Decline in the labor share of income in the U.S.(vox.com)
vox.com
Decline in the labor share of income in the U.S.
http://www.vox.com/2015/1/8/7511281/labor-share-income
11 comments
The key point is that technology have increasingly replaced not just manual labour but also replaced higher and higher levels of abstracted thinking.
I.e. technology now is gunning for competing with our brains too not just our muscle.
The problem with the discussion is that people often assume that it will only happen if we create robots that are as general purpose as ourselves. However no one uses everything they are to do their jobs. And so a lot of people from radiologist to factory workers will find themselves out of a job with no realistic way to re-educate themselves into areas that require them.
The horses lost to the cars and didn't find new jobs.
I don't know if technology is going to take over all the jobs but it is going to take over enough that it will require all nations to rethink society.
The longer that discussion is brushed aside the harder it's going to be to change.
I.e. technology now is gunning for competing with our brains too not just our muscle.
The problem with the discussion is that people often assume that it will only happen if we create robots that are as general purpose as ourselves. However no one uses everything they are to do their jobs. And so a lot of people from radiologist to factory workers will find themselves out of a job with no realistic way to re-educate themselves into areas that require them.
The horses lost to the cars and didn't find new jobs.
I don't know if technology is going to take over all the jobs but it is going to take over enough that it will require all nations to rethink society.
The longer that discussion is brushed aside the harder it's going to be to change.
"The horses lost to the cars and didn't find new jobs"
That's a good line. I hope you don't mind if I pinch it.
I agree that there is not obvious rule in economics stating that most humans must remain employed. I also agree that without close to full employment (say long term >80% of people that want/need jobs) the basic economic and political paradigms we have no longer work.
I'm kind of agnostic whether or not we are headed there. Technology taking skill out of the equation like in Adam Smith's famous pin example is somewhat similar to driverless cars. Generally technology has affected the demand for labour all throughout history, and it's affected the demand for labour of all kinds. We used to need musicians to listen to music, bars & cinemas employed them. Is that brain power or manual labour? We used to need engineers to do calculations by hand. Demand for engineers stayed high because we just do more engineering.
Also, in my agnosticism, I think there's a bunch of room for middle ground outcomes. Unemployment that stays around 30%, for example. That is also a political paradigm shift.
I don't expect we'll soon run out of demand or that people will not have an effect on our productive capacity. But perhaps the bar for economic productivity will be higher. That's potentially a problem.
That's a good line. I hope you don't mind if I pinch it.
I agree that there is not obvious rule in economics stating that most humans must remain employed. I also agree that without close to full employment (say long term >80% of people that want/need jobs) the basic economic and political paradigms we have no longer work.
I'm kind of agnostic whether or not we are headed there. Technology taking skill out of the equation like in Adam Smith's famous pin example is somewhat similar to driverless cars. Generally technology has affected the demand for labour all throughout history, and it's affected the demand for labour of all kinds. We used to need musicians to listen to music, bars & cinemas employed them. Is that brain power or manual labour? We used to need engineers to do calculations by hand. Demand for engineers stayed high because we just do more engineering.
Also, in my agnosticism, I think there's a bunch of room for middle ground outcomes. Unemployment that stays around 30%, for example. That is also a political paradigm shift.
I don't expect we'll soon run out of demand or that people will not have an effect on our productive capacity. But perhaps the bar for economic productivity will be higher. That's potentially a problem.
By all means please do :)
With regards to jobs see this graph.
https://plot.ly/~BethS/8/job-growth-by-decade-in-the-united-...
Job creation is falling each decade so it's not true as some claim that technology just creates new jobs.
Well it does but globally not domestically. Or in other words. The west has lost jobs both to the east and to automation and not gained enough new ones.
The primary issue right now in my view seems to be that technology is now changing things so fast that it's not possible for people to re-educate themselves. This is one of the major issues whether on is agnostic or not.
But we will see.
With regards to jobs see this graph.
https://plot.ly/~BethS/8/job-growth-by-decade-in-the-united-...
Job creation is falling each decade so it's not true as some claim that technology just creates new jobs.
Well it does but globally not domestically. Or in other words. The west has lost jobs both to the east and to automation and not gained enough new ones.
The primary issue right now in my view seems to be that technology is now changing things so fast that it's not possible for people to re-educate themselves. This is one of the major issues whether on is agnostic or not.
But we will see.
This video discusses horse unemployment and more: https://www.youtube.com/watch?v=7Pq-S557XQU&t=3m32s
Oh wow hah. Nice!
This comment sounds like the short version of 'humans need not apply' by cgp grey.
The link is set to start at 3:22 but its the whole Humans video if you start from the beginning.
I just saw the video another commenter posted it. I guess cgp and me are in agreement then :)
> People with 1990 skills now are not employable today in many/most fields.
There has been a shift in the US from businesses providing training for workers to the expectation that workers will train themselves in advance of seeking employment.
I suspect this is the most untenable modern development in the US going forward. It shifts a significant amount of cost and risk to workers: you both have to pay for your own education (instead of getting paid while training) and take on a substantial risk that the skills you are training in will be relevant to an employer when you complete your training. It creates a large pool of people who have training no one needs (they guessed wrong on which skills a future employer needs in the future) and in too much debt to survive off of the income from unskilled labor. It's unsustainable.
If this doesn't shift back, to employers accepting the cost of training employees and the risk that they may train employees they don't need five years from now, we end up with yet another way for government to subsidize big business: government picks up the tab for training employees (through its educational spending) and for misjudging training needs (through unemployment spending). It's no different than Walmart paying their employees so little they are eligible for SNAP.
There has been a shift in the US from businesses providing training for workers to the expectation that workers will train themselves in advance of seeking employment.
I suspect this is the most untenable modern development in the US going forward. It shifts a significant amount of cost and risk to workers: you both have to pay for your own education (instead of getting paid while training) and take on a substantial risk that the skills you are training in will be relevant to an employer when you complete your training. It creates a large pool of people who have training no one needs (they guessed wrong on which skills a future employer needs in the future) and in too much debt to survive off of the income from unskilled labor. It's unsustainable.
If this doesn't shift back, to employers accepting the cost of training employees and the risk that they may train employees they don't need five years from now, we end up with yet another way for government to subsidize big business: government picks up the tab for training employees (through its educational spending) and for misjudging training needs (through unemployment spending). It's no different than Walmart paying their employees so little they are eligible for SNAP.
Can you really imagine a 18th century France style revolution in the west today? Try! I can't. Why is that? People haven't changed in 200 years yet it's completely unimaginable.
I'd say it's a combination of A: a long period of relative stability and B: in the west, everyone is freakishly wealthy by historical standards and has a lot to lose, thus, you lack a base of desperate people with nothing to lose. (Chatter about "wealth inequality" in the West can sometimes cover over the fact that by historical standards, we have basically cured poverty as much as we can, modulo some fiddling around the edges of incarceration vs. institutionalization vs. homelessness at the fringes. Doesn't mean it's not bad or not a problem, but it does pay to contextualize it historically every so often, to stay grounded.)
On the other hand, it does mean that if there any sort of instability, people will have to rediscover from scratch how to deal with it, a process that sounds relatively painful to me. Here's hoping we never really have to find out.
On the other hand, it does mean that if there any sort of instability, people will have to rediscover from scratch how to deal with it, a process that sounds relatively painful to me. Here's hoping we never really have to find out.
>everyone is freakishly wealthy by historical standards and has a lot to lose
You raise a really good point here, and I think this is one of the most important stabilizing factors in today's society.
You raise a really good point here, and I think this is one of the most important stabilizing factors in today's society.
Not an 18th century French style revolution but similar results I can easily imagine. What you'll end up with is a state which becomes more and more Socialist. This is a prediction Marx made about Capitalism. It will eventually result in many more have-nots than haves and the have-nots will either through violent revolution or political policy enact Socialism.
It is not an outcome we want but it is up to the capital class to ensure this doesn't happen by regulating themselves well enough so everyone feels they are getting a fair piece of the pie.
My point is, there is a balance somewhere between chaotic growth at any cost with its wealth generation and ensuring people can participate fairly and share the results and have equity in the future.
It is not an outcome we want but it is up to the capital class to ensure this doesn't happen by regulating themselves well enough so everyone feels they are getting a fair piece of the pie.
My point is, there is a balance somewhere between chaotic growth at any cost with its wealth generation and ensuring people can participate fairly and share the results and have equity in the future.
I think restricting this to "the west" begs the question. We conventionally define "the west" to be the relatively stable, relatively democratic countries of the US and Western Europe. We exclude various countries simply because they haven't been stable.
But even in "the west", you don't need to go back very far to find revolutions driven (in part) by economic issues. Hitler couldn't have seized power without Germany's rough experiences in the great depression.
But even in "the west", you don't need to go back very far to find revolutions driven (in part) by economic issues. Hitler couldn't have seized power without Germany's rough experiences in the great depression.
The West has invented political/cultural systems that permit revolutions without violence. The transition that is happening in Canada now is a good example, as were the 2008 and 2010 elections in the U.S.
Basically, most people in rich Western countries today have a lot more to lose from violence than they do from policy disagreements. And most citizens essentially believe in the power of the political system, because they can remember popular political uprisings that had tangible impacts: the labor movement, the environmental movement, LGBT rights, etc.
If you look at the most desperate movement in the U.S. today, it has to be Black Lives Matter. Even those organizers reject violence as a means to their ends.
Basically, most people in rich Western countries today have a lot more to lose from violence than they do from policy disagreements. And most citizens essentially believe in the power of the political system, because they can remember popular political uprisings that had tangible impacts: the labor movement, the environmental movement, LGBT rights, etc.
If you look at the most desperate movement in the U.S. today, it has to be Black Lives Matter. Even those organizers reject violence as a means to their ends.
There aren't too many absolute monarchies with starving peasants in the west today.
However, it's easy to imagine domino instability at the edges of the "west". For example, if an agreement hadn't been reached on Greece. Or Catalan secession turning violent. Or something triggered by the millions of Syrian refugees.
However, it's easy to imagine domino instability at the edges of the "west". For example, if an agreement hadn't been reached on Greece. Or Catalan secession turning violent. Or something triggered by the millions of Syrian refugees.
