10 ms·

The Cost of Financialization-Globalization: You Lost $500k and Gained $137.13

105 points by Melchizedek 5y ago

mjburgess 5y ago
This is just an extremely poorly informed rant. It's premised on a zero-sum view of economics, where any change in distribution is necessarily a loss for some and a gain for others. And a view that the shape of the distribution, rather than its height, is the only factor in quality of life. These are both profoundly misguided. In the last several decades QoL has improved dramatically, as has the amount of disposable income available to every household: the distribution is higher. And the main reason for increasing inequality in the distribution, is the rate of investment returns... ie., different rates of gain -- not money being "stolen".
- marginalia_nu 5y ago
  How would you counter someone who argues that given hedonic adaptation, they'll be roughly as happy regardless of QoL as long as their base needs are met.
  - rosndo 5y ago
    Research has largely shown this theory to be false. Recent one: https://penntoday.upenn.edu/news/money-matters-to-happiness-perhaps-more-than-previously-thought https://penntoday.upenn.edu/news/money-matters-to-happiness-...
    - marginalia_nu 5y ago
      This does not agree with my experience of the world. Where is this research? --edit-- Ok, you edited in a link. Do you have like a metanalysis or something? Individual studies, especially in psychology with its myriad quality problems[1], are hard to take at face value without context. [1] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1182327/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1182327/
      - rosndo 5y ago
        Probably the most recent one https://www.pnas.org/content/118/4/e2016976118 https://www.pnas.org/content/118/4/e2016976118 In my experience this is obviously true.
        john_minsk 5y ago
        Here is my experience and why I believe some level of "optimal income" exists: A. You start your life at this level based on what life your family can afford. You can't control it, you can just adapt. You get used to it and that is your base level. You have some "needs" that were not possible at this level and this is your ambition level. B. Depending on a lot of factors you can go in any direction from level A. If you have a lot of motivation - you will work hard and if you are lucky - you will get to higher levels, if not - you can even degrade compared to the level your parents are in. Most of the things that you dreamed of as a child will not be at the billionaire level. Probably most things will be at the level C, which is slightly higher than what your parents had (depends on a lot of factors like your character etc.) C. This is the level where you probably fulfilled all your child dreams and wants. You can afford everything your parents could + something on top of it. This is usually the easiest level to get to - you can get here by exploiting tools of level B given to you by your parents + smart work from your side. While you fulfil your child dreams you start become smarter as well and some of the crazy child dreams, which seemed genius (buy 100 Lego boxes and build the most epic Star Wars fleet among my friends) now seem irrelevant and is not worth the resources. If you haven't reached level C - additional resources will bring you happiness doesn't matter if this level is at 75000 or 1M. If you reached it you have a decision to make. D. Next level after C. It is much more harder and riskier to reach it. You might need to sacrifice your family, time and life to reach it. But all your basic wants and needs are met. So now you face a few great options: 1. You can keep increasing your needs and now your level C becomes your level B and D becomes your new level C. This comes with the risk to lose your ground at the level C and get back to Level B or lower. You become unhappy again before you reach your new level C. 2. You can stop raising your needs, give it some time and/or hard work and cement your position at level C. Diversify, deleverage, lower risk profile etc. This works toward your feeling of security, which increases happiness, but not to the extent of new needs. 3. You can do #1+#2 and reach level #2 faster with higher risk. As you can see at the level D you are looking for a mindset change. Before that you had a clear goal of "why do I need more money", but when you are at the level D you have to come up with new goals. This is the most exciting place to be in my mind. See Anton Kreil's "Build and Own Your Own Infrastructure" - this talk changed my perspective on my personal financial goals.
    - RyanHamilton 5y ago
      >>given hedonic adaptation, they'll be roughly as happy >>Research has largely shown this theory to be false. The research you link does NOT show that, it looks at a link between log(income) to happiness level. 1. It says nothing about hedonic adaptation as it does not take into account how long the person has been receiving that income. How their happiness shifted over time relative to income. 2. It does find a link between log(income) and happiness. If anything, given that happiness likely relies on multiple factors, and that the relationship is log, i.e. diminishing returns. It suggests a weakening link as income increases.
  - roenxi 5y ago
    Happiness isn't the be all and end all. Even if that is true we should take actions that make life objectively better - doing things that increase lifespans, health, leisure, safety, etc.
    - marginalia_nu 5y ago
      Why should we objectively improve life when life is subjectively experienced?
      - roenxi 5y ago
        Why shouldn't we? If we start by assuming that happiness naturally tends to some constant level, then the obvious thing to do is use something other than happiness not make decisions. Material outcomes are easy to coordinate around.
        marginalia_nu 5y ago
        Right, but shouldn't society cater to the humans that live in it, rather than demonstrably incorrect mathematical models of the same humans?
  - mjburgess 5y ago
