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Rising US Inequality: How We Got Here, Where We're Going

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Re: Rising US Inequality: How We Got Here, Where We're Going

#71

Post by car12 »

Kiro wrote: post #49
pjc50 wrote: post #27

Earlier quoted context omitted.

Huge assumptions there. And some significant work has gone into investigating the first and found it's the other way round: https://www.oecd-ilibrary.org/docserver/9789264288737-8-en.p... > We can help Africa and South american countries It would be a significant improvement if the US stopped "helping" South America. Allende would like a word.

The effect you're talking about is not instant. If you get a lot of asylum seekers in a short time your GDP/capita will take a hit until they've been integrated into society and become a net positive.

And that period to get assimilated and become net positive might be a period of +- few decades which is an insanely long time in today's world of super fast moving money and economic conditions and 4 year hyper partisan election cycles.

Re: Rising US Inequality: How We Got Here, Where We're Going

#72

Post by sokoloff »

JMTQp8lwXL wrote: post #69
sokoloff wrote: post #68

Earlier quoted context omitted.

In a consumer driven economy, with a savings rate of around 7%, most people are spending the vast majority of their income on consumption [competing with other consumers for some scarce goods], why would we think that median real income should increase significantly faster than inflation?

Because of the huge productivity gains over the past 42 years. The profits from those gains all collect at the top.

That seems to be a reason to think that the median (real) income will not increase.

Re: Rising US Inequality: How We Got Here, Where We're Going

#73

Post by FooHentai »

cycrutchfield wrote: post #23
deogeo wrote: post #8

Earlier quoted context omitted.

> Also, how much of this effect is basically the rest of the world playing catch up in terms of economic production? If the rest of the world becoming more productive results in US workers being worse off, then something is severely wrong with US trade policy. For one, it contradicts the dogma that more trade is strictly beneficial.

>For one, it contradicts the dogma that more trade is strictly beneficial. It is strictly beneficial, in aggregate. But in any situation, there are winners and there are losers. There are no decisions you can make where everybody wins. If you live in a first world country and your skill set is worse than somebody in the developing world, you’re going to have a bad time.

>If you live in a first world country and your skill set is worse than somebody in the developing world, you’re going to have a bad time.

Even if your skill set is greater, your cost of living is higher. So you'd have to be more than marginally better.

Also, the logical conclusion of where this seems to be headed is that if you're a low-skill person living in a first-world county, voting for protectionist, isolationist policies/politicians is a rational choice.

Re: Rising US Inequality: How We Got Here, Where We're Going

#74

Post by roenxi »

nabla9 wrote: post #42
dnautics wrote: post #14

Of course, no mention of inflation, the policy choice which robs from the poor and gives to the rich. How does it rob from the poor? https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hi... "when you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts." In other words, inflation is a policy choice to combat sticky wages, which (if you think th…

> In other words, inflation is a policy choice to combat sticky wages, which (if you think that's a problem), the solution is to, apparently, screw labor by devaluing their wages from under them. This is complete misunderstanding of how this works. Inflation does not increase the real return from stock markets. Inflation erodes also capital. Capital must work just to stay still. Inflation or not, the wages reach equi…

> Inflation does not increase the real return from stock markets. Inflation erodes also capital. Capital must work just to stay still.

Actually, it is not so. What we call 'real return' in the stock market is stock prices as a percentage less consumer price inflation as a percentage. If inflation causes stocks prices to inflate more quickly than wages, then it will appear to boost real returns in the stock market because we aren't very good at measuring such things. To state the same thing in a different way, there is no special reason why consumer price inflation and asset price inflation should be the same thing.

Modern methods of money creation (ie, post what has been happening post 1970) focus on money creation by lending people money to buy assets. It seems quite unlikely that the inflation indexes in common use are the right adjustments to make to the stock market, house prices, etc, etc.

Look at the price of gold for example - according to the BLS [0] $165 dollars of gold in 1975 should be worth about $811 today. It is actually worth double that. Gold is a pet rock with no prospect of a real return, and also out of fashion as an asset. It is certainly not the sort of thing people borrow money to purchase - and that makes it a great indicator that asset prices are inflating much faster than the official inflation statistics, because even with those headwinds it is acting as though owning a pet rock is a productive long-term decision. It is quite likely that inflation is reallocating resources from workers to owners of assets.

[0] https://www.bls.gov/data/inflation_calculator.htm

[1] https://goldprice.org/gold-price-history.html

Re: Rising US Inequality: How We Got Here, Where We're Going

#75

Post by imtringued »

nabla9 wrote: post #42
dnautics wrote: post #14

Of course, no mention of inflation, the policy choice which robs from the poor and gives to the rich. How does it rob from the poor? https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hi... "when you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts." In other words, inflation is a policy choice to combat sticky wages, which (if you think th…

> In other words, inflation is a policy choice to combat sticky wages, which (if you think that's a problem), the solution is to, apparently, screw labor by devaluing their wages from under them. This is complete misunderstanding of how this works. Inflation does not increase the real return from stock markets. Inflation erodes also capital. Capital must work just to stay still. Inflation or not, the wages reach equi…

>This is complete misunderstanding of how this works. Inflation does not increase the real return from stock markets. Inflation erodes also capital. Capital must work just to stay still.

