8 ms·

Likewise, looking only at nominal wage increases is a “pretty terrible” way of gauging who benefits from increased wealth. If improvement in productivity (autom

Likewise, looking only at nominal wage increases is a “pretty terrible” way of gauging who benefits from increased wealth. If improvement in productivity (automation) results in lower prices (or better or more goods for the same price), that increases the purchasing power of a worker’s earnings, even if their wage has not risen. In other words, a worker is richer if they can buy more and better stuff even without any rise in their wage. The fact that everyone can afford a smartphone, including those with jobs that “suck”, does not reconcile with “only a very small number of people are capturing the wealth that it is generating.“

smackay 7y ago
Sorry, but I see a lot of people, kids especially, with expensive smart phones because of status not because they can afford one.
- alexmingoia 7y ago
  The fact that smartphones, which didn’t exist decades ago, are now afforded by everyone, contradicts the assertion that productivity gains are captured by a small class/group, and demonstrates why looking at nominal measures of income is an incomplete picture of increasing productivity and wealth disparity.
  - La1n 7y ago
    >contradicts the assertion that productivity gains are captured by a small class/group, Only that they are fully captured by a small class. It says nothing about the relative amount, and doesn't change anything about the wealth disparity picture, for those smartphones are cheaper for everyone but one group has a lot more to spend AND smartphones are cheaper for them
  - atoav 7y ago
    I think this is a common misconception when it comes to judging Karl Marx perspective on capitalism: he didn’t say that a worker in 2020 is going to be absolutely worse off than a worker in his days if capitalism continues — quite the opposite: he said workers will be better off than they were in his days. What he did predict however is that the rich ones will even better off still. If you try to look at how much much of societies gains go to which wealth bracket and how much they actually do for it, this gap widened considerably during the last century and has become a real threat to these western values of liberty and democracy, especially because the rules of civilization and democracy exclude those on top. One doesn’t really have to be a marxist in order to want to go back to a resonable wealth/wage gap. One doesn’t have to be a marxist to demand the rich should pay their taxes and follow the rules. I’d argue that every conservative in the very sense of the word should stand behind this as well.
  - jordanbeiber 7y ago
    There’s also a booming market for high interest micro consumer loans though. Many cannot afford these smart phones and gadgets but will take loans or buy them with plans that on the surface looks cheap. Loans from pretty much fully automated ”banks” working on-line only. Send an sms and get $500 to buy that phone! Further increasing the gap in the process...
  - TheOtherHobbes 7y ago
    No. Because wealth is defined by claims on other people's productivity, not by the ownership of one particular consumer good. If you'd said "Everyone now gets a significant proportion of their income from investments and uses some of it to buy a smartphone" you might have had a point.
  - bsanr2 7y ago
    People buy smartphones instead of CDs, movie tickets, and new cars.
MaximumYComb 7y ago
It depends on what goods you are looking at. Sure, people can "afford" an iPhone but where I live a modest house costs around 14x median full-time male salary. The wealth inequality is from a small number of people capturing all this wealth. 40% of Australia's population live in either Sydney or Melbourne, and these two cities are among the top 5 least affordable in the world [1]. 1 - https://www.afr.com/companies/financial-services/australian-property-still-world-s-most-expensive-despite-sharp-falls-20190508-p51l5x https://www.afr.com/companies/financial-services/australian-...
- dmytroi 7y ago
  Numbers don't match though. It looks like there is physically not enough money to buy everything that is sold. For example: - There is a ballpark estimate that sum of all physical money in the world is 90.4$ trillion, let's distribute it equally to all 7.53 billion people: we get 12k$ per person. This is not enough to buy an apartment in most parts of the world. - There is an estimate that 1% has 303.9$ billion, let's distribute it equally to US population of 327.2 million people: we get 928$ per person. Barely enough to buy status smartphone. So I don't see how wealth distribution can solve anything. Even if we equalize wealth and prices at a same time, free market will quickly spiral down to similar pricing that we have today (things are barely purchasable, or not at all).
  - calmworm 7y ago
    Why just physical money?
    - irishcoffee 7y ago
      s/physical/virtually-tangiable/g
    - perl4ever 7y ago
      I have no idea why or what exactly physical money is, since money mostly isn't physical, but it seems to me that it might not disrupt society too much if we redistributed all of the stock in companies in the S&P 500 equally. We already have widely diversified ownership, with index funds and pension funds, so why not take it all the way? However, the total value of the S&P 500 (which is probably about half the world stock markets value) is about $26 trillion, so that is about $3400 per person or maybe double or triple for a family. And the dividend of 1.75% means an income of $60/year if you hold on to the stock. So I think doing this redistribution would result in everybody to whom $3400 is a lot immediately selling (assuming they were allowed to). I'm not sure what the distribution of capital would end up being. Someone would buy, say "Barren Wuffet" who fortunately had all their investments in cash, bonds, and small cap stocks. So ownership would end up being concentrated again, but maybe not as concentrated. Anyone who has a lot of money saved for retirement in a large-cap fund would be unhappy, but why should you be better off than an average citizen of the world? It seems like a fine experiment to me. Edit: but just to spell it out, obviously politically impossible given the consequences for first world people who are relatively privileged but don't think of themselves that way. The median IRA balance (note, not the average that is skewed by the rich) is somewhere around $20-30K, so redistribution would affect those people like a 90% market crash.
buzzkillington 7y ago
>In other words, a worker is richer if they can buy more and better stuff even without any rise in their wage. I don't see everyday life improving several billion times from 1970 even though the number of switches I control in my laptop are several billion times (at least) larger than the number of switches that existed in the world in 1970.
0xfaded 7y ago
This argument forgets that where people spend most of their money, housing, education, healthcare, costs are rapidly raising in real terms and have not followed Moore's law in usefulness. Yes technology has made cool gadgets for consumption, but that isn't what wealth is about. From Wikipedia: "Wealth is the abundance of valuable financial assets or physical possessions which can be converted into a form that can be used for transactions." The average worker hasn't seen a real pay ride in 40 years, and their ability to build wealth through savings has been greatly diminished.
- malandrew 7y ago
  Incorrect about workers not earning more. The problem is that household sizes are shrinking. https://www.minneapolisfed.org/article/2008/where-has-all-the-income-gone https://www.minneapolisfed.org/article/2008/where-has-all-th...
- makomk 7y ago
  So basically, improvements in productivity are only benefitting people in areas where productivity has improved? That seems more like a tautology to me than something which can be fixed by gnashing teeth about the distribution of wealth
  - xg15 7y ago
    How did you get from > The average worker hasn't seen a real pay [rise] in 40 years to > So basically, improvements in productivity are only benefitting people in areas where productivity has improved? ? Worker productivity has increased enormously in the last decades.
    - makomk 7y ago
      I didn't? Obviously, I got that from the "housing, education, healthcare, costs are rapidly raising in real terms and have not followed Moore's law in usefulness" part...
  - bsanr2 7y ago
zaptheimpaler 7y ago
Quality of life is the only thing really worth having. The wealthy have the option to spend their time however they like, great healthcare, a big home etc. All the smartphones and gadgets in the world can't make up for that. Free time and economic security are still things very few people have.
onion2k 7y ago
... that increases the purchasing power of a worker’s earnings, even if their wage has not risen. If your boss said you're not getting a pay rise this year but that's OK because you'll still be able to buy more would you accept that as a fair and reasonable argument? No? Don't use it as an argument to keep poor people's wages low then.
barrkel 7y ago
Gadgets aren't a large proportion of most people's expenditure.
- bigj0n 7y ago
  But people do spend an extremely large portion of their lives on them

