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I've posted this many times. Its essentially been: 1. Money printing, which pumped assets, cutting off younger middle class from buying an affordable house. Th

I've posted this many times. Its essentially been: 1. Money printing, which pumped assets, cutting off younger middle class from buying an affordable house. The money printing starting in 2008 patched up flaws in our economy, and there is no free lunch. Along the same lines, the financialization of assets like homes in the 80s by firms like Blackstone transformed what a home was and what it costed. This was a financial innovation, almost on the same level of societal impact as Google creating search. 2. Immigration. The biggest lie ever told in economics was that, "replaced american workers would move up the value chain and be retrained for new jobs". This never happened, and the phrase, "you cant teach an old dog new tricks" is true. It was a core tenant of both the left and the right. 3. Outsourcing. In the 90s there was a massive business arbitrage of sending whatever you could be done overseas. Politicians on both sides of the isle have acted like the above three are the second coming of christ. Paradoxically, the left is pro immigrant and pro free trade, both of which actively hurts the lower and middle classes in america. Very puzzling how capitalist doctrines have been construed as left wing. Last caveat I'll say is immigrants have produced extreme value and innovation in tech. They are intelligent and dilligent. They just arent good for the american middle class.

anamax 5y ago
> Last caveat I'll say is immigrants have produced extreme value and innovation in tech. They are intelligent and dilligent. They just arent good for the american middle class. Are you saying that immigrants are interchangeable?
- ldjkfkdsjnv 5y ago
  I dont want to argue the merits/drawbacks of immigrants. Its a simple fact, flood a labor market and watch wages and working conditions go down
  - astrange 5y ago
    If that was a simple fact then Russians’ upcoming autarky would make them richer and you could get a raise by killing your coworkers. Well, unless they got to you first.
  - unglaublich 5y ago
    Unless you have unions, or in other words: price fixing. While illegal for companies, it should be mandatory for human beings. What else separates humans competing for survival in a capitalist world from them surviving in the wilderness?
  - BeetleB 5y ago
    > Its a simple fact, flood a labor market and watch wages and working conditions go down Then ... simply add more without flooding. There's no point appealing to extremes.
- gscott 5y ago
  Most of the greatest inventions come from immigrants. I think the structure of the H1B program and its easy manipulation is bad for the middle class but everyone in the United States is or came from immigrants.
  - anamax 5y ago
    > Most of the greatest inventions come from immigrants. Whether or not that's true, it doesn't answer "Are immigrants interchangable?" That leads to "Does it matter which immigrants?" I ask because Pareto's law applies, which gets us to "Can we get all/most of the benefits with few of the costs by picking immigrants?" (The costs are an increasing function of the total number. Do the benefits depend on which immigrants?)
ausudhz 5y ago
> they are simply willing to work for less for longer hours If you're don't have a law that treats people equally probably yes. > Last caveat I'll say is immigrants have produced extreme value and innovation in tech. They are intelligent and dilligent. They just arent good for the american middle class. You do realize that people in tech probably belong to the middle class right?
- ldjkfkdsjnv 5y ago
  I dont want to get bogged down by the values of immigrants. Its just a fact that flooding a labor market with labor will cause working conditions and wages to be lower. You can argue that their existence ended up exapnding the labor market, but take a look at any silicon valley firm, very very few middle class americans working there.
  - stormbrew 5y ago
    > Its just a fact that flooding a labor market with labor will cause working conditions and wages to be lower. This is.. a drastic oversimplification. Massive amounts of middle class growth in the post-war era was driven by a flood of women, who were previously largely barred from most middle class work, into the workforce. So it's clearly possible to have a sudden influx of workers and not depress wages. The thing is, more people working means more people making money means more money moving around the market means, in theory, more money being spent on and paid to middle class people. Even Henry Ford understood that, but it's an idea that's lost on the modern liberal establishment on both sides of the American political aisle. The big differences between then and now have a lot more to do with wealth redistribution than anything else. In the post-war era, until Reagan/Thatcher flipped the table, taxes were far more progressive and the social safety net was growing. And while women weren't paid as much as men, and still aren't largely, that's nothing compared to the ways in which immigrants are underpaid since so many of them are undocumented, and visa programs are more and more designed to keep their negotiating power as close to zero as possible.
    - ausudhz 5y ago
black_puppydog 5y ago
Regarding your point about immigration: it would be in the interest of both immigrants and non-immigrants to agree on reasonable minimum working standards (salary and other benefits) which would largely avoid them being pitted against one another. Typically, when a group of people has a common interest like this, it makes sense for each individual to join forces with the others. Ideally they'd then get this sort of rule codified as a law. Of course, the joining of forces of individuals somehow has a bad rap in the US...
- ldjkfkdsjnv 5y ago
  Theres no way to get around the adversarial relationship between immigrants and host workers. You can claim it doesnt exist, which is a common move in american politics, but the diminishing middle class points to the contrary.
- unglaublich 5y ago
  When there's an oversupply of employees, they are not in a good position to set such requirements: they cannot NOT work. That's why unions are needed. But the US has declared them "enemy of the state". This holds for all essential services: housing, medical services. These are no real 'free markets', and if not regulated, suppliers can raise prices as much as they want, which will further exaggerate the gap between low- and upper-class. That's why regulation is needed. But the US has declared regulation the "enemy of the state". That's why the US is a "free country" in its most literal sense: if you can't make it, you are free to rot away.
  - vladvasiliu 5y ago
    I'm not completely convinced by the lack of regulation argument. I live in France, where unions are a thing, there's a minimum wage, plenty of regulations for everything. But I still see the same issues. The middle class is disappearing, income inequality rises, people can't afford to buy a shoebox to live in, etc... But there are also the same exact issues GP complained about: moving of industry to Asia / Eastern Europe / North Africa, outsourcing of services to the same (think call centers), money printing like there's no tomorrow, financialization of housing. Unions can only do so much. At the end of the day, if the factory closes to move two countries over, union or no union, you're still out of a job. So short of introducing tariffs or outright banning commerce with other countries, there's not much the government can do.
