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The Stock Market vs. the Labor Market

theatlantic.com

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Re: The Stock Market vs. the Labor Market

#31

Post by readme »

jbooth wrote: post #10
civilian wrote: post #3

Yup. Using humans to get stuff done isn't our only option anymore, so a difference between the stock market and labor market isn't surprising. I live in a liberal area and I'm facebook friends with a lot of Burners (people who have gone to burning man). I see a ton of image macros and posts where people are implying that it's a moral wrong that businesses are doing well while we have high unemployment. :-/ For me, on…

It's not wrong for businesses to do well -- but it's arguably wrong and certainly unsustainable for business prosperity not to trickle down to average people doing better.

Most businesses will optimize for profit within the parameters they are given. That's why workers need to have unions.

Supply-side economics do have a grain of truth to them, a very small one. The problem is they are "trickle down" and there are a lot of people who need a bit more than a light sprinkle to happen.

Re: The Stock Market vs. the Labor Market

#32

Post by [deleted] »

civilian wrote: post #3

Yup. Using humans to get stuff done isn't our only option anymore, so a difference between the stock market and labor market isn't surprising. I live in a liberal area and I'm facebook friends with a lot of Burners (people who have gone to burning man). I see a ton of image macros and posts where people are implying that it's a moral wrong that businesses are doing well while we have high unemployment. :-/ For me, on…

[deleted]

Re: The Stock Market vs. the Labor Market

#33

Post by rayiner »

jeffdavis wrote: post #30
rayiner wrote: post #23

Earlier quoted context omitted.

The economy is also not a theoretical abstraction. Wealth disparity has rippling effects throughout society. If it's Pareto efficient that the super rich make 10x more and ordinary people make 1% more, it can still be sociologically undesirable. What you see is an economy replete with goods and services, but by and large one in which the people getting rich neither make, consume, nor develop the technology to make th…

"It takes a special sort to see all the gains in wealth go to the investor and manager class and argue that this is the proper order of things." I don't think anyone sees it as the proper order of things. For one thing, only central planners even think in those terms. For another, there is no obvious policy that will have a better overall result in a large country like the US -- remember, every policy has unintended…

I think when you ask everyone to get together to institute a society to create an environment in which business can exist, then reject the idea that it matters how the production of that society is distributed, that's a special sort of person.

Re: The Stock Market vs. the Labor Market

#34

Post by tptacek »

This story has nothing whatsoever to do with Hacker News. It's a recapitulation of basic economics trend stories that serves no purpose here other than to start Reddit-style flame wars about politics. Not every good blog post is a good Hacker News submission. I flagged it, and you should too.

Re: The Stock Market vs. the Labor Market

#35

Post by bjhoops1 »

acslater00 wrote: post #22

Couple things here. First, corporate profits are aberrantly high for a number of reasons, none of which are likely to be permanent. John Hussman, an analyst whom I respect deeply, has a good discussion of this from the perspective of stock valuations, but the basic point is relevant here. [ http://www.hussmanfunds.com/wmc/wmc130408.htm ] Second, while I agree that this is "the story" in a purely journalistic sense, i…

Income inequality is a useful statistic for more purposes than just describing the strength of incentives in a system. Surely it is also one measure (amongst many) of the fairness of a system; a measure of how truly egalitarian a society really is.

Re: The Stock Market vs. the Labor Market

#36

Post by CleanedStar »

Karl Marx said the process of value creation is thus: a carpenter goes into a woodshop and bangs on wood for eight hours a day. The raw materials (wood, nails) plus partially used and worn down materials (saw blade etc.) are transformed into tables, which are worth more than the materials used. $2000 worth of material becomes worth $2160 in eight hours. In eight hours $160 of value is created.

The carpenter keeps all the wealth he creates for the first six hours of work - all $160 worth. The last two hours he keeps none of the wealth he creates - it goes to the woodshop owner who rents the woodshop, owns the mechanical saws etc.

