7 ms·

> Even the good old GDP per capita covers your case. Absolutely not. If corporate revenue increases, but wages stay the same, GDP per capita goes up, yet the

> Even the good old GDP per capita covers your case. Absolutely not. If corporate revenue increases, but wages stay the same, GDP per capita goes up, yet the workers aren't any better off. All that extra money is being absorbed by the ones at the top. Median disposable household income is probably the best measure.

shafyy 1y ago
Even better one: real wages, and income and wealth inequality.
- ajmurmann 1y ago
  Why does wealth inequality matter? If my real wealth doubles and Elon's real wealth doubles, inequality went up, yet everyone is tremendously better off. I think we are using inequality as a very bad proxy for poverty but we have much better metrics for that. I suspect people just dislike it for emotional reasons. I want to point out that Sweden has more billionaires per capita than the US. Yet everyone is fine with Sweden. I can set an argument about political influence that's gotten really strong lately but maybe that's better addressed by strengthening the politically system
  - PaulDavisThe1st 1y ago
    > Why does wealth inequality matter? If my real wealth doubles and Elon's real wealth doubles, inequality went up, Not in terms of the ratio between you, which is the way we normally talk about wealth inequality : "he has X times more wealth than I do", or "she makes X times more than I do". Anyway, this is not how wealth inequality has grown at all. It has happened by most people's real income barely rising at all over 40-50 years, while the rich have seen theirs rise by huge factors (hundreds to many thousands in some cases).
    - ajmurmann 1y ago
      That's not at all what I've seen in the US. The middle class has shrunk but that part of the overall population has moved to upper income. Meanwhile, real (aka inflation corrected) median household income has gone up: https://fred.stlouisfed.org/series/MEHOINUSA672N https://fred.stlouisfed.org/series/MEHOINUSA672N If what you care about is standing real wages why talk about inequality? I'm concerned that it just functions better as rage bait and leads to unproductive policies.
      - PaulDavisThe1st 1y ago
        1. it is well established that human pyschology makes relative income and wealth much more significant than absolute. And it doesn't matter which quintile you're in for that to be true. 2. real median household income stayed relatively flat between 1970 and 2012. Since then it has risen again in a significant way. 3. despite the gains in real median household income, the rise in the household income (and net worth) of various upper percentiles (20%, 10%, 5%, 1%, 0.1% ... take your pick) has been very, very much larger. consequently, the "double my income, double Musk's income" line is not a description of what has happened. 4. the percentage of GDP that accrues to capital rather than to labor have gone steadily up since 1980.
      - danaris 1y ago
        If that's what "you've seen", then you aren't looking in the right places. Look at the graphs of real wages vs productivity that start pre-1970. Yes, it's true that real wages have gone up some since that time, but they remain completely divorced from productivity in a way that's totally different from the time before Reagan. Meanwhile, the income/wealth of the highest earners has gone up astronomically during the same time. They are staggeringly wealthy because they have redirected the flow of money from us to them. This is a very clearly visible and uncontroversial fact. The controversy is simply over whether it is a good thing.
  - nradov 1y ago
    It depends on what you're trying to measure. From a purely rational perspective, increasing inequality doesn't matter if everyone's quality of life is improving. But humans are irrational, and happiness is often tied to social status within the hierarchy. Even if you're materially better off you might find yourself lower on the status scale. Status is a zero-sum game. Maybe we shouldn't care about such things but yet most people do.
  - gman83 1y ago
    Wealth inequality matters a lot when rich people can spend unlimited amounts of money buying influence in politics and then use that influence to enact policies that favor the rich over the poor.
    - hellojesus 1y ago
      Aren't votes supposed to counter this effect? Individuals get the same voting power, so if things are too out of line, it should be easier to vote in folks that prioritize unbiased policies. Of course you could argue that the funds push up candidates for the wealthy for both parties, but independent media is allowing the unfinanced to compete.
      - danaris 1y ago
        What independent media? Mainstream media companies are owned by very wealthy people, who vote Republican, and put their thumbs on the scales over and over again. You can see that in a myriad of different ways, but at no time in recent memory has it been more blatant than during the last election cycle, with events like Bezos forcing the Washington Post to issue no endorsement rather than endorsing Harris. Like, you can agree or disagree with the politics of it, but it should take a monumental amount of motivated reasoning to deny the existence of this bias in our media.
