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Why is there no talk about the dramatic increase in the supply of workers over the last 40 years? Globalization has brought millions out of poverty and those pe

by pg_bot 9y ago

Why is there no talk about the dramatic increase in the supply of workers over the last 40 years? Globalization has brought millions out of poverty and those people are now competing with Americans when they wouldn't before. It makes sense from an economic standpoint that the price of labor would not rise when the supply is increased and is likely the cause of income inequality in the US.

gottam 9y ago
pretty much this. its why there was a lot of h1b visa abuse. top 0.01% doesnt want to pay a lot for tech workers but the demand is high, so increase the supply of tech workers.
- deleted 9y ago
  [deleted]
DanielBMarkham 9y ago
And in response to the overload of cheap labor, the central banks have been printing currency -- which means that people who own lots of equity end up with more money than they had before. (more money with the same assets means suddenly your assets are worth much more money) Also "hoarding" implies intent and capability. From all I can see, what's happening is the natural consequences of lifting billions of people out of poverty.
- AlexandrB 9y ago
  > From all I can see, what's happening is the natural consequences of lifting billions of people out of poverty. Ah yes, billionaire CEOs and investors have lifted millions out of poverty and so the market has rewarded them with steadily increasing incomes. But wait! I thought the market only cared about profits!? Why would it reward them for lifting millions out of poverty?? Is it possible that the modern American political system has been bent to the exclusive benefit of the rich at the expense of everyone else? Nah.
  - closeparen 9y ago
    >Why would it reward them for lifting millions out of poverty? Because a worker and consumer with high productivity and high standard of living is more valuable to everyone involved (creates more value, buys more stuff) than a subsistence farmer? [0] Really the only people totally losing out here are environmentalists, as the newly minted middle class overwhelmingly buys cars and air conditioning. [0] https://en.wikipedia.org/wiki/Human_capital https://en.wikipedia.org/wiki/Human_capital
AlexandrB 9y ago
> It makes sense from an economic standpoint that the price of labor would not rise when the supply is increased and is likely the cause of income inequality in the US. So why are CEO salaries still going up? Is there not increased competition for C-level positions in companies from globalization? If not, why not?
- eikenberry 9y ago
  One explanation would be because of the cheaper labor and favorable legal frameworks the corporation can grow much larger today. Pushing the pay of the top level positions to rise even higher. You could look at C-level positions 50 years ago as a mid-level manager today in terms of managed organization size and economic impact.
  - AlexandrB 9y ago
    > One explanation would be because of the cheaper labor and favorable legal frameworks the corporation can grow much larger today. But that means there are fewer C-level positions/capita today. So: * supply of C-level candidates has gone up (more MBA graduates, larger supply of candidates from overseas) * demand for C-level candidates has gone down (fewer, larger corporations, so fewer C-level jobs overall) And yet C-level compensation is going up. Doesn't this contradict all the supply/demand theories I keep hearing about lower/middle class employees?
    - mrep 9y ago
      In the big 5 that I work for, MBA's become product managers and make less than programmers (per years in industry). They then have to compete for more than a decade (with programmers going into management), for a shot at even VP level. Guess what, there are some VP's that have 5 more layers of VP, Senior VP's... before C suite. You want to incentive people to work hard at their jobs to get promoted to the next level so you need to constantly pay them more. When you have 10 layers in your company and people at the bottom are making 6 figures (for software engineers, easily the case), the top level employees are going to make a lot of money.
- 9y ago
steadicat 9y ago
Another factor I don't see talked about is the increase in women's participation in the workforce. When wages were higher it was common to only have one breadwinner in the family. Today women are more likely to get a job (or two), which is bound to depress wages. The perverse effect of lower wages is that families are forced to take on more jobs than they did before, which depresses wages further. Not sure if there is causation between women's participation and wage stagnation, but logically it seems possible that this would cause a downward spiral. The more wages suffer, the more jobs/hours/years people are forced to seek to work, the lower the wages.
Camillo 9y ago
