4 ms·

The problem is a perception that the stock market continues to go up, yet the lot of the average person is either stagnant or getting worse. It isn’t an impossi

by oivey 6y ago

The problem is a perception that the stock market continues to go up, yet the lot of the average person is either stagnant or getting worse. It isn’t an impossible double standard. The frustration is with the ever increasing wealth inequality.

anonu 6y ago
return on assets over the last 2 decades has far outpaced wage growth. Read: The rich get richer. In addition, with inflation at or above 2%, the average person needs to see a substantial hike in their wages to keep pace with their current standard of living.
- sooheon 6y ago
  Return to capital > growth of economy. This is the central dogma of Piketty's Capital.
  - AnthonyMouse 6y ago
    > Return to capital > growth of economy. This is the central dogma of Piketty's Capital. The problem with this is taking it as a law of nature rather than an observed behavior over a specific period of history. And notably one with a stark lack of antitrust enforcement. Suppose you bust up monopolies and require companies to compete with each other. Then prices go down, which increases growth (lower price, higher demand), but decreases return on capital (lower margins). Is r > g still true then? Maybe not. I say we try it and find out.
    - sooheon 6y ago
      I mean, it is kind of a law of nature, like gravity wells accumulating, that power and wealth beget power and wealth at a greater rate than the global mean. But yes, I agree, the whole idea of pointing out r > g is to advocate for policy changes that would counteract this. The question is which policies? It's easy to say "break up monopolies", much harder to devise elegant countermeasures that align interests across the whole spectrum and are robust to defection.
      - nwellnhof 6y ago
        > much harder to devise elegant countermeasures Here's a simple and elegant countermeasure. Don't allow people to inherit more than say $50M with an extremely progressive estate tax.
        AnthonyMouse 6y ago
        That may be simple but it is neither elegant nor effective. The estate tax is a joke because it can be avoided through tax planning. The theory is that Richard Rich dies and then little Richie inherits the money but would lose 90% of it to the tax. What happens in practice is that when Richie is 18 years old he launches a company with a loan from his parents in the same line of business where they have expertise and contacts so that 20 years later he's a billionaire in his own right. Meanwhile all the usual tax avoidance strategies are happening with jurisdictional arbitrage and transfer pricing and self-dealing so that by the time the parents retire they still have all they need for a lavish retirement but the bulk of their assets have already been transferred to their children at a low tax rate. The problem isn't inheritance. It isn't taxes at all. It's market consolidation and regulatory capture which yields regulations that favor big businesses over small ones and incumbents over upstarts. Because small business and competition are the ways growth flows to the little guy.
        nwellnhof 6y ago
        > What happens in practice is that when Richie is 18 years old he launches a company with a loan from his parents in the same line of business where they have expertise and contacts so that 20 years later he's a billionaire in his own right. It's not as simple as you make it sound. In every sane tax system, donations (even loans with lower than usual interest rates) are taxed just like inheritance. Of course, getting a million dollar loan at all makes a huge difference. But it's still no guarantee to build a successful business. The point is to make it a lot harder to bequeath obscene amounts of wealth.
        AnthonyMouse 6y ago
- imtringued 6y ago
  >In addition, with inflation at or above 2%, the average person needs to see a substantial hike in their wages to keep pace with their current standard of living. Inflation is what happens when there is a shortage of labor and thus inflation is generally associated with increased incomes. This stupid myth that CPI inflation is bad for workers should die. Your comment is also wrong that inflation is above 2%. If that were the case nobody would have gotten angry that assets have outpaced wage growth. Assets outpacing wage growth is deflation except it is not denominated in dollars but rather in housing or stocks. No, the fantasy economy (read the stock or housing market being pumped by easy money) should not be part of the CPI inflation rate because it's not real. The entire point of CPI inflation is to measure the real economy. Supply side economics are generally done to combat inflation, demand side economics are generally done to increase inflation and what we need is a stimulus on the demand side because there is already an oversupply of labor.