        hellojesus 1y ago
        There is bias in all media. I used independent media to mean the plethora of single or small member operations that publish their findings on their own blogs, where they are not beholden to shareholders or investors. There are also many emerging podcasts which either directly interview candidates or at least discuss the impacts of policy beyond the nonquestions presented by mainstream journalists. For example, how many times have journalists allowed Powell to say that he can't comment on proposed legislation like the BBB? Not once have we seen a follow up asking Powell why he has no comment on the bill considering his job is to offset its effects? His literal job is to comment on policy. > events like Bezos forcing the Washington Post to issue no endorsement rather than endorsing Harris. The Washington Post is independent media. It's just dependent on its owner like all media. I have no problem with Bezos' move concerning endorcements; he's maximizing his utility.
  - jampekka 1y ago
    At billionairre scale money becomes qualitatively different compared to typical household scale. For households money typically goes to consumption (or future consumption via savings) whereas billionairre money goes to affect how productive (and often political) forces get organized. At consumption money level at least inequality is also inefficient allocation of resources due to the diminishing marginal utility of money.
  - derf_ 1y ago
    If everyone's real wealth doubles, that is great, but it is not a stable equilibrium. If a very small percentage of the people own a large percentage of the wealth, it compounds. They literally cannot spend all of their income on consumption, except maybe by lighting piles of cash on fire, but that is not a route to doubling the real wealth of everyone in society. That means that asset prices rise, and fewer people can afford property. Jobs concentrate near where rich people live, because they are the ones with disposable income to spend, making this worse. Transfer payments (rent) from ordinary people to the remaining property owners are high. Wages stagnate, because wealthy people spend most of their money on assets, not goods and services. Consumer demand decreases. Capital moves away from producing things that ordinary people need, because they can no longer afford them, and is instead allocated to producing luxury goods. Social mobility is low because low wages and high property prices make it impossible to work your way up. The cycle is self-reinforcing, not self-correcting. Most of history throughout the world has consisted of a few very wealthy feudal lords and a large population of serfs. Strengthening the political system might be nice, but post-Citizen's United, that does not seem to be the direction the US is headed, at least, nor is it in the interests of those who benefit most from the current system.
  - danans 1y ago
    > If my real wealth doubles and Elon's real wealth doubles, inequality went up, yet everyone is tremendously better off. What's this universe that only contains you and Elon? Or do you think that everyone's real wealth has doubled? > I can set an argument about political influence that's gotten really strong lately but maybe that's better addressed by strengthening the politically system Citizens United has practically dismissed that possibility in the near term.
  - dclowd9901 1y ago
    Lots of leaps of logic here. I'm certainly not fine with Sweden having a higher disparity of wealth but I don't live in Sweden so I can't effect much change there. We're also ignoring how many safety net benefits Sweden provides its population, ostensibly because it reasonably taxes its wealthy. If Swedes are ok with their situation, it's probably because it's being handled adequately. The issue with disparity is it's a reflection of the unfair conditions of compensation. Elon Musk's employees make him that money, not Elon. He could make all of his employees multi-millionaires overnight by granting more generous stock plans commensurate with the money they've made the company. Reasonable profit sharing plans basically ensure this, but since companies all collude to not grant them, we see them as relatively rare in the working world. The state should be requiring companies to grant profit sharing. Not gonna bike shed it here, but it needs to be done yesterday.
    - StackRanker3000 1y ago
      Just to be clear, I don’t think it’s fair to say that Sweden has higher disparity of wealth than the US: https://news.ycombinator.com/item?id=44453264 https://news.ycombinator.com/item?id=44453264
  - NoMoreNicksLeft 1y ago
    [flagged]
    - tomhow 1y ago
      > Leftists don't care Please avoid ideological swipes like this on HN. It's covered in multiple guidelines: https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
  - fendy3002 1y ago
    it matters when "something" become scarce that normal person need to compete with the richests to get, or if one day the richests decided they want something and suddenly those things become scarce. Let's not kid ourselves, majority of politics can be bought by billionaires and when some day fresh waters become scarce or wheat is, it'll be monopolized by the richests. We already get this in some way with housing.