    I think the only people who get angry at the shape of the distribution are those who get angry at the shape of the distribution. In other words, envy towards "the better off" is not a general feature of human experience. It is of some, but not all. One of the cultural triumphs of the west has been, somehow who knows, to mitigate envy (ie., hostility towards those who have more). So that most people today think "I'm grateful that I can do xyz, who cares that Musk can do o,p,q". People who write articles like this are the people "on the (envy) treadmill", and this isnt a cheap attack: they really are suffering! For them, it is a daily stress to see others have more. Society should do more to understand how this comes about, and what can be done to ameliorate this issue. It seems most acute in the "almost rich", i'm guessing because the condition of being rich seems available, but they cant get it. Whereas poorer people don't even think its an option. Given the amount of such possible "elites" we are producing today, who will never be elite, this is a politically unstable situation.
    - andrepd 5y ago
      Income inequality has risen dramatically since the onset of modern neoliberal financialised capitalism. Even though workers produce more, their wages have been stagnant or receding in real terms for the last 40-50 years. Nearly all of the gains have went only to a very small percentage of people. Even though value is created by all, it's appropriated by less and less people, in a more and more skewed distribution. And your argument is "yall just jealous lol"? People just want what's theirs. When the wealthiest country in world history has 1 in 6 children living in poverty, I really think you ought to look at yourself in the mirror when you talk about "envy".
    - pharmakom 5y ago
      It’s not about me (relatively wealthy denizen of HN) but people choosing between food and rent. It bothers me that some people are in this situation whilst others have so much wealth that they never have to work a day, if they choose to. I don’t mind some inequality, but I think don’t think we should tolerate such a low floor when the ceiling is so high.
      - mjburgess 5y ago
- kesor 5y ago
  The main point is the productivity/production has been shifted elsewhere. Once upon a time if you wanted to be wealthy, you had to produce physical stuff. Today you just find somewhere else in the world where people are forced to produce for pennies and you make them produce cheap crap for you, while the west does a lot less production than its potential and mostly just reaps the benefits. But the problem is not that production was mostly removed as the enabler to buy stuff. The real huge problem in the last 45 years is that the constraints on financing were removed. Once upon a time in order to buy cheap labor from another country, you had to pay with something physical, probably something you actually produced. Today you can just punch a key on your keyboard and give them extra numbers that are backed by nothing really, there is no need to produce anymore. When the only constraint on production is to find more fools to produce for you, eventually you run out of fools.
  - Broken_Hippo 5y ago
    "The main point is the productivity/production has been shifted elsewhere. Once upon a time if you wanted to be wealthy, you had to produce physical stuff. Today you just find somewhere else in the world where people are forced to produce for pennies and you make them produce cheap crap for you, while the west does a lot less production than its potential and mostly just reaps the benefits." This just isn't true. People were wealthy slave owners and got rich because you had forced labor. You didn't even have to pay them pennies. We have a long history of unpaid labor, globally, and the fact that we still have low-and-unpaid labor shouldn't be a surprise (even if we find it wrong now). Lawyers have been somewhat well-to-do for some generations now, alongside other things you had to go off to college for, and I'm not sure they produced anything either. Perhaps not in the US, but churches were freaking wealthy at one time too, and I can't really think of things they consistently produced either. Same for royals: They didn't directly produce anything.
  - sokoloff 5y ago
    Taking away someone else’s best option rarely leaves that person better off (especially in the short-run)
Barrin92 5y ago
>The fact is your household lost $500,000 in earnings and gained essentially nothing in supposed "cost savings I assume 'you' in this piece isn't addressing the people in this circle[1]. I mean even the extremely wrong basis for that quoted claim aside (anyone who has visited an electronics store and compares quality and price to pre-globalization can verify that for themselves), I always find it funny how anyone can think globalization hasn't drastically improved the world we live in. It's somewhat bizarre to me that support for globalisation is being attributed to shills and some financialied elite. I don't know which 70s the author grew up in but I don't think a minimum wage worker had a pristine supercomputer in their pocket and a big flatscreen tv on the wall. [1] https://en.wikipedia.org/wiki/Valeriepieris_circle#/media/File:Valeriepieris_circle.svg https://en.wikipedia.org/wiki/Valeriepieris_circle#/media/Fi...
- mjburgess 5y ago
  When remembering past decades they identify themselves with the top 1% on the basis of having 70s 1%-markers today (eg., a degree, etc.). What has happened is that the markers of the 70s 1% are now of the c. 50% today. The author should be mapping the life of a 70th percentile person across all the decades... till the late 70s, that person was a poor industrial worker.
  - andrepd 5y ago
    This is false. See https://www.epi.org/publication/ib330-productivity-vs-compensation/ https://www.epi.org/publication/ib330-productivity-vs-compen.... Income inequality has massively increased since the end of Bretton Woods and the start of the era of neoliberalism, deregulation, financialisation, and Reagan/Thatcher. Productivity increased while median (not top!) compensation remains stagnant.
    - kortilla 5y ago
      Income inequality is irrelevant. The key metric is just how the income has changed for the bulk of the people. The existence of a 100 people with 100 billion each really does nothing for the real purchasing power of the middle and lower class. Income inequality is a red herring designed to act as a political wedge and distract you from a failing government.
