If wages are to rise, workers need more bargaining power
economist.com
economist.com
Mr H. if you're reading this, im certainly not quitting anytime soon! :)
Ive worked in aerospace as well, where tradesmen are frequently paid more than managers. hassling an engine tech here, or casually second guessing one, is unthinkable and has gotten good managers demoted or fired. I was basically on-par with a surgeon as far as my respect and authority was concerned.
Im not saying ive never been part of a strike. Most of my union jobs have been rewarding and fulfilling, with a level of transparency rarely seen in big shops. Ive had C level accountants sit down in a hanger with us to go over why we need to trim down on expenses, and make sure we understand it in plain english. To me, that speaks a lot.
As for people in the Amazon shipping trenches, all you need to do is be brave, stay motivated, and push for a union. You regional and long haul amazon truckers also have a lot more bargaining power than you realize.
People who do unskilled or close to unskilled jobs for big companies that aren't pressured by competition still get the shaft though.
Sure, jobs will remain. People will be paid to sit on trucks while they drive themselves across the country. People will be paid to sit in air conditioned offices and watch trucks as little dots as they travel across the country.
They will have to find people to do those as well. The whole industry is boring unless you are management/executive level. Truckers today will have first dibs on all those positions, also, leaving new truckers completely screwed as their relatively new high paying trucking job leaves them with nothing.
Jim will be happy to hear that.
EDIT: I probably should have used "express" rather than "capture", apologies.
The question is, how good is the approximation and how meaningful is an average statistic?
The statistic is useful and meaningful, but doesn't say everything. Fortunately we have hundreds of inflation metrics, for different groups (urban, rural), age groups, countries, states, regions and sectors.
Virtually none of these are published in media outside the general CPI measure, but all can be found on government/centralbank/consultants etc websites, typically with methodological sections explaining how they came to their conclusions.
For example: https://www.bls.gov/cpi/home.htm
Here you can find various inflation figures, methodology and data.
Indeed (as you edited), the national inflation figure can 'capture' it in the statistic sense, but cannot capture it in the sense that the number expresses individual paint points that different subsections of the population experiences, like rent in a HCOL urban area, or the inability for wages to catch up with an ever increasing downpayment requirement.
Every European capital / big city has seen absolutely massive increases in rent and house prises since the ECB started printing money. (Housing sector if very 'close' to the banking sector and so more directly affected by the availability of cheap credit). Not causes by the ECB 100%, but accelerated by it nonetheless.
But if the cost of all other goods has stayed the same, plus the rent and house prises in rural areas has been normal or even dropped, inflation on average will be ok.
(And then the ECB says: inflation is less than 2% _on average_ so no problem here. print. print.. print...)
For Brussels at least, that is simply not true. See the graph in section 'Brussels Hoofdstedelijk Gewest' of [1] for the evolution of real estate prices in the Brussels region since 2008. There are also strict rent controls in Belgium: if you are renting your landlord can increase the rent with inflation, but not more. Every three years the landlord can theoretically increase the price, if he has made improvements to the property or he can prove that the rental value has objectively increased by more than 20% (which is hard, if there are disputes courts tend to side with tenants).
[1] https://statbel.fgov.be/nl/themas/bouwen-wonen/vastgoedprijz...
This assumes the numbers accurately represent reality. Here in Canada, the shelter component of our CPI numbers do not reflect at all the massive price inflation that has been occurring in both buying and renting shelter.
https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=181000...
If one was to take their numbers at face value, you would conclude that shelter price inflation is generally consistent with all other goods, and that it has been consistent across all regions, neither of which is true.
Printing money is what central banks do. It's what every Eurozone nation used to do with their own money as well before switching to the Euro. So unless you can explain what the ECB does differently that makes this worse than the central banks before it, you don't really have much of an argument.
Is it printing money faster than the central banks before it did? If so, give some numbers and sources please.
And in general, be explicit about your claims, because as written you're practically suggesting that the Eurozone is acting like the Weimar Republic.
Search "FED balance sheet vs S&P" or something similar. E.g. http://whattheythink.com/data/84893-feds-balance-sheet/
Inflation is a vague concept. When people try to measure inflation, they're using filters and aggregates. Criticism that those filters and aggregations are distorting the view (for political purposes) is valid and a frequent motivation to publish academic papers.
tl;dr Of course it can.
What we see in our everyday lives is sometimes called "price inflation", i.e. prices rising, and that can happen disproportionally.
As a US-centric example, computer prices have been gradually decreasing, while healthcare and housing costs have skyrocketed.
So an increase in the supply of money is separate from an increase in "a concentration" of money in a "market area" like healthcare, and productivity and material costs and whatever else factors into prices at any given time.
Of course, an increase in the supply of money factors into prices where ever the money goes.
This is not true unless you live in early 1900's or only surf some crackpot websites.
In the language of economics inflation without specifics means price inflation. If you mean monetary inflation, you must use two words.
Increasing money supply is not going to prices if
1) economy grows and demand for money matches the supply or
2) velocity of money decreases. https://fred.stlouisfed.org/series/M2V As a thought experiment: If you mint a trillion dollar coin but are not using it, monetary supply increases radically but it has no effect on price inflation because it has zero velocity.
"Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output. … A steady rate of monetary growth at a moderate level can provide a framework under which a country can have little inflation and much growth. It will not produce perfect stability; it will not produce heaven on earth; but it can make an important contribution to a stable economic society."
That's not so say that many don't hold the belief you have (i.e. that inflation should be understood primarily as price inflation, and monetary inflation is a secondary consideration). But it's not the only mainstream opinion.
The same applies to food. If you can afford eating in a restuarant for $20+ twice a day, you probably haven't seen any significant prise rises. But if you have trouble not spending more than $100 to feed four mouths a week, you probably a big decline in quality of your food since 2000. E.g. this requirement is hard to come by when you try to include fresh fruits.
Thus I'd say it's still an important point to consider.
When home-values inflate, it's a wealth transfer from first-time buyers to retirees that are downsizing, selling a large home for a smaller one, putting the profits into stocks and bonds. To your point, that's not a net loss, just a wealth transfer. Note, it's not a net gain either. Building homes is a gain (usually), inflating asset prices are not.
As for the rising rent, that's part of inflation ... Anyway, you seem distressed that things are "really tough to represent in the statistics" but I assure you many of your concerns have been considered.
Doesn't technological progress complicate this question even further?
When I think of more expensive products, I think of computers, smartphones, etc. Yes, the new flagship products stay expensive, but that also represents new possibilities that weren't possible a decade ago (let alone a few decades ago).
But nowadays you can get a functioning computer that lets you browse the Internet, watch videos and do your emails for the price of a Raspberry Pi (and the investment of a separate keyboard, mouse, charger, SD card and TV - but those can be gotten for cheap as well).
Similarly, a lot of things that used to be expensive are now cheap.
