5 ms·

I've just started the book this guy wrote. It's really good so far and is very readable. It's not like the epic and unreadable Picketty. Note that he is saying

by sien 11y ago

I've just started the book this guy wrote. It's really good so far and is very readable. It's not like the epic and unreadable Picketty. Note that he is saying that the growth were getting will be the same as levels from 1820 to 1870, just not the same as it was from 1870 to 1970. The book is worth reading because he has loads of data, not just Internet comment opinions about how things are going. Even if he is wrong and productivity shoots up again he's shown fairly strongly that between 1970 and 2016 growth has slowed. The consequences are pretty serious for the welfare state. Either benefits cannot continue to grow or taxation must increase.

iandanforth 11y ago
Perhaps you can answer a question I would ask him. My quality of life is hugely improved by things for which I pay nothing, e.g. the information freely available online. Do his calculations take into account things which don't register as standard economic activity? I would guess that if you looked at the time it takes someone to learn a new skill you'd have a metric showing an even faster improvement than the total productivity gains of the baby boom generation.
- sien 11y ago
  Yes. He talks about some remarkable things about GDP and how the economic numbers don't capture improvements early on. For instance cars were not looked at in terms of inflation in the US until 1935. Total Factor Productivity is looked at extensively.
Retric 11y ago
Per capita GDP has been going up far faster than entitlement spending per capita. The top have been getting most economic gains and fewer taxes which is the core problem. We could talk about long term demographics, but GDP growth is loosely tied with workforce size. PS: A lot of systemic corruption is also going on. Almost half of the lifetime gains from a 401K ends up as management and other fees, that was clearly designed to make someone money, but not working class Americans.
- sien 11y ago
  Hauser's law, that states that federal tax revenues since World War II have always been approximately equal to 19.5% of GDP, would suggest that tax levels are similar as a percent of per capita GDP. https://en.wikipedia.org/wiki/Hauser%27s_law https://en.wikipedia.org/wiki/Hauser%27s_law
  - Retric 11y ago
    U.S. gov spending is 20,000$ per person which takes vastly more than 19% GDP. http://www.usgovernmentspending.com/per_capita http://www.usgovernmentspending.com/per_capita Local, State, and Federal = ~32 to 42% GDP over last 30 years. http://www.usgovernmentspending.com/spending_brief.php?brief=recent http://www.usgovernmentspending.com/spending_brief.php?brief.... Defense for example is all over the map, 7% under Reagan down to 3.45% with Clintion then bumped under Bush to amost 6% and then back down under Obama. PS: US tax code is designed around talking points so people can support all sorts of things. But at the end of the day Total government spending is what's important not what you call it.
    - zaroth 11y ago
      Thanks for editing to point out that is Local+State+Federal. sien's point and "Hauser's law" is about Federal revenue and specifically how Federal tax revenue doesn't seem to respond to policy changes in the marginal Federal income tax rates as you might expect. They are both good metrics to consider at different times, for example sometimes you ignore certain classes of taxes and spending (like local/property taxes which are largely for K-12 education) when you want to focus on welfare spending, which is 95%+ Federal.
      - Retric 11y ago
        https://research.stlouisfed.org/fred2/series/FYONGDA188S https://research.stlouisfed.org/fred2/series/FYONGDA188S Even then federal outlays go from 10 to 25% post WW2. There is little support for a law. People love to pretend marginal rates are the hole story while ignoring tax breaks, social security, gas taxes, etc. it's a political tug of war and positions hate to make things clear cut. Ex: hand outs in the form of very targeted tax breaks are rarely considered spending even as they subsidize industries.
deleted 11y ago
[deleted]
zaroth 11y ago
Check out historical Federal tax receipts as a percent of GDP [1]. It looks like median is around 18% of GDP and it's been that way pretty much since the 50s. For recent history, Bush years ranged 15.6% - 20%, Obama years it started at 14.6% but is estimated to be coming back to around 18% by this year. In the last 16 years, we saw both the highest collections as a percentage of GDP (20% in 2000), and the lowest since 1950 at 14.6% from 2009-2010. Also from a 2.3% surplus in 2000, to incredible deficits from 2009 - 2012. Looking at the total amount collected, combining the policy shifts (the % of GDP collected) and economic growth (the actual GDP) -- total receipts in 2009 was $2.1 trillion, but 2016 is projected to be $3.1 trillion -- almost a 50% increase! So what this tells me is policy and growth together can have a tremendous impact even in a relatively short time window, and taxation has also increased already very significantly as of late. Of course, even with a cool extra Trillion dollars coming in, we still manage to spend it all and more. (What the heck are we spending an extra trillion dollars on anyway?!) The only way benefits can continue to grow without taxation increasing is if we can get more value for the same dollars. That's why I think the "solution" if there can be one, must come in the form of a radical reduction in cost somewhere. For example, total spending (not just government) on healthcare is about 18% of GDP now. When we talk about welfare, healthcare is a huge component of