6 ms·

It’s time for a new, progressive supply-side economics

36 points by apsec112 6y ago

minikites 6y ago
>Supply-side economics has a dirty reputation. Since the late 1970s, the term has been associated with “trickle-down” economics: the now-defunct theory that cuts in the highest tax brackets would boost economic productivity so much that government revenue would increase and all of society, even the poor, would benefit. Since when are these ideas "defunct"? Politicians currently serving in government advocate for these falsified ideas. >We badly need health innovation to drive down costs. As I argued in Fortune, research on biological aging could lead to longer healthspans, compressed morbidity, reduced chronic disease prevalence, and lower medical expenditures. Additionally, consumer medical devices could lower the cost of high-quality medical monitoring, replacing the annual physical with continuous observation of health indicators. With better monitoring, serious conditions could be detected earlier, when they are cheaper to address. Other breakthroughs in biology, like mRNA vaccines and computer-simulated protein folding, could lead to quicker and less expensive cures for virtually every disease. Or we could just pay for everyone's healthcare from taxes like most other developed nations.
- apsec112 6y ago
  The US already spends more tax dollars per capita on healthcare than virtually any other country: https://en.m.wikipedia.org/wiki/List_of_countries_by_total_health_expenditure_per_capita#/media/File%3AOECD_health_expenditure_per_capita_by_country.svg https://en.m.wikipedia.org/wiki/List_of_countries_by_total_h...
  - minikites 6y ago
    Because we have parasites in the form of private insurance companies. If that money went directly to healthcare users and providers instead, it would be a lot more effective for a lot more people.
    - TheOtherHobbes 6y ago
      In the general case, economic measures fail to distinguish between wealth creation and wealth capture. Health insurance is almost pure wealth capture. The provision of services is actually rationed acutely. Public healthcare is wealth creation. There a trickle-out effect as private sector "insurance taxes" are reduced. But access is also increased, which creates jobs in frontline health care services. There's a limited role for private industry in health R&D innovation, overlapping with public funding of original research. But provision is most economically efficient and productive when it's state-managed. What it isn't is politically efficient. Wealth capture is political capture, and dilution of one creates dilution of the other. This is not a popular idea in some quarters.
      - maxerickson 6y ago
        It's pretty obvious that the current healthcare system in the US is bad for business, in addition to not serving a bunch of people. Yet people still take the position that changing it would be risky.
        disposekinetics 6y ago
        Those can both be true. It can be incredibly risky to change and also have high risk currently.
    - apsec112 6y ago
      Health insurance profit margins typically run around 1-3%. 2018 was 3.3% and that was an exceptionally good year for them. https://naic.org/documents/topic_insurance_industry_snapshots_2018_health_ins_ind_report.pdf https://naic.org/documents/topic_insurance_industry_snapshot...
      - minikites 6y ago
        Why are you only considering profit? The entirety of their revenue is parasitic.
      - 6y ago
MisterBastahrd 6y ago
Is this an Onion article? The poor are poor for a variety of reasons, but the main one is that we HAVE productivity increases and virtually none of it benefits the them. Prices aren't going down and their wages aren't increasing without new laws.
- apsec112 6y ago
  Growth in productivity has slowed down substantially since the middle of the 20th century: https://rootsofprogress.org/technological-stagnation https://rootsofprogress.org/technological-stagnation
  - runako 6y ago
    Productivity growth has outpaced the growth of the minimum wage over the last ~40 years.
    - Fernicia 6y ago
      What makes you think labour is the cause for the productivity growth? (if that's your assumption)
      - ModernMech 6y ago
        It doesn't matter if they are the cause, they're the ones still doing all the actual work. If productivity is going up, they should share in it just as much as the capitalists.
      - clairity 6y ago
        all value is created by labor. raw resources embedded in the earth is useless without labor. food doesn't get prepared without labor. financial transactions cannot be made without labor (even if computers are involved, which require labor to make and program). productivity (growth) is simply labor applied to magnifying other labor, like building a winch rather than applying direct work. there is a forceful ideological denial of this simple premise by the owner and managerial class, because it's an existential threat, but labor is still the essence of value. that technology can leverage labor and multiply its output doesn't change that. labor can create value that is not yet owned (depending on law), which itself is a threat and why owners focus so much legal fortification on that front. also note that economists work for the owner and managerial class, providing a powerful incentive for bias in this regard.
insert_coin 6y ago