So basically: technological progress is shifting the "quality" spectrum itself, in some cases very quickly, in some cases barely.
(I'm not saying you're wrong, I'm just curious how economists deal with questions like this)
Sometimes economists like to create some aggregate measure of increasing consumer choice by counting the number of SKUs available in a store. Big box stores pushing out Mom & Pop made that awkward. Now Amazon makes it tougher still.
Back in grad school, I was not aware of any consensus on the topic. I haven't kept up with it since.
One technique is to focus your research on products that are largely stable in quality. For example, wine glasses. Not plastic ones, but glass or crystal. They've got a fairly large distribution in "quality" or at least in price and yet had a fairly stable range of quality since the 1950s.
So their example was that if restaurant food hasn't increased in price by much, but basic groceries have then the 'inflation' seen by different groups may be very different.
Another example may be that if average housing costs increase just a bit, but the lowest rents have increased the most then cost of living changes could be significantly different between mid and low income families.
I'm not saying either of those examples accurately reflect how things are changing in the US (as I don't have the data to hand), but they are realistic scenarios.
My whole point is that adding things and then dividing by the sum of things is not a way to represent the reality that people face. You need to argue against that if you want to make a counter point. Just repeating what the person said that I responded to (after reading what he wrote) doesn't provide anything to the discussion.
Not trying to argue semantics here, your point is completely correct but it may be confusing to say 'the EU (as if, as a whole) considers housing and inflation as separate measures'.
Only if you realize the appreciation somehow.
But all of them or missing some? In Canada there are various inflation calculators: CPI, CPIX, SHS, MEANSTD, CPIW, price-level targeting, all including or excluding various things like gasoline, transit, mortgages, some taxes, tobacco.
>all including or excluding various things like gasoline, transit, mortgages, some taxes, tobacco.
You can critique inflation measures, but there is good critique and bad critique.
Including some items can introduce unnecessary noise or make the measurement less accurate over long term. Some prices can be safely left out from the price basket because their prices are know to get into the index indirectly.
In US CPI used to overestimate inflation mostly because slow adjustments. CPI is modified to correct to this. Most developed nations use good modern CPI measures that take into account things like product substitution etc.
A cost of living statistic that averages out cost of living between say Michigan and coastal California is quite wrong in both places. It will grossly underestimate cost of living in California and overestimate it in Michigan.
I think this is one of the major problems with politics and economic policy setting at the national and global level. National and global leaders look at big aggregate statistics, which completely blinds them to the street level realities everywhere except those places that happen to coincide with the statistical median. Most places do not coincide with the statistical median. I think this largely explains the recent global populist uprising as well as the fact that global leaders were surprised by it.
Large scale macro statistics might be useful for setting things like Fed interest rates, but they're nearly worthless for addressing local problems.
The national government looks at national figures, that's not worthless. The state looks at state figures. And the municipality looks at local figures. This idea that politicians are completely blind and have no idea of street level realities, only exist at the national level, or have no data or policy instruments beyond the national level is a joke, but it seems almost like you're implying just that.
If a city looks and feels unsafe, dirty, deserted, and so on, then it probably is those things. No amount of statistics can explain away the experience of any unbiased, reasonable observer.
Park your car in the center of town somewhere. Hang out and eat a sandwich with your windows open in your car. See who walks by, hear the noises, the beeps, the sirens, the shouting kids or quiet wind.
Then you'll know what a town is really like.
I'd say plenty of people aren't fully aware of ways in which their lives get cheaper or better. That's just 'normal'. Whereas growing up and paying $2 for a coffee, and now 15 years later it's $3, is just a sign of you getting squeezed, and people are very much aware of that.
One cognitive / measurement issue here is hedonic inflation.
For example, the average new home was 1000 square feet in the 20th century and 2500 square feet today. Meanwhile, average household sizes decreased. We all got bigger houses with fewer people to share them with. We also got universal central heating, hot piped water, flush toilets.
Similarly, our computers have gotten faster. I don't need to explain the implications of moore's law to anyone here.
Suppose the average $1000 computer gets twice as fast previous year. Is that to be measured as inflation or no change? No change? Perhaps, average prices remained constant. But inflation is, among other things, a purchasing power kind of metric. 'How much computing power can I purchase with this money'. In that sense, prices halved. In short, there was deflation, on a hedonic basis.
This is something a lot of people don't realise. Inflation figures are sometimes suppressed by such improvements (which halved computing prices, even if sticker prices didn't change). Homes got more than twice as big, computers a thousand times as fast, these things can't simply be ignored by stating 'average homes and computers are more expensive', which is the reality that people experience in real life when looking at sticker prices of computers and rental properties. The reality that people often omit is that the product itself has massively improved.
Same with healthcare. Yes, costs increased. So did outcomes. Try surviving cancer today vs 50 years ago. Try living till 80 years old on average, 50 years ago, when life expectancy was sub 70.
https://ourworldindata.org/grapher/life-expectancy?tab=chart...
Wow, if you're right about the meaning of "real pay" (and I do think you're correct[1]), then The Economist is being pretty dishonest in their reporting by not explaining that important point. It makes a huge difference in how anyone interprets the story. How many people reading The Economist are actually economists? I for one assumed that The Economist was saying that people on average are massively worse off since 2000 -- which is the obvious conclusion if (nominal) pay increased 1% a year but inflation was 2-3% a year.
[1] https://en.wikipedia.org/wiki/Real_versus_nominal_value_(eco...
EDIT: I'd like to mention that "real" meaning "adjusted for inflation" is easily misinterpreted when used in normal English sentences. The article says, "In most rich countries, real pay has grown by at most 1% per year." That sounds a lot like, "In most rich countries, your actual paycheck has grown by at most 1% per year." Or, "In most rich countries, the pay you get after taxes has grown by at most 1% per year." Or other senses in which "real" has a normal English meaning rather than "adjusted for inflation".
Defining real vs nominal in this article would be like defining "variable" and "recursion" in an article about deep learning implementation at Google. Completely annoying and useless to those who subscribe.
Rather than doing what the Eonomist tends to do and assume an educated readership, they should have defined any term not daily used by someone possessed of an education past that of the 8th grade or so. This would ensure that every single reader, every single time, without any exceptions, would attain full, proper, and correct understanding. No saying "real wages" - define it as nominal wage growth less inflation. And don't just say "nominal" or "inflation", define them. Immediately and in context, so that anyone can understand.
Alternately, readers could put forth the minimal amount of effort required to Google any jargon (and "real pay" is pretty clearly jargon) they did not immediately know the definition of. I understand if some readers consider this work they should not be expected to do or otherwise an undue burden to which they refuse to rise.
In other terms, if you are spending on health care of education you are in a really bad place - prices for those services have risen at about 8x the inflation rate over the last 40 years. IF you are purchasing or building a house you will face prices 3x inflation price. However, if you are mostly buying electronics and software, the prices have actually fallen by about 50-80% over the same period.
