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This seems to map pretty well to that famous graph showing the divergence between productivity and wage gains [1]. It also at least correlates with the start of

by epups 3y ago

This seems to map pretty well to that famous graph showing the divergence between productivity and wage gains [1]. It also at least correlates with the start of a relative predominance of China and other third-world countries in economic growth, which kept wage growth lower in the West than it could have been - empowered, of course, by the policies of people like Reagan and Thatcher. [1] https://www.weforum.org/agenda/2020/11/productivity-workforce-america-united-states-wages-stagnate/ https://www.weforum.org/agenda/2020/11/productivity-workforc...

tootie 3y ago
It's also pretty similar to the constant belief that crime is rising regardless of whether it's actually falling: https://news.gallup.com/poll/404048/record-high-perceive-local-crime-increased.aspx https://news.gallup.com/poll/404048/record-high-perceive-loc...
hash872 3y ago
How did Reagan and Thatcher 'empower' other countries to rise up and compete with the US & Europe? If they passed the right combination of laws, we would've prevented billions of smart, hard-working people from daring to compete with the West? Do you think it's moral to impoverish billions of people to keep the West economically pre-eminent? (Should the US have kept Europe impoverished post-WW2 to prevent the competition?) I strongly disagree with the idea that the government is a magic God-like wizard, who can bend objective reality and achieve any economic or social outcome by twisting the right knobs here or there. Other countries rose economically to compete with the West and that's not something that the government can magically outlaw, any more than it can pass a law against the tide coming in tomorrow
- eru 3y ago
  > I strongly disagree with the idea that the government is a magic God-like wizard, who can bend objective reality and achieve any economic or social outcome by twisting the right knobs here or there. Agreed. See also https://news.ycombinator.com/item?id=38838608 https://news.ycombinator.com/item?id=38838608 on a similar topic recently. You might like my sibling comment https://news.ycombinator.com/item?id=38953586 https://news.ycombinator.com/item?id=38953586
- epups 3y ago
  I never said they should have kept other countries poorer - if anything, they achieved the opposite with their policies. However, they were elected democratically by their societies and, in my opinion, they implemented policies that were not meant for the common good, but for the profit of a minority. The rise of China may have been inevitable - was massive financial deregulation inevitable as well? Neoliberalism led to the disenfranchisement and deterioration of the quality of life of American and British low- and middle-income workers to a higher degree than in other comparable nations (Canada, France, Germany, etc.) which did not embrace these policies to the same degree. See [1]. [1] https://www.ft.com/content/ef265420-45e8-497b-b308-c951baa68945 https://www.ft.com/content/ef265420-45e8-497b-b308-c951baa68...
  - hash872 3y ago
    Respectfully, this is par for the course in discussing public policy with populists. It's just a Gish Gallop of random disconnected arguments. OK so now you concede that Reagan and Thatcher weren't responsible for the rise of China, so you've completely switched gears to financial regulation- which has nothing to do with China. Complete non-sequitur switch of topics, but it makes sense to your worldview because you lump it all under the rubric of 'neoliberalism'. (Also, how is quality of life lower for Americans than Canada/France/Germany when the median worker is so much richer here? And I said median- not mean)