I think that kind of scenario is inevitable if we carry on the way we are.
Luddites were wrong because the rise in efficiency was matched by rise in consumption back than. Today the main problem is how to rise consumption even further. And there seems to be easy answer to that. There's definitely a limit to what ads can do.
I kind of disagree. That is, I suspect this is wrong but I don't think we really know.
The problem with imagining increased consumption is that we tend to imagine frivolous consumption. There are non frivolous things tot consumer too. Health, for example. We have a pretty greedy appetite for health "consumption." If we can afford more of that we will. Elderly care is another thing people struggle to afford enough of. Education…
I don't think consumption capacity is really the issue. I think the ability of the great majority to contribute economically to a sufficient degree that they can have a non-humiliating piece of the pie. Jobs, basically.
The problem with imagining increased consumption is that we tend to imagine frivolous consumption. There are non frivolous things tot consumer too. Health, for example. We have a pretty greedy appetite for health "consumption." If we can afford more of that we will. Elderly care is another thing people struggle to afford enough of. Education…
I don't think consumption capacity is really the issue. I think the ability of the great majority to contribute economically to a sufficient degree that they can have a non-humiliating piece of the pie. Jobs, basically.
True. If we are able to channel more wealth to the poorest they will definitely spend much more on health, education and such. Even more so if it's done on global level: How much more would Africa, India and such consume if given the chance!
But when all that is done we are back to the fundamental problem: Productivity can raise without a limit, while consumption is inherently limited.
But when all that is done we are back to the fundamental problem: Productivity can raise without a limit, while consumption is inherently limited.
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>People with 1990 skills now are not employable today in many/most fields.
Citation or clarification or examples needed. If you started a job in 1990 at 25 years old, you'd only be 50 years old today. I don't think unemployment among 50 year olds is higher today than in 1990. So I guess they got upgraded skill along the way? Which fields are we talking about? Nursing? Law? Architecture? Garbage man? Interior decorator? Computer programmer? Car salesman? Retail worker? Heavy equipment operator?
http://www.bls.gov/web/empsit/cpseea10.htm
Citation or clarification or examples needed. If you started a job in 1990 at 25 years old, you'd only be 50 years old today. I don't think unemployment among 50 year olds is higher today than in 1990. So I guess they got upgraded skill along the way? Which fields are we talking about? Nursing? Law? Architecture? Garbage man? Interior decorator? Computer programmer? Car salesman? Retail worker? Heavy equipment operator?
http://www.bls.gov/web/empsit/cpseea10.htm
> I don't think unemployment among 50 year olds is higher today than in 1990.
Unemployment numbers don't show it, because that only includes people looking for work. The missing 50-year-old workers are on disability and don't factor in to labor statistics. The Social Security Disability dole swelled from 5M in 2000 to 9M in 2015, nearly double. And it's fairly certain that these disability recipients skew older than the median age of the working population.
http://www.ssa.gov/oact/STATS/dibStat.html (it was responding spottily for me, but search for the url and use google's cache if you need)
Unemployment numbers don't show it, because that only includes people looking for work. The missing 50-year-old workers are on disability and don't factor in to labor statistics. The Social Security Disability dole swelled from 5M in 2000 to 9M in 2015, nearly double. And it's fairly certain that these disability recipients skew older than the median age of the working population.
http://www.ssa.gov/oact/STATS/dibStat.html (it was responding spottily for me, but search for the url and use google's cache if you need)
You also have to look at labor participation rate, as discouraged workers who stop looking for a job are not counted in unemployment numbers: http://www.bls.gov/emp/ep_table_303.htm
Note an interesting trend that while the rate drops from 80.2% for 45-54 age to 64.5% for 55-64, it's been trending up since 1992 sharply, while other participation rates have seen a modest decline.
This could suggest that people 55-64 are more employable today, but it could also mean they are poorer on average and have to take a job to survive. My money is on the latter.
Note an interesting trend that while the rate drops from 80.2% for 45-54 age to 64.5% for 55-64, it's been trending up since 1992 sharply, while other participation rates have seen a modest decline.
This could suggest that people 55-64 are more employable today, but it could also mean they are poorer on average and have to take a job to survive. My money is on the latter.
> I don't think unemployment among 50 year olds is higher today than in 1990.
Aren't they generally more employed and at higher wages than younger people?
Aren't they generally more employed and at higher wages than younger people?
Though those workers have been learning modern skills, so they're not at a 1990s worker's skill level.
So I guess once we get time machines, we'll have to worry about immigration from the past?
I've never heard of this idea of trade and technology being "economically equivalent, or literally fungible." I think you might be confusing technology with the means of production. Take a look at the basic production function: Y = zf(K,L)
Where Y = output, z = Total Factor Productivity (technology), K = capital, and L = labor.
We started by trading output for output when the production process was simple. Clothing for meat, lumber for gold, etc.
As we began to organize by country, we started to specialize and create more sophisticated outputs to trade from country to country. Silk for glass, spice for minerals, cars for wheat, etc. Still, we traded mostly commodities and finished goods, but we also began to see countries "trading" labor in the form of immigration and emigration as people flowed from countries with low economic potential to those with higher potential.
Nowadays, the flow of outputs (Y), labor (L), and capital (K), is extremely fungible relative to 100 years ago due to advances in logistics, transportation, finance - in one word, globalization.
But we haven't addressed that last variable - Total Factor Productivity (z). Economists refer to this as the "level of technology," which makes it the economist's catchall for things that are hard to measure, but extremely important when determining an individual, firm, or country's level of output in the long term. It is thought to account for around 60% of the growth within economies, although I wouldn't put much stock in hard estimates - the point is, it bundles together some really important, non-fungible variables.
We are still unable to trade things like education, social and legal norms and customs, and basic infrastructure. To me, this is what we mean when we talk about technology. Modern standards of living, medicine, software, hardware etc. are "high tech" because they could only have been brought about in a society with a sophisticated educational system, favorable social and legal norms, and advanced infrastructure. Technology should be thought of as the system that makes the creation of more advanced goods and services possible, not the goods and services themselves.
In summary, yes commodities, labor, and capital are easily traded, but we are still working on transferring the underlying technology of one country to another. So I have to disagree with the statement that trade is indistinguishable from technology.
Where Y = output, z = Total Factor Productivity (technology), K = capital, and L = labor.
We started by trading output for output when the production process was simple. Clothing for meat, lumber for gold, etc.
As we began to organize by country, we started to specialize and create more sophisticated outputs to trade from country to country. Silk for glass, spice for minerals, cars for wheat, etc. Still, we traded mostly commodities and finished goods, but we also began to see countries "trading" labor in the form of immigration and emigration as people flowed from countries with low economic potential to those with higher potential.
Nowadays, the flow of outputs (Y), labor (L), and capital (K), is extremely fungible relative to 100 years ago due to advances in logistics, transportation, finance - in one word, globalization.
But we haven't addressed that last variable - Total Factor Productivity (z). Economists refer to this as the "level of technology," which makes it the economist's catchall for things that are hard to measure, but extremely important when determining an individual, firm, or country's level of output in the long term. It is thought to account for around 60% of the growth within economies, although I wouldn't put much stock in hard estimates - the point is, it bundles together some really important, non-fungible variables.
We are still unable to trade things like education, social and legal norms and customs, and basic infrastructure. To me, this is what we mean when we talk about technology. Modern standards of living, medicine, software, hardware etc. are "high tech" because they could only have been brought about in a society with a sophisticated educational system, favorable social and legal norms, and advanced infrastructure. Technology should be thought of as the system that makes the creation of more advanced goods and services possible, not the goods and services themselves.
In summary, yes commodities, labor, and capital are easily traded, but we are still working on transferring the underlying technology of one country to another. So I have to disagree with the statement that trade is indistinguishable from technology.
> One of the key concepts for thinking like an economist
One of the key concepts for thinking like an economist is following Marshall's lead and calling yourself an economist rather than someone studying political economy. The moment study of political economy became super-political, the new charlatans dropped the word political from the field.
> Trade (like outsourcing) and technology is economically indistinguishable from technology from the perspective of a single country. The classic example is that if you export potatoes and import cars, this is economically equivalent to finding a way to grow cars in a field. In practice trade and technology have always been closely related. When China could make silk...
David Ricardo can be forgiven for thinking this in the early 19th century, that this is still widely repeated is more of a function of ideological benefit than observation. Ricardo's example for this was ironically Portuguese wine and English textiles - he said both parties benefited from such change. Joan Robinson did a study in the 1970's showing the effects on both countries economies - England industrializing and Portugal concentrating on farming - of course the effect was great for England's economy and terrible for Portugal.
Also, mentioning China is strange in this, since China's boom over the past decade was fueled by controlling capital leaving the country. Also, the US has been fighting against some of its technology going to China, as it keeps arresting (and releasing) Chinese people it has been accusing of "stealing" its technology, like Xiafen Chen last year and Bo Jiang in 2013. The TPP is widely seen (and described) as the US creating a trade bloc against China.
> I think we also need to consider some points Marx was fairly right about, the inevitability of political instability as a result of certain economic realities. Too much inequality can lead to revolution.
Marx (and Engels) said that every economic system reifies itself as a permanent thing, but every economic system is actually a temporary thing. Prior to 10,000 years ago, the entire world was communist, if communism is defined as common ownership of the means of profuction and the absence of classes, surplus, and the state. Then, a new economic system arose - slavery - with the slave states of Sumeria, Babylon, Egypt, Greece, Rome. With these changes in the relations of production came changes in the forces of production with the agricultural revolution.
Between the fourth century and ninth century, the slavery and centralized empire of Rome and its latifundias was replaced by the decentralized feudalism of the Holy Roman Empire. Other political and hegemonic changes happened at this time - paganism was replaced by Christianity, Rome was sacked by the Visigoths, and relations of production changed from master and slave to lord and serf.
In the early sixteenth century, capitalism began to develop in England and Holland, and along with it came things such as Martin Luther's 95 theses, the Copernican revolution, the Glorious revolution, the Age of Enlightenment and the French revolution. Enlightenment, liberal and scientific ideas came to dominate. Lord and serf became capitalist and wage worker. What Marx called the reserve army of labor became permanent, with their slightly coded counterparts in mainstream economics, using phrases such as "non-accelerating inflation rate of unemployment" - in other words, the permanent rate at which government and business should desire unemployment to be. We also see attempts to suppress wages, Steve Jobs secret deal with Eric Schmidt and other Silicon Valley honchos to illegally suppress wages would have been no surprise to Marx.