Cost of living is a variety of factors, moreover, inflation tends to not include housing and fuel. Though there are many measure of inflation ...
[A national estimate of] housing generally is included.
I don’t agree with the root poster of this thread, though, because real wages are generally indexed to national consumption, whereas housing specifically (and to a lesser extent, food and services) are local markets, so you can have real wage growth but if you live in a high COL area, you really do have to look at real income and deflate (slightly! People often do COL deflation on gross salary, which is silly) for COL.
Fuel is not included sometimes because of it's inherent volatility, it jams the numbers up and does not give a clear picture.
Housing - I think they might include rent but not mortgages as the later reflects consumption over times other than for when inflation is calculated.
If the establishment was doing it's job people wouldn't vote anti-establishment.
Generally, that's simply not true. There are infinite different measures of inflation and it's up to the synthesizer of the inflation metric to include or exclude things, but generally housing and medical care are part of the equation.
Now, picking on the US, primary energy production has risen by less than 1% /edit: per annum/ since the year 2000 [1]. I suspect manufacturing growth is of a similar magnitude [2]. There was a report making the rounds a while ago saying that US infrastructure isn't in a great place. It isn't obvious how you could generate real increases without an increased real production to back it up, no matter how good your strongarm negotiating.
I don't see how the Economist came up with a position of the problem being disorganised labour. The issues in America are that whatever people are doing isn't creating real wealth. Maybe they're finally hitting resource limits, maybe there are capital allocation issues.
[1] https://www.eia.gov/totalenergy/data/annual/#summary [2] https://fred.stlouisfed.org/series/OUTMS
In short, I don't think it's right to imagine wages going up enormously with more bargaining power; I think it's more accurate to imagine benefits and terms of employment (job security, vacation, autonomy) going up. Not a normative point but more of a positive one.
I believe this happens because of how the union works. People who care a lot about some issue (e.g., parents caring about childcare) will push hard on the union to bargain for their particular benefit. Wage increases, by contrast, are spread over the whole union and thus expensive in total but not huge for any individual, so there is a sort of collective action inertia even within the union. A small wage increase would cost as much as a huge increase in childcare help, so the parents will be able to mobilize more easily. Personally, this arrangement me benefits me a lot as I care more about those benefits than salary.
As for specific benefits, healthcare is a very obvious example of why people push for benefits, and how it distorts earning charts. Per capita healthcare spending has grown much faster than inflation. A worker who forgoes healthcare for a salary hike will either fall behind immediately, or need to negotiate a present-value benefit that will quickly become an awkwardly large number. (And that's before we take into account the ability of employers to get good healthcare at a discount.)
The price of healthcare, college, housing, and childcare have skyrocketed compared to inflation. Anything an employer can offer that either covers those costs (healthcare, on-site daycare) or helps reduce them (flexible hours or a shuttle to improve commutes) is going to become steadily more valuable to employees for as long as that continues, and consequently more important to lock in now.
So really, that's a bit of a strawman. The issue isn't that there isn't enough to go around and we should be thankful that we haven't become China. The issue is that a small proportion of the population has manipulated law and the markets to allow them to make off with the wealth, while the rest of us have been screwed over.
...and that's a dangerous thing to allow for many, many reasons.
I was with you up to that point. Do you have a reference for this? My reading was that centralization of wealth was a relatively natural consequence of our economic model and not something that was manipulated into being. Hence the discussions on UBI and other ways to fix it.
I agree that the growth in regulation has negative consequences and that the education system is largely ineffective, but I think these are unintended consequences rather than the result of conscious manipulation by powerful people and organizations.
Markets that allow unregulated investment of private capital have a natural tendency to concentrate wealth through multiplier effects. Basically the more money you have, the easier it is to make money from your money, and the more money you get.
But wealth is power. As you get more money, you have more money you can use to manipulate the political system in any of a myriad of ways. Everything from donating to campaigns, to hiring lobbyists, to funding ads, to the revolving door and regulatory capture, to just straight up bribes.
So I do think there are natural concentrating tendencies that we can introduce policies, like UBI, to counter-act. But there is also pretty clear evidence of those with wealth manipulating the system to grant themselves more of both wealth and power.
Just look at the lobbying the wealthy have done over the past few decades that have taken America's formerly very progressive taxation system down to where it is today. That didn't just happen. People with wealth pushed for it. The same can be said of any number of other changes to the regulatory and economic infrastructure that primarily benefited those with wealth and harmed those with out (weakening of unions and collective bargaining, the weakening of financial regulations, weakening of environment regulations, and so forth). That stuff didn't just happen. It wasn't a natural outgrowth of the system. People made it happen.
That you frame that as a "natural truth" and not a cultural artefact is part and parcel of the manipulation. Our "economic model" is something that has been arrived at by centuries of manipulation and is constantly being contested and changed in ways large and small.
It depends on what you mean by "our economic model."
http://time.com/5280446/baby-boomer-generation-america-steve...
Incidentally another thing happened around 1973 - the incarceration rate began a meteroic rise[4] that did not abate until Obama's presidency. Connecting these facts is left as an exercise for the reader.
[1]https://stephenpruis.files.wordpress.com/2012/12/chart-wages... [2]http://www.mybudget360.com/wp-content/uploads/2013/07/us-deb... [3]https://upload.wikimedia.org/wikipedia/commons/d/d7/2008_Top... [4]https://www.lexisnexis.com/legalnewsroom/cfs-file.ashx/__key...
They don't?
End result is increasing income inequality. If nothing is done we will return to the historical norm of peasants and wealthy nobles with nothing in between.
I'm sorry, but that is obviously not true.
In the case of illegal immigration, the illegal immigrant is definitely better off by finding a higher wage and safer life than in his/her home country. The average Central American working illegally in the US, while not afforded employment rights like a legal worker, is still unequivocally better off than his/her options in his/her home country.
Similarly globalization has been a major benefit to the poor in many developing countries. If you compare the median per capita GDP in countries like China, Vietnam, or any African country, it is immediately obvious that economic development and globalization has been good for them.
I think what you are referring to is the it has not been good for the average American while it has been good to elite/wealthy Americans.
But please don't misrepresent that it has only been a benefit to the few simply bc it hasn't helped the majority of people in developed countries. People in developing countries have been benefitted immensely.
Or worse. The amount of control and capital on that 'wealthy noble' side is way more than it's ever been at any time in history, and we are watching the kinds of damage they inflict when they're capable of that much more than just 'buying fancy tulip bulbs'. All it takes is a few crazy ones deciding the best thing to do is kill all the serfs, and their real power will show. We're already seeing it.
Yes, living standard is high, but that doesn't mean that it can't be better.
