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And yet income has stagnated [0], income inequality[1] has let wealth coalesce into the hands of a few oligarchs[2] and those rich have the lowest tax rates in

• ETH_start 3y ago
  Income growth has stagnated because of growing centralization. All of this socialism you claim we need is contributing to that centralization. The EPI, which you cite twice, is heavily funded by public sector unions who are the primary beneficiaries of this socialism, and puts out misleading graphs. For example, the graph showing a growing gap between wages and productivity in the first article is based on using measures of wages and GDP that use different inflation indexes. [1] As for tax rates, the top income tax bracket was $400,000 in 1950, which adjusted for inflation, was equal to $4,000,000 today. And average incomes were lower in real terms too, so very few fell in that bracket. There were also significant tax loopholes in the 1950s, and a much larger cash economy, which enabled tax avoidance and evasion, respectively. Due to the loopholes being closed, the effective tax rates on the top 1% only decreased slightly since the 1950s, despite a massive decrease in nominal taxes. [2] When Kennedy decreased the nominal rate, tax revenues increased. So no, there's nothing to suggest we should return to those high nominal tax rates, especially as inflation and income growth would make those high brackets cover a much larger proportion of the population today than when those tax rates were last in place. Also let's look at the 1950s: that era had huge unions, which led to the destruction of the largest US industries. So the wage growth in the 1950s wasn't sustainable. And counter-acting the massive burden of the unions, the 1950s had: * fewer social programs (no Medicare) * much fewer regulations (no EPA or OSHA) * lower government spending * no collective bargaining for the Big Three Automaker workers (that death knell came in the 1960s) There was zero income tax between 1870 and 1900, when wages doubled and the financial position of industry improved. This was very much unlike the post-war period, where US industry was running on borrowed time, making increasingly burdensome concessions to unions. [1] https://www.brookings.edu/articles/sources-of-real-wage-stagnation/ https://www.brookings.edu/articles/sources-of-real-wage-stag... [2] https://taxfoundation.org/taxes-on-the-rich-1950s-not-high/ https://taxfoundation.org/taxes-on-the-rich-1950s-not-high/
  • esarbe 3y ago
    > Income growth has stagnated because of growing centralization. All of this socialism you claim we need is contributing to that centralization. That's an unsubstantiated claim. The material you referenced points to other sources as the culprit. But let's start from the beginning. There has been wage stagnation and the workers share of the profit has been steadily shrinking ever since the 1970ies. The Bosworth piece you link to asserts that much. To quote from the article: > all of the evidence points to uncommonly small gains in workers’ real (adjusted for inflation) wages All the while, non-worker compensation has been rising disproportionately at double digit levels, at times decoupled even from the growth of the associated companies[1]. So, there's money. It's just not going to the workers. > All of this socialism you claim we need is contributing to that centralization. I'm not sure I see an argument for that. > especially as inflation and income growth would make those high brackets cover That's fine. We don't have to go back to the rates of the 1950ies. But having a person earning hundreds of thousands of USD per year paying a lower effective rate than a janitor is just cynical exploitation. > Also let's look at the 1950s: that era had huge unions, which led to the destruction of the largest US industries. The US industry and manufacturing was doing fine - until the shareholders and the management decided it would be more profitable to offshore production.[2] > So the wage growth in the 1950s wasn't sustainable. Differences in compensation between management and workers have been continuously expanding ever since the '50ies. So there seems to money around to continue to grow some wages. Just not to grow those of the workers doing the actual work. Strange, right? Meanwhile, Bosworth makes a compelling argument that offshoring and reduced competition is very much responsible for the drop in real wages. He writes: > However, some analysts point to the development of a highly competitive global market for labor combined with a more general reduction in product-market competition through reliance of mergers, IT patents, and regulations that suggest a reduced labor share may be a longer-lasting phenomenon. Percentage of workers represented in unions has not been as low as today in the last fifty years.[3] So, there you have it; by not having bargaining power, workers are being exploited by companies that leverage their size, reach and influence of regulations, resulting in record profits for these companies[4]. So, maybe we actually need stronger unions. I think there's an argument to be made. [1] https://www.shrm.org/ResourcesAndTools/hr-topics/compensation/Pages/confront-pay-disparity.aspx https://www.shrm.org/ResourcesAndTools/hr-topics/compensatio... [2] https://www.bls.gov/opub/btn/volume-9/forty-years-of-falling-manufacturing-employment.htm https://www.bls.gov/opub/btn/volume-9/forty-years-of-falling... [3] https://www.statista.com/statistics/195351/number-of-employees-represented-by-unions-in-the-us-since-2000/ https://www.statista.com/statistics/195351/number-of-employe... [4] https://www.pbs.org/newshour/classroom/2022/04/why-corporations-are-reaping-record-profits-with-inflation-on-the-rise/ https://www.pbs.org/newshour/classroom/2022/04/why-corporati...