  - StackRanker3000 1y ago
    Sweden has more billionaires per capita, because it’s fairly friendly to businesses and there have been quite a few success stories over the last century. The US however have more millionaires per capita and SUBSTANTIALLY more people in poverty per capita. Sweden’s Gini coefficient is 0.276 (2024), the US’ is 0.418 (2023). The US has a lot more income inequality.
  - amy214 1y ago
    >Why does wealth inequality matter? If my real wealth doubles and Elon's real wealth doubles, inequality went up, yet everyone is tremendously better off. You forgot to mention, also the cost of everything doubles and maybe kicks off some good ole hyperinflation Wealth inequality means all the investment and excess income goes to the top 0.0001%, rather than the average person. Whereas now this may support he average person's purchase of a home, or retirement, or similar, this now supports the billionaire's purchase of a million homes to rent to the common man, earn a fixed profit, to launch rocket ships with a head, two spheres at the base, and veins, where the billionaire with the biggest, longest, firmest rocketship is the winner! That, instead of people having houses and a retirement.
- NickC25 1y ago
  And the money velocity! A healthy economy is one where money is made via wages, and spent via economic activity. The more active a given dollar is in terms of circulation through the economy, the healthier the economy usually is. Economies tend to stagnate when a small group of people hoard the vast majority of the money, and don't circulate it back into the economy.
spacemadness 1y ago
In this episode of how economists lie to us all…
- HPsquared 1y ago
  I mean it's basically their job.
darth_avocado 1y ago
> Median disposable household income is probably the best measure If I used to make $78k as a full time IT employee, but now have to work two jobs to make $78k, I still have same household income but I’m considerably worse than before. A combination of hours worked, wages earned and household debt together would paint a much more accurate picture.
- hx8 1y ago
  I'm not sure household debt is a great indicator. Someone that has a mortgage will have much more household debt than a renter, but also not have to pay rent. This would need data to contextualize.
  - elzbardico 1y ago
    Don't matter. You still have the debt. If you lose your job in a depression, odds are no much other people will be in the market to buy your home.
    - hx8 1y ago
      The amount of equity you have in your home matters. Most recessions do not take 20% off home values, so people with conventional loans are pretty safe. Even the Great Depression just cut valuations about 35%. If you lose your job in a depression there will be plenty of people willing to buy assets at a discount. If you have equity in your home then your position will be net positive. About half of all mortgages have an outstanding balance less than 50% of the home's value.
      - dmoy 1y ago
        That kinda works in the abstract, but it's pretty risky for any individual house. If your house was somehow a representative slice of all US housing, sure maybe it won't drop 35%. But if you owned a house in Detroit from 2003-2010 it might have dropped 70-80%. Or, more on point for many on HN, if you own a house in the Bay Area worth $2-$3M with 25% equity, and the tech job market collapses, then you might get completely wiped out.
BurningFrog 1y ago
GDP is fairly easy to measure, and since a society normally consumes as much as it produces, it's a pretty good measure of average economic health. You're right that there is more nuance you'd wish to see, but it's harder to measure, and I don't know how much it's normally worth.
- MangoToupe 1y ago
  > it's a pretty good measure of average economic health Median economic health strikes me as far more interesting than mean. I don't really care how well rich people are doing.
  - Henchman21 1y ago
    We all need to be concerned when they’re doing too well
  - lawlessone 1y ago
    >I don't really care how well rich people are doing. ahem "people of wealth"
    - wyldfire 1y ago
      Maybe "people currently experiencing extraordinarily fine housing"?
  - BurningFrog 1y ago
    Perhaps, but until there is a way of measuring that, GDP/person wins by existing.
    - msgodel 1y ago
      Just because you can measure it doesn't mean it's a good objective.
jltsiren 1y ago
Household income is a funny collective measure. If housing becomes less affordable, household income increases, as kids stay longer with their parents. And if housing becomes more affordable, household income decreases, as kids move out earlier.
- thayne 1y ago
  I think a better measure would be household income divided by number of adults in the household. Possibly with some consideration for the number of children in the household.
  - jampekka 1y ago
    E.g. OECD normalizes household income by household size: > Household income is adjusted for differences in the needs of households of different sizes with an equivalence scale that divides household income by the square root of household size. The adjusted income is then attributed to every person in the household. https://www.oecd.org/en/publications/society-at-a-glance-2024_918d8db3-en/full-report/household-income_3ee61044.html https://www.oecd.org/en/publications/society-at-a-glance-202...