seibelj 5y ago
The US parties have never been ideologically consistent. It’s impossible for a 2-party system to construct tents large enough to hold interest groups with aligned philosophies. Broadly speaking the US left is libertarian on social issues and authoritarian on economic issues, and the right is reversed. However US culture has an ingrained individualist streak where there is general bipartisan agreement on “support for small business”, which encourages lower taxes, lower regulations, etc. that help capital and hurt labor. So the left tries to preach certain things but is stymied by the size of their tent and the contradictions of US culture. You can see the same story over and over. The right typically dislikes large government yet has knee-jerk support for the military, a giant money sucking boondoggle in so many ways yet is sacrosanct. And on and on.
- math_denial 5y ago
  > libertarian on social issues I'm not from the US but looking from far away the left seems quite authoritarian on social issues, it's just a different kind of authoritarianism. > authoritarian on economic issues This is quite strange from an Europe prospective. In Europe the Democrats would be classified as economically center right, free market and all that.
- ldjkfkdsjnv 5y ago
  The left claims to be for the low class. But is again for: open borders/immigration open/free trade large scale money printing/welfare these, more so than taxes, are core capitalist ideas. They disenfranchise the american worker. its just very odd that everyday americans are confused by this. the money printing during COVID effectively made the low classes even poorer. Relative to financial assets they got way poorer, and they are hurt most by inflation.
  - seibelj 5y ago
    I’m in agreement but I would characterize support from the left based on emotional and humanitarian viewpoints rather than cold capitalist calculations. The left wants to help immigrants because they feel bad for them. The fact it helps capital is an unintended side effect that they can’t seem to square.
vishnugupta 5y ago
+1 to all the above though I would place immigration at 3 (in terms of impact) and move outsourcing to #1. Here's another overarching theme/cause that's often missed in these discussions. Financialization of corporate sector. There was this well known push by wall-street to show more and more profits which most of the big corporations succumbed to. The phrase is "maximising share holder value". This in turn lead to cutting down costs which has had big cascading effect such as outsourcing, cutting down on pension funds etc., What's not that well known is that about 30% of the corporate profit of US firms is now purely from financial investments and activities. Most of this money does not make it to the real world economy and people. I can go on for quite a bit longer on this topic but I'll let you form your own opinion. Here's a good short video as a jump off point: https://www.youtube.com/watch?v=vtIk7WlINPQ https://www.youtube.com/watch?v=vtIk7WlINPQ If that interests you then here's a good little book "Capitalizing on Crisis": https://www.hup.harvard.edu/catalog.php?isbn=9780674066199 https://www.hup.harvard.edu/catalog.php?isbn=9780674066199
- ldjkfkdsjnv 5y ago
  I agree with this, there were inefficiencies within companies that did not get penalized because wall street was in its infancy. With the advent of computerized trading, higher levels of liquidity, more sophistication etc, earnings reports have become more important. I really do think in the 70s having a bad quarter is nowhere near the impact of having one now. I think these inefficiencies existed basically everywhere: corporations equities the bond market housing private equity basically every asset class. it was these inefficiencies that led to high quality of life for everyday people.
ayngg 5y ago
A lot of it is politicians chasing a golden age where everything lined up for American prosperity which we can't really return to. The postwar period had so many things going for America, everyone else was rebuilding or bankrupt, immigration was very low, the majority of global capital was USD, strong capital controls meant domestic investment which hindered outsourcing and de-industrialization and the monetary policy of the time was reacting to prewar era of massive unemployment that led to political instability in the world, so they focused heavily on full employment to maintain stability. Focusing on full employment meant wage growth was persistent since it was always in high demand, which worked because it was paid for by the gains in innovation from those workers, and the rest of the world was catching up and created demand creating a cycle. The cycle eventually became unsustainable because at some point innovation gains could not keep up with inflation and the world became more competitive as everyone caught up. Labor had a lot of power in this regime but if it was not worth it for capital to invest since there was no return, they would stop investing because the scales of power tipped too far in the favor of labor, which led to unemployment and stagflation. The response to this was to shift monetary policy towards taming inflation and creating price stability. The pendulum swung hard in the other direction against labor. Interest rates were jacked up and the financial system was liberalized to entice lending, women are entering the workforce and immigration is taking off and capital (and labor) was going international to where it got the greatest return. Inflation was crushed, the power of domestic labor was gutted but interest rates were still high, which led to the financialization of the economy because lending became so incredibly profitable. Everyone wanted money because they were previously credit starved, and everyone wanted to lend money because it was so profitable. Since price stability and taming inflation were the goals of policy and liberalized credit gave the gains that traditionally went to the working class to the developing world, wage stagnation was inevitable, which put a hard limit on growth unless growth was to be increasingly fueled by more debt. Inequality shifted dramatically because gains on capital were very high and gains in labor were very limited, and limited to those who interacted with the financialization of the economy (finance that ran the system, technology that innovated the system and the other industries that worked in tandem like big law). This led to 2008 when everything was so levered that things started to fall apart, but instead of letting it fall apart, governments wanted to keep the sinking ship alive, and so central banks stepped in to provide the liquidity to keep things afloat. Keeping things afloat exacerbated the problems that the system perpetuated, only now it is being pushed to the extreme because the only way forward is even more debt which creates even more inequality which is where we are now where we have crushed interest rates to keep the party going and can barely raise them without blowing up the economy, and the rise of working class populist movements across the developed world. This is basically a summary of a lecture given by Mark Blyth on the subject which can be seen here: https://www.youtube.com/watch?v=tJoe_daP0DE https://www.youtube.com/watch?v=tJoe_daP0DE