mercy_dude 5y ago
Geniuses in the party of Davos, not original people.
coderintherye 5y ago
"B-b-but wait, didn't we all save a fortune on cheap jeans and TVs? No, you lost on that, too, as every product was crapified by globalization" Cites no sources other than his own blog post in which he rants about the IRS (and also doesn't cite any sources).
nottorp 5y ago
Hmm. Nice rant against the meta financial products with which i kind of agree. But his appliance example... let's put $500 from 1975 into an inflation calculator. Oops, they're worth $2600 ish 2022 dollars. Versus the $400 cheap option. Edit: also globalization will stay no matter how protectionist the state is. In the black market.
- kesor 5y ago
  Globalization is the new slavery. Once upon a time you force-brought cheap labor to work on your plantation and paid them with food basically. Today the slaves do their work in China and you pay them with printed dollars backed by nothing.
  - nottorp 5y ago
    Yeah those poor slaves queueing at Foxconn's gates to get a job assembling iphones for the evil american consumer. Because it pays a lot more than tending the rice fields like their parents. Just for the record, I'm eastern european and slaving for the evil american tech firms ;)
    - andrepd 5y ago
      >Yeah those poor slaves queueing at Foxconn's gates to get a job assembling iphones for the evil american consumer. Because it pays a lot more than tending the rice fields like their parents. Unironically yes? Do you claim those people are making choices of their own free will? When they have no other option? They can't even change their government for christs sake, how can it be claimed they are engaging in a "free" market? You are very privileged that you can work from your bedroom and get a nice salary while living in a low cost of living area. Don't forget that, when you talk about how sweet those assembly line jobs are.
      - kortilla 5y ago
        But they are better jobs and they are voluntary employees. That’s pretty much by definition not slavery.
Ekaros 5y ago
So Mercantilism would be preferable? No more importing anything, just using local resources locally? Maybe for USA just do away with inter-state commerce too. Can't have that ruin things, locally produced and build food, shelter and clothing. By own hands.
- kesor 5y ago
  That is not what the article said. It would be preferable to produce real physical stuff everywhere in the world. Instead of using printed money to avoid production and still being able to buy everything someone else produced for you. If you produce real things, and you have excess, you can use that excess to trade with other countries/states that have excess. But the USA for at least 30 years had a deficit, covered by debt, covered by printed dollars. https://fred.stlouisfed.org/series/BOPGSTB https://fred.stlouisfed.org/series/BOPGSTB
  - nly 5y ago
    What about services?
    - hirako2000 5y ago
      the same has also been happening to services. see how outsourcing dev, support, creative work etc to the same or similar countries that took on physical production. While the service sector remains, it is more and more comprising of bullshit jobs with fancier and fancier ego nurturing titles. the US still export a lot of services, those that people in developing countries don't seem able to offer yet. but the import/export balance isn't there. fill the gab with debt.
    - kesor 5y ago
      Once upon a time you had services, a kid would clean your windows and filled the gas for you, a productive kid that could buy a house at 20yo. Today at 30yo you are still living with your parents and services you receive are over-the-phone-from-another-country, and it takes about 20-30 phone calls to get something simple done.
trabant00 5y ago
Products getting cheaper and lower quality is a spiral I'm not sure how we are going to escape. As production "optimizes" for cost the first place they look at is wages. Low wage consumers look for the cheapest thing out there out of necessity. Quality goods are very much a niche product these days. Economics of scale make them even more expensive than they otherwise would be. Even middle class consumers find it hard to swallow the price of a 200$ tshirt so they mostly buy Pakistan made 10$ ones, with all the environment, social, moral, etc, problems that come with that. What's the alternative and how do we get there? I can't even begin to imagine.
- kesor 5y ago
  The alternative is what we had 50 years ago, quality products, quality mindset, longer term thinking. With how the corporations are set up today, it makes sense for them to reduce wages and quality to the minimum. Corporations only see the profit in the near term, and really don't care about the future of mankind on the long term all that much - those who do get crushed by competition. There is some talk about faking it with ESG mandates, I personally doubt its anything more than lip service.
  - Broken_Hippo 5y ago
    I don't think we had a "quality mindset" at the time. We were just limited in technology. Example: Safety features make cars better quality, yet manufacturers haven't exactly lined up to implement them early. We didn't take arsenic fabrics off the market for... well, a long time. I don't know about you, but I expect a quality product not to poison me. We used to sell breads with additives in them if we could. "Quality mindset" is just a scam of nostalgic thinking. The products were simply different back then.
  - rosndo 5y ago
    Really been chugging the survivorship bias kool-aid, haven’t we?
  - thinkharderdev 5y ago
    50 years ago would be 1972. In 1972 if you were filling up the gas tank of the best-selling vehicle you would be filling the gas tank of a VW Beetle with gasoline infused with a potent neuro-toxin. None of that screams quality or long-term thinking to me.
tommy5dollar 5y ago
Crapification of stuff is good, you don't need a pair of jeans that lasts 400 years that you pass down to your grandchildren and most people don't want to save up for years (or take out financial products) to "invest" in furniture. The previous high quality of goods was a bug, not a feature.