jakubadamw 1y ago
“The Measure of Progress: Counting What Really Matters” is supposedly a good book discussing the inadequacy of GDP as a metric for how well off a society is.
mitthrowaway2 1y ago
Perhaps the Gini coefficient would be a better metric to capture this?
- ajmurmann 1y ago
  Certainly not in isolation. It measures inequality. If everyone has nothing you get a perfect Gini score. Pakistan, Ukraine, Belarus and Algeria have a lower (better) Gini score than all of the Americas and most of western Europe and Japan. Want to move?
  - nradov 1y ago
    The Gini coefficients published for deeply corrupt countries like Pakistan and Ukraine are almost certainly a total fiction. Much of the real wealth held by the elites in those countries is hidden from official statistics.
csallen 1y ago
Ironically, you're proving the person you're responding to right: The problem is trying to get a holistic view by focusing on one metric in isolation. You need to consider multiple metrics. Any one metric by itself is going to have holes.
- gopher_space 1y ago
  The old “number of dudes on a street corner” metric works perfectly fine by itself. Folks at the bottom of the pile are perfect economic bellwethers.
  - 9283409232 1y ago
    You're right but this would require caring about the poorest in society which the US seems to have a problem with.
JumpCrisscross 1y ago
> Median disposable household income is probably the best measure Median disposable income won’t meaningfully capture OP’s case of losing a high-paying job and having it replaced by a low-paying one. For that you need to look at the distribution of household disposable income. We have terrific economic metrics in America. It really should be part of a mandatory civics class to learn how to read them.
SR2Z 1y ago
If a software engineer starts working at Applebees, GDP will decrease. If lots of software engineers do it, GDP decreases more. If corporate revenue increases and is spent (as most revenue is), then the workers will be better off in the most bland "raising all boats" sense of the word - there will be more competition for their labor and more opportunities for them to jump ship. GDP gets a bad rap but if I had to pick a single metric, that's the one I'd choose.
- the_real_cher 1y ago
  Not if those are replaced by automation, offshoring, or outsourcing.
- nradov 1y ago
  One thing I remember from the first Dot-com crash circa 2002 is that the service quality in Silicon Valley area restaurants suddenly got a lot better. There were a lot of former "HTML programmers" forced to find other jobs.
  - SR2Z 1y ago
    Right - if you ask a heart surgeon to wait tables they'll probably do a great job! But it's still a waste of their talents and society as a whole will be worse off than if they did heart surgery. You can measure that because a waiter makes minimum wage and a heart surgeon does not - the heart surgeon contributes more to the GDP than a food service worker. That's the meaning of that metric and that's why it's useful.
- davidw 1y ago
  I attended a talk by Alberto Alesina (RIP) a few years back and he made the point that, yeah, GDP isn't perfect, but by and large, people in countries with a high GDP are healthier and happier. It might not measure the difference between the US and France as well, but it's pretty good at pointing out that Sweden is doing better than Somalia.
  - toomuchtodo 1y ago
groby_b 1y ago
That was not the argument. The argument was that their case "lost six-figure job, working as waiter now" was covered by GDP/capita, and it is. Applebee's doesn't make the same revenue per capita as a place that hands out six-figure jobs. Your argument is the exact reason why the media focus on a single metric is bad - because some but-whataboutism will always pop up and use it as pretext to debate an unrelated issue not covered by the metric. It's also the exact reason why we shouldn't measure economic health as a single metric at all - it's not that to whom value accrues doesn't matter, it's that it's a different metric than how much value is generated in the first place. It also explains why there isn't a single best economic policy - the absence of a single metric means there is no strict ordering. (You can easily construe a counter-argument why median disposable household income isn't the best metric, either: "Median wage is stagnant, everybody needs to take a second job so disposable income goes up". And you can do that for every single metric in isolation)
NickC25 1y ago
Also a great measure is the money supply & velocity chart - the M2. If GDP goes up and the velocity of money drops, it means that real economic gains are not being realized by those who actually spend the majority of their income versus saving it. Not that there's anything wrong with saving money - it's just that the more money that is being spent regularly, the healthier the entire economy is. Generally.
standardUser 1y ago
For that we have the Gini coefficient: https://en.wikipedia.org/wiki/Gini_coefficient https://en.wikipedia.org/wiki/Gini_coefficient
dmix 1y ago
That's an extremely simplistic view of our economics works.

