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Did you read the article? It’s the anticipation of higher interest rates by the stock markets that send stocks down. And the Fed may do so because they want to

Did you read the article? It’s the anticipation of higher interest rates by the stock markets that send stocks down. And the Fed may do so because they want to raise them “just so much to counter inflation without drifting into a recession”. For Tech that may mean that the focus will shift towards profitability which may increase pressure on the workforce. What do you mean by “higher income equality”? E.g., people earning the same irrespective of their capability, effort, working hours and “value creation contribution in the economy”? Isn’t income equality (government interventions in some aspects aside) a mere reflection of people’s contribution to a economy and their ability to negotiate? So, are you assuming/applying everyone more or less has the same contribution or do you want everyone to be paid the same irrespective?

pjc50 4y ago
> Isn’t income equality (government interventions in some aspects aside) a mere reflection of people’s contribution to a economy and their ability to negotiate? Watch the elision between this and the next sentence: > So, are you assuming/applying everyone more or less has the same contribution or do you want everyone to be paid the same irrespective? The bit that's gone is "their ability to negotiate", which depends to a great extent on how wealthy you are already. BATNA, and so on. Also, conflating income from labour with income from capital confuses the issue further.
- looping__lui 4y ago
  Income from capital is generally lower in low-interest regimes. We probably saw inflation in asset classes such as housing and stock as a result of monetary oversupply and cheap access to capital. Not factoring in such things into inflation is a question the Fed would have to address. With a sufficient social net and minimum wages, even poorly qualified have good negotiation power. No offense, but I’m also not sure how paying 30 USD/h to somebody who doesn’t speak the language and is performing low complexity work is doing society any good. I live in Europe and there is no way anybody would come for house cleaning, shopping or whatnot below that - because they are just better off with free housing, free healthcare, free schooling and money on top.
  - anonymouskimmer 4y ago
    Unless they are disabled, people should be doing their own house cleaning, doing their own shopping, and etcetera. Service jobs should be limited to corporations. In your home, you (or your children) do it. Otherwise it's a waste of human talent to have another human dedicate their life to doing a menial task.
    - Godel_unicode 4y ago
      I don’t understand your point. It’s not a zero-sum game where some people are forced to clean houses. If they want to not clean houses they can change career. If you don’t pay them you’re not somehow freeing them up to realize their potential, you’re just giving them fewer customers. At least where I live a lot of professional house cleaners are small business owners.
      - anonymouskimmer 4y ago
        Sure, I'm probably going to extremes. There are definite economies of scale to specialize in house cleaning and the like. I'm thinking more about the stereotypical rich person type of service with multiple dedicated servants for a single household.
        looping__lui 4y ago
        I also think you should grow your own vegetables, keep your own chicken and generate your own electricity. I mean, I’m thinking more about the stereotypical first world person that can just go into a supermarket and buy whatever he wants.
        anonymouskimmer 4y ago
        Unfortunately the majority of people in the first world live in areas where that just isn't possible. Outside of a potted plant or two. But yes, victory gardens FTW! :) At the very least they build in more resiliency. I think you're being tongue in cheek, but I responded to a person elsewhere online a while back from India who was basically justifying hiring servants as being beneficial. I disagree and think that that's a sink of human resources. The economy, and capitalism, can come up with better uses for most people who are full-time servants.
dougmwne 4y ago
Inflation benefits people in debt and light labor markets benefit people who earn a wage. It hurts people who already have accumulated capital in the form of bonds and stocks. The Fed acts to protect the interests of the very rich, at the expense of the lower and middle class. It is a balance. The government is a democracy and corporations need customers, but the wealth gap must be maintained, lest you lose the support of the wealthy who fund politics and buy newspapers to shape public opinion. This tension between the rich and everyone else has existed in every society since the shift to agriculture.
- Reason077 4y ago
  > "Inflation benefits people in debt" Only if that debt is at fixed rates of interest, like corporate bonds or a fixed-rate mortgage. If your rate is variable, then inflation leads to higher interest rates which increases the cost of servicing that debt. Note that the US mortgage market is unusual in that 30-year fixed rates are quite common. In most of the world, mortgages are variable-rate, or fixed for much shorter periods.
  - gymbeaux 4y ago
    Actually, higher inflation doesn’t necessarily correspond to higher variable interest rates. Indirectly, yea, but only because the fed is raising the benchmark rate to “fight inflation”.
    - lazide 4y ago
      No one is going to write a mortgage for a lower rate than inflation unless they’re crazy (so the gov’t might, but even then not usually!). They’d be signing up to 100% burn their cash doing so. Inflation absolutely impacts mortgage rates, and all other lending.
      - luckylion 4y ago
        So the standard mortgage rate is agreed on as "official inflation rate + x%"?
lizzardbraind 4y ago
Isn't the idea behind raising rates to combat inflation that it works to reduce demand by forcing people to tighten their belts? "We need companies to fire a lot of people so that fewer people can afford nice things" is less politically palatable than, "we are aiming for a soft landing". Stocks went up previously because the companies believe that with all the layoffs, people were getting desperate enough that the rate hikes would slacken off and they'd be able to start hiring at fire-sale prices. The strong January jobs data makes the companies and Fed alike worry that their workers might start to get uppity and ask for raises or benefits again soon.
melenaboija 4y ago
> For Tech that may mean that the focus will shift towards profitability Is it like tech or any other industry has ever focused (directly or indirectly) in something else? Maybe they just realized their superpowers are waning and they can’t keep hiring with obscene salaries indefinitely.
- deleted 4y ago
  [deleted]
- looping__lui 4y ago
  I’m not sure I follow your cynicism: I celebrate ICs making 500k or 1M working for a company in the US instead of making “the same with a PhD in physics as an assembly line worker at Volkswagen”. If an IC delivers 100MM in cost savings for a company because his software scales almost arbitrarily and gets paid highly: that’s a win for the working class population.