smackay 7y ago

Sorry, but I see a lot of people, kids especially, with expensive smart phones because of status not because they can afford one.

alexmingoia 7y ago
The fact that smartphones, which didn’t exist decades ago, are now afforded by everyone, contradicts the assertion that productivity gains are captured by a small class/group, and demonstrates why looking at nominal measures of income is an incomplete picture of increasing productivity and wealth disparity.
- La1n 7y ago
  >contradicts the assertion that productivity gains are captured by a small class/group, Only that they are fully captured by a small class. It says nothing about the relative amount, and doesn't change anything about the wealth disparity picture, for those smartphones are cheaper for everyone but one group has a lot more to spend AND smartphones are cheaper for them
- atoav 7y ago
  I think this is a common misconception when it comes to judging Karl Marx perspective on capitalism: he didn’t say that a worker in 2020 is going to be absolutely worse off than a worker in his days if capitalism continues — quite the opposite: he said workers will be better off than they were in his days. What he did predict however is that the rich ones will even better off still. If you try to look at how much much of societies gains go to which wealth bracket and how much they actually do for it, this gap widened considerably during the last century and has become a real threat to these western values of liberty and democracy, especially because the rules of civilization and democracy exclude those on top. One doesn’t really have to be a marxist in order to want to go back to a resonable wealth/wage gap. One doesn’t have to be a marxist to demand the rich should pay their taxes and follow the rules. I’d argue that every conservative in the very sense of the word should stand behind this as well.
- jordanbeiber 7y ago
  There’s also a booming market for high interest micro consumer loans though. Many cannot afford these smart phones and gadgets but will take loans or buy them with plans that on the surface looks cheap. Loans from pretty much fully automated ”banks” working on-line only. Send an sms and get $500 to buy that phone! Further increasing the gap in the process...
- TheOtherHobbes 7y ago
  No. Because wealth is defined by claims on other people's productivity, not by the ownership of one particular consumer good. If you'd said "Everyone now gets a significant proportion of their income from investments and uses some of it to buy a smartphone" you might have had a point.
- bsanr2 7y ago
  People buy smartphones instead of CDs, movie tickets, and new cars.