shafyy 1y ago

Even better one: real wages, and income and wealth inequality.

ajmurmann 1y ago
Why does wealth inequality matter? If my real wealth doubles and Elon's real wealth doubles, inequality went up, yet everyone is tremendously better off. I think we are using inequality as a very bad proxy for poverty but we have much better metrics for that. I suspect people just dislike it for emotional reasons. I want to point out that Sweden has more billionaires per capita than the US. Yet everyone is fine with Sweden. I can set an argument about political influence that's gotten really strong lately but maybe that's better addressed by strengthening the politically system
- PaulDavisThe1st 1y ago
  > Why does wealth inequality matter? If my real wealth doubles and Elon's real wealth doubles, inequality went up, Not in terms of the ratio between you, which is the way we normally talk about wealth inequality : "he has X times more wealth than I do", or "she makes X times more than I do". Anyway, this is not how wealth inequality has grown at all. It has happened by most people's real income barely rising at all over 40-50 years, while the rich have seen theirs rise by huge factors (hundreds to many thousands in some cases).
  - ajmurmann 1y ago
    That's not at all what I've seen in the US. The middle class has shrunk but that part of the overall population has moved to upper income. Meanwhile, real (aka inflation corrected) median household income has gone up: https://fred.stlouisfed.org/series/MEHOINUSA672N https://fred.stlouisfed.org/series/MEHOINUSA672N If what you care about is standing real wages why talk about inequality? I'm concerned that it just functions better as rage bait and leads to unproductive policies.
    - PaulDavisThe1st 1y ago
      1. it is well established that human pyschology makes relative income and wealth much more significant than absolute. And it doesn't matter which quintile you're in for that to be true. 2. real median household income stayed relatively flat between 1970 and 2012. Since then it has risen again in a significant way. 3. despite the gains in real median household income, the rise in the household income (and net worth) of various upper percentiles (20%, 10%, 5%, 1%, 0.1% ... take your pick) has been very, very much larger. consequently, the "double my income, double Musk's income" line is not a description of what has happened. 4. the percentage of GDP that accrues to capital rather than to labor have gone steadily up since 1980.
    - danaris 1y ago
      If that's what "you've seen", then you aren't looking in the right places. Look at the graphs of real wages vs productivity that start pre-1970. Yes, it's true that real wages have gone up some since that time, but they remain completely divorced from productivity in a way that's totally different from the time before Reagan. Meanwhile, the income/wealth of the highest earners has gone up astronomically during the same time. They are staggeringly wealthy because they have redirected the flow of money from us to them. This is a very clearly visible and uncontroversial fact. The controversy is simply over whether it is a good thing.
- nradov 1y ago
  It depends on what you're trying to measure. From a purely rational perspective, increasing inequality doesn't matter if everyone's quality of life is improving. But humans are irrational, and happiness is often tied to social status within the hierarchy. Even if you're materially better off you might find yourself lower on the status scale. Status is a zero-sum game. Maybe we shouldn't care about such things but yet most people do.
- gman83 1y ago
  Wealth inequality matters a lot when rich people can spend unlimited amounts of money buying influence in politics and then use that influence to enact policies that favor the rich over the poor.
  - hellojesus 1y ago
    Aren't votes supposed to counter this effect? Individuals get the same voting power, so if things are too out of line, it should be easier to vote in folks that prioritize unbiased policies. Of course you could argue that the funds push up candidates for the wealthy for both parties, but independent media is allowing the unfinanced to compete.
    - danaris 1y ago
      What independent media? Mainstream media companies are owned by very wealthy people, who vote Republican, and put their thumbs on the scales over and over again. You can see that in a myriad of different ways, but at no time in recent memory has it been more blatant than during the last election cycle, with events like Bezos forcing the Washington Post to issue no endorsement rather than endorsing Harris. Like, you can agree or disagree with the politics of it, but it should take a monumental amount of motivated reasoning to deny the existence of this bias in our media.
      - hellojesus 1y ago
        There is bias in all media. I used independent media to mean the plethora of single or small member operations that publish their findings on their own blogs, where they are not beholden to shareholders or investors. There are also many emerging podcasts which either directly interview candidates or at least discuss the impacts of policy beyond the nonquestions presented by mainstream journalists. For example, how many times have journalists allowed Powell to say that he can't comment on proposed legislation like the BBB? Not once have we seen a follow up asking Powell why he has no comment on the bill considering his job is to offset its effects? His literal job is to comment on policy. > events like Bezos forcing the Washington Post to issue no endorsement rather than endorsing Harris. The Washington Post is independent media. It's just dependent on its owner like all media. I have no problem with Bezos' move concerning endorcements; he's maximizing his utility.
- jampekka 1y ago