  - pmalynin 4y ago
    Its probably a case of crab in bucket mentality
  - 988747 4y ago
    But that does not take into account VC-powered startups, like Uber, which never turned profit in their history, so that 500k-1M compensations for ICs are directly financed by VC money, which is unsustainable. I think that's what GP meant: the "superpower" to raise VC money is waning, and Sillicon Valey unicorns need to start operating like any other company, hence the layoffs.
    - deleted 4y ago
      [deleted]
  - melenaboija 4y ago
    Agree, as long as it is sustainable and realistic but this trend of firing people in the tech scene where even companies like Google have been involved, with still huge earnings, makes me doubt about it. And even worst it seems they don’t know either what is going on and if it is the right path.
UltraViolence 4y ago
The markets have been wishing / predicting a decline in the rise of interest rates, which clearly isn't going to happen.
GAN_Game 4y ago
> Isn’t income equality (government interventions in some aspects aside) a mere reflection of people’s contribution to a economy and their ability to negotiate? So, are you assuming/applying everyone more or less has the same contribution or do you want everyone to be paid the same irrespective? Sure, the heirs from Rich Kids of Instagram are living off their rentier expropriation as a "reflection of people’s contribution to a economy", while the people doing the work and creating the wealth are contributing less to the economy, in your view. The fruits of the economy are swallowed up by these parasitic heirs expropriating surplus labor time from those who work and create wealth, but your view is parasitism is somehow the greater contribution to the economy.
- looping__lui 4y ago
  So you are mainly talking about passive income inequality? I was talking about income that is earned. Well, what do you want me to say: the country I live in we have a high tax on inheritance, capital gains etc. But to me personally: I am grown up enough to not care how many Porsches my neighbor has. How does this matter? There are resources that cover basic needs such as health, living, education and food. But in Europe you get all that for free irrespective whether you work or not. Health coverage is as good for an unemployed family not speaking the language as it is for two full time working parents. As is schooling as is university.
  - GAN_Game 4y ago
    > But to me personally: I am grown up enough to not care how many Porsches my neighbor has. How does this matter? When something I made is sold at a company, used raw materials are rebought, but then left over is the wealth I created. A portion goes to me in wages, a portion is mailed off in dividend checks to the heir who is expropriating my surplus time. It matters because the heir is expropriating surplus labor time from me, and all the wealth I create in this time. That is why it matters.
    - looping__lui 4y ago
      Then you have either negotiated your share in value creation poorly or your skills are easily sourced. Irrespective of that you are assuming happiness is just associated to absolute monetary wealth - which I disagree with. If basic resources and needs are catered for and the rest is spent on luxury goods or extravagant lifestyles - how would I care? If you want to still play that game, just travel and ask yourself what a person living in India/Bangladesh/Laos would say about your first world problems. Being born into a wealthy society is the most important differentiator for wealth - and I assume you are totally ok with the luck you had there!?
MattPalmer1086 4y ago
The Fed wants to control inflation sure by raising interest rates. They see a strong labour market as a driver of inflation, as workers can negotiate higher wages when they are in shorter supply. In terms of income equality, I don't think the OP was advocating that people should all be paid the same. Merely that lower paid workers would be in a strong position to gain relatively more, thus narrowing the gap. I don't know if that is true; it's merely what I understood from the post.
KptMarchewa 4y ago
"The shift towards profitability" that made facebook lay off 11,000 people to save 1.5 billion to spend 40 billion on buybacks.
- looping__lui 4y ago
  And their stock soared 25% yesterday because of their profitability. Are you trying to prove the point I’m making or just mad at me that I explain capitalism?
  - SauciestGNU 4y ago
    I think many people (myself included) see it as a problem that capitalism so clearly works against the interest of the many to benefit the few. We understand why stock buybacks and layoffs increase shareholder value, and therein lies the problem.
    - looping__lui 4y ago
      Every other system had more wealth destroying and catastrophic outcome for society. Not arguing for “unrestricted capitalism that is never tamed” - but with a functioning social net and access to basic needs for almost everyone it’s probably pretty amazing. You are also missing, that for most people this is probably great: less high income individuals competing for resources in the marriage, housing, etc market. They see their wages increased and their relative purchasing power in society lifted and are happy about this development.
  - KptMarchewa 4y ago
    The biggest problem (among many) I have is that they bold faced lie. When Zucc says "I view layoffs as a last resort" and then announces 40 billion buyback he should be lawfully punished. If there's no law for that there should be.
    - mrep 4y ago
      I 100% agree with that. Companies should be barred from doing stock buybacks or paying out dividends for some time if they do layoffs.
toiletfuneral 4y ago
[dead]
harimau777 4y ago
I think that what many people want looks something like: Everyone who makes a good faith effort to contribute to society is paid enough to have a decent quality of life (raise a family, own a home, afford medical bills, participate in recreation). When a company succeeds, the employees receive a meaningful amount of the benefit. Not necessarily that they receive as much as the CEO (or even in the same order of magnitude) but that they are meaningfully rewarded. Wealth inequality is not so great that the wealthy are effectively above the rules that apply to everyone else.
chadash 4y ago
> So, are you assuming/applying everyone more or less has the same contribution or do you want everyone to be paid the same irrespective? The parent said, "more equal", not equal. There is a big difference between saying that everyone should have the same exact wage versus we should narrow the gap between the highest and the lowest paid people. And there are plenty of examples of people with massive contributions to society who didn't get paid very well. Van Gogh lived in poverty. Albert Einstein was certainly not poor, but I'd have a hard time believing that his "contribution to society" is less than 1/10000th that of Jeff Bezos. For that matter, my elementary school teachers contributed a lot to society. So do many others. I don't believe that the parent comment is arguing that teachers should make as much as CEOs, they are just saying that the gap shouldn't be so ludicrously large.