  - lifty 6y ago
    In what reality isn’t the housing market part of the real economy? The fact that it’s a scarce asset sensitive to easy money policies does not make it fantasy economy. More importantly, the housing market outpacing income increases is one of the major pains for a large percent of people.
    - deleted 6y ago
      [deleted]
    - anonu 6y ago
      The term inflation here is getting mixed up... I'm talking about CPI inflation. Real estate is what you would call a risk asset. Wage inflation is yet another type of inflation. They're all interconnected
  - candiodari 6y ago
    To put it mildly, this hasn't been my experience. Inflation is only 2% because CPI is bullshit. CPI keeps getting changed so it would be 2%. There are no realistic housing options in there anymore, nor education, nor healthcare, nor ... and if you reinsert those inflation has never been below 4% per year. While I've gotten above inflation pay rises, they have been exceptions (and due to exceptional performance, ie. usually more than 8h/day for quite a while). Besides, it is very obvious that modern states and central banks are using inflation to minimize/eliminate the effect of debts on the actual economy. Given what has been going on, how can you realistically defend any other position? Btw: given what has happened to these debts, you can safely bet your right arm that real inflation is going up to at least 5.3%. And that was before COVID-19 measures.
- blackrock 6y ago
  The inflation is real. Fruit at the grocery store has increased 30% in just the past few months. Apples used to be $0.99/pound. Now it’s $1.29/pound. I’ve seen other basic food commodities also increase 50%. This is the fastest rate increase that I’ve seen in quite a while, if ever. The only saving grace is that I’m not commuting to work. But the savings from gasoline, just went straight into groceries. Hence, practically no savings at all. I’m not looking forward to when we must go back into the office, and then everything still remains at the higher prices. I would need to demand a raise or a promotion to match up with the inflation.
  - bmn__ 6y ago
    > [anecdotes] That's not how inflation works or is determined. Instead go to your country's office for statistics Web site. FWIW, here that's 0.3% inflation on food and non-alcoholic beverages, 1.3% in total from 2020-06 to 2020-12. Both numbers are ordinary/close to expected. To see an inflation of 30%, I have to take the difference to 2007.
    - blackrock 6y ago
      You misread my comment. I didn’t say it was 30% across the board. I just claimed I was seeing a 30% price increase, for one product item. Now, you can choose to not buy that item, in which case, the price increase doesn’t impact you.
      - UncleMeat 6y ago
        But it is one product. Isn’t it far more likely that seasonal variation in apples is what triggered the price change, not a devaluation of the dollar?
    - anonu 6y ago
      Actually it is how inflation works. The BLS actually goes out and buys a basket of household items and groceries at regular intervals across the USA
BobbyJo 6y ago
What's funny is you don't even need to take the ethical viewpoint that wealth and inequality are bad to worry. Even if you're a total sociopath, the growth in asset values relative to CPI and wages should make you worried about how the system is working, and whether or not there is a bomb ticking somewhere just out of earshot. If you think things are working as intended right now, you haven't been paying attention.
8bitsrule 6y ago
The average person buying stocks has been told to just buy and hold. Yes, as the market rises over the long term, you'll make some money. It seems pretty obvious that when you hand your money to someone else to play with, they're going to make more ... if they're good at it, a LOT more ... than you. (Also true of long-term mortgages.) Glad to see people have a chance to play the game and discover some of the angles. A lot of people could learnn to do way better than just 'let it ride'.