Accepting that housing and healthcare costs have outpaced wage growth, that mathematically implies that costs of other goods and services were outpaced by wages by an even larger (appropriately weighted) margin.
> costs of other goods and services where outpaced by wages
You're implying that all people consume the same basket of goods as calculated by the article. Wage growth and spending is not even across society, so most people could be worse off while all of the above math holds true. labour productivity rose by 75% in America from 1973 to 2016, while average pay rose by less than 50% and median pay by just over 10%. which is largely because between 1979 and 2016, pay adjusted for inflation for the bottom fifth of American earners barely rose at all.
Further, many goods like computing power have gotten vastly cheaper, but that savings mostly end up with people who have disposable income. Spend a lower percentage of your income on such goods and the benifit decreases. This means the the bottom half of the work force is worse off than you might think.
See https://medium.com/@6pranavk/insight-of-the-day-cost-disease... especially the graph.
Or do you mean that wage rises should be compared against only a part of inflation?
My point is, not everyone has the same high standard of living to begin with.
I'll propose two alternatives: If wages are to rise, people need to be more fluid about their job situation. How this happens could manifest itself in many ways. The most idealistic case is that people save money instead of living month to month, giving them the confidence to invest in a job search or absorb the expenses of moving to an area that pays better or has a lower cost of living. I'd entertain ideas to move to improve the possibility of people moving jobs or locations.
The second is basic money management skills. I think there's an entire class of people in the USA that could be paid several thousand a month and they would still be in debt. We overuse credit and salespeople on everything from cars to cell phones want you to talk about affording monthly payments rather than paying the lowest possible price.
EDIT: this idea is in the article:
More radical ideas like a universal basic income—a welfare payment made to everyone regardless of work status—or a jobs guarantee, which extends the right to a government job paying a decent wage to everyone, would shift power to workers and force firms to work harder to retain employees.
People have same salaries but can afford supercomputer with a great camera in their pocket. I could only dream about it in 2000.
Most people use it for entertainment but we really are spoiled with the amount of information at our fingertips. The good will of professionals sharing their know-how online has helped my career grow and made me much more self-sufficient in other areas.
Tangentially regarding wage growth, sure growing some of my food or fixing my car is a net-loss in terms of potential earnings because of the invested time, it's well worth it in other respects. Also, developed countries have a pretty good standard of living already. Needless consumption is a greater problem IMO.
The main cost issues today are healthcare, education, and housing.
And I have covered only one minor thing supercomputer in your pocket does.
- People on average have less disposable incoming due to rising costs of housing, education and healthcare.
- Some goods (e.g. computers) have gotten dramatically cheaper in the last 20 years.
So you can save a little by not having the latest products and services, but it is insignificant compared to the overall financial challenges people face. [1]
[1] https://www.theguardian.com/commentisfree/2017/may/16/avocad...
But the eye opener is this. This is the change in the size of each economic group between 1979 and 2014 as a percent of the total population:
- Rich: 0.1% -> 1.8%
- Upper Middle Class: 12.9% -> 29.4%
- Middle Class: 38.8% -> 32%
- Lower Middle Class: 23.9% -> 17.1%
- Poor or Near-Poor: 24.3% -> 19.8%
Such tremendous progress in just 35 years is absolutely remarkable. Statistics like this are certainly subject to biased interpretation and 'massaging'. If one is curious about the source, wiki has a section on the political stance of the Urban Institute [2]. Though the paper itself is very transparent in their methodology and extremely readable. I found it all eye opening to the point that it actually changed my worldview.
[1] - https://www.urban.org/research/publication/growing-size-and-...
[2] - https://en.wikipedia.org/wiki/Urban_Institute#Political_stan...
How do you square that with the fact that most families couldn't spare $500 in an emergency? That is absolutely "poor" in my opinion.
[1] https://www.forbes.com/sites/maggiemcgrath/2016/01/06/63-of-...
Key points:
- What is stated is not what was asked. The question asked, 'How would you pay for an unexpected expense?' 37% said use savings, 23% said reduce spending, 12% use credit cards, and 21% would borrow from family/friends. Presumably that remaining 7% answered other/do not know. That was converted into "63% of Americans don't have enough savings to cover $500." Thanks Forbes, thanks.
- The question was not asked of Americans families, as implied. It was asked of millennials. Income is obviously strongly linked with age. It's self selecting to a young demographic that will not only be earning much less but also be less inclined to save.
That said, Americans certainly aren't saving as much as they should be but that's probably more of a social than an economic issue. A relatively large percent of Americans have $0 savings when the current median household income is a hair above $59,000. Even just saving $1000 a year would be a game changer in the longrun, but people are of course not doing that - even though most have the ability to do so if they tried.
But regardless, it's my understanding that American wealth and savings are actually lower than the 1970s, even if the income is higher.
No, it's just a product of bad methodology that adopts a operationalization of economic class that is incompatible with the general use of the term. “Absolute income thresholds adjusted for inflation” don't have much correlation to the way anyone defines economic class outside the context of that specific piece of research. The classic definitions of class in capitalist society have to do with economic roles (labor, mixed, or capital); the common modern American use is based around income percentiles.
Income percentiles can't really define progress as of course there will always be e.g. 20% in the bottom 20% of society and their relative income to the top is meaningless as it could just as well mean that the top of society has nothing as it could that the bottom of society has lots. So you need to measure spending power, which is exactly what this paper did.
I was looking into information on the chiseling out of the middle class. I had assumed that most people were becoming poor (as many in this thread also assume). But it turns out that we, as a whole, are becoming far wealthier than ever before while the number of people living in society with minimal spending power continues to decline. This reality is not even remotely accurately reflected by the media and I'd imagine the vast majority of Americans have no idea about the economic trajectory of this country. In particular I've been fairly involved in socio-political discussion for years now and it came as a jaw dropper to me!
I suppose the most fundamental change I had was in realizing that what we've been doing the past decades has been doing a phenomenally good job of improving society. Of course we can always do better, but we're at least on the right track.
If you cannot afford to work and live, it doesn't count as a job. And that's where things are, for most people, so the 'jobs' are lies.
During that time, something like a sixth of the population will have retired and now be collecting a pension (ie living off asset wealth). Another sixth will have come of age (roughly "millenials") and entered the workforce. The latter group also starts with an increased educational debt (in the US and UK) and faces a steep cliff of affording housing.
A lot of the jobs are "lies" - the famous zero-hour contracts, where people are technically employed but not guaranteed to be given any shifts at all during a week. There are also a lot of people who are technically self-employed but not able to earn a reasonable income. Is sitting in an Uber waiting for a job "employed"?
EDIT: Seriously the down voting! Here are some resources for you to think about:
[1] https://en.wikipedia.org/wiki/Wealth_inequality_in_the_Unite...
[2] https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...
