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At the time of the Gilded Age, there was no income tax (personal or corporate), and government expenditure as a ratio of GDP was at single-digit percents; yet t

At the time of the Gilded Age, there was no income tax (personal or corporate), and government expenditure as a ratio of GDP was at single-digit percents; yet there was massive productivity gains and corresponding massive real wage growth among unskilled workers[0], even against the backdrop of surging immigration. Stupendous private fortunes later funded philanthropic efforts behind some of the most renowned institutions of today. In contrast, today, we have government expenditures at a full third of GDP[1] and progressive taxation (with public calls by elected officials for truly confiscatory levels of taxation), yet real wages (as you point out) are rising a lot slower[2] than in the Gilded Age, and the poverty rate has more or less remained constant for decades[3]. I, too, wonder if we can move towards an economy made for man again. [0]: https://www.nber.org/system/files/working_papers/w14555/w14555.pdf https://www.nber.org/system/files/working_papers/w14555/w145... [1]: https://fred.stlouisfed.org/graph/?g=8fX https://fred.stlouisfed.org/graph/?g=8fX [2]: https://fred.stlouisfed.org/series/LES1252881600Q https://fred.stlouisfed.org/series/LES1252881600Q [3]: https://aspe.hhs.gov/sites/default/files/private/pdf/154286/50YearTrends.pdf https://aspe.hhs.gov/sites/default/files/private/pdf/154286/...

rovolo 3y ago
> At the time of the Gilded Age, [1] starts at 1947; [2] starts at 1979; [3] starts at 1964. None of your sources show that poverty was less of a problem during the Gilded Age (1877 to 1896). I find it very hard to believe the Gilded Age handled poverty better since it predates Social Security and the Great Depression.
- prottog 3y ago
  You're right that data is poor for the 19th century. The point I wanted to draw with my more recent sources is that there seems to be little empirical evidence to show that increased redistribution via taxation and expanded government social programs actually alleviate poverty, compared to the evidence for rising living standards via technological advances and fierce capitalistic competition that lowers costs. Across OECD countries, there appears to be at least a passing correlation between countries that have a higher ratio of government expenditure to GDP (and are at least commonly perceived to have generous government-provided social benefits) and lack of real wage growth over the past two decades[0]. [0]: https://stats.oecd.org/index.aspx?DataSetCode=AV_AN_WAGE https://stats.oecd.org/index.aspx?DataSetCode=AV_AN_WAGE
  - al_hag 3y ago
    Aren’t wealth impacts of “technological advances” significantly skewed by a supply chain designed around cheap labor abroad?
    - nine_k 3y ago
      The thing is that the use of "cheaper labor abroad" makes said labor less and less cheap, because the economies develop where production is very active, and life standards improve. Right now labor on Chinese high-tech factories is already not cheap enough for many Western customers, and they set sights on countries like Vietnam.

rovolo 3y ago

> At the time of the Gilded Age, [1] starts at 1947; [2] starts at 1979; [3] starts at 1964. None of your sources show that poverty was less of a problem during the Gilded Age (1877 to 1896). I find it very hard to believe the Gilded Age handled poverty better since it predates Social Security and the Great Depression.

prottog 3y ago
You're right that data is poor for the 19th century. The point I wanted to draw with my more recent sources is that there seems to be little empirical evidence to show that increased redistribution via taxation and expanded government social programs actually alleviate poverty, compared to the evidence for rising living standards via technological advances and fierce capitalistic competition that lowers costs. Across OECD countries, there appears to be at least a passing correlation between countries that have a higher ratio of government expenditure to GDP (and are at least commonly perceived to have generous government-provided social benefits) and lack of real wage growth over the past two decades[0]. [0]: https://stats.oecd.org/index.aspx?DataSetCode=AV_AN_WAGE https://stats.oecd.org/index.aspx?DataSetCode=AV_AN_WAGE
- al_hag 3y ago
  Aren’t wealth impacts of “technological advances” significantly skewed by a supply chain designed around cheap labor abroad?
  - nine_k 3y ago
    The thing is that the use of "cheaper labor abroad" makes said labor less and less cheap, because the economies develop where production is very active, and life standards improve. Right now labor on Chinese high-tech factories is already not cheap enough for many Western customers, and they set sights on countries like Vietnam.