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Comment by jstewartmobile | Hacker News Reader

- Two-income households: doubled the labor supply without making an equally large increase in demand (NOT A DIG AGAINST FEMINISM, JUST TALKING NUMBERS)

- Automation. Not talking AI. Just old-fashioned mechanical engineering and micro-controllers. Not going to name any names, but almost every practical thing you buy is made in only a handful of factories, and those factories don't need very many people to run at full-tilt.[0]

- BS Jobs. Most of the US defense spending is make-work for engineers/welders/managers/subcontractors/etc working on projects of dubious strategic value. It sure as hell doesn't go to the soldiers. 30% of hospital payroll is admin staff. Higher ed is the same story.

[0] https://www.bloomberg.com/news/articles/2017-06-21/how-just-...

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> Two-income households: doubled the labor supply without making an equally large increase in demand

Interesting perspective. In Norway the consensus is that equal employment and the resulting doubling of productivity was a major force in increasing standard of living - way before the oil boom (corally: Sweden and Denmark are also rich/high standard of living - with no/hardly any oil industry).

Growing consensus among economists is that productivity slowdown is key to understanding stagnation. The top commenter almost put his finger on it when he said that workers aren't paid more because they aren't worth more, before attributing it to the "monopoly of capitalism". In reality if the machines we rely on to be productive aren't improving much themselves, then our productivity is capped.

Technological innovation has slowed down a lot over the past 20-30 years, and is now diffusing throughout the world rather than being pushed forward by the large industrial conglomerates, pharmaceuticals, chipmakers, OEMs, etc.

A recent post on this topic:

https://mainlymacro.blogspot.com/2017/09/productivity-and-mo...

It's worth noting that doubling the output of a tiny economy of 5 million people, and doubling the output of a large nation that in 1968 had half of all global manufacturing - are two very, very different things.

If you double America's output today, and take the GDP up toward $40 trillion - who is going to buy all of those products and services in the near term? Nobody, it couldn't happen over a short period of historical time (10-20 years); that supply could not be absorbed, it would be a disaster for the producing nation.

If you're Norway in 1990, and you have a $100 billion GDP, doubling that into a global economy of $28 trillion, is very feasible. If you're the US in 1990 with a $6.x trillion economy (20-25% of global GDP), doubling that quickly is essentially impossible. A global economy of $28 trillion can absorb an additional $100 billion in output from Norway fairly easily over a few years, assuming it's competitive / desired output. As a smaller economy selling into a massive ocean globally, you're dramatically less bound by the global growth rate; if you're the world's largest economy, you're tightly (not strictly) bound to global growth rates. From its smaller base, Norway can see huge economic gains and defy global growth rate limits; for example, imagine Norway having an Apple size company, that grew from $30b to $200b in sales over six or seven years, it would add 50% to their economy and that output could be easily absorbed by the global economy.

It also helps to sit on oil, while your own country uses hydropower.

Good points - however, not sure if you're arguing against yourself here (or if you're talking about different time frames):

> If you double America's output today, and take the GDP up toward $40 trillion - who is going to buy all of those products and services in the near term? Nobody, it couldn't happen over a short period of historical time (10-20 years); that supply could not be absorbed (...)

> If you're the US in 1990 with a $6.x trillion economy (20-25% of global GDP), doubling that quickly is essentially impossible.

US GDP[1], inflation adjusted :

Dec 31, 1990 8.91 trillion

Dec 31, 2010 14.94 trillion

It's not quite double in 20 years, but it's closeish at 1.67x? (An actual question, I'm not sure if you'd consider it close). Looks like it'll be doubled this year - so I guess one could view that as the slow-down (the extra 7 years).

[1] http://www.multpl.com/us-gdp-inflation-adjusted/table

Apparently those numbers are in "2009" dollars - while the numbers in "current" dollars is more like 6 to 15 (as opposed to 9 to 16) in the same period - I guess this might have to do with the 2008 crash?

https://bea.gov/national/xls/gdplev.xls

Did I miss something? I think their point was labor supply increased without equivalent labor demand. You are talking about standard of living which of course will increase if more people earn per household.

I can see this happening in countries with large population. I observed directly in India where there are double income households working in IT sector and their living standard is way higher in terms of material consumption and on other hand huge army of unemployed IT graduates desperate to find any job.

Why would tax funded make-work result in lower wages across the board?

Because it's more like alms than a salary. Even on a meager salary, you can still be overpaid.

Yes, but that doesn't answer the question.

i think the idea is that unemployment should be higher. the fact employment numbers are kept high by bs jobs makes demand for labor seem higher than it is.

That's assuming that the governments don't game the unemployment statistics (and they do agressivly) for example if the UK used the older definition of unemployment it would be higher than 4.3.

The article is "Why Wages Aren't Growing," not "Why are wages lower across the board?"

I'd say make-work is why wages have only stagnated instead of catastrophically plummeting.

F35 procurement is made from something like 40+ states. This makes zero sense from an engineering/supply chain perspective (consider the fact that Toyota has the vast majority of its domestic supply chain within Aichi prefecture, up to 3 levels of sub-suppliers down).

Much of defense spending is a jobs program that is brought home by congressmen to their home states. (and when it's a jobs program, supply of prospective employees outpaces demand, and thus you likely won't have wage growth)

Sounds less like a ding on defense spending than a ding on labor market demand. Imagine just how many industries and entire localities would lose their base income sources if defense spending were 0.

I wonder how it would change if the “make work” government institution were NASA. I imagine their projects would employ more people across more diverse fields.

Nah, NASA is in the end, specialist work.

The Army can do everything from dig ditches to build sheds and structures - its there to have the sheer physical ability of killing its enemies to varying degrees of dead.

>30% of hospital payroll is admin staff

Interesting. Any links to back this up?

Overstated by 5%, but still crazy: http://www.commonwealthfund.org/publications/in-the-literatu...

Ah, it's all administrative costs, not just payroll. That's more reasonable.

I know this is getting down into the weeds of accounting, but what would be an administrative cost that is not payroll?

I just know from my own business that most of the big numbers that go through admin (like benefits, insurance, etc) end up itemized in other columns, and admin itself is all payroll.

Anything administrative paid to a third-party vendor is administrative cost but not payroll. For example, the EPIC software license fee is admin but not payroll.

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