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The fact that rapid productivity increases due to the computer industry began in the late 1970s is a flashing red light to me. The late 1970s is when productiv

The fact that rapid productivity increases due to the computer industry began in the late 1970s is a flashing red light to me. The late 1970s is when productivity and wages began to diverge. Much ink has been spilled about this, as it corresponded with the emergence of neoliberal economics by Reagan and Thatcher. Maybe wages and productivity began to diverge not because labor was capturing less value due to political developments, but because we have been overestimating the productivity of industry in aggregate due to the rapid productivity growth in one sector, computers, skewing the aggregate. It seems like a statistical misattribution of this scale could be applied to many other phenomena.

mc32 8y ago
It's a bit surprising that statisticians and others who study the economy would miss this nuance. If Piper Jaffrey and others can pour into Apple's suppliers to divine whether Apple will meets iPhone shipment expectations, one would think professional economists would peer similarly into the nuts and bolts of the industries they profess to know about. There was a time the US had an interest in the getting the rest of the work to "Globalize" to stem the Soviet tide. We won, it's over, but the American worker is still getting shafted by the industrialists who loved cheap outsourced labor. Clinton, Bush and Obama either were completely complicit in this or lacked the wherewithal to fight it. Maybe Kanye along with others can get Americans reluctant to side with current American policies to see the advantages to bringing things back state side --or at least stemming the hemorrhage. It's not like China or Mexico or anyone else thinks "Oh, those poor Americans who get laid off, who will think of them". Nope, everyone is out for themselves --despite what Globalists say.
- greglindahl 8y ago
  "Comparative Advantage" in economics involves everyone being out for themselves, and that's how businesses choose where to produce or procure things.
- simonh 8y ago
  The problem for Clinton, Bush and Obama is that if you put up protectionist firewalls against cheaper goods from foreign counties with cheaper labour two things happen. Firstly yes you stimulate employment in local manufacturing, but by definition all of the consumers buying those locally made goods are paying more for them. You might have a million more manufacturing jobs, but hundreds of millions of people are paying through the nose for it. Meanwhile you may not actually make any significant difference to overall employment. Most of those million people now in manufacturing will have moved from jobs in other sectors, increasing costs in those sectors too. Meanwhile none of this does anything for America’s exports, because foreigners can still buy the same goods from your cheaper foreign competitors. In fact it can hurt exports if the goods you’re manufacturing are inputs to existing American exporters. Take steel, if American car exporters now have to buy more expensive locally made steel, the price of their cars goes up hurting car exports as well as shafting American car buyers.
  - mc32 8y ago
    Well, the problem is they let companies skirt taxes as well as foreign concerns dump goods and never called their bluff. they allowed foreign markets to retain tariffs while we happily lowered ours --how is that in any way "fair"? Glad someone is at long last willing to take a stand. Never the less, Japan and S Korea prove the claim is not true -they are protectionist but they are not paying much higher prices and their societies benefit form that. Also, I think we're coming to the conclusion that disposable consumerism is not good --maybe expensive but good with low "velocity" is better.
    - forapurpose 8y ago
      Can the parent support any of these claims? It's just a long string of assertions. > Japan and S Korea ... are protectionist They are not except in the absolutist sense.[0] And the U.S. protects its politically powerful industries too. In fact, the last round of the WTO was held up primarily, IIRC, by the US (and possibly Europe) refusing to lower domestic agriculture protections. Finally, you are better off if you lower tariffs even if the other side does not. Whatever 'fair' means, tariffs cause goods to be more expensive for your consumers and divert economic resources from their most productive uses to unproductive domestic companies that hide behind tariffs. It breeds corruption (as the government picks winners rather than the market) and unproductive business, instead of meritocracy of competitive businesses. [0] For example, another absolute statement is 'everyone is a liar' - obviously true in an absolute sense but meaningless. Some are far more trustworthy than others; most people are not called "liars".
- ianai 8y ago
  It was the Democrats who didn’t want free trade with China. (Because China had a repressive regime and Democrats can’t stand that sort of thing. If only because of WWII) But both parties wound up agreeing to it because 1+ billion people represent two huge advantages: -Very low labor costs from 1+ billion potential employees. -Very, very high growth potentials from a potential of 1+ billion new consumers as the industrial level matures. They saw that while the US had the position as the defacto world leader, it was also dwarfed in population size by China’s emerging market. So the prospect was to either try to somehow maintain the US position on the world stage through somehow sanctioning these 1+ billion people and their government (and that would of course fail). Or, they could “peddle with the current” by positioning the US strategically with the emerging behemoth. And largely they did. China and the US have this relationship where China produces many goods and the US fills in various details - like providing the defacto world currency and political leadership. What do you suppose will happen to the US if it tries to sanction China now? Do you figure the world would follow the US? Any negative trade action towards China will permanently dethrone the US. There is no “globalist” interest in the long term US policy. There is the US best interest instilled within the reigning politial forces of the world. Of course they’re going to word that to sound globalist, and of course it is not. Or else the US wouldn’t have so many nations gunning for it. Globalism would look like a UN ideal currency (look it up) and UN political governance where the US had 300 million/7 billion (ish) voting power. That is not what the world has now.
