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Jonny just likes nitpicking with claims because that makes it look like the main thrust of the claim has no truth to it. Instead of saying, "well actually worker compensation went up 11% instead of down 7%" he says "well the nearly 100% increase in productivity on the graph wouldn't look so dramatic if it were plotted against worker compensation instead of wages."
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On November 14 2013 10:49 JonnyBNoHo wrote:Show nested quote +On November 14 2013 10:21 IgnE wrote:On November 14 2013 05:22 JonnyBNoHo wrote:On November 14 2013 04:36 IgnE wrote:
Yes, I know what you meant. Then I don't understand why you made your comment. I was disputing the posted gap between wages and productivity, not the well-being or purchasing power of an average worker. What is the basis of your disputation? You must mean that while wages have not gone up, compensation for labor has. Explain how that is so. Employers pay employees with wages and benefits. Benefits have risen as a share of total compensation. Some of the loss of wages have been gains in benefits. There's also an issue with how productivity and real compensation are calculated. Productivity is typically calculated using the price deflator, while real wages are calculated using CPI. One isn't necessarily better than the other, but both measures should be converted to real terms the same way, otherwise you aren't comparing apples to apples. There's an explanation of this in the article WhiteDog linked to here. Or a NEBR working paper explanation here.
So the point you gloss over is that in exchange for nearly doubled productivity, workers get to devote a larger percentage of their compensation towards healthcare for roughly the same quality of care they had before.
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I think a lot of people would be more than satisfied if their wages went up even 10% as quickly as the top 1% of earners.
30% raise over 5 years? Yes, please!
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On November 14 2013 10:18 Liquid`Drone wrote:Show nested quote +On November 14 2013 08:44 coverpunch wrote:On November 14 2013 02:56 Liquid`Drone wrote:
yes. the notion that a CEO needs 600 times entry level salary to be motivated to do a good job is absolutely ridiculous. Some inequality is not bad though, and hardly anyone claims that some inequality is bad. That's why the chart with "this is how americans want wealth to be distributed - this is how they think it is - this is how it really is" chart is so powerful, because how americans want wealth to be distributed is actually very sensible, whereas the reality is so incredibly different from that. (and yes I know wealth distribution is very different from income distribution and the income distribution chart wouldn't be equally as top heavy, but whatever, wealth one was linked and debated recently. )
I don't mind my boss making twice as much as I do. He has more responsibility, he occasionally needs to have some really emotionally taxing meetings, he's not done with his job when he goes home. But would he want to trade jobs and salary with me? No way. He likes his wealth, and twice my pay actually makes him wealthy. Would he prefer 300 times as much as he's getting now? sure, but he does a great job even with just twice my salary, and if he was getting 300 times more, then that would either mean taking 10% of the paycheck from 6000 people, or it would mean that 599 people are out of a job, or somewhere in between those numbers. In the US, and well, many other parts of the world (but I only ever see non-wealthy americans actually defend this system), the salaries of the most wealthy are completely blown out of proportion, there's no reason why your top earners need to make so much, and it greatly hurts your society. CEO's of big companies could literally slice away 99% of their income and they would STILL be rich. But you're aware that pay is set by the owners and managers of the company, not by the employees, yes? So if Mark Zuckerberg wants to pay himself $2 billion and pay an entry level customer service rep at Facebook $25k, that's his prerogative, not the rep's. You don't get to round up the other employees and decide how much your boss gets paid, particularly if he owns the business. But it's a double edged sword. CEOs don't last forever at their high pay, in fact they tend to get fired quite quickly if they don't deliver excellent results. Large companies pay those amounts to find people with the Midas touch but they're under tremendous pressure, far more than you at a more "reasonable" rate in a lower job. Since I live in Japan now, I will tell you that what I see is the opposite problem here. CEOs aren't paid exorbitantly here but as a consequence, they take no risks and are incentivized to leave companies drifting along on stability rather than growth. A CEO can only be fired if he royally screws up, if the company loses a lot of money or he gets caught committing a crime. That's part of the reason that large Japanese companies have shrunk, particularly in electronics and technology. To put it in perspective, Samsung is 3x bigger than all the Japanese electronics companies put together. I'm not defending US inequality or gross CEO pay. Just pointing out who gets to decide CEO pay (not employees) and the downsides to a world where CEOs have no benefit in pay to take risks. 1: Obviously gross CEO pay is a consequence of workers having no say in the matter. If they did, the inequality would be more in line with how people actually want the inequality to be. I mean, what you're saying here explains why there's such gross pay inequality, but it doesn't justify it or even attempt to showcase that it is in any way societally beneficial. 