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Why Rent Is So High and Pay So Low

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Re: Why Rent Is So High and Pay So Low

#91

Post by danieltillett »

cinquemb wrote: post #79
danieltillett wrote: post #29

Earlier quoted context omitted.

In order to have an effective meritocracy you have to have universal education. You then pick the top 0.1% and invite them to join you and marry your son or daughter. The whole economic system is designed to identify the very clever no matter their background and bring them into the ruling class.

If we build upon your assertion ("to have an effective meritocracy you have to have universal education"), if some of those in power define universal education differently (which would seem to make any concept of universality in education void of such in practice), then it wouldn't be surprising to see a decline in the effectiveness of an economic system, which is what I would suggest is what we are seeing today.

Universal education is not the same as universality in education. If the aim is to identify the 0.1% it does not matter if the universal education is rather spotty in quality since the highly intelligent will manage to succeed no matter how poor the educational environment.

If you want to be really clever you just give those smart kids who had a bad school environment bonus marks at the university entrance stage and give full scholarships - say just like the elite universities do right now.

I should mention the aim of the rich is not to maximise production, but their share and status. It does not matter if the pie is smaller as long as the size of your slice is larger.

Re: Why Rent Is So High and Pay So Low

#92

Post by kuni-toko-tachi »

Utter leftist nonsense. Reagan was responsible for the biggest and longest economic boom since World War 2, he freed millions of people from the miserable tyranny of communism. His tax cuts and deregulation revitalized the American economy. By winning the cold war through strength, he allowed Clinton (forced by strong Republican leaders in Congress) to demilitarize and reap the cost savings which balanced the budget.

The decline in wages has nothing to do with him, it has everything with productivity gains through technology and by loss of bargaining power through illegal immigration and by "free" trade agreements like NAFTA - passed by Clinton - which were pure crony capitalism purposely designed to chop the legs out from underneath the American worker. This, combined with out of control government spending - which funnels money printed out of thin air through Wall Street is what caused the conditions described.

Re: Why Rent Is So High and Pay So Low

#93

Post by rm_-rf_slash »

danieltillett wrote: post #35
rm_-rf_slash wrote: post #23

Earlier quoted context omitted.

My social networks include a fair number of wealthy people. Some of their kids are dumb as rocks, and they don't have to improve themselves, ever. Those are the real welfare queens. Sometimes a fool can be made a leader by other people in power. Believe me, I'm American.

You might have noticed that I said the rich are smarter than in the past, but the ruling class are very clever. As you rightly point out there are plenty of dumb rich, but relatively few of these dumb rich are ruling. As for leaders who the figurehead is does not matter - ask yourself what do the rulers care more about; who is the POTUS or who is the head of the federal reserve.

Are the ruling classes more clever, or has technology and globalization allowed average cleverness to be more impactful than in the past?

Re: Why Rent Is So High and Pay So Low

#94

Post by ktothemc »

adam419 wrote: post #48
nostromo wrote: post #6

This article doesn't answer the question and seems primary based on nostalgia. My theory: the Fed's zero interest rate policy is very good at inflating asset values: S&P500, housing, you name it. Rising income is a second-order effect: we hope that rising asset values will lead to increased wages. That used to be the case, but no longer is. Why? Because of automation and globalization probably. So, the Fed has the pe…

Here's another solution: Respect the wisdom of markets. Allow corrections to take place and don't bury malinvestment under the rug only for it rear it's ugly head worse later on by acting as if you have a better intuition on what the price of money should be. Most people accept the virtue of free markets. Yet many don't see that the actions the Fed has been taking destroys the concept of a market by artificially supp…

That's, uh, what we've been doing since the early 1980s, at least ideologically speaking.

Re: Why Rent Is So High and Pay So Low

#95

Post by dragonwriter »

WalterBright wrote: post #51
nostromo wrote: post #6

This article doesn't answer the question and seems primary based on nostalgia. My theory: the Fed's zero interest rate policy is very good at inflating asset values: S&P500, housing, you name it. Rising income is a second-order effect: we hope that rising asset values will lead to increased wages. That used to be the case, but no longer is. Why? Because of automation and globalization probably. So, the Fed has the pe…

One thing nobody mentions is the increasing share of the GDP that the government consumes: http://www.usgovernmentspending.com/total_spending_chart That wealth has to come from somewhere.

The data you point to shows government spending as a share of GDP peaking in FY 2009, dropping through FY 2014, rising slighting to FY 2016, and with a projected sharp bend upward beginning in FY 2018.

