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Declining worker power vs. rising monopoly power: explaining recent macro trends

409 points by hhs 6y ago

brenden2 6y ago
I think this plays into the current social unrest as well. People have been trying to separate the looters and protestors, but they seem to completely ignore the extreme inequality that exists throughout the US, especially in this period of high unemployment. People at the bottom have it bad, very bad. Being ignorant of that problem is just going to make it worse. Lashing out at fancy retailers in fancy neighbourhoods makes a lot of sense as a way of sending a message to rich people, whether you like it or not.
- deleted 6y ago
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- brenden2 6y ago
  Someone commented and deleted, but in response I'll leave this here: https://www.youtube.com/watch?v=JNfqr-rzj5I https://www.youtube.com/watch?v=JNfqr-rzj5I It's an interview with Cornel West. You may not agree with his political philosophy, but he "gets it" with regard to the current social unrest. If you want to understand what's happening, you should try to empathize with what he's talking about.
- pydry 6y ago
  In all likelihood lashing out at fancy retailers will be effective. Additional police powers and crackdowns will be paired with throwing the rioters a few bones (e.g. greater checks on police powers and throwing the book at George Floyd's murderers). Of course, the elites will pretend that they meant to throw that bone all along and will vehemently deny it has anything to do with a smashed up Gucci store in Beverly Hills and a lot of Americans (perhaps most) will believe this denial.
  - brenden2 6y ago
    Indeed, peaceful protests are good for the status quo because they're easy to ignore. They want you to sit down and be quiet so they can ignore you. Once you start to inconvenience rich people, or god forbid cause the stock market to go down, real change will begin to happen.
  - asdfasgasdgasdg 6y ago
    Do you really think so? These stores all have insurance. The deductibles will hurt a little but I don't think it's going to be game changing, especially for any national or international chains.
    - brenden2 6y ago
      It hurts insurance companies, but it's great for anyone who fixes or repairs windows.
      - lotsofpulp 6y ago
        Until the businesses don’t exist anymore because it’s not possible to insure at a price where people will still buy product.
        brenden2 6y ago
        These are mostly big chains, I think they'll be okay.
        lotsofpulp 6y ago
        The big chains were suffering outside of a handful of affluent neighborhoods in all cities even in good times, I don’t see why this wouldn’t be a problem. Margins are low, and consumers’ ability to spend is low, so raising prices might not be possible leaving closing down as the only option.
        brenden2 6y ago
        If you don't run a viable business, should your business continue to exist? Which one do you want, socialism or capitalism? In a capitalist system, failed businesses are allowed to fail and don't get free money from the government.
        lotsofpulp 6y ago
  - whatshisface 6y ago
    Wait, so if there were some elites in charge of everything, and if they felt personally threatened, you are suggesting that their response would be to decrease the power of their security forces? Wouldn't they want to make the police even more powerful?
    - pydry 6y ago
      Yes of course they'd want that, but compromise is often a necessity to prevent things from spiraling totally out of control. The French and Russian revolutions are a testament to what happens when the ruler tries to effect the appearance of compromise without actually doing it (e.g. Constitution of 1906). It ended very badly for the rulers in both of those cases. They fucked up a lot more than just that, but that was a key contributing factor to their deaths.
      - ChuckNorris89 6y ago
        The difference is in the times of the French revolution, the elite lived only mere miles away from the angry poor, within striking reach of their wrath whereas now the elites can move to super safe heavens, isolated from the mess they created and suffer no consequences from the angry masses. Jeff Bezos and Warren Buffett can move with their families to some private island in the Caribbean and wait while things cool down while running their gigs remotely. The French elite had no such luxury.
        pydry 6y ago
        I could see Louis 16th's failed flight to varennes being repeated in a different form. It wasnt a lack of technology that stopped him, it was a man recognizing him and arresting him. Part of the problem was that he left it too long to attempt fleeing.
        brenden2 6y ago
        They didn't have helicopters, underground bunkers, and air force one.
  - deleted 6y ago
    [deleted]
  - BurningFrog 6y ago
    This is really wrong. Destroying retail will just destroy retail. When it's gone it's gone. If you think shopkeepers control the Police, you are hopelessly confused.
    - brenden2 6y ago
      The pandemic demonstrated that luxury retail is non-essential (you can still buy your Gucci bags online). When luxury retail was closed the world did not fall apart. Nobody is protesting because they can't shop at the Apple store.
      - Aunche 6y ago
        Plenty of people complain that not enough stores like Target open up in low income areas and riots are only going to make this worse.
        brenden2 6y ago
        For someone in desperation all I hear is further reason to riot and loot. Nobody cares about these people, and politicians keep going on TV saying how they're going to put everyone in jail or shoot them.
        fein 6y ago
        Statements and actions are two very different things, and as far as I can tell the rioters have the support of both corporations and the state, as absolutely nothing has been done to deal with the unrest. That is, unless you start to cause trouble in the wrong neighborhood, then the police will absolutely take care of it: https://www.nbcnewyork.com/news/local/crime-and-courts/nypd-shoot-gunman-after-finding-man-shot-in-brooklyn/2444323/ https://www.nbcnewyork.com/news/local/crime-and-courts/nypd-... I'm not sure why people are eating up the media lie idea that the government is some fascist entity supporting corporations, because the government's actions show that the rioters, politicians, corporations, and government (state and federal) are all on the same side. Revolutionaries that signal on the same lines as Sony, Target, Walmart, Google, the state governments, and the federal government... It's honestly laughable how well this is orchestrated and how incredibly naive or stupid the people are that are eating it up for social brownie points. The only people not being represented by anyone are the small business owners who don't wan't their homes and businesses eviscerated, and normal citizens who keep their heads down.
- metalliqaz 6y ago
  I know a few rich people. They basically want Trump to just shoot all the protesters. I don't see any message being received.
  - brenden2 6y ago
    Agreed, I (unfortunately) know many of these people. They simply don't understand the problem, and do not want to empathize with "the other side". It's worth trying to help others understand why people are angry. People need real help, police need to be held accountable, and we can't just keep shoveling cash into the pockets of the rich.
    - cheez 6y ago
      Not exactly. They know, but don't care. They believe they are disconnected from the consequences.
      - brenden2 6y ago
        That may be true, but as someone who has been actually poor before, and have also known many people who were born into money, I don't think rich people really understand what it means to be poor, hopeless, and also discriminated against.
        cheez 6y ago
        They can sympathize (intellectually) or empathize (having been poor before). The rich are not even sympathizing at this point.
  - deleted 6y ago
    [deleted]
  - cheez 6y ago
    Same
  - Miner49er 6y ago
- babycake 6y ago
  Politicians, police, corporations, media... the institution is trying to pushing the idea that protestors == looters. And therefore the protests should be quelled. Several states even went so far as to declare, without any evidence, that the majority of the people in the protests were from out-of-state troublemakers... which makes no sense. Even more fitting, President Trump called the protestors thugs and terrorists. It's all part of a design to stop the momentum of these protests. It's not the people who are 'ignoring' the inequalities. With 40+ million unemployed, unable to feed or pay rent, watching their tax dollars get gulped up by big corporations from the 'small business loan program', unable to get their unemployment checks, and getting beaten by police for no reason other than race and deep pocket money from politicians/rich elites. People at the bottom know exactly what's happening, because it affects their personal livelihoods very deeply, and the combination of those issues is why they are on the streets protesting day and night, while computer people like HNers who are generally well off are still behind a corporate desk with no unions, and only observing from afar.
  - rixrax 6y ago
    It’s a protest! You want someones attention. What good would it do to shout slogans in some hick town in the middle of nowhere. Of course You want to go somewhere where someone actually notices. So people protesting out of state/town/county makes perfect sense to me. That said, completely agree that narrative around ‘trouble makers coming out of town’ was overblown and likely put out to take attention away from real issues at hand.
  - swiley 6y ago
    I was under the impression that Trump called the rioters thugs and terrorists which is a little different.
    - scollet 6y ago
      Those are loaded terms. When you conspire to conflate protesters and looters as the latter, then it doesn't make a difference.
  - blockmarker 6y ago
- vinhboy 6y ago
  It's easy to see this in graph form. 100K+ COVID deaths, 15%+ unemployment, wide spread homelessness, unaffordable housing crisis, riots and curfew in every major American city. Google DJIA to see a graph of how this has affected the wealthy... I am not blaming the players (well some), but the game is rigged.
  - brenden2 6y ago
    The Federal Reserve injected trillions of free money into the markets, so naturally they went up.
    - rcoder 6y ago
      This IMHO defends, not defuses the preceding argument. When there was risk of the market crashing, the federal government injected trillions _into the market_. This primarily benefits those with significant capital investments, not those whose ability to provide for themselves and their families is tied directly to regular employment. Small business, retail and service workers, and employees whose jobs can't be trivially moved online are in desperate straights right now. The Fed's action did almost nothing for them.
      - brenden2 6y ago
