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I’m optimistic about inequality. I think the introduction of hundreds of millions of Chinese workers has depressed wages in a lot of sectors, but wages in China

by simonh 5y ago

I’m optimistic about inequality. I think the introduction of hundreds of millions of Chinese workers has depressed wages in a lot of sectors, but wages in China have shot up. They went up by over 60% from 2011 to 2017, and the country is climbing up the value chain. This is good because it makes it a valuable market for high value developed world goods and services as well as raising the wage floor for workers globally. I do think there’s more to do to cut down on rent seeking, but I hope the dynamics that gave capital an unreasonable advantage over labour are playing out. What we don’t need to do is discourage investment, it’s critical fuel for generating prosperity.

Blackstone4 5y ago
Not sure I am convinced…business owners, I’ve been speaking to, have been saying that they are either moving manufacturing away from China to cheaper locations like Vietnam or Mexico or they are on-shoring to the US but with more automation. This means shorter supply chains to turn things around. I think the wealth will still accumulate to business owners and those who operate around the capital markets (I.e. m&a lawyers, investment bankers, private equity, hedge funds) then you can throw in Senior management who get share points and a few exceptions like those who work at Google and get crazy comp packages
- simonh 5y ago
  Your first paragraph is good news driven by higher Chinese labour costs. More investment in countries with higher costs will raise their standards of living too. More manufacturing in the US, even with automation is still good. Those robots need to be monitored programmed and serviced, the factory needs supplies which need to be delivered. All income generating activities. Managers and investors do useful work growing companies and capitalising them to grow and prosper. There is a better balance to be struck though.
imtringued 5y ago
I don't know why it is always the same basic pattern. As soon as something becomes a "store of value" it ceases to be useful. It's a big problem with money and land. I put store of value in quotes because things like stocks and bonds are direct promises of value. Storing value has been delegated to the employees of the company or the borrower of the bond. Meanwhile with Bitcoin, deflationary currency (think of the yen) and land where is that value coming from? Who are you delegating the process to? You are basically letting the rest of the world figure it out while doing nothing to help them figure it out. Clearly all the increases in value are coming out of the pocket of someone else. Also, what is the point of an abstract "store of value"? At the end of the month you spent less than you earned. Meaning you didn't use up the labor of other people allotted to you this month. When you think about it, it basically means you worked and someone else didn't. Their time was wasted so to speak but you insist that the person that didn't work still owes you the labor you worked so hard for. Even if you let the person work in that same month, that person would still have to know what you want to buy in the future and produce it ahead of time so that the product that you want to buy is sitting on a shelf waiting for you. But if that is the case, why not buy the product the month it was produced? Why delay the purchase? It feels to me that our money system is flawed in exactly the opposite way that most people think. The average person wants their money to be flawed, I mean they want it to be sound money: Aesthetically pleasing to collect with as little utility as possible.
- simonh 5y ago
  Things like stocks and land are valuable because they do economic work. Land yields minerals, or hosts useful homes, shops, factories etc that provide services people need. Companies also provide needed goods and services. They are productive. They don’t just store value, they generate it. Their value is based on their ability to do economic work. This is why investment in companies is a good thing, it capitalises them so that they can expand, hire more workers, provide more and better products. Bitcoin is like gold. It does have a few economically useful functions, but it’s main actual use is purely as a store of value. It’s price is driven by speculation. That's a pure value store. Money in an economy is like oil in an engine, it reduces economic friction. It’s a substitute for barter. In principle it represents the value of economic work to produce goods or provide services. When I save money in a month I might spend it years later, but the thing I buy might have been manufactured before I was even born, or I might put a down payment on something yet to be made. It doesn’t matter, what matters is the value it has to me at that time. Being able to delay purchases until the time when you know what you need is an incredibly valuable benefit that eliminates huge amounts of waste.
bmitc 5y ago
> I’m optimistic about inequality. In the U.S., inequality is getting worse and worse, and you’re optimistic about that because ... China’s making a large middle class? I don't understand the reason in that stance.
- simonh 5y ago
  Inequality actually started falling in many states from 2010 to 2018 driven by wage rises for low income families and a tighter labour market, but obviously the pandemic has messed everything up since then. Still, I do think the effects in play before the pandemic are still there. The reasoning is that wages in developed countries were depressed because many of them were competing with cheap Chinese labour. Now Chinese labour isn’t as cheap so that competition isn’t as fierce.
  - bmitc 5y ago
    Wages, particularly minimum wages, are just one component of inequality.