So we've seen primitive communism, slavery, feudalism and now capitalism. As I said, each system reifies itself as being permanent. Is capitalism permanent, are we at the end of history as Fukuyama said? Marx thought not, he saw in the Paris Commune the dawn of the new type of society.
Lenin's comrades in April 1917, who themselves were already not in the Marxist mainstream, were surprised when he said he planned to make Russia socialist. They had been expecting to support the bourgeois revolution against feudalism, and to then lightly agitate against that new formation, while waiting for the revolution to happen in Germany. One aspect of this was Marx always said the revolution would start at the center of capitalism, not a backwater like Germany.
The Marxian idea is the change from capitalism to post-capitalism, which he called socialism, would start at the most advanced state and area of capitalism, where the means of production were being revolutionized. I mean terms bandied about here like "disruption" are just what Marx was talking about. Marx wasn't anti-capitalist as portrayed, he praised the development of capitalism. He had a "dialectical" approach to capitalism - he said one day it will have outlived its use, just like primitive communism, slavery and feudalism had done.
Not to be millenialist about it, but if Marx was looking for signs of change in economic systems, it would probably be in things like the change from manual work to staring at the office wall, contemplating data models. The continual rise of AI to replacing not only manual work, but intellectual work. The ability of DNA sequencing, CRISPR and other advances in biology which may change what it means to be human. Things like Github and Debian and Linux - the free software movement allowing for raqpid changes in productivity (in a somewhat non-capitalist context).
Also lots of things lurking underneath the surface like an iceberg. In Marx's day, working class school children were not being taught trigonometry and then chemistry in schools. The idea of a suburban/exurban area dotted by strip malls with Wal-Marts, Home Depots, and other national chains would have looked very much like a harbinger of socialism to him - the middle class merchants had been wiped out, now there were just the wage workers and the centralized capitalists.
One of the key concepts for thinking like an economist is following Marshall's lead and calling yourself an economist rather than someone studying political economy. The moment study of political economy became super-political, the new charlatans dropped the word political from the field.
> Trade (like outsourcing) and technology is economically indistinguishable from technology from the perspective of a single country. The classic example is that if you export potatoes and import cars, this is economically equivalent to finding a way to grow cars in a field. In practice trade and technology have always been closely related. When China could make silk...
David Ricardo can be forgiven for thinking this in the early 19th century, that this is still widely repeated is more of a function of ideological benefit than observation. Ricardo's example for this was ironically Portuguese wine and English textiles - he said both parties benefited from such change. Joan Robinson did a study in the 1970's showing the effects on both countries economies - England industrializing and Portugal concentrating on farming - of course the effect was great for England's economy and terrible for Portugal.
Also, mentioning China is strange in this, since China's boom over the past decade was fueled by controlling capital leaving the country. Also, the US has been fighting against some of its technology going to China, as it keeps arresting (and releasing) Chinese people it has been accusing of "stealing" its technology, like Xiafen Chen last year and Bo Jiang in 2013. The TPP is widely seen (and described) as the US creating a trade bloc against China.
> I think we also need to consider some points Marx was fairly right about, the inevitability of political instability as a result of certain economic realities. Too much inequality can lead to revolution.
Marx (and Engels) said that every economic system reifies itself as a permanent thing, but every economic system is actually a temporary thing. Prior to 10,000 years ago, the entire world was communist, if communism is defined as common ownership of the means of profuction and the absence of classes, surplus, and the state. Then, a new economic system arose - slavery - with the slave states of Sumeria, Babylon, Egypt, Greece, Rome. With these changes in the relations of production came changes in the forces of production with the agricultural revolution.
Between the fourth century and ninth century, the slavery and centralized empire of Rome and its latifundias was replaced by the decentralized feudalism of the Holy Roman Empire. Other political and hegemonic changes happened at this time - paganism was replaced by Christianity, Rome was sacked by the Visigoths, and relations of production changed from master and slave to lord and serf.
In the early sixteenth century, capitalism began to develop in England and Holland, and along with it came things such as Martin Luther's 95 theses, the Copernican revolution, the Glorious revolution, the Age of Enlightenment and the French revolution. Enlightenment, liberal and scientific ideas came to dominate. Lord and serf became capitalist and wage worker. What Marx called the reserve army of labor became permanent, with their slightly coded counterparts in mainstream economics, using phrases such as "non-accelerating inflation rate of unemployment" - in other words, the permanent rate at which government and business should desire unemployment to be. We also see attempts to suppress wages, Steve Jobs secret deal with Eric Schmidt and other Silicon Valley honchos to illegally suppress wages would have been no surprise to Marx.
So we've seen primitive communism, slavery, feudalism and now capitalism. As I said, each system reifies itself as being permanent. Is capitalism permanent, are we at the end of history as Fukuyama said? Marx thought not, he saw in the Paris Commune the dawn of the new type of society.
Lenin's comrades in April 1917, who themselves were already not in the Marxist mainstream, were surprised when he said he planned to make Russia socialist. They had been expecting to support the bourgeois revolution against feudalism, and to then lightly agitate against that new formation, while waiting for the revolution to happen in Germany. One aspect of this was Marx always said the revolution would start at the center of capitalism, not a backwater like Germany.
The Marxian idea is the change from capitalism to post-capitalism, which he called socialism, would start at the most advanced state and area of capitalism, where the means of production were being revolutionized. I mean terms bandied about here like "disruption" are just what Marx was talking about. Marx wasn't anti-capitalist as portrayed, he praised the development of capitalism. He had a "dialectical" approach to capitalism - he said one day it will have outlived its use, just like primitive communism, slavery and feudalism had done.
Not to be millenialist about it, but if Marx was looking for signs of change in economic systems, it would probably be in things like the change from manual work to staring at the office wall, contemplating data models. The continual rise of AI to replacing not only manual work, but intellectual work. The ability of DNA sequencing, CRISPR and other advances in biology which may change what it means to be human. Things like Github and Debian and Linux - the free software movement allowing for raqpid changes in productivity (in a somewhat non-capitalist context).
Also lots of things lurking underneath the surface like an iceberg. In Marx's day, working class school children were not being taught trigonometry and then chemistry in schools. The idea of a suburban/exurban area dotted by strip malls with Wal-Marts, Home Depots, and other national chains would have looked very much like a harbinger of socialism to him - the middle class merchants had been wiped out, now there were just the wage workers and the centralized capitalists.
There are more issues here that could be discussed - particularly what is pointed out already in point 5, statistical quirks - but I'll stick to this one in point 6 for now:
"Another possibility is that the decline is more recent than we assume, and the result of slack in the labor market is due in large part to the recession."
I haven't studied US data, but in my country (Finland), which is a small country dependent on trade, the impact of recession is exactly the opposite. Recession means that the labor share of income goes up, not down. Labor share of income has been in historically local highs at a time when life was very very bad (1992-1993): high unemployment, falling income, foreclosures.
The labor share of income has gone down here, as well. But it's not because of more money going to capitalists. Their share has been essentially the same since 1970's (23-25%). In my country, the falling share of labor is almost entirely explained by the rising share of state: the proportion of taxes on production and imports has gone up by about 5 percentage points, from 10 % to 15% of national income. So the share of labor has gone down from ~67 % to ~60 %.
I wrote this blog post three years ago but it's still quite valid: http://ptaipale.blogspot.fi/2012_08_01_archive.html
"Another possibility is that the decline is more recent than we assume, and the result of slack in the labor market is due in large part to the recession."
I haven't studied US data, but in my country (Finland), which is a small country dependent on trade, the impact of recession is exactly the opposite. Recession means that the labor share of income goes up, not down. Labor share of income has been in historically local highs at a time when life was very very bad (1992-1993): high unemployment, falling income, foreclosures.
The labor share of income has gone down here, as well. But it's not because of more money going to capitalists. Their share has been essentially the same since 1970's (23-25%). In my country, the falling share of labor is almost entirely explained by the rising share of state: the proportion of taxes on production and imports has gone up by about 5 percentage points, from 10 % to 15% of national income. So the share of labor has gone down from ~67 % to ~60 %.
I wrote this blog post three years ago but it's still quite valid: http://ptaipale.blogspot.fi/2012_08_01_archive.html
" Recession means that the labor share of income goes up, not down."
I think that is the way a capitalist system is supposed to work. Unfortunately in the UK and the US at least, they have been throwing money at the problem in the form of quantative easing. This has almost certainly kept asset prices high (the UK is well overdue for a hous price crash), and I assume that it has the effects of keeping labor prices lower.
I think that is the way a capitalist system is supposed to work. Unfortunately in the UK and the US at least, they have been throwing money at the problem in the form of quantative easing. This has almost certainly kept asset prices high (the UK is well overdue for a hous price crash), and I assume that it has the effects of keeping labor prices lower.
Nobody has ever explained to me, in a satisfying way, what's wrong with a helicopter drop.
Edit: I mean helicopter drops in the original sense. That is, printing money and the giving it away unconditionally and equally to all flesh-and-blood citizens.
Edit: I mean helicopter drops in the original sense. That is, printing money and the giving it away unconditionally and equally to all flesh-and-blood citizens.
>Nobody has ever explained to me, in a satisfying way, what's wrong with a helicopter drop.
The main effect would be a a transfer of wealth from debtors to the indebted, a hit of inflation and an economic stimulus effect.
The economic multiplier would not be as high as something like SNAP (which is about 2.5-3.5x I think), since the middle classes and rich recipients would just squirrel away what they got. Or use it to pay down debts. It would have a higher economic multiplier than pretty much any money that's been funneled into bailouts though.
Whether all this is "good" depends on your perspective.
Practically speaking, though, any potential helicopter drop is going to be so small it will have virtually no effect. At the same time, it'll be demonized every step of the way by the people who would hate the precedent it would set (i.e. anybody who is owed money).
I think whatever your desired effect is there's probably a better tool to achieve it than a helicopter drop. It's a fairly blunt tool.