overall welfare spending, and if you can decrease not just Medicare/Medicaid but overall healthcare cost (better results for less dollars) you provide a lot of value to everyone. I think more effective than trying to figure out how to tax at 20%+ of GDP (and to sien's point about Hauser's law, is probably not even possible without a fundamentally different mode of taxation like VAT), we need to figure out how to achieve massive productivity gains in healthcare. An easy place to start is always to blame someone else... Well, the rest of the world is certainly reaping huge savings off the largess of American healthcare spending. And to some extent I'd say that's a very good thing, new life-saving medicines is one of the best ways that American prosperity can positively impact the rest of the world. Probably it's not sustainable at current levels (as assessed by American %GDP healthcare spending vs. other developed nation averages). And some savings could be gleaned from figuring out better ways to cost-share with the rest of the world better, but the gains from that alone wouldn't be nearly big enough. We need to find much more cost effective ways to research, develop, and practice medicine. So then you turn to how can we achieve savings through medical technology... But it seems like medical technology over the last decades just drives increasing costs (is there good data on this?). Certainly spending overall has increased quite consistently, but I assume much of that is increased utilization as much as increased per-patient cost. The big question in my mind is will we see a "4th revolution" specifically in the case of medicine which could drive costs down 50-90% from current levels. Perhaps this is "slaying the dragon" [2] thinking and, in the context of the article is one of those "50+ years out" unpredictable events. In the shorter-term, maybe we could start to see more robotics/automation in the long-term/elderly care segments, that type of thing... Or as our ability to sequence and customize medicine based on genetics continues to develop, I hear that could also serve as the foundation for large-scale increases in cost efficiency. Some argue there is a structural problem, like evergreen patents, that prevent technology from ever bending the cost curve, and that's probably true to some extent, but I feel like that's still just a peripheral issue which is easier to attack but not the root of solving the problem. Perhaps the fundamental problem is the significant negative reinforcement as better medicine extends lives of retirees driving up both 'lifetime medical costs' per capita as well as 'years of received welfare benefits' per capita -- doing "better" just drives up costs even more! [1] - http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=200 http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Doc... [2] - http://www.nickbostrom.com/fable/dragon.html http://www.nickbostrom.com/fable/dragon.html P.S. http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1361028/ http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1361028/ The Lifetime Distribution of Health Care Costs - Principal Findings Per capita lifetime expenditure is $316,600, a third higher for females ($361,200) than males ($268,700). Two-fifths of this difference owes to women's longer life expectancy. Nearly one-third of lifetime expenditures is incurred during middle age, and nearly half during the senior years. For survivors to age 85, more than one-third of their lifetime expenditures will accrue in their remaining years. Conclusions Given the essential demographic phenomenon of our time, the rapid aging of the population, our findings lend increased urgency to understanding and addressing the interaction between aging and health care spending.
epicureanideal 11y ago
For the benefit of those who haven't tried to read Piketty, I highly encourage you to do so. I don't agree with all his proposed causes or solutions, but the data is very interesting. And I didn't find him unreadable at all, in fact highly enjoyable, if you're the kind of person who likes to read serious non-fiction.
- sien 11y ago
  Yeah. It's worth a go. Kudos to anyone who can get through it. I read a fair bit of non-fiction but found that book terrible to read. It's not his fault. It's an academic book written in French that just happened to take off. It's also clearly an important book. There's data around that it is very often unread. http://www.wsj.com/articles/the-summers-most-unread-book-is-1404417569 http://www.wsj.com/articles/the-summers-most-unread-book-is-...
tostitos1979 11y ago
Curious what this slow-growth world does to housing prices. Our governments seem to be fueling epic housing bubbles by having low interest rates. I've heard two arguments: buy now or never be able to afford (since increasing rates will affect monthly payments), and the crash is just around the corner .. as soon as rates rise. Which is it? As a joke ... I wonder if we have zero innovation if all the scientists, PhDs and many other smart people spend all their time trying to deal with property prices and less on coming up with actual invention. But seriously ... I hate my life. If I buy now, I'll be paying a mortgage till the day I die. Any misfortune will destroy us. Taxes keep increasing, job stability keeps decreasing. Wonder if I am the only one who feels this way.
- AnimalMuppet 11y ago
  Houses are a bit of a weird market. There's supply and demand, but the market isn't driven by the purchase price of the house. It's driven by the monthly payment (because most people buying houses are getting mortgages, not paying cash). So when interest rates rise, house prices decrease, and the monthly payments to buy the same house stay almost exactly the same.

