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ephor

>"A world of free movement would be $78 trillion richer"

...A world where everyone's mother is a prostitute would be considerably more economically active.

Its a shame the economy is seen as a end rather than a means.

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^^^^^^

I would also like to ask to whom would the majority of that increase in wealth go? I would argue it wouldn't be to the people doing the moving. It would be to the people driving them to move.

Supposing this is true, does it matter, if the overall size of the pie increases? Isn't everyone better off? Would you rather the poor stay poor so that the rich don't get richer?

I think all you have to do is look at modern American income disparity in the United States over the last 50 or so years and you have your answer. Sure, the poorest did become moderately better off financially in terms of wages. Yet did there quality of life increase? I would argue that the size of the pie is irrelevant past the point of what is required for basic survival. What truely matters is the relative size of the pieces. Especially in a country where we have equated money with speech.

> Yet did there quality of life increase?

You seriously think poor people's quality of life hasn't increased in the last 50 years?

Go drive around "working poor" neighborhoods right after Christmas and see how many huge flat-screen TV boxes are curbside waiting for "big trash day" (small hint: a lot) or see how many people don't have smartphones.

I would argue that Wallyworld did more to bring up the standard of living for poor people than the last 50 years of social engineering but I know how much people like the downmod button...

I think you confuse the proliferation of techno-toys with quality of life. The same could be said of the proliferation of radio, automobiles, etc.

If they have the disposable income to purchase "techno-toys" then obviously they have the means to support their basic needs.

I'm actually curious what quality of life metric you're judging by that's declined in the last 50 years?

The cost of huge flat-screen TVs has plummeted. Meanwhile, the cost of housing and healthcare is going through the roof in most of the western world. It very much does not follow that people who have the disposable income to purchase techno-toys can support their basic needs.

The cost of most things has plummeted since 50 years ago which, arguably, improves people's lives.

And, btw, I wasn't proposing some new measure of Quality of Life through the size of the living room TV but using it as an illustrative example of technology becoming more accessible to more people at lower costs. Same with the smartphone reference, having the sum total of human knowledge at your fingertips seems like a quick and easy way to improve one's lot in life.

I do wonder if people would complain if Walmart managed to decrease housing and healthcare costs using their aggressive bargaining tactics like they've done with generic prescription drugs?

--edit--

Forgot a requisite huffpo link praising Walmart for prescription drugs prices (whoops, wrong link the first time around) --> https://www.huffingtonpost.com/paul-a-london/a-way-to-save-b...

cost of housing proportional to wages, cost of healthcare proportional to wages, access to education and the quality of that education, overall life expectancy, likelyhood of incarceration, etc.

> Wallyworld did more to bring up the standard of living

The quality of food Walmart sells is abysmal. The pressure Walmart put on food manufactures to drop prices played a significant role in the malnutrition and obesity in the us. TVs and smart phones are a very small part of Quality of Life. Having fulfilling work, good health, and a clean environment are more important aspects that Walmart worsen.

> The pressure Walmart put on food manufactures to drop prices played a significant role in the malnutrition and obesity in the us.

Making food less expensive is bad? Never really understood that argument but maybe it's just me...

There are studies on the percentage of income a family spends on food today vs. some time in the past (with "time" depending on whatever study you look at) and it has steadily declined. Less money spent on food == more money to spend on some other necessary thing to live a quality life.

Also, I'd put more blame on the USDA[0] for "obesity in the us" than Wallyworld selling people what they want to buy. People grow up believing in the Food Pyramid and end up becoming overweight through a "well balanced diet" dreamed up through regulatory capture.

[0]https://www.huffingtonpost.com/jonathan-bailor/obesity-epide... -- note: #1 result on the google for "food pyramid obesity" is the huffpo so it has to be true...

> Making food less expensive is bad?

Making equivalent food lower cost is good. Reducing food quality to reduce price is bad.

>Go drive around "working poor" neighborhoods right after Christmas and see how many huge flat-screen TV boxes are curbside waiting for "big trash day" (small hint: a lot) or see how many people don't have smartphones.

Perhaps the hedonistic acquisition of inessential physical goods is not necessarily commensurate with a higher standard of living?

While there has been progress in the past 50 years, there has certainly also been much regress. When measuring the advancement of a civilization, it seems something other than the pervasiveness of bigger, cheaper screens for reruns of Baywatch (et al.) should be the yardstick.

The income disparity is the game of numbers. When Jeff Bezos’ income increases due to the work of his US employees, people notice. When Saudi Arabian King’s net worth increases due to the work of his US employees (and employees of any affiliated companies controlled by Saudis), people don’t notice it as much, since the King does not file a personal tax return with IRS.

If you were to strip everybody in the Forbes 1000 list of their US citizenship (someone like Singapore or Monaco would surely step up to provide them with a valid passport), relieve them of IRS personal income filing duty, but allow their money to stay in the US economy, the economy would look the same and act the same. But the income disparity numbers would look much brighter.

You rightly point out that income disparity metrics can be manipulated, but changing the calculation (eg by ignoring Bezos) does nothing to change the actual disparity, it just makes it harder to detect... So what exactly is your point?

That the stat is not only subject to manipulation, it’s pointless.

If every American shopped on Rakuten vs Amazon, bought Samsung vs Apple, searched on Yandex instead of Google, banked at Barclays vs Chase, took a Didi vs Uber, if every hedge fund manager was based in Zurich vs Greenwich, US income disparity would not be so jarring, as the wealth would accrue elsewhere, exporting the income disparity with it.

Would the US economy be better off?

So many people miss this point. Most things in economics are positive sum games. But most people treat things like zero sum games (if someone gains something then I have less/am able to get less). But people produce products, people produce value. This is exactly why we have an economy. And it grows (meaning positive sum). We've left so much money and value on the table because of this.