The main effect would be a a transfer of wealth from debtors to the indebted, a hit of inflation and an economic stimulus effect.
The economic multiplier would not be as high as something like SNAP (which is about 2.5-3.5x I think), since the middle classes and rich recipients would just squirrel away what they got. Or use it to pay down debts. It would have a higher economic multiplier than pretty much any money that's been funneled into bailouts though.
Whether all this is "good" depends on your perspective.
Practically speaking, though, any potential helicopter drop is going to be so small it will have virtually no effect. At the same time, it'll be demonized every step of the way by the people who would hate the precedent it would set (i.e. anybody who is owed money).
I think whatever your desired effect is there's probably a better tool to achieve it than a helicopter drop. It's a fairly blunt tool.
Why is a helicopter drop more prone to inflation than QE? Presume we're in a liquidity trap as the proponents of helicopter drops and QE do.
Edit: I have misinterpreted what you said. I read your first sentence as explaining what was wrong with a helicopter drop of money, because that is what was asked. However you probably didn't mean that to be a list of bad effects, just effects, to set the stage for your real answer which is the multiplier. Which is indeed the most important thing to consider.
Edit: I have misinterpreted what you said. I read your first sentence as explaining what was wrong with a helicopter drop of money, because that is what was asked. However you probably didn't mean that to be a list of bad effects, just effects, to set the stage for your real answer which is the multiplier. Which is indeed the most important thing to consider.
A helicopter drop will put money into the hands of poor people, causing them to consume. Concretely, a poor person might eat more. This makes food prices (included in CPI) go up, hence inflation.
In contrast, QE might also stimulate investment. Concretely, we might build a factory or a road. This makes industrial machinery prices (not included in CPI) go up, hence no inflation.
Since the goal of stimulus is to reduce real wages and induce workers to stop turning down productive labor, the former is more useful than the latter. Of course, there are countervailing effects - giving workers money directly can substitute for them getting a job. (See my other post: https://news.ycombinator.com/item?id=10438248 )
In contrast, QE might also stimulate investment. Concretely, we might build a factory or a road. This makes industrial machinery prices (not included in CPI) go up, hence no inflation.
Since the goal of stimulus is to reduce real wages and induce workers to stop turning down productive labor, the former is more useful than the latter. Of course, there are countervailing effects - giving workers money directly can substitute for them getting a job. (See my other post: https://news.ycombinator.com/item?id=10438248 )
What you're saying doesn't make sense. Why would anyone invest without expecting more consumption?
The economy cycle doesn't start with investing, it starts at consumers having money and giving them to someone in exchange for a service or product. How could you know what to invest in before there is even demand?
The economy cycle doesn't start with investing, it starts at consumers having money and giving them to someone in exchange for a service or product. How could you know what to invest in before there is even demand?
There is clearly demand present, given that we have not (as an economy) reverted to 100% subsistence farming. In any case, you don't need to expect an increase in consumption to invest - one can simply expect to steal customers from the other guy. Uber's investors didn't expect Uber to create new rides, merely to steal riders from the cartels.
Of course, if you are correct that no one will invest, then all the money from QE will be funneled into consumption. This will have the same effect as the helicopter drop, modulo distribution.
Of course, if you are correct that no one will invest, then all the money from QE will be funneled into consumption. This will have the same effect as the helicopter drop, modulo distribution.
What I mean is that there can't be more investment without more demand. In the Uber example, there won't be more investment either - if you expect Uber to grow on behalf of other companies, these will be divested. In fact, you could expect decrease of investment with Uber, like with any other new technology (disputable in Uber's case, but for the sake of argument), because the whole point of moving to new technology is to decrease investment needed to maintain the same level of consumption (that is, increase productivity).
> all the money from QE will be funneled into consumption
They are, after sitting there idly for a while. The bank CEOs have to pay their mistresses and so on.
And distribution is important too. The whole problem of debt deflation is that you have money sitting idly (or better say idly circulating in an endless vortex of financial machinations), not being spent on goods and services.
> all the money from QE will be funneled into consumption
They are, after sitting there idly for a while. The bank CEOs have to pay their mistresses and so on.
And distribution is important too. The whole problem of debt deflation is that you have money sitting idly (or better say idly circulating in an endless vortex of financial machinations), not being spent on goods and services.
I think you are confusing investment and cost of operation. Investment is building the new technology, cost of operation is the cost of providing consumption. Increasing investment today will indeed increase production in the future - that's the whole point.
*They are, after sitting there idly for a while. The bank CEOs have to pay their mistresses and so on...money sitting idly..."
The production is either consumed, invested, spent on government or exported. P=C+I+G+NX. You seem to believe it can be neither C nor I (well sometimes), so are the wealthy spending all their unconsumed income on government or exports?
*They are, after sitting there idly for a while. The bank CEOs have to pay their mistresses and so on...money sitting idly..."
The production is either consumed, invested, spent on government or exported. P=C+I+G+NX. You seem to believe it can be neither C nor I (well sometimes), so are the wealthy spending all their unconsumed income on government or exports?
> Increasing investment today will indeed increase production in the future - that's the whole point.
So you agree that for the investment to be worth it (and thus made), consumption in the future must increase (or at least appear that it will increase to the investor)? That was my point.
> The production is either consumed, invested, spent on government or exported.
I talked about money, not production. Money can be saved, or in today's world more likely, ran around in circles through the financial system, without ever causing more consumption to happen.
So you agree that for the investment to be worth it (and thus made), consumption in the future must increase (or at least appear that it will increase to the investor)? That was my point.
> The production is either consumed, invested, spent on government or exported.
I talked about money, not production. Money can be saved, or in today's world more likely, ran around in circles through the financial system, without ever causing more consumption to happen.
No, for the investment to be worth it the return needs to exceed the risk free rate.
If your sole claim about money is that there needs to be a functioning monetary system so that the consumer can easily transfer value to the producer, I agree.
If your sole claim about money is that there needs to be a functioning monetary system so that the consumer can easily transfer value to the producer, I agree.
>What you're saying doesn't make sense. Why would anyone invest without expecting more consumption?
Exactly. That bit was dumb. Hence why industrial machinery didn't shoot up in price like the cost of a 2 bedroom semi in San Fran did.
Exactly. That bit was dumb. Hence why industrial machinery didn't shoot up in price like the cost of a 2 bedroom semi in San Fran did.
Industrial machinery didn't crazily shoot up in price because NIMBYs haven't made it illegal to produce more.
Housing prices in SF are entirely a self-inflicted ill - NIMBYs causing scarcity. Houston does it right: http://marginalrevolution.com/marginalrevolution/2015/03/hou...
Housing prices in SF are entirely a self-inflicted ill - NIMBYs causing scarcity. Houston does it right: http://marginalrevolution.com/marginalrevolution/2015/03/hou...
QE seems to have had the effect of keeping asset prices high and not much more.
> The main effect would be a transfer of wealth from debtors to the indebted
"debtors" and "the indebted" are different names for the same group. I think you mean "debtors to creditors".
"debtors" and "the indebted" are different names for the same group. I think you mean "debtors to creditors".
>Or use it to pay down debts.
Paying down debt is stabilizing, though, so it's not wasted.
Paying down debt is stabilizing, though, so it's not wasted.
What is SNAP?
> Nobody has ever explained to me, in a satisfying way, what's wrong with a helicopter drop.
There is nothing to explain, since there is nothing wrong with it. Steve Keen did a simulation of policies against debt deflation, comparing austerity (business as usual), quantitative easing (giving money to banks) and helicopter drop (giving money to consumers).
The result was that helicopter drop worked the best, followed by QE, and austerity came last. This is consistent with recent historical data we have on austerity (Japan and Europe) and QE (USA); I am not sure if someone ever attempted helicopter drop in debt deflation (although a similar thing - debt cancellations - happened in history).
There is nothing to explain, since there is nothing wrong with it. Steve Keen did a simulation of policies against debt deflation, comparing austerity (business as usual), quantitative easing (giving money to banks) and helicopter drop (giving money to consumers).
The result was that helicopter drop worked the best, followed by QE, and austerity came last. This is consistent with recent historical data we have on austerity (Japan and Europe) and QE (USA); I am not sure if someone ever attempted helicopter drop in debt deflation (although a similar thing - debt cancellations - happened in history).
It's basically the place you drop it, everybody agrees that we should drop it on the needy, but somehow we always drop it on the banks and the wealthy.
That is conventional policy, yes, which is why helicopter drops are so exciting: unconditional and equal transfer to flesh-and-blood citizens create much-needed inflation without disproportionately favoring the rich.
If the Fed prints money and buys bonds, then in the future when they need to take that money back out of circulation in order to control inflation, then they just sell the bonds.
If the Fed prints money and gives it to people, getting nothing in return, then the only way to take the money back out is to raise taxes, which will result in deadweight losses.
If the Fed prints money and gives it to people, getting nothing in return, then the only way to take the money back out is to raise taxes, which will result in deadweight losses.
The central bank can't control the price at which the market will buy the bonds, but that's a good point.
That said, has hyperinflation ever occurred without the central bank printing money while inflation is above-target? Private holders of money can flood the market with cash, but only the central bank can sustain that flood for a really long time.
That said, has hyperinflation ever occurred without the central bank printing money while inflation is above-target? Private holders of money can flood the market with cash, but only the central bank can sustain that flood for a really long time.
According to Keynesian theory, recessions are caused by workers refusing to accept work at a lower nominal wage and instead become unemployed. The concern with a direct helicopter drop is that it might enable workers to refuse to work for longer.
As an example of this, consider the semi-"helicopter drop" of money we had during the last recession: the extension of unemployment benefits. It turns out benefit cuts cause workers to accept jobs.
http://c0.nrostatic.com/sites/default/files/w20884.pdf
As an example of this, consider the semi-"helicopter drop" of money we had during the last recession: the extension of unemployment benefits. It turns out benefit cuts cause workers to accept jobs.
http://c0.nrostatic.com/sites/default/files/w20884.pdf
Frankly that "theory" is so out there that it pees on the name of Keynes.
It comes out of a massive abuse of preference curves, a model that itself have some massive assumptions bouncing around (like that if your income increases, you will not switch preferences completely, just keep buying more of one or the other).