    - epups 3y ago
      What I said is that wage growth in the West has been kept lower than it could have been because of their policies, including massive financial deregulation. Here is a primer in case others are interested [1]. > (Also, how is quality of life lower for Americans than Canada/France/Germany when the median worker is so much richer here? And I said median- not mean) There are multiple indicators for that. A very neutral and uncontroversial one is that life expectancy is ~5 years higher in those other countries compared to the US, a phenomenon that has only gotten worse since Reagan [2]. But we could also talk about work hours, parental leave, vacation and many other things that are much more favorable for the median worker in all of these other countries. [1] https://www.epi.org/publication/causes-of-wage-stagnation/ https://www.epi.org/publication/causes-of-wage-stagnation/ [2] https://www.healthsystemtracker.org/chart-collection/u-s-life-expectancy-compare-countries/#Life%20expectancy%20and%20per%20capita%20healthcare%20spending%20(PPP%20adjusted),%202021 https://www.healthsystemtracker.org/chart-collection/u-s-lif...
eru 3y ago
And that infamous graph is silly and bogus. The graph uses different counts of inflation adjustment for the two lines. It introduces more unnecessary complications. That's how you lie with statistics. Instead: just look at the labour share of GDP; that is the sum of all nominal wages divided by nominal GDP. Available for the US at eg https://fred.stlouisfed.org/series/LABSHPUSA156NRUG https://fred.stlouisfed.org/series/LABSHPUSA156NRUG Because we are looking at a ratio of nominal values, we don't need to adjust for inflation: the influence of the price level naturally cancels. For the US the labour share of GDP has stayed between 60 - 65% in the last 70 years. For that ratio to stay so constant, productivity growth and wage increases must have approximately kept pace with each other.
- epups 3y ago
  The core of the issue seems to be that the graph I posted represents the experience of the median rather than the average worker. The data you suggest as more representative is simply the result of placing CEOs together with factory floor workers. I would argue that for the general perception of the population, the median pay is far more significant than the average one. You can read more here if you are interested: https://www.epi.org/blog/nothing-misleading-about-this-typical-workers-pay-and-productivity-have-diverged/ https://www.epi.org/blog/nothing-misleading-about-this-typic...
  - eru 3y ago
    Yes, other people have also noticed that the graph is rubbish, and EPI is trying to defend it. Badly. I don't mind using median instead of averages, if it's clearly labelled. The version of the graph you linked first was almost not labelled at all. However, even in their apology / defense they are still not fixing the mixed-up deflators. They merely claim that we should ignore this problem. However following links in the meek defense leads to https://www.epi.org/productivity-pay-gap/ https://www.epi.org/productivity-pay-gap/ which has a bit more information than what you first linked. (I might go through it later. But on a first skimming, it's seems to be still pretty light on actual details about the numbers and where they came from.) > If the fruits of economic growth are not going to workers, where are they going? > [...] And it went into higher profits (i.e., toward returns to shareholders and other wealth owners). That's wrong. The capital share of GDP hasn't really budged. (And in this case, distribution doesn't matter for our discussion. Since we only care that it's not going to workers, not which shareholders are getting what.) However, the share of GDP going to land rent is disturbing. But EPI doesn't want to talk about NIMBYs, I guess.