[3] https://en.wikipedia.org/wiki/The_Spirit_Level_(book)
I suggest the rise of populism is caused by increases in wealth going to the very richest while in real terms the majority of people are poorer than ever.
I don't think that's a fair reaction. It's possible to care about the rest of the world and recognise context. Workers looking for greater bargaining power in the US shouldn't accept "but things are much better in Eastern Europe these days" as a reason for them to not organise - the two are entirely separate issues, and can happen independent of each other.
The absolute improvement is great.
The accelerated concentration of Wealth is not.
The term economists have now settled on and are considering is the very mundane “lack of social mobility”
It’s a problem.
Yes, exactly. The reason actually is very simple: wealth inequality results in inequality in political (not to mention legal) representation, as the wealthy always carry more influence in society and use that influence to stack the odds in their own favor.
It’s pretty much the same line parents use on their children - I don’t think it works for them, much less adults.
The conclusion that I draw is that while people broadly in this position might accurately perceive that they are now in a more comfortable short-term position than they were, they are at high risk in the medium-term and long-term.
Secondly, it's not clear whether wealth has improved for poor people (something I should take a look at...).
https://avc.com/2016/08/elephant-chart/
The chart, as I understand it (in limited reading), tracks three phenomenon:
1. Increasing wealth formation by more disadvantaged groups in non-first world countries (the "body" of the elephant).
2. Wealth stagnation for middle classes in first-world countries (the "dip" in the elephant's trunk).
3. Increasing returns to capital held by upper classes in first-world countries (the "trunk" of the elephant).
I found this version [1] showing that, in absolute terms, the gaps are actually increasing.
[1] https://patternsofmeaning.files.wordpress.com/2018/05/elepha...
Fixating on silly numbers that ultimately mean nothing doesn't seem like a good way to make the world better. We should look at concrete things - and how often you can eat an orange is the kind of concrete thing that really matters.
Many things are much more inexpensive jeans, shoes (functional not trendiest), entry-level tools, computers, media, etc.
Whats not more inexpensive and what imho really actually matters are things like education, housing, and the barrier to entry to careers (require licensing, certfications etc.)
Yes. The delta between the richest and poorest indicates a lot of things about a society.
Doesn't do a single thing to address the point made.
Why are people trotting out chicken as an example of healthy food? It is anything but:
https://www.huffingtonpost.com/2014/09/15/poultry-farms-anti...
If you're thinking the unhealthy food in the grocery store is cheap, that's also not true. Chips are $3-$5/bag while 3 pounds of onions is $2. I could go on.
Poor people are likely to be both cash-poor and time-poor: it's not a question of "being bothered". If you have the available time to fully consider, process, and follow this advice, then you may not realistically be poor at all.
And, if you did manage to follow this advice, you would likely still be poor - saving pennies on food is not any way out of poverty.
She kept the house stocked with canned soup and lunch meat because a 6 year old (me) and a 12 year old (my brother) could manage to make a meal out of it while she was working.
Which, if you're working 2 jobs, you very well might not have.
"If you're thinking the unhealthy food in the grocery store is cheap, that's also not true."
Time is also a cost. So is the ability to store food.
Not everywhere.
"Maybe you don’t care that much about the world outside the US or Western Europe, but literally billions of people have seen their living standards rise from the subsistence level to a decent level."
That's very uncivil of you. There is lots of poverty in the US, and despite popular opinion, there is lots of hunger here too.
The "locally grown food" in many cases was little more besides white flour and mincemeat. (A situation that still exists in parts of rural Russia.) The only tea that could be drunk was usually a single variety of black tea. I think "poverty" is a reasonable adjective for that state of affairs. The fact that people in urban Russia today do have access to a vastly wider choice of food is a significant advance.
[1] https://en.m.wikipedia.org/wiki/Soviet_famine_of_1932–33
In countries like Canada and the EU, where opportunity is more equality distributed, we still have the problem of increasing gains going to the rich. I sold a company at 27 for fucks sakes, the vicious and virtuous circles that the internet enables are stratifying wealth. We need more regulation to stop the vicious circles from forming and we need more redistributive taxes with global coordination to stop region shopping. Also, we need to delink mortgage interest rates from general interest rates to stop bubbles from forming in housing. If housing wasn't 5x as expensive in real terms much fewer people would care about the rich getting richer. The problem is that, in some respects, housing is an arms race so even though society is getting richer the poor and middle class can't ever stop struggling.
No not really, you boil it down to that, but that's simply your framing nothing more. There's also the regulatory environment, so no it's not all about tariffs. There are almost no environmental controls or labor laws in China. So that is a huge factor. There is equal or more possibility that companies wish to avoid the responsibility of ensuring compliance as they do with merely avoiding taxes.
"If you want fat, state protected corporations then fine"
How does restricting the supply of unskilled labor from illegal immigrants and border crossers, visa holders of various stripes have anything to do wit fat protected corporations?
Try again, this time taking observed facts into account.
https://www.economist.com/finance-and-economics/2016/09/17/s...
A common interpretation of this is that globalization has resulted in the middle class of wealthy countries now competing with the hungrier, more desperate residents of poor countries. This suppresses the former's wages and raises the latter's.
Capitalism will always have a "race to the bottom" to find the cheapest way to complete a product or service at the lowest possible cost. It can be exploitative, but it is not a zero sum game. With every passing year human society bootstraps itself into more wealth that is used to solve our daily problems.
To me, this is net positive to the world. The global poorest are in the most need of more income, and stand the most to benefit. Efforts at redistribution and charity, while well-meaning, pale in comparison to individuals working hard to better their lot in life. The middle classes are not suffering too greatly on net from globalization (their income did not shrink, it merely stagnated or rose less quickly).
It is easy to weave and popularize a story of middle class deprivation and suffering, because this story provides an interesting tale of the demise of bourgeois values- and who doesn't like that story? But in reality the economy is more nuanced than that. Maybe in some number of decades, the elephant curve will begin to flatten out as enough people rise to relative wealth, or cheap energy will boost the economy with gusto. Until then the middle class can wait.
The way that has been selected, at least in the United States, is that we detached wages from productivity. This means that the benefits from offshoring production (which is good, get more people involved in the economy) is enjoyed by those that receive those jobs, and by those who own capital, while the costs are carried by the middle class of the US.
You say it isn't a zero sum game, but then why in the hell is the middle class in the US getting wiped out, while we produce more and more billionaires?
The pie is growing, so it's possible for the rich to have a larger percentage but everyone still see gains. This is manifested by rising standards of living, more purchasing power, and so on.
The US dollar has also gained a lot relative to foreign currencies since 2008, which makes imports cheaper and further boosts American standards of living and purchasing relative to the rest of the world.
The emphasis should be on boosting living standards than trying to enforce equality.
They are consuming an increasing percentage of a much slower growing pie. This is a problem. Nobody is talking about enforcing equality but about avoid inequality growing even more.