pjc50 4y ago

> Isn’t income equality (government interventions in some aspects aside) a mere reflection of people’s contribution to a economy and their ability to negotiate? Watch the elision between this and the next sentence: > So, are you assuming/applying everyone more or less has the same contribution or do you want everyone to be paid the same irrespective? The bit that's gone is "their ability to negotiate", which depends to a great extent on how wealthy you are already. BATNA, and so on. Also, conflating income from labour with income from capital confuses the issue further.

looping__lui 4y ago
Income from capital is generally lower in low-interest regimes. We probably saw inflation in asset classes such as housing and stock as a result of monetary oversupply and cheap access to capital. Not factoring in such things into inflation is a question the Fed would have to address. With a sufficient social net and minimum wages, even poorly qualified have good negotiation power. No offense, but I’m also not sure how paying 30 USD/h to somebody who doesn’t speak the language and is performing low complexity work is doing society any good. I live in Europe and there is no way anybody would come for house cleaning, shopping or whatnot below that - because they are just better off with free housing, free healthcare, free schooling and money on top.
- anonymouskimmer 4y ago
  Unless they are disabled, people should be doing their own house cleaning, doing their own shopping, and etcetera. Service jobs should be limited to corporations. In your home, you (or your children) do it. Otherwise it's a waste of human talent to have another human dedicate their life to doing a menial task.
  - Godel_unicode 4y ago
    I don’t understand your point. It’s not a zero-sum game where some people are forced to clean houses. If they want to not clean houses they can change career. If you don’t pay them you’re not somehow freeing them up to realize their potential, you’re just giving them fewer customers. At least where I live a lot of professional house cleaners are small business owners.
    - anonymouskimmer 4y ago
      Sure, I'm probably going to extremes. There are definite economies of scale to specialize in house cleaning and the like. I'm thinking more about the stereotypical rich person type of service with multiple dedicated servants for a single household.
      - looping__lui 4y ago
        I also think you should grow your own vegetables, keep your own chicken and generate your own electricity. I mean, I’m thinking more about the stereotypical first world person that can just go into a supermarket and buy whatever he wants.
        anonymouskimmer 4y ago
        Unfortunately the majority of people in the first world live in areas where that just isn't possible. Outside of a potted plant or two. But yes, victory gardens FTW! :) At the very least they build in more resiliency. I think you're being tongue in cheek, but I responded to a person elsewhere online a while back from India who was basically justifying hiring servants as being beneficial. I disagree and think that that's a sink of human resources. The economy, and capitalism, can come up with better uses for most people who are full-time servants.