anamax 5y ago

> Last caveat I'll say is immigrants have produced extreme value and innovation in tech. They are intelligent and dilligent. They just arent good for the american middle class. Are you saying that immigrants are interchangeable?

ldjkfkdsjnv 5y ago
I dont want to argue the merits/drawbacks of immigrants. Its a simple fact, flood a labor market and watch wages and working conditions go down
- astrange 5y ago
  If that was a simple fact then Russians’ upcoming autarky would make them richer and you could get a raise by killing your coworkers. Well, unless they got to you first.
- unglaublich 5y ago
  Unless you have unions, or in other words: price fixing. While illegal for companies, it should be mandatory for human beings. What else separates humans competing for survival in a capitalist world from them surviving in the wilderness?
- BeetleB 5y ago
  > Its a simple fact, flood a labor market and watch wages and working conditions go down Then ... simply add more without flooding. There's no point appealing to extremes.
gscott 5y ago
Most of the greatest inventions come from immigrants. I think the structure of the H1B program and its easy manipulation is bad for the middle class but everyone in the United States is or came from immigrants.
- anamax 5y ago
  > Most of the greatest inventions come from immigrants. Whether or not that's true, it doesn't answer "Are immigrants interchangable?" That leads to "Does it matter which immigrants?" I ask because Pareto's law applies, which gets us to "Can we get all/most of the benefits with few of the costs by picking immigrants?" (The costs are an increasing function of the total number. Do the benefits depend on which immigrants?)