2: I don't think you can state that lack of exorbidant pay is the sole, or even main reason why japanese CEOs are more risk-averse. I think this also correlates strongly with general societal mentality; japanese CEOs, from my understanding, feel an incredible responsibility for their worker's safety. While I'm not gonna challenge your knowledge of japanese society as you live there and I've never been there, I certainly need some more convincing that the relatively low pay of CEOs is the sole/main reason why they take no risks before I accept that as truth. 3: I don't think what the western world actually needs is continued economic growth. From my perspective, stability should be prioritized over growth. Not that growth is necessarily bad (although I would argue that increased consumption absolutely is - and economic growth is normally followed by increased consumption) - but this is more of an ecological point than an economical one and if somehow increased economic growth caused more ecologically-minded consumption rather than more consumption period then I'd be willing to accept it as a good. But like, all western countries have more than enough resources to supply every inhabitant with their actual needs. 4: From my quick google search, which according to this page (frankly I don't know its credibility but it seems fair enough), the top 327 american companies on average have CEOs earning 350 times entry level pay. In Japan, the number is 67. From my norwegian perspective, 67 times entry level pay is absolutely exorbidant. In Japan, one year of labor for a CEO pays more than a lifetime for a regular employee. It doesn't make sense to me. In USA, three months as a CEO in a large company means you're set for life. I mean, I can see how this type of pay makes people more willing to take risks - because they're already so wealthy that it hardly even matters if they fail. But I don't understand how that is good. Obviously CEOs are people and they want to succeed even without money being a factor, because feeling of accomplishment/mastery is an incredible motivator for humans everywhere, but I fail to see how this incredible income/wealth is in any way beneficial. Like, I've had a part time job in a factory for some years now. I have one boss, who is the boss of like 40 people, and he has one boss, who basically is the boss of like 160 people. My boss makes like twice as much as I do, and the boss above him makes like three times as much as I do. From my perspective, THIS is an actual incentive for them to do an as good job as possible, on a long term basis, because they cannot quickly accumulate so much wealth that the prosperity of the company becomes financially irrelevant to them. At the same time, the difference between around $70k and $140k and $210k is so significant that they themselves feel that the added responsibility and working hours is actually worth it. 5: I don't think there's any quick fix to this problem, but it's definitely not gonna improve if people just accept this degree of income inequality as an inevitability. I actually used to think that there was a huge difference in mentality between the east and west side of the atlantic - but when I see charts where americans state how they ideally think wealth/income should be distributed, they're actually largely in agreement with my point of view. Americans don't want the inequality to be this gross, but somehow they're even more averse towards political changes that could alleviate the problem. The true tragedy is that your politicians have showcased such gross malpractice that people are more willing to entrust the future of your country to absolutely greedy CEOs than politicians whom ideally should want nothing more than to improve your standard of living. 
Points 1-3 show that you at least implicitly acknowledge some push and pull over incentives though. US CEOs aren't paid monstrous salaries, most of their pay comes from stock options that encourage them to take risks that will help the company grow. Part of the reason that Japanese and presumably Norwegian CEOs are not so unequally paid is that they don't have the same stock options and thus do not have the same incentives to take big risks.
According to HuffPo, Norwegian CEOs get paid 58x of the average worker's salary. So we need to reset our expectations a little. All developed countries are technocratic to a certain degree, meaning we find the smartest and most capable people in our society and let them be in charge. And there's inevitably a premium to being a superstar, even in nominally equal societies like Norway or Japan.
You make a fair point that it's totally unclear that providing American incentives to Japanese or Norwegian CEOs would make Japanese or Norwegian companies much more successful with higher growth rates. I'm not particularly convinced that it works in the US, but this stems from the question of why exactly inequality is bad.
If you're going to say that the incentives have made American CEOs more corrupt and more willing to tamper with the political process to avoid beneficial legislation or more willing to cheat customers, that would be something. If you're going to say there's a problem that wealth is ingrained in the US so that there's too little mobility and too many smart people are being unfairly kept down because they don't have enough opportunities, that's also something. But people aren't making those claims in justifying higher taxes or more regulation and showing how those policies would improve the situation.
