4 ms·
We need new terminology to distinguish between macroeconomic recessions and living standard recessions. Traditionally, those two things are more or less intertw
by p-e-w 3y ago
We need new terminology to distinguish between macroeconomic recessions and living standard recessions. Traditionally, those two things are more or less intertwined, so the term "recession" carries connotations of both. With the steady increase of economic inequality, the link between the two meanings becomes less and less firm.
The median living standard in Germany has been in free fall for 20 years. By that criterion, the country (like many other Western countries) has been in a continuous recession since 9/11. By macroeconomic numbers, however, Germany has experienced several booms in between, which can easily be used to create the (intentionally) misleading narrative that "the economy" (insofar as it affects the median individual) is "sometimes up, sometimes down", when in reality there has been a continuous downtrend for a very long time.
- cheschire 3y agoContinuous downtrends, free falls, I'm interested what graphs and charts and numbers you're looking at to arrive at this conclusion. Especially when you've called out that someone (who specifically and where?) has been intentionally misleading. You may be objectively correct about all of this but right now it doesn't come off that way to me.
- prottog 3y agoThe median real wage in Germany grew until the 90s, stagnated for a while, then started declining in the early noughts[0], with the effect worse for new entrants to the employment marketplace (i.e. young people and immigrants). The latter is predictable in a developed country (meaning past peak GDP growth) with high social safety nets and employee protection (meaning an additional burden for newer entrants to clear). I'm not sure about "free fall", but the median worker's earnings has basically broken even since the 80s or so, with a definite noticeable downward trend since the 2000s. [0]: https://labourmarketresearch.springeropen.com/articles/10.1007/s12651-017-0227-3 https://labourmarketresearch.springeropen.com/articles/10.10...
- s1artibartfast 3y agoLooking only at workers earnings is misleading in both Germany and the United States because it ignores monetary transfers through the government, which is a huge component of GDP. I can't speak for Germany, but for the US, worker earnings continue to climb if you count government mediated benefits. Similarly, it's impossible for worker income to grow at the rate of GDP while taxes grow faster than GDP
- prottog 3y agoAbsolutely true, and it's a good point; but I'm not sure if the source I listed for Germany includes or excludes transfer receipts.
- s1artibartfast 3y agoyeah, It is kind of the elephant in the room nobody talks about in these discussions. If you look at the US, inflation adjusted Government spending tripled between 2000 and 2022. Do people feel that they are getting 300% more services for the taxes 300% higher than 20 years ago. Schools, roads, healthcare, and prisons certainly aren't 3X better. https://www.imf.org/en/Publications/WEO/weo-database/2022/October/weo-report?c=134,111,&s=NGDPD,NGDPRPC,GGX,GGX_NGDP,&sy=2000&ey=2027&ssm=0&scsm=1&scc=0&ssd=1&ssc=0&sic=0&sort=country&ds=.&br=1 https://www.imf.org/en/Publications/WEO/weo-database/2022/Oc...
- jjoonathan 3y ago> worker earnings continue to climb if you count government mediated benefits I thought counting medical inflation as a salary increase only changed the threshold from 90% to 80% of workers seeing wage contraction over the last 40 years.
- s1artibartfast 3y agoThere's a bunch of papers and books that recalculate growth after transfer payments. Here is a link to one book review and you can take a look at some of the figures that they came up with. https://johnhcochrane.blogspot.com/2022/12/calomiris-on-gramm-ekelund-and-early-on.html https://johnhcochrane.blogspot.com/2022/12/calomiris-on-gram...? When you see those numbers about wage stagnation it always comes down to three big questions: 1) Are transfers & taxes included 2) Do you calculate the value of the transfer at the cost the government spent, or the utility received 3) What inflation metric you use
- vitehozonage 3y agohttps://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/
- paulddraper 3y agoNot disagreeing, but I'm interested in your specifics. > The median living standard in Germany has been in free fall for 20 years. Is that a qualitative assessment or a quantitative assessment? If the later, what metric do you use?
- alfons_foobar 3y ago> The median living standard in Germany has been in free fall for 20 years. ??
- nradov 3y agoHere is some relevant terminology: Stagflation https://www.investopedia.com/terms/s/stagflation.asp https://www.investopedia.com/terms/s/stagflation.asp Gini index (coefficient) https://www.investopedia.com/terms/g/gini-index.asp https://www.investopedia.com/terms/g/gini-index.asp