by simonh 5y ago

Blackstone4 5y ago

Not sure I am convinced…business owners, I’ve been speaking to, have been saying that they are either moving manufacturing away from China to cheaper locations like Vietnam or Mexico or they are on-shoring to the US but with more automation. This means shorter supply chains to turn things around. I think the wealth will still accumulate to business owners and those who operate around the capital markets (I.e. m&a lawyers, investment bankers, private equity, hedge funds) then you can throw in Senior management who get share points and a few exceptions like those who work at Google and get crazy comp packages

simonh 5y ago
Your first paragraph is good news driven by higher Chinese labour costs. More investment in countries with higher costs will raise their standards of living too. More manufacturing in the US, even with automation is still good. Those robots need to be monitored programmed and serviced, the factory needs supplies which need to be delivered. All income generating activities. Managers and investors do useful work growing companies and capitalising them to grow and prosper. There is a better balance to be struck though.

imtringued 5y ago

I don't know why it is always the same basic pattern. As soon as something becomes a "store of value" it ceases to be useful. It's a big problem with money and land. I put store of value in quotes because things like stocks and bonds are direct promises of value. Storing value has been delegated to the employees of the company or the borrower of the bond. Meanwhile with Bitcoin, deflationary currency (think of the yen) and land where is that value coming from? Who are you delegating the process to? You are basically letting the rest of the world figure it out while doing nothing to help them figure it out. Clearly all the increases in value are coming out of the pocket of someone else. Also, what is the point of an abstract "store of value"? At the end of the month you spent less than you earned. Meaning you didn't use up the labor of other people allotted to you this month. When you think about it, it basically means you worked and someone else didn't. Their time was wasted so to speak but you insist that the person that didn't work still owes you the labor you worked so hard for. Even if you let the person work in that same month, that person would still have to know what you want to buy in the future and produce it ahead of time so that the product that you want to buy is sitting on a shelf waiting for you. But if that is the case, why not buy the product the month it was produced? Why delay the purchase? It feels to me that our money system is flawed in exactly the opposite way that most people think. The average person wants their money to be flawed, I mean they want it to be sound money: Aesthetically pleasing to collect with as little utility as possible.

simonh 5y ago
Things like stocks and land are valuable because they do economic work. Land yields minerals, or hosts useful homes, shops, factories etc that provide services people need. Companies also provide needed goods and services. They are productive. They don’t just store value, they generate it. Their value is based on their ability to do economic work. This is why investment in companies is a good thing, it capitalises them so that they can expand, hire more workers, provide more and better products. Bitcoin is like gold. It does have a few economically useful functions, but it’s main actual use is purely as a store of value. It’s price is driven by speculation. That's a pure value store. Money in an economy is like oil in an engine, it reduces economic friction. It’s a substitute for barter. In principle it represents the value of economic work to produce goods or provide services. When I save money in a month I might spend it years later, but the thing I buy might have been manufactured before I was even born, or I might put a down payment on something yet to be made. It doesn’t matter, what matters is the value it has to me at that time. Being able to delay purchases until the time when you know what you need is an incredibly valuable benefit that eliminates huge amounts of waste.

bmitc 5y ago

> I’m optimistic about inequality. In the U.S., inequality is getting worse and worse, and you’re optimistic about that because ... China’s making a large middle class? I don't understand the reason in that stance.

simonh 5y ago
Inequality actually started falling in many states from 2010 to 2018 driven by wage rises for low income families and a tighter labour market, but obviously the pandemic has messed everything up since then. Still, I do think the effects in play before the pandemic are still there. The reasoning is that wages in developed countries were depressed because many of them were competing with cheap Chinese labour. Now Chinese labour isn’t as cheap so that competition isn’t as fierce.
- bmitc 5y ago
  Wages, particularly minimum wages, are just one component of inequality.