MaximumYComb 7y ago

It depends on what goods you are looking at. Sure, people can "afford" an iPhone but where I live a modest house costs around 14x median full-time male salary. The wealth inequality is from a small number of people capturing all this wealth. 40% of Australia's population live in either Sydney or Melbourne, and these two cities are among the top 5 least affordable in the world [1]. 1 - https://www.afr.com/companies/financial-services/australian-property-still-world-s-most-expensive-despite-sharp-falls-20190508-p51l5x https://www.afr.com/companies/financial-services/australian-...

dmytroi 7y ago
Numbers don't match though. It looks like there is physically not enough money to buy everything that is sold. For example: - There is a ballpark estimate that sum of all physical money in the world is 90.4$ trillion, let's distribute it equally to all 7.53 billion people: we get 12k$ per person. This is not enough to buy an apartment in most parts of the world. - There is an estimate that 1% has 303.9$ billion, let's distribute it equally to US population of 327.2 million people: we get 928$ per person. Barely enough to buy status smartphone. So I don't see how wealth distribution can solve anything. Even if we equalize wealth and prices at a same time, free market will quickly spiral down to similar pricing that we have today (things are barely purchasable, or not at all).
- calmworm 7y ago
  Why just physical money?
  - irishcoffee 7y ago
    s/physical/virtually-tangiable/g
  - perl4ever 7y ago
    I have no idea why or what exactly physical money is, since money mostly isn't physical, but it seems to me that it might not disrupt society too much if we redistributed all of the stock in companies in the S&P 500 equally. We already have widely diversified ownership, with index funds and pension funds, so why not take it all the way? However, the total value of the S&P 500 (which is probably about half the world stock markets value) is about $26 trillion, so that is about $3400 per person or maybe double or triple for a family. And the dividend of 1.75% means an income of $60/year if you hold on to the stock. So I think doing this redistribution would result in everybody to whom $3400 is a lot immediately selling (assuming they were allowed to). I'm not sure what the distribution of capital would end up being. Someone would buy, say "Barren Wuffet" who fortunately had all their investments in cash, bonds, and small cap stocks. So ownership would end up being concentrated again, but maybe not as concentrated. Anyone who has a lot of money saved for retirement in a large-cap fund would be unhappy, but why should you be better off than an average citizen of the world? It seems like a fine experiment to me. Edit: but just to spell it out, obviously politically impossible given the consequences for first world people who are relatively privileged but don't think of themselves that way. The median IRA balance (note, not the average that is skewed by the rich) is somewhere around $20-30K, so redistribution would affect those people like a 90% market crash.

buzzkillington 7y ago

>In other words, a worker is richer if they can buy more and better stuff even without any rise in their wage. I don't see everyday life improving several billion times from 1970 even though the number of switches I control in my laptop are several billion times (at least) larger than the number of switches that existed in the world in 1970.

0xfaded 7y ago

This argument forgets that where people spend most of their money, housing, education, healthcare, costs are rapidly raising in real terms and have not followed Moore's law in usefulness. Yes technology has made cool gadgets for consumption, but that isn't what wealth is about. From Wikipedia: "Wealth is the abundance of valuable financial assets or physical possessions which can be converted into a form that can be used for transactions." The average worker hasn't seen a real pay ride in 40 years, and their ability to build wealth through savings has been greatly diminished.

malandrew 7y ago
Incorrect about workers not earning more. The problem is that household sizes are shrinking. https://www.minneapolisfed.org/article/2008/where-has-all-the-income-gone https://www.minneapolisfed.org/article/2008/where-has-all-th...
makomk 7y ago
So basically, improvements in productivity are only benefitting people in areas where productivity has improved? That seems more like a tautology to me than something which can be fixed by gnashing teeth about the distribution of wealth
- xg15 7y ago
  How did you get from > The average worker hasn't seen a real pay [rise] in 40 years to > So basically, improvements in productivity are only benefitting people in areas where productivity has improved? ? Worker productivity has increased enormously in the last decades.
  - makomk 7y ago
    I didn't? Obviously, I got that from the "housing, education, healthcare, costs are rapidly raising in real terms and have not followed Moore's law in usefulness" part...
- bsanr2 7y ago

zaptheimpaler 7y ago

Quality of life is the only thing really worth having. The wealthy have the option to spend their time however they like, great healthcare, a big home etc. All the smartphones and gadgets in the world can't make up for that. Free time and economic security are still things very few people have.

onion2k 7y ago

... that increases the purchasing power of a worker’s earnings, even if their wage has not risen. If your boss said you're not getting a pay rise this year but that's OK because you'll still be able to buy more would you accept that as a fair and reasonable argument? No? Don't use it as an argument to keep poor people's wages low then.

barrkel 7y ago

Gadgets aren't a large proportion of most people's expenditure.

bigj0n 7y ago
But people do spend an extremely large portion of their lives on them