4 ms·

1. If you look at the productivity gains in the U.S. over the past 50 years, the vast majority of the gains have been captured by a very small subset of the pop

by jdkee 7y ago

1. If you look at the productivity gains in the U.S. over the past 50 years, the vast majority of the gains have been captured by a very small subset of the population. 2. A zero sum game in terms of the distribution of money is not the same as a similar distribution of wealth.

weeksie 7y ago
Neither of those points are relevant to the larger one.
- JMTQp8lwXL 7y ago
  The first point directly contradicts your main argument; that without growth, economics is zero-sum. We have growth, yet none of that growth is captured by middle income people. The growth (and wealth) is being plundered.
  - mech1234 7y ago
    It's false that none of the growth is being captured by middle income people. It is being captured to a greater extent by the very top of the income distribution and by the global poor, but income is growing across the board. Real median wages and household income in the U.S. are higher than they've ever been. This is all despite the increased international competition typified by globalization trends and detailed by the Elephant Curve. https://fred.stlouisfed.org/series/LES1252881600Q https://fred.stlouisfed.org/series/LES1252881600Q https://milescorak.com/2016/05/18/the-winners-and-losers-of-globalization-branko-milanovics-new-book-on-inequality-answers-two-important-questions/ https://milescorak.com/2016/05/18/the-winners-and-losers-of-...
    - JMTQp8lwXL 7y ago
      Your second link proves that middle income people are getting virtually none of the growth; at best, scraps. The difference between "none" and "effectively none" isn't a mischaracterization on my part. I will clarify by "middle income" I meant the American middle class, and not the global median.
      - mech1234 7y ago
        I think it is a mischaracterization. Notably, the graph provided at the second link covers a time period ending in 2008, the depths of the great recession. Things are numerically a bit better than depicted there. The overall story is the same- the bottom and the top of the worldwide income distribution is where things are growing fastest, but the middle is growing slower. It is certainly growing though. 10% real median income growth since the 80's is nothing to sneeze at.
        JMTQp8lwXL 7y ago
        That's 10% total --over 40 years-- not 10% annualized. In 1979, the median real weekly earnings was $335. Today, it is $362. The actual calculation, 362-335/335 = 8.05%. Over 40 years, 8.05% is 0.2% annualized growth. Let's compare to the S&P 500 index. From Jan 1979 to Dec 2019, the S&P has returned 746% (2,401% including dividend reinvestment) -- both figures adjusted for inflation (as is the FRED data). Annualized, these figures are 5.35% and 8.16%. https://dqydj.com/sp-500-return-calculator/ https://dqydj.com/sp-500-return-calculator/ For bonds, that's 262% and 3.19%, respectively. https://dqydj.com/treasury-return-calculator/ https://dqydj.com/treasury-return-calculator/ 10% over 40 years is absolutely something to sneeze at. That cannot be characterized as meaningful growth.
        mech1234 7y ago
        Another well-regarded source is the congressional budget office. The data linked below from 2014 is even more optimistic than my previous data because it uses household income instead of individual income. (because the distribution of individual incomes is skewed and growing even more skewed, median household incomes grow faster than individual incomes). The CBO data shows 26.1% growth in the incomes of middle quintile households since 1979. This growth is larger if you look at the lowest quintile, include taxes and transfers, or do both. The data goes up to 2014 and would show larger growth still if it went all the way to 2019. https://www.cbo.gov/publication/53597 https://www.cbo.gov/publication/53597
        7y ago
baryphonic 7y ago
Why does this matter? If we expand the timeline to the last 200 years, the gains in agricultural productivity have gone to a very small subset of the population (around 2%). This is in fact the major reason you're able to write comments on the Internet rather than having to plow your field. I'd rather live in a world where we can maximize the productivity gains of the entire population and let us have more leisure than one which we jam the gears of the machines because we're jealous that any given productivity gain has a power law distribution. Your comment about "distribution of money" and "distribution of wealth" makes no sense, but let's assume that by "money" you mean "income." By definition, looking at the distribution of anything is zero-sum. The problem is, growth has nothing to do with distribution and everything to do with production. Production is not a fixed-sum game: you can have positive-, negative- or zero-sum production at any given time. The chief question of production is how do we produce more wealth using fewer resources, or more efficient combinations of existing resources? How we should distribute that wealth, income and control over the products made is an ethical and political question (though I am strongly opposed to any scheme that seeks to deprive a person from owning the product of her labor).

by jdkee 7y ago

weeksie 7y ago

Neither of those points are relevant to the larger one.

