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The rich world needs higher real wage growth

economist.com

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Re: The rich world needs higher real wage growth

#11

Post by xapata »

GatorD42 wrote: post #2

I think there are many reasons to be skeptical of inflation and productivity statistics because they don’t seem to capture the rate of innovation in consumer goods such as smartphones and related areas like wireless plans. I wrote a piece on inflation statistics showing how U.S. inflation statistics fail to account for the quality improvement in iPhones: https://medium.com/@vince.pavlish/using-iphone-prices-to-che...

I don't believe your assumptions: fashion and marketing matter.

Contrarians often claim "the old version was better!" It's not clear that more features is a substantial quality improvement.

Re: The rich world needs higher real wage growth

#12

Post by closeparen »

mozumder wrote: post #6

Or better yet, reduce prices all around. Think of all your expenses and look at ways to systematically reduce them for everyone. Start with food, get a meal down to less than a dollar. Rent is high because everyone wants to move to certain dense areas, while moving away from more spacious/rural areas. This is unsustainable. Offer incentives for people to move elsewhere, including jobs programs and subsidizing mass tr…

Everyone in dense areas is the only sustainable settlement pattern. The energy alone needed to maintain existing levels of sprawl cannot go on much longer.

Re: The rich world needs higher real wage growth

#13

Post by extralego »

GatorD42 wrote: post #2

I think there are many reasons to be skeptical of inflation and productivity statistics because they don’t seem to capture the rate of innovation in consumer goods such as smartphones and related areas like wireless plans. I wrote a piece on inflation statistics showing how U.S. inflation statistics fail to account for the quality improvement in iPhones: https://medium.com/@vince.pavlish/using-iphone-prices-to-che...

They should at least factor in how thin the MacBook Pro has gotten.

Re: The rich world needs higher real wage growth

#14

Post by tfehring »

GatorD42 wrote: post #2

I think there are many reasons to be skeptical of inflation and productivity statistics because they don’t seem to capture the rate of innovation in consumer goods such as smartphones and related areas like wireless plans. I wrote a piece on inflation statistics showing how U.S. inflation statistics fail to account for the quality improvement in iPhones: https://medium.com/@vince.pavlish/using-iphone-prices-to-che...

Interesting take, but I'm not sure I buy it. I certainly don't feel like I get ~2.5x more utility from my current iPhone than I did from the smartphone I purchased in 2012, which was just as fast (on the software of the time) and had most of the same functionality. I'd also be curious as to how you were able to conclude that the so-called "fashion effect" is not supported by evidence.

Re: The rich world needs higher real wage growth

#15

Post by hfeyhvdtbcdtv »

pknopf wrote: post #9

What exactly (as if anyone can know) caused the wage growth and productivity to split in the 1970s? Was Nixon's complete split from the gold standard a factor at all?

credit card debt. corporations gave money to banks to loan to the employees instead of giving them raises.

Re: The rich world needs higher real wage growth

#16

Post by mozumder »

xapata wrote: post #7
mozumder wrote: post #6

Or better yet, reduce prices all around. Think of all your expenses and look at ways to systematically reduce them for everyone. Start with food, get a meal down to less than a dollar. Rent is high because everyone wants to move to certain dense areas, while moving away from more spacious/rural areas. This is unsustainable. Offer incentives for people to move elsewhere, including jobs programs and subsidizing mass tr…

Deflation causes problems. Better to inflate wages in correspondance with prices.

It only really causes a problem if you don't prepare your economy for it. Prices should really only drop for commodity products and basics, so that one can live for $100/month. You should still offer incentives for people to spend more, such as offering higher end real-estate and products, or just bringing in more people into your economy.

Re: The rich world needs higher real wage growth

#17

Post by Nokinside »

mozumder wrote: post #6

Or better yet, reduce prices all around. Think of all your expenses and look at ways to systematically reduce them for everyone. Start with food, get a meal down to less than a dollar. Rent is high because everyone wants to move to certain dense areas, while moving away from more spacious/rural areas. This is unsustainable. Offer incentives for people to move elsewhere, including jobs programs and subsidizing mass tr…

Large cities have higher productivity than smaller cities. Smaller cities have higher productivity than rural areas. Generally speaking cities' productivity is proportional to their size This happens because cities achieve agglomeration economies through the clustering of activities, labor pooling and knowledge spillovers.

http://www.nber.org/chapters/c7977.pdf

https://en.wikipedia.org/wiki/Economies_of_agglomeration

Re: The rich world needs higher real wage growth

#20

Post by rootusrootus »

closeparen wrote: post #12
mozumder wrote: post #6

Or better yet, reduce prices all around. Think of all your expenses and look at ways to systematically reduce them for everyone. Start with food, get a meal down to less than a dollar. Rent is high because everyone wants to move to certain dense areas, while moving away from more spacious/rural areas. This is unsustainable. Offer incentives for people to move elsewhere, including jobs programs and subsidizing mass tr…

Everyone in dense areas is the only sustainable settlement pattern. The energy alone needed to maintain existing levels of sprawl cannot go on much longer.

I hear this a lot. But the fact remains that it is significantly more expensive to live in a dense urban area. Until the claimed efficiency improvement can be translated to an actual day-to-day cost improvement, people will continue to live where their dollars go farther.
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