  At billionairre scale money becomes qualitatively different compared to typical household scale. For households money typically goes to consumption (or future consumption via savings) whereas billionairre money goes to affect how productive (and often political) forces get organized. At consumption money level at least inequality is also inefficient allocation of resources due to the diminishing marginal utility of money.
- derf_ 1y ago
  If everyone's real wealth doubles, that is great, but it is not a stable equilibrium. If a very small percentage of the people own a large percentage of the wealth, it compounds. They literally cannot spend all of their income on consumption, except maybe by lighting piles of cash on fire, but that is not a route to doubling the real wealth of everyone in society. That means that asset prices rise, and fewer people can afford property. Jobs concentrate near where rich people live, because they are the ones with disposable income to spend, making this worse. Transfer payments (rent) from ordinary people to the remaining property owners are high. Wages stagnate, because wealthy people spend most of their money on assets, not goods and services. Consumer demand decreases. Capital moves away from producing things that ordinary people need, because they can no longer afford them, and is instead allocated to producing luxury goods. Social mobility is low because low wages and high property prices make it impossible to work your way up. The cycle is self-reinforcing, not self-correcting. Most of history throughout the world has consisted of a few very wealthy feudal lords and a large population of serfs. Strengthening the political system might be nice, but post-Citizen's United, that does not seem to be the direction the US is headed, at least, nor is it in the interests of those who benefit most from the current system.
- danans 1y ago
  > If my real wealth doubles and Elon's real wealth doubles, inequality went up, yet everyone is tremendously better off. What's this universe that only contains you and Elon? Or do you think that everyone's real wealth has doubled? > I can set an argument about political influence that's gotten really strong lately but maybe that's better addressed by strengthening the politically system Citizens United has practically dismissed that possibility in the near term.
- dclowd9901 1y ago
  Lots of leaps of logic here. I'm certainly not fine with Sweden having a higher disparity of wealth but I don't live in Sweden so I can't effect much change there. We're also ignoring how many safety net benefits Sweden provides its population, ostensibly because it reasonably taxes its wealthy. If Swedes are ok with their situation, it's probably because it's being handled adequately. The issue with disparity is it's a reflection of the unfair conditions of compensation. Elon Musk's employees make him that money, not Elon. He could make all of his employees multi-millionaires overnight by granting more generous stock plans commensurate with the money they've made the company. Reasonable profit sharing plans basically ensure this, but since companies all collude to not grant them, we see them as relatively rare in the working world. The state should be requiring companies to grant profit sharing. Not gonna bike shed it here, but it needs to be done yesterday.
  - StackRanker3000 1y ago
    Just to be clear, I don’t think it’s fair to say that Sweden has higher disparity of wealth than the US: https://news.ycombinator.com/item?id=44453264 https://news.ycombinator.com/item?id=44453264
- NoMoreNicksLeft 1y ago
  [flagged]
  - tomhow 1y ago
    > Leftists don't care Please avoid ideological swipes like this on HN. It's covered in multiple guidelines: https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- fendy3002 1y ago
  it matters when "something" become scarce that normal person need to compete with the richests to get, or if one day the richests decided they want something and suddenly those things become scarce. Let's not kid ourselves, majority of politics can be bought by billionaires and when some day fresh waters become scarce or wheat is, it'll be monopolized by the richests. We already get this in some way with housing.
- StackRanker3000 1y ago
  Sweden has more billionaires per capita, because it’s fairly friendly to businesses and there have been quite a few success stories over the last century. The US however have more millionaires per capita and SUBSTANTIALLY more people in poverty per capita. Sweden’s Gini coefficient is 0.276 (2024), the US’ is 0.418 (2023). The US has a lot more income inequality.
- amy214 1y ago
  >Why does wealth inequality matter? If my real wealth doubles and Elon's real wealth doubles, inequality went up, yet everyone is tremendously better off. You forgot to mention, also the cost of everything doubles and maybe kicks off some good ole hyperinflation Wealth inequality means all the investment and excess income goes to the top 0.0001%, rather than the average person. Whereas now this may support he average person's purchase of a home, or retirement, or similar, this now supports the billionaire's purchase of a million homes to rent to the common man, earn a fixed profit, to launch rocket ships with a head, two spheres at the base, and veins, where the billionaire with the biggest, longest, firmest rocketship is the winner! That, instead of people having houses and a retirement.
NickC25 1y ago
And the money velocity! A healthy economy is one where money is made via wages, and spent via economic activity. The more active a given dollar is in terms of circulation through the economy, the healthier the economy usually is. Economies tend to stagnate when a small group of people hoard the vast majority of the money, and don't circulate it back into the economy.

