12 ms·

Decline in the labor share of income in the U.S.

117 points by whocansay 11y ago

ptaipale 11y ago
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 http://ptaipale.blogspot.fi/2012_08_01_archive.html
- collyw 11y ago
  " 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.
  - tormeh 11y ago
    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.
    - eronhp 11y ago
      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.
      - tormeh 11y ago
        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.
    - adventured 11y ago
      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.
- ThomPete 11y ago
  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.
EGreg 11y ago
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 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 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://magarshak.com/blog/?p=185=1
- crdoconnor 11y ago
  >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.
mattmanser 11y ago
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.
- learnstats2 11y ago
  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.
gasull 11y ago
What about quantitative easing? QE is like making the financial part of the economy grow on steroids.
ThomPete 11y ago
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/destroying.jobs_.chart1x910_0.jpg http://www.technologyreview.com/sites/default/files/images/d... https://plot.ly/~BethS/8/job-growth-by-decade-in-the-united-states/ https://plot.ly/~BethS/8/job-growth-by-decade-in-the-united-... https://hateandanger.files.wordpress.com/2013/10/trends-in-us-gdp-profits-investment-and-employment-1995-2011.jpg https://hateandanger.files.wordpress.com/2013/10/trends-in-u...
PythonicAlpha 11y ago
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.
- ThomPete 11y ago
  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.
  - PythonicAlpha 11y ago
    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.
biehl 11y ago
Vox (Matt Yglesias) has another take on the subject here http://www.vox.com/2015/10/20/9570175/labor-share-housing 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.
- crdoconnor 11y ago
  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.
  - stvswn 11y ago
    Yeah, because Matt Yglesias is leading the conspiracy on behalf of the big banks. I guess you're not familiar with his work.
    - selimthegrim 11y ago
      Yglesias is someone I'm pretty comfortable putting in the "neoliberal shill at first blush" category though, even if he's trolling
- biehl 11y ago
  It seems that The Economist agreeshttps://news.ycombinator.com/item?id=10442929 https://news.ycombinator.com/item?id=10442929
netcan 11y ago
One of the key concepts for thinking like an economist is noticing where and how things are economically equivalent, or literally fungible. 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.
- Paul_S 11y ago
  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.
  - tmorton 11y ago
    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.
tim333 11y ago
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-Week-Posts/Chart-of-the-Week/ArticleID/378/The-Wage-Gap-Between-the-U-S-and-China-Continues-to-Narrow http://www.marquetteassociates.com/Research/Chart-of-the-Wee...
- ThomPete 11y ago
  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.
- dang 11y ago
  Ok, we added the US to the title.
digi_owl 11y ago
http://www.amazon.com/Debunking-Economics-Revised-Expanded-Dethroned/dp/1848139926 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.
deleted 11y ago
[deleted]

117 points by whocansay 11y ago

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 http://ptaipale.blogspot.fi/2012_08_01_archive.html

collyw 11y ago
" 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.
- tormeh 11y ago
  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.
  - eronhp 11y ago
    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.
    - tormeh 11y ago
      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.
  - adventured 11y ago
    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.
ThomPete 11y ago
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.

EGreg 11y ago

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 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 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://magarshak.com/blog/?p=185=1

crdoconnor 11y ago
>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.

mattmanser 11y ago

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.

learnstats2 11y ago
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.

gasull 11y ago

What about quantitative easing? QE is like making the financial part of the economy grow on steroids.

ThomPete 11y ago

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/destroying.jobs_.chart1x910_0.jpg http://www.technologyreview.com/sites/default/files/images/d... https://plot.ly/~BethS/8/job-growth-by-decade-in-the-united-states/ https://plot.ly/~BethS/8/job-growth-by-decade-in-the-united-... https://hateandanger.files.wordpress.com/2013/10/trends-in-us-gdp-profits-investment-and-employment-1995-2011.jpg https://hateandanger.files.wordpress.com/2013/10/trends-in-u...

PythonicAlpha 11y ago

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.

ThomPete 11y ago
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.
- PythonicAlpha 11y ago
  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.

biehl 11y ago

Vox (Matt Yglesias) has another take on the subject here http://www.vox.com/2015/10/20/9570175/labor-share-housing 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.

crdoconnor 11y ago
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.
- stvswn 11y ago
  Yeah, because Matt Yglesias is leading the conspiracy on behalf of the big banks. I guess you're not familiar with his work.
  - selimthegrim 11y ago
    Yglesias is someone I'm pretty comfortable putting in the "neoliberal shill at first blush" category though, even if he's trolling
biehl 11y ago
It seems that The Economist agreeshttps://news.ycombinator.com/item?id=10442929 https://news.ycombinator.com/item?id=10442929

netcan 11y ago

One of the key concepts for thinking like an economist is noticing where and how things are economically equivalent, or literally fungible. 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.

Paul_S 11y ago
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.
- tmorton 11y ago
  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.

tim333 11y ago

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-Week-Posts/Chart-of-the-Week/ArticleID/378/The-Wage-Gap-Between-the-U-S-and-China-Continues-to-Narrow http://www.marquetteassociates.com/Research/Chart-of-the-Wee...

ThomPete 11y ago
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.
dang 11y ago
Ok, we added the US to the title.

digi_owl 11y ago

http://www.amazon.com/Debunking-Economics-Revised-Expanded-Dethroned/dp/1848139926 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.

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