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

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

#161

Post by eiaoa » Thu, Oct 25, 2018, 8:07 PM UTC

AnimalMuppet wrote: post #157

eiaoa wrote: post #134

Earlier quoted context omitted.

> Not sure what you mean here, but I'm saying investors are entitled to the returns stipulated in the investment agreement. You said "...(efficient) economics [means y]ou don't earn more money unless you're producing more value." However, an owner can be nearly completely idle yet still profit handsomely, by simply paying others a modest fee to increase her fortune, so your statement isn't really true.

Nearly completely idle, except for the part about building a whole new steel mill. That's... not very idle. And it is exactly that creation of a new steel mill that is where the value is going to be created - by the steel mill producing it.

> Nearly completely idle, except for the part about building a whole new steel mill. That's... not very idle.

No one said they built it, just that they owned it. It's totally possible (and common!) to own something that you didn't build and have never had a hand in operating.

But lets say a new steel plant was built. Who actually built it? Was it the the owner, or the project managers, engineers, architects, construction crews, etc.? Which of these groups contributed more value to the enterprise?

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

#162

Post by zip1234 » Thu, Oct 25, 2018, 8:10 PM UTC

rwcarlsen wrote: post #151

watwut wrote: post #147

Earlier quoted context omitted.

Then again, your counterpoint completely ignores amount of household work needed in 1970 versus 2018. Cooking, cleaning, washing dishes and cloth now are incomparable to 1970. Changing diapers is a lot less work now too.

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.

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

#163

Post by rwcarlsen » Thu, Oct 25, 2018, 8:13 PM UTC

refurb wrote: post #145

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…

Ummm... since at least the 1980's the number of 2 or more income households has actually fallen from 45% to 40%, not gone up.[1] In terms of hours worked, it's about the same, 44 hours although has been trends down since the early 2000's. [1] http://www.aei.org/publication/update-how-changing-household...

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 unaccounted for that could make the data "seem" this way - or perhaps my anecdata is just wrong. Also, the data doesn't go back further than 1980. I wonder what it would show if we had it back to 1970.

[Edit] Just another thought - that data does not break down the households into percentiles for total household income. I would expect that the fraction of multi and no income households w.r.t. total households has increased more on the lower income side of the spectrum than the middle/upper end. It also doesn't account for how much each earner brings in - which is related to the weekly hours stat in your source - I'd expect this to be even more influenced by accounting for income quintiles (or quartiles).

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

#164

Post by kwillets » Thu, Oct 25, 2018, 8:15 PM UTC

onlyrealcuzzo wrote: post #132

maxxxxx wrote: post #125

Earlier quoted context omitted.

Exactly. Low inflation doesn't help much if your salary increases get eaten up by housing, education hand healthcare. Rent, health care and education should be counted into inflation numbers.

Wait. Aren't rent, healthcare, AND education all included in the eight components of CPI? Isn't that how the government measures inflation? I think one of the big things left off is housing prices. But I'm pretty sure rent, healthcare, and education are part of it: https://www.bls.gov/cpi/factsheets/medical-care.htm http://webapps.dol.gov/dolfaq/go-dol-faq.asp?faqid=94

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).

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

#165

Post by rconti » Thu, Oct 25, 2018, 8:18 PM UTC

kimmeld wrote: post #85

rconti wrote: post #49

This is an astoundingly bad comparison if it's missing the point I think it's missing. It's arguing that the average person makes more than their parents by comparing household income . I searched the article a few times for a few keywords trying to make sure I hadn't missed anything, but I see no mention of number of wage earners per household. All the rest, about "fringe benefits" and the conclusion that everything…

From past podcasts he doesn't see the problem with having two people working to get that gain while ignoring the individual stagnating/declining worker pay. That stance is not logical to me, but it seems to fit his view on the world.

Okay, so he's being intentionally misleading in this piece, rather than presenting an academic view.

I'm fine with that stance, too. He's welcome to argue that the average household is "better off" as long as he's willing to subtract the added costs this situation creates. Or you can calculate doing the reverse; calculate the value generated with a greater number of stay-at-home parents in the 70s, so that this opportunity cost is reflected in the numbers when a second earner enters the formal workforce. Then at least we're comparing apples to apples and we can see where we end up. It's totally possible those lower-income cohorts are better off now, but he hasn't attempted to prove it.

