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"Technology and globalization radically expanded the pie, but they also shrank the number of people who got the big pieces." All this talk of US income and wea

"Technology and globalization radically expanded the pie, but they also shrank the number of people who got the big pieces." All this talk of US income and wealth inequality... First of all, global inequality is falling. This is indisputable! Secondarily, the pie should be measured in actual consumption, not in income or wealth. Look at what Mark Zuckerberg consumes, not what he earns!

dionidium 10y ago
You and I know that in absolute terms people are better off now than they were 30 years ago. But, that's simply not how regular people view the world. Their evaluations are relative. They will always be relative.
- jrs235 10y ago
  And as the essay mentions - "But human psychology doesn't work in absolute terms. It works in relative ones." - this is how psychology works. As much as all the "logical" and "rational thinking" folks in the world want to ignore and dismiss emotions and politics in decisions and actions, the truly rational thinking and logical decisions and actions understand, accept, and take into account emotions and politics.
pjmorris 10y ago
> Look at what Mark Zuckerberg consumes, not what he earns! I disagree; what one person hoards isn't available for others to consume. Both wealth and consumption are worth examining.
- ulrikmoe 10y ago
  That's not how the economy works. Without savings/investments you cannot produce goods or services. https://en.wikipedia.org/wiki/Golden_Rule_savings_rate https://en.wikipedia.org/wiki/Golden_Rule_savings_rate
  - dctoedt 10y ago
    > Without savings/investments you cannot produce goods or services. Savings \neq investments. It's been said that one reason the U.S. economy hasn't picked up as much as we'd like in the past few years is that gun-shy banks and corporations were sitting cash instead of investing it. In theory the optimal economic policy is one that balances (1) creating incentives for investment against (2) encouraging demand for the products of that investment. The latter isn't a given, by the way: The "if you build it, they will come" notion that demand will always exist --- and, therefore, supply-side incentives for investors are supposedly all that's needed --- rests on the "no problem, we'll just assume we have a can opener" assumption that Homo economicus normally behaves rationally, with a view to optimizing his or her economic position. Those assumptions have been widely and, it seems to me, justly criticized (as the author of the post seems to agree).
    - ulrikmoe 10y ago
      The US savings rate is still historically low and on a downwards trend. The savings rate is definitely lower than the optimal capital/labour ratio, but economists disagree on how much.

dionidium 10y ago

You and I know that in absolute terms people are better off now than they were 30 years ago. But, that's simply not how regular people view the world. Their evaluations are relative. They will always be relative.

jrs235 10y ago
And as the essay mentions - "But human psychology doesn't work in absolute terms. It works in relative ones." - this is how psychology works. As much as all the "logical" and "rational thinking" folks in the world want to ignore and dismiss emotions and politics in decisions and actions, the truly rational thinking and logical decisions and actions understand, accept, and take into account emotions and politics.

pjmorris 10y ago

> Look at what Mark Zuckerberg consumes, not what he earns! I disagree; what one person hoards isn't available for others to consume. Both wealth and consumption are worth examining.

ulrikmoe 10y ago
That's not how the economy works. Without savings/investments you cannot produce goods or services. https://en.wikipedia.org/wiki/Golden_Rule_savings_rate https://en.wikipedia.org/wiki/Golden_Rule_savings_rate
- dctoedt 10y ago
  > Without savings/investments you cannot produce goods or services. Savings \neq investments. It's been said that one reason the U.S. economy hasn't picked up as much as we'd like in the past few years is that gun-shy banks and corporations were sitting cash instead of investing it. In theory the optimal economic policy is one that balances (1) creating incentives for investment against (2) encouraging demand for the products of that investment. The latter isn't a given, by the way: The "if you build it, they will come" notion that demand will always exist --- and, therefore, supply-side incentives for investors are supposedly all that's needed --- rests on the "no problem, we'll just assume we have a can opener" assumption that Homo economicus normally behaves rationally, with a view to optimizing his or her economic position. Those assumptions have been widely and, it seems to me, justly criticized (as the author of the post seems to agree).
  - ulrikmoe 10y ago
    The US savings rate is still historically low and on a downwards trend. The savings rate is definitely lower than the optimal capital/labour ratio, but economists disagree on how much.