How do you pull that off without enforcing equality in some way?
We could also tax capital gains at the same interest rate as regular income or get rid of the mortgage deduction. These mainly benefit higher incomes and I believe the mortgage deduction drives up home prices.
Basic utilities/services being improved and increased such as education, healthcare, vocational training.
Investment in public resources such as public transit, roads, and public parks.
Increased low-income housing availability.
Higher (not absolute equality) taxation rates.
These aren't hard fixes and have relatively widespread support. They are just unpopular when it comes to those in power of our political system currently.
And before someone says it, making things closer to equality is not enforcing full equality. We already have basic services that would qualify under that and the only way you can be consistent under that argument is to go full libertarian, which hasn't seem to have worked out practically for populations at large.
The rich are consuming an increasingly large percentage of a very slowly growing pie, so while you are technically correct, you seem to be unfairly dismissing a real issue here.
Purchasing power is cool, but necessary goods (food, housing) prices* are raising much faster than wages. Yes, you can buy a new fablet and yet another pair of jeans for cheaper than ever, but what for exactly?
* Please do your own research as these facts are highly location-dependent.
Housing is an entirely different matter.
Individuals seldom pay the stick price. A $10k/month drug does not mean one pays $10k/month out of his or her own pocket. Same for a $1,000 emergency room visit. Or college tuition, due to generous financial aid and payment deferment programs (some universities have huge discounts for low and middle-class students).
So one must adjust prices for what one actually pays, not the MSRP.
Second, although people are spending a lot on healthcare, they are getting more healthcare and better healthcare, which is the key distinction. This means cutting-edge treatments for diseases that decades ago would have been fatal (a notable example is CML, which used to be fatal within 3-6 years of diagnosis but can now be managed as a chronic condition like diabetes).
Healthcare would be very cheap if drugs were limited to Advil and Aspirin, but also very bad. People would be irate if those were their only options. Not saying the system is perfect or that drugs are not overpriced, but one must take into account quality and quantity than just the price.
Rent, however, is an example of a cost that has exceeded inflation, but where there is no notable improvement in quality, and there are no payment deferment programs. People are paying more and more for the same 2-bedroom apartment. I suspect part of the problem is due to the difficulty of evincing deadbeat renters and due to regulation, so landlords pass the costs to renters both in the form of high rents and huge, upfront, multi-month down-payments. But also, the housing bust in 2008 created a construction shortage, so people who lost their homes in 2005-2010 found themselves with no option but to rent, and this created more demand, but also due to less housing constitution. Housing starts plunged in 2008 and never really recovered: https://www.census.gov/construction/img/c20_curr.gif
Not helping matters is anti-elitism as a crab bucket mentality where they complain about the geographically near comfortable instead of the actual powers. Blaming the miller for their problems instead of their lord.
Even when not hijacked populism often fails to actually fix anything, it may be its refusal to acknowledge reality in its groupthink and search for easy solutions, dislike of nuance and not wanting to hear that the things they had just aren't sustainable or what they would need to do to make it so.
Not only have physical and financial poverty increased in the West - the UK and US have non-trivial numbers of people literally starving to death - but so have poverty of education and poverty of opportunity.
"The poor are lazy and deserve it" arguments are naive, irrational, self-serving - and a populist oversimplification themselves.
The reality is that when education improves, nepotism and corruption are constrained, and wealth becomes more widely distributed and accessible, economies boom and the poor do much better - unless the growth is sabotaged by external influences, as it sometimes is.
Don't confuse the two.
Julius Caesar, after all, was far from poor.
The rich aren't that dumb. The most important things (like medical, fire, etc) will rise accordingly with demand. Restaurants may shift more towards the high end, but that will mean matching tips (for the few that can get a job there). I dislike the unregulated free market a good deal but even I can admit it will adjust before any critical situation affects the rich. Again, those most affected by these dynamics the most will be at the bottom of the pecking order. Should we fix this? Of course. Are we all on the verge of not being able to live in California? No way.
"in real terms the majority of people are poorer than ever"
Disclaimer: I am not rich and dev salaries here are about 30K to 60K (rent is 1.5K per month). Tax is 40%+ (i.e. thrifty SV-people make a lot more)
[1] https://www.ted.com/talks/hans_rosling_shows_the_best_stats_...
It's main message is that:
1) The averages person's knowledge of the world is extremely outdated and in most cases blatantly incorrect. It's not that people don't know the answers to questions like "what percentage of the world's population live in extreme poverty", it's that they think they know and their answer is incorrect.
2) Human's have a lot of instincts that work against them when trying to evaluate data. For example, implicitly assuming that straight line graphs will continue in a straight line, focusing far more on negative things than positive things, categorizing things incorrectly, and misunderstanding large numbers.
3) Positive change tends to happen very slowly and therefore isn't consider newsworthy, so we don't hear about it even though it's happening every day.
The book really made me question my view of the world and I would highly recommend it to everyone. It's short, easy to read, enjoyable, and very insightful.
That said, the author focused more in the differences between what he calls the four levels of poverty, and to be on level 4 (the level almost everyone on this site is on) you only need to make $64 or more a day. He doesn't talk much about the inequality between the people at the bottom of level 4 and those at the top.
I would attempt to apply the authors thoughts to this specific situation, but I only finished the book a few hours ago and haven't really finished processing the information yet so I will leave that task to someone else for now.
Hope this information helps, and I really think the book is a good read for everyone. Bill Gates is giving a free .epub copy away to all college grads in the US this year, and I don't think his website actually verifies that you are graduating, so I think anyone that signs up can download it here. [1]
[1] https://www.gatesnotes.com/About-Bill-Gates/My-gift-to-colle...
As someone who isn't where here is, this kind of comment isn't as hugely insightful as you may think.
Anything even slight center-left on this site will immediately get inundated with broken, inordinary American right+ talking points. We're not hackers here, just American middle class programmers.
This thread is full of justifications completely ignoring the fact that we almost had a full blown financial meltdown just 8-9 years ago, at the expense of the middle class, and the only thing that stopped it was extreme government intervention and then lowering the absolutely hell out of interest rates. How did the middle class survive and maintain its perceived wealth? It's not because they had the purchasing power to do so, quite the opposite. It turns out that lowering interest rates across the board implicitly creates a credit bubble (because low interest money isn't used for assets, it's used for loans). A lot of middle class Americans have maintained their standard of living (or just survived in general) off credit and they're propping up other middle class workers with that debt (notably the service industry).
Here's a quick little stat to satiate anyone who wants to go "citation pls": http://www.businessinsider.com/american-credit-card-debt-nea...
>Why would Americans be struggling when unemployment is so low? Well, having a job and having a well-paying job are two different things. And wages have largely remained stagnant in the 21st century.
We're letting a time bomb tick and tock if wages do not significantly rise over the next decade.