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On November 14 2013 10:47 WhiteDog wrote:Show nested quote +On November 14 2013 10:39 JonnyBNoHo wrote:On November 14 2013 10:15 WhiteDog wrote:On November 14 2013 10:08 JonnyBNoHo wrote:On November 14 2013 09:14 WhiteDog wrote:On November 14 2013 03:10 JonnyBNoHo wrote:On November 14 2013 03:00 WhiteDog wrote:On November 14 2013 02:56 Liquid`Drone wrote:
yes. the notion that a CEO needs 600 times entry level salary to be motivated to do a good job is absolutely ridiculous. Some inequality is not bad though, and hardly anyone claims that some inequality is bad. That's why the chart with "this is how americans want wealth to be distributed - this is how they think it is - this is how it really is" chart is so powerful, because how americans want wealth to be distributed is actually very sensible, whereas the reality is so incredibly different from that. (and yes I know wealth distribution is very different from income distribution and the income distribution chart wouldn't be equally as top heavy, but whatever, wealth one was linked and debated recently. )
I don't mind my boss making twice as much as I do. He has more responsibility, he occasionally needs to have some really emotionally taxing meetings, he's not done with his job when he goes home. But would he want to trade jobs and salary with me? No way. He likes his wealth, and twice my pay actually makes him wealthy. Would he prefer 300 times as much as he's getting now? sure, but he does a great job even with just twice my salary, and if he was getting 300 times more, then that would either mean taking 10% of the paycheck from 6000 people, or it would mean that 599 people are out of a job, or somewhere in between those numbers. In the US, and well, many other parts of the world (but I only ever see non-wealthy americans actually defend this system), the salaries of the most wealthy are completely blown out of proportion, there's no reason why your top earners need to make so much, and it greatly hurts your society. CEO's of big companies could literally slice away 99% of their income and they would STILL be rich. And to add to your point, this idea of incentive is also empirically wrong because when the average workers becomes more productive, more efficient in their work, they are not paid more anymore in the US (and in many developped countries). Proof ![[image loading]](http://www.washingtonpost.com/blogs/wonkblog/files/2013/07/SherkImage1.gif) http://www.washingtonpost.com/blogs/wonkblog/wp/2013/07/17/higher-productivity-used-to-mean-higher-wages-has-that-broken-down/ The graph is incorrect in terms of the economic theory. It should be productivity vs labor compensation (not wages) and compensation should use the same deflator as productivity (not CPI). There's still a bit of a breakdown, but not as dramatic. You're spouting nonsense, read the graph you are talking about is below in the article I linked, and it is not more "true" than the first graph. Everything you say just shows how fragile your knowledge of economy is. All indicators are imperfect, and thus imperfectly reflect reality. For exemple, I could say that average wage or average compensation also is wrong as it is indirectly diminishing the fact that "people are not paid more when they work more efficiently" because one could think high income workers might hide part of this process (something median wage or compensation would be able to see). You can question indicator all you want, but even with a different indicator (labor compensation) the fact still remain : there is a gap between productivity gain and disposable income in most developped countries and this gap is specifically touching middle class worker. Also the fact that inequality has "positive effect on the economy" doesn't mean shit too. It is just an ideological justification, but it says nothing about the degree of inequality nor about the type of inequalities. Some are acceptable, others are not, some might have positive impact on the economy, some certainly not. We're reaching the same point, were you cannot justify your arguments and your ideology just shows up, just like that time when you argued that market are efficient because market are efficient, without - I'm pretty sure of it - actually understanding what economists means when they say that market are "efficient". There is supposed to be a link between productivity and compensation, not productivity and wages. The link should be expressed in apples to apples terms. That is, they should both be deflated using the same index. Moreover, as I already stated if you use the correct terms, there is still a gap. Refuting me on the grounds that there is still a gap is not refuting me at all since I already pointed out that a gap remains! As for my comment on the positive effects of inequality, I wrote that it has both positive and negative effects. Refuting me on the grounds that "some [types and degrees] are acceptable, others are not" is, again, not refuting me at all! Really, is something lost in translation here? Read what I write. Then what's the point of the discussion if you're only pointing out small things that doesn't contribute at all to the main point ? When you asses that there are "positive effect" to inequality, you stay vague and don't explain your point, while you go into the detail of the indicator when something does not go along with your own vision of "the economy". That's why I'm bothered by your answers, nothing is lost in translation. To clarify, I'll just quote Krugman : Larry Mishel has a systematic breakdown of the reasons for worker income stagnation since 1973. He starts with the familiar divergence: productivity up 80 percent, the compensation (including benefits) of the median worker up only 11 percent. Where did the productivity go?