The only recent period of a significant runup in government spending (federal or overall) as a percent of GDP was approximately the second term of the most recent Bush Administration, and the only periods with any sustained growth in that measure since the 1970s are about from the middle of the Carter Administration through Reagan's first term and then again both terms of the second Bush Administration (as noted, with a particularly rapid rise in the second term.) Even with the projected increase in the out years, the projected 2020 spending level as a percent GDP isn't that much ahead of 1970.

Re: Why Rent Is So High and Pay So Low

#96

Post by dougmany »

scott_karana wrote: post #83
ryandrake wrote: post #69

Earlier quoted context omitted.

> I couldn't agree more. I'm young and capital-poor, so this fact is a huge problem for me. I don't see a solution. Vote for politicians not obsessed with propping up the business and real-estate portfolios of wealthy middle-aged people? (assuming you can find such politicians)

> Assuming you can find such politicians Some of us might become those politicians. :)

but not before becoming wealthy middle-aged people.

Re: Why Rent Is So High and Pay So Low

#97

Post by dsr_ »

The velocity of money is too low.

When money flows through many hands quickly, prosperity is the result.

When money stagnates and accumulates in deep pools, the economy suffers.

Reducing the number of people being employed reduces the speed of money. That's been happening.

Increasing wealth disparity reduces the speed of money. That's been happening.

Government spending increases the speed of money, but money spent on projects that end up with high concentrations of wealth (stadiums, military) are not as useful as projects that enable further speed increases (transportation, infrastructure, sanitation, urban renewal).

Re: Why Rent Is So High and Pay So Low

#98

Post by dragonwriter »

merpnderp wrote: post #80
WalterBright wrote: post #51

Earlier quoted context omitted.

One thing nobody mentions is the increasing share of the GDP that the government consumes: http://www.usgovernmentspending.com/total_spending_chart That wealth has to come from somewhere.

I like how the charts run to 2020 to hide the massive ramp up in the last few years.

> I like how the charts run to 2020 to hide the massive ramp up in the last few years.

From the data there, spending as a share of GDP peaked in FY 2009, bottomed in FY 2014, and rose slightly from that trough through FY 2016. Extending it to the projected FY 2020 levels provides a bigger ramp up than recent years, since the 2018-2020 ramp up is the fastest one since the FY 2009 peak.

The only massive ramp up in recent years was the one leading up to the 2009 peak.

Re: Why Rent Is So High and Pay So Low

#99

Post by sedachv »

tcbawo wrote: post #74
adam419 wrote: post #48

Earlier quoted context omitted.

Here's another solution: Respect the wisdom of markets. Allow corrections to take place and don't bury malinvestment under the rug only for it rear it's ugly head worse later on by acting as if you have a better intuition on what the price of money should be. Most people accept the virtue of free markets. Yet many don't see that the actions the Fed has been taking destroys the concept of a market by artificially supp…

This is a gray area. If we allowed a large automaker to go bankrupt, we probably would have lost the supply chain and many supporting industries which would be gone (from the US) forever. Same with banks. As much as we detest bailing out bankers, allowing the US to economy to be cut off from credit would create lasting collateral damage.

> If we allowed a large automaker to go bankrupt, we probably would have lost the supply chain and many supporting industries which would be gone (from the US) forever.

That's what people thought about textiles and apparel. Neither turned out to be true. Textile mills are coming back to the East Coast (http://www.nytimes.com/2015/08/03/business/chinese-textile-m...) and the number of apparel manufacturing jobs in the Los Angeles County has stabilized in the past several years.

Re: Why Rent Is So High and Pay So Low

#100

Post by adam419 »

tcbawo wrote: post #74
adam419 wrote: post #48

Earlier quoted context omitted.

Here's another solution: Respect the wisdom of markets. Allow corrections to take place and don't bury malinvestment under the rug only for it rear it's ugly head worse later on by acting as if you have a better intuition on what the price of money should be. Most people accept the virtue of free markets. Yet many don't see that the actions the Fed has been taking destroys the concept of a market by artificially supp…

This is a gray area. If we allowed a large automaker to go bankrupt, we probably would have lost the supply chain and many supporting industries which would be gone (from the US) forever. Same with banks. As much as we detest bailing out bankers, allowing the US to economy to be cut off from credit would create lasting collateral damage.

Creating too bigger to fail out of already too big to fail industries does nothing except throw good money after bad, and increase systemic risk for an even worse repetition of a failure.

Not to mention the fact that continuously proceeding with such bailouts is simply unsustainable. The problem lies in our modern inability to stomach losses and handle austerity. It's something no one rightfully wants, but when market failures or financial crises occur, it's for a reason. You're witnessing a natural repricing mechanism at work and no one is disagreeing a lot of destruction can be a by product. But I don't buy your narrative that unless we saved those industries in the US they would have permanently moved elsewhere.

The economy is like an organism, not a washing-machine. The most optimal repairing mechanism is itself.

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