While attempting to refute the idea that the poor haven't improved their station since the 70s, they cite a lot of stats that show most households make more income than their parents did (inflation adjusted), but they completely neglect to account for the huge factor that is the number of people working (or cumulative hours worked) per household in order to achieve that improvement. In the 1970s, there were a lot more single-income households. The new standard of multi-income households, I expect, entirely accounts for any gains made by the lower income quintiles of people.
Do the Rich Capture All the Gains from Economic Growth?
51–60 of 311 posts
Re: Do the Rich Capture All the Gains from Economic Growth?
#52I'd like to add to this argument. If Ohio's steel industry grows by 500% who reaps the benefits? Me? The guy writing code in Portland, Oregon? No... its pretty clear that a specific subset of people receive the benefits. The people who own the steel mill. The people who receive employment from the steel mill. The governments which tax the steel mill. But not me. Economic growth isn't uniform. Its an uneven field that…
>I don't know why anyone should feel entitled to economic growth if they didn't participate in it in any way. Maybe that's the real question then - what prevents people from participating in the economic growth? The economy has seen strong growth for about a decade now, yet stock ownership in the broader population remains low. Unemployment is low, but incomes also remain low outside the top 10% of earners. Overall s…
Forget retirement, something like 20% live paycheck-to-paycheck with no emergency fund and would be in crisis mode with an unexpected $500 bill.
Re: Do the Rich Capture All the Gains from Economic Growth?
#53Adjusted for inflation, the US economy has more than doubled in real terms since 1975. How much of that growth has gone to the average person? According to many economists, the answer is close to zero. First of all, the population has increased from around 200M to 325M. The inflation-adjusted economic output would have to increase by that same factor just to say the same per capita .
I believe the rest of the article is making the same point as you. There are lots of factors at play.
Re: Do the Rich Capture All the Gains from Economic Growth?
#54> possible overstatement of inflation
This has been the drum beat for well over two decades. Conservatives revised CPI and CPI markers to their liking in the mid 1990s with the Boskin commission. Yet if you look at inflation over the past two decades and see idle class heirs enriched and the workers creating the wealth stagnant, it's back to the old inflation-is-overstated argument. I mean, Trump is saying it this week in criticizing the Fed chair.
An odd counterpart to German conservative bankers, who seem more obsessed with low inflation and currency stability.
Re: Do the Rich Capture All the Gains from Economic Growth?
#55The author Russ Roberts runs the EconTalk podcast and is a well respected economist/journalist/thinker in the field, definitely worth reading for a fair assessment. Here he presents a few studies that go against general economic consensus popularized mainly by Piketty in "Capital in the 21st century" and through papers/writing by Krugman, Saez, Zucman, Stiglitz, etc. that most of the economic gains in the past 100 ye…
> Here he presents a few studies that go against general economic consensus popularized mainly by Piketty in "Capital in the 21st century" and through papers/writing by Krugman, Saez, Zucman, Stiglitz, etc. that most of the economic gains in the past 100 years have gone to a concentrated few owners of capital.
> Basically - absolute mobility (how much people gain over time) is still decently healthy today in percentage terms in the US, but relative mobility (how easy it is to move between classes) is widening and the wealthy in 1980 still have a much higher income on average than the poor in 1980.
These are not at all in conflict. As you say, the studies he discusses are not related to, much less undermine, any of the arguments that Krugman/Saez/Zucman/Piketty are making. I don't see any reason why individual characteristics like absolute mobility should be used to measure the health or inequality of an overall economy. Income mobility is a different thing from concentration of wealth or inequality.
Re: Do the Rich Capture All the Gains from Economic Growth?
#56So the trend disappears when the groups are disaggregated - I'm surprised that the author does not mention Simpson's Paradox: https://en.wikipedia.org/wiki/Simpson%27s_paradox
Re: Do the Rich Capture All the Gains from Economic Growth?
#57This bullshit article tries to paint a rosy picture of the economy by dismissing proportional median income gains between quintiles and instead argues that absolute income gains of individuals over time is enough evidence to suggest everything is actually great. This chart [1] seems to be the crux of their argument, as in - Surprise! Over 30 years poor people gained an average of almost $30k in income! I sure fucking…
even worse; absolute household income gains over time, not accounting for the increase in person-hours worked outside of the home, nor the corresponding increases in yard work, housekeeping, child care, meal preparation costs....
Re: Do the Rich Capture All the Gains from Economic Growth?
#58The problem with most economic analysis is that adjustments are generally based on arbitrary metrics like PPP or inflation.
If a child (or couple) in Britain earns three times as much, in "real" terms, that their parent (or parents) did at that stage of life, they will probably have to live in a smaller house, further from the center of town, with a worse commute.
Pretty much the biggest QoL improvements knocked out. The fact they can buy a few more toys or nicer food is not really that consequential.
Re: Do the Rich Capture All the Gains from Economic Growth?
#59This bullshit article tries to paint a rosy picture of the economy by dismissing proportional median income gains between quintiles and instead argues that absolute income gains of individuals over time is enough evidence to suggest everything is actually great. This chart [1] seems to be the crux of their argument, as in - Surprise! Over 30 years poor people gained an average of almost $30k in income! I sure fucking…
> Surprise! Over 30 years poor people gained an average of almost $30k in income! I sure fucking hope someone who started at minimum wage in 1980 is making $30k more today.
Well this is an important part of his argument. The people's wages are not stagnant, but rather they went up an 30K (including inflation). That fact this their wages went up is not trivial.
Re: Do the Rich Capture All the Gains from Economic Growth?
#60No they tinkle down to the poor millionaires via rent.