That chart really does tell it all. Which lines are going up? the ones the government is most involved in. Which lines are going down? the ones with the least(by comparison) regulated markets. I don't know why people after seeing that chart attribute it to uneven "productivity growth".
- woah 6y ago
  Correlation is not causation
  - insert_coin 6y ago
    Sure, it doesn't imply it. It also doesn't not imply it. But, it is a hell of a lot better than something not even in the chart like the undefined and catch it all concept of 'productivity', as anyone who saw an operating room in the 70s, or an ICU and has seen one now can attest to the enormous real growth in core productivity driven by the same factor as all the other sectors of the economy: technology.
    - orwin 6y ago
      Actually, its energy usage. You can conflate that to technology but unless you find a way to have a Carnot machine more efficient, energy use is what drive growth (or used to until QE).
- minikites 6y ago
  Do you really think the market for television sets behaves the same as the market for healthcare and that government intervention is the reason healthcare is so expensive? How do you explain nations with more government involvement in healthcare who have lower healthcare costs?
  - deleted 6y ago
    [deleted]
  - tharne 6y ago
foolinaround 6y ago
the 'cover' example provided as a cheaper building alternative is not really that cheap compared to conventional homes. if it is to be a disrupter, it must be cheaper on a much larger scale...like 50%
kmclean 6y ago
America doesn't need healthcare innovation. Every developed country in the world has better and cheaper healthcare already. They need policy innovation and a functioning political system.
- notmenope 6y ago
  Better? Not even close.
- testfoobar 6y ago
  A few things drive major medical costs in the United States. 1. End of life costs. Americans spend an enormous amount of medical dollars in the last 12-18 months of life. 2. Medical Malpractice insurance. This drives aggressive testing and monitoring. 3. Obesity, diabetes, metabolic syndrome. These are the result of subsidized farming and sugar. All three are entrenched and would take a massive lift to pacify.
  - medium_burrito 6y ago
    4. Insurance is state-level. This entrenches big players.
  - slothtrop 6y ago
    > 3. Obesity, diabetes, metabolic syndrome. These are the result of subsidized farming and sugar. This is true in Canada, the U.K., and elsewhere in the world with Universal healthcare. You could have have summed the above as "insurance".
  - theptip 6y ago
    You missed the most obvious one - lack of public health insurance. The Western European countries pay half as much per capita for healthcare as the US, and get the same average healthcare outcomes. Sure, the population is more unhealthy, so you’d not expect to get down to European levels just by implementing healthcare reform, but it’s the big difference.
    - 6y ago
jkingsbery 6y ago
All good ideas for things to go fix! I don't understand why this is "progressive," in the way that term is usually used. I have been reading various different conservatives arguing for supply-side changes in these different industries my entire adult life. Sometimes, a thing is just a thing that people can agree on independent of world view. For example, the author could have instead written "People who care about affordable housing must continue to unite against excessive zoning and NIMBYism."
- repsilat 6y ago
  The author's audience is progressives. If these sorts of solutions become palatable on the left they'll likely find enough support on the right to get done. Branding these as progressive policies likely helps lower progressive reticence to enacting supply-side policies. It's not purely cynical, of course -- TFA demonstrated that these efforts help people in lower-income groups more (by some measures) than they help people in upper-income groups.
johbjo 6y ago
The "more expensive" goods and services are not relocatable, or otherwise have special limitations on supply. College textbooks, for example, are priced monopolistically to maximize revenue as opposed to quantity. Housing is priced based on mortgage rates. Improved manufacturing and (essentially) cheap Chinese labour is responsible for the cheaper goods. The connection here is that "inflation" as it is measured by central banks is artificially lowered by improved and cheap manufacturing. This allows them to keep very low interest rates while being congruent with their "charter" of keeping stable average prices. Artificially low interest rates can be seen as the cause of the most of the "more expensive" goods. It inflates the price of assets relative to income. And there are many stake holders in asset inflation.
- throwawaygh 6y ago