As for cutting benefits makes workers accept jobs, no surprise there. Cut benefits and it is accept anything or starve. Basically it is wage-slavery.
It comes out of a massive abuse of preference curves, a model that itself have some massive assumptions bouncing around (like that if your income increases, you will not switch preferences completely, just keep buying more of one or the other).
As for cutting benefits makes workers accept jobs, no surprise there. Cut benefits and it is accept anything or starve. Basically it is wage-slavery.
What, exactly, do you believe Keynesian theory claims? Specifically, how do you believe Keynesian theory explains involuntary unemployment?
(Involuntary unemployment is when workers are employed at a wage K, and other workers are unemployed but have a reservation wage of K.)
Given that you agree with my factual claim (that giving people money directly causes unemployment), what do you disagree with me on? Is it just my mood affiliation that you dislike?
(Involuntary unemployment is when workers are employed at a wage K, and other workers are unemployed but have a reservation wage of K.)
Given that you agree with my factual claim (that giving people money directly causes unemployment), what do you disagree with me on? Is it just my mood affiliation that you dislike?
I think Keynes was firmly in the camp that involuntary unemployment in a depression+ is caused by a cascading demand shortfall due to everyone trying to put their money in safe assets and pay off debt vs consume.
+ As opposed to a central bank engineered recession.
+ As opposed to a central bank engineered recession.
Can you draw a supply/demand curve illustrating a demand shortfall + flexible wages causing involuntary unemployment? I've certainly never seen such a thing.
Classical (not Keynesian) economics does explain how a demand shortfall causes voluntary unemployment. It also explains how helicopter drops + substitution effect can cause voluntary unemployment. Involuntary unemployment is the tricky bit.
Classical (not Keynesian) economics does explain how a demand shortfall causes voluntary unemployment. It also explains how helicopter drops + substitution effect can cause voluntary unemployment. Involuntary unemployment is the tricky bit.
You haven't seen such a thing because wages aren't flexible, wages are sticky. Everyone of course knows that from direct experience. However it drives post war economists completely mad+ so they invent concepts like voluntary unemployment to explain it away.
+ Post-war economists are obsessed with linear equations and closed form solutions that look like the 'laws' the guys in the physics department rely on. However once you take into account that wages (and rents!) are sticky, that means changing a workers wages from $10/hr -> $11/hr is different than $11/hr -> $10/hr. And then you're nice happy linear equations go out the window and you enter the land of Chaos theory.
+ Post-war economists are obsessed with linear equations and closed form solutions that look like the 'laws' the guys in the physics department rely on. However once you take into account that wages (and rents!) are sticky, that means changing a workers wages from $10/hr -> $11/hr is different than $11/hr -> $10/hr. And then you're nice happy linear equations go out the window and you enter the land of Chaos theory.
Wages are sticky? If only I thought of that - then I probably would have said "recessions are caused by workers refusing to accept work at a lower nominal wage and instead become unemployed" in my very first post.
I'm glad we are in complete agreement (apart from mood affiliation).
I'm glad we are in complete agreement (apart from mood affiliation).
What you describe is part of the Keynesian economics. There is a great deal of resources about the criticism of Keynesian economics especially from Austrian School. But i like the rap battle the most :) https://www.youtube.com/watch?v=d0nERTFo-Sk
The problem is that it requires an uptake in the economy to work and it requires that the countries have saved up in the good times to pay for it in the bad times.
Problem is that the economy isn't really picking up and so now the bill is passed on to our children and grandchildren to pick up.
Problem is that the economy isn't really picking up and so now the bill is passed on to our children and grandchildren to pick up.
And this is different to QE in which way?
They aren't they are equally bad IMO unless you hit exactly at the right time and have money saved up from the good times. Which 99.9% of the times isn't the case.
I like to distinguish between true-Keynesianism and political-Keynesianism, because they are very, very not the same thing. True Keynesianism, as you say, requires saving in the good times. Political-Keynesianism is trotted out only when times are bad and it's important to justify government intervention, but most of the people who were saying "Keynes Keynes Keynes" conveniently get quiet when it's time to pay down, until next time the economy is down again.
It has often seemed to me that if you truly believe in Keynesianism, the fact that the economy is still in the crapper and has been for nearly a decade now really shouldn't surprise you, because we've really only used the bits of Keynesianism that happen to be convenient to our ruling class. If you don't do what Keynesianism tells you to do, you shouldn't expect the results it promises.
(Again, I'm not really a big believer in either true- or political-Keynes, but still, one is a serious economic theory and the other is a convenient fiction.)
It has often seemed to me that if you truly believe in Keynesianism, the fact that the economy is still in the crapper and has been for nearly a decade now really shouldn't surprise you, because we've really only used the bits of Keynesianism that happen to be convenient to our ruling class. If you don't do what Keynesianism tells you to do, you shouldn't expect the results it promises.
(Again, I'm not really a big believer in either true- or political-Keynes, but still, one is a serious economic theory and the other is a convenient fiction.)
I was totally with you until this part:
> we've really only used the bits of Keynesianism that happen to be convenient to our ruling class.
where I would remind that it is not just about convenience to ruling class; much of it is about populism (paying out popular social transfers from state coffers, and not collect unpopular taxes) which is rewarded with votes.
> we've really only used the bits of Keynesianism that happen to be convenient to our ruling class.
where I would remind that it is not just about convenience to ruling class; much of it is about populism (paying out popular social transfers from state coffers, and not collect unpopular taxes) which is rewarded with votes.
I agree. My point is that neither keynesianism or austerity are actual solutions they both have a lot of unknown consequence because the context they are being used in is always changing.
You're debasing the currency that you're 'printing' to use in the helicopter drop. That means you're stealing purchasing power from anyone that uses eg dollars, to redistribute it to whomever is on the receiving end of that helicopter drop (which is almost guaranteed to not be everyone you just stole the purchasing power from).
Ever see Canadians complain about the value of their loonie in threads online? I see it constantly, they complain because they've lost purchasing power. What happened? The USD soared when the Fed stopped debasing it so aggressively with QE, and the Canadian economy went into recession because commodities are priced in dollars (leading to a double whammy).
The US effectively did helicopter drop trillions of dollars. The Fed's balance sheet presently represents a housing, bank, government and stock market bailout.
The bottom 50% don't own much in the way of assets however, so when you debase their purchasing power and send the value of the dollar plunging (post 2002 or so), their standard of living falls significantly. The rich could mostly care less, within reason, because their assets can often be shifted to better returns based on what's happening at the moment. Average worker incomes however cannot be shifted, they simply get eroded.
This is fundamentally why the median US worker has seen almost zero inflation-adjusted income increase in 40 years, post Nixon's choice to debase the USD. No coincidence the cost of everything has soared (including commodities), perfectly timed from that fateful decision.
It's also no coincidence that every nation's GDP simultaneously skyrocketed - priced in dollars - when the Fed began debasing the USD around 2002/03. In vague terms that represents the vast loss of purchasing power that the dollar experienced, to the benefit of pretty much everyone else. It's also why, when the dollar turned back the other way after QE stopped, emerging economies like Brazil crashed so hard and fast (as the USD pulls capital out of Brazil like a gravity well), and it's why China is bleeding such large sums of capital right now (as occurred on a smaller scale across Asia the last time the dollar went on a big bull run in the 1990s, leading to the Asian economic crisis of 1997).
If you're the Fed and you run actual 3% to 4% persistent inflation (while lying and pretending the CPI is accurate at say 2%), and worker wages climb by 1% to 2% per year - then over 20 years the average worker gets destroyed.
In pretty much every country a helicopter drop has been tried, it has led to inflation in relative proportion to the size of the drop. Inflation harms the poorest the most (see: Venezuela, Argentina, Zimbabwe, Russia, Brazil). The US is a bit of a special case in that regard, because it can export some of that inflation to the world via the global reserve currency, which helps blunt the amount of inflation that immediately hits the domestic economy. That inflation often finds its way back however, which we may see shortly with China liquidating its treasuries.
Ever see Canadians complain about the value of their loonie in threads online? I see it constantly, they complain because they've lost purchasing power. What happened? The USD soared when the Fed stopped debasing it so aggressively with QE, and the Canadian economy went into recession because commodities are priced in dollars (leading to a double whammy).
The US effectively did helicopter drop trillions of dollars. The Fed's balance sheet presently represents a housing, bank, government and stock market bailout.
The bottom 50% don't own much in the way of assets however, so when you debase their purchasing power and send the value of the dollar plunging (post 2002 or so), their standard of living falls significantly. The rich could mostly care less, within reason, because their assets can often be shifted to better returns based on what's happening at the moment. Average worker incomes however cannot be shifted, they simply get eroded.
This is fundamentally why the median US worker has seen almost zero inflation-adjusted income increase in 40 years, post Nixon's choice to debase the USD. No coincidence the cost of everything has soared (including commodities), perfectly timed from that fateful decision.
It's also no coincidence that every nation's GDP simultaneously skyrocketed - priced in dollars - when the Fed began debasing the USD around 2002/03. In vague terms that represents the vast loss of purchasing power that the dollar experienced, to the benefit of pretty much everyone else. It's also why, when the dollar turned back the other way after QE stopped, emerging economies like Brazil crashed so hard and fast (as the USD pulls capital out of Brazil like a gravity well), and it's why China is bleeding such large sums of capital right now (as occurred on a smaller scale across Asia the last time the dollar went on a big bull run in the 1990s, leading to the Asian economic crisis of 1997).
If you're the Fed and you run actual 3% to 4% persistent inflation (while lying and pretending the CPI is accurate at say 2%), and worker wages climb by 1% to 2% per year - then over 20 years the average worker gets destroyed.
In pretty much every country a helicopter drop has been tried, it has led to inflation in relative proportion to the size of the drop. Inflation harms the poorest the most (see: Venezuela, Argentina, Zimbabwe, Russia, Brazil). The US is a bit of a special case in that regard, because it can export some of that inflation to the world via the global reserve currency, which helps blunt the amount of inflation that immediately hits the domestic economy. That inflation often finds its way back however, which we may see shortly with China liquidating its treasuries.