by sien 11y ago

iandanforth 11y ago

Perhaps you can answer a question I would ask him. My quality of life is hugely improved by things for which I pay nothing, e.g. the information freely available online. Do his calculations take into account things which don't register as standard economic activity? I would guess that if you looked at the time it takes someone to learn a new skill you'd have a metric showing an even faster improvement than the total productivity gains of the baby boom generation.

sien 11y ago
Yes. He talks about some remarkable things about GDP and how the economic numbers don't capture improvements early on. For instance cars were not looked at in terms of inflation in the US until 1935. Total Factor Productivity is looked at extensively.

Retric 11y ago

Per capita GDP has been going up far faster than entitlement spending per capita. The top have been getting most economic gains and fewer taxes which is the core problem. We could talk about long term demographics, but GDP growth is loosely tied with workforce size. PS: A lot of systemic corruption is also going on. Almost half of the lifetime gains from a 401K ends up as management and other fees, that was clearly designed to make someone money, but not working class Americans.

sien 11y ago
Hauser's law, that states that federal tax revenues since World War II have always been approximately equal to 19.5% of GDP, would suggest that tax levels are similar as a percent of per capita GDP. https://en.wikipedia.org/wiki/Hauser%27s_law https://en.wikipedia.org/wiki/Hauser%27s_law
- Retric 11y ago
  U.S. gov spending is 20,000$ per person which takes vastly more than 19% GDP. http://www.usgovernmentspending.com/per_capita http://www.usgovernmentspending.com/per_capita Local, State, and Federal = ~32 to 42% GDP over last 30 years. http://www.usgovernmentspending.com/spending_brief.php?brief=recent http://www.usgovernmentspending.com/spending_brief.php?brief.... Defense for example is all over the map, 7% under Reagan down to 3.45% with Clintion then bumped under Bush to amost 6% and then back down under Obama. PS: US tax code is designed around talking points so people can support all sorts of things. But at the end of the day Total government spending is what's important not what you call it.
  - zaroth 11y ago
    Thanks for editing to point out that is Local+State+Federal. sien's point and "Hauser's law" is about Federal revenue and specifically how Federal tax revenue doesn't seem to respond to policy changes in the marginal Federal income tax rates as you might expect. They are both good metrics to consider at different times, for example sometimes you ignore certain classes of taxes and spending (like local/property taxes which are largely for K-12 education) when you want to focus on welfare spending, which is 95%+ Federal.
    - Retric 11y ago
      https://research.stlouisfed.org/fred2/series/FYONGDA188S https://research.stlouisfed.org/fred2/series/FYONGDA188S Even then federal outlays go from 10 to 25% post WW2. There is little support for a law. People love to pretend marginal rates are the hole story while ignoring tax breaks, social security, gas taxes, etc. it's a political tug of war and positions hate to make things clear cut. Ex: hand outs in the form of very targeted tax breaks are rarely considered spending even as they subsidize industries.

deleted 11y ago

[deleted]