  > College textbooks, for example, are priced monopolistically to maximize revenue as opposed to quantity. College textbooks are such an odd case because the incentives make no god damn sense. Obviously they aren't Veblen; the actual owner (students) would always rather pay less. But colleges and universities also don't make a ton of money on books. Two of the colleges I'm familiar with would lose money on their bookstore if they didn't have a monopoly on college-branded merchandise. It'd be better for them to just stop selling books and only sell clothes + electronics + price-gauged office supplies for the captive market ("I need some pens/paper/etc. but don't want to leave campus tonight"). Books lose money -- they're heavy, require a ton of extra labor, have thin margins, and you have to do all of that work twice so you can capture a few extra pennies in the used market. The best you can say is that they're pretty cheap loss leaders for selling hoodies and hats. Instructors/professors don't really have an incentive to insist on expensive textbooks either. People always share anecdotes about being required to use the professor's super expensive book. But even if the prof wrote the book: 1. publishing just isn't very profitable (for me, 10 hours of consulting can make as much as about 30K book sales... maybe that goes up to 40 or even 80 hours for an expensive textbook. Maybe even a whole month of consulting for a super expensive hardback! But writing a book takes years of labor, so even on the upper bound it's just a horrendously bad way to make money as an author), and 2. this is rare enough to not explain systematic behavior -- remember that the US has 5000+ colleges and hundreds of thousands of professors. In most subjects there are fewer than 10 widely used textbooks. One of the best Linear Algebra textbooks available is completely open source (I think the author is even on HN sometimes). For some reason, small colleges and local branch campuses of state university systems still insist on using $100+ Linear Algebra textbooks that are... quite bad. This is true in lots of other subjects, too. It's like non-open-access academic publishing. Why do colleges/universities/professors keep going along with generating profit for the publishing industry? It makes no sense.
villasv 6y ago
TLDR > The trickle-down theory is all but dead, but there is more to the supply side of the economy than taxes. Thousands of government decisions affect real output and economic productivity. A new supply-side economics would recognize that productivity growth is the right target, but it would reject tax policy as the primary means of stimulating productivity. Instead, it would examine how everything government does — from permitting to procurement — could be improved to increase productivity. Which is basically saying that lowering taxes is not the only way to achieve trickle-down. The rest of the article is stating the obvious fact that the poor spend a higher proportion of their income on things that are essential - and it's possible to make those cheaper. But the criticism of tickle-down was never that it targeted the wrong services (e.g. entertainment instead of housing). The main criticism is that it increases inequality.
- bluecalm 6y ago
  While the fact that making things cheaper improves the situation e for everyone, especially the poor/struggling people is obvious to you or me it's far for obvious to most people and is absent from the public debate. Every progressive politician beats the drum of more taxes, more money for healthcare (and other stuff) and things magically improve. When was the last time a major politician said something a long the lines of: "let's think how to make doctor visits cheaper so people don't avoid them, maybe you know, lower requirements, allow nurses and other healthcare workers to carry simple checkups or minor treatments". Making stuff cheaper if what worked historically to improve the economic situation of poor/lower economic classes. It should be the main focus but it somehow isn't.
  - ModernMech 6y ago
    This is a premature optimization. Making things cheaper isn't the solution when there's a giant, engorged parasite sitting in the middle of the system sucking up all the slack. As soon as you make things cheaper, the parasite will just gobble up all your savings. Get rid of the parasite first.
    - bluecalm 6y ago
orange_joe 6y ago
I've come to this conclusion as well. I believe that a significant amount of our income/wealth inequality stems from demand side solutions to these issues. I'm unable to perfectly articulate why, but it seems that government programs have been centered around providing short term services to the needy but that money is effectively funneled to the wealthy. Our programs seem to have largely increased the costs of the things because they haven't increased their availability. Rather than building new houses for the poor, government programs bid up the price of existing houses. Medicare/Medicaid goes to Drs, but they also cap the number of doctors, etc. I have come to the conclusion that our government programs need to address scarcity rather than simply assuming that we have enough of a particular thing.
SeanFerree 6y ago
Great article! The graph really helps put this into perspective
eclat 6y ago
I suspect the wage figure doesn’t take into account non-monetary benefits like health insurance. Considering healthcare and education are the only sectors that have increased prices in relation to wages, this is probably an omission that would change the argument of this article. But yes, make education better and cheaper like the Swedes and Estonians have done with school vouchers, and adopt the Bismarck healthcare model used to great success in many European countries like Germany, Switzerland, France, & the Netherlands. These are two simple suggestions, naturally the method will be as key as the principle in order for them to be successful, but the track record is there. Alternatively, adopt the negative income tax that Milton Friedman suggested, which together with a state-guaranteed health insurance and a school voucher system, would create a really solid and efficient welfare state. Maybe forego income tax totally and do that with a higher VAT instead.