        Just FYI, I was agreeing with the parent (and I agree with you). QE is free money for rich people, and a big slap in the face to the poor.
  - derg 6y ago
    And this is all _before_ evictions and foreclosures are allowed to start again. With the number of people already behind on rent and the number of people paying rent on credit cards it could get really ugly without any policy to mitigate this.
zwaps 6y ago
One thought: US centric.
- lotsofpulp 6y ago
  Economies of scale from computing power and reduced demand for labor due to automation is not US specific.
  - harpratap 6y ago
    > But the decline in the labour share has been much more pronounced in the US than in other industrialised economies which are arguably similarly exposed to globalisation and technological change From the linked article
    - lotsofpulp 6y ago
      The US happens to have a huge population speaking the same language and dealing with roughly the same regulations, so the economies of scale are even better. But, as the article says, labor everywhere faces the same risks.
    - willcipriano 6y ago
      If compared to European countries the US has higher wages generally, is it possible this effect is due to wages in those economies being at or near the wage floor already?
specialist 6y ago
+1 Comparing wages to corporate profitability, valuations. Drives me nuts when these aspects are treated as completely unrelated. I'm still deeply ambivalent about redistribution, cashectomies, etc. But it'd a lot easier to remain neutral if there was (a lot) more profit sharing. Also, I have a hunch that gross inequity is related to the "missing productivity". I'm hoping someone is researching this.
- Taek 6y ago
  It's a structural issue. Corporations are designed to extract as much value for shareholders as possible, paying employees as little as possible is a part of that. That includes all levels of compensation, such as awarding shares to employees.
  - specialist 6y ago
    Are you defending or explaining?
- zozbot234 6y ago
  AIUI, profits do not really explain inequality. It's a wages dynamic, where the premium that's paid for highly-skilled work tends to grow over time. Separately, wages in highly-regulated sectors (such as law and healthcare) also show significant growth, even though skill requirements haven't changed all that much in these occupations.
  - specialist 6y ago
    I still have zero intuition about cost disease. https://en.wikipedia.org/wiki/Baumol%27s_cost_disease https://en.wikipedia.org/wiki/Baumol%27s_cost_disease The only notion that makes any sense to me (so far) is Graeber's bullshit jobs thesis. Being a life long patient, my observation is that healthcare workers have become A LOT more skillful, knowledgeable, educated. The natural trend towards ever greater specialization and all that. I know nothing about lawyers, so can't comment.
    - 6y ago
tryptophan 6y ago
This seems like a political piece. There is no mention of how the decline in worker share is due to a rise in real-eastate income share, not due to monopolies or corporations or capitalism or billionaires. "Due to" is maybe a strong way of putting it, but that's where the share from the decrease went. For some reason everyone seems to accept the idea that just being there first and buying land first somehow entitles you to eternally increasing prices and rents for that land, even when you do literally nothing to improve it's value(hello, 'historic' parking lots in SF). With the trend towards big cities, this is starting to be an issue that was previously masked by just how big the us was and how much free land there was.
- xnyan 6y ago
  >This seems like a political piece Politics is the study of how power is distributed in a society. By definition, almost everything you could discuss involves politics. Complaining that something is "political" usually means "I have everything I need with regards to power distribution in society, why are you wasting my time talking about what you want?"
- sokoloff 6y ago
  I don't think anyone believes that "owning land entitles you to eternally increasing prices". I think most people accept that owning land/buildings and renting it out to other people is an appropriate type of economic transaction to allow.
  - jimmaswell 6y ago
    I'm skeptical of its implementation. So much land is bought up by a small number of entities with a lot of money then rented out at a profit indefinitely with little to no value added. My parents have been paying rent for 15 years and the only involvement from the landlord has been fixing the heater once or twice after having to be harassed to do so. In this situation he's essentially a parasitic middleman for property taxes. There are legitimate reasons people may want to rent instead of own, but it seems to me that it needs to be curtailed to some extent. Maybe controls on how much property can be rented or owned without occupying so that people who want to live in a house without sending half their paycheck into a black hole all their lives have a better chance.
RcouF1uZ4gsC 6y ago
The big issue is supply and demand. With increasing automation and global supply chains, there is a huge amount of labor available relative to the need. In the past, a union strike at a plant would see a generous long-term contract and benefits for the workers. Now, it is likely for the plant to be moved or workers replaced with automation.
- rapsey 6y ago
  Automation is a drop in the ocean compared to the effects of trade agreements that resulted in jobs being exported.
  - altvali 6y ago
    Could you back that up with data? I'm curious to know by how much and how you reached that conclusion.
    - scohesc 6y ago
      It's something that's so obviously common sense that you really don't need a study to back it up - let alone in today's culture any study that would even suggest this would be in the news with labels of 'racist' or 'alt-right'.
      - deleted 6y ago
        [deleted]
    - rapsey 6y ago
      I would like to see someone back up the data with regards to automation. Why is the burden of truth on the other side? Fact of the matter is Chinese factories that produce the world's gadgets employ millions. This is reality and not some mythical fully automated factories. Globalism made the very poor in China/Mexico/etc. richer, created their middle class and it made the very rich in US/EU even richer at the cost of US/EU middle class. Saying how that is irrelevant now because of automation just smells like new propaganda to replace the old one so that the rich can get richer and the rest of us arguing propaganda.
jakozaur 6y ago
In almost all USA industries, there is increasing amount of consolidation. The top 4 companies' in almost any industry has a larger share of the total market: https://www.economist.com/briefing/2016/03/26/too-much-of-a-good-thing https://www.economist.com/briefing/2016/03/26/too-much-of-a-... Some consolidation is natural, but a huge part is caused by mergers and acquisitions (M&A) fulled by Private Equity. The M&A benefits the shareholders of participating companies at the expense of consumers, employees, and other companies.
- take_a_breath 6y ago
  There are fewer publicly traded companies and the ones that do exists are larger than ever. From Bloomberg: ==About 3,600 firms were listed on U.S. stock exchanges at the end of 2017, down more than half from 1997.== https://www.bloomberg.com/opinion/articles/2018-04-09/where-have-all-the-u-s-public-companies-gone https://www.bloomberg.com/opinion/articles/2018-04-09/where-...
  - lotsofpulp 6y ago
    This article also has some good statistics: https://www.nytimes.com/2018/08/04/business/shrinking-stock-market.html https://www.nytimes.com/2018/08/04/business/shrinking-stock-...
- sokoloff 6y ago
  What is PE fueled by? IMO, in large part by zero interest rate policies.
  - JamesBarney 6y ago
    I think the cause and the effect is reversed. There is more money for investment now than ever before (due to an aging population, and increased inequality) which leads to both a low/zero interest rate, and lots of money for PE. If it was an artificially low interest rate we'd see wage inflation, as opposed to just asset inflation.
joycian 6y ago
Does anybody here know of a good modern book about land value tax or Georgist economics in general? Any (constructive) opinions would also be welcome.
- bwestergard 6y ago
  "Radical Markets" by Weyl and Posner (2018) is a very accessible summary of what you might call "neo-Georgist" thinking. George's essential political idea was that society is not a struggle between labor (workers) and capital (entrepreneurs, investors, landowners, etc), but between rentiers - paradigmatically landlowners, but in neo-Georgist thought all "owners" - and the "productive" classes (labor and entrepreneurial capital). For George, the general interest can always be identified with capital accumulation. Rentiers stand in the way of capital accumulation, and thus in the way of the general interest. Many software developers feel the line between entrepreneurial capital and highly remunerated wage work is quite blurry because, for at least two decades, they have seen a significant amount of upward and downward mobility. Who doesn't know someone who started a "lifestyle business", retired early, or cashed out some stock options and played the VC game a bit? Combine this with the obvious dysfunctionality of the Bay Area housing market, VC excess, etc. and Georgism seems entirely natural. The difficult questions for the neo-Georgists include: Can capital accumulation really be identified with welfare? Given how stagnant labor productivity enhancing technological development has been for two decades, can we really assume institutional changes will boost it? If they can't, doesn't this make the normative questions all the more difficult?
- combinatorzx 6y ago
  https://www.amazon.com/New-School-Economics-Platform-Physiocrats-ebook/dp/B07B6329KQ/ https://www.amazon.com/New-School-Economics-Platform-Physioc... The New School of Economics (2018)
lanevorockz 6y ago
Trying to break the conditioning here but government should always tax in a way that it incentive WORK. The way things are Wealth is no longer being produced, so those who have it will be on top because income will never be enough to prop you up. Therefore we should want a Growth market so that more wealth is produced and risk averse people will still be rich but more people will become as rich as them. To resolve Inequality we can't just have the mindset of punish the rich for creating wealth. We need to grease up our economy so that everyone else can be rich as well. Different mindset but this problem is super hard to solve and I don't think anyone has a decent solution for it.
- toiletfuneral 6y ago
  landlords don't WORK and equity firms don't produce anything, we can start by removing these parasites
- rfulop 6y ago
  I'm with this argument. Capital gains should at least be taxed as much as earned income.
  - creddit 6y ago