spacemadness 1y ago

In this episode of how economists lie to us all…

HPsquared 1y ago
I mean it's basically their job.

darth_avocado 1y ago

> Median disposable household income is probably the best measure If I used to make $78k as a full time IT employee, but now have to work two jobs to make $78k, I still have same household income but I’m considerably worse than before. A combination of hours worked, wages earned and household debt together would paint a much more accurate picture.

hx8 1y ago
I'm not sure household debt is a great indicator. Someone that has a mortgage will have much more household debt than a renter, but also not have to pay rent. This would need data to contextualize.
- elzbardico 1y ago
  Don't matter. You still have the debt. If you lose your job in a depression, odds are no much other people will be in the market to buy your home.
  - hx8 1y ago
    The amount of equity you have in your home matters. Most recessions do not take 20% off home values, so people with conventional loans are pretty safe. Even the Great Depression just cut valuations about 35%. If you lose your job in a depression there will be plenty of people willing to buy assets at a discount. If you have equity in your home then your position will be net positive. About half of all mortgages have an outstanding balance less than 50% of the home's value.
    - dmoy 1y ago
      That kinda works in the abstract, but it's pretty risky for any individual house. If your house was somehow a representative slice of all US housing, sure maybe it won't drop 35%. But if you owned a house in Detroit from 2003-2010 it might have dropped 70-80%. Or, more on point for many on HN, if you own a house in the Bay Area worth $2-$3M with 25% equity, and the tech job market collapses, then you might get completely wiped out.

BurningFrog 1y ago

GDP is fairly easy to measure, and since a society normally consumes as much as it produces, it's a pretty good measure of average economic health. You're right that there is more nuance you'd wish to see, but it's harder to measure, and I don't know how much it's normally worth.

MangoToupe 1y ago
> it's a pretty good measure of average economic health Median economic health strikes me as far more interesting than mean. I don't really care how well rich people are doing.
- Henchman21 1y ago
  We all need to be concerned when they’re doing too well
- lawlessone 1y ago
  >I don't really care how well rich people are doing. ahem "people of wealth"
  - wyldfire 1y ago
    Maybe "people currently experiencing extraordinarily fine housing"?
- BurningFrog 1y ago
  Perhaps, but until there is a way of measuring that, GDP/person wins by existing.
  - msgodel 1y ago
    Just because you can measure it doesn't mean it's a good objective.

jltsiren 1y ago

Household income is a funny collective measure. If housing becomes less affordable, household income increases, as kids stay longer with their parents. And if housing becomes more affordable, household income decreases, as kids move out earlier.

thayne 1y ago
I think a better measure would be household income divided by number of adults in the household. Possibly with some consideration for the number of children in the household.
- jampekka 1y ago
  E.g. OECD normalizes household income by household size: > Household income is adjusted for differences in the needs of households of different sizes with an equivalence scale that divides household income by the square root of household size. The adjusted income is then attributed to every person in the household. https://www.oecd.org/en/publications/society-at-a-glance-2024_918d8db3-en/full-report/household-income_3ee61044.html https://www.oecd.org/en/publications/society-at-a-glance-202...