Wealth concentration was the goal, globalization was the means. The rich saw a great arbitrage opportunity in the fact that the price of labor (and its legal rights) in the developing world was much lower than in the first world. In the late 90s, there was a big political struggle over globalization. The pro-globalists (the economic establishment and the Clinton administration) argued that it would (A) grow the economy (based on comparative advantage), (B) enrich the developing world, and (C) push them towards liberal democracy, as a consequence of having a richer middle class. The anti-globalists (mainly left-wing opposition) argued that it would (D) destroy the working class in the first world, (E) shift the balance of power enormously in the favor of corporations, (F) destroy the developing world too. The pro-globalization side won the fight completely: the WTO was established, China was brought into the global trade system, etc. Twenty years on, it is clear that both sides were partially right. The pro-global side was right about A and B, and wrong about C. The anti-global side was right about D and E, and wrong about F. Strangely, the anti-global side disappeared entirely from the public discussion; in fact, that entire period of history seems to have been memory-holed with incredible rapidity. Even as D (the destruction of the working class in the developed world) was brought into the 2016 presidential campaign as one of the main issues (by Sanders and, surprisingly, by Trump), nobody seemed to recall the anti-globalization protests of the 90s. None of the activists from back then came out of the woodwork to say "we were right!"; no journalists went to look for them. This should give pause to those who put trust in the media, even (especially?) the self-proclaimed progressive ones, like Vox.
- shadowtree 9y ago
  Fox News, Breitbart et all are massively anti-globalists. Breitbart marks Globalists in their article headlines with literal globes. Also a pure coincidence that all of those are Jewish of course. Trump ran on abolishing NAFTA and TTIP. How is this not a mainstream position now?
- rubicon33 9y ago
  Fascinating points you make, thank you for posting this. Can you elaborate on what you mean when you say "This should give pause to those who put trust in the media, even (especially?) the self-proclaimed progressive ones, like Vox" Why does the media's lack of memory, and lack of pursuit of the anti-globalists, mean we should not have trust that what they report now is accurate? (Genuine question not trying to make a point with my question).
closeparen 9y ago
Because those workers also buy things and contribute to demand?
zaptheimpaler 9y ago
Because the rich are getting richer, and hoarded money is useless to the rest of society. Regardless of why they get richer, the economy exists to serve society. Large amounts of money lying in investments hoping to outpace inflation is not useful to society - there are practical limits on how much money can be invested usefully at all, determined by how many capital intensive tasks businesses take on as a whole. Perhaps in older times when there were railways to build, factories and assembly lines to setup, power grids and communication networks to build, there was more room for investment in the sense of spending money now to gain rewards later. Now that businesses have little trouble raising capital, we may be getting closer to the point where new technology/ideas are scarcer than capital. In that climate, money may be more useful to society in the hands of government or regular people than the beneficiaries of investments like entrepreneurs. Concretely, when $1B is better used to build housing or improve healthcare, than invested into 10 "Uber for X" startups, it makes sense to tax more and let the government use the money for just that.
- WalterBright 9y ago
  > hoarded money is useless to the rest of society. There is no hoarded money. It's all invested. Where do you think Gates' money is, for example?
  - zaptheimpaler 9y ago
    A large part of Gates' money goes to preventing common disease, providing education etc. Buying mosquito nets was the latest one I saw. These aren't investments and they aren't going to generate a monetary return for Gates. Under traditional economic dogma, no one should ever do this. Its not an investment, its donation. Money set out purely for generating return can be hoarded when theres no good use for it. Money lying in an investment fund or an investors bank account is useless while not invested and can continue to be useless when invested in a company that fails or does nothing to help society.
    - WalterBright 9y ago
      > These aren't investments and they aren't going to generate a monetary return for Gates. That's correct, but it isn't hoarded, either. It's spent. > Under traditional economic dogma, no one should ever do this. Its not an investment, its donation. There's no such dogma. > Money lying in an investment fund or an investors bank account is useless while not invested It's always invested. Investment accounts/funds do not hoard cash in Scrooge McDuck cash vaults, either. It's all invested. > and can continue to be useless when invested in a company that fails or does nothing to help society. Wealthy people tend to be good at investing, which is why they're wealthy in the first place. Besides, money spent on a failed investment was still spent, and others were the recipients of that money.
kartan 9y ago
> Why is there no talk about the dramatic increase in the supply of workers over the last 40 years? Because it is irrelevant. If you have 100 workers, they produce and consume as 100. If you get 100 million, they produce as 100 million, but also consume as 1000 million. > It makes sense from an economic standpoint that the price of labor would not rise when the supply is increased The price of labor would not fall if the demand increases also. That´s why it´s a non problem to have more people, until you hit the ceiling of Earth resources. The problem is the distribution of the wealth created, and that´s explained in the article.
- Eridrus 9y ago
  This discounts economies of scale. Capitalism's argument is that we will always want to consume more things so we'll just make more different things, but there's really only so much one can consume.