    But then if you want to help people build wealth that don’t have it, you make it much harder. I really feel like people need to look into land taxes a la Henry George: https://en.wikipedia.org/wiki/Henry_George https://en.wikipedia.org/wiki/Henry_George Taxing things like capital gains differently or implementing a generic wealth tax can actually hurt those we want to help to build wealth as well as incentivize things like expatriation of wealth. Can’t expatriate land.
    - RNCTX 6y ago
      Taxes are not punishment. Taxes exist because a certain amount of wealth is required to maintain a state. I understand that the financial/business world has been trying to convince people otherwise since the mid 1970s, but they are still as wrong today as they were then. Tax “fairness” is therefore simple. He who earns the most should pay the most. You cannot expatriate dollars. The currency is issued by the state and the state can seize it. Chinese factory? Great, tariff on iPhones at the dock. Baseline tax = difference in currency value between country of origin and country of destination on that day. HQ in Ireland? Super, you owe the US the difference between the tax you paid there and the equivalent rate here. Don’t like it? No security sales in US markets. Sell bonds and stock somewhere else. These aren’t hard problems.
jorblumesea 6y ago
Could it be that Larry Summers, proponent of deregulation and globalization, could have contributed to the destruction of the American worker? Ironically, no mention of those policies here.
- rmrfstar 6y ago
  There's also his 1998 attack on Brooksley Born and her proposal to regulate swaps. This proposal would have likely avoided or mitigated the 2008 crisis [1,2]. If I made an error that big, it would take some huge new insight for my research to be taken seriously again. [1] https://www.nytimes.com/2008/10/09/business/economy/09greenspan.html?pagewanted=print https://www.nytimes.com/2008/10/09/business/economy/09greens... [2] https://en.wikipedia.org/wiki/Brooksley_Born https://en.wikipedia.org/wiki/Brooksley_Born
- creddit 6y ago
  Depends so much on what deregulation you mean. If you mean deregulating from an antitrust perspective, sure that could be blamed. I don’t know specifically of him doing so, though, it’s completely possible. However, have you ever tried to open or run a small business? The regulations are INSANE especially if you want a physical location. Go try and build housing in the city that needs it most. Good luck. Free the fucking markets a bit. It works.
amaajemyfren 6y ago
TIL: NAIRU. Non-Accelerating Inflation Rate of Unemployment refers to a theoretical level of unemployment below which inflation would be expected to rise. It was first introduced as NIRU (non-inflationary rate of unemployment) by Franco Modigliani and Lucas Papademos in 1975, as an improvement over the "natural rate of unemployment" concept which was proposed earlier by Milton Friedman. In the United States, estimates of NAIRU typically range between 5 and 6%. Monetary policy conducted under the assumption of a NAIRU typically involves allowing just enough unemployment in the economy to prevent inflation rising above a given target figure. Prices are allowed to increase gradually and some unemployment is tolerated. https://en.wikipedia.org/wiki/NAIRU https://en.wikipedia.org/wiki/NAIRU
- kgin 6y ago
  It’s a fascinating thing to realize that policymakers consider zero unemployment to be too low. The economy is built on the idea that some people at the bottom will be desperate enough to keep minimum wages low.
  - ls612 6y ago
    Zero unemployment would be bad because it would imply there’s no churn of people leaving one job for another. Back last year when unemployment was 3.5% most of that is people choosing to leave a job to find a new one.
    - sudosysgen 6y ago
      It is not necessary to be unemployed for an extended amount of time in order to change jobs.
      - ls612 6y ago
        But on average a few percent of people will be unemployed at the moment the survey week is conducted. And that is what the unemployment rate is measuring.
scottlocklin 6y ago
No sane person should ever listen to Larry Summers again. This weasel looted America; even looted Russia with his pals at Harvard -anything he has to say that isn't a groveling apology for his life of treachery and destruction isn't worth listening to.
- nickff 6y ago
  I'm not sure that Larry Summers would call the people at Harvard his 'pals'; my understanding is that Summers was forced out of his position there.
  - scottlocklin 6y ago
    Andrei Shleifer was definitely his pal, definitely helped loot Russia, is STILL at Harvard, despite their settling a lawsuit over insider trading related to his activities, and Summers was not forced out from his position there for any malfeasance. He was forced out for saying things. Which shows you where Harvard is at; commit crimes, loot multiple countries? No problemo; just don't say things which trigger people.
- jeffreyrogers 6y ago
  It's a bit funny watching all of these economists backpedal and attempt to explain why the policies they promised would be so great for the average American have failed. Summers has been talking elsewhere about how America needs a new approach to China that is more aligned with America's economic interests. Of course, he doesn't mention that he helped shape America's approach to China originally.
- ShamelessC 6y ago
  I'm unfamiliar with this scandal and am having trouble researching it on Google. Can you explain it in simple-ish terms (I'm weak on economics) and/or provide a source?
kebman 6y ago
To me it's pretty easy to understand. It's far easier for state organs to control large corporations, than many small and independent businesses. Meanwhile, it's far easier for coroporations with means to lobby for legislation that makes it difficult for smaller, i.e. competing, businesses to thrive. They can do this, because they can afford the armies of lawyers and lobbyists needed to uphold and exploit all those rules. Just add revolving doors. It's particularly conspicuous that this is going on to such a degree in the USA. In effect, it means the USA is increasingly ending up with a new kind of aristocracy not dissimilar from the royal rule they once rebelled against.
- Dumblydorr 6y ago
  I'd argue it's simpler for governments to foster a free and competitive market than try to work against massive vertically integrated companies with tons of lobbyists and power. Are you suggesting the US has any control over the tech giants? It's clearly not the case, most politicians talk the talk, but they take massive donations in private events and then craft legislation to favor big tech. What we need is more companies, more competition, government needs to bust up the big players and disallow M&A.
  - nickff 6y ago
    Bureaucracies don't like working with a bunch of small companies; they want to work with a few large companies with specialized departments that make it easy to get what they want. The rules and regulations are all written for large corporations with inside counsel and compliance departments, not small independent companies. source: I work at a small company, and have dealt with such bureaucrats
joantune 6y ago
This related video pops to mind TL;DR buybacks and CEOs bonuses based on share value, create an incentive not to invest in the worker force https://youtu.be/ylLTMYt24lA https://youtu.be/ylLTMYt24lA
suyash 6y ago
I fail to see this in High Tech Companies, let's take FANG for example, by various measure we can call these monopolies, now if you look at their worker's earning, they earn by far the highest in the industry for same type of job. So that seems to have failed the premise of this argument "Declining worker power vs. rising monopoly power:"
- rjkennedy98 6y ago
  In a bubble, yes. But if you compare them to the top paying jobs of prior generations (say finance jobs of 20 years ago) they are actually pretty paltry wages in comparison. Plus, 250K in San Francisco where the average home is over a million dollars is not really that great.
benjaminjosephw 6y ago
I came across this very relevant article earlier today: "Computers Don't Kill Jobs, People Do: Technology and Power in the Workplace"[0] It was written in 1996 but many of the observations affirm these trend: > Technology undoubtedly contributes to productivity, which should, of course, make more available to all. But buried (not too deeply) in the very innovations that increase productive capacity of the workforce are factors that serve to deny the workforce the bargaining power to gain their share of the output. It argues that the people who drive innovation and technological advancement in the workplace tend to do so for the benefit of a small minority (i.e. the owners/buyers rather than the worker/users) which itself contributes to an increasing inequality of power. [0] - https://www.jstor.org/stable/1047971 https://www.jstor.org/stable/1047971
yogthos 6y ago
Marx literally wrote about this in Das Kapital over a 100 years ago laying out the mechanisms of capitalist consolidation: The splitting-up of the total social capital into many individual capitals or the repulsion of its fractions from one another, is counteracted by their attraction. This last does not mean that simple concentration of the means of production and of the command over labour, which is identical with accumulation. It is concentration of capitals already formed, destruction of their individual independence, expropriation of capitalist by capitalist, transformation of many small into few large capitals. This process differs from the former in this, that it only presupposes a change in the distribution of capital already on hand, and functioning; its field of action is therefore not limited by the absolute growth of social wealth, by the absolute limits of accumulation. Capital grows in one place to a huge mass in a single hand, because it has in another place been lost by many. This is the centralization proper, as distinct from accumulation and concentration. The laws of this centralization of capitals, or of the attraction of capital by capital, cannot be developed here. A brief hint at a few facts must suffice. The battle of competition is fought by cheapening of commodities. The cheapness of commodities depends, coeteris pribus, on the productiveness of labour, and this again on the scale of production. Therefore, the larger capitals beat the smaller. It will further be remembered that, with the development of the capitalist mode of production, there is an increase in the minimum amount of individual capital necessary to carry on a business under its normal conditions. The smaller capitals, therefore, crowd into spheres of production which Modern Industry has only sporadically or incompletely got hold of. Here competition rages in direct proportion to the number, and the inverse proportion to the magnitudes, of the antagonistic capitals. It always ends in the ruin of many small capitalists, whose capitals partly pass into the hand of their conquerors, partly vanish. Apart from this, with capitalist production an altogether new force comes into play - the credit system. In its beginnings, the credit system sneaks in as a modest helper of accumulation and draws by invisible threads the money resources scattered all over the surface of society into the hands of individual or associated capitalists. But soon it becomes a new and formidable weapon in the competitive struggle, and finally it transforms itself into an immense social mechanism for centralization of capitals.