jakubadamw 1y ago

“The Measure of Progress: Counting What Really Matters” is supposedly a good book discussing the inadequacy of GDP as a metric for how well off a society is.

mitthrowaway2 1y ago

Perhaps the Gini coefficient would be a better metric to capture this?

ajmurmann 1y ago
Certainly not in isolation. It measures inequality. If everyone has nothing you get a perfect Gini score. Pakistan, Ukraine, Belarus and Algeria have a lower (better) Gini score than all of the Americas and most of western Europe and Japan. Want to move?
- nradov 1y ago
  The Gini coefficients published for deeply corrupt countries like Pakistan and Ukraine are almost certainly a total fiction. Much of the real wealth held by the elites in those countries is hidden from official statistics.

csallen 1y ago

Ironically, you're proving the person you're responding to right: The problem is trying to get a holistic view by focusing on one metric in isolation. You need to consider multiple metrics. Any one metric by itself is going to have holes.

gopher_space 1y ago
The old “number of dudes on a street corner” metric works perfectly fine by itself. Folks at the bottom of the pile are perfect economic bellwethers.
- 9283409232 1y ago
  You're right but this would require caring about the poorest in society which the US seems to have a problem with.

JumpCrisscross 1y ago

> Median disposable household income is probably the best measure Median disposable income won’t meaningfully capture OP’s case of losing a high-paying job and having it replaced by a low-paying one. For that you need to look at the distribution of household disposable income. We have terrific economic metrics in America. It really should be part of a mandatory civics class to learn how to read them.

SR2Z 1y ago

If a software engineer starts working at Applebees, GDP will decrease. If lots of software engineers do it, GDP decreases more. If corporate revenue increases and is spent (as most revenue is), then the workers will be better off in the most bland "raising all boats" sense of the word - there will be more competition for their labor and more opportunities for them to jump ship. GDP gets a bad rap but if I had to pick a single metric, that's the one I'd choose.

the_real_cher 1y ago
Not if those are replaced by automation, offshoring, or outsourcing.
nradov 1y ago
One thing I remember from the first Dot-com crash circa 2002 is that the service quality in Silicon Valley area restaurants suddenly got a lot better. There were a lot of former "HTML programmers" forced to find other jobs.
- SR2Z 1y ago
  Right - if you ask a heart surgeon to wait tables they'll probably do a great job! But it's still a waste of their talents and society as a whole will be worse off than if they did heart surgery. You can measure that because a waiter makes minimum wage and a heart surgeon does not - the heart surgeon contributes more to the GDP than a food service worker. That's the meaning of that metric and that's why it's useful.
davidw 1y ago
I attended a talk by Alberto Alesina (RIP) a few years back and he made the point that, yeah, GDP isn't perfect, but by and large, people in countries with a high GDP are healthier and happier. It might not measure the difference between the US and France as well, but it's pretty good at pointing out that Sweden is doing better than Somalia.
- toomuchtodo 1y ago

groby_b 1y ago

That was not the argument. The argument was that their case "lost six-figure job, working as waiter now" was covered by GDP/capita, and it is. Applebee's doesn't make the same revenue per capita as a place that hands out six-figure jobs. Your argument is the exact reason why the media focus on a single metric is bad - because some but-whataboutism will always pop up and use it as pretext to debate an unrelated issue not covered by the metric. It's also the exact reason why we shouldn't measure economic health as a single metric at all - it's not that to whom value accrues doesn't matter, it's that it's a different metric than how much value is generated in the first place. It also explains why there isn't a single best economic policy - the absence of a single metric means there is no strict ordering. (You can easily construe a counter-argument why median disposable household income isn't the best metric, either: "Median wage is stagnant, everybody needs to take a second job so disposable income goes up". And you can do that for every single metric in isolation)

NickC25 1y ago

Also a great measure is the money supply & velocity chart - the M2. If GDP goes up and the velocity of money drops, it means that real economic gains are not being realized by those who actually spend the majority of their income versus saving it. Not that there's anything wrong with saving money - it's just that the more money that is being spent regularly, the healthier the entire economy is. Generally.

standardUser 1y ago

For that we have the Gini coefficient: https://en.wikipedia.org/wiki/Gini_coefficient https://en.wikipedia.org/wiki/Gini_coefficient

dmix 1y ago

That's an extremely simplistic view of our economics works.