by pg_bot 9y ago

gottam 9y ago

pretty much this. its why there was a lot of h1b visa abuse. top 0.01% doesnt want to pay a lot for tech workers but the demand is high, so increase the supply of tech workers.

deleted 9y ago
[deleted]

DanielBMarkham 9y ago

And in response to the overload of cheap labor, the central banks have been printing currency -- which means that people who own lots of equity end up with more money than they had before. (more money with the same assets means suddenly your assets are worth much more money) Also "hoarding" implies intent and capability. From all I can see, what's happening is the natural consequences of lifting billions of people out of poverty.

AlexandrB 9y ago
> From all I can see, what's happening is the natural consequences of lifting billions of people out of poverty. Ah yes, billionaire CEOs and investors have lifted millions out of poverty and so the market has rewarded them with steadily increasing incomes. But wait! I thought the market only cared about profits!? Why would it reward them for lifting millions out of poverty?? Is it possible that the modern American political system has been bent to the exclusive benefit of the rich at the expense of everyone else? Nah.
- closeparen 9y ago
  >Why would it reward them for lifting millions out of poverty? Because a worker and consumer with high productivity and high standard of living is more valuable to everyone involved (creates more value, buys more stuff) than a subsistence farmer? [0] Really the only people totally losing out here are environmentalists, as the newly minted middle class overwhelmingly buys cars and air conditioning. [0] https://en.wikipedia.org/wiki/Human_capital https://en.wikipedia.org/wiki/Human_capital

AlexandrB 9y ago

> It makes sense from an economic standpoint that the price of labor would not rise when the supply is increased and is likely the cause of income inequality in the US. So why are CEO salaries still going up? Is there not increased competition for C-level positions in companies from globalization? If not, why not?

eikenberry 9y ago
One explanation would be because of the cheaper labor and favorable legal frameworks the corporation can grow much larger today. Pushing the pay of the top level positions to rise even higher. You could look at C-level positions 50 years ago as a mid-level manager today in terms of managed organization size and economic impact.
- AlexandrB 9y ago
  > One explanation would be because of the cheaper labor and favorable legal frameworks the corporation can grow much larger today. But that means there are fewer C-level positions/capita today. So: * supply of C-level candidates has gone up (more MBA graduates, larger supply of candidates from overseas) * demand for C-level candidates has gone down (fewer, larger corporations, so fewer C-level jobs overall) And yet C-level compensation is going up. Doesn't this contradict all the supply/demand theories I keep hearing about lower/middle class employees?
  - mrep 9y ago
    In the big 5 that I work for, MBA's become product managers and make less than programmers (per years in industry). They then have to compete for more than a decade (with programmers going into management), for a shot at even VP level. Guess what, there are some VP's that have 5 more layers of VP, Senior VP's... before C suite. You want to incentive people to work hard at their jobs to get promoted to the next level so you need to constantly pay them more. When you have 10 layers in your company and people at the bottom are making 6 figures (for software engineers, easily the case), the top level employees are going to make a lot of money.
9y ago

steadicat 9y ago

Another factor I don't see talked about is the increase in women's participation in the workforce. When wages were higher it was common to only have one breadwinner in the family. Today women are more likely to get a job (or two), which is bound to depress wages. The perverse effect of lower wages is that families are forced to take on more jobs than they did before, which depresses wages further. Not sure if there is causation between women's participation and wage stagnation, but logically it seems possible that this would cause a downward spiral. The more wages suffer, the more jobs/hours/years people are forced to seek to work, the lower the wages.