- andrepd 5y ago
  I can't believe I'm reading on this website, when the last drum of oil has been burnt shipping fast fashion and useless plastic junk across the world and the air is too thick with smoke to breathe, at least we'll know it was all for the best, for we got to swap jeans every 3 months rather than every 5 years.
- forgotmypw17 5y ago
  When you consider that every pair of jeans, crappy or good, has a hidden cost of several gallons of burned diesel, several square meters of razed wildlands, and many kilos of natural resources that needed to be collected, processed, transported, reprocessed, re-transported, several times over, it's hard to call that a feature. Think about all the cotton, then thread, then cloth, plus dye, plus metal, plus other thread for putting it together, all the transportation and machinery, all the manual labor in poor conditions, and so on, which go into that cheap pair of jeans. Now, consider that every time you buy a pair, you're voting for more of that to happen. Now, consider the environmental and habitat cost to us and the rest of the world contained in that one "cheap" pair of jeans. I would not call that a feature.
originalvichy 5y ago
Finance, like the democratic process, should be explainable to your average person. If it can’t be explained, it is ripe for exploitation by ones who spend most of their time trying to find loopholes to get wealthy off of some esoteric financial instruments. Much like clever MMO doing their best to find bugs in the game and find things like duplication glitches. If it can’t be explained it is going to create a new global papacy that we have to defer our earthly futures to in hopes that they will find the magic cure for our stagnating incomes. Much of it can’t be explained and that’s why we can’t vote our way to a world that doesn’t give the wealthy and their foot soldiers an unfair advantage to use financial instrument tricks to gain vast amounts of on-paper-wealth that can then be used to repeat the process. Even though this is a shoot from the hip blog it does point at the fact that while globalization has seemingly made some costs cheaper for wealthy westerners, it also made the ones who planned and executed this shift many times more money.
- thinkharderdev 5y ago
  I'm not sure that this is a great heuristic. Most of the financial instruments that, for example, were at the root of the 2007-9 financial crisis are relatively easy to explain (you can find innumerable articles providing explanations of what a CDO is that I believe the average person can understand quite easily). > Even though this is a shoot from the hip blog it does point at the fact that while globalization has seemingly made some costs cheaper for wealthy westerners Arguably the largest benefits of globalization has been the global poor and not wealthy westerners. In some cases this has come at the expense of the western middle and working class (who are ~85th percentile globally) in specific sectors, which is why I think it is so contentious in the west.
NoLinkToMe 5y ago
This really is a terribly written article, wouldn't get a passing grade for a high school student. There's absolutely no coherence to any of the arguments, it's just a rant and poor understanding of finance. I'd like to be more concrete in my criticisms but honestly I don't even know where to start. There's an idea about financialisation, which is just completely wrong: he notes companies are willing to pay $20 billion for a $10 billion company, after selling it off for its pieces, and noting no value has been added. Typically the reverse happens, companies get merged for economies of scale, thereby adding value through efficiency. Sometimes companies are broken up because the individual pieces don't work well together anymore and create strategic issues, e.g. because a company has two units moving into two different directions, and require completely different strategy, people, ideas, customers, financing approach etc. e.g. a newspaper company that has a journalist branch that produces news, and a factory branch that produces printed (news)paper. That may have worked before. But in a digital age, journalists want to focus on news, and paper printing businesses on paper printing. You can lose value by tying these companies together under one CEO, one strategy, one financing model. You can add value by disentangling, letting them focus on their core business. The notion you can routinely magically just sell for 20 billion, what you purchased for 10, without adding value, is I hope obviously nonsense. Then there's a whole piece on globalisation... again, not sure where to start. The big claim is it reduces quality and this is a net loss for everyone, and that second, personal income has been dropping for decades. In reality, quality changes are well studied and part of inflation data, and personal income after inflation adjustment has been increasing for decades. [0] [0] https://fred.stlouisfed.org/series/RPI https://fred.stlouisfed.org/series/RPI
- pydry 5y ago
  >There's an idea about financialisation, which is just completely wrong: he notes companies are willing to pay $20 billion for a $10 billion company, after selling it off for its pieces, and noting no value has been added. This is just one face of financialization.It's known as asset stripping and it has a long wikipedia page so my sophomoric take is that it's probably real, but I'd be interested to see your rebuttal to it nonetheless. >Typically the reverse happens, companies get merged for economies of scale They typically get merged to bolster market power and they say that it's for economies of scale because it sounds like it's in the consumers interest rather than diametrically opposed to it and that's how to get mergers approved. Anybody who has worked in a large multinational corporation of stitched together mergers could tell you just how kafkaesque the diseconomies of scale can be. >Then there's a whole piece on globalisation... again, not sure where to start Maybe don't.
aiisahik 5y ago
This guy has a degree in "Comparative Philosophy" and thus this blog article should be viewed as such: philosophical rant
boksiora 5y ago
You may not like it, but this is what peak capitalism looks like