First, you're criticising fiscal stimulus in general, not helicopter drops in the original sense. Second, creating inflation is very beneficial when current inflation is below target. That's the point. Third, inflation harms holders of money, not those that have no money. It thus incentivizes spending and investment, which is why we have above-zero inflationary targets. Yes, hyperinflation is bad - which is why helicopter drops have to be used in moderation. But then again, that's true of almost anything in politics and life in general, so I don't see why that's relevant.
>Second, creating inflation is very beneficial when current inflation is below target.
That's not a blanket truth. Inflation is good if you don't have savings. It's bad if you do.
That's not a blanket truth. Inflation is good if you don't have savings. It's bad if you do.
You mean aside from the rioting and violence that would break out as people scrambled to get some money?
Finland (and Denmark, Sweden, Norway) this isn't as big an issue yet because we redistribute wealth quite heavily. But it will be more and more because no matter whether you believe in austerity or heavily investing via ex quantitative easing technology outperform the effect of them all.
Love it! This article is the best I've seen so far on a topic I've been writing about for years, ever since Obama said this:
http://m.youtube.com/watch?v=yIBhg1v4bMo
All those politicians promising the middle class jobs to come back ... they are selling you a bill of goods. Automation and outsourcing has caused wages to fall. David Harvey argues this started in the 70s but was masked by the consumer credit boom and the internet boom:
http://m.youtube.com/watch?v=qOP2V_np2c0
WE WILL NEED expanded safety nets, preferably in the form of a universal basic income, so laid off people can re educate themselves. This money can come from taxing the gains that corporations make from automation, not enougu to disincentivize R&D but enough to redistribute some of that value to offset the DEMAND SHOCKS to local human labor. Without this we are heading for trouble. We do not have an elastic system right now that responds to increasing automation!
"He who does not work does not eat" - we need to decouple these in our economic system.
And contrary to what anarcho capitalists believe, it will enable more efficient allocation of resources: http://magarshak.com/blog/?p=185=1
http://m.youtube.com/watch?v=yIBhg1v4bMo
All those politicians promising the middle class jobs to come back ... they are selling you a bill of goods. Automation and outsourcing has caused wages to fall. David Harvey argues this started in the 70s but was masked by the consumer credit boom and the internet boom:
http://m.youtube.com/watch?v=qOP2V_np2c0
WE WILL NEED expanded safety nets, preferably in the form of a universal basic income, so laid off people can re educate themselves. This money can come from taxing the gains that corporations make from automation, not enougu to disincentivize R&D but enough to redistribute some of that value to offset the DEMAND SHOCKS to local human labor. Without this we are heading for trouble. We do not have an elastic system right now that responds to increasing automation!
"He who does not work does not eat" - we need to decouple these in our economic system.
And contrary to what anarcho capitalists believe, it will enable more efficient allocation of resources: http://magarshak.com/blog/?p=185=1
>Automation and outsourcing has caused wages to fall
Outsourcing, austerity and union busting have caused vastly more damage to wages than automation ever has or ever will.
Automation is simply given most of the credit for it because it's a fantastic scapegoat. That's the real reason it appears at the the top of lists like these.
It lets American oligarchs and the politicians and elite economists who follow in their wake redirect blame for outsourcing, austerity and union busting and cast their opponents as luddites who are "against progress".
I think basic income is performing a similar, although slightly different function. Almost every person who advocates for it realizes that it's a political non-starter. This is, of course, glossed over every time that it is brought up.
The great thing about it being a political non-starter is that, as an oligarch you can advocate for it maintaining your progressive and 'forward thinking' credentials and your notional opposition to income/wealth inequality while safe in the knowledge that you will never have to actually suffer its effects (higher inflation & a less pliant workforce).
You can continue to enjoy the great benefits income an wealth inequality has to offer you and still remain "one of the good guys" in the public eye.
Outsourcing, austerity and union busting have caused vastly more damage to wages than automation ever has or ever will.
Automation is simply given most of the credit for it because it's a fantastic scapegoat. That's the real reason it appears at the the top of lists like these.
It lets American oligarchs and the politicians and elite economists who follow in their wake redirect blame for outsourcing, austerity and union busting and cast their opponents as luddites who are "against progress".
I think basic income is performing a similar, although slightly different function. Almost every person who advocates for it realizes that it's a political non-starter. This is, of course, glossed over every time that it is brought up.
The great thing about it being a political non-starter is that, as an oligarch you can advocate for it maintaining your progressive and 'forward thinking' credentials and your notional opposition to income/wealth inequality while safe in the knowledge that you will never have to actually suffer its effects (higher inflation & a less pliant workforce).
You can continue to enjoy the great benefits income an wealth inequality has to offer you and still remain "one of the good guys" in the public eye.
What austerity are you talking about? There was no austerity in the US. The US government has spent more money every year throughout the financial crisis.
Also I assume by "outsourcing" you actually meant "offshoring." But this was covered in the article -- it's part of globalization.
Also I assume by "outsourcing" you actually meant "offshoring." But this was covered in the article -- it's part of globalization.
> What austerity are you talking about? There was no austerity in the US.
http://krugman.blogs.nytimes.com/2013/02/11/austere-indeed/
http://krugman.blogs.nytimes.com/2013/02/11/more-about-us-au...
http://krugman.blogs.nytimes.com/2013/04/27/american-austeri...
http://krugman.blogs.nytimes.com/2013/12/12/unprecedented-au...
http://krugman.blogs.nytimes.com/2013/02/11/austere-indeed/
http://krugman.blogs.nytimes.com/2013/02/11/more-about-us-au...
http://krugman.blogs.nytimes.com/2013/04/27/american-austeri...
http://krugman.blogs.nytimes.com/2013/12/12/unprecedented-au...
>What austerity are you talking about?
SNAP cuts were one example of a deliberately inflicted austerian reform. The overall cost was actually pretty low, but the ripple effect is magnified.
With less SNAP, low income families are far more reliant on their jobs for sustenance, which turns them into more pliant workers and who accept lower wages/worse hours.
>The US government has spent more money every year throughout the financial crisis.
Yes, well, funneling ever more money into too big to fail banks and bloated military contractors while cutting food stamps is still austerity as far as 99% of the nation is concerned.
SNAP cuts were one example of a deliberately inflicted austerian reform. The overall cost was actually pretty low, but the ripple effect is magnified.
With less SNAP, low income families are far more reliant on their jobs for sustenance, which turns them into more pliant workers and who accept lower wages/worse hours.
>The US government has spent more money every year throughout the financial crisis.
Yes, well, funneling ever more money into too big to fail banks and bloated military contractors while cutting food stamps is still austerity as far as 99% of the nation is concerned.
The SNAP budget has doubled during Obama's presidency. It hasn't been cut.
Here's a chart showing its extreme increase:
http://i.imgur.com/tGgtpmL.jpg
And as a share of GDP:
http://i.imgur.com/4JbxWiT.png
The primary problem in the SNAP program, was the flood of people participating. The per capita sum didn't quite keep up with the large influx of people wanting to be on the program. However, that has been partially offset by increases at the State level as well.
The US has never spent more per capita on food programs overall, between the local + state + national level, than it does today.
There has hardly been a drop of austerity in anything in the US.
Here's a chart showing its extreme increase:
http://i.imgur.com/tGgtpmL.jpg
And as a share of GDP:
http://i.imgur.com/4JbxWiT.png
The primary problem in the SNAP program, was the flood of people participating. The per capita sum didn't quite keep up with the large influx of people wanting to be on the program. However, that has been partially offset by increases at the State level as well.
The US has never spent more per capita on food programs overall, between the local + state + national level, than it does today.
There has hardly been a drop of austerity in anything in the US.
"The per capita sum didn't quite keep up with the large influx of people wanting to be on the program."
Which is just a euphemistic way of saying that SNAP benefits have been cut.
It may not look like austerity from your oblique perspective, but then again, you're definitely not claiming food stamps.
Which is just a euphemistic way of saying that SNAP benefits have been cut.
It may not look like austerity from your oblique perspective, but then again, you're definitely not claiming food stamps.
There definitely was austerity from the federal government. There was an across the board 10% cut to all spending.
And even if you don't consider that austerity, several states severely trimmed their budgets for public assistance, despite it being a time when it was needed more than before.
And even if you don't consider that austerity, several states severely trimmed their budgets for public assistance, despite it being a time when it was needed more than before.
Outsourcing and globalization has caused wages to increase and inequality to decrease. Immigration has similar effects.
http://www.maxroser.com/economic-world-history-in-one-chart/
Oops, ruined the narrative.
http://www.maxroser.com/economic-world-history-in-one-chart/
Oops, ruined the narrative.
Your graph is not even measuring globalization or outsourcing or immigration.
Let alone demonstrating any causal relationship.
A lot happened between 1820 and 2000 to change the shape of those graphs - the fall of the British empire, labor movements (both national and international) & two world wars as well as industrialization and the rise of American hegemony.
Let alone demonstrating any causal relationship.
A lot happened between 1820 and 2000 to change the shape of those graphs - the fall of the British empire, labor movements (both national and international) & two world wars as well as industrialization and the rise of American hegemony.
No, it's measuring wages and inequality.
Are you claiming that global wages would have increased even further without globalization? It would be fun to see some sort of argument in that direction.
To observe the result of immigration, you basically just need to compute immigrant wages - wages of whoever is left back at home. Those wage gaps are so huge that they dwarf anything which happens domestically.
Are you claiming that global wages would have increased even further without globalization? It would be fun to see some sort of argument in that direction.
To observe the result of immigration, you basically just need to compute immigrant wages - wages of whoever is left back at home. Those wage gaps are so huge that they dwarf anything which happens domestically.
Global wages have increased, US wages have fallen in mean reversion t to the global average.
Immigration makes workers participate in paying for your society's taxes and paying for its social expenditures. Outsourcing is a vote against your own standard of living. But it helps more people than it hurts, if you ignore national interests!
Immigration makes workers participate in paying for your society's taxes and paying for its social expenditures. Outsourcing is a vote against your own standard of living. But it helps more people than it hurts, if you ignore national interests!
US wages have remained flat only because employers have increased non-wage benefits rather than wages. Worker compensation has done nothing but go up.
https://research.stlouisfed.org/fred2/series/ECICOM
https://research.stlouisfed.org/fred2/series/RCPHBS
In short, everyone has become richer.
