Do the Rich Capture All the Gains from Economic Growth? • Hacker News Board

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

#191

Post by sarcher » Thu, Oct 25, 2018, 8:55 PM UTC

kimmeld wrote: post #80

roymurdock wrote: post #37

The 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…

Russ' political views have been drifting steadily right over time so the data that he cherry picks regarding inflation, total household income, income inequality, is not surprising. I used to listen to his podcast pretty frequently to get a different perspective on econ but now it's pretty painful due to his increasing inability to see outside his own bubble.

There was a guest this summer who noted that unmarried and areligious people are "emasculated". The guest also received zero push-back while implying that immigrants were purposefully being directed by the government to avoid assimilation and that we should return to harsh methods for dealing with immigrants. Russ just let the whole statement slide by without comment.

Have conversations with difficult people, sure, but have a conversation, don't just let stuff like that slide by! Not sure how long I'll be subscribed if those attitudes keep receiving clear air.

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

#192

Post by kwillets » Thu, Oct 25, 2018, 9:02 PM UTC

derekdahmer wrote: post #188

kwillets wrote: post #164

Earlier quoted context omitted.

Rent is not in the CPI. That's what made Shiller's work useful (comparing housing costs and CPI). Edit: Shiller was wrong (I asked him about this point after a lecture about his work on historical housing prices).

Rent is definitely included in the US CPI as "Rent of Primary Residence". See all the weights here: https://www.bls.gov/cpi/tables/relative-importance/2017.pdf

I was wrong -- I see both rent and what appears to be ownership costs in there.

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

#193

Post by poulsbohemian » Thu, Oct 25, 2018, 9:04 PM UTC

Izkata wrote: post #52

poulsbohemian wrote: post #18

Earlier quoted context omitted.

>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.

Yes, I know, and I suspect the parent poster knows too.

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

#194

Post by resu_nimda » Thu, Oct 25, 2018, 9:06 PM UTC

Hoasi wrote: post #167

resu_nimda wrote: post #42

This reads like research sponsored by a tobacco company showing that cigarettes are actually not that harmful. I like how it frames the economy as this independent entity that we just sort of observe and hope for the best. Oh our divining rod produced these arbitrary statistics so the glass is half full guys! In reality, though, the forces of human nature driving the economy don't change. Since the dawn of the surplu…

> Since the dawn of the surplus, there have always been a handful of kings and many serfs, and there probably always will be. One thing is different though: the thralls of today possess costly devices that simultaneously entertain and surveil them, among other things. Past kings would never even have dreamed about that.

I think it's largely irrelevant. Do the kings of today have a harder or easier time maintaining the status quo? I think most changes and fluctuations there are more attributable to chance (i.e. mechanisms we don't understand) than our conscious efforts. The same devices that surveil can also empower, in the end it could be a wash. We change the world around us but I'm convinced there's a certain homeostasis to our social and cultural experience, at core we're having the same conversations and dealing with issues analogous to the ones they had 3000 years ago.

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

#195

Post by krisgee » Thu, Oct 25, 2018, 9:09 PM UTC

chrismanfrank wrote: post #177

crazygringo wrote: post #82

Earlier quoted context omitted.

In other words, regression to the mean. Of course the poorest people are more likely to gain in income -- when you start at the bottom, there's really only one direction you can go. You can still have regression to the mean among individuals while society itself is becoming horrifyingly unequal.

"Of course the poorest people are more likely to gain in income -- when you start at the bottom, there's really only one direction you can go." But doesn't this claim in itself refute the thesis that all the income gains are going to the top? If we find people at the bottom gaining income far faster than people at the top, which is what my quote claims, isn't that evidence that we live in a just society, not an unjus…

Firstly as pointed out in other comments they were measuring income. People at higher incomes in the 80s were probably more likely to retire early or "on time". A more representative number would be wealth which I would imagine is probably horrifying in the vein that the parent and grandparent meant. People living hand to mouth in the 80s were probably doing the same in 2014. People who could save probably weren't.

Even just from the numbers presented imagine the lower percentile person who was making say 10k in constant dollars in the 80s. They're making 20k (100% increase) in same dollars in 2014.

Imagining the person in top was making 1,000,000 dollars in constant dollars they dropped 29% so they're now "only" making 750kish.

I know which group I'd rather be in.