by epups 3y ago

tootie 3y ago

It's also pretty similar to the constant belief that crime is rising regardless of whether it's actually falling: https://news.gallup.com/poll/404048/record-high-perceive-local-crime-increased.aspx https://news.gallup.com/poll/404048/record-high-perceive-loc...

hash872 3y ago

How did Reagan and Thatcher 'empower' other countries to rise up and compete with the US & Europe? If they passed the right combination of laws, we would've prevented billions of smart, hard-working people from daring to compete with the West? Do you think it's moral to impoverish billions of people to keep the West economically pre-eminent? (Should the US have kept Europe impoverished post-WW2 to prevent the competition?) I strongly disagree with the idea that the government is a magic God-like wizard, who can bend objective reality and achieve any economic or social outcome by twisting the right knobs here or there. Other countries rose economically to compete with the West and that's not something that the government can magically outlaw, any more than it can pass a law against the tide coming in tomorrow

eru 3y ago
> I strongly disagree with the idea that the government is a magic God-like wizard, who can bend objective reality and achieve any economic or social outcome by twisting the right knobs here or there. Agreed. See also https://news.ycombinator.com/item?id=38838608 https://news.ycombinator.com/item?id=38838608 on a similar topic recently. You might like my sibling comment https://news.ycombinator.com/item?id=38953586 https://news.ycombinator.com/item?id=38953586
epups 3y ago
I never said they should have kept other countries poorer - if anything, they achieved the opposite with their policies. However, they were elected democratically by their societies and, in my opinion, they implemented policies that were not meant for the common good, but for the profit of a minority. The rise of China may have been inevitable - was massive financial deregulation inevitable as well? Neoliberalism led to the disenfranchisement and deterioration of the quality of life of American and British low- and middle-income workers to a higher degree than in other comparable nations (Canada, France, Germany, etc.) which did not embrace these policies to the same degree. See [1]. [1] https://www.ft.com/content/ef265420-45e8-497b-b308-c951baa68945 https://www.ft.com/content/ef265420-45e8-497b-b308-c951baa68...
- hash872 3y ago
  Respectfully, this is par for the course in discussing public policy with populists. It's just a Gish Gallop of random disconnected arguments. OK so now you concede that Reagan and Thatcher weren't responsible for the rise of China, so you've completely switched gears to financial regulation- which has nothing to do with China. Complete non-sequitur switch of topics, but it makes sense to your worldview because you lump it all under the rubric of 'neoliberalism'. (Also, how is quality of life lower for Americans than Canada/France/Germany when the median worker is so much richer here? And I said median- not mean)
  - epups 3y ago
    What I said is that wage growth in the West has been kept lower than it could have been because of their policies, including massive financial deregulation. Here is a primer in case others are interested [1]. > (Also, how is quality of life lower for Americans than Canada/France/Germany when the median worker is so much richer here? And I said median- not mean) There are multiple indicators for that. A very neutral and uncontroversial one is that life expectancy is ~5 years higher in those other countries compared to the US, a phenomenon that has only gotten worse since Reagan [2]. But we could also talk about work hours, parental leave, vacation and many other things that are much more favorable for the median worker in all of these other countries. [1] https://www.epi.org/publication/causes-of-wage-stagnation/ https://www.epi.org/publication/causes-of-wage-stagnation/ [2] https://www.healthsystemtracker.org/chart-collection/u-s-life-expectancy-compare-countries/#Life%20expectancy%20and%20per%20capita%20healthcare%20spending%20(PPP%20adjusted),%202021 https://www.healthsystemtracker.org/chart-collection/u-s-lif...

eru 3y ago

And that infamous graph is silly and bogus. The graph uses different counts of inflation adjustment for the two lines. It introduces more unnecessary complications. That's how you lie with statistics. Instead: just look at the labour share of GDP; that is the sum of all nominal wages divided by nominal GDP. Available for the US at eg https://fred.stlouisfed.org/series/LABSHPUSA156NRUG https://fred.stlouisfed.org/series/LABSHPUSA156NRUG Because we are looking at a ratio of nominal values, we don't need to adjust for inflation: the influence of the price level naturally cancels. For the US the labour share of GDP has stayed between 60 - 65% in the last 70 years. For that ratio to stay so constant, productivity growth and wage increases must have approximately kept pace with each other.

epups 3y ago
The core of the issue seems to be that the graph I posted represents the experience of the median rather than the average worker. The data you suggest as more representative is simply the result of placing CEOs together with factory floor workers. I would argue that for the general perception of the population, the median pay is far more significant than the average one. You can read more here if you are interested: https://www.epi.org/blog/nothing-misleading-about-this-typical-workers-pay-and-productivity-have-diverged/ https://www.epi.org/blog/nothing-misleading-about-this-typic...
- eru 3y ago
  Yes, other people have also noticed that the graph is rubbish, and EPI is trying to defend it. Badly. I don't mind using median instead of averages, if it's clearly labelled. The version of the graph you linked first was almost not labelled at all. However, even in their apology / defense they are still not fixing the mixed-up deflators. They merely claim that we should ignore this problem. However following links in the meek defense leads to https://www.epi.org/productivity-pay-gap/ https://www.epi.org/productivity-pay-gap/ which has a bit more information than what you first linked. (I might go through it later. But on a first skimming, it's seems to be still pretty light on actual details about the numbers and where they came from.) > If the fruits of economic growth are not going to workers, where are they going? > [...] And it went into higher profits (i.e., toward returns to shareholders and other wealth owners). That's wrong. The capital share of GDP hasn't really budged. (And in this case, distribution doesn't matter for our discussion. Since we only care that it's not going to workers, not which shareholders are getting what.) However, the share of GDP going to land rent is disturbing. But EPI doesn't want to talk about NIMBYs, I guess.