acd 6y ago
We need to end exponential debt growth and shift focus manufacturing to long term sustainable products. Exponential debt growth as that is making people go more into debt energy use creates higher carbon footprint.
- unchocked 6y ago
  Energy's going carbon neutral faster than you can reengineer society.
steve76 6y ago
First, back to basics: 1. Hammurabi: Limit violence, don't create it. 2. Magna Carta: Apply the law equally, or there is no law. 3. Bill of Rights: You can't really tell someone else what to do all the time without their consent first. You do it. If it works, I'll do it too. 4. Nonviolence and Forgiveness: Keep up the bullying, and eventually those who don't fight will find someone who will, and they will be far worst than what you have now. 5. Mutual Respect: No one is ever defeated. There is an infinite amount of people in line waiting to take their shot at you. Victory in battle only means a tougher enemy has left home and is on their way to defeat you. Learn to control your own emotions, worry about yourself leave other people alone, and not provoke other people. 6. Natural Law: Don't cross great rivers. Don't build expecting uphill flow or the western sunrise. While others have to stand for all Russian speaking peoples or mandate under heaven or the green flag of Islam is to fly over the White House, take the other side of the table. What's the minimal you have to do to be called a government, and just do that and nothing more. With a strong basis of above, you can finally have some fun: 7. Keep Lofty Goals: To hell with solar panels, childish toys bought on loan, callous authority just to make another boring tv star. Sail to the center of the sun itself. Envelope our solar system. Melt anything that dare offends me. This is not some far off dream. With advances in matter waves, gravity applications are on the table. Humanity is the king of the sun. All revolves around them. After them, darkness, and the flood. Start with the mass driver.
specialist 6y ago
These pop-economics posts have arm waves treatments of cost disease, slowing productivity growth, growing inequity. Very unsatisfying. I'd prefer they wouldn't nod towards those issues without even making a guess to the root causes. -- Supply side is a "push" strategy. Top down, more or less. Monetarians, those who primarily see money as a commodity, prefer top down. They worry more about deficits and balances. Demand side is a "pull" strategy. Bottom up, more or less. Fiscal-o-tarians (I forget the proper label), those who primarily see money as measure of value, prefer bottom up. They worry more about interest rates. The period from The New Deal to the 70s was mostly demand side policies. It got out of whack. Then Reaganomics switched us to supply side policies. It too got out of whack. The Correct Answer™ is some kind of hybrid. Balance the two forces. Ideally with automatic triggers (adjustments) to dynamically rebalance. Recognizing that policy making is too slow, automatic triggers will minimize recurring under- and oversteer. Today, we need to shift emphasis from just deficits and inflation to also include interest rates. We must remain vigilant about unemployment. And we need better policies for productivity and inequity. -- Technology influences our mental models for how the world works. In the West, Greeks gave us mind & body duality. Clocks made us imagine the Great Clockmaker in the Sky. Automata got us thinking we're all just machines. And now the digital age. We're just computing and communication systems. Input, processing, output. Massive game-like simulations. Optimization algorithms with feedback loops. Transaction costs. Attention economy. I definitely have an algorithmic view of humanity. So here's my response to this "progressive supply side" OC: We rebuild the economy, creating wealth, by keeping the money moving, by increasing the velocity of money. Hoarding money suppresses wealth creation, increases inequity, and reduces productivity. So The Correct Answer™ (today): "Pull" more money thru the economy by giving money directly to people. Then recover that money thru taxes. Implement complimentary policies to keep the money moving. Tax idle wealth. Tax corporate profits, to restore prior levels of R&D and profit sharing (wages, benefits). Tax windfall profits. My own notions are adjacent ("Yes, and...") to advocates for universal basic income (UBI) and modern monetary theory (MMT). Mostly, I think in algorithms and systems. -- Beyond the scope of this thesis: Rebuild economy thru "caring work". All the stuff where people are helping others, creating new stuff, building a better world. Teachers, doctors, eldercare, police, firefighters, parenting, journalism, farming, etc, etc. Disincentives for managerialism. All that wealth destroying middle management. The unnecessary work in financialization, public relations, advertising, project management, etc. h/t David Graeber and many others
DonnyV 6y ago
This entire article is built around avoiding taxing the wealthy who have sucked up most of the money and refuse to put it back in the economy. Instead it hijacks the word "progressive" and tries to attach it to a new version of supplied side economics. The biggest red flag is how it completely avoids talking about removing Health Insurance companies, who provide zero value. A single payer systems would actually start creating a real healthcare system in the US and be cheaper.