> So many people miss this point.

I'd be careful making assumptions about the reasons people don't agree with you.

Taking the grandparent comment: "Supposing this is true, does it matter, if the overall size of the pie increases? Isn't everyone better off? Would you rather the poor stay poor so that the rich don't get richer?"

I don't disagree with this point because I believe economics is a zero some game, I disagree with it because it's wrong (it takes "everyone being better off" for granted), and I will be on guard to oppose any other initiatives (say, open borders) suggested by a group that thinks like this.

That's a pretty disingenuous argument. If the pie gets bigger, cost of living also goes up, and so does income inequality.

Even with a larger pie, the people with an ever diminishing share have less control over their lives, more stress, and more uncertainty. There is too great a power disparity arising as a result of inequality.

There's a very good SMBC comic that addresses the "greater pie" fallacy. [1] To summarize: the total economic pie growing and individual slices shrinking are not mutually exclusive.

[1] https://www.smbc-comics.com/comic/2012-04-03

The increase in wealth from someone moving from a poor to a rich country is massive, and far more than the marginal benefit to an employer from hiring them rather than a slightly more expensive alternative person.

Wealth to who?

An immigrant will capture a much smaller share of the value they generate, otherwise why use them, than a native born citizen.

This means that while theoretically 'wealth' is increasing it is increasing in such a way that those who are in the position to pay wages keep more of them and those in the position to receive them get much less.

In short then what's the point of an average in a power law distribution which by definition does not have a defined average?

Or to put it even more dumbly would you rather live in a world of 100 units of wealth distributed between the 5 quintiles as [80.0, 16.0, 3.2, 0.64, 0.128] or one of 20 units distributed as [6,5,4,3,2]. For 2/3rds of the people in the world the second would be better.

Extending that analogy to corporate entities, you imply that anyone with competing offers from Google and local Arco AM/PM Gas Station is better off choosing the latter one, even if Google’s offer is more competitive? Because, after all, Google is likely to extract more wealth out of that careet stint than Arco, and implicitly screw the employee over?

Your confusing the locally optimal choice of a single member within a system to apply to a description of a more globally optimal state of the system overall.

That is not what I wrote. Please re-read it.

> An immigrant will capture a much smaller share of the value they generate, otherwise why use them, than a native born citizen.

Why not use them, if they're more qualified?

The only reason why employers can fleece immigrants in US today, is because immigrants are effectively "locked in" - e.g. if you're on H1-B, you can't change employers without going through a bunch of paperwork; and if you get fired, they just kick you out of the country. Which, obviously, means that you can't negotiate from the same position of strength as a native. But remove those, and why do you think an immigrant would demand to be paid any less? We're not stupid.

>But remove those, and why do you think an immigrant would demand to be paid any less? We're not stupid.

Because you're poor. An Indian in India makes 1/20th the wage a US citizen makes in the US. If they get 1/15th you have just received a huge raise and are happy.

You forget that if you live and work in US, your cost of living is also the same as any native. 1/15th would only be attractive to person in India at Indian prices.

Besides, why would someone take 1/15th, if they can have the whole thing? I mean, by a similar logic, you'd expect people in US readily undercut each other at 1/2th, 1/4th etc in a race to the bottom. But we don't.

People in the US have to support a family at US living standards. Indians on the other hand either have their family in India or are used to living in conditions that Americans balk at, multiple people per room, no lawn, one car or less per family.

Listening to the dumps some of my co workers live in I can see why median hourly wages have not increased in the last 40 years.

This is political economy 101. One of Malthus's suggestions for reducing the mortality rate was getting exotic materials to become staples of life so food wouldn't be the limiting factor of population.

Actually, in the proper context, it isn't. In fact, it's pitiful compared to the increase in wealth resulting from focusing on turning the poor country into a rich one. THAT'S the biggest economic story of the last several decades; and to first order, immigration is only relevant to the extent that it facilitates more rapid development of China/India/Rwanda/etc. The US electorate is still more annoyed by predominantly Mexican/Central American illegal immigration than the combination of reverse-mercantilist trade policy, foreign student education and practical training, outsourcing, and tech transfer that the US has deployed to facilitate the development of China, India, and many countries before and after them. The total positive impact of the latter is easily >20x as large as the former, higher-cost policy.

You don't get to discount China/India/etc.'s growth as "inevitable catch-up growth" on one side of the equation, yet fully count it on the other side.

As a consequence, I support reverse-mercantilist trade policy, foreign student education and practical training, outsourcing, and tech transfer, especially for countries like India which both have a lot to gain and are strategically highly aligned with the US (I acknowledge that China is now a more complicated case), to the extent that Americans can continue to bear these things. (Canadians and Australians seem to be fine with continuing these practices indefinitely, while also letting a pretty high number of skilled nonwhite foreigners from poor countries settle permanently.) And I violently oppose the grossly inefficient mass-low-skill-immigration policy that threatens to turn Americans, Germans, and others against the overall project while accomplishing so little.

Someone quoted something on this site a while ago to the effect of "a measure that becomes a goal is no longer a good measure"

That’s known as Goodhart's law.

A world where we printed $78 trillion dollars and gave it out to whomever would also be $78 trillion dollars richer.

That isn't how it works. Inflation is a thing.

No idea why this is getting downvoted, as you're entirely correct (obviously). OP is talking about real economic growth as massive amounts of wealth are created. A change in the money supply would create nominal growth, but no change in the underlying quantity of wealth.

For those confused as to the difference between the two, reread pg's essay on How to Make Wealth. http://www.paulgraham.com/wealth.html

Yeah, but the writer of the article doesn't get that either.

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