I think you made a basic mistake there. The assumption you're making is that the inflation is spread over every single citizen. In reality there is no reason for that to happen. It is equally possible for all inflation to happen in the stock or housing market which is inaccessible to the average low income worker. Therefore the one who is staying still is the low income worker.

Re: Rising US Inequality: How We Got Here, Where We're Going

#76

Post by ikeyany »

xwdv wrote: post #70

I wonder if multiple people of low incomes may someday pool income together and use it to buy housing and food that they can all use to live comfortably. I feel this may be the only way to solve the inequality crisis.

You are describing roommates/co-ops.

Re: Rising US Inequality: How We Got Here, Where We're Going

#77

Post by roenxi »

The article is a lot more substantive than the headline, but the frame that inequality is the problem will lead to 'solutions' that do not solve the real problems.

The root problem here is clearly that living standards are at risk of dropping. That is not necessarily linked to inequality - inequality can rise in tandem with living standards. The policy tools that raise living standards are not the same policies that promote equality (the experiences in the 20th and 21st centuries suggest quite the opposite).

If people became rich relative to their ability to raise living standards - which is the main line of defense for capitalism as a system, by the way - then we expect higher inequality because the people who figure out how to raise mass living standards by small amounts should become disgustingly wealthy. The problem is that current policies are making people rich who aren't productive members of society. They are making idiot bankers rich who set us up for things like the '07-'08 financial crisis, then bailing them out when it looks like the market might call their bluffs.

Re: Rising US Inequality: How We Got Here, Where We're Going

#78

Post by frankbreetz »

sokoloff wrote: post #66
rayiner wrote: post #63

Earlier quoted context omitted.

Income inequality comparisons are full of problems like this. Reflecting your intuition, I’d imagine most people would conceive of increasing income inequality to mean increasing gaps between people in the same station in life across two time periods. But demographics have changed dramatically since 1970. For example, immigrants make up almost 3x as large a fraction of the population (from 5% to almost 15%) than in 1…

I also suspect that some of these "oversights" aren't mistakes at all, but rather intentional obfuscation of facts. Take note of how often you hear/read something like "incomes haven't risen in 30 years, but prices have gone up over 50% over that period". [Almost?] Inevitably, the income will be real income [inflation adjusted] and the prices nominal prices .

Do you have a source for such a comparison, everything I have seen is all real prices. I know rent and college had gone up about 50% in real prices and some things like food and high end electronics have gone down. Honestly, your comment seems like intentional obfuscation of facts.

Re: Rising US Inequality: How We Got Here, Where We're Going

#79

Post by harryh »

frankbreetz wrote: post #78
sokoloff wrote: post #66

Earlier quoted context omitted.

I also suspect that some of these "oversights" aren't mistakes at all, but rather intentional obfuscation of facts. Take note of how often you hear/read something like "incomes haven't risen in 30 years, but prices have gone up over 50% over that period". [Almost?] Inevitably, the income will be real income [inflation adjusted] and the prices nominal prices .

Do you have a source for such a comparison, everything I have seen is all real prices. I know rent and college had gone up about 50% in real prices and some things like food and high end electronics have gone down. Honestly, your comment seems like intentional obfuscation of facts.

Housing costs are only going up because people are buying/renting bigger houses (despite the fact that mean houshold size has decreased by almost a full person in 50 years).

On a per square foot basis, you don't really see an increase.

http://www.aei.org/publication/new-us-homes-today-are-1000-s...

Re: Rising US Inequality: How We Got Here, Where We're Going

#80

Post by cycrutchfield »

FooHentai wrote: post #73
cycrutchfield wrote: post #23

Earlier quoted context omitted.

>For one, it contradicts the dogma that more trade is strictly beneficial. It is strictly beneficial, in aggregate. But in any situation, there are winners and there are losers. There are no decisions you can make where everybody wins. If you live in a first world country and your skill set is worse than somebody in the developing world, you’re going to have a bad time.

>If you live in a first world country and your skill set is worse than somebody in the developing world, you’re going to have a bad time. Even if your skill set is greater, your cost of living is higher. So you'd have to be more than marginally better. Also, the logical conclusion of where this seems to be headed is that if you're a low-skill person living in a first-world county, voting for protectionist, isolationi…

Sure, as we saw quite vividly in 2016. This is also known as Crab Mentality.
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