That's my working thesis as well. the increased in real poverty rate in the USA is causing the previously hidden tensions to be exposed and flexed. When the pie was large, it was easy to be easy. When the pie is small, ya gotta watch out for the neighbors taking your slice.
Note, I've lived in the poor(er) white areas of rural America, and I've lived & worked in the rich(er) urban America. It's very hard to have genuine communication. The difference verges on the incommensurable.... from both sides.
but lately im seeing comments downvoted seemingly because users just dont agree with the author or their point of view. thats not helpful. meaningful discussion and debate must embrace alternative points of view. please dont downvote to censor.
I think it's been proven time-and-time again that HN can't handle politics. It just turns in to low-effort garbage.
Source with data? This doesn't match any place I've seen such as BLS data or Census data or FRED data.
Some people just want you to believe that the world is always getting worse.
Ban had many wonderful things to say, but one thing really shook me. he said that as a leader of the UN, he had failed in fostering the world's development, as had his recent predecessors.
he then went on to say that accomplishing the MDGs and specifically slashing severe poverty was largely an illusion if you approach it from the perspective of international collaboration. he said that nearly all of the MDGs which were met were met because china had reinvested in its own country to the extent that its massive population's standard of living had substantially improved.
that's it. not international collaboration. not the west's efforts to pull others out of poverty. just china doing the best that it could for itself over a long period of time, with the amazing conclusion of those efforts coinciding with the deadlines for the MDGs.
so yeah, the world is getting better -- but it isn't necessarily the whole world, and it isn't necessarily because of our efforts to improve things, and we definitely can't relax.
In terms of relative wealth though, comparing the average to people at the top, the 1%'s wealth has grown much faster than everyone else. It's true to say that we are all relatively less well off than we were in 2000. This is bad because wealth begets more wealth, so the inequality grows. That could lead to all sorts of problems (societal breakdown, revolution, civil war at the extremes...).
That itself isn't enough to state poor people became poorer, only in comparison to an ever increasing moving goalpost of what poor means is that statement enough to say poor get poorer.
Median personal real income has grown by about 35% or so in the past few decades. The average is quite a bit higher, I'm just talking about the median.
Household income usually isn't as good an indicator because household size has shrunk.
(1) relative deprivation is a substantial source of disutility, and
(2) additional wealth/income has declining marginal utility.
It's quite easy for a situation where the rich/poor gap grows and everyone gets richer in absolute terms to actually have negative net utility.
A good explanation of neo liberalism here: https://americanaffairsjournal.org/2017/11/progressive-neoli...
Where? When?
that is due to concerns over immigration , not wealth inequality
Russia 1918
this had to do with famine and massive unemployment as a consequence of ww1, not merely wealth inequality. America is a long way from being as bad as Russia was in 1918. The Great Depression is far worse than anything now, yet there was no civil unrest in America.
French revolution
Wealth inequality was just a single factor, all. France was in financial crisis due to debt from various wars, causing high taxes and food shortages, again, which are problems America does not have.
https://news.uchicago.edu/article/2018/02/14/universal-basic...
Also, there appears to be no effect comparable to any of the overheated lower 48 coastal housing markets as well.
Only if those are demand-priced, not commodities. That's a problem whether UBI exists or not, and therefore needs to be addressed in conjunction, not instead. Anyone who saves any money at all would benefit from increased income.
Or honestly, rent nationalization. I do not feel that private landlords for residential property are a thing that should exist. They really are nothing more than accumulating a sufficient pile of money to exclude people from a human necessity, and then using the leverage to squeeze people.
Meanwhile, the other economies of the world has a huge demand for the basic services and goods and thus their economies have risen dramatically.
I think we are seeing a levelling off of the world's richest economies because a lot of our growth has been from capital investments into broadening international trade and leveraging. I have actually moved my investments away from Europe for now because the interest rates are so low, the innovation is so low and the political climate is becoming more and more polarized that I just think it's too risky for now.
https://tradingeconomics.com/united-states/corporate-profits
And I believe, though recognise this has counter arguments, if we kept (or implemented depending on region) better tax redistribution and worker wage support the first world economies would be growing at a better rate. The trickle down policy we see in most western countries has been disproven time and time again yet the politicians still rebrand and implement it as its good for short term gains for the people funding their political careers.
You do have a point that developing economies have a advantage in they have more upside to gain and this lets countries have those 10%+ per annum growth rates. But also its worth noting, and this may be 'causation does not equal correlation' type scenario, but no country has become developed as we consider it now without having a significant improvement in financial equality.
See this graph: https://ourworldindata.org/wp-content/uploads/2013/12/Top-In...
Article here: https://ourworldindata.org/income-inequality
And while its not as simple as one variable, its going to be interesting to see what happens if we continue to allow inequality to grow.
And, some sectors are also showing growth because the middle class is becoming more narrow in the West. Budget chains like Wal Mart are going strong and luxury brands too, it's the middle class restaurants and retail stores (Game Stop is a good example of a middle class retailer) that are taking a big pounding right now. So, a lot of growth is just market shifts while the previous caterers to the middle class are leveraging to stay afloat.
Meanwhile, in some places where millions of people live cholera in the main water supply is Tuesday. You can make boatloads of cash if you satisfy that market demand.
That's what they are.
It's always interesting to see free marketeers sing the praises of monopsonist buyers of labor and (corporate) sellers of products, but suddenly change their tune when sellers of labor gain market power.
If workers in general are being underpaid, I think they are justified. But then you have other industries where they have a good grip on it and then take things a bit too far.
But once an industry is generally pretty safe and relatively fairly structured, unions begin to lack a certain sense of purpose. Union leadership is elected and "keeping us safe and fairly paid" won't get you re-elected. Promising to extract better compensation for your members (even beyond just 'safe' and 'fair') will get you votes, so that is naturally what happens.
There's just no objective way to tell a union that they have accomplished their goals and aren't really needed until/unless there is a threat to those goals, but nor is there a way to tell a company that they are operating unfairly and their workers need a union...
Union membership is the lowest ever, and so is wage growth.
Too much kool-aid, I think.
Wages are simply the price of labour. For the price of labour to rise, there must be less workers willing to do work at the market clearing price.
It is just not possible to do this at this time due to societal factors that Economists, and this article, have largely failed to address—due to the sensitive nature of the these factors.
Foremost, the addition of women in the workplace has effectively doubled the labour supply. IMHO quite rightly as well, freedom is a fundamental civil rights issue... but the global economy did not outgrow the additional labour supply and wages have been flat as a result.
Secondly, globalisation has brought about the shifting of jobs from higher cost centres to lower ones. This reduces the demand side for labour in the West, resulting in a lower price equilibrium (but has increased the demand side for labour in the East, where wages have been forced to rise, albeit from a very low place). It's also obvious that this issue has been a political hot potato as most moderate political parties in the West have accelerated globalisation at the same time as they largely ignored its consequences. I think it's fair to say that this has now given rise to extreme political views, and parties, on both the left and the right.
