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

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

#271

Post by conanbatt » Fri, Oct 26, 2018, 6:27 AM UTC

metalchianti wrote: post #25

Floegipoky wrote: post #14

Tl;dr: Wealthy and poor cohorts are not necessarily stable over time, generational boundaries in particular seem to be a relatively strong predictor of change. However people who are now poor are just as poor as the poor of the 70s, while those who are now extremely wealthy are even more extremely wealthy than the rich of the 70s.

I bet that compound earnings are the main contributor here. It's much easier to save more money because you're wealthy and have more money. Across generations this effect is massive.

I think this explains a gap between a line of wealthy people and the poor classes that reach adulthood with 0 wealth. But on the other side, an upper class that have a kid that never produces and lives off the inheritance will fall behind another one that continues with the empire growing. And it turns out, most multi-millionaires have a regression to the mean: people really do spend up inheritances.

If the world gets richer, we should expect that the richest will be wealthiest with the passage of time, due to the compounding effect of wealth itself, but thats not really a problem for anyone..

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

#272

Post by conanbatt » Fri, Oct 26, 2018, 6:28 AM UTC

metalchianti wrote: post #48

marricks wrote: post #35

Earlier quoted context omitted.

That will certainly be compounded by the demise of the estate tax. That said it’s not like intergenerational wealth is a new thing, wouldn’t that be the case way before the 70s? It seems the trickle down economics approach taken since the 70s from both Democrats and Republicans hasn’t really helped anyone but the rich.

The same inter-generational wealth logic would apply pre-1970s. I think that 1970 is used as a starting point because that's also when real wages started dropping relative to production output. I'm don't think it's fair to blame US politics. I bet this is a universal phenomenon.

Usually economists are obsessed with the Reagan administration, its quite remarkable.

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

#273

Post by tasuki » Fri, Oct 26, 2018, 6:48 AM UTC

orbitingpluto wrote: post #255

T2_t2 wrote: post #178

Earlier quoted context omitted.

That needs a citation. If you cut out everything we have they didn't - cable TV, Netflix, computers, internet, cafes, restaurants, Kindle, better choices in grocery food and alcohol - and ate the sort of cheap food people lived on, things like meatloaf and crappy ingredient dishes, I reckon it would be entirely possible. The only thing that is prohibitively expensive today vs 1980 is housing. The reasons for that are…

But then you'd need to include things that they have that we don't. The cost of activities for children has skyrocketed beyond belief compared to 40 years ago.

Wasn't the primary activity for children 40 years ago "go play in the street with your friends"? Has that become any more expensive?

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

#274

Post by alexgmcm » Fri, Oct 26, 2018, 7:25 AM UTC

T2_t2 wrote: post #178

JimboOmega wrote: post #174

Earlier quoted context omitted.

That, to me, is what really seals it all as ridiculous. My parents had the standard of living they had with only my father working and in a fairly normal government job. That as enough to support my mom and 2 children while also saving for retirement. That standard of living now would require both parents working and being rather successful in their white collar careers. Even as a reasonably successful person in an a…

That needs a citation. If you cut out everything we have they didn't - cable TV, Netflix, computers, internet, cafes, restaurants, Kindle, better choices in grocery food and alcohol - and ate the sort of cheap food people lived on, things like meatloaf and crappy ingredient dishes, I reckon it would be entirely possible. The only thing that is prohibitively expensive today vs 1980 is housing. The reasons for that are…

I think they had cafes and restaurants etc. in the 70's...

Also Netflix is really, really cheap and my computer cost me approx 800 USD and has lasted 5 years.

Housing (and in the USA, healthcare and college I suppose) are by far the most expensive things for most people and have soared in price.

All the other things are negligible in comparison - it's like the people going on about avocado toast.

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

#275

Post by ido » Fri, Oct 26, 2018, 7:27 AM UTC

NeedMoreTea wrote: post #205

rwcarlsen wrote: post #163

Earlier quoted context omitted.