ausudhz 5y ago

> they are simply willing to work for less for longer hours If you're don't have a law that treats people equally probably yes. > Last caveat I'll say is immigrants have produced extreme value and innovation in tech. They are intelligent and dilligent. They just arent good for the american middle class. You do realize that people in tech probably belong to the middle class right?

ldjkfkdsjnv 5y ago
I dont want to get bogged down by the values of immigrants. Its just a fact that flooding a labor market with labor will cause working conditions and wages to be lower. You can argue that their existence ended up exapnding the labor market, but take a look at any silicon valley firm, very very few middle class americans working there.
- stormbrew 5y ago
  > Its just a fact that flooding a labor market with labor will cause working conditions and wages to be lower. This is.. a drastic oversimplification. Massive amounts of middle class growth in the post-war era was driven by a flood of women, who were previously largely barred from most middle class work, into the workforce. So it's clearly possible to have a sudden influx of workers and not depress wages. The thing is, more people working means more people making money means more money moving around the market means, in theory, more money being spent on and paid to middle class people. Even Henry Ford understood that, but it's an idea that's lost on the modern liberal establishment on both sides of the American political aisle. The big differences between then and now have a lot more to do with wealth redistribution than anything else. In the post-war era, until Reagan/Thatcher flipped the table, taxes were far more progressive and the social safety net was growing. And while women weren't paid as much as men, and still aren't largely, that's nothing compared to the ways in which immigrants are underpaid since so many of them are undocumented, and visa programs are more and more designed to keep their negotiating power as close to zero as possible.
  - ausudhz 5y ago

black_puppydog 5y ago

Regarding your point about immigration: it would be in the interest of both immigrants and non-immigrants to agree on reasonable minimum working standards (salary and other benefits) which would largely avoid them being pitted against one another. Typically, when a group of people has a common interest like this, it makes sense for each individual to join forces with the others. Ideally they'd then get this sort of rule codified as a law. Of course, the joining of forces of individuals somehow has a bad rap in the US...

ldjkfkdsjnv 5y ago
Theres no way to get around the adversarial relationship between immigrants and host workers. You can claim it doesnt exist, which is a common move in american politics, but the diminishing middle class points to the contrary.
unglaublich 5y ago
When there's an oversupply of employees, they are not in a good position to set such requirements: they cannot NOT work. That's why unions are needed. But the US has declared them "enemy of the state". This holds for all essential services: housing, medical services. These are no real 'free markets', and if not regulated, suppliers can raise prices as much as they want, which will further exaggerate the gap between low- and upper-class. That's why regulation is needed. But the US has declared regulation the "enemy of the state". That's why the US is a "free country" in its most literal sense: if you can't make it, you are free to rot away.
- vladvasiliu 5y ago
  I'm not completely convinced by the lack of regulation argument. I live in France, where unions are a thing, there's a minimum wage, plenty of regulations for everything. But I still see the same issues. The middle class is disappearing, income inequality rises, people can't afford to buy a shoebox to live in, etc... But there are also the same exact issues GP complained about: moving of industry to Asia / Eastern Europe / North Africa, outsourcing of services to the same (think call centers), money printing like there's no tomorrow, financialization of housing. Unions can only do so much. At the end of the day, if the factory closes to move two countries over, union or no union, you're still out of a job. So short of introducing tariffs or outright banning commerce with other countries, there's not much the government can do.

seibelj 5y ago

The US parties have never been ideologically consistent. It’s impossible for a 2-party system to construct tents large enough to hold interest groups with aligned philosophies. Broadly speaking the US left is libertarian on social issues and authoritarian on economic issues, and the right is reversed. However US culture has an ingrained individualist streak where there is general bipartisan agreement on “support for small business”, which encourages lower taxes, lower regulations, etc. that help capital and hurt labor. So the left tries to preach certain things but is stymied by the size of their tent and the contradictions of US culture. You can see the same story over and over. The right typically dislikes large government yet has knee-jerk support for the military, a giant money sucking boondoggle in so many ways yet is sacrosanct. And on and on.

math_denial 5y ago
> libertarian on social issues I'm not from the US but looking from far away the left seems quite authoritarian on social issues, it's just a different kind of authoritarianism. > authoritarian on economic issues This is quite strange from an Europe prospective. In Europe the Democrats would be classified as economically center right, free market and all that.
ldjkfkdsjnv 5y ago
The left claims to be for the low class. But is again for: open borders/immigration open/free trade large scale money printing/welfare these, more so than taxes, are core capitalist ideas. They disenfranchise the american worker. its just very odd that everyday americans are confused by this. the money printing during COVID effectively made the low classes even poorer. Relative to financial assets they got way poorer, and they are hurt most by inflation.
- seibelj 5y ago
  I’m in agreement but I would characterize support from the left based on emotional and humanitarian viewpoints rather than cold capitalist calculations. The left wants to help immigrants because they feel bad for them. The fact it helps capital is an unintended side effect that they can’t seem to square.