  - mc32 8y ago
    >It was the Democrats who didn’t want free trade with China I'm pretty sure it was Bill Clinton grinning[1] when they were allowed into the WTO. He totally shafted the blue collar unions who dutifully continued to vote democrat (they could have defected to I or G, or even R --but not even a protest. [1]http://apps.cndls.georgetown.edu/projects/uschina/items/show/434 http://apps.cndls.georgetown.edu/projects/uschina/items/show...
- pif 8y ago
  > the American worker is still getting shafted by the industrialists who loved cheap outsourced labor. No! No, no, no! Thousands times no! American workers are being shafted by consumers who love cheap products. Smartphones will be built again in USA when USA workers will accept to be payed as much as their Chinese colleagues. Either that, or be forced to pay more for everything so that USA brothers will be able to produce other stuff as well. I really don't understand how people could vote for a clown promising to 《make USA great again》: USA are still great, there's not a better past to long for, and that is also due to cheap stuff being provided from abroad. Globalisation is not something you can choose: it is the reality, and it will remain at least until we will have cheap oil to ship things around the globe. You can choose to embrace globalisation or to stomp your feet, but the world will move on anyway. Do you want manufacturing jobs back in the West? Fight for better work conditions in the East!
  - dougabug 8y ago
    It's not just US consumers who demonstrate a strong preference for low prices, it's generally a global phenomenon. While most consumers would likely prefer that revenues from the products they purchase be distributed equitably, they generally appear unwilling to pay a consistent, significant premium for social conscience. Corporate PR and advertisement seems to satisfy any demands consumers have for companies to serve the public good.
  - HillaryBriss 8y ago
    > Smartphones will be built again in USA when USA workers will accept to be payed as much as their Chinese colleagues. smartphone manufacture requires a significant, specific, miniaturized, electronic-industrial ecosystem AND a large number of trained industrial, electronic and other engineers, not just cheap labor. (Africa has cheap labor but where are its smartphone manufacturers?) China has a city like Shenzen with thousands of electronics makers. China has lots and lots of engineers of various kinds. China has pro-industrial development governmental policies, labor rules and environmental rules. We cannot simply look to labor pay rates. It's a much larger system.
corv 8y ago
Convertibility of the U.S. dollar to gold ended on August 15, 1971. The divergence could be attributed to the devaluation that has been happening since. See 'Figure A': https://www.epi.org/publication/understanding-the-historic-divergence-between-productivity-and-a-typical-workers-pay-why-it-matters-and-why-its-real/ https://www.epi.org/publication/understanding-the-historic-d...
cma 8y ago
> The late 1970s is when productivity and wages began to diverge. Women began entering the workforce en masse. You had a huge increase in labor supply, while consumer demand didn't increase the same amount. Wages had to give.
- stevenwoo 8y ago
  The census data does not show a reduction in salary commensurate to the increase in labor supply in the 1970's USA. https://hbr.org/2018/01/when-more-women-join-the-workforce-wages-rise-including-for-men https://hbr.org/2018/01/when-more-women-join-the-workforce-w... We do see a loss of volunteer time by women who previously might not have worked. https://www.theatlantic.com/politics/archive/2016/09/what-women-lost/500537/ https://www.theatlantic.com/politics/archive/2016/09/what-wo...
  - naasking 8y ago
    The HBR article says that wages increase commensurate with women entering a market. Assuming I'm reading it correctly, I'm not sure the causal implication you and the article subtly imply is justified. This appears to be a correlation given the article keeps saying "associated with", so it seems equally plausible that women are entering fields where wages are already rising. The article speculates a lot on why and how the reverse implication might be true, but all of the problems with explaining that implication simply don't exist if you flip it.
  - cma 8y ago
    Demand for some services does go up (daycare is a prominent example). And since we do important/export it isn't a completely closed loop system like I made it out to be. But another point is healthcare expenditure increases have outpaced inflation dramatically in that period (women today make up ~80% of healthcare workers). And a final point is in the same period that women's labor force participation rate went up, men's went down a massive amount, so you wouldn't expect the full effect of increased female supply: https://cdn2.vox-cdn.com/assets/4599519/fredgraph__3_.png https://cdn2.vox-cdn.com/assets/4599519/fredgraph__3_.png