36 points by apsec112 6y ago

>Supply-side economics has a dirty reputation. Since the late 1970s, the term has been associated with “trickle-down” economics: the now-defunct theory that cuts in the highest tax brackets would boost economic productivity so much that government revenue would increase and all of society, even the poor, would benefit. Since when are these ideas "defunct"? Politicians currently serving in government advocate for these falsified ideas. >We badly need health innovation to drive down costs. As I argued in Fortune, research on biological aging could lead to longer healthspans, compressed morbidity, reduced chronic disease prevalence, and lower medical expenditures. Additionally, consumer medical devices could lower the cost of high-quality medical monitoring, replacing the annual physical with continuous observation of health indicators. With better monitoring, serious conditions could be detected earlier, when they are cheaper to address. Other breakthroughs in biology, like mRNA vaccines and computer-simulated protein folding, could lead to quicker and less expensive cures for virtually every disease. Or we could just pay for everyone's healthcare from taxes like most other developed nations.

apsec112 6y ago
The US already spends more tax dollars per capita on healthcare than virtually any other country: https://en.m.wikipedia.org/wiki/List_of_countries_by_total_health_expenditure_per_capita#/media/File%3AOECD_health_expenditure_per_capita_by_country.svg https://en.m.wikipedia.org/wiki/List_of_countries_by_total_h...
- minikites 6y ago
  Because we have parasites in the form of private insurance companies. If that money went directly to healthcare users and providers instead, it would be a lot more effective for a lot more people.
  - TheOtherHobbes 6y ago
    In the general case, economic measures fail to distinguish between wealth creation and wealth capture. Health insurance is almost pure wealth capture. The provision of services is actually rationed acutely. Public healthcare is wealth creation. There a trickle-out effect as private sector "insurance taxes" are reduced. But access is also increased, which creates jobs in frontline health care services. There's a limited role for private industry in health R&D innovation, overlapping with public funding of original research. But provision is most economically efficient and productive when it's state-managed. What it isn't is politically efficient. Wealth capture is political capture, and dilution of one creates dilution of the other. This is not a popular idea in some quarters.
    - maxerickson 6y ago
      It's pretty obvious that the current healthcare system in the US is bad for business, in addition to not serving a bunch of people. Yet people still take the position that changing it would be risky.
      - disposekinetics 6y ago
        Those can both be true. It can be incredibly risky to change and also have high risk currently.
  - apsec112 6y ago
    Health insurance profit margins typically run around 1-3%. 2018 was 3.3% and that was an exceptionally good year for them. https://naic.org/documents/topic_insurance_industry_snapshots_2018_health_ins_ind_report.pdf https://naic.org/documents/topic_insurance_industry_snapshot...
    - minikites 6y ago
      Why are you only considering profit? The entirety of their revenue is parasitic.
    - 6y ago

MisterBastahrd 6y ago

Is this an Onion article? The poor are poor for a variety of reasons, but the main one is that we HAVE productivity increases and virtually none of it benefits the them. Prices aren't going down and their wages aren't increasing without new laws.

apsec112 6y ago
Growth in productivity has slowed down substantially since the middle of the 20th century: https://rootsofprogress.org/technological-stagnation https://rootsofprogress.org/technological-stagnation
- runako 6y ago
  Productivity growth has outpaced the growth of the minimum wage over the last ~40 years.
  - Fernicia 6y ago
    What makes you think labour is the cause for the productivity growth? (if that's your assumption)
    - ModernMech 6y ago
      It doesn't matter if they are the cause, they're the ones still doing all the actual work. If productivity is going up, they should share in it just as much as the capitalists.
    - clairity 6y ago
      all value is created by labor. raw resources embedded in the earth is useless without labor. food doesn't get prepared without labor. financial transactions cannot be made without labor (even if computers are involved, which require labor to make and program). productivity (growth) is simply labor applied to magnifying other labor, like building a winch rather than applying direct work. there is a forceful ideological denial of this simple premise by the owner and managerial class, because it's an existential threat, but labor is still the essence of value. that technology can leverage labor and multiply its output doesn't change that. labor can create value that is not yet owned (depending on law), which itself is a threat and why owners focus so much legal fortification on that front. also note that economists work for the owner and managerial class, providing a powerful incentive for bias in this regard.