Also, it's a lie to present this as individuals earning more money unless you acknowledge that you're averaging individuals across households, and not comparing ACTUAL working individuals.. And admit that you're factoring in some number of individuals in the 70s earning $0 and some other number of individuals today earning $0.

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

#166

Post by komali2 » Thu, Oct 25, 2018, 8:20 PM UTC

maxxxxx wrote: post #155

komali2 wrote: post #36

Earlier quoted context omitted.

And what kind of fringe benefits are minimum wage earners pulling? I hear Starbucks gives health insurance, for example, anyone else?

My company gives only nominal raises each year but we get bagels and donuts once a week.

Hah well, I guess that'd be pretty fringe, especially if you're on keto / don't eat sweets / can't eat gluten or whatever.

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

#167

Post by Hoasi » Thu, Oct 25, 2018, 8:21 PM UTC

resu_nimda wrote: post #42

This reads like research sponsored by a tobacco company showing that cigarettes are actually not that harmful. I like how it frames the economy as this independent entity that we just sort of observe and hope for the best. Oh our divining rod produced these arbitrary statistics so the glass is half full guys! In reality, though, the forces of human nature driving the economy don't change. Since the dawn of the surplu…

> Since the dawn of the surplus, there have always been a handful of kings and many serfs, and there probably always will be.

One thing is different though: the thralls of today possess costly devices that simultaneously entertain and surveil them, among other things. Past kings would never even have dreamed about that.

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

#168

Post by billmalarky » Thu, Oct 25, 2018, 8:23 PM UTC

weberc2 wrote: post #93

billmalarky wrote: post #66

Earlier quoted context omitted.

>I don't know why anyone should feel entitled to economic growth if they didn't participate in it in any way. Tangentially related point: The problem occurs when advances in technology make it so the vast majority of humans are literally _unable_, not to be mistaken for _unwilling_, to participate in economic growth. In this scenario inequality shoots through the roof and that reasonably leads to instability and viol…

> A pragmatic wealthy person in this scenario should see wealth redistribution as a wise investment, not a cost, seeing as the "let them eat cake" alternative is less desirable if you like to keep your head. This seems like a false dichotomy in that (for the foreseeable future) we have other options, like retraining people whose jobs have been automated away. This is strictly better (read "less invasive" and "more ec…

>like retraining people whose jobs have been automated away

In the scenario I am describing, this is not possible.

Yes I am aware of the luddites. I also strongly believe that a threshold exists where technology can outperform humans in every conceivable way, and we will cross that line one day. FWIW, complete collapse of our (current) economic system would occur well before we reach that line anyways. If even 50% of humans were displaced by technology you would likely see violent revolution. Consider the impact of the US great depression, where just under 25% of people were unemployed...

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

#169

Post by maxxxxx » Thu, Oct 25, 2018, 8:26 PM UTC

snikeris wrote: post #159

maxxxxx wrote: post #150

Earlier quoted context omitted.

The fact that it's growing is a problem.

Why?

I don't think it's healthy for a society to split into haves and have-nots. At some point the have-nots will realize that something is not fair there.

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

#170

Post by cmurphycode » Thu, Oct 25, 2018, 8:26 PM UTC

kimmeld wrote: post #80

roymurdock wrote: post #37

The author Russ Roberts runs the EconTalk podcast and is a well respected economist/journalist/thinker in the field, definitely worth reading for a fair assessment. Here he presents a few studies that go against general economic consensus popularized mainly by Piketty in "Capital in the 21st century" and through papers/writing by Krugman, Saez, Zucman, Stiglitz, etc. that most of the economic gains in the past 100 ye…

Russ' political views have been drifting steadily right over time so the data that he cherry picks regarding inflation, total household income, income inequality, is not surprising. I used to listen to his podcast pretty frequently to get a different perspective on econ but now it's pretty painful due to his increasing inability to see outside his own bubble.

I agree, but I don't have an alternative with the range/quality of guests he interviews. Any suggestions?