Camillo 9y ago

Wealth concentration was the goal, globalization was the means. The rich saw a great arbitrage opportunity in the fact that the price of labor (and its legal rights) in the developing world was much lower than in the first world. In the late 90s, there was a big political struggle over globalization. The pro-globalists (the economic establishment and the Clinton administration) argued that it would (A) grow the economy (based on comparative advantage), (B) enrich the developing world, and (C) push them towards liberal democracy, as a consequence of having a richer middle class. The anti-globalists (mainly left-wing opposition) argued that it would (D) destroy the working class in the first world, (E) shift the balance of power enormously in the favor of corporations, (F) destroy the developing world too. The pro-globalization side won the fight completely: the WTO was established, China was brought into the global trade system, etc. Twenty years on, it is clear that both sides were partially right. The pro-global side was right about A and B, and wrong about C. The anti-global side was right about D and E, and wrong about F. Strangely, the anti-global side disappeared entirely from the public discussion; in fact, that entire period of history seems to have been memory-holed with incredible rapidity. Even as D (the destruction of the working class in the developed world) was brought into the 2016 presidential campaign as one of the main issues (by Sanders and, surprisingly, by Trump), nobody seemed to recall the anti-globalization protests of the 90s. None of the activists from back then came out of the woodwork to say "we were right!"; no journalists went to look for them. This should give pause to those who put trust in the media, even (especially?) the self-proclaimed progressive ones, like Vox.

shadowtree 9y ago
Fox News, Breitbart et all are massively anti-globalists. Breitbart marks Globalists in their article headlines with literal globes. Also a pure coincidence that all of those are Jewish of course. Trump ran on abolishing NAFTA and TTIP. How is this not a mainstream position now?
rubicon33 9y ago
Fascinating points you make, thank you for posting this. Can you elaborate on what you mean when you say "This should give pause to those who put trust in the media, even (especially?) the self-proclaimed progressive ones, like Vox" Why does the media's lack of memory, and lack of pursuit of the anti-globalists, mean we should not have trust that what they report now is accurate? (Genuine question not trying to make a point with my question).

closeparen 9y ago

Because those workers also buy things and contribute to demand?

zaptheimpaler 9y ago

Because the rich are getting richer, and hoarded money is useless to the rest of society. Regardless of why they get richer, the economy exists to serve society. Large amounts of money lying in investments hoping to outpace inflation is not useful to society - there are practical limits on how much money can be invested usefully at all, determined by how many capital intensive tasks businesses take on as a whole. Perhaps in older times when there were railways to build, factories and assembly lines to setup, power grids and communication networks to build, there was more room for investment in the sense of spending money now to gain rewards later. Now that businesses have little trouble raising capital, we may be getting closer to the point where new technology/ideas are scarcer than capital. In that climate, money may be more useful to society in the hands of government or regular people than the beneficiaries of investments like entrepreneurs. Concretely, when $1B is better used to build housing or improve healthcare, than invested into 10 "Uber for X" startups, it makes sense to tax more and let the government use the money for just that.

WalterBright 9y ago
> hoarded money is useless to the rest of society. There is no hoarded money. It's all invested. Where do you think Gates' money is, for example?
- zaptheimpaler 9y ago
  A large part of Gates' money goes to preventing common disease, providing education etc. Buying mosquito nets was the latest one I saw. These aren't investments and they aren't going to generate a monetary return for Gates. Under traditional economic dogma, no one should ever do this. Its not an investment, its donation. Money set out purely for generating return can be hoarded when theres no good use for it. Money lying in an investment fund or an investors bank account is useless while not invested and can continue to be useless when invested in a company that fails or does nothing to help society.
  - WalterBright 9y ago
    > These aren't investments and they aren't going to generate a monetary return for Gates. That's correct, but it isn't hoarded, either. It's spent. > Under traditional economic dogma, no one should ever do this. Its not an investment, its donation. There's no such dogma. > Money lying in an investment fund or an investors bank account is useless while not invested It's always invested. Investment accounts/funds do not hoard cash in Scrooge McDuck cash vaults, either. It's all invested. > and can continue to be useless when invested in a company that fails or does nothing to help society. Wealthy people tend to be good at investing, which is why they're wealthy in the first place. Besides, money spent on a failed investment was still spent, and others were the recipients of that money.

kartan 9y ago

> Why is there no talk about the dramatic increase in the supply of workers over the last 40 years? Because it is irrelevant. If you have 100 workers, they produce and consume as 100. If you get 100 million, they produce as 100 million, but also consume as 1000 million. > It makes sense from an economic standpoint that the price of labor would not rise when the supply is increased The price of labor would not fall if the demand increases also. That´s why it´s a non problem to have more people, until you hit the ceiling of Earth resources. The problem is the distribution of the wealth created, and that´s explained in the article.

Eridrus 9y ago
This discounts economies of scale. Capitalism's argument is that we will always want to consume more things so we'll just make more different things, but there's really only so much one can consume.