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You're missing the point. The wages will _nominally_ rise. I'm sure the politicians will beat their chest over this fact in front of the fiscally illiterate pub

by m0zg 5y ago

You're missing the point. The wages will _nominally_ rise. I'm sure the politicians will beat their chest over this fact in front of the fiscally illiterate public. It's just that the prices will rise slightly faster than wages. Or not so slightly if we enter hyperinflation, which we might. That's why inflation is called a "tax on the poor". The poor and lower middle class don't have the option of putting their savings into any assets that are even remotely protected against inflation, since they don't have any savings in the first place and live hand to mouth as it is.

lotsofpulp 5y ago
> It's just that the prices will rise slightly faster than wages. This is not an inevitability. Wages can rise for the bottom deciles more than prices rise. The difference would come from wages rising less or even decreasing for the upper deciles. It would also cause asset prices to rise less (or maybe even decrease) as labor expenses rise. In other words, wealth transfer, where the income/wealth gap decreases. As an illustration, someone used to getting Starbucks every day can only get it once per week now. And someone who used to never be able to buy Starbucks can get it once per week now.
- m0zg 5y ago
  Are you Paul Krugman or something? I mean, there aren't any examples of what you're suggesting at least in the past hundred years, and yet you suggest it might happen. Might it? Sure, I might win a PowerBall jackpot next week, too. Will it? Based on historical evidence chances of it happening are nil. I'd be willing to bet hard cash on this outcome. There's also no plausible mechanism, short of a dramatic reduction in labor supply, that could drive a macroeconomic trend like this. Not to mention that even if it does happen, the prices will rise faster than wages - labor is a good chunk of the price in the first place, and you, the employer gotta pay social security off those increased wages, so bake in another 6% into that labor cost delta. Guess who will be paying for that? The consumer, AKA the working class largely. And this absolutely, under no circumstances, will cause any "wealth redistribution" from the rich to the poor. It'll be in the other direction. The rich can pay the poor in worthless QE fiat, while they hold inflation-protected assets. I've seen this shit happen with my own eyes and experienced it on my own skin in the 90s in Russia. I didn't have any money back then, but my parents had a little, and they lost pretty much all of their life's savings.
  - lotsofpulp 5y ago
    Does poor people in China moving up the socioeconomic ladder compared to the “middle class” factory workers in the US who moved down the socioeconomic ladder not count as if happening in the previous century? > There's also no plausible mechanism, short of a dramatic reduction in labor supply, that could drive a macroeconomic trend like this. Is proportion of working age population and fertility rates not going down? Of course they can be offset with immigration and automation, but will it be for the types of labor requested by the increasing proportion of old people? I do not know the future for sure, but one big variable that has changed is slowing population growth. The government can print all the fiat it wants, but it will not make the necessary labor appear out of thin air if people are not having kids at the same rate as before. Immigration and automation might blunt the impact of slowing population growth, but it may not be able to absorb all of it.
    - m0zg 5y ago
      China is experiencing increasing demand for labor thanks to our inability to make stuff in the Rust Belt. China is also, at least to some extent, a planned economy (and has planned demographics, too). As such it is subject to a different set of supply/demand tradeoffs, and definitely not a good pattern to extrapolate from. Any fertility-related stuff will take decades to play out, and it'd have to outpace off-shoring, legal immigration, and illegal migration, none of which is the case today or will be in the foreseeable future. It is not the case specifically for this reason: the rich like abundant supply of cheap labor. They achieve this abundance through both reducing demand and increased supply. Worse, reduced fertility will result in state's inability to provide social services and healthcare to the elderly poor, which means rising taxes and therefore further acceleration of off-shoring. In this regard we are too very much unlike China where the young are supposed to care for _their_ elderly. If our government thought at least 20 years ahead, they'd be trying to stimulate the birth rate, boost manufacturing, and they'd clamp down on the borders. But their planning horizon does not extend beyond 4 years, unlike, say, Xi Jinping's.
      - chii 5y ago
        > our government thought at least 20 years ahead, they'd be trying to stimulate the birth rate, boost manufacturing, and they'd clamp down on the borders. it is hubris to think that mere mortals can predict complex chaotic systems 20 yrs ahead. I think allowing people the freedom to choose and let individuals make the best choices available to them is really the only "good" way forward. Planning an economy, or planning population growth, as seen done in the past, had not ever worked out.
- idiotsecant 5y ago
  I'm not sure what the mechanism would be for this- it seems like the last 100 years have been solidly trending toward greater and greater wealth inequality, with a brief hiatus caused by new deal policies and the great depression. Even worse, since the 50s wealth generated by increased production from automation has accelerated this trend, breaking the rough correlation between productivity and real median family income. In short, there is no way we can fix this (as far as I can tell) without major radical restructuring of how we distribute wealth. I'd say the odds of that happening are pretty slim.
  - lotsofpulp 5y ago
    >I'm not sure what the mechanism would be for this- it seems like the last 100 years have been solidly trending toward greater and greater wealth inequality, with a brief hiatus caused by new deal policies and the great depression. The mechanism would be lower supply of labor relative to demand. And many, many people have experienced increases in quality of life and increases in the wealth. It just happened to come close the gap with the middle in developed countries, not the richest.

