the basement. You'd think that professional bankers wou…

Consumed money is more stimulative of the economy then money that is invested, because consumed money first circulates 1 or more times, and then is likely invested as well, whereas directly invested money doesn't circulate before it's invested.

It's like saying that a formula 1 race isn't faster then a car parked on the start line because it ends up at the same place. It ignores the times the car goes around the track.

It also presumes that a choice of an investment is as good as the free market in distributing capital effectively.

Re: The rich world needs higher real wage growth

#265

Post by salawat » Wed, Jul 04, 2018, 12:40 AM UTC

WalterBright wrote: post #255

salawat wrote: post #254

Earlier quoted context omitted.

Value deserts in the sense that no competitors can break into the market to capture share, because the market is essentially defined by the entrenched player. Yes it does happen. Again, look at Wal-Mart and dairy. Alphabet\Google does the same with digital advertising. I'm not saying people are crap investors either. I'm saying the definition of a "good investor" (maximize fimancial ROI) and a "good company" (maximiz…

I think this has wandered way off topic.

Not really... It's just about a 4th degree argument I'm making.

-1st degree:Real wage growth doesn't happen, because investor behavior wants the most money back to them from a company.

-2nd degree: A company will try to trim "waste" by cutting immediate liabilities to the lowest they can to maintain requisite Talent.

-3rd Degree: Talent is going to go where the biggest bucks can be made, and that will be the biggest market behemoth which exists currently. The infusion of investor capital exaggerates buying power to acquire and retain Talent which would be necessary for smaller competitors to get a leg up against the behemoth"s entrenched position. This leads to value deserts, which adversely effects industry as a whole.

-4th degree: Smaller competitors die in value deserts. supply goes down, demand stays the same or goes up. Prices go up, profit goes up, return to 1st degree.

Wal-Mart captured a great deal of investor capital. In order to keep itself looking tempting to investor's it has to grow (diversify), cut liabilities (minimize wage growth, decrease employment/payroll via automation, and minimize benefits expenditures through scheduling shenanigans), or do BOTH at the same time by vertically integrating their supply chain and using loss leading's attendant benefits to undercut small producers; this pushes them out of the market, jacks up prices on the commodity when supply goes down, thereby increasing profits, thereby drawing more investment capital. Start the cycle again with the next industry.

It's called a positive feedback loop, and in nature, if they aren't compensated for, bad things happen. It just so happens that this one has a multi-generational period, so no-one has lived long enough or paid enough attention to get upset about it. If they did, I just haven't found their paper, bit I have the feeling people are starting to notice, even if they can't articulate it.

It goes back to wage growth because of the link between 1 and 2. 3 and 4 are what cause the actual societal\market damage. You can't "solve" the problem without fundamental rethink on the axiom that kicks off all of this, which is "the best investment is to dump as much money as possible into the fastest growing company", which has a sub axiom of "growth without bounds is acceptable and to be encouraged".

It ain't straightforward, but nothing about economics seems to be. If there is a glaring flaw, please enlighten me. I REALLY want to improve my understanding.