Also, outsourcing increases your own standard of living. Foreigners work while locals consume. What next, hiring a maid reduces my standard of living?
https://research.stlouisfed.org/fred2/series/ECICOM
https://research.stlouisfed.org/fred2/series/RCPHBS
In short, everyone has become richer.
Also, outsourcing increases your own standard of living. Foreigners work while locals consume. What next, hiring a maid reduces my standard of living?
Buckminster Fuller also argued we crossed the line in the 70's:
>In technology's "invisible" world, inventors continually increase the quantity and quality of performed work per each volume or pound of material, erg of energy, and unit of worker and "overhead" time invested in each given increment of attained functional performance. This complex process we call progressive ephemeralization. In 1970, the sum total of increases in overall technological know-how and their comprehensive integration took humanity across the epochal but invisible threshold into a state of technically realizable and economically feasible universal success for all humanity
-Grunch of Giants
Simply put, we've got too many cooks in the kitchen trying to work while our kitchenware can do nearly everything for us already. The reason we consider unemployment a problem is because our economy is not based on practicality but hollow morality -- i.e. "the devil finds work for idle hands to do" so we MUST keep everyone working.
UBI or some sort of "ephemeralization price adjustment system" is necessary fundamentally if we want to keep automation going. Otherwise the unemployed workers will not have the purchasing power to buy the goods produced by automation and so the machine owner will have invested in this automation and gain nothing. People must be reimbursed for the work done by the machine on their behalf or else the machine works for nothing.
>In technology's "invisible" world, inventors continually increase the quantity and quality of performed work per each volume or pound of material, erg of energy, and unit of worker and "overhead" time invested in each given increment of attained functional performance. This complex process we call progressive ephemeralization. In 1970, the sum total of increases in overall technological know-how and their comprehensive integration took humanity across the epochal but invisible threshold into a state of technically realizable and economically feasible universal success for all humanity
-Grunch of Giants
Simply put, we've got too many cooks in the kitchen trying to work while our kitchenware can do nearly everything for us already. The reason we consider unemployment a problem is because our economy is not based on practicality but hollow morality -- i.e. "the devil finds work for idle hands to do" so we MUST keep everyone working.
UBI or some sort of "ephemeralization price adjustment system" is necessary fundamentally if we want to keep automation going. Otherwise the unemployed workers will not have the purchasing power to buy the goods produced by automation and so the machine owner will have invested in this automation and gain nothing. People must be reimbursed for the work done by the machine on their behalf or else the machine works for nothing.
Unfortunately I cannot see any kind of political support for any of that in the current political climate.
The trend is going on for decades now. The rise of the finance sector is IMHO the main reason.
In the finance sector, multitudes more money is flowing today, than in the real economy with products and services. Big money is going, where the most interest is been made ... but the interest must come from somewhere. To think, that it just appears somehow and everybody is getting richer, is just wishful thinking. Finally, some day, somebody will have to work for it or somebody will loose something (e.g. land that is sold to investors, that use it to generate even more money).
So, more and more interest is made by investments, money lending or even speculations. Who are the losers? The working people, that just have not enough money to invest and use their working power or their brains to get the money for living.
Globalization is helping this trend. Money can just go where it is cheapest, instead fighting fights with worker organizations. In many countries, people are so desperate, that they sell their work for a prize, they merely can survive on.
Trend is going on. Money seeks better places to invest, more land to grab, more patents, more, more, more -- and for those that have not got money already, the possibilities to earn money or to get better of are vanishing, since more and more land is owned, more "intellectual property", more lobbyist, which say, how the laws shall be that shape our future. Also more trade treaties, like TPP, TTIP and the others, which create better conditions to invest and to make profits for corporations ... which are owned by big money.
In the finance sector, multitudes more money is flowing today, than in the real economy with products and services. Big money is going, where the most interest is been made ... but the interest must come from somewhere. To think, that it just appears somehow and everybody is getting richer, is just wishful thinking. Finally, some day, somebody will have to work for it or somebody will loose something (e.g. land that is sold to investors, that use it to generate even more money).
So, more and more interest is made by investments, money lending or even speculations. Who are the losers? The working people, that just have not enough money to invest and use their working power or their brains to get the money for living.
Globalization is helping this trend. Money can just go where it is cheapest, instead fighting fights with worker organizations. In many countries, people are so desperate, that they sell their work for a prize, they merely can survive on.
Trend is going on. Money seeks better places to invest, more land to grab, more patents, more, more, more -- and for those that have not got money already, the possibilities to earn money or to get better of are vanishing, since more and more land is owned, more "intellectual property", more lobbyist, which say, how the laws shall be that shape our future. Also more trade treaties, like TPP, TTIP and the others, which create better conditions to invest and to make profits for corporations ... which are owned by big money.
>the interest must come from somewhere
This is one of the primary problems of the financial system according to Prof. Franz Hormann. In his banned TED Talk he explains that when money is created and loaned out by the central banks, the money to pay back the interest which is owed is never created, only the principal is created.
So basically we are not playing a zero-sum game. The money owed in the form of interest physically can never be paid because it does not exist, and this unpayable debt is what is shoved down to the bottom rungs of society and is what creates the "rat race". We are told we must work to pay off a debt that literally can never be paid off by default.
https://www.youtube.com/watch?v=FYWVbdSX7B4
This is one of the primary problems of the financial system according to Prof. Franz Hormann. In his banned TED Talk he explains that when money is created and loaned out by the central banks, the money to pay back the interest which is owed is never created, only the principal is created.
So basically we are not playing a zero-sum game. The money owed in the form of interest physically can never be paid because it does not exist, and this unpayable debt is what is shoved down to the bottom rungs of society and is what creates the "rat race". We are told we must work to pay off a debt that literally can never be paid off by default.
https://www.youtube.com/watch?v=FYWVbdSX7B4
The problem IMHO is, that even the finance experts do not understand our finance system completely and partly it is more like a believe system instead of real science.
>The study of money, above all other fields in economics, is the one in which complexity is used to disguise truth or to evade truth, not to reveal it.
-John Kenneth Galbraith, Money: Whence it came, where it went
-John Kenneth Galbraith, Money: Whence it came, where it went
But you have to ask yourself why the finance sector have been on the rise and the answer to that inevitably become technology which powers 4 things.
Automation Digitalization Globalization Capital intensive companies instead of labour intensive ones.
All these things allow for scalability and therefore support a "highlander principle" where very few players can control most of the wealth.
Automation Digitalization Globalization Capital intensive companies instead of labour intensive ones.
All these things allow for scalability and therefore support a "highlander principle" where very few players can control most of the wealth.
>But you have to ask yourself why the finance sector have been on the rise and the answer to that inevitably become technology
It's not technology at all. Technology doesn't confer the monopoly powers which have led financial giants to be so dominant. Technology can be copied, reproduced and replicated.
The reason is much more mundane. The financial sector has been given dumptrucks full of cash and special privileges in the form of valuable guarantees. They're an adjunct of the government in all but name.
It's not technology at all. Technology doesn't confer the monopoly powers which have led financial giants to be so dominant. Technology can be copied, reproduced and replicated.
The reason is much more mundane. The financial sector has been given dumptrucks full of cash and special privileges in the form of valuable guarantees. They're an adjunct of the government in all but name.
This trend happens everywhere around the world. Even in social democratic countries like the Scandinavian countries this is happening and is only slowed down by the strong redistribution of wealth.
So yes regardless of how tight or lax the regulation is same trend is seen everywhere and the only thing they have in common is the use of technology.
Ignoring that is simply lying to ourselves.
So yes regardless of how tight or lax the regulation is same trend is seen everywhere and the only thing they have in common is the use of technology.
Ignoring that is simply lying to ourselves.
Of course, everything is interconnected. But I wanted to point out, which financial, social, business and political trend is following and in the same time behind many developments.
That technology drives changes and also drives capital accumulation increase is something we see for more than 100 years. But in the time between the first and second world war (and short after) we also saw a limiting trend that limited capital power. But since the Reagan / Thatcher areas and somehow now accelerated threw the fall of the so called communist block, dominance of capital over labor power and also over social achievements (look in the sweat-shop countries and look in western countries, that drop social standards to be more "competitive") is rising globally in a rate never seen before.
Never did we have that many possibilities to speculate or to invest, in things that are more and more artificial. One of the reasons of the finance disaster of 2008 where artificial "financial products" that where derived of derivations of real things (housing loans) -- so the investors could not know, what they where investing in. But the possibilities to speculate are growing and growing. Now I read here, that there are people speculating on lawsuits ...
There are so many ways to earn money -- without ever taking up a tool or move a muscle. Just by letting the the computers do the job. But in the end, somebody will have to farm the crops that are used to bake the bread you buy from the speculated money -- or somebody will loose the land, where you build your bungalow on.
It just seems that "capital" has taken over everything: Morals, social standards, individual believes, even religion.
That technology drives changes and also drives capital accumulation increase is something we see for more than 100 years. But in the time between the first and second world war (and short after) we also saw a limiting trend that limited capital power. But since the Reagan / Thatcher areas and somehow now accelerated threw the fall of the so called communist block, dominance of capital over labor power and also over social achievements (look in the sweat-shop countries and look in western countries, that drop social standards to be more "competitive") is rising globally in a rate never seen before.
Never did we have that many possibilities to speculate or to invest, in things that are more and more artificial. One of the reasons of the finance disaster of 2008 where artificial "financial products" that where derived of derivations of real things (housing loans) -- so the investors could not know, what they where investing in. But the possibilities to speculate are growing and growing. Now I read here, that there are people speculating on lawsuits ...
There are so many ways to earn money -- without ever taking up a tool or move a muscle. Just by letting the the computers do the job. But in the end, somebody will have to farm the crops that are used to bake the bread you buy from the speculated money -- or somebody will loose the land, where you build your bungalow on.
It just seems that "capital" has taken over everything: Morals, social standards, individual believes, even religion.
Globalization because of technology before first world war was actually increasing and was only stopped by the two wars.
So what you saw was globalization briefly held back and technology innovation going into the war. When that stopped technology started to be used for civilian innovation again and globalization started increasing again now with the help of the computer and later internet.