That is interesting. I confirmed those numbers looking at the actual census data. The changes you mention are much less pronounced if you remove no-income households from the data though. Perhaps no-income households should be included in the 2 or more stat - since one could make a case for that category being the people who "gave up" because they couldn't keep up with expenses. I wonder what other things might be un…

I wonder if those single income households include maintenance and alimony. The nature of families has changed significantly since the 1970s with more divorce and more children being raised in one parent households. I doubt the single parent receiving money from the estranged parent is counted as a two earner household, even though in some senses it is. Once you add the changing rate of marriage, increase in single p…

But has it changed in recent years? Anecdotally, I was born in 1983 and when I was growing up in the 90s single-parents & working-mothers were already common.

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

#276

Post by ido » Fri, Oct 26, 2018, 8:03 AM UTC

zip1234 wrote: post #162

rwcarlsen wrote: post #151

Earlier quoted context omitted.

Some things have become more difficult since then too. Free range parenting is very frowned upon - and micro-managing kids takes a lot of time and effort.

Perhaps more time is spent driving kids to activities, but a counterpoint is that kids have never had more video games or TV than the present.

We already had more tv and video games than we can handle when i was growing up in the 90s.

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

#277

Post by anonunt » Fri, Oct 26, 2018, 8:46 AM UTC

I have nothing against this article.. its all analysis and information.. but is it just me or does it have very little to do with what we actually think of when we consider where the benefits have gone?

Where are the numbers on average expected spend, including spending expectations for disposable income. so that we get a reasonable idea of someones saving power. and compare this to various income levels. We don't live in a vacuum and we all have to be living up to the expectations of those around us.

Also looking at social mobility, security to find a job etc. numbers are irrelevant freedoms are relevant.

If the poor earn lots more than the rich (in comparison to previous generations) do these days but rich people living expenses have not gone up and tax evasion has increased and the spending expectations on the poor have increased then I would still say the benefits have gone to the rich.

if the poor are still working 40 hour weeks and a few people are becoming so rich that if they reduced their income to millions per year that they could reduce average working hours to 30 hours per week i would still be hard pushed to say that the benefits were not being hoarded by the rich.

I don't know.. there are many ways to look at this but these numbers seem among the least relevant - like they have absolutely no causal link with the concerns that people have.

Are there any articles that go attempt to put numbers on some of these vaguer but more relevant things? i feel like even data with huge error bars could be very damning - or am i just naive and jealous of my parents :)?

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

#278

Post by ionised » Fri, Oct 26, 2018, 11:20 AM UTC

weberc2 wrote: post #207

maxxxxx wrote: post #110

Earlier quoted context omitted.

I have a problem with calling people that have a lot of money to invest with as value creating. We should give more respect to the people who do the work instead of funneling all the benefits to people who just happen to have money.

Sorry dude, that's how economies work. Investors agree to buy shares in exchange for the right to sell those shares later. Employees agree to work in exchange for a salary; if they can find a larger salary elsewhere, they're free to pursue it. If employees want to buy some part of a company, they can do that as well (assuming they can persuade someone with shares to sell them) and then they'll earn (or lose) RoI just…

> Sorry dude, that's how economies work.

No, it's how this economy works. There is natural law saying we have to do it this way.

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

#279

Post by ionised » Fri, Oct 26, 2018, 11:26 AM UTC

skookumchuck wrote: post #182

jimbokun wrote: post #176

Earlier quoted context omitted.

If you have free cash flow.

The US is not divided into two categories - 1% with everything and 99% who have nothing.

No, but it is filled mostly with people living paycheck to paycheck without any savings.

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

#280

Post by ryanwaggoner » Fri, Oct 26, 2018, 11:40 AM UTC

thrmsforbfast wrote: post #244

alehul wrote: post #240

Earlier quoted context omitted.

Wouldn't this be addressed by the fact that, as you said, we now have a new standard of multi-income households? If everyone in America was in a single-income household, and then we all became, for instance, two-income households, wouldn't it make sense for individual incomes to drop by half?

Only if GDP remained constant. Inflation-adjusted GDP increase from ~5 trillion in the 70's to ~18 trillion today. Much larger than 2x, and not every household is dual-income.

Wouldn’t you want to adjust this for household growth too? Not saying it wouldn’t be larger than 2x, but population has grown and households I believe are growing even faster, so maybe it’s actually closer to 2x?