The answer is, it’s two-thirds the inequality, stupid. [...]
What this says is that widening inequality makes a huge difference. Income stagnation does not reflect overall economic stagnation; the incomes of typical workers would be 30 or 40 percent higher than they are if inequality hadn’t soared. http://krugman.blogs.nytimes.com/2012/04/28/where-the-productivity-went/?_r=0 WhiteDog, you made specific comments that I disagreed with on the grounds that I believed them to be factually inaccurate. The article you drew your graph from agrees with me, not you, on that point. If that's problematic to the "main point" you are trying to make - too fucking bad. Put on your big kid pants, admit the error, and stress that the main point is still valid. I'm not sure where you are going with the Krugman quote. Average productivity increases for the entire economy aren't supposed to translate to compensation increases for every job or every industry or every income class. If your main point is that inequality has increased, you don't need to draw odd references to productivity to make that point - just point to the inequality itself. What ? I'm sorry, but I showed post after post, that there is an income problem, that there are rising inequalities, and that there is indeed a correlation between low marginal taxation rate and inequalities. All you did was saying some nonsense about savings, argue indicators - I only quickly copy/paste a curve because, guess what, I'm french and my own curve are in french (and "compensation" doesn't mean anything to me as we use the term "revenue"). So all in all, you argued over nothing and now you're waving a flag like you've conquered the nothing we've been arguing. Can we at least agree marginal taxation rate could lower inequality ? Can we at least agree that middle ground income are suffering ? That working more, when you are a middle class worker, doesn't equal in higher wage ? That mobility in the US is weaker than in most other more equal countries ? Because all those are the facts I have been talking about.
This discussion began with my replying to a graph on wealth inequality. You then jumped into an extremely antagonistic and rude discussion over income inequality. Great start. And contrary to your post here, savings does matter in a discussion of wealth accumulation. Way to continue being wrong.
I never disagreed that higher marginal tax rates can lower inequality. Why do you think I did? Did you not read my posts? I wrote that marginal tax rates weren't the whole story, that other tax code aspects matter as well. I'm not sure why that's a controversial statement. Does no one complain when the rich pay far less than the statutory rate?
I never disagreed that the middle class could be doing a whole lot better. Cyclical issues aside, I do disagree over the phrase "suffering" as middle class incomes have been rising.
I didn't disagree that mobility isn't lower in the US. I disagreed that comparing nations is perfectly apples to apples.
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On November 14 2013 10:54 IgnE wrote:Show nested quote +On November 14 2013 10:49 JonnyBNoHo wrote:On November 14 2013 10:21 IgnE wrote:On November 14 2013 05:22 JonnyBNoHo wrote:On November 14 2013 04:36 IgnE wrote:
Yes, I know what you meant. Then I don't understand why you made your comment. I was disputing the posted gap between wages and productivity, not the well-being or purchasing power of an average worker. What is the basis of your disputation? You must mean that while wages have not gone up, compensation for labor has. Explain how that is so. Employers pay employees with wages and benefits. Benefits have risen as a share of total compensation. Some of the loss of wages have been gains in benefits. There's also an issue with how productivity and real compensation are calculated. Productivity is typically calculated using the price deflator, while real wages are calculated using CPI. One isn't necessarily better than the other, but both measures should be converted to real terms the same way, otherwise you aren't comparing apples to apples. There's an explanation of this in the article WhiteDog linked to here. Or a NEBR working paper explanation here. So the point you gloss over is that in exchange for nearly doubled productivity, workers get to devote a larger percentage of their compensation towards healthcare for roughly the same quality of care they had before.
I would think that price rises in healthcare are reflected in inflation figures.