- julienfr112 6y ago
  Well, Marx predicted that : https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit_to_fall https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit... . The exact opposite of what we are looking at.
alexose 6y ago
I find it very disappointing that the most reliably lucrative career arc for a programmer nowadays is to get hired by a tech giant and stay there as long as possible. And the second most is probably to go to work for a company that could get gobbled up by a tech giant. I've made a career out of small startups, and I wouldn't trade it for a thing. On the other hand, if I'd gone to work for Amazon straight out of college, I'd probably have a boat by now.
- zeroonetwothree 6y ago
  Well yeah usually the more fun job pays less. That’s just basic economics. Life is all about trade offs.
  - cvlasdkv 6y ago
    There is nothing inherent in "basic economics" that postulates that fulfilling or fun jobs pay less. I also find the idea of "basic economics" laughable given how impossible economics is in the first place. I mean, yes, if you assume spherical cows...
    - luckylion 6y ago
      > There is nothing inherent in "basic economics" that postulates that fulfilling or fun jobs pay less. It kinda is, isn't it? The fun, fulfilling job is one that everybody is happy to do. The boring, soul-devouring job is where you need to encourage people to do it by offering more money.
    - gnicholas 6y ago
      > There is nothing inherent in "basic economics" that postulates that fulfilling or fun jobs pay less It's called 'psychic income', and it is something that people will accept, to some extent, as a substitute for cash comp. This is widely cited as the reason that teachers earn less than other professions, and why garbage collectors earn more. There are a lot of people who enjoy teaching, and not a lot who enjoy garbage collecting. https://www.wipo.int/edocs/pubdocs/en/wipo_pub_econstat_wp_50.pdf https://www.wipo.int/edocs/pubdocs/en/wipo_pub_econstat_wp_5...
amaajemyfren 6y ago
I am not an economist. Compared with the hard sciences (physics, biology, chemistry, mathematics) economics is still quite new and I suspect there would be more people seeing these trends and offer other models trying to explain them. From a libertarian acquaintance the root cause is clear. Going off the Gold standard[1] in the US. I am not completely convinced. [1] https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/
Proven 6y ago
That alleged trend doesn't concern me at all. What concerns me is my declining power vs. State power.
deleted 6y ago
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Merrill 6y ago
But why did worker power decline? I think that a major factor is the increasing number of roles occupied by workers. Workers were easier to organize when large numbers performed similar job functions in large manufacturing industries. Now manufacturing that requires a large number of one type of worker has been offshored. The residual manufacturing is either highly automated, or it is producing a large array of higher-tech products requiring a wider variety of skill sets. The new service economy also requires a vast number of different roles fitting into partially automated business processes. As the degree of automation shifts, roles change rapidly. This makes it difficult to engage in union bargaining to arrive at contracts that define wages and benefits for specific jobs.
- viburnum 6y ago
  Nope, it was a political battle that labor lost.
viburnum 6y ago
It’s sad to see elite American economists fumbling around with productivity and employment issues that Swedish economists like Wigforss, Karleby, Sandler, and the Myrdahls had worked out in the 1930s and 1940s.
- afterburner 6y ago
  It's a feature not a bug. Things that were figured out in the 30's (such as Keynes) were actively fought against by people who didn't like the policy those economic conclusions led to. Mainly because those policies interfered with their plans to gobble everything up. Entire erroneous economic theories were concocted to wage their war.
thayne 6y ago
I'm suprised there isn't any mention of the relation between monopoly power and declining worker power. I'm not an economist, but it seems like if a company gets a monopoly on an industry, it most likely also has a monopsony on workers in that industry, thus reducing the negotiating power of those workers, since they can't go work for another company if their employer treats them badly. At least, not without having to be re-trained to work in a different industry.
dclowd9901 6y ago
This paper still dances around the real issue. Why has worker power decreased? Yes, we can say that capital owners capitalised on the fact that workers were willing to give up more. But why were they? Unions can explain some of it, but why did Unions go away? Why is it, when two workers sit in two rooms with two managers, one of them is willing to take less than the other? Consumer credit is why. Because of consumer credit, the person who is able to and willing to overextend their financial position "wins", which is an awful race to the bottom. The essential purpose of work is to provide a lifestyle. If you cannot achieve the lifestyle you want with your job, you will demand more money. Why work at all if you're just scraping by, and not able to enjoy any of life? But, wait, here's a credit card. Now you can have that lifestyle you want, and you don't really _need_ to demand more from your employer. Or maybe you do, but you know the next guy has one too, and you know that he'll take less because he can, and maybe he's less financially intelligent than you are. So you feel like you have less bargaining power at the table. Would unions help with this? Maybe. But lifestyle is what drives us at our core. If greed is a core component of demand, then we need to make it so that we can't quench greed with false financial mechanisms.
- shoo 6y ago
  Is there any research that supports this claim that access to consumer credit is primarily responsible for decreasing worker power?
PatrolX 6y ago
Monopolies and centralization drive fear. Fear controls populations, and protects power. We need to start taking decentralization far more seriously than we have been. https://twitter.com/asculthorpe/status/1268265854648700930 https://twitter.com/asculthorpe/status/1268265854648700930
uoaei 6y ago
This is co-authored by Larry Summers, whose main ideological bent is that economic activity is good only as long as it serves US interests and can be directed by the US. He is on record as saying that African countries are underpolluted. This is not to disavow any of the conclusions in the document, but only to provide a framing and context for the kinds of problems he is capable of identifying and the kinds of solutions he is comfortable proposing.
nahuel0x 6y ago
The law of increasing concentration of capital is probably the most successful prediction made by Karl Marx until now. Just another sample: "Since the 1950s, food retailing in the UK has undergone a massive shift from high streets, covered markets and district centres full of small independent specialist food shops; grocers, greengrocers, bakers and butchers, to the domination of food retailing by the "big four" supermarket chains; Tesco, Asda, Sainsbury's and Morrisons. In 1960 small independent retailers had a 60% share of the food retail market, supermarkets about 20%. Now the small independents share is reduced to 6%, while the multiples' share has increased to 88%.7"
JohnnyHerz 6y ago
this statement by the authors is silly on it's face... They claim that the US has seen a falling labor share due to the following --- "the decline in worker power – as private sector unionization and union power fell, the real value of the minimum wage declined, shareholder activism increased, and ‘ruthless’ management tactics became widespread" The authors are either locked up in their academic high tower and out of touch or they are writing to serve a political agenda. Unions served a valuable purpose when management was truly "ruthless", however nothing in current work culture remotely approaches "ruthless" anymore. Unions are effective at increasing pay in return for less production. it's sad but true. There are few unions left that actually have anything resembling an ethic of hard work when compared to non-union norms. These remnants of hard working union types are only found in the blue collar "gloves and sweat" industries. That point aside, America has lost it's blue collar labor force because we have developed a technocratic, first world, entitlement culture that considers physical labor as an untenable acquaintance. Meanwhile, the rest of the world has to fight and struggle to survive and hard work is a fact of life and a measure of worth. Consequently, Americas blue collar workforce is simply out worked by the rest of the world and if not for the immigrant work force, that bring the drive and desire to work hard with them, American labor would be in an even worse predicament. Pricing power for the workforce does exist in America and examples abound. However, it is these unionized parts of the economy that have contributed to the downward trend in labor share by offering less production in return for extorted compensation increases. American born workforce has lost the cultural sponsorship of physical labor and each generation laments the laziness of the next. This is the underlying reason that America's share of world labor has declined. Academics are laughingly stupid sometimes.
simonebrunozzi 6y ago
The problem is not just consolidation, which is certainly happening. The real problem is that certain industries (e.g. airlines) supposedly compete on prices and service, but large chunks of their stocks are owned by the same investors. It doesn't take a smart brain to imagine what happens behind the scenes...
lazulicurio 6y ago
Although the economy is a complex system and it's dangerous to try to over-simplify, my personal opinion is that there are two main and intertwined causes: 1) the cost to participate in the US court system. 2) the abuse of copyright, patent, trademark, and contract[1] law to divorce workers from their experience and treat employee knowledge as company property. The time and money involved in both pursuing and defending court cases favors larger entities with armies of lawyers and large war chests. Intellectual "property" cases take especially vast amounts of resources because of the fuzziness involved. Meanwhile, treating workers as fungible producers of ideas that can be bought and sold both reduces the bargaining power of individual workers while empowering companies that can amass large portfolios of patents, etc. to use in litigation. Not sure about reforms for the court system, but patent and copyright reform, combined with restrictions on unfair employment contracts, would go a long way to improving the situation. [1] NDAs, NCAs, etc.