by oivey 6y ago

anonu 6y ago

return on assets over the last 2 decades has far outpaced wage growth. Read: The rich get richer. In addition, with inflation at or above 2%, the average person needs to see a substantial hike in their wages to keep pace with their current standard of living.

sooheon 6y ago
Return to capital > growth of economy. This is the central dogma of Piketty's Capital.
- AnthonyMouse 6y ago
  > Return to capital > growth of economy. This is the central dogma of Piketty's Capital. The problem with this is taking it as a law of nature rather than an observed behavior over a specific period of history. And notably one with a stark lack of antitrust enforcement. Suppose you bust up monopolies and require companies to compete with each other. Then prices go down, which increases growth (lower price, higher demand), but decreases return on capital (lower margins). Is r > g still true then? Maybe not. I say we try it and find out.
  - sooheon 6y ago
    I mean, it is kind of a law of nature, like gravity wells accumulating, that power and wealth beget power and wealth at a greater rate than the global mean. But yes, I agree, the whole idea of pointing out r > g is to advocate for policy changes that would counteract this. The question is which policies? It's easy to say "break up monopolies", much harder to devise elegant countermeasures that align interests across the whole spectrum and are robust to defection.
    - nwellnhof 6y ago
      > much harder to devise elegant countermeasures Here's a simple and elegant countermeasure. Don't allow people to inherit more than say $50M with an extremely progressive estate tax.
      - AnthonyMouse 6y ago
        That may be simple but it is neither elegant nor effective. The estate tax is a joke because it can be avoided through tax planning. The theory is that Richard Rich dies and then little Richie inherits the money but would lose 90% of it to the tax. What happens in practice is that when Richie is 18 years old he launches a company with a loan from his parents in the same line of business where they have expertise and contacts so that 20 years later he's a billionaire in his own right. Meanwhile all the usual tax avoidance strategies are happening with jurisdictional arbitrage and transfer pricing and self-dealing so that by the time the parents retire they still have all they need for a lavish retirement but the bulk of their assets have already been transferred to their children at a low tax rate. The problem isn't inheritance. It isn't taxes at all. It's market consolidation and regulatory capture which yields regulations that favor big businesses over small ones and incumbents over upstarts. Because small business and competition are the ways growth flows to the little guy.
        nwellnhof 6y ago
        > What happens in practice is that when Richie is 18 years old he launches a company with a loan from his parents in the same line of business where they have expertise and contacts so that 20 years later he's a billionaire in his own right. It's not as simple as you make it sound. In every sane tax system, donations (even loans with lower than usual interest rates) are taxed just like inheritance. Of course, getting a million dollar loan at all makes a huge difference. But it's still no guarantee to build a successful business. The point is to make it a lot harder to bequeath obscene amounts of wealth.
        AnthonyMouse 6y ago
imtringued 6y ago
>In addition, with inflation at or above 2%, the average person needs to see a substantial hike in their wages to keep pace with their current standard of living. Inflation is what happens when there is a shortage of labor and thus inflation is generally associated with increased incomes. This stupid myth that CPI inflation is bad for workers should die. Your comment is also wrong that inflation is above 2%. If that were the case nobody would have gotten angry that assets have outpaced wage growth. Assets outpacing wage growth is deflation except it is not denominated in dollars but rather in housing or stocks. No, the fantasy economy (read the stock or housing market being pumped by easy money) should not be part of the CPI inflation rate because it's not real. The entire point of CPI inflation is to measure the real economy. Supply side economics are generally done to combat inflation, demand side economics are generally done to increase inflation and what we need is a stimulus on the demand side because there is already an oversupply of labor.
- lifty 6y ago
  In what reality isn’t the housing market part of the real economy? The fact that it’s a scarce asset sensitive to easy money policies does not make it fantasy economy. More importantly, the housing market outpacing income increases is one of the major pains for a large percent of people.
  - deleted 6y ago
    [deleted]
  - anonu 6y ago
    The term inflation here is getting mixed up... I'm talking about CPI inflation. Real estate is what you would call a risk asset. Wage inflation is yet another type of inflation. They're all interconnected
- candiodari 6y ago
  To put it mildly, this hasn't been my experience. Inflation is only 2% because CPI is bullshit. CPI keeps getting changed so it would be 2%. There are no realistic housing options in there anymore, nor education, nor healthcare, nor ... and if you reinsert those inflation has never been below 4% per year. While I've gotten above inflation pay rises, they have been exceptions (and due to exceptional performance, ie. usually more than 8h/day for quite a while). Besides, it is very obvious that modern states and central banks are using inflation to minimize/eliminate the effect of debts on the actual economy. Given what has been going on, how can you realistically defend any other position? Btw: given what has happened to these debts, you can safely bet your right arm that real inflation is going up to at least 5.3%. And that was before COVID-19 measures.
blackrock 6y ago
The inflation is real. Fruit at the grocery store has increased 30% in just the past few months. Apples used to be $0.99/pound. Now it’s $1.29/pound. I’ve seen other basic food commodities also increase 50%. This is the fastest rate increase that I’ve seen in quite a while, if ever. The only saving grace is that I’m not commuting to work. But the savings from gasoline, just went straight into groceries. Hence, practically no savings at all. I’m not looking forward to when we must go back into the office, and then everything still remains at the higher prices. I would need to demand a raise or a promotion to match up with the inflation.
- bmn__ 6y ago
  > [anecdotes] That's not how inflation works or is determined. Instead go to your country's office for statistics Web site. FWIW, here that's 0.3% inflation on food and non-alcoholic beverages, 1.3% in total from 2020-06 to 2020-12. Both numbers are ordinary/close to expected. To see an inflation of 30%, I have to take the difference to 2007.
  - blackrock 6y ago
    You misread my comment. I didn’t say it was 30% across the board. I just claimed I was seeing a 30% price increase, for one product item. Now, you can choose to not buy that item, in which case, the price increase doesn’t impact you.
    - UncleMeat 6y ago
      But it is one product. Isn’t it far more likely that seasonal variation in apples is what triggered the price change, not a devaluation of the dollar?
  - anonu 6y ago
    Actually it is how inflation works. The BLS actually goes out and buys a basket of household items and groceries at regular intervals across the USA

BobbyJo 6y ago

What's funny is you don't even need to take the ethical viewpoint that wealth and inequality are bad to worry. Even if you're a total sociopath, the growth in asset values relative to CPI and wages should make you worried about how the system is working, and whether or not there is a bomb ticking somewhere just out of earshot. If you think things are working as intended right now, you haven't been paying attention.

8bitsrule 6y ago

The average person buying stocks has been told to just buy and hold. Yes, as the market rises over the long term, you'll make some money. It seems pretty obvious that when you hand your money to someone else to play with, they're going to make more ... if they're good at it, a LOT more ... than you. (Also true of long-term mortgages.) Glad to see people have a chance to play the game and discover some of the angles. A lot of people could learnn to do way better than just 'let it ride'.