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

#196

Post by Joeri » Thu, Oct 25, 2018, 9:12 PM UTC

rwcarlsen wrote: post #51

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 mor…

The biggest manipulation is they divide household income by the square of household size, which makes the bigger families of the 60’s seem to earn a lot less than they did. The whole thing is based on two studies funded by the same institute based on the same biased dataset, and diving into how they get their numbers is enlightening.

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

#197

Post by weberc2 » Thu, Oct 25, 2018, 9:16 PM UTC

eiaoa wrote: post #179

weberc2 wrote: post #149

Earlier quoted context omitted.

I think you misunderstand investment. Enterprises are risky; someone has to lose money when they fail or otherwise lose value. Those people are investors. Employees can also be investors (e.g., employee owned companies or other arrangements in which employees buy stock in their companies). By definition, the people who get returns on investment are the investors. Buying risk (aka investment) is inherently valuable. I…

> I think you misunderstand investment. I understand investment, I'm just telling you that your original statement is wrong. If you're an owner, you don't have to create any value to get paid. Mere ownership gets owners paid. Sure, they can actively invest if they want to, and they may be better off for it, but that kind of activity is strictly optional .

> I understand investment

I'm ... not sure you do...

> If you're an owner, you don't have to create any value to get paid. Mere ownership gets owners paid. Sure, they can actively invest if they want to, and they may be better off for it, but that kind of activity is strictly optional.

This isn't true. Owners are investors by definition; owners are the sole investors in their companies. Like all investors, owners don't "get paid" unless they sell their shares at a higher price than they bought them. I'm not sure if you take issue with those definitions or if you're trying to nit-pick what it means to 'create value', but I'm pretty sure I've simplified this as much as I can. Good luck.

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

#198

Post by weberc2 » Thu, Oct 25, 2018, 9:19 PM UTC

AnimalMuppet wrote: post #172

eiaoa wrote: post #161

Earlier quoted context omitted.

> Nearly completely idle, except for the part about building a whole new steel mill. That's... not very idle. No one said they built it, just that they owned it. It's totally possible (and common!) to own something that you didn't build and have never had a hand in operating. But lets say a new steel plant was built. Who actually built it? Was it the the owner, or the project managers, engineers, architects, construc…

All right, let me put it this way. Without the money, it doesn't get built. The project managers, engineers, architects, and construction crews (plus the steel workers' local) aren't going to have a bake sale and come up with the money. If there's going to be a steel mill, the owner has to do something - at least write the checks plus hire someone to be the general contractor, and someone else to be the plant manager…

> The project managers, engineers, architects, and construction crews (plus the steel workers' local) aren't going to have a bake sale and come up with the money.

But if they did, they'd still be investors (i.e., employee-owners) and everything I said would still apply :).

More seriously, employee-owned businesses aren't uncommon, but still, the investors/employees are profiting from the company's increased producitivity _as investors_--their wages don't increase, the value of their shares increases. Just like owners in sole-proprieter businesses like our hypothetical steel mill.

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

#199

Post by qubax » Thu, Oct 25, 2018, 9:22 PM UTC

curun1r wrote: post #118

rwcarlsen wrote: post #51

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 mor…

They also likely use inflation statistics that are problematic, at best. When considering consumables, we've had pretty reasonable inflation and people are making more than their parents. But if you were to calculate inflation based on prices for things that don't benefit from advances in our production abilities (commodities, equities, housing, education, health care, etc), we'd be making nowhere near as much as pre…

Anyone know if tuition costs are part of inflation?

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

#200

Post by weberc2 » Thu, Oct 25, 2018, 9:26 PM UTC

billmalarky wrote: post #168

weberc2 wrote: post #93

Earlier quoted context omitted.

> 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. This seems like a false dichotomy in that (for the foreseeable future) we have other options, like retraining people whose jobs have been automated away. This is strictly better (read "less invasive" and "more ec…

>like retraining people whose jobs have been automated away In the scenario I am describing, this is not possible. Yes I am aware of the luddites. I also strongly believe that a threshold exists where technology can outperform humans in every conceivable way, and we will cross that line one day. FWIW, complete collapse of our (current) economic system would occur well before we reach that line anyways. If even 50% of…

> In the scenario I am describing, this is not possible.

Ok, I wasn't sure how you meant your comment, so I addressed the more plausible (although less literal) interpretation. Thanks for clarifying though. I imagine your scenario is theoretically possible, but it's science fiction for the foreseeable future, so I'm not very concerned about it. That said, it's interesting and I often think about it; I'd be really interested to hear economists opinions.