4 ms·

Here's McKinsey in 2019: "Labor’s share of national income—that is, the amount of GDP paid out in wages, salaries, and benefits—has been declining in developed

Here's McKinsey in 2019: "Labor’s share of national income—that is, the amount of GDP paid out in wages, salaries, and benefits—has been declining in developed and, to a lesser extent, emerging economies since the 1980s." https://www.mckinsey.com/featured-insights/employment-and-growth/a-new-look-at-the-declining-labor-share-of-income-in-the-united-states https://www.mckinsey.com/featured-insights/employment-and-gr... This divergence since 1980 is the subject of Picketty's Capital in the 21st Century.

eru 5y ago
Yes, the labour share of income has slightly declined. I agreed with that? But the extra has gone to land, not capital. Piketty fails to make that distinction. See eg https://www.forbes.com/sites/chuckdevore/2015/07/22/piketty-vs-rognlie-land-use-restrictions-inflate-housing-values-drive-wealth-concentration/?sh=5fc0e3dd4698 https://www.forbes.com/sites/chuckdevore/2015/07/22/piketty-... or https://www.brookings.edu/bpea-articles/deciphering-the-fall-and-rise-in-the-net-capital-share/ https://www.brookings.edu/bpea-articles/deciphering-the-fall...
- pfkurtz 5y ago
  I was not aware of this paper, I will read it and see what further work has said, thanks (it's from 2015 there's gotta be something).
- pfkurtz 5y ago
  Interesting. There seems to be some debate among the critics, but putting that aside... If it's all gone to land, the situation seems worse as far as inequality goes. The top 1% of households own 40% of land in the US as of 2017. The next 9 percent own 42%. So maybe it's inexact to call it "capital" vs. "labor", but... a class of people is dominating.
  - eru 5y ago
    > So maybe it's inexact to call it "capital" vs. "labor", but... a class of people is dominating. Not sure about 'class'. But the policy implications are quite different: Land value taxation can capture all that extra rent going to land without hurting the economy one bit. See https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax By contrast, taxing capital is a really bad idea. Eg capital gains taxes hamper productivity growth.

eru 5y ago

Yes, the labour share of income has slightly declined. I agreed with that? But the extra has gone to land, not capital. Piketty fails to make that distinction. See eg https://www.forbes.com/sites/chuckdevore/2015/07/22/piketty-vs-rognlie-land-use-restrictions-inflate-housing-values-drive-wealth-concentration/?sh=5fc0e3dd4698 https://www.forbes.com/sites/chuckdevore/2015/07/22/piketty-... or https://www.brookings.edu/bpea-articles/deciphering-the-fall-and-rise-in-the-net-capital-share/ https://www.brookings.edu/bpea-articles/deciphering-the-fall...

pfkurtz 5y ago
I was not aware of this paper, I will read it and see what further work has said, thanks (it's from 2015 there's gotta be something).
pfkurtz 5y ago
Interesting. There seems to be some debate among the critics, but putting that aside... If it's all gone to land, the situation seems worse as far as inequality goes. The top 1% of households own 40% of land in the US as of 2017. The next 9 percent own 42%. So maybe it's inexact to call it "capital" vs. "labor", but... a class of people is dominating.
- eru 5y ago
  > So maybe it's inexact to call it "capital" vs. "labor", but... a class of people is dominating. Not sure about 'class'. But the policy implications are quite different: Land value taxation can capture all that extra rent going to land without hurting the economy one bit. See https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax By contrast, taxing capital is a really bad idea. Eg capital gains taxes hamper productivity growth.