409 points by hhs 6y ago

I think this plays into the current social unrest as well. People have been trying to separate the looters and protestors, but they seem to completely ignore the extreme inequality that exists throughout the US, especially in this period of high unemployment. People at the bottom have it bad, very bad. Being ignorant of that problem is just going to make it worse. Lashing out at fancy retailers in fancy neighbourhoods makes a lot of sense as a way of sending a message to rich people, whether you like it or not.

deleted 6y ago
[deleted]
brenden2 6y ago
Someone commented and deleted, but in response I'll leave this here: https://www.youtube.com/watch?v=JNfqr-rzj5I https://www.youtube.com/watch?v=JNfqr-rzj5I It's an interview with Cornel West. You may not agree with his political philosophy, but he "gets it" with regard to the current social unrest. If you want to understand what's happening, you should try to empathize with what he's talking about.
pydry 6y ago
In all likelihood lashing out at fancy retailers will be effective. Additional police powers and crackdowns will be paired with throwing the rioters a few bones (e.g. greater checks on police powers and throwing the book at George Floyd's murderers). Of course, the elites will pretend that they meant to throw that bone all along and will vehemently deny it has anything to do with a smashed up Gucci store in Beverly Hills and a lot of Americans (perhaps most) will believe this denial.
- brenden2 6y ago
  Indeed, peaceful protests are good for the status quo because they're easy to ignore. They want you to sit down and be quiet so they can ignore you. Once you start to inconvenience rich people, or god forbid cause the stock market to go down, real change will begin to happen.
- asdfasgasdgasdg 6y ago
  Do you really think so? These stores all have insurance. The deductibles will hurt a little but I don't think it's going to be game changing, especially for any national or international chains.
  - brenden2 6y ago
    It hurts insurance companies, but it's great for anyone who fixes or repairs windows.
    - lotsofpulp 6y ago
      Until the businesses don’t exist anymore because it’s not possible to insure at a price where people will still buy product.
      - brenden2 6y ago
        These are mostly big chains, I think they'll be okay.
        lotsofpulp 6y ago
        The big chains were suffering outside of a handful of affluent neighborhoods in all cities even in good times, I don’t see why this wouldn’t be a problem. Margins are low, and consumers’ ability to spend is low, so raising prices might not be possible leaving closing down as the only option.
        brenden2 6y ago
        If you don't run a viable business, should your business continue to exist? Which one do you want, socialism or capitalism? In a capitalist system, failed businesses are allowed to fail and don't get free money from the government.
        lotsofpulp 6y ago
- whatshisface 6y ago
  Wait, so if there were some elites in charge of everything, and if they felt personally threatened, you are suggesting that their response would be to decrease the power of their security forces? Wouldn't they want to make the police even more powerful?
  - pydry 6y ago
    Yes of course they'd want that, but compromise is often a necessity to prevent things from spiraling totally out of control. The French and Russian revolutions are a testament to what happens when the ruler tries to effect the appearance of compromise without actually doing it (e.g. Constitution of 1906). It ended very badly for the rulers in both of those cases. They fucked up a lot more than just that, but that was a key contributing factor to their deaths.
    - ChuckNorris89 6y ago
      The difference is in the times of the French revolution, the elite lived only mere miles away from the angry poor, within striking reach of their wrath whereas now the elites can move to super safe heavens, isolated from the mess they created and suffer no consequences from the angry masses. Jeff Bezos and Warren Buffett can move with their families to some private island in the Caribbean and wait while things cool down while running their gigs remotely. The French elite had no such luxury.
      - pydry 6y ago
        I could see Louis 16th's failed flight to varennes being repeated in a different form. It wasnt a lack of technology that stopped him, it was a man recognizing him and arresting him. Part of the problem was that he left it too long to attempt fleeing.
        brenden2 6y ago
        They didn't have helicopters, underground bunkers, and air force one.
- deleted 6y ago
  [deleted]
- BurningFrog 6y ago
  This is really wrong. Destroying retail will just destroy retail. When it's gone it's gone. If you think shopkeepers control the Police, you are hopelessly confused.
  - brenden2 6y ago
    The pandemic demonstrated that luxury retail is non-essential (you can still buy your Gucci bags online). When luxury retail was closed the world did not fall apart. Nobody is protesting because they can't shop at the Apple store.
    - Aunche 6y ago
      Plenty of people complain that not enough stores like Target open up in low income areas and riots are only going to make this worse.
      - brenden2 6y ago
        For someone in desperation all I hear is further reason to riot and loot. Nobody cares about these people, and politicians keep going on TV saying how they're going to put everyone in jail or shoot them.
        fein 6y ago
        Statements and actions are two very different things, and as far as I can tell the rioters have the support of both corporations and the state, as absolutely nothing has been done to deal with the unrest. That is, unless you start to cause trouble in the wrong neighborhood, then the police will absolutely take care of it: https://www.nbcnewyork.com/news/local/crime-and-courts/nypd-shoot-gunman-after-finding-man-shot-in-brooklyn/2444323/ https://www.nbcnewyork.com/news/local/crime-and-courts/nypd-... I'm not sure why people are eating up the media lie idea that the government is some fascist entity supporting corporations, because the government's actions show that the rioters, politicians, corporations, and government (state and federal) are all on the same side. Revolutionaries that signal on the same lines as Sony, Target, Walmart, Google, the state governments, and the federal government... It's honestly laughable how well this is orchestrated and how incredibly naive or stupid the people are that are eating it up for social brownie points. The only people not being represented by anyone are the small business owners who don't wan't their homes and businesses eviscerated, and normal citizens who keep their heads down.
metalliqaz 6y ago
I know a few rich people. They basically want Trump to just shoot all the protesters. I don't see any message being received.
- brenden2 6y ago
  Agreed, I (unfortunately) know many of these people. They simply don't understand the problem, and do not want to empathize with "the other side". It's worth trying to help others understand why people are angry. People need real help, police need to be held accountable, and we can't just keep shoveling cash into the pockets of the rich.
  - cheez 6y ago
    Not exactly. They know, but don't care. They believe they are disconnected from the consequences.
    - brenden2 6y ago
      That may be true, but as someone who has been actually poor before, and have also known many people who were born into money, I don't think rich people really understand what it means to be poor, hopeless, and also discriminated against.
      - cheez 6y ago
        They can sympathize (intellectually) or empathize (having been poor before). The rich are not even sympathizing at this point.
- deleted 6y ago
  [deleted]
- cheez 6y ago
  Same
- Miner49er 6y ago
babycake 6y ago
Politicians, police, corporations, media... the institution is trying to pushing the idea that protestors == looters. And therefore the protests should be quelled. Several states even went so far as to declare, without any evidence, that the majority of the people in the protests were from out-of-state troublemakers... which makes no sense. Even more fitting, President Trump called the protestors thugs and terrorists. It's all part of a design to stop the momentum of these protests. It's not the people who are 'ignoring' the inequalities. With 40+ million unemployed, unable to feed or pay rent, watching their tax dollars get gulped up by big corporations from the 'small business loan program', unable to get their unemployment checks, and getting beaten by police for no reason other than race and deep pocket money from politicians/rich elites. People at the bottom know exactly what's happening, because it affects their personal livelihoods very deeply, and the combination of those issues is why they are on the streets protesting day and night, while computer people like HNers who are generally well off are still behind a corporate desk with no unions, and only observing from afar.
- rixrax 6y ago
  It’s a protest! You want someones attention. What good would it do to shout slogans in some hick town in the middle of nowhere. Of course You want to go somewhere where someone actually notices. So people protesting out of state/town/county makes perfect sense to me. That said, completely agree that narrative around ‘trouble makers coming out of town’ was overblown and likely put out to take attention away from real issues at hand.
- swiley 6y ago
  I was under the impression that Trump called the rioters thugs and terrorists which is a little different.
  - scollet 6y ago
    Those are loaded terms. When you conspire to conflate protesters and looters as the latter, then it doesn't make a difference.
- blockmarker 6y ago
vinhboy 6y ago
It's easy to see this in graph form. 100K+ COVID deaths, 15%+ unemployment, wide spread homelessness, unaffordable housing crisis, riots and curfew in every major American city. Google DJIA to see a graph of how this has affected the wealthy... I am not blaming the players (well some), but the game is rigged.
- brenden2 6y ago
  The Federal Reserve injected trillions of free money into the markets, so naturally they went up.
  - rcoder 6y ago
    This IMHO defends, not defuses the preceding argument. When there was risk of the market crashing, the federal government injected trillions _into the market_. This primarily benefits those with significant capital investments, not those whose ability to provide for themselves and their families is tied directly to regular employment. Small business, retail and service workers, and employees whose jobs can't be trivially moved online are in desperate straights right now. The Fed's action did almost nothing for them.
    - brenden2 6y ago
      Just FYI, I was agreeing with the parent (and I agree with you). QE is free money for rich people, and a big slap in the face to the poor.
- derg 6y ago
  And this is all _before_ evictions and foreclosures are allowed to start again. With the number of people already behind on rent and the number of people paying rent on credit cards it could get really ugly without any policy to mitigate this.

zwaps 6y ago

One thought: US centric.

lotsofpulp 6y ago
Economies of scale from computing power and reduced demand for labor due to automation is not US specific.
- harpratap 6y ago
  > But the decline in the labour share has been much more pronounced in the US than in other industrialised economies which are arguably similarly exposed to globalisation and technological change From the linked article
  - lotsofpulp 6y ago
    The US happens to have a huge population speaking the same language and dealing with roughly the same regulations, so the economies of scale are even better. But, as the article says, labor everywhere faces the same risks.
  - willcipriano 6y ago
    If compared to European countries the US has higher wages generally, is it possible this effect is due to wages in those economies being at or near the wage floor already?

specialist 6y ago

+1 Comparing wages to corporate profitability, valuations. Drives me nuts when these aspects are treated as completely unrelated. I'm still deeply ambivalent about redistribution, cashectomies, etc. But it'd a lot easier to remain neutral if there was (a lot) more profit sharing. Also, I have a hunch that gross inequity is related to the "missing productivity". I'm hoping someone is researching this.