JMTQp8lwXL 7y ago
The first point directly contradicts your main argument; that without growth, economics is zero-sum. We have growth, yet none of that growth is captured by middle income people. The growth (and wealth) is being plundered.
- mech1234 7y ago
  It's false that none of the growth is being captured by middle income people. It is being captured to a greater extent by the very top of the income distribution and by the global poor, but income is growing across the board. Real median wages and household income in the U.S. are higher than they've ever been. This is all despite the increased international competition typified by globalization trends and detailed by the Elephant Curve. https://fred.stlouisfed.org/series/LES1252881600Q https://fred.stlouisfed.org/series/LES1252881600Q https://milescorak.com/2016/05/18/the-winners-and-losers-of-globalization-branko-milanovics-new-book-on-inequality-answers-two-important-questions/ https://milescorak.com/2016/05/18/the-winners-and-losers-of-...
  - JMTQp8lwXL 7y ago
    Your second link proves that middle income people are getting virtually none of the growth; at best, scraps. The difference between "none" and "effectively none" isn't a mischaracterization on my part. I will clarify by "middle income" I meant the American middle class, and not the global median.
    - mech1234 7y ago
      I think it is a mischaracterization. Notably, the graph provided at the second link covers a time period ending in 2008, the depths of the great recession. Things are numerically a bit better than depicted there. The overall story is the same- the bottom and the top of the worldwide income distribution is where things are growing fastest, but the middle is growing slower. It is certainly growing though. 10% real median income growth since the 80's is nothing to sneeze at.
      - JMTQp8lwXL 7y ago
        That's 10% total --over 40 years-- not 10% annualized. In 1979, the median real weekly earnings was $335. Today, it is $362. The actual calculation, 362-335/335 = 8.05%. Over 40 years, 8.05% is 0.2% annualized growth. Let's compare to the S&P 500 index. From Jan 1979 to Dec 2019, the S&P has returned 746% (2,401% including dividend reinvestment) -- both figures adjusted for inflation (as is the FRED data). Annualized, these figures are 5.35% and 8.16%. https://dqydj.com/sp-500-return-calculator/ https://dqydj.com/sp-500-return-calculator/ For bonds, that's 262% and 3.19%, respectively. https://dqydj.com/treasury-return-calculator/ https://dqydj.com/treasury-return-calculator/ 10% over 40 years is absolutely something to sneeze at. That cannot be characterized as meaningful growth.
        mech1234 7y ago
        Another well-regarded source is the congressional budget office. The data linked below from 2014 is even more optimistic than my previous data because it uses household income instead of individual income. (because the distribution of individual incomes is skewed and growing even more skewed, median household incomes grow faster than individual incomes). The CBO data shows 26.1% growth in the incomes of middle quintile households since 1979. This growth is larger if you look at the lowest quintile, include taxes and transfers, or do both. The data goes up to 2014 and would show larger growth still if it went all the way to 2019. https://www.cbo.gov/publication/53597 https://www.cbo.gov/publication/53597
        7y ago

baryphonic 7y ago

Why does this matter? If we expand the timeline to the last 200 years, the gains in agricultural productivity have gone to a very small subset of the population (around 2%). This is in fact the major reason you're able to write comments on the Internet rather than having to plow your field. I'd rather live in a world where we can maximize the productivity gains of the entire population and let us have more leisure than one which we jam the gears of the machines because we're jealous that any given productivity gain has a power law distribution. Your comment about "distribution of money" and "distribution of wealth" makes no sense, but let's assume that by "money" you mean "income." By definition, looking at the distribution of anything is zero-sum. The problem is, growth has nothing to do with distribution and everything to do with production. Production is not a fixed-sum game: you can have positive-, negative- or zero-sum production at any given time. The chief question of production is how do we produce more wealth using fewer resources, or more efficient combinations of existing resources? How we should distribute that wealth, income and control over the products made is an ethical and political question (though I am strongly opposed to any scheme that seeks to deprive a person from owning the product of her labor).