by m0zg 5y ago

lotsofpulp 5y ago

> It's just that the prices will rise slightly faster than wages. This is not an inevitability. Wages can rise for the bottom deciles more than prices rise. The difference would come from wages rising less or even decreasing for the upper deciles. It would also cause asset prices to rise less (or maybe even decrease) as labor expenses rise. In other words, wealth transfer, where the income/wealth gap decreases. As an illustration, someone used to getting Starbucks every day can only get it once per week now. And someone who used to never be able to buy Starbucks can get it once per week now.

m0zg 5y ago
Are you Paul Krugman or something? I mean, there aren't any examples of what you're suggesting at least in the past hundred years, and yet you suggest it might happen. Might it? Sure, I might win a PowerBall jackpot next week, too. Will it? Based on historical evidence chances of it happening are nil. I'd be willing to bet hard cash on this outcome. There's also no plausible mechanism, short of a dramatic reduction in labor supply, that could drive a macroeconomic trend like this. Not to mention that even if it does happen, the prices will rise faster than wages - labor is a good chunk of the price in the first place, and you, the employer gotta pay social security off those increased wages, so bake in another 6% into that labor cost delta. Guess who will be paying for that? The consumer, AKA the working class largely. And this absolutely, under no circumstances, will cause any "wealth redistribution" from the rich to the poor. It'll be in the other direction. The rich can pay the poor in worthless QE fiat, while they hold inflation-protected assets. I've seen this shit happen with my own eyes and experienced it on my own skin in the 90s in Russia. I didn't have any money back then, but my parents had a little, and they lost pretty much all of their life's savings.
- lotsofpulp 5y ago
  Does poor people in China moving up the socioeconomic ladder compared to the “middle class” factory workers in the US who moved down the socioeconomic ladder not count as if happening in the previous century? > There's also no plausible mechanism, short of a dramatic reduction in labor supply, that could drive a macroeconomic trend like this. Is proportion of working age population and fertility rates not going down? Of course they can be offset with immigration and automation, but will it be for the types of labor requested by the increasing proportion of old people? I do not know the future for sure, but one big variable that has changed is slowing population growth. The government can print all the fiat it wants, but it will not make the necessary labor appear out of thin air if people are not having kids at the same rate as before. Immigration and automation might blunt the impact of slowing population growth, but it may not be able to absorb all of it.
  - m0zg 5y ago
    China is experiencing increasing demand for labor thanks to our inability to make stuff in the Rust Belt. China is also, at least to some extent, a planned economy (and has planned demographics, too). As such it is subject to a different set of supply/demand tradeoffs, and definitely not a good pattern to extrapolate from. Any fertility-related stuff will take decades to play out, and it'd have to outpace off-shoring, legal immigration, and illegal migration, none of which is the case today or will be in the foreseeable future. It is not the case specifically for this reason: the rich like abundant supply of cheap labor. They achieve this abundance through both reducing demand and increased supply. Worse, reduced fertility will result in state's inability to provide social services and healthcare to the elderly poor, which means rising taxes and therefore further acceleration of off-shoring. In this regard we are too very much unlike China where the young are supposed to care for _their_ elderly. If our government thought at least 20 years ahead, they'd be trying to stimulate the birth rate, boost manufacturing, and they'd clamp down on the borders. But their planning horizon does not extend beyond 4 years, unlike, say, Xi Jinping's.
    - chii 5y ago
      > our government thought at least 20 years ahead, they'd be trying to stimulate the birth rate, boost manufacturing, and they'd clamp down on the borders. it is hubris to think that mere mortals can predict complex chaotic systems 20 yrs ahead. I think allowing people the freedom to choose and let individuals make the best choices available to them is really the only "good" way forward. Planning an economy, or planning population growth, as seen done in the past, had not ever worked out.
idiotsecant 5y ago
I'm not sure what the mechanism would be for this- it seems like the last 100 years have been solidly trending toward greater and greater wealth inequality, with a brief hiatus caused by new deal policies and the great depression. Even worse, since the 50s wealth generated by increased production from automation has accelerated this trend, breaking the rough correlation between productivity and real median family income. In short, there is no way we can fix this (as far as I can tell) without major radical restructuring of how we distribute wealth. I'd say the odds of that happening are pretty slim.
- lotsofpulp 5y ago
  >I'm not sure what the mechanism would be for this- it seems like the last 100 years have been solidly trending toward greater and greater wealth inequality, with a brief hiatus caused by new deal policies and the great depression. The mechanism would be lower supply of labor relative to demand. And many, many people have experienced increases in quality of life and increases in the wealth. It just happened to come close the gap with the middle in developed countries, not the richest.