Taek 6y ago
It's a structural issue. Corporations are designed to extract as much value for shareholders as possible, paying employees as little as possible is a part of that. That includes all levels of compensation, such as awarding shares to employees.
- specialist 6y ago
  Are you defending or explaining?
zozbot234 6y ago
AIUI, profits do not really explain inequality. It's a wages dynamic, where the premium that's paid for highly-skilled work tends to grow over time. Separately, wages in highly-regulated sectors (such as law and healthcare) also show significant growth, even though skill requirements haven't changed all that much in these occupations.
- specialist 6y ago
  I still have zero intuition about cost disease. https://en.wikipedia.org/wiki/Baumol%27s_cost_disease https://en.wikipedia.org/wiki/Baumol%27s_cost_disease The only notion that makes any sense to me (so far) is Graeber's bullshit jobs thesis. Being a life long patient, my observation is that healthcare workers have become A LOT more skillful, knowledgeable, educated. The natural trend towards ever greater specialization and all that. I know nothing about lawyers, so can't comment.
  - 6y ago

tryptophan 6y ago

This seems like a political piece. There is no mention of how the decline in worker share is due to a rise in real-eastate income share, not due to monopolies or corporations or capitalism or billionaires. "Due to" is maybe a strong way of putting it, but that's where the share from the decrease went. For some reason everyone seems to accept the idea that just being there first and buying land first somehow entitles you to eternally increasing prices and rents for that land, even when you do literally nothing to improve it's value(hello, 'historic' parking lots in SF). With the trend towards big cities, this is starting to be an issue that was previously masked by just how big the us was and how much free land there was.

xnyan 6y ago
>This seems like a political piece Politics is the study of how power is distributed in a society. By definition, almost everything you could discuss involves politics. Complaining that something is "political" usually means "I have everything I need with regards to power distribution in society, why are you wasting my time talking about what you want?"
sokoloff 6y ago
I don't think anyone believes that "owning land entitles you to eternally increasing prices". I think most people accept that owning land/buildings and renting it out to other people is an appropriate type of economic transaction to allow.
- jimmaswell 6y ago
  I'm skeptical of its implementation. So much land is bought up by a small number of entities with a lot of money then rented out at a profit indefinitely with little to no value added. My parents have been paying rent for 15 years and the only involvement from the landlord has been fixing the heater once or twice after having to be harassed to do so. In this situation he's essentially a parasitic middleman for property taxes. There are legitimate reasons people may want to rent instead of own, but it seems to me that it needs to be curtailed to some extent. Maybe controls on how much property can be rented or owned without occupying so that people who want to live in a house without sending half their paycheck into a black hole all their lives have a better chance.

RcouF1uZ4gsC 6y ago

The big issue is supply and demand. With increasing automation and global supply chains, there is a huge amount of labor available relative to the need. In the past, a union strike at a plant would see a generous long-term contract and benefits for the workers. Now, it is likely for the plant to be moved or workers replaced with automation.

rapsey 6y ago
Automation is a drop in the ocean compared to the effects of trade agreements that resulted in jobs being exported.
- altvali 6y ago
  Could you back that up with data? I'm curious to know by how much and how you reached that conclusion.
  - scohesc 6y ago
    It's something that's so obviously common sense that you really don't need a study to back it up - let alone in today's culture any study that would even suggest this would be in the news with labels of 'racist' or 'alt-right'.
    - deleted 6y ago
      [deleted]
  - rapsey 6y ago
    I would like to see someone back up the data with regards to automation. Why is the burden of truth on the other side? Fact of the matter is Chinese factories that produce the world's gadgets employ millions. This is reality and not some mythical fully automated factories. Globalism made the very poor in China/Mexico/etc. richer, created their middle class and it made the very rich in US/EU even richer at the cost of US/EU middle class. Saying how that is irrelevant now because of automation just smells like new propaganda to replace the old one so that the rich can get richer and the rest of us arguing propaganda.

jakozaur 6y ago

In almost all USA industries, there is increasing amount of consolidation. The top 4 companies' in almost any industry has a larger share of the total market: https://www.economist.com/briefing/2016/03/26/too-much-of-a-good-thing https://www.economist.com/briefing/2016/03/26/too-much-of-a-... Some consolidation is natural, but a huge part is caused by mergers and acquisitions (M&A) fulled by Private Equity. The M&A benefits the shareholders of participating companies at the expense of consumers, employees, and other companies.

take_a_breath 6y ago
There are fewer publicly traded companies and the ones that do exists are larger than ever. From Bloomberg: ==About 3,600 firms were listed on U.S. stock exchanges at the end of 2017, down more than half from 1997.== https://www.bloomberg.com/opinion/articles/2018-04-09/where-have-all-the-u-s-public-companies-gone https://www.bloomberg.com/opinion/articles/2018-04-09/where-...
- lotsofpulp 6y ago
  This article also has some good statistics: https://www.nytimes.com/2018/08/04/business/shrinking-stock-market.html https://www.nytimes.com/2018/08/04/business/shrinking-stock-...
sokoloff 6y ago
What is PE fueled by? IMO, in large part by zero interest rate policies.
- JamesBarney 6y ago
  I think the cause and the effect is reversed. There is more money for investment now than ever before (due to an aging population, and increased inequality) which leads to both a low/zero interest rate, and lots of money for PE. If it was an artificially low interest rate we'd see wage inflation, as opposed to just asset inflation.

joycian 6y ago

Does anybody here know of a good modern book about land value tax or Georgist economics in general? Any (constructive) opinions would also be welcome.

bwestergard 6y ago
"Radical Markets" by Weyl and Posner (2018) is a very accessible summary of what you might call "neo-Georgist" thinking. George's essential political idea was that society is not a struggle between labor (workers) and capital (entrepreneurs, investors, landowners, etc), but between rentiers - paradigmatically landlowners, but in neo-Georgist thought all "owners" - and the "productive" classes (labor and entrepreneurial capital). For George, the general interest can always be identified with capital accumulation. Rentiers stand in the way of capital accumulation, and thus in the way of the general interest. Many software developers feel the line between entrepreneurial capital and highly remunerated wage work is quite blurry because, for at least two decades, they have seen a significant amount of upward and downward mobility. Who doesn't know someone who started a "lifestyle business", retired early, or cashed out some stock options and played the VC game a bit? Combine this with the obvious dysfunctionality of the Bay Area housing market, VC excess, etc. and Georgism seems entirely natural. The difficult questions for the neo-Georgists include: Can capital accumulation really be identified with welfare? Given how stagnant labor productivity enhancing technological development has been for two decades, can we really assume institutional changes will boost it? If they can't, doesn't this make the normative questions all the more difficult?
combinatorzx 6y ago
https://www.amazon.com/New-School-Economics-Platform-Physiocrats-ebook/dp/B07B6329KQ/ https://www.amazon.com/New-School-Economics-Platform-Physioc... The New School of Economics (2018)

lanevorockz 6y ago

Trying to break the conditioning here but government should always tax in a way that it incentive WORK. The way things are Wealth is no longer being produced, so those who have it will be on top because income will never be enough to prop you up. Therefore we should want a Growth market so that more wealth is produced and risk averse people will still be rich but more people will become as rich as them. To resolve Inequality we can't just have the mindset of punish the rich for creating wealth. We need to grease up our economy so that everyone else can be rich as well. Different mindset but this problem is super hard to solve and I don't think anyone has a decent solution for it.