mc32 8y ago

It's a bit surprising that statisticians and others who study the economy would miss this nuance. If Piper Jaffrey and others can pour into Apple's suppliers to divine whether Apple will meets iPhone shipment expectations, one would think professional economists would peer similarly into the nuts and bolts of the industries they profess to know about. There was a time the US had an interest in the getting the rest of the work to "Globalize" to stem the Soviet tide. We won, it's over, but the American worker is still getting shafted by the industrialists who loved cheap outsourced labor. Clinton, Bush and Obama either were completely complicit in this or lacked the wherewithal to fight it. Maybe Kanye along with others can get Americans reluctant to side with current American policies to see the advantages to bringing things back state side --or at least stemming the hemorrhage. It's not like China or Mexico or anyone else thinks "Oh, those poor Americans who get laid off, who will think of them". Nope, everyone is out for themselves --despite what Globalists say.

greglindahl 8y ago
"Comparative Advantage" in economics involves everyone being out for themselves, and that's how businesses choose where to produce or procure things.
simonh 8y ago
The problem for Clinton, Bush and Obama is that if you put up protectionist firewalls against cheaper goods from foreign counties with cheaper labour two things happen. Firstly yes you stimulate employment in local manufacturing, but by definition all of the consumers buying those locally made goods are paying more for them. You might have a million more manufacturing jobs, but hundreds of millions of people are paying through the nose for it. Meanwhile you may not actually make any significant difference to overall employment. Most of those million people now in manufacturing will have moved from jobs in other sectors, increasing costs in those sectors too. Meanwhile none of this does anything for America’s exports, because foreigners can still buy the same goods from your cheaper foreign competitors. In fact it can hurt exports if the goods you’re manufacturing are inputs to existing American exporters. Take steel, if American car exporters now have to buy more expensive locally made steel, the price of their cars goes up hurting car exports as well as shafting American car buyers.
- mc32 8y ago
  Well, the problem is they let companies skirt taxes as well as foreign concerns dump goods and never called their bluff. they allowed foreign markets to retain tariffs while we happily lowered ours --how is that in any way "fair"? Glad someone is at long last willing to take a stand. Never the less, Japan and S Korea prove the claim is not true -they are protectionist but they are not paying much higher prices and their societies benefit form that. Also, I think we're coming to the conclusion that disposable consumerism is not good --maybe expensive but good with low "velocity" is better.
  - forapurpose 8y ago
    Can the parent support any of these claims? It's just a long string of assertions. > Japan and S Korea ... are protectionist They are not except in the absolutist sense.[0] And the U.S. protects its politically powerful industries too. In fact, the last round of the WTO was held up primarily, IIRC, by the US (and possibly Europe) refusing to lower domestic agriculture protections. Finally, you are better off if you lower tariffs even if the other side does not. Whatever 'fair' means, tariffs cause goods to be more expensive for your consumers and divert economic resources from their most productive uses to unproductive domestic companies that hide behind tariffs. It breeds corruption (as the government picks winners rather than the market) and unproductive business, instead of meritocracy of competitive businesses. [0] For example, another absolute statement is 'everyone is a liar' - obviously true in an absolute sense but meaningless. Some are far more trustworthy than others; most people are not called "liars".
ianai 8y ago
It was the Democrats who didn’t want free trade with China. (Because China had a repressive regime and Democrats can’t stand that sort of thing. If only because of WWII) But both parties wound up agreeing to it because 1+ billion people represent two huge advantages: -Very low labor costs from 1+ billion potential employees. -Very, very high growth potentials from a potential of 1+ billion new consumers as the industrial level matures. They saw that while the US had the position as the defacto world leader, it was also dwarfed in population size by China’s emerging market. So the prospect was to either try to somehow maintain the US position on the world stage through somehow sanctioning these 1+ billion people and their government (and that would of course fail). Or, they could “peddle with the current” by positioning the US strategically with the emerging behemoth. And largely they did. China and the US have this relationship where China produces many goods and the US fills in various details - like providing the defacto world currency and political leadership. What do you suppose will happen to the US if it tries to sanction China now? Do you figure the world would follow the US? Any negative trade action towards China will permanently dethrone the US. There is no “globalist” interest in the long term US policy. There is the US best interest instilled within the reigning politial forces of the world. Of course they’re going to word that to sound globalist, and of course it is not. Or else the US wouldn’t have so many nations gunning for it. Globalism would look like a UN ideal currency (look it up) and UN political governance where the US had 300 million/7 billion (ish) voting power. That is not what the world has now.
- mc32 8y ago
  >It was the Democrats who didn’t want free trade with China I'm pretty sure it was Bill Clinton grinning[1] when they were allowed into the WTO. He totally shafted the blue collar unions who dutifully continued to vote democrat (they could have defected to I or G, or even R --but not even a protest. [1]http://apps.cndls.georgetown.edu/projects/uschina/items/show/434 http://apps.cndls.georgetown.edu/projects/uschina/items/show...
pif 8y ago
> the American worker is still getting shafted by the industrialists who loved cheap outsourced labor. No! No, no, no! Thousands times no! American workers are being shafted by consumers who love cheap products. Smartphones will be built again in USA when USA workers will accept to be payed as much as their Chinese colleagues. Either that, or be forced to pay more for everything so that USA brothers will be able to produce other stuff as well. I really don't understand how people could vote for a clown promising to 《make USA great again》: USA are still great, there's not a better past to long for, and that is also due to cheap stuff being provided from abroad. Globalisation is not something you can choose: it is the reality, and it will remain at least until we will have cheap oil to ship things around the globe. You can choose to embrace globalisation or to stomp your feet, but the world will move on anyway. Do you want manufacturing jobs back in the West? Fight for better work conditions in the East!
- dougabug 8y ago
  It's not just US consumers who demonstrate a strong preference for low prices, it's generally a global phenomenon. While most consumers would likely prefer that revenues from the products they purchase be distributed equitably, they generally appear unwilling to pay a consistent, significant premium for social conscience. Corporate PR and advertisement seems to satisfy any demands consumers have for companies to serve the public good.
- HillaryBriss 8y ago
  > Smartphones will be built again in USA when USA workers will accept to be payed as much as their Chinese colleagues. smartphone manufacture requires a significant, specific, miniaturized, electronic-industrial ecosystem AND a large number of trained industrial, electronic and other engineers, not just cheap labor. (Africa has cheap labor but where are its smartphone manufacturers?) China has a city like Shenzen with thousands of electronics makers. China has lots and lots of engineers of various kinds. China has pro-industrial development governmental policies, labor rules and environmental rules. We cannot simply look to labor pay rates. It's a much larger system.

