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The importance of "The Economy" doing well is baked deep into the American psyche: if the economy is healthy, the country is healthy. And "doing well" is unders

by twh270 3y ago

The importance of "The Economy" doing well is baked deep into the American psyche: if the economy is healthy, the country is healthy. And "doing well" is understood to mean businesses are healthy (revenue/market/profit growth). That means working as much as possible, for as few benefits as possible, is the accepted standard. Because who wants the economy (and by implication, the country) to do poorly? And if some, or a lot, of people suffer from stress and mental breakdowns, physical injuries, or death, well, that's a price our business and political "leadership" is willing to pay. (Some sarcasm there, in case it isn't obvious.) Recently there does appear to be more noise around employee/worker benefits (including wages), hence things like the striking screen actors and auto workers (and attempted strike from railroad workers, who have shockingly terrible benefits), and renewed interest in unions. The health of a country ought not be measured solely by its GDP and financial markets.

ndiddy 3y ago
I think a lot of this is because of the shift from pension plans to 401Ks and IRAs. When an economic downturn means that you have years of retirement savings wiped out, of course you'll want the economy to do well.
- lotsofpulp 3y ago
  Pension plans and 401K/IRA are invested in the same thing. The only difference is a pension plan board/fund manager is an additional middleman that can be stupid/corrupted, hence more agency risk for the benefit recipient. Taxpayer funded pension plans offset that agency risk with the power of being able to increase taxes, assuming their tax base is sufficient.
  - KMag 3y ago
    Historically, many pensions were defined benefit, rather than defined contribution. Market risk (and benefit) fell upon the employer rather than the employee. My understanding is that defined benefit pensions are pretty rare these days.
    - gloryjulio 3y ago
      The problem of pension is that it doesn't come out of thing air. Someone still has to pay for it. In US the company pension get raided. In France pension is gonna run out soon and it put much pressure on the young people. Unless you have deep pocket like Norway oil money, pension would always favor the old. I have never seen a pension system that favors young people instead of the old yet. I think 401k style of you get what you pay is at least fairer to the individuals.
      - KMag 3y ago
        I remember Bush got a lot of flak in the press over his attempts at partial privatization of Social Security, with a payroll tax going into named accounts invested in broad-based equity indexes. (The details differ substantially, but it was somewhat like making 401(k) contributions mandatory and deducted from every paycheck.) Increasing the size of the investing class and putting names and yearly balance statements on accounts (so voters will call bloody murder if the legislature raids the funds like they currently do with Social Security) both seem extremely useful to me. Though, increased transparency would likely force reductions in benefits for current retirees, with current workers being the beneficiaries. Also flooding so much money into the major indexes would likely bring down investment returns, but likely resulting in a slight narrowing of income inequality.
    - lotsofpulp 3y ago
      And the risk of the employer not existing or being profitable enough decades in the future still falls on the benefit recipient, so just another agency risk.
paul_funyun 3y ago
It's interest rates that are screwing the worker. When they say they're fighting inflation they mean wage 'inflation.' When wages go up working class people are more able to repay their loans without incurring penalties and interest, which isn't good for mortgage companies or banks. Don't confuse the two, the interests of capital and working people are necessarily at odds when it comes to interest rates.
- samvega_ 3y ago
  That's one of the contradictions of capitalism. As wages are pushed down, so does the ability to purchase the wares and services they produce. This also hurts the profits of companies.

by twh270 3y ago

ndiddy 3y ago

I think a lot of this is because of the shift from pension plans to 401Ks and IRAs. When an economic downturn means that you have years of retirement savings wiped out, of course you'll want the economy to do well.

lotsofpulp 3y ago
Pension plans and 401K/IRA are invested in the same thing. The only difference is a pension plan board/fund manager is an additional middleman that can be stupid/corrupted, hence more agency risk for the benefit recipient. Taxpayer funded pension plans offset that agency risk with the power of being able to increase taxes, assuming their tax base is sufficient.
- KMag 3y ago
  Historically, many pensions were defined benefit, rather than defined contribution. Market risk (and benefit) fell upon the employer rather than the employee. My understanding is that defined benefit pensions are pretty rare these days.
  - gloryjulio 3y ago
    The problem of pension is that it doesn't come out of thing air. Someone still has to pay for it. In US the company pension get raided. In France pension is gonna run out soon and it put much pressure on the young people. Unless you have deep pocket like Norway oil money, pension would always favor the old. I have never seen a pension system that favors young people instead of the old yet. I think 401k style of you get what you pay is at least fairer to the individuals.
    - KMag 3y ago
      I remember Bush got a lot of flak in the press over his attempts at partial privatization of Social Security, with a payroll tax going into named accounts invested in broad-based equity indexes. (The details differ substantially, but it was somewhat like making 401(k) contributions mandatory and deducted from every paycheck.) Increasing the size of the investing class and putting names and yearly balance statements on accounts (so voters will call bloody murder if the legislature raids the funds like they currently do with Social Security) both seem extremely useful to me. Though, increased transparency would likely force reductions in benefits for current retirees, with current workers being the beneficiaries. Also flooding so much money into the major indexes would likely bring down investment returns, but likely resulting in a slight narrowing of income inequality.
  - lotsofpulp 3y ago
    And the risk of the employer not existing or being profitable enough decades in the future still falls on the benefit recipient, so just another agency risk.

paul_funyun 3y ago

It's interest rates that are screwing the worker. When they say they're fighting inflation they mean wage 'inflation.' When wages go up working class people are more able to repay their loans without incurring penalties and interest, which isn't good for mortgage companies or banks. Don't confuse the two, the interests of capital and working people are necessarily at odds when it comes to interest rates.

samvega_ 3y ago
That's one of the contradictions of capitalism. As wages are pushed down, so does the ability to purchase the wares and services they produce. This also hurts the profits of companies.