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On November 14 2013 11:20 JonnyBNoHo wrote:Show nested quote +On November 14 2013 10:54 IgnE wrote:On November 14 2013 10:49 JonnyBNoHo wrote:On November 14 2013 10:21 IgnE wrote:On November 14 2013 05:22 JonnyBNoHo wrote:On November 14 2013 04:36 IgnE wrote:
Yes, I know what you meant. Then I don't understand why you made your comment. I was disputing the posted gap between wages and productivity, not the well-being or purchasing power of an average worker. What is the basis of your disputation? You must mean that while wages have not gone up, compensation for labor has. Explain how that is so. Employers pay employees with wages and benefits. Benefits have risen as a share of total compensation. Some of the loss of wages have been gains in benefits. There's also an issue with how productivity and real compensation are calculated. Productivity is typically calculated using the price deflator, while real wages are calculated using CPI. One isn't necessarily better than the other, but both measures should be converted to real terms the same way, otherwise you aren't comparing apples to apples. There's an explanation of this in the article WhiteDog linked to here. Or a NEBR working paper explanation here. So the point you gloss over is that in exchange for nearly doubled productivity, workers get to devote a larger percentage of their compensation towards healthcare for roughly the same quality of care they had before. I would think that price rises in healthcare are reflected in inflation figures.
Are you saying that healthcare costs have not outpaced inflation?
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On November 14 2013 11:52 IgnE wrote:Show nested quote +On November 14 2013 11:20 JonnyBNoHo wrote:On November 14 2013 10:54 IgnE wrote:On November 14 2013 10:49 JonnyBNoHo wrote:On November 14 2013 10:21 IgnE wrote:On November 14 2013 05:22 JonnyBNoHo wrote:On November 14 2013 04:36 IgnE wrote:
Yes, I know what you meant. Then I don't understand why you made your comment. I was disputing the posted gap between wages and productivity, not the well-being or purchasing power of an average worker. What is the basis of your disputation? You must mean that while wages have not gone up, compensation for labor has. Explain how that is so. Employers pay employees with wages and benefits. Benefits have risen as a share of total compensation. Some of the loss of wages have been gains in benefits. There's also an issue with how productivity and real compensation are calculated. Productivity is typically calculated using the price deflator, while real wages are calculated using CPI. One isn't necessarily better than the other, but both measures should be converted to real terms the same way, otherwise you aren't comparing apples to apples. There's an explanation of this in the article WhiteDog linked to here. Or a NEBR working paper explanation here. So the point you gloss over is that in exchange for nearly doubled productivity, workers get to devote a larger percentage of their compensation towards healthcare for roughly the same quality of care they had before. I would think that price rises in healthcare are reflected in inflation figures. Are you saying that healthcare costs have not outpaced inflation?
Nope. Are you saying that we should double count healthcare inflation?
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Nope. I'm saying that if your argument is that the graph of wages vs productivity makes it look worse than it really is, because employees are getting compensated with higher cost health care plans, then a graph of worker compensation vs productivity is misleading. It's not a good deal to have lower wages even if you are in theory getting more compensation (11% more compensation in return for nearly double productivity) just because your healthcare costs have soared (to the benefit of the insurance and healthcare industries) for the same healthcare.
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Canada11355 Posts
On November 14 2013 11:04 coverpunch wrote:Show nested quote +On November 14 2013 10:18 Liquid`Drone wrote:On November 14 2013 08:44 coverpunch wrote:On November 14 2013 02:56 Liquid`Drone wrote:
yes. the notion that a CEO needs 600 times entry level salary to be motivated to do a good job is absolutely ridiculous. Some inequality is not bad though, and hardly anyone claims that some inequality is bad. That's why the chart with "this is how americans want wealth to be distributed - this is how they think it is - this is how it really is" chart is so powerful, because how americans want wealth to be distributed is actually very sensible, whereas the reality is so incredibly different from that. (and yes I know wealth distribution is very different from income distribution and the income distribution chart wouldn't be equally as top heavy, but whatever, wealth one was linked and debated recently. )
I don't mind my boss making twice as much as I do. He has more responsibility, he occasionally needs to have some really emotionally taxing meetings, he's not done with his job when he goes home. But would he want to trade jobs and salary with me? No way. He likes his wealth, and twice my pay actually makes him wealthy. Would he prefer 300 times as much as he's getting now? sure, but he does a great job even with just twice my salary, and if he was getting 300 times more, then that would either mean taking 10% of the paycheck from 6000 people, or it would mean that 599 people are out of a job, or somewhere in between those numbers. In the US, and well, many other parts of the world (but I only ever see non-wealthy americans actually defend this system), the salaries of the most wealthy are completely blown out of proportion, there's no reason why your top earners need to make so much, and it greatly hurts your society. CEO's of big companies could literally slice away 99% of their income and they would STILL be rich. But you're aware that pay is set by the owners and managers of the company, not by the employees, yes? So if Mark Zuckerberg wants to pay himself $2 