The villain isn't capital or capitalism they are just pawns in the larger game where technology is the primary factor to look for.
As I mentioned somewhere else. Technology is seen as an externality in economic theory. It's the dark horse that everyone is talking about the wrong way IMO.
So what you saw was globalization briefly held back and technology innovation going into the war. When that stopped technology started to be used for civilian innovation again and globalization started increasing again now with the help of the computer and later internet.
The villain isn't capital or capitalism they are just pawns in the larger game where technology is the primary factor to look for.
As I mentioned somewhere else. Technology is seen as an externality in economic theory. It's the dark horse that everyone is talking about the wrong way IMO.
> Globalization because of technology before first world war was actually increasing and was only stopped by the two wars.
I have a slightly different view. The US had some very good presidents. Franklin D. Roosevelt was one of them. He did some serious reforms in the US and countered some of the capitalistic outgrowths. As much I understood, he really did fight for a more human society.
In my view, that was one of the main brakes against capital aggregation. An other of course where the two world wars. These factors where important for the rapid growth of social systems and wealth in many western nations.
The reversal came later with presidents like Reagan in the US and Thatcher in the UK.
---
In my opinion, yes, technology can bring capital aggregation and thus become a problem for democracy itself -- but good and brave statesmen can counter this trend. I see the few decades after the 2nd WW, which brought wealth to many people (not only the few), as example that technology needs not to be a money accumulating force.
Human decisions are also important -- but where to take brave politicians, when there are none? The problem is, that we are all already corrupted by money and easy living (and brainwashed by the tv).
I have a slightly different view. The US had some very good presidents. Franklin D. Roosevelt was one of them. He did some serious reforms in the US and countered some of the capitalistic outgrowths. As much I understood, he really did fight for a more human society.
In my view, that was one of the main brakes against capital aggregation. An other of course where the two world wars. These factors where important for the rapid growth of social systems and wealth in many western nations.
The reversal came later with presidents like Reagan in the US and Thatcher in the UK.
---
In my opinion, yes, technology can bring capital aggregation and thus become a problem for democracy itself -- but good and brave statesmen can counter this trend. I see the few decades after the 2nd WW, which brought wealth to many people (not only the few), as example that technology needs not to be a money accumulating force.
Human decisions are also important -- but where to take brave politicians, when there are none? The problem is, that we are all already corrupted by money and easy living (and brainwashed by the tv).
The point is that globalization happened outside the US too so regardless of any one president this was made possible by technology not politics.
> make profits for corporations ... which are owned by big money.
I agree with your general sentiment, but I'm not sure you're right on this point... Increasingly, the largest shareholders are becoming mutual funds, in which the largest shareholders are pension funds. So essentially, the corporations are becoming more and more owned (although not controlled by) the public.
I agree with your general sentiment, but I'm not sure you're right on this point... Increasingly, the largest shareholders are becoming mutual funds, in which the largest shareholders are pension funds. So essentially, the corporations are becoming more and more owned (although not controlled by) the public.
The global trend is, that the wealth (in money, shareholder-value, ...) of the world is mostly owned by <<10% of the people.
Of course, when you put together all the money of the middle class and also the better of lower class, you get a huge stack of money ... but this part of the worlds wealth is distributed much more than the money of the 1% richest persons.
I am not sure, how the pension funds fit into this ... but ask yourself, who controls all the money. In most cases, the money of smaller owners is controlled by the money of the big owners.
Of course, it is absolutely conforming with the system, that the small owners also become shareholder threw own investments or funds. But the system is always that way, that money is inherently not democratic, but those with the (singular) hugest stack of money controls the rest. Also those with the most money can draw the biggest benefits from it -- and finally, the money will concentrate more and more in few hands.
Might be, that corporations are owned to a large part by the public ... as long as the most benefits go to the wealthiest people (normal people seldom have funds so huge, that they and their children's children don't need to work to have a good live ... billionaires have) and are controlled by the wealthiest people, the extra money from public funds are just a welcome benefit for the system.
Of course, when you put together all the money of the middle class and also the better of lower class, you get a huge stack of money ... but this part of the worlds wealth is distributed much more than the money of the 1% richest persons.
I am not sure, how the pension funds fit into this ... but ask yourself, who controls all the money. In most cases, the money of smaller owners is controlled by the money of the big owners.
Of course, it is absolutely conforming with the system, that the small owners also become shareholder threw own investments or funds. But the system is always that way, that money is inherently not democratic, but those with the (singular) hugest stack of money controls the rest. Also those with the most money can draw the biggest benefits from it -- and finally, the money will concentrate more and more in few hands.
Might be, that corporations are owned to a large part by the public ... as long as the most benefits go to the wealthiest people (normal people seldom have funds so huge, that they and their children's children don't need to work to have a good live ... billionaires have) and are controlled by the wealthiest people, the extra money from public funds are just a welcome benefit for the system.
Vox (Matt Yglesias) has another take on the subject here
http://www.vox.com/2015/10/20/9570175/labor-share-housing
However, the focus on zoning laws is a bit weird - taxing "location value" properly seems more obvious.
http://www.vox.com/2015/10/20/9570175/labor-share-housing
However, the focus on zoning laws is a bit weird - taxing "location value" properly seems more obvious.
It seems that The Economist agreeshttps://news.ycombinator.com/item?id=10442929
Sounds like scapegoating again. Don't look at the magician behind the financial magic curtain wielding QE and deregulating lending. Look at the busybodies in your neighborhood. It was all them.
Yeah, because Matt Yglesias is leading the conspiracy on behalf of the big banks.
I guess you're not familiar with his work.
I guess you're not familiar with his work.
Yglesias is someone I'm pretty comfortable putting in the "neoliberal shill at first blush" category though, even if he's trolling
Outsourcing really just is the last step before automation.
The major trend to look for is always cost of production where labour being the number one cost.
In order for products to keep getting cheaper the cost has to come down. This trend doesn't stop just because we outsource it to China or Brazil or India and so even they become too expensive.
Unless economist start factoring in technology as one of the key economic factors rather than treating it as they do now – an externality – we will still argue about whether too much government or too little government is going to save us all.
And the politicians wont do anything because they don't see it projected in the forecasts the economist give them.
In the meantime robots are going to slowly but surely put most of us out of a job in almost all the industries we know of right now.
Or put another way – it's the technology stupid.
These three graphs paint a picture that says a lot.
http://www.technologyreview.com/sites/default/files/images/d...
https://plot.ly/~BethS/8/job-growth-by-decade-in-the-united-...
https://hateandanger.files.wordpress.com/2013/10/trends-in-u...
In order for products to keep getting cheaper the cost has to come down. This trend doesn't stop just because we outsource it to China or Brazil or India and so even they become too expensive.
Unless economist start factoring in technology as one of the key economic factors rather than treating it as they do now – an externality – we will still argue about whether too much government or too little government is going to save us all.
And the politicians wont do anything because they don't see it projected in the forecasts the economist give them.
In the meantime robots are going to slowly but surely put most of us out of a job in almost all the industries we know of right now.
Or put another way – it's the technology stupid.
These three graphs paint a picture that says a lot.
http://www.technologyreview.com/sites/default/files/images/d...
https://plot.ly/~BethS/8/job-growth-by-decade-in-the-united-...
https://hateandanger.files.wordpress.com/2013/10/trends-in-u...
I mildly object to the title which would be better saying US in it. For the other 95.6% of us non US persons things have often been different. Here's a graph showing US wages largely static from 2000 to 2011 while China's have gone up something like 5 fold.
http://www.marquetteassociates.com/Research/Chart-of-the-Wee...
http://www.marquetteassociates.com/Research/Chart-of-the-Wee...
Yeah but please keep in mind where they came from income wise.
Don't think for a second that the chinese will be spared when also they are too expensive.
Between 98-04 the US lost 4 million jobs t the chinese in that same period the chinese lost 18 million to the robots.
Outsourcing is just one step before automation.
Don't think for a second that the chinese will be spared when also they are too expensive.
Between 98-04 the US lost 4 million jobs t the chinese in that same period the chinese lost 18 million to the robots.
Outsourcing is just one step before automation.
Ok, we added the US to the title.
What about quantitative easing? QE is like making the financial part of the economy grow on steroids.
[deleted]
http://www.amazon.com/Debunking-Economics-Revised-Expanded-D...
Just going to leave this here. Its a real helpful read for any kind of economics debate.
Just going to leave this here. Its a real helpful read for any kind of economics debate.
I appreciate the sentiment, but that graph is awful. On a scale of 0-115 they are showing just 20 of it, wildly exaggerating the scale of the drop.
You never see financial/commercial graphs with a zeroed y-axis; why should graphs criticising finance/commerce be subject to this condition?
The graph correctly illustrates what they are trying to show, with the correct numbers that you have correctly identified.
The graph correctly illustrates what they are trying to show, with the correct numbers that you have correctly identified.
Trade (like outsourcing) and technology is economically indistinguishable from technology from the perspective of a single country. The classic example is that if you export potatoes and import cars, this is economically equivalent to finding a way to grow cars in a field.
In practice trade and technology have always been closely related. When China could make silk and Italy could make glass, trade was very obviously a substitute for the technology.
So basically, it makes a lot of sense to treat advancements in trade and technologies similarly in our thinking. Luddite ideas and economic isolationist ideas are in this sense different flavors of the same reaction by those made redundant.
Personally, I don't buy "robots wil take all jobs" wholesale. There's a lot of guesses in there we don't have a rational way of making. We need to remember the many incarnations of Ned Ludd though time, including eminent figures like Ghandi. I think they've all been wrong regarding the big picture. While this time might indeed be different, we need to give some respect to the fact that this is an idea we have a long history with, and we've been wrong about it in most cases.
That said, I think the pace of change is a new part of the mix. The work in a 1850 factory and an 1875 factory was not different to the same extent as 1990-2015. People with 1990 skills now are not employable today in many/most fields. If that condenses further as I think it will, many people will fail to stay employable from 18-65, which means more unemployment.
I think we also need to consider some points Marx was fairly right about, the inevitability of political instability as a result of certain economic realities. Too much inequality can lead to revolution.