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Job growth has slowed sharply; the question is why

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Re: Job growth has slowed sharply; the question is why

#71

Post by throwaway2237 »

andsoitis wrote: post #16
dileeparanawake wrote: post #2

Increasing wealth inequality, drives prices inflation, wage stagnation and less disposable income, driving less consumption, driving less revenue for businesses, meaning cuts happen and hiring freezes, drives slowing growth in new job market.

I think you've got your cause/effect chain a little muddled. I would also assert that the system dynamics are neither linear nor singular in the way you frame it. > Increasing wealth inequality, drives prices inflation How does increasing wealth inequality drive price increases?

If you will please allow me an oversimplified example:

A restaurant is limited by the amount of food a person can eat in a meal. So this hypothetical restaurant can sell a $20 meal to 100 people (with $20 expendable income to spend,) and thus will generate $2,000 revenue for that meal service.

However, if fewer and fewer people have $20 expendable income, then obviously it becomes harder and harder for that restaurant to generate that same $2,000. Especially as the cost of bills, ingredients, and employee wages increase, for example.

So they are left with a dilemma of: 1) Raise prices knowing that there will be fewer customers with enough expendable income to buy the expensive food, or 2) Lower prices and hope that more customers will offset the lower prices (this usually does not happen.)

Also it's important to point out that 1 person with a lot of money won't come in and order 100 people's worth of meals. The human stomach doesn't scale in that way.

This example is obviously oversimplified for the sake of showing the point

Re: Job growth has slowed sharply; the question is why

#73

Post by xboxnolifes »

andsoitis wrote: post #16
dileeparanawake wrote: post #2

Increasing wealth inequality, drives prices inflation, wage stagnation and less disposable income, driving less consumption, driving less revenue for businesses, meaning cuts happen and hiring freezes, drives slowing growth in new job market.

I think you've got your cause/effect chain a little muddled. I would also assert that the system dynamics are neither linear nor singular in the way you frame it. > Increasing wealth inequality, drives prices inflation How does increasing wealth inequality drive price increases?

If the majority of wealth is centralized to a small group of people, why would you bother trying to extract smaller amounts of money from the other group?

Re: Job growth has slowed sharply; the question is why

#74

Post by [deleted] »

sedawkgrep wrote: post #66
andsoitis wrote: post #47

Earlier quoted context omitted.

> The missing dynamic is that businesses are encouraged to increase growth in profit YoY. > Each year, a business needs to grow faster than it did the previous year. It is very reasonable for an investor or a worker wanting the business they have hitched their financial wellbeing to to do very well, which means growing profit. It gives the business more strength and stability.

I don't think anyone is disagreeing that this is what investors want. I think the point is that it ultimately becomes detrimental.

[deleted]

Re: Job growth has slowed sharply; the question is why

#76

Post by andsoitis »

xboxnolifes wrote: post #73
andsoitis wrote: post #16

Earlier quoted context omitted.

I think you've got your cause/effect chain a little muddled. I would also assert that the system dynamics are neither linear nor singular in the way you frame it. > Increasing wealth inequality, drives prices inflation How does increasing wealth inequality drive price increases?

If the majority of wealth is centralized to a small group of people, why would you bother trying to extract smaller amounts of money from the other group?

> If the majority of wealth is centralized to a small group of people, why would you bother trying to extract smaller amounts of money from the other group?

That's a fantastic question that I don't think I've heard before, but I have a practical answer to.

Most of the wealth of the top 1% (to pick an arbitrary "small group of people") is not sitting as cash in the bank; it is concentrated in financial and business assets: equities & mutual funds, private businesses, real estate, bonds and other fixed-income investments, alternative assets.

In the US, over half of all publicly traded stocks and mutual fund shared are held by the top 1%, meaning their wealth is overwhelmingly tied to ownership of productive assets rather than wages or savings accounts.

So as a tax authority you have to balance getting cash (to run the government) against reducing the productive capacity of the economy (by asking businesses to reduce their capital).

Re: Job growth has slowed sharply; the question is why

#77

Post by andsoitis »

Volundr wrote: post #64
andsoitis wrote: post #61

Earlier quoted context omitted.

> > the issue is that the GP's premise ("When super-rich people receive money, it goes mostly to tax havens, removing it from circulation.") is invalid. > Is it? Yes, it is an inaccurate belief. The super-rich don't take most of the money (did the person mean money or did they mean wealth?) they receive, remove it from the economic system, and stash it unproductively in a tax haven.

Ok, what do they do with it, and how does effect the economy compared to the way lower wealth people behave when they receive money? FWIW I do agree that if we give Jeff Bezos or Elon Musk more money, it's not headed straight for an account in the Caymans, but I also don't think the exact destination of said money is core to the point.

> what do they do with it, and how does effect the economy compared to the way lower wealth people behave when they receive money?

Most of the wealth of the top 1% (to pick an arbitrary "small group of people") is not sitting as cash in the bank; it is concentrated in financial and business assets: equities & mutual funds, private businesses, real estate, bonds and other fixed-income investments, alternative assets.

In the US, over half of all publicly traded stocks and mutual fund shared are held by the top 1%, meaning their wealth is overwhelmingly tied to ownership of productive assets rather than wages or savings accounts (and is therefore illiquid).

Re: Job growth has slowed sharply; the question is why

#78

Post by andsoitis »

dannyobrien wrote: post #62
andsoitis wrote: post #61

Earlier quoted context omitted.

> > the issue is that the GP's premise ("When super-rich people receive money, it goes mostly to tax havens, removing it from circulation.") is invalid. > Is it? Yes, it is an inaccurate belief. The super-rich don't take most of the money (did the person mean money or did they mean wealth?) they receive, remove it from the economic system, and stash it unproductively in a tax haven.

I mean, apart from the open question of whether the majority of money gets moved into tax havens, if the money is out of the economic system entirely, won't it just inflate away? I presume rich people want to put their money in instruments that return interest, which means that it has to be used /somehow/. I mean, potentially just speculative assets like gold or art, but those are high risk.

see my reply to sibling about where most of the wealth of the top 1% is applied (tl;dr productive assets or ownership)

Re: Job growth has slowed sharply; the question is why

#79

Post by exabrial »

Not mentioned in the summary at the bottom: crippling inflation. This is the result of policies (Both Red and Blue) put into motion 4-5 years ago. Businesses run on razor thin margins, and when your purchasing power is suddenly reduced 25%, well this result is predictable.

Re: Job growth has slowed sharply; the question is why

#80

Post by exabrial »

dileeparanawake wrote: post #2

Increasing wealth inequality, drives prices inflation, wage stagnation and less disposable income, driving less consumption, driving less revenue for businesses, meaning cuts happen and hiring freezes, drives slowing growth in new job market.

I hate to tell you, the single cause of inflation is not "wealth inequality", it's extra dollars spent by the Federal Government that literally don't exist.

The US Government writes checks that always cash, and unlike you and me, they don't have to have anything in the bank account behind it. This is the _sole and only_ cause of inflation. _Its the literal definition_ and is well documented.

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