zaroth 11y ago

Check out historical Federal tax receipts as a percent of GDP [1]. It looks like median is around 18% of GDP and it's been that way pretty much since the 50s. For recent history, Bush years ranged 15.6% - 20%, Obama years it started at 14.6% but is estimated to be coming back to around 18% by this year. In the last 16 years, we saw both the highest collections as a percentage of GDP (20% in 2000), and the lowest since 1950 at 14.6% from 2009-2010. Also from a 2.3% surplus in 2000, to incredible deficits from 2009 - 2012. Looking at the total amount collected, combining the policy shifts (the % of GDP collected) and economic growth (the actual GDP) -- total receipts in 2009 was $2.1 trillion, but 2016 is projected to be $3.1 trillion -- almost a 50% increase! So what this tells me is policy and growth together can have a tremendous impact even in a relatively short time window, and taxation has also increased already very significantly as of late. Of course, even with a cool extra Trillion dollars coming in, we still manage to spend it all and more. (What the heck are we spending an extra trillion dollars on anyway?!) The only way benefits can continue to grow without taxation increasing is if we can get more value for the same dollars. That's why I think the "solution" if there can be one, must come in the form of a radical reduction in cost somewhere. For example, total spending (not just government) on healthcare is about 18% of GDP now. When we talk about welfare, healthcare is a huge component of overall welfare spending, and if you can decrease not just Medicare/Medicaid but overall healthcare cost (better results for less dollars) you provide a lot of value to everyone. I think more effective than trying to figure out how to tax at 20%+ of GDP (and to sien's point about Hauser's law, is probably not even possible without a fundamentally different mode of taxation like VAT), we need to figure out how to achieve massive productivity gains in healthcare. An easy place to start is always to blame someone else... Well, the rest of the world is certainly reaping huge savings off the largess of American healthcare spending. And to some extent I'd say that's a very good thing, new life-saving medicines is one of the best ways that American prosperity can positively impact the rest of the world. Probably it's not sustainable at current levels (as assessed by American %GDP healthcare spending vs. other developed nation averages). And some savings could be gleaned from figuring out better ways to cost-share with the rest of the world better, but the gains from that alone wouldn't be nearly big enough. We need to find much more cost effective ways to research, develop, and practice medicine. So then you turn to how can we achieve savings through medical technology... But it seems like medical technology over the last decades just drives increasing costs (is there good data on this?). Certainly spending overall has increased quite consistently, but I assume much of that is increased utilization as much as increased per-patient cost. The big question in my mind is will we see a "4th revolution" specifically in the case of medicine which could drive costs down 50-90% from current levels. Perhaps this is "slaying the dragon" [2] thinking and, in the context of the article is one of those "50+ years out" unpredictable events. In the shorter-term, maybe we could start to see more robotics/automation in the long-term/elderly care segments, that type of thing... Or as our ability to sequence and customize medicine based on genetics continues to develop, I hear that could also serve as the foundation for large-scale increases in cost efficiency. Some argue there is a structural problem, like evergreen patents, that prevent technology from ever bending the cost curve, and that's probably true to some extent, but I feel like that's still just a peripheral issue which is easier to attack but not the root of solving the problem. Perhaps the fundamental problem is the significant negative reinforcement as better medicine extends lives of retirees driving up both 'lifetime medical costs' per capita as well as 'years of received welfare benefits' per capita -- doing "better" just drives up costs even more! [1] - http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=200 http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Doc... [2] - http://www.nickbostrom.com/fable/dragon.html http://www.nickbostrom.com/fable/dragon.html P.S. http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1361028/ http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1361028/ The Lifetime Distribution of Health Care Costs - Principal Findings Per capita lifetime expenditure is $316,600, a third higher for females ($361,200) than males ($268,700). Two-fifths of this difference owes to women's longer life expectancy. Nearly one-third of lifetime expenditures is incurred during middle age, and nearly half during the senior years. For survivors to age 85, more than one-third of their lifetime expenditures will accrue in their remaining years. Conclusions Given the essential demographic phenomenon of our time, the rapid aging of the population, our findings lend increased urgency to understanding and addressing the interaction between aging and health care spending.

epicureanideal 11y ago

For the benefit of those who haven't tried to read Piketty, I highly encourage you to do so. I don't agree with all his proposed causes or solutions, but the data is very interesting. And I didn't find him unreadable at all, in fact highly enjoyable, if you're the kind of person who likes to read serious non-fiction.

sien 11y ago
Yeah. It's worth a go. Kudos to anyone who can get through it. I read a fair bit of non-fiction but found that book terrible to read. It's not his fault. It's an academic book written in French that just happened to take off. It's also clearly an important book. There's data around that it is very often unread. http://www.wsj.com/articles/the-summers-most-unread-book-is-1404417569 http://www.wsj.com/articles/the-summers-most-unread-book-is-...

tostitos1979 11y ago

Curious what this slow-growth world does to housing prices. Our governments seem to be fueling epic housing bubbles by having low interest rates. I've heard two arguments: buy now or never be able to afford (since increasing rates will affect monthly payments), and the crash is just around the corner .. as soon as rates rise. Which is it? As a joke ... I wonder if we have zero innovation if all the scientists, PhDs and many other smart people spend all their time trying to deal with property prices and less on coming up with actual invention. But seriously ... I hate my life. If I buy now, I'll be paying a mortgage till the day I die. Any misfortune will destroy us. Taxes keep increasing, job stability keeps decreasing. Wonder if I am the only one who feels this way.

AnimalMuppet 11y ago
Houses are a bit of a weird market. There's supply and demand, but the market isn't driven by the purchase price of the house. It's driven by the monthly payment (because most people buying houses are getting mortgages, not paying cash). So when interest rates rise, house prices decrease, and the monthly payments to buy the same house stay almost exactly the same.