Economists Are Rethinking the Numbers on Inequality
economist.com
Economists Are Rethinking the Numbers on Inequality
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Re: Economists Are Rethinking the Numbers on Inequality
#2Just don't mention the elephant in the room: the Cantillon effect which is primary reason for the wealth flowing from working classes and savers to the bankers and the managerial class. Entirely courtesy of artificially low interest rates created by central banks and lax controls on monetary emission (i.e. fractional reserve shenanigans) by private banks.
Re: Economists Are Rethinking the Numbers on Inequality
#3Just don't mention the elephant in the room: the Cantillon effect which is primary reason for the wealth flowing from working classes and savers to the bankers and the managerial class. Entirely courtesy of artificially low interest rates created by central banks and lax controls on monetary emission (i.e. fractional reserve shenanigans) by private banks.
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Re: Economists Are Rethinking the Numbers on Inequality
#4Sign-up wall prevents reading the article. Here is an outline.com link for this article:
Re: Economists Are Rethinking the Numbers on Inequality
#5Re: Economists Are Rethinking the Numbers on Inequality
#6Just don't mention the elephant in the room: the Cantillon effect which is primary reason for the wealth flowing from working classes and savers to the bankers and the managerial class. Entirely courtesy of artificially low interest rates created by central banks and lax controls on monetary emission (i.e. fractional reserve shenanigans) by private banks.
>artificially low interest
Interest rates are driven by the supply and demand of credit. Supply outstrips demand now.
There are two sides to every transaction; low rates are good for borrowers and bad for lenders. What makes you think the lenders are entitled to a greater return on their savings? Do you think we should force people to borrow at higher rates for this purpose?
>wealth flowing from working classes and savers to the bankers and the managerial class.
The working class in America are debtors and have no savings. Outside of low rates contributing to driving housing prices higher in some communities, how are the working class harmed by lower payments on their debt?
Re: Economists Are Rethinking the Numbers on Inequality
#7This Economist article points out some of the many small academic works that quibble over details with Piketty and Saez. But that's not anything new. The major points of their work, and especially of Piketty's monumental _Capital for the 21st century_ still stand: that capital is a positive feedback loop in a way that labor is not; that mid-20th-century laws that put brakes on this feedback loop have been removed; that a variety of data sources are confirming growing inequality and market capture particularly in the UK and US; and that the only reasonable solution for this is a tax on owned capital (not on income or cap gains) and the political chances of this happening are slim, etc.
And in the end this article is another one in their house style: not particularly informative in the details, they're not arguing openly or forcefully against Piketty, but instead bring up enough different nitpicky papers that it starts sowing doubt in the mind of a reader who hasn't actually read the book.
But then again The Economist has had it out for Piketty (and Saez) for a long time now, they very clearly hate Piketty's Capital and keep sniping at it, but can't stop themselves from bringing it up all the time. :)
At least they are very open about their biases: they promote a view that the solution to all ills is lower taxes and less regulation. However, Piketty's analysis and proposed solution directly contradicts that.
Re: Economists Are Rethinking the Numbers on Inequality
#8Just don't mention the elephant in the room: the Cantillon effect which is primary reason for the wealth flowing from working classes and savers to the bankers and the managerial class. Entirely courtesy of artificially low interest rates created by central banks and lax controls on monetary emission (i.e. fractional reserve shenanigans) by private banks.
> artificially low interest Interest rates are driven by the supply and demand of credit. Supply outstrips demand now. There are two sides to every transaction; low rates are good for borrowers and bad for lenders. What makes you think the lenders are entitled to a greater return on their savings? Do you think we should force people to borrow at higher rates for this purpose? > wealth flowing from working classes and…
> Interest rates are driven by the supply and demand of credit. Supply outstrips demand now.
While that's somewhat true, its also largely dictated / controlled / heavily influenced by government. This means the overnight lending rate, U.S. bond rate, etc.
Re: Economists Are Rethinking the Numbers on Inequality
#9Just don't mention the elephant in the room: the Cantillon effect which is primary reason for the wealth flowing from working classes and savers to the bankers and the managerial class. Entirely courtesy of artificially low interest rates created by central banks and lax controls on monetary emission (i.e. fractional reserve shenanigans) by private banks.
> artificially low interest Interest rates are driven by the supply and demand of credit. Supply outstrips demand now. There are two sides to every transaction; low rates are good for borrowers and bad for lenders. What makes you think the lenders are entitled to a greater return on their savings? Do you think we should force people to borrow at higher rates for this purpose? > wealth flowing from working classes and…
Interest rates are set by FED, who can print arbitrary amount of money out of thin air, there is no supply/demand mechanism involved in setting them. Basically every rate change is an experiment testing whatever monetary theory is currently popular among FED board members.
Re: Economists Are Rethinking the Numbers on Inequality
#10It seems to me that income is in effect an abstraction of a person's social class. Therefore, I wonder if it might be more effective to look at the factors that actually separate different social classes.
For example:
What percentage of a population is self employed and/or employed in a role with significant autonomy?
What percentage of a population owns their own house? Of those who own a house, how much control over their house do they have (e.g. you cannot add an extension to a multi-unit house even if you own it and you likely cannot put in a workshop due to noise)? How do these measures change based on how desirable the location is (e.g. top tier cities, suburbs, etc.)?
How easy is it for a given population to acquire the means of production? E.g. if someone doesn't like the products that the corporations are making, how difficult would it be for them to try to make an alternative?
What level of political office could a member of a given population realistically run for?