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Do the Rich Capture All the Gains from Economic Growth?

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Re: Do the Rich Capture All the Gains from Economic Growth?

#61

Post by moduspol »

TangoTrotFox wrote: post #41

On top of the studies within the article, there are other really interesting papers. Some time back I was searching information on the chiseling out of the middle class, and I found this paper [1]. And the paper does describe that chiseling out. In 1979 the middle class controlled 46% of all income, and the upper/rich classes controlled 30%. Today (as of 2014) the rich and upper class control 63% with the middle clas…

> I don't understand the media motivations in choosing to omit these crucial, and greatly encouraging, data when writing on this topic.

Surely you do understand them, though, right?

Re: Do the Rich Capture All the Gains from Economic Growth?

#62

Post by rconti »

irq11 wrote: post #4
dreamdu5t wrote: post #2

TLDR Not so simple. First, purchasing power is not considered. If wages are stagnant, but most consumer goods have gotten cheaper, then the bottom 50% with stagnant wages is capturing productivity gains. Second, there’s no account for economic mobility. Wages for the bottom 50% are stagnant but most people don’t stay the same income all their life. There’s no account of economic mobility. From the article: “As in the…

That is not the TLDR. The post is about cross-cohort vs. same-cohort comparisons. The argument is that if you follow the same people over time, the poor make the biggest percentage gains. Nothing in this is about inflation or prices of consumer goods. And in fact, inflation metrics take that into account.

the beginning of the piece implies that inflation measures will be covered, but they're not.

I thought TL;DR was supposed to be FOR people who didn't read it, not FROM people who didn't read it.

Re: Do the Rich Capture All the Gains from Economic Growth?

#63

Post by munificent »

TheBeardKing wrote: post #31

This 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…

Thank you for writing this comment so that I don't feel like a crazy person after reading this article. It came across to me as so obviously flawed that it's hard to even apply Hanlon's Razor to it.

Not once does he mention of any correction for the obvious bias that people make different amounts at different points in their careers.

Using his exact same process, you could also show that the average height of Americans has increased significantly in the past thirty years, possibly up to a foot! Because, duh, people are shorter when they're kids.

If you're trying to measure how the economy is doing over time, you don't want panels, you want to compare equivalent people at different points in time. Comparing a 20 year old in 1980 to a 50 year old in 2010 confounds the differences between 1980 and 2010 with the differences between being 20 and being 50.

There are reasonable criticisms that identifying representative "equal" people over time is hard, but the author's solution seems dramatically worse than all of them.

Re: Do the Rich Capture All the Gains from Economic Growth?

#64

Post by tanderson92 »

munificent wrote: post #63
TheBeardKing wrote: post #31

This 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…

Thank you for writing this comment so that I don't feel like a crazy person after reading this article. It came across to me as so obviously flawed that it's hard to even apply Hanlon's Razor to it. Not once does he mention of any correction for the obvious bias that people make different amounts at different points in their careers. Using his exact same process, you could also show that the average height of America…

One huge blind spot in using panel data over a 34 year period is that a lot of the people you are initially looking at are retired, and so do not typically pay as much tax or otherwise need to make the same amount of income to have the same standard of living.

The article is very poorly framed and argued.

Re: Do the Rich Capture All the Gains from Economic Growth?

#65

Post by michaelmrose »

rfugger wrote: post #5
dreamdu5t wrote: post #2

TLDR Not so simple. First, purchasing power is not considered. If wages are stagnant, but most consumer goods have gotten cheaper, then the bottom 50% with stagnant wages is capturing productivity gains. Second, there’s no account for economic mobility. Wages for the bottom 50% are stagnant but most people don’t stay the same income all their life. There’s no account of economic mobility. From the article: “As in the…

If wages are stagnant with respect to the consumer price index, they are not capturing productivity gains, because the CPI accounts for lower prices on goods.

While health insurance captures an increasing share of the stagnant income.

Re: Do the Rich Capture All the Gains from Economic Growth?

#66

Post by billmalarky »

rukittenme wrote: post #6

I'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.

Tangentially related point:

The problem occurs when advances in technology make it so the vast majority of humans are literally _unable_, not to be mistaken for _unwilling_, to participate in economic growth.

In this scenario inequality shoots through the roof and that reasonably leads to instability and violence. At a certain point the wealth has to be shared in order to maintain a stable and high-quality society. A pragmatic wealthy person in this scenario should see wealth redistribution as a wise investment, not a cost, seeing as the "let them eat cake" alternative is less desirable if you like to keep your head.

Re: Do the Rich Capture All the Gains from Economic Growth?

#67

Post by lgats »

munificent wrote: post #63
TheBeardKing wrote: post #31

This 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…

Thank you for writing this comment so that I don't feel like a crazy person after reading this article. It came across to me as so obviously flawed that it's hard to even apply Hanlon's Razor to it. Not once does he mention of any correction for the obvious bias that people make different amounts at different points in their careers. Using his exact same process, you could also show that the average height of America…

Hanlon's razor is an aphorism expressed in various ways, including:

Never attribute to malice that which is adequately explained by stupidity

https://en.wikipedia.org/wiki/Hanlon%27s_razor

Re: Do the Rich Capture All the Gains from Economic Growth?

#69

Post by weberc2 »

rhacker wrote: post #11
rukittenme wrote: post #6

I'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 think the thing that is at odds with this attitude is that more and more prevalently "The people who receive employment from the steel mill." don't actually benefit from 500% growth. Instead they might have 6 additional months of job security with little to no raises. And that job security isn't a favor it's because that's the amount of time those workers are needed to get through whatever contract and not any furt…

It's not "shitting on" anyone; it's how (efficient) economics works. You don't earn more money unless you're producing more value. If a steel mill increases its output by way of some new automation, the accounting department and janitorial staff are unlikely to see a wage increase. The folks on the assembly line are also unlikely to see a wage increase because they're not more productive. The people who will be principally rewarded are the people who developed (including investing) the automation.

In other words, as I understand it, economic rules aren't arbitrary--it's not like some cabal of mean rich guys is preventing us from flipping the switch that would make everyone obscenely rich (which is distinct from a cabal of mean rich guys _interfering_ with an economy to make themselves wealthy at the expense of the efficiency of the economy).

Re: Do the Rich Capture All the Gains from Economic Growth?

#70

Post by jdlyga »

We're definitely due for a major shift in our political and economic systems over the next hundred years. At some point, the inequality and gains going to the top are going to boil over into something like the European-wide revolutions of 1848. Back then, much of central europe was still ruled by absolutist monarchs, with even the wealthiest business owners not having representation in government. Basically, people were scared of what a kingless republic is capable of after the reign of terror during the French Revolution. Within a few decades, and especially after WW1, the entire continent transformed republics. It's bound to boil over again at some point.
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