This is how business works. It is obvious. Of course there are caveats, which Marx spends thousands of pages covering - only a fool would reply to this saying my summation of thousands of pages in a short HN comment missed one of those caveats.

It is also obvious how in a system like this, the owners are making money while the workers are stagnant or doing worse. And the method owners have of doing this is obvious - either have the worker work more hours for free per day, or try to somehow increase the amount of wealth that is created every hour. Obviously both methods are used.

Re: The Stock Market vs. the Labor Market

#37

Post by bjhoops1 »

rayiner wrote: post #23
youngerdryas wrote: post #2

From the comments: "The focus and concern shouldn't be how much the top 1% are making, it should be how much the 99% are making, especially the bottom 50%. I dont really care how much money Bill Gates and Donald Trump are making. Their income has absolutely no effect at all on my income, what I'm most concerned about is how much money I'm making. The economy is not a zero sum game, where if the rich make a trillion m…

The economy is also not a theoretical abstraction. Wealth disparity has rippling effects throughout society. If it's Pareto efficient that the super rich make 10x more and ordinary people make 1% more, it can still be sociologically undesirable. What you see is an economy replete with goods and services, but by and large one in which the people getting rich neither make, consume, nor develop the technology to make th…

> The economy is also not a theoretical abstraction.

Yes, thank you. Irritates me to hear people pontificate about the importance of "incentives" in the system, with the only real concern of economists being the overall increase in production and wealth. It's as if the distribution of wealth is of no concern whatsoever to economists and business people.

Re: The Stock Market vs. the Labor Market

#38

Post by methodover »

acslater00 wrote: post #22

Couple things here. First, corporate profits are aberrantly high for a number of reasons, none of which are likely to be permanent. John Hussman, an analyst whom I respect deeply, has a good discussion of this from the perspective of stock valuations, but the basic point is relevant here. [ http://www.hussmanfunds.com/wmc/wmc130408.htm ] Second, while I agree that this is "the story" in a purely journalistic sense, i…

I disagree.

The sheer magnitude of income inequality is a social problem in its own right. It doesn't matter all that much if the inequality happened with or without corruption. What matters is that some people work hard and are rewarded with quite little, and have unnecessarily difficult lives as a result -- and furthermore, that the system appears to be trending towards _more_ of that, not less.

Re: The Stock Market vs. the Labor Market

#39

Post by kgmpers »

methodover wrote: post #38
acslater00 wrote: post #22

Couple things here. First, corporate profits are aberrantly high for a number of reasons, none of which are likely to be permanent. John Hussman, an analyst whom I respect deeply, has a good discussion of this from the perspective of stock valuations, but the basic point is relevant here. [ http://www.hussmanfunds.com/wmc/wmc130408.htm ] Second, while I agree that this is "the story" in a purely journalistic sense, i…

I disagree. The sheer magnitude of income inequality is a social problem in its own right. It doesn't matter all that much if the inequality happened with or without corruption. What matters is that some people work hard and are rewarded with quite little, and have unnecessarily difficult lives as a result -- and furthermore, that the system appears to be trending towards _more_ of that, not less.

Seconded. I think this TED talk does a good job correlating income inequality to a lot of disagreeable outcomes. http://www.ted.com/talks/richard_wilkinson.html

Re: The Stock Market vs. the Labor Market

#40

Post by boomlinde »

sergiosgc wrote: post #20

Don't look at inequality from a justice perspective. Justice is a moral definition, and highly volatile, so the discussion would be endless. Look at it from a society efficiency point of view. From an efficiency point of view, some inequality is interesting. You need to aggregate some capital for investments to occur, you need rich people for high risk investments to be possible. However, as in most systems, there is…

> You need to aggregate some capital for investments to occur, you need rich people for high risk investments to be possible.

No, you need economic capital for high risk investments to occur. However that capital is distributed is really besides the point.

From an efficiency point of view, high risk investments probably shouldn't exist at all. In a production model where goods and services are produced based on what the people need and can realistically attain in a sustainable manner, rather than tricking people into thinking they need things, you don't need to take very high risks.

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