insert_coin 6y ago

That chart really does tell it all. Which lines are going up? the ones the government is most involved in. Which lines are going down? the ones with the least(by comparison) regulated markets. I don't know why people after seeing that chart attribute it to uneven "productivity growth".

woah 6y ago
Correlation is not causation
- insert_coin 6y ago
  Sure, it doesn't imply it. It also doesn't not imply it. But, it is a hell of a lot better than something not even in the chart like the undefined and catch it all concept of 'productivity', as anyone who saw an operating room in the 70s, or an ICU and has seen one now can attest to the enormous real growth in core productivity driven by the same factor as all the other sectors of the economy: technology.
  - orwin 6y ago
    Actually, its energy usage. You can conflate that to technology but unless you find a way to have a Carnot machine more efficient, energy use is what drive growth (or used to until QE).
minikites 6y ago
Do you really think the market for television sets behaves the same as the market for healthcare and that government intervention is the reason healthcare is so expensive? How do you explain nations with more government involvement in healthcare who have lower healthcare costs?
- deleted 6y ago
  [deleted]
- tharne 6y ago

foolinaround 6y ago

the 'cover' example provided as a cheaper building alternative is not really that cheap compared to conventional homes. if it is to be a disrupter, it must be cheaper on a much larger scale...like 50%

kmclean 6y ago

America doesn't need healthcare innovation. Every developed country in the world has better and cheaper healthcare already. They need policy innovation and a functioning political system.

notmenope 6y ago
Better? Not even close.
testfoobar 6y ago
A few things drive major medical costs in the United States. 1. End of life costs. Americans spend an enormous amount of medical dollars in the last 12-18 months of life. 2. Medical Malpractice insurance. This drives aggressive testing and monitoring. 3. Obesity, diabetes, metabolic syndrome. These are the result of subsidized farming and sugar. All three are entrenched and would take a massive lift to pacify.
- medium_burrito 6y ago
  4. Insurance is state-level. This entrenches big players.
- slothtrop 6y ago
  > 3. Obesity, diabetes, metabolic syndrome. These are the result of subsidized farming and sugar. This is true in Canada, the U.K., and elsewhere in the world with Universal healthcare. You could have have summed the above as "insurance".
- theptip 6y ago
  You missed the most obvious one - lack of public health insurance. The Western European countries pay half as much per capita for healthcare as the US, and get the same average healthcare outcomes. Sure, the population is more unhealthy, so you’d not expect to get down to European levels just by implementing healthcare reform, but it’s the big difference.
  - 6y ago

jkingsbery 6y ago

All good ideas for things to go fix! I don't understand why this is "progressive," in the way that term is usually used. I have been reading various different conservatives arguing for supply-side changes in these different industries my entire adult life. Sometimes, a thing is just a thing that people can agree on independent of world view. For example, the author could have instead written "People who care about affordable housing must continue to unite against excessive zoning and NIMBYism."

repsilat 6y ago
The author's audience is progressives. If these sorts of solutions become palatable on the left they'll likely find enough support on the right to get done. Branding these as progressive policies likely helps lower progressive reticence to enacting supply-side policies. It's not purely cynical, of course -- TFA demonstrated that these efforts help people in lower-income groups more (by some measures) than they help people in upper-income groups.

johbjo 6y ago

The "more expensive" goods and services are not relocatable, or otherwise have special limitations on supply. College textbooks, for example, are priced monopolistically to maximize revenue as opposed to quantity. Housing is priced based on mortgage rates. Improved manufacturing and (essentially) cheap Chinese labour is responsible for the cheaper goods. The connection here is that "inflation" as it is measured by central banks is artificially lowered by improved and cheap manufacturing. This allows them to keep very low interest rates while being congruent with their "charter" of keeping stable average prices. Artificially low interest rates can be seen as the cause of the most of the "more expensive" goods. It inflates the price of assets relative to income. And there are many stake holders in asset inflation.