dougmwne 4y ago

Inflation benefits people in debt and light labor markets benefit people who earn a wage. It hurts people who already have accumulated capital in the form of bonds and stocks. The Fed acts to protect the interests of the very rich, at the expense of the lower and middle class. It is a balance. The government is a democracy and corporations need customers, but the wealth gap must be maintained, lest you lose the support of the wealthy who fund politics and buy newspapers to shape public opinion. This tension between the rich and everyone else has existed in every society since the shift to agriculture.

Reason077 4y ago
> "Inflation benefits people in debt" Only if that debt is at fixed rates of interest, like corporate bonds or a fixed-rate mortgage. If your rate is variable, then inflation leads to higher interest rates which increases the cost of servicing that debt. Note that the US mortgage market is unusual in that 30-year fixed rates are quite common. In most of the world, mortgages are variable-rate, or fixed for much shorter periods.
- gymbeaux 4y ago
  Actually, higher inflation doesn’t necessarily correspond to higher variable interest rates. Indirectly, yea, but only because the fed is raising the benchmark rate to “fight inflation”.
  - lazide 4y ago
    No one is going to write a mortgage for a lower rate than inflation unless they’re crazy (so the gov’t might, but even then not usually!). They’d be signing up to 100% burn their cash doing so. Inflation absolutely impacts mortgage rates, and all other lending.
    - luckylion 4y ago
      So the standard mortgage rate is agreed on as "official inflation rate + x%"?

lizzardbraind 4y ago

Isn't the idea behind raising rates to combat inflation that it works to reduce demand by forcing people to tighten their belts? "We need companies to fire a lot of people so that fewer people can afford nice things" is less politically palatable than, "we are aiming for a soft landing". Stocks went up previously because the companies believe that with all the layoffs, people were getting desperate enough that the rate hikes would slacken off and they'd be able to start hiring at fire-sale prices. The strong January jobs data makes the companies and Fed alike worry that their workers might start to get uppity and ask for raises or benefits again soon.

melenaboija 4y ago

> For Tech that may mean that the focus will shift towards profitability Is it like tech or any other industry has ever focused (directly or indirectly) in something else? Maybe they just realized their superpowers are waning and they can’t keep hiring with obscene salaries indefinitely.

deleted 4y ago
[deleted]
looping__lui 4y ago
I’m not sure I follow your cynicism: I celebrate ICs making 500k or 1M working for a company in the US instead of making “the same with a PhD in physics as an assembly line worker at Volkswagen”. If an IC delivers 100MM in cost savings for a company because his software scales almost arbitrarily and gets paid highly: that’s a win for the working class population.
- pmalynin 4y ago
  Its probably a case of crab in bucket mentality
- 988747 4y ago
  But that does not take into account VC-powered startups, like Uber, which never turned profit in their history, so that 500k-1M compensations for ICs are directly financed by VC money, which is unsustainable. I think that's what GP meant: the "superpower" to raise VC money is waning, and Sillicon Valey unicorns need to start operating like any other company, hence the layoffs.
  - deleted 4y ago
    [deleted]
- melenaboija 4y ago
  Agree, as long as it is sustainable and realistic but this trend of firing people in the tech scene where even companies like Google have been involved, with still huge earnings, makes me doubt about it. And even worst it seems they don’t know either what is going on and if it is the right path.

UltraViolence 4y ago

The markets have been wishing / predicting a decline in the rise of interest rates, which clearly isn't going to happen.