Lastly, it is hard to argue that immigration movements have not also brought about an over supply of labour to the West. Legal or illegal it doesn't really matter, the net effect is an increase in the labour supply which will push down price equilibrium.
And as a bonus, most Economists fail to think about the impact inflation (AKA stealth tax) has on real (AKA inflation-adjusted) wages.
IMHO, productivity and growth are the real only solutions, but I'm afraid that political uncertainty caused by social upheaval will mean that productivity and growth are stymied for years to come.
As for the rest of your comment, you should look into the Lump of Labour fallacy[1].
And very quickly after that, if they stay in the program, find out that Econ 101 is highly simplified, and things are much, much more nuanced than that.
I am ambivalent about this solution. On one hand, even if I were to lose my job, I'd be able to afford my house just with unemployment pay, and even if I take a job that pays less after, it will likely still remain affordable. On the other hand, it ties me more to my employer because not all are willing to allow remote work and if I have to take a new job in the city, it may require a very long commute 5 days a week. But not all, or even most employers in the city pay enough to live in or near it. That's just the way it is.
I understand many people are not lucky enough to have either choice.
By excluding these things, the inflation figure is smaller. This smaller figure is then used by your employer to justify your small pay rises.
E.g. "real pay has grown by 1%" when in reality it might be "real pay has fallen by 5%"
> in America from 1973 to 2016, while average pay rose by less than 50% and median pay by just over 10%.
Wild mix of numbers. Each one in isolation I would draw different conclusions.
Btw, this thread only reminds me why I believe in Bitcoin.
Government money is only as responsible as the government behind it. After decades of American politics and corruption, I'll take BTC>USD long.
Most people don't stockpile USD; they use it for transactions...salary, rent, groceries, stock etc.
Capitalism says you will always find an employer who values your work. But whereas your grandfather worked for decades as a company man, had a pension and was able to support a family on one paycheck, today productivity per capita is 4-10x higher and people are doing 2 year stints, part time jobs, gig economy, etc.
Socialism says collective bargaining power will get workers what they want because they are valued collectively. But as much as oxen and horses unionized the fields would still be turned into parking lots.
People have needs like food and rent. A Universal Basic Income captures
Everything else is lower order.
I mean, share of labor in the economic pie is probably not falling, but it's the top 10% who wins anything, and most goes to top 1% - and these are actual labor, employees, not some corruptioners, or business owners. Broad labor - 'the masses' - has lost it and it's not going to return.
Why trying to break the neck of economy by introducing artificial redistributive policies, which will skew things closer and closer to communism? I grew up in the Soviet Union and i definitely don't want to see any of that shit, ever again.
Why not look for solutions in non-economic means such as better propaganda, better ways to spend time, and better law enforcement?
Just wondering if the real pay growth was evenly distributed.
> In most rich countries, real pay has grown by at most 1% per year, on average, since 2000.
Later:
> Thus labour productivity rose by 75% in America from 1973 to 2016, while average pay rose by less than 50% and median pay by just over 10%.
But the article is largely an opinion piece; the statistics are not completely fleshed out.
> What, besides free trade and free markets, does The Economist believe in? "It is to the Radicals that The Economist still likes to think of itself as belonging. The extreme centre is the paper's historical position." That is as true today as when former Economist editor Geoffrey Crowther said it in 1955. The Economist considers itself the enemy of privilege, pomposity and predictability. It has backed conservatives such as Ronald Reagan and Margaret Thatcher. It has supported the Americans in Vietnam. But it has also endorsed Harold Wilson and Bill Clinton, and espoused a variety of liberal causes: opposing capital punishment from its earliest days, while favouring penal reform and decolonisation, as well as—more recently—gun control and gay marriage.
The modern world economic system makes it easy for capital to move overseas by removing barriers ( legal, national, borders ) while keeping labor bound to particular nations and regions.
And in regards to the US, we allow corporations to keep money offshore untaxed while if I moved overseas to work, I have to pay taxes on my earnings.
The economist along with most media has pushed the neoliberal agenda of the wealthy elite for decades while large swathes of the nation turned to the rust belt. The days of me taking anything from the economist or much of the media seriously has long passed. I consider the economist and much of the media as I do facebook, just information pollution.
Hello Marx.
> If firms have the upper hand, because a new job is harder to find than a new worker, employers capture most of the surplus, creating a gap between the value created by workers and what they are paid.
US has full employment, so this explanation does not take into account that finding a job is super easy. Im skeptical.
The plea for unions is so unique coming from The economist.
> The plea for unions is so unique coming from The economist.
The Economist and the FT often say things which are considered "radical" by popular economic discourse standards, because their readers are interested in what's actually happening while the popular discourse is extremely dogmatic and driven by the right.
> The Economist and the FT often say things which are considered "radical" by popular economic discourse standards, because their readers are interested in what's actually happening while the popular discourse is extremely dogmatic and driven by the right.
I do not mind, but the economist is an economically liberal news source and Unions(as they are known by the public) are enemies of liberal economics.
I hope Unions don't make a comeback.
They've slightly changed their discourse in the last couple of years (not sure if it coincides with their change of editor). My guess is that the sort of people that work at newspapers/magazines like the Economist started to realize that the "working classes" (in which I include most of the actual middle-class) need a bigger share of the economic pie, otherwise they (the working classes) will keep voting into power more and more populist leaders, and that's very bad for business.
A similar thing happened in the 1870s and especially after the Bolshevik conquest of power in 1917, the capitalists in the West realized that they need to better take care of their workers otherwise they and their families might end up in a common grave, their properties nationalized.
capitalism has become so exaggerated that it threatens stability thanks to its inequality. the economist recognizes that and is trying to do some thought leadership to course-correct.
> In most rich countries, real pay has grown by at most 1% per year, on average, since 2000.
The next sentence breaks out one piece of that average:
> For low-wage workers the stagnation has been more severe and prolonged: between 1979 and 2016, pay adjusted for inflation for the bottom fifth of American earners barely rose at all.
2. Property prices have multiple other factors affecting them than just GDP. For instance, if you have a large increase in population without enough new housing to account for it, then property prices naturally go up. I think that describes 21st century Britain quite well, don't you?
3. The economic dogma of blaming all problems on the rich is no different than blaming all problems on a certain ethnic group. It's just that it's not as easy to immediately recognize it as intellectually dishonest.
https://www.statista.com/statistics/188105/annual-gdp-of-the...
19.61% increase in wages seems like a lot but if you factor in housing prices increased 100%+, prices of steaks increased 200%, etc, then that 19.61% doesn't look too good.
In fact it was voted as one of the most trustworthy sources.
You make it sound like some sensationalist rag.