105 points by Melchizedek 5y ago

This is just an extremely poorly informed rant. It's premised on a zero-sum view of economics, where any change in distribution is necessarily a loss for some and a gain for others. And a view that the shape of the distribution, rather than its height, is the only factor in quality of life. These are both profoundly misguided. In the last several decades QoL has improved dramatically, as has the amount of disposable income available to every household: the distribution is higher. And the main reason for increasing inequality in the distribution, is the rate of investment returns... ie., different rates of gain -- not money being "stolen".

marginalia_nu 5y ago
How would you counter someone who argues that given hedonic adaptation, they'll be roughly as happy regardless of QoL as long as their base needs are met.
- rosndo 5y ago
  Research has largely shown this theory to be false. Recent one: https://penntoday.upenn.edu/news/money-matters-to-happiness-perhaps-more-than-previously-thought https://penntoday.upenn.edu/news/money-matters-to-happiness-...
  - marginalia_nu 5y ago
    This does not agree with my experience of the world. Where is this research? --edit-- Ok, you edited in a link. Do you have like a metanalysis or something? Individual studies, especially in psychology with its myriad quality problems[1], are hard to take at face value without context. [1] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1182327/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1182327/
    - rosndo 5y ago
      Probably the most recent one https://www.pnas.org/content/118/4/e2016976118 https://www.pnas.org/content/118/4/e2016976118 In my experience this is obviously true.
      - john_minsk 5y ago
        Here is my experience and why I believe some level of "optimal income" exists: A. You start your life at this level based on what life your family can afford. You can't control it, you can just adapt. You get used to it and that is your base level. You have some "needs" that were not possible at this level and this is your ambition level. B. Depending on a lot of factors you can go in any direction from level A. If you have a lot of motivation - you will work hard and if you are lucky - you will get to higher levels, if not - you can even degrade compared to the level your parents are in. Most of the things that you dreamed of as a child will not be at the billionaire level. Probably most things will be at the level C, which is slightly higher than what your parents had (depends on a lot of factors like your character etc.) C. This is the level where you probably fulfilled all your child dreams and wants. You can afford everything your parents could + something on top of it. This is usually the easiest level to get to - you can get here by exploiting tools of level B given to you by your parents + smart work from your side. While you fulfil your child dreams you start become smarter as well and some of the crazy child dreams, which seemed genius (buy 100 Lego boxes and build the most epic Star Wars fleet among my friends) now seem irrelevant and is not worth the resources. If you haven't reached level C - additional resources will bring you happiness doesn't matter if this level is at 75000 or 1M. If you reached it you have a decision to make. D. Next level after C. It is much more harder and riskier to reach it. You might need to sacrifice your family, time and life to reach it. But all your basic wants and needs are met. So now you face a few great options: 1. You can keep increasing your needs and now your level C becomes your level B and D becomes your new level C. This comes with the risk to lose your ground at the level C and get back to Level B or lower. You become unhappy again before you reach your new level C. 2. You can stop raising your needs, give it some time and/or hard work and cement your position at level C. Diversify, deleverage, lower risk profile etc. This works toward your feeling of security, which increases happiness, but not to the extent of new needs. 3. You can do #1+#2 and reach level #2 faster with higher risk. As you can see at the level D you are looking for a mindset change. Before that you had a clear goal of "why do I need more money", but when you are at the level D you have to come up with new goals. This is the most exciting place to be in my mind. See Anton Kreil's "Build and Own Your Own Infrastructure" - this talk changed my perspective on my personal financial goals.
  - RyanHamilton 5y ago
    >>given hedonic adaptation, they'll be roughly as happy >>Research has largely shown this theory to be false. The research you link does NOT show that, it looks at a link between log(income) to happiness level. 1. It says nothing about hedonic adaptation as it does not take into account how long the person has been receiving that income. How their happiness shifted over time relative to income. 2. It does find a link between log(income) and happiness. If anything, given that happiness likely relies on multiple factors, and that the relationship is log, i.e. diminishing returns. It suggests a weakening link as income increases.
- roenxi 5y ago
  Happiness isn't the be all and end all. Even if that is true we should take actions that make life objectively better - doing things that increase lifespans, health, leisure, safety, etc.
  - marginalia_nu 5y ago
    Why should we objectively improve life when life is subjectively experienced?
    - roenxi 5y ago
      Why shouldn't we? If we start by assuming that happiness naturally tends to some constant level, then the obvious thing to do is use something other than happiness not make decisions. Material outcomes are easy to coordinate around.
      - marginalia_nu 5y ago
        Right, but shouldn't society cater to the humans that live in it, rather than demonstrably incorrect mathematical models of the same humans?
- mjburgess 5y ago
  I think the only people who get angry at the shape of the distribution are those who get angry at the shape of the distribution. In other words, envy towards "the better off" is not a general feature of human experience. It is of some, but not all. One of the cultural triumphs of the west has been, somehow who knows, to mitigate envy (ie., hostility towards those who have more). So that most people today think "I'm grateful that I can do xyz, who cares that Musk can do o,p,q". People who write articles like this are the people "on the (envy) treadmill", and this isnt a cheap attack: they really are suffering! For them, it is a daily stress to see others have more. Society should do more to understand how this comes about, and what can be done to ameliorate this issue. It seems most acute in the "almost rich", i'm guessing because the condition of being rich seems available, but they cant get it. Whereas poorer people don't even think its an option. Given the amount of such possible "elites" we are producing today, who will never be elite, this is a politically unstable situation.
  - andrepd 5y ago
    Income inequality has risen dramatically since the onset of modern neoliberal financialised capitalism. Even though workers produce more, their wages have been stagnant or receding in real terms for the last 40-50 years. Nearly all of the gains have went only to a very small percentage of people. Even though value is created by all, it's appropriated by less and less people, in a more and more skewed distribution. And your argument is "yall just jealous lol"? People just want what's theirs. When the wealthiest country in world history has 1 in 6 children living in poverty, I really think you ought to look at yourself in the mirror when you talk about "envy".
  - pharmakom 5y ago
    It’s not about me (relatively wealthy denizen of HN) but people choosing between food and rent. It bothers me that some people are in this situation whilst others have so much wealth that they never have to work a day, if they choose to. I don’t mind some inequality, but I think don’t think we should tolerate such a low floor when the ceiling is so high.
    - mjburgess 5y ago
kesor 5y ago
The main point is the productivity/production has been shifted elsewhere. Once upon a time if you wanted to be wealthy, you had to produce physical stuff. Today you just find somewhere else in the world where people are forced to produce for pennies and you make them produce cheap crap for you, while the west does a lot less production than its potential and mostly just reaps the benefits. But the problem is not that production was mostly removed as the enabler to buy stuff. The real huge problem in the last 45 years is that the constraints on financing were removed. Once upon a time in order to buy cheap labor from another country, you had to pay with something physical, probably something you actually produced. Today you can just punch a key on your keyboard and give them extra numbers that are backed by nothing really, there is no need to produce anymore. When the only constraint on production is to find more fools to produce for you, eventually you run out of fools.
- Broken_Hippo 5y ago
  "The main point is the productivity/production has been shifted elsewhere. Once upon a time if you wanted to be wealthy, you had to produce physical stuff. Today you just find somewhere else in the world where people are forced to produce for pennies and you make them produce cheap crap for you, while the west does a lot less production than its potential and mostly just reaps the benefits." This just isn't true. People were wealthy slave owners and got rich because you had forced labor. You didn't even have to pay them pennies. We have a long history of unpaid labor, globally, and the fact that we still have low-and-unpaid labor shouldn't be a surprise (even if we find it wrong now). Lawyers have been somewhat well-to-do for some generations now, alongside other things you had to go off to college for, and I'm not sure they produced anything either. Perhaps not in the US, but churches were freaking wealthy at one time too, and I can't really think of things they consistently produced either. Same for royals: They didn't directly produce anything.
- sokoloff 5y ago
  Taking away someone else’s best option rarely leaves that person better off (especially in the short-run)

