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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?

#261

Post by Gibbon1 »

gruez wrote: post #241
skybrian wrote: post #209

Earlier quoted context omitted.

The inflation rate does include rent, or "imputed rent" for home owners. However, it's an average of what people actually pay, including people who somehow got a sweet deal on housing costs, through rent control or buying their house a long time ago or whatever. It's not going to match the prices you see advertised when you're looking to move.

>However, it's an average of what people actually pay, including people who somehow got a sweet deal on housing costs which is arguably the more accurate way of measuring consumer prices.

That not accurate because important information about the spatial distribution gets filtered out. Economists are pretending their statistics are filtering out 'noise' when they are really filtering out data they don't want people to see.

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

#262

Post by NTDF9 »

onlyrealcuzzo wrote: post #201
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).

I think Shiller's work was useful because housing prices (if I'm not mistaken) are not part of CPI. Housing prices go into much bigger bubbles than rent. If interest rates go up or down, it doesn't very much affect the average person's ability to pay rent. But it has a huge impact on how much the average person can borrow. My understanding for the reason that housing prices aren't included in CPI is because nobody bu…

> My understanding for the reason that housing prices aren't included in CPI is because nobody buys houses in cash

But they should include the sale value of houses in CPI, otherwise its pointless. Just because the vast majority of people buy houses with a mortgage doesn't mean the sale price isn't a real price

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

#263

Post by ddebernardy »

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…

Another problem is that discretionary spending as a percent of household expenses went down over the same period. Households are much less financially secure than they used to be as a result.

In the 1970s, a single income household could more or less make ends meet when the primary bread winner couldn't work. The other spouse would find a job, the household would consume however much less, and life continued.

Nowadays, it's not unheard of for non-discretionary spending (mortgage or rent, other loans, taxes, health insurance, etc.) to constitute over half of a household's spending. If either of the two spouses can't work, things can rapidly go to hell.

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

#264

Post by TangoTrotFox »

fzeroracer wrote: post #233
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'm more curious as to why you chose to omit the critically important data behind the study. What exactly is your motivation there? First, let's look at how they define the income brackets: -Poor and near-poor $0 $29,999 -Lower middle class $30,000 $49,999 -Middle class $50,000 $99,999 -Upper middle class $100,000 $349,999 -Rich $350,000 None A quote from the publication: "The study did not adjust for regional differ…

Indeed. And similarly, as the paper mentions, there are many places in the US where someone earning just under $100k would only be counted as middle class, even though they'd be well into the upper middle class. So the important question then is there a big bias in one direction or another? The paper concludes that the answer to this is no.

So why would they use such an ostensibly broad metric in the first place? The paper also goes into this. The reason is that on a micro level there are often extreme quality of living differences that are not accurately reflected by any data. For instance the CPI inflation rate of San Francisco, according to California, is only 11% higher than the US average. By any metric you'll be able to point to various little bubbles throughout the nation and indicate, accurately, that the macro level data does not hold true.

So you need to try to pick aggregate data that most likely balances out the biases so much as possible. Do you think this fails to do so?

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

#265

Post by GabrielBen »

sangnoir wrote: post #154
krupan wrote: post #144

Earlier quoted context omitted.

On the other hand, my medical supplies and devices fund in my IRA is way up

Not to get all Marxist - but using IRA's/401k's to get labor to go all-in on the stock-market was one hell of a judo move by the American capital class.

I think its fantastic both ways, it helps both sides close a gap. When you have a large divide between, then you get general intents to tax, seize and punish stocks. In argentina, whenever the stock market goes up 5% the marxist-left goes bonkers on all fronts saying the economy is tanking and workers are being robbed. Literally.

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

#267

Post by conanbatt »

eiaoa wrote: post #107
weberc2 wrote: post #69

Earlier quoted context omitted.

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 princ…

> 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 pri…

You are battling with the century old fight about interests. What are interests at all.

You can read much argumentation from different economists across the ages about this topic. Hating interest is a very natural endeavor: it has been banned for long periods of time after all.

But economics has clarified that interests is just what you pay for opportunity cost. If you build a hammer, you can use it or loan it. And you can loan it for another new hammer in the future, plus, some value extra for not having it. You could then, in the next period, loan the new hammer again. And so on, forever, without causing anyone harm, you can "passively" gain an income from your original investment. This is Bastiat's explanation of interest from the 1850's

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

#268

Post by conanbatt »

komali2 wrote: post #39
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. Can we use this entitlement argument elsewhere? Would that be fair? So, how would you feel if I restated this as: >I don't know why anyone should feel entitled to economic benefits, if they don't contribute to the pool of economic benefits Two issues I take with this: 1. Those incapable of contributing, such…

I would answer to 1.:

It is a very different society, one where the top 90% give to the bottom 10%, to one where the middle 80% take from the top 10%, eat most and give scraps to the bottom 10%. A society that cares for the weak does not need to fund it with taxes, it can subsist on charity. You will see that in practice, always a middle class person takes the money first before it goes to the person that needs it.

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

#269

Post by conanbatt »

gooseifer wrote: post #223
rhacker wrote: post #19

Earlier quoted context omitted.

It's sad that people still think we benefit from taxes. If people patched their own roads, paid for their own schools, paid for the police, we'd still be far far far richer. Instead we're paying 10-20k PER BOMB. Every time we drop 5 bombs that could have been a freaking decent salary for a local teacher. Instead that money is killing, like 50-100 people. The world has become what it is because of the way we treat oth…

Getting people to pay for all of those things is what taxes are for. If it was completely voluntary how many people would actually pitch in to pay for all of these services? What about the communities that are unable to afford these services? It’s very easy to imagine that in your scenario that the very wealthy segment themselves off to pay for private services while everyone else suffers.

> If it was completely voluntary how many people would actually pitch in to pay for all of these services?

Government is the system where everyone expects to live at everyone elses expense. I ask you, if you believe nobody wants to pay for it, why do you think people want it at all?

> What about the communities that are unable to afford these services?

Government does not make it affordable. Government does not pay for it: someone pays for it, the government takes a cut, and gives it to someone else.

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

#270

Post by conanbatt »

alexnewman wrote: post #117

I can only speak of my experience. Adam smith pointed out that the rich will always dominate the poor, as we are small and we can talk to each other. This has been my experience as well.

Sorry, when did he pointed that out? I don't think that is true at all.

In fact, he claims that the worst and most pernicious oppression of the poor is done by the measures and people that claim to do it in their aid.

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