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Do the Rich Capture All the Gains from Economic Growth?

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

#251

Post by curun1r »

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

They may factor those things in, but that doesn't mean they factor them in correctly or that their calculation ends up matching the realities of many middle-class people these days. From medical-illness-caused bankruptcies to crippling student loan debt to declining home ownership (by equity and age of first purchase), there are common realities that don't mesh with the CPI statistics that are calculated/released. You can argue that the CPI deals with averages and for every horror story of un-repayable student loan, savings-zapping cancer or hot housing market that makes purchasing a pipe dream for the majority of residents there are people who graduate college, get a job that pays well enough to repay their loans in time to save up and buy a home before starting a family and avoiding serious illnesses, but then is that statistic really useful in the face of so many people struggling?

At a certain point, enough individual incedences of a problem becomes far more than isolated incidents and graduates to a problem for society.

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

#252

Post by anonuser123456 »

rukittenme wrote: post #6

I'd like to add to this argument. If Ohio's steel industry grows by 500% who reaps the benefits? Me? The guy writing code in Portland, Oregon? No... its pretty clear that a specific subset of people receive the benefits. The people who own the steel mill. The people who receive employment from the steel mill. The governments which tax the steel mill. But not me. Economic growth isn't uniform. Its an uneven field that…

You benefit from the reduction in the price of steel, or the growth of steel based products. Industries don't just grow in a vacuum.

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

#253

Post by [deleted] »

michaelmrose wrote: post #65
rfugger wrote: post #5

Earlier quoted context omitted.

If wages are stagnant with respect to the consumer price index, they are not capturing productivity gains, because the CPI accounts for lower prices on goods.

While health insurance captures an increasing share of the stagnant income.

[deleted]

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

#254

Post by spectrum1234 »

maxxxxx wrote: post #125
curun1r wrote: post #118

Earlier quoted context omitted.

They also likely use inflation statistics that are problematic, at best. When considering consumables, we've had pretty reasonable inflation and people are making more than their parents. But if you were to calculate inflation based on prices for things that don't benefit from advances in our production abilities (commodities, equities, housing, education, health care, etc), we'd be making nowhere near as much as pre…

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.

Good point. Of these 3 which are truly free market? Zero.

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

#255

Post by orbitingpluto »

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…

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.

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

#256

Post by spectrum1234 »

gowld wrote: post #249
beat wrote: post #190

Earlier quoted context omitted.

A quick look at education numbers finds that, since 1988, the cost of private four year college has doubled (in inflation-adjusted dollars), and the cost of state four year college has tripled. Again in constant dollars, health care has seen a more than fivefold increase since 1970, from under $2000 to over $10,000 per capita. Constant dollars, mind you. Health care and education costs are more or less fixed and unav…

Health care is amazingly better now than it was for our parents.

It's too good.

You can't pay less to get the world class care of ten years ago. Name one other sector you can't pay less for lower quality

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

#257

Post by spectrum1234 »

TimJYoung wrote: post #72
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…

Correct me if I'm wrong, but is he trying to say that if a lower-to-middle-class person now makes $10K more than his parents (who made $40k combined), that somehow that is better than the wealthy person that now makes $10K less than his parents (who made $1.2m combined) ? I think this deserves a "man on the street" survey to see which income most people would prefer...

Of course this is better. The poor are improving the most in absolute terms in your example.

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

#258

Post by mindviews »

>Adjusted for inflation, the US economy has more than doubled in real terms since 1975. How much of that growth has gone to the average person? According to many economists, the answer is close to zero.

Simple question to ask yourself and anyone you know: would you rather be alive in your income bracket (inflation adjusted, etc.) today or 30 years ago?

I keep asking this question to people I've met and have yet to have any takers for the 30 years ago option. Clearly these types of economic measurements are missing something important. Deflationary technology improvements not being properly taken into account? Something else?

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

#259

Post by Gibbon1 »

curun1r wrote: post #118
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…

They also likely use inflation statistics that are problematic, at best. When considering consumables, we've had pretty reasonable inflation and people are making more than their parents. But if you were to calculate inflation based on prices for things that don't benefit from advances in our production abilities (commodities, equities, housing, education, health care, etc), we'd be making nowhere near as much as pre…

Recently read someone also making an observation that smoothed statistics are hiding that 'life event' expenses hit all at once and threaten every last bit of accumulated savings.

Have a baby and either daycare or one spouse off work for a couple of years. Main bread winner out of work for a year. Sending kids to college. Parents need support or assisted living. Major illness. End of like expenses.

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

#260

Post by physcab »

chrismanfrank wrote: post #177
crazygringo wrote: post #82

Earlier quoted context omitted.

In other words, regression to the mean. Of course the poorest people are more likely to gain in income -- when you start at the bottom, there's really only one direction you can go. You can still have regression to the mean among individuals while society itself is becoming horrifyingly unequal.

"Of course the poorest people are more likely to gain in income -- when you start at the bottom, there's really only one direction you can go." But doesn't this claim in itself refute the thesis that all the income gains are going to the top? If we find people at the bottom gaining income far faster than people at the top, which is what my quote claims, isn't that evidence that we live in a just society, not an unjus…

No, because what you’re measuring is rate of change vs volume. If you made $1 and now you make $2, that is 100% growth in income. If you made $1M and now make $1.2M that is 20% growth, but in absolute dollars you make way more.
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