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All things being equal, more people working is a an increase in buying power. The decreased buying power of wages is only negative relative to the amount people

by tootie 4y ago

All things being equal, more people working is a an increase in buying power. The decreased buying power of wages is only negative relative to the amount people being paid a wage. Which itself is a function of both employment opportunity and size of the labor force. The recent rise in inflation is definitely correlated with a rise in wages albeit at a slightly lower rate resulting in a roughly 1% lag in the past year. If you map out wages paid per GDP you can get an idea of how much of a share of economic growth has been going to workers and it's a been a pretty solid, steady decline since 1970: https://fred.stlouisfed.org/graph/fredgraph.png?g=Sfun https://fred.stlouisfed.org/graph/fredgraph.png?g=Sfun So, that sucks, but it doesn't make a useful definition of recession. This is the result of massive, global macroeconomic forces. It's basically a slow reset of the post-WWII global order.

s1artibartfast 4y ago
Im not sure I follow your argument. >All things being equal, more people working is a an increase in buying power. This isnt an absolute. If you have 1 person working for $1/day and go to 2 people for $0.5/day, buying power hasn't changed. You can have more people working, and people working longer, for less and less material goods. I think any meaningful definition of economic growth/recession must address the fundamental question of is there more material goods and wellbeing in a country today than yesterday. I agree that the allocation of those goods is a separate question entirely. >This is the result of massive, global macroeconomic forces. It's basically a slow reset of the post-WWII global order. I think that what we are seeing is the start of a realization that part of historic GDP growth was actually a fiction, in that more tangible goods were not produced. This is why a small increase in wages sent inflation through the roof. In theory, US real GDP per capita has gone up 33% since 2000[1]. This looks fine on paper as long as the growth is just accumulating in a bank account. Once people actually try to consume more, it becomes obvious that there isn't 33% more stuff to buy.

by tootie 4y ago

s1artibartfast 4y ago

Im not sure I follow your argument. >All things being equal, more people working is a an increase in buying power. This isnt an absolute. If you have 1 person working for $1/day and go to 2 people for $0.5/day, buying power hasn't changed. You can have more people working, and people working longer, for less and less material goods. I think any meaningful definition of economic growth/recession must address the fundamental question of is there more material goods and wellbeing in a country today than yesterday. I agree that the allocation of those goods is a separate question entirely. >This is the result of massive, global macroeconomic forces. It's basically a slow reset of the post-WWII global order. I think that what we are seeing is the start of a realization that part of historic GDP growth was actually a fiction, in that more tangible goods were not produced. This is why a small increase in wages sent inflation through the roof. In theory, US real GDP per capita has gone up 33% since 2000[1]. This looks fine on paper as long as the growth is just accumulating in a bank account. Once people actually try to consume more, it becomes obvious that there isn't 33% more stuff to buy.