toiletfuneral 6y ago
landlords don't WORK and equity firms don't produce anything, we can start by removing these parasites
rfulop 6y ago
I'm with this argument. Capital gains should at least be taxed as much as earned income.
- creddit 6y ago
  But then if you want to help people build wealth that don’t have it, you make it much harder. I really feel like people need to look into land taxes a la Henry George: https://en.wikipedia.org/wiki/Henry_George https://en.wikipedia.org/wiki/Henry_George Taxing things like capital gains differently or implementing a generic wealth tax can actually hurt those we want to help to build wealth as well as incentivize things like expatriation of wealth. Can’t expatriate land.
  - RNCTX 6y ago
    Taxes are not punishment. Taxes exist because a certain amount of wealth is required to maintain a state. I understand that the financial/business world has been trying to convince people otherwise since the mid 1970s, but they are still as wrong today as they were then. Tax “fairness” is therefore simple. He who earns the most should pay the most. You cannot expatriate dollars. The currency is issued by the state and the state can seize it. Chinese factory? Great, tariff on iPhones at the dock. Baseline tax = difference in currency value between country of origin and country of destination on that day. HQ in Ireland? Super, you owe the US the difference between the tax you paid there and the equivalent rate here. Don’t like it? No security sales in US markets. Sell bonds and stock somewhere else. These aren’t hard problems.

jorblumesea 6y ago

Could it be that Larry Summers, proponent of deregulation and globalization, could have contributed to the destruction of the American worker? Ironically, no mention of those policies here.

rmrfstar 6y ago
There's also his 1998 attack on Brooksley Born and her proposal to regulate swaps. This proposal would have likely avoided or mitigated the 2008 crisis [1,2]. If I made an error that big, it would take some huge new insight for my research to be taken seriously again. [1] https://www.nytimes.com/2008/10/09/business/economy/09greenspan.html?pagewanted=print https://www.nytimes.com/2008/10/09/business/economy/09greens... [2] https://en.wikipedia.org/wiki/Brooksley_Born https://en.wikipedia.org/wiki/Brooksley_Born
creddit 6y ago
Depends so much on what deregulation you mean. If you mean deregulating from an antitrust perspective, sure that could be blamed. I don’t know specifically of him doing so, though, it’s completely possible. However, have you ever tried to open or run a small business? The regulations are INSANE especially if you want a physical location. Go try and build housing in the city that needs it most. Good luck. Free the fucking markets a bit. It works.

amaajemyfren 6y ago

TIL: NAIRU. Non-Accelerating Inflation Rate of Unemployment refers to a theoretical level of unemployment below which inflation would be expected to rise. It was first introduced as NIRU (non-inflationary rate of unemployment) by Franco Modigliani and Lucas Papademos in 1975, as an improvement over the "natural rate of unemployment" concept which was proposed earlier by Milton Friedman. In the United States, estimates of NAIRU typically range between 5 and 6%. Monetary policy conducted under the assumption of a NAIRU typically involves allowing just enough unemployment in the economy to prevent inflation rising above a given target figure. Prices are allowed to increase gradually and some unemployment is tolerated. https://en.wikipedia.org/wiki/NAIRU https://en.wikipedia.org/wiki/NAIRU

kgin 6y ago
It’s a fascinating thing to realize that policymakers consider zero unemployment to be too low. The economy is built on the idea that some people at the bottom will be desperate enough to keep minimum wages low.
- ls612 6y ago
  Zero unemployment would be bad because it would imply there’s no churn of people leaving one job for another. Back last year when unemployment was 3.5% most of that is people choosing to leave a job to find a new one.
  - sudosysgen 6y ago
    It is not necessary to be unemployed for an extended amount of time in order to change jobs.
    - ls612 6y ago
      But on average a few percent of people will be unemployed at the moment the survey week is conducted. And that is what the unemployment rate is measuring.

scottlocklin 6y ago

No sane person should ever listen to Larry Summers again. This weasel looted America; even looted Russia with his pals at Harvard -anything he has to say that isn't a groveling apology for his life of treachery and destruction isn't worth listening to.

nickff 6y ago
I'm not sure that Larry Summers would call the people at Harvard his 'pals'; my understanding is that Summers was forced out of his position there.
- scottlocklin 6y ago
  Andrei Shleifer was definitely his pal, definitely helped loot Russia, is STILL at Harvard, despite their settling a lawsuit over insider trading related to his activities, and Summers was not forced out from his position there for any malfeasance. He was forced out for saying things. Which shows you where Harvard is at; commit crimes, loot multiple countries? No problemo; just don't say things which trigger people.
jeffreyrogers 6y ago
It's a bit funny watching all of these economists backpedal and attempt to explain why the policies they promised would be so great for the average American have failed. Summers has been talking elsewhere about how America needs a new approach to China that is more aligned with America's economic interests. Of course, he doesn't mention that he helped shape America's approach to China originally.
ShamelessC 6y ago
I'm unfamiliar with this scandal and am having trouble researching it on Google. Can you explain it in simple-ish terms (I'm weak on economics) and/or provide a source?

kebman 6y ago

To me it's pretty easy to understand. It's far easier for state organs to control large corporations, than many small and independent businesses. Meanwhile, it's far easier for coroporations with means to lobby for legislation that makes it difficult for smaller, i.e. competing, businesses to thrive. They can do this, because they can afford the armies of lawyers and lobbyists needed to uphold and exploit all those rules. Just add revolving doors. It's particularly conspicuous that this is going on to such a degree in the USA. In effect, it means the USA is increasingly ending up with a new kind of aristocracy not dissimilar from the royal rule they once rebelled against.

Dumblydorr 6y ago
I'd argue it's simpler for governments to foster a free and competitive market than try to work against massive vertically integrated companies with tons of lobbyists and power. Are you suggesting the US has any control over the tech giants? It's clearly not the case, most politicians talk the talk, but they take massive donations in private events and then craft legislation to favor big tech. What we need is more companies, more competition, government needs to bust up the big players and disallow M&A.
- nickff 6y ago
  Bureaucracies don't like working with a bunch of small companies; they want to work with a few large companies with specialized departments that make it easy to get what they want. The rules and regulations are all written for large corporations with inside counsel and compliance departments, not small independent companies. source: I work at a small company, and have dealt with such bureaucrats

joantune 6y ago

This related video pops to mind TL;DR buybacks and CEOs bonuses based on share value, create an incentive not to invest in the worker force https://youtu.be/ylLTMYt24lA https://youtu.be/ylLTMYt24lA

suyash 6y ago

I fail to see this in High Tech Companies, let's take FANG for example, by various measure we can call these monopolies, now if you look at their worker's earning, they earn by far the highest in the industry for same type of job. So that seems to have failed the premise of this argument "Declining worker power vs. rising monopoly power:"

rjkennedy98 6y ago
In a bubble, yes. But if you compare them to the top paying jobs of prior generations (say finance jobs of 20 years ago) they are actually pretty paltry wages in comparison. Plus, 250K in San Francisco where the average home is over a million dollars is not really that great.

benjaminjosephw 6y ago

I came across this very relevant article earlier today: "Computers Don't Kill Jobs, People Do: Technology and Power in the Workplace"[0] It was written in 1996 but many of the observations affirm these trend: > Technology undoubtedly contributes to productivity, which should, of course, make more available to all. But buried (not too deeply) in the very innovations that increase productive capacity of the workforce are factors that serve to deny the workforce the bargaining power to gain their share of the output. It argues that the people who drive innovation and technological advancement in the workplace tend to do so for the benefit of a small minority (i.e. the owners/buyers rather than the worker/users) which itself contributes to an increasing inequality of power. [0] - https://www.jstor.org/stable/1047971 https://www.jstor.org/stable/1047971

yogthos 6y ago

Marx literally wrote about this in Das Kapital over a 100 years ago laying out the mechanisms of capitalist consolidation: The splitting-up of the total social capital into many individual capitals or the repulsion of its fractions from one another, is counteracted by their attraction. This last does not mean that simple concentration of the means of production and of the command over labour, which is identical with accumulation. It is concentration of capitals already formed, destruction of their individual independence, expropriation of capitalist by capitalist, transformation of many small into few large capitals. This process differs from the former in this, that it only presupposes a change in the distribution of capital already on hand, and functioning; its field of action is therefore not limited by the absolute growth of social wealth, by the absolute limits of accumulation. Capital grows in one place to a huge mass in a single hand, because it has in another place been lost by many. This is the centralization proper, as distinct from accumulation and concentration. The laws of this centralization of capitals, or of the attraction of capital by capital, cannot be developed here. A brief hint at a few facts must suffice. The battle of competition is fought by cheapening of commodities. The cheapness of commodities depends, coeteris pribus, on the productiveness of labour, and this again on the scale of production. Therefore, the larger capitals beat the smaller. It will further be remembered that, with the development of the capitalist mode of production, there is an increase in the minimum amount of individual capital necessary to carry on a business under its normal conditions. The smaller capitals, therefore, crowd into spheres of production which Modern Industry has only sporadically or incompletely got hold of. Here competition rages in direct proportion to the number, and the inverse proportion to the magnitudes, of the antagonistic capitals. It always ends in the ruin of many small capitalists, whose capitals partly pass into the hand of their conquerors, partly vanish. Apart from this, with capitalist production an altogether new force comes into play - the credit system. In its beginnings, the credit system sneaks in as a modest helper of accumulation and draws by invisible threads the money resources scattered all over the surface of society into the hands of individual or associated capitalists. But soon it becomes a new and formidable weapon in the competitive struggle, and finally it transforms itself into an immense social mechanism for centralization of capitals.