throwawaygh 6y ago
> College textbooks, for example, are priced monopolistically to maximize revenue as opposed to quantity. College textbooks are such an odd case because the incentives make no god damn sense. Obviously they aren't Veblen; the actual owner (students) would always rather pay less. But colleges and universities also don't make a ton of money on books. Two of the colleges I'm familiar with would lose money on their bookstore if they didn't have a monopoly on college-branded merchandise. It'd be better for them to just stop selling books and only sell clothes + electronics + price-gauged office supplies for the captive market ("I need some pens/paper/etc. but don't want to leave campus tonight"). Books lose money -- they're heavy, require a ton of extra labor, have thin margins, and you have to do all of that work twice so you can capture a few extra pennies in the used market. The best you can say is that they're pretty cheap loss leaders for selling hoodies and hats. Instructors/professors don't really have an incentive to insist on expensive textbooks either. People always share anecdotes about being required to use the professor's super expensive book. But even if the prof wrote the book: 1. publishing just isn't very profitable (for me, 10 hours of consulting can make as much as about 30K book sales... maybe that goes up to 40 or even 80 hours for an expensive textbook. Maybe even a whole month of consulting for a super expensive hardback! But writing a book takes years of labor, so even on the upper bound it's just a horrendously bad way to make money as an author), and 2. this is rare enough to not explain systematic behavior -- remember that the US has 5000+ colleges and hundreds of thousands of professors. In most subjects there are fewer than 10 widely used textbooks. One of the best Linear Algebra textbooks available is completely open source (I think the author is even on HN sometimes). For some reason, small colleges and local branch campuses of state university systems still insist on using $100+ Linear Algebra textbooks that are... quite bad. This is true in lots of other subjects, too. It's like non-open-access academic publishing. Why do colleges/universities/professors keep going along with generating profit for the publishing industry? It makes no sense.

villasv 6y ago

TLDR > The trickle-down theory is all but dead, but there is more to the supply side of the economy than taxes. Thousands of government decisions affect real output and economic productivity. A new supply-side economics would recognize that productivity growth is the right target, but it would reject tax policy as the primary means of stimulating productivity. Instead, it would examine how everything government does — from permitting to procurement — could be improved to increase productivity. Which is basically saying that lowering taxes is not the only way to achieve trickle-down. The rest of the article is stating the obvious fact that the poor spend a higher proportion of their income on things that are essential - and it's possible to make those cheaper. But the criticism of tickle-down was never that it targeted the wrong services (e.g. entertainment instead of housing). The main criticism is that it increases inequality.

bluecalm 6y ago
While the fact that making things cheaper improves the situation e for everyone, especially the poor/struggling people is obvious to you or me it's far for obvious to most people and is absent from the public debate. Every progressive politician beats the drum of more taxes, more money for healthcare (and other stuff) and things magically improve. When was the last time a major politician said something a long the lines of: "let's think how to make doctor visits cheaper so people don't avoid them, maybe you know, lower requirements, allow nurses and other healthcare workers to carry simple checkups or minor treatments". Making stuff cheaper if what worked historically to improve the economic situation of poor/lower economic classes. It should be the main focus but it somehow isn't.
- ModernMech 6y ago
  This is a premature optimization. Making things cheaper isn't the solution when there's a giant, engorged parasite sitting in the middle of the system sucking up all the slack. As soon as you make things cheaper, the parasite will just gobble up all your savings. Get rid of the parasite first.
  - bluecalm 6y ago

orange_joe 6y ago

I've come to this conclusion as well. I believe that a significant amount of our income/wealth inequality stems from demand side solutions to these issues. I'm unable to perfectly articulate why, but it seems that government programs have been centered around providing short term services to the needy but that money is effectively funneled to the wealthy. Our programs seem to have largely increased the costs of the things because they haven't increased their availability. Rather than building new houses for the poor, government programs bid up the price of existing houses. Medicare/Medicaid goes to Drs, but they also cap the number of doctors, etc. I have come to the conclusion that our government programs need to address scarcity rather than simply assuming that we have enough of a particular thing.

SeanFerree 6y ago

Great article! The graph really helps put this into perspective

eclat 6y ago

I suspect the wage figure doesn’t take into account non-monetary benefits like health insurance. Considering healthcare and education are the only sectors that have increased prices in relation to wages, this is probably an omission that would change the argument of this article. But yes, make education better and cheaper like the Swedes and Estonians have done with school vouchers, and adopt the Bismarck healthcare model used to great success in many European countries like Germany, Switzerland, France, & the Netherlands. These are two simple suggestions, naturally the method will be as key as the principle in order for them to be successful, but the track record is there. Alternatively, adopt the negative income tax that Milton Friedman suggested, which together with a state-guaranteed health insurance and a school voucher system, would create a really solid and efficient welfare state. Maybe forego income tax totally and do that with a higher VAT instead.

acd 6y ago

We need to end exponential debt growth and shift focus manufacturing to long term sustainable products. Exponential debt growth as that is making people go more into debt energy use creates higher carbon footprint.