GAN_Game 4y ago

> Isn’t income equality (government interventions in some aspects aside) a mere reflection of people’s contribution to a economy and their ability to negotiate? So, are you assuming/applying everyone more or less has the same contribution or do you want everyone to be paid the same irrespective? Sure, the heirs from Rich Kids of Instagram are living off their rentier expropriation as a "reflection of people’s contribution to a economy", while the people doing the work and creating the wealth are contributing less to the economy, in your view. The fruits of the economy are swallowed up by these parasitic heirs expropriating surplus labor time from those who work and create wealth, but your view is parasitism is somehow the greater contribution to the economy.

looping__lui 4y ago
So you are mainly talking about passive income inequality? I was talking about income that is earned. Well, what do you want me to say: the country I live in we have a high tax on inheritance, capital gains etc. But to me personally: I am grown up enough to not care how many Porsches my neighbor has. How does this matter? There are resources that cover basic needs such as health, living, education and food. But in Europe you get all that for free irrespective whether you work or not. Health coverage is as good for an unemployed family not speaking the language as it is for two full time working parents. As is schooling as is university.
- GAN_Game 4y ago
  > But to me personally: I am grown up enough to not care how many Porsches my neighbor has. How does this matter? When something I made is sold at a company, used raw materials are rebought, but then left over is the wealth I created. A portion goes to me in wages, a portion is mailed off in dividend checks to the heir who is expropriating my surplus time. It matters because the heir is expropriating surplus labor time from me, and all the wealth I create in this time. That is why it matters.
  - looping__lui 4y ago
    Then you have either negotiated your share in value creation poorly or your skills are easily sourced. Irrespective of that you are assuming happiness is just associated to absolute monetary wealth - which I disagree with. If basic resources and needs are catered for and the rest is spent on luxury goods or extravagant lifestyles - how would I care? If you want to still play that game, just travel and ask yourself what a person living in India/Bangladesh/Laos would say about your first world problems. Being born into a wealthy society is the most important differentiator for wealth - and I assume you are totally ok with the luck you had there!?

MattPalmer1086 4y ago

The Fed wants to control inflation sure by raising interest rates. They see a strong labour market as a driver of inflation, as workers can negotiate higher wages when they are in shorter supply. In terms of income equality, I don't think the OP was advocating that people should all be paid the same. Merely that lower paid workers would be in a strong position to gain relatively more, thus narrowing the gap. I don't know if that is true; it's merely what I understood from the post.

KptMarchewa 4y ago

"The shift towards profitability" that made facebook lay off 11,000 people to save 1.5 billion to spend 40 billion on buybacks.

looping__lui 4y ago
And their stock soared 25% yesterday because of their profitability. Are you trying to prove the point I’m making or just mad at me that I explain capitalism?
- SauciestGNU 4y ago
  I think many people (myself included) see it as a problem that capitalism so clearly works against the interest of the many to benefit the few. We understand why stock buybacks and layoffs increase shareholder value, and therein lies the problem.
  - looping__lui 4y ago
    Every other system had more wealth destroying and catastrophic outcome for society. Not arguing for “unrestricted capitalism that is never tamed” - but with a functioning social net and access to basic needs for almost everyone it’s probably pretty amazing. You are also missing, that for most people this is probably great: less high income individuals competing for resources in the marriage, housing, etc market. They see their wages increased and their relative purchasing power in society lifted and are happy about this development.
- KptMarchewa 4y ago
  The biggest problem (among many) I have is that they bold faced lie. When Zucc says "I view layoffs as a last resort" and then announces 40 billion buyback he should be lawfully punished. If there's no law for that there should be.
  - mrep 4y ago
    I 100% agree with that. Companies should be barred from doing stock buybacks or paying out dividends for some time if they do layoffs.

toiletfuneral 4y ago

[dead]

harimau777 4y ago

I think that what many people want looks something like: Everyone who makes a good faith effort to contribute to society is paid enough to have a decent quality of life (raise a family, own a home, afford medical bills, participate in recreation). When a company succeeds, the employees receive a meaningful amount of the benefit. Not necessarily that they receive as much as the CEO (or even in the same order of magnitude) but that they are meaningfully rewarded. Wealth inequality is not so great that the wealthy are effectively above the rules that apply to everyone else.

chadash 4y ago

> So, are you assuming/applying everyone more or less has the same contribution or do you want everyone to be paid the same irrespective? The parent said, "more equal", not equal. There is a big difference between saying that everyone should have the same exact wage versus we should narrow the gap between the highest and the lowest paid people. And there are plenty of examples of people with massive contributions to society who didn't get paid very well. Van Gogh lived in poverty. Albert Einstein was certainly not poor, but I'd have a hard time believing that his "contribution to society" is less than 1/10000th that of Jeff Bezos. For that matter, my elementary school teachers contributed a lot to society. So do many others. I don't believe that the parent comment is arguing that teachers should make as much as CEOs, they are just saying that the gap shouldn't be so ludicrously large.