vishnugupta 5y ago

+1 to all the above though I would place immigration at 3 (in terms of impact) and move outsourcing to #1. Here's another overarching theme/cause that's often missed in these discussions. Financialization of corporate sector. There was this well known push by wall-street to show more and more profits which most of the big corporations succumbed to. The phrase is "maximising share holder value". This in turn lead to cutting down costs which has had big cascading effect such as outsourcing, cutting down on pension funds etc., What's not that well known is that about 30% of the corporate profit of US firms is now purely from financial investments and activities. Most of this money does not make it to the real world economy and people. I can go on for quite a bit longer on this topic but I'll let you form your own opinion. Here's a good short video as a jump off point: https://www.youtube.com/watch?v=vtIk7WlINPQ https://www.youtube.com/watch?v=vtIk7WlINPQ If that interests you then here's a good little book "Capitalizing on Crisis": https://www.hup.harvard.edu/catalog.php?isbn=9780674066199 https://www.hup.harvard.edu/catalog.php?isbn=9780674066199

ldjkfkdsjnv 5y ago
I agree with this, there were inefficiencies within companies that did not get penalized because wall street was in its infancy. With the advent of computerized trading, higher levels of liquidity, more sophistication etc, earnings reports have become more important. I really do think in the 70s having a bad quarter is nowhere near the impact of having one now. I think these inefficiencies existed basically everywhere: corporations equities the bond market housing private equity basically every asset class. it was these inefficiencies that led to high quality of life for everyday people.

ayngg 5y ago

A lot of it is politicians chasing a golden age where everything lined up for American prosperity which we can't really return to. The postwar period had so many things going for America, everyone else was rebuilding or bankrupt, immigration was very low, the majority of global capital was USD, strong capital controls meant domestic investment which hindered outsourcing and de-industrialization and the monetary policy of the time was reacting to prewar era of massive unemployment that led to political instability in the world, so they focused heavily on full employment to maintain stability. Focusing on full employment meant wage growth was persistent since it was always in high demand, which worked because it was paid for by the gains in innovation from those workers, and the rest of the world was catching up and created demand creating a cycle. The cycle eventually became unsustainable because at some point innovation gains could not keep up with inflation and the world became more competitive as everyone caught up. Labor had a lot of power in this regime but if it was not worth it for capital to invest since there was no return, they would stop investing because the scales of power tipped too far in the favor of labor, which led to unemployment and stagflation. The response to this was to shift monetary policy towards taming inflation and creating price stability. The pendulum swung hard in the other direction against labor. Interest rates were jacked up and the financial system was liberalized to entice lending, women are entering the workforce and immigration is taking off and capital (and labor) was going international to where it got the greatest return. Inflation was crushed, the power of domestic labor was gutted but interest rates were still high, which led to the financialization of the economy because lending became so incredibly profitable. Everyone wanted money because they were previously credit starved, and everyone wanted to lend money because it was so profitable. Since price stability and taming inflation were the goals of policy and liberalized credit gave the gains that traditionally went to the working class to the developing world, wage stagnation was inevitable, which put a hard limit on growth unless growth was to be increasingly fueled by more debt. Inequality shifted dramatically because gains on capital were very high and gains in labor were very limited, and limited to those who interacted with the financialization of the economy (finance that ran the system, technology that innovated the system and the other industries that worked in tandem like big law). This led to 2008 when everything was so levered that things started to fall apart, but instead of letting it fall apart, governments wanted to keep the sinking ship alive, and so central banks stepped in to provide the liquidity to keep things afloat. Keeping things afloat exacerbated the problems that the system perpetuated, only now it is being pushed to the extreme because the only way forward is even more debt which creates even more inequality which is where we are now where we have crushed interest rates to keep the party going and can barely raise them without blowing up the economy, and the rise of working class populist movements across the developed world. This is basically a summary of a lecture given by Mark Blyth on the subject which can be seen here: https://www.youtube.com/watch?v=tJoe_daP0DE https://www.youtube.com/watch?v=tJoe_daP0DE