corv 8y ago

Convertibility of the U.S. dollar to gold ended on August 15, 1971. The divergence could be attributed to the devaluation that has been happening since. See 'Figure A': https://www.epi.org/publication/understanding-the-historic-divergence-between-productivity-and-a-typical-workers-pay-why-it-matters-and-why-its-real/ https://www.epi.org/publication/understanding-the-historic-d...

cma 8y ago

> The late 1970s is when productivity and wages began to diverge. Women began entering the workforce en masse. You had a huge increase in labor supply, while consumer demand didn't increase the same amount. Wages had to give.

stevenwoo 8y ago
The census data does not show a reduction in salary commensurate to the increase in labor supply in the 1970's USA. https://hbr.org/2018/01/when-more-women-join-the-workforce-wages-rise-including-for-men https://hbr.org/2018/01/when-more-women-join-the-workforce-w... We do see a loss of volunteer time by women who previously might not have worked. https://www.theatlantic.com/politics/archive/2016/09/what-women-lost/500537/ https://www.theatlantic.com/politics/archive/2016/09/what-wo...
- naasking 8y ago
  The HBR article says that wages increase commensurate with women entering a market. Assuming I'm reading it correctly, I'm not sure the causal implication you and the article subtly imply is justified. This appears to be a correlation given the article keeps saying "associated with", so it seems equally plausible that women are entering fields where wages are already rising. The article speculates a lot on why and how the reverse implication might be true, but all of the problems with explaining that implication simply don't exist if you flip it.
- cma 8y ago
  Demand for some services does go up (daycare is a prominent example). And since we do important/export it isn't a completely closed loop system like I made it out to be. But another point is healthcare expenditure increases have outpaced inflation dramatically in that period (women today make up ~80% of healthcare workers). And a final point is in the same period that women's labor force participation rate went up, men's went down a massive amount, so you wouldn't expect the full effect of increased female supply: https://cdn2.vox-cdn.com/assets/4599519/fredgraph__3_.png https://cdn2.vox-cdn.com/assets/4599519/fredgraph__3_.png