unchocked 6y ago
Energy's going carbon neutral faster than you can reengineer society.

steve76 6y ago

First, back to basics: 1. Hammurabi: Limit violence, don't create it. 2. Magna Carta: Apply the law equally, or there is no law. 3. Bill of Rights: You can't really tell someone else what to do all the time without their consent first. You do it. If it works, I'll do it too. 4. Nonviolence and Forgiveness: Keep up the bullying, and eventually those who don't fight will find someone who will, and they will be far worst than what you have now. 5. Mutual Respect: No one is ever defeated. There is an infinite amount of people in line waiting to take their shot at you. Victory in battle only means a tougher enemy has left home and is on their way to defeat you. Learn to control your own emotions, worry about yourself leave other people alone, and not provoke other people. 6. Natural Law: Don't cross great rivers. Don't build expecting uphill flow or the western sunrise. While others have to stand for all Russian speaking peoples or mandate under heaven or the green flag of Islam is to fly over the White House, take the other side of the table. What's the minimal you have to do to be called a government, and just do that and nothing more. With a strong basis of above, you can finally have some fun: 7. Keep Lofty Goals: To hell with solar panels, childish toys bought on loan, callous authority just to make another boring tv star. Sail to the center of the sun itself. Envelope our solar system. Melt anything that dare offends me. This is not some far off dream. With advances in matter waves, gravity applications are on the table. Humanity is the king of the sun. All revolves around them. After them, darkness, and the flood. Start with the mass driver.

specialist 6y ago

These pop-economics posts have arm waves treatments of cost disease, slowing productivity growth, growing inequity. Very unsatisfying. I'd prefer they wouldn't nod towards those issues without even making a guess to the root causes. -- Supply side is a "push" strategy. Top down, more or less. Monetarians, those who primarily see money as a commodity, prefer top down. They worry more about deficits and balances. Demand side is a "pull" strategy. Bottom up, more or less. Fiscal-o-tarians (I forget the proper label), those who primarily see money as measure of value, prefer bottom up. They worry more about interest rates. The period from The New Deal to the 70s was mostly demand side policies. It got out of whack. Then Reaganomics switched us to supply side policies. It too got out of whack. The Correct Answer™ is some kind of hybrid. Balance the two forces. Ideally with automatic triggers (adjustments) to dynamically rebalance. Recognizing that policy making is too slow, automatic triggers will minimize recurring under- and oversteer. Today, we need to shift emphasis from just deficits and inflation to also include interest rates. We must remain vigilant about unemployment. And we need better policies for productivity and inequity. -- Technology influences our mental models for how the world works. In the West, Greeks gave us mind & body duality. Clocks made us imagine the Great Clockmaker in the Sky. Automata got us thinking we're all just machines. And now the digital age. We're just computing and communication systems. Input, processing, output. Massive game-like simulations. Optimization algorithms with feedback loops. Transaction costs. Attention economy. I definitely have an algorithmic view of humanity. So here's my response to this "progressive supply side" OC: We rebuild the economy, creating wealth, by keeping the money moving, by increasing the velocity of money. Hoarding money suppresses wealth creation, increases inequity, and reduces productivity. So The Correct Answer™ (today): "Pull" more money thru the economy by giving money directly to people. Then recover that money thru taxes. Implement complimentary policies to keep the money moving. Tax idle wealth. Tax corporate profits, to restore prior levels of R&D and profit sharing (wages, benefits). Tax windfall profits. My own notions are adjacent ("Yes, and...") to advocates for universal basic income (UBI) and modern monetary theory (MMT). Mostly, I think in algorithms and systems. -- Beyond the scope of this thesis: Rebuild economy thru "caring work". All the stuff where people are helping others, creating new stuff, building a better world. Teachers, doctors, eldercare, police, firefighters, parenting, journalism, farming, etc, etc. Disincentives for managerialism. All that wealth destroying middle management. The unnecessary work in financialization, public relations, advertising, project management, etc. h/t David Graeber and many others

DonnyV 6y ago

This entire article is built around avoiding taxing the wealthy who have sucked up most of the money and refuse to put it back in the economy. Instead it hijacks the word "progressive" and tries to attach it to a new version of supplied side economics. The biggest red flag is how it completely avoids talking about removing Health Insurance companies, who provide zero value. A single payer systems would actually start creating a real healthcare system in the US and be cheaper.