julienfr112 6y ago
Well, Marx predicted that : https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit_to_fall https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit... . The exact opposite of what we are looking at.

alexose 6y ago

I find it very disappointing that the most reliably lucrative career arc for a programmer nowadays is to get hired by a tech giant and stay there as long as possible. And the second most is probably to go to work for a company that could get gobbled up by a tech giant. I've made a career out of small startups, and I wouldn't trade it for a thing. On the other hand, if I'd gone to work for Amazon straight out of college, I'd probably have a boat by now.

zeroonetwothree 6y ago
Well yeah usually the more fun job pays less. That’s just basic economics. Life is all about trade offs.
- cvlasdkv 6y ago
  There is nothing inherent in "basic economics" that postulates that fulfilling or fun jobs pay less. I also find the idea of "basic economics" laughable given how impossible economics is in the first place. I mean, yes, if you assume spherical cows...
  - luckylion 6y ago
    > There is nothing inherent in "basic economics" that postulates that fulfilling or fun jobs pay less. It kinda is, isn't it? The fun, fulfilling job is one that everybody is happy to do. The boring, soul-devouring job is where you need to encourage people to do it by offering more money.
  - gnicholas 6y ago
    > There is nothing inherent in "basic economics" that postulates that fulfilling or fun jobs pay less It's called 'psychic income', and it is something that people will accept, to some extent, as a substitute for cash comp. This is widely cited as the reason that teachers earn less than other professions, and why garbage collectors earn more. There are a lot of people who enjoy teaching, and not a lot who enjoy garbage collecting. https://www.wipo.int/edocs/pubdocs/en/wipo_pub_econstat_wp_50.pdf https://www.wipo.int/edocs/pubdocs/en/wipo_pub_econstat_wp_5...

amaajemyfren 6y ago

I am not an economist. Compared with the hard sciences (physics, biology, chemistry, mathematics) economics is still quite new and I suspect there would be more people seeing these trends and offer other models trying to explain them. From a libertarian acquaintance the root cause is clear. Going off the Gold standard[1] in the US. I am not completely convinced. [1] https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/

Proven 6y ago

That alleged trend doesn't concern me at all. What concerns me is my declining power vs. State power.

deleted 6y ago

[deleted]

Merrill 6y ago

But why did worker power decline? I think that a major factor is the increasing number of roles occupied by workers. Workers were easier to organize when large numbers performed similar job functions in large manufacturing industries. Now manufacturing that requires a large number of one type of worker has been offshored. The residual manufacturing is either highly automated, or it is producing a large array of higher-tech products requiring a wider variety of skill sets. The new service economy also requires a vast number of different roles fitting into partially automated business processes. As the degree of automation shifts, roles change rapidly. This makes it difficult to engage in union bargaining to arrive at contracts that define wages and benefits for specific jobs.

viburnum 6y ago
Nope, it was a political battle that labor lost.

viburnum 6y ago

It’s sad to see elite American economists fumbling around with productivity and employment issues that Swedish economists like Wigforss, Karleby, Sandler, and the Myrdahls had worked out in the 1930s and 1940s.

afterburner 6y ago
It's a feature not a bug. Things that were figured out in the 30's (such as Keynes) were actively fought against by people who didn't like the policy those economic conclusions led to. Mainly because those policies interfered with their plans to gobble everything up. Entire erroneous economic theories were concocted to wage their war.

thayne 6y ago

I'm suprised there isn't any mention of the relation between monopoly power and declining worker power. I'm not an economist, but it seems like if a company gets a monopoly on an industry, it most likely also has a monopsony on workers in that industry, thus reducing the negotiating power of those workers, since they can't go work for another company if their employer treats them badly. At least, not without having to be re-trained to work in a different industry.

dclowd9901 6y ago

This paper still dances around the real issue. Why has worker power decreased? Yes, we can say that capital owners capitalised on the fact that workers were willing to give up more. But why were they? Unions can explain some of it, but why did Unions go away? Why is it, when two workers sit in two rooms with two managers, one of them is willing to take less than the other? Consumer credit is why. Because of consumer credit, the person who is able to and willing to overextend their financial position "wins", which is an awful race to the bottom. The essential purpose of work is to provide a lifestyle. If you cannot achieve the lifestyle you want with your job, you will demand more money. Why work at all if you're just scraping by, and not able to enjoy any of life? But, wait, here's a credit card. Now you can have that lifestyle you want, and you don't really _need_ to demand more from your employer. Or maybe you do, but you know the next guy has one too, and you know that he'll take less because he can, and maybe he's less financially intelligent than you are. So you feel like you have less bargaining power at the table. Would unions help with this? Maybe. But lifestyle is what drives us at our core. If greed is a core component of demand, then we need to make it so that we can't quench greed with false financial mechanisms.

shoo 6y ago
Is there any research that supports this claim that access to consumer credit is primarily responsible for decreasing worker power?

PatrolX 6y ago

Monopolies and centralization drive fear. Fear controls populations, and protects power. We need to start taking decentralization far more seriously than we have been. https://twitter.com/asculthorpe/status/1268265854648700930 https://twitter.com/asculthorpe/status/1268265854648700930

uoaei 6y ago

This is co-authored by Larry Summers, whose main ideological bent is that economic activity is good only as long as it serves US interests and can be directed by the US. He is on record as saying that African countries are underpolluted. This is not to disavow any of the conclusions in the document, but only to provide a framing and context for the kinds of problems he is capable of identifying and the kinds of solutions he is comfortable proposing.

nahuel0x 6y ago

The law of increasing concentration of capital is probably the most successful prediction made by Karl Marx until now. Just another sample: "Since the 1950s, food retailing in the UK has undergone a massive shift from high streets, covered markets and district centres full of small independent specialist food shops; grocers, greengrocers, bakers and butchers, to the domination of food retailing by the "big four" supermarket chains; Tesco, Asda, Sainsbury's and Morrisons. In 1960 small independent retailers had a 60% share of the food retail market, supermarkets about 20%. Now the small independents share is reduced to 6%, while the multiples' share has increased to 88%.7"

JohnnyHerz 6y ago

this statement by the authors is silly on it's face... They claim that the US has seen a falling labor share due to the following --- "the decline in worker power – as private sector unionization and union power fell, the real value of the minimum wage declined, shareholder activism increased, and ‘ruthless’ management tactics became widespread" The authors are either locked up in their academic high tower and out of touch or they are writing to serve a political agenda. Unions served a valuable purpose when management was truly "ruthless", however nothing in current work culture remotely approaches "ruthless" anymore. Unions are effective at increasing pay in return for less production. it's sad but true. There are few unions left that actually have anything resembling an ethic of hard work when compared to non-union norms. These remnants of hard working union types are only found in the blue collar "gloves and sweat" industries. That point aside, America has lost it's blue collar labor force because we have developed a technocratic, first world, entitlement culture that considers physical labor as an untenable acquaintance. Meanwhile, the rest of the world has to fight and struggle to survive and hard work is a fact of life and a measure of worth. Consequently, Americas blue collar workforce is simply out worked by the rest of the world and if not for the immigrant work force, that bring the drive and desire to work hard with them, American labor would be in an even worse predicament. Pricing power for the workforce does exist in America and examples abound. However, it is these unionized parts of the economy that have contributed to the downward trend in labor share by offering less production in return for extorted compensation increases. American born workforce has lost the cultural sponsorship of physical labor and each generation laments the laziness of the next. This is the underlying reason that America's share of world labor has declined. Academics are laughingly stupid sometimes.

simonebrunozzi 6y ago

The problem is not just consolidation, which is certainly happening. The real problem is that certain industries (e.g. airlines) supposedly compete on prices and service, but large chunks of their stocks are owned by the same investors. It doesn't take a smart brain to imagine what happens behind the scenes...

lazulicurio 6y ago

Although the economy is a complex system and it's dangerous to try to over-simplify, my personal opinion is that there are two main and intertwined causes: 1) the cost to participate in the US court system. 2) the abuse of copyright, patent, trademark, and contract[1] law to divorce workers from their experience and treat employee knowledge as company property. The time and money involved in both pursuing and defending court cases favors larger entities with armies of lawyers and large war chests. Intellectual "property" cases take especially vast amounts of resources because of the fuzziness involved. Meanwhile, treating workers as fungible producers of ideas that can be bought and sold both reduces the bargaining power of individual workers while empowering companies that can amass large portfolios of patents, etc. to use in litigation. Not sure about reforms for the court system, but patent and copyright reform, combined with restrictions on unfair employment contracts, would go a long way to improving the situation. [1] NDAs, NCAs, etc.