Barrin92 5y ago

>The fact is your household lost $500,000 in earnings and gained essentially nothing in supposed "cost savings I assume 'you' in this piece isn't addressing the people in this circle[1]. I mean even the extremely wrong basis for that quoted claim aside (anyone who has visited an electronics store and compares quality and price to pre-globalization can verify that for themselves), I always find it funny how anyone can think globalization hasn't drastically improved the world we live in. It's somewhat bizarre to me that support for globalisation is being attributed to shills and some financialied elite. I don't know which 70s the author grew up in but I don't think a minimum wage worker had a pristine supercomputer in their pocket and a big flatscreen tv on the wall. [1] https://en.wikipedia.org/wiki/Valeriepieris_circle#/media/File:Valeriepieris_circle.svg https://en.wikipedia.org/wiki/Valeriepieris_circle#/media/Fi...

mjburgess 5y ago
When remembering past decades they identify themselves with the top 1% on the basis of having 70s 1%-markers today (eg., a degree, etc.). What has happened is that the markers of the 70s 1% are now of the c. 50% today. The author should be mapping the life of a 70th percentile person across all the decades... till the late 70s, that person was a poor industrial worker.
- andrepd 5y ago
  This is false. See https://www.epi.org/publication/ib330-productivity-vs-compensation/ https://www.epi.org/publication/ib330-productivity-vs-compen.... Income inequality has massively increased since the end of Bretton Woods and the start of the era of neoliberalism, deregulation, financialisation, and Reagan/Thatcher. Productivity increased while median (not top!) compensation remains stagnant.
  - kortilla 5y ago
    Income inequality is irrelevant. The key metric is just how the income has changed for the bulk of the people. The existence of a 100 people with 100 billion each really does nothing for the real purchasing power of the middle and lower class. Income inequality is a red herring designed to act as a political wedge and distract you from a failing government.

mercy_dude 5y ago

Geniuses in the party of Davos, not original people.

coderintherye 5y ago

"B-b-but wait, didn't we all save a fortune on cheap jeans and TVs? No, you lost on that, too, as every product was crapified by globalization" Cites no sources other than his own blog post in which he rants about the IRS (and also doesn't cite any sources).

nottorp 5y ago

Hmm. Nice rant against the meta financial products with which i kind of agree. But his appliance example... let's put $500 from 1975 into an inflation calculator. Oops, they're worth $2600 ish 2022 dollars. Versus the $400 cheap option. Edit: also globalization will stay no matter how protectionist the state is. In the black market.

kesor 5y ago
Globalization is the new slavery. Once upon a time you force-brought cheap labor to work on your plantation and paid them with food basically. Today the slaves do their work in China and you pay them with printed dollars backed by nothing.
- nottorp 5y ago
  Yeah those poor slaves queueing at Foxconn's gates to get a job assembling iphones for the evil american consumer. Because it pays a lot more than tending the rice fields like their parents. Just for the record, I'm eastern european and slaving for the evil american tech firms ;)
  - andrepd 5y ago
    >Yeah those poor slaves queueing at Foxconn's gates to get a job assembling iphones for the evil american consumer. Because it pays a lot more than tending the rice fields like their parents. Unironically yes? Do you claim those people are making choices of their own free will? When they have no other option? They can't even change their government for christs sake, how can it be claimed they are engaging in a "free" market? You are very privileged that you can work from your bedroom and get a nice salary while living in a low cost of living area. Don't forget that, when you talk about how sweet those assembly line jobs are.
    - kortilla 5y ago
      But they are better jobs and they are voluntary employees. That’s pretty much by definition not slavery.

Ekaros 5y ago

So Mercantilism would be preferable? No more importing anything, just using local resources locally? Maybe for USA just do away with inter-state commerce too. Can't have that ruin things, locally produced and build food, shelter and clothing. By own hands.

kesor 5y ago
That is not what the article said. It would be preferable to produce real physical stuff everywhere in the world. Instead of using printed money to avoid production and still being able to buy everything someone else produced for you. If you produce real things, and you have excess, you can use that excess to trade with other countries/states that have excess. But the USA for at least 30 years had a deficit, covered by debt, covered by printed dollars. https://fred.stlouisfed.org/series/BOPGSTB https://fred.stlouisfed.org/series/BOPGSTB
- nly 5y ago
  What about services?
  - hirako2000 5y ago
    the same has also been happening to services. see how outsourcing dev, support, creative work etc to the same or similar countries that took on physical production. While the service sector remains, it is more and more comprising of bullshit jobs with fancier and fancier ego nurturing titles. the US still export a lot of services, those that people in developing countries don't seem able to offer yet. but the import/export balance isn't there. fill the gab with debt.
  - kesor 5y ago
    Once upon a time you had services, a kid would clean your windows and filled the gas for you, a productive kid that could buy a house at 20yo. Today at 30yo you are still living with your parents and services you receive are over-the-phone-from-another-country, and it takes about 20-30 phone calls to get something simple done.

trabant00 5y ago

Products getting cheaper and lower quality is a spiral I'm not sure how we are going to escape. As production "optimizes" for cost the first place they look at is wages. Low wage consumers look for the cheapest thing out there out of necessity. Quality goods are very much a niche product these days. Economics of scale make them even more expensive than they otherwise would be. Even middle class consumers find it hard to swallow the price of a 200$ tshirt so they mostly buy Pakistan made 10$ ones, with all the environment, social, moral, etc, problems that come with that. What's the alternative and how do we get there? I can't even begin to imagine.

kesor 5y ago
The alternative is what we had 50 years ago, quality products, quality mindset, longer term thinking. With how the corporations are set up today, it makes sense for them to reduce wages and quality to the minimum. Corporations only see the profit in the near term, and really don't care about the future of mankind on the long term all that much - those who do get crushed by competition. There is some talk about faking it with ESG mandates, I personally doubt its anything more than lip service.
- Broken_Hippo 5y ago
  I don't think we had a "quality mindset" at the time. We were just limited in technology. Example: Safety features make cars better quality, yet manufacturers haven't exactly lined up to implement them early. We didn't take arsenic fabrics off the market for... well, a long time. I don't know about you, but I expect a quality product not to poison me. We used to sell breads with additives in them if we could. "Quality mindset" is just a scam of nostalgic thinking. The products were simply different back then.
- rosndo 5y ago
  Really been chugging the survivorship bias kool-aid, haven’t we?
- thinkharderdev 5y ago
  50 years ago would be 1972. In 1972 if you were filling up the gas tank of the best-selling vehicle you would be filling the gas tank of a VW Beetle with gasoline infused with a potent neuro-toxin. None of that screams quality or long-term thinking to me.

tommy5dollar 5y ago

Crapification of stuff is good, you don't need a pair of jeans that lasts 400 years that you pass down to your grandchildren and most people don't want to save up for years (or take out financial products) to "invest" in furniture. The previous high quality of goods was a bug, not a feature.

andrepd 5y ago
I can't believe I'm reading on this website, when the last drum of oil has been burnt shipping fast fashion and useless plastic junk across the world and the air is too thick with smoke to breathe, at least we'll know it was all for the best, for we got to swap jeans every 3 months rather than every 5 years.
forgotmypw17 5y ago
When you consider that every pair of jeans, crappy or good, has a hidden cost of several gallons of burned diesel, several square meters of razed wildlands, and many kilos of natural resources that needed to be collected, processed, transported, reprocessed, re-transported, several times over, it's hard to call that a feature. Think about all the cotton, then thread, then cloth, plus dye, plus metal, plus other thread for putting it together, all the transportation and machinery, all the manual labor in poor conditions, and so on, which go into that cheap pair of jeans. Now, consider that every time you buy a pair, you're voting for more of that to happen. Now, consider the environmental and habitat cost to us and the rest of the world contained in that one "cheap" pair of jeans. I would not call that a feature.

originalvichy 5y ago

Finance, like the democratic process, should be explainable to your average person. If it can’t be explained, it is ripe for exploitation by ones who spend most of their time trying to find loopholes to get wealthy off of some esoteric financial instruments. Much like clever MMO doing their best to find bugs in the game and find things like duplication glitches. If it can’t be explained it is going to create a new global papacy that we have to defer our earthly futures to in hopes that they will find the magic cure for our stagnating incomes. Much of it can’t be explained and that’s why we can’t vote our way to a world that doesn’t give the wealthy and their foot soldiers an unfair advantage to use financial instrument tricks to gain vast amounts of on-paper-wealth that can then be used to repeat the process. Even though this is a shoot from the hip blog it does point at the fact that while globalization has seemingly made some costs cheaper for wealthy westerners, it also made the ones who planned and executed this shift many times more money.

thinkharderdev 5y ago
I'm not sure that this is a great heuristic. Most of the financial instruments that, for example, were at the root of the 2007-9 financial crisis are relatively easy to explain (you can find innumerable articles providing explanations of what a CDO is that I believe the average person can understand quite easily). > Even though this is a shoot from the hip blog it does point at the fact that while globalization has seemingly made some costs cheaper for wealthy westerners Arguably the largest benefits of globalization has been the global poor and not wealthy westerners. In some cases this has come at the expense of the western middle and working class (who are ~85th percentile globally) in specific sectors, which is why I think it is so contentious in the west.

NoLinkToMe 5y ago

This really is a terribly written article, wouldn't get a passing grade for a high school student. There's absolutely no coherence to any of the arguments, it's just a rant and poor understanding of finance. I'd like to be more concrete in my criticisms but honestly I don't even know where to start. There's an idea about financialisation, which is just completely wrong: he notes companies are willing to pay $20 billion for a $10 billion company, after selling it off for its pieces, and noting no value has been added. Typically the reverse happens, companies get merged for economies of scale, thereby adding value through efficiency. Sometimes companies are broken up because the individual pieces don't work well together anymore and create strategic issues, e.g. because a company has two units moving into two different directions, and require completely different strategy, people, ideas, customers, financing approach etc. e.g. a newspaper company that has a journalist branch that produces news, and a factory branch that produces printed (news)paper. That may have worked before. But in a digital age, journalists want to focus on news, and paper printing businesses on paper printing. You can lose value by tying these companies together under one CEO, one strategy, one financing model. You can add value by disentangling, letting them focus on their core business. The notion you can routinely magically just sell for 20 billion, what you purchased for 10, without adding value, is I hope obviously nonsense. Then there's a whole piece on globalisation... again, not sure where to start. The big claim is it reduces quality and this is a net loss for everyone, and that second, personal income has been dropping for decades. In reality, quality changes are well studied and part of inflation data, and personal income after inflation adjustment has been increasing for decades. [0] [0] https://fred.stlouisfed.org/series/RPI https://fred.stlouisfed.org/series/RPI

pydry 5y ago
>There's an idea about financialisation, which is just completely wrong: he notes companies are willing to pay $20 billion for a $10 billion company, after selling it off for its pieces, and noting no value has been added. This is just one face of financialization.It's known as asset stripping and it has a long wikipedia page so my sophomoric take is that it's probably real, but I'd be interested to see your rebuttal to it nonetheless. >Typically the reverse happens, companies get merged for economies of scale They typically get merged to bolster market power and they say that it's for economies of scale because it sounds like it's in the consumers interest rather than diametrically opposed to it and that's how to get mergers approved. Anybody who has worked in a large multinational corporation of stitched together mergers could tell you just how kafkaesque the diseconomies of scale can be. >Then there's a whole piece on globalisation... again, not sure where to start Maybe don't.

aiisahik 5y ago

This guy has a degree in "Comparative Philosophy" and thus this blog article should be viewed as such: philosophical rant

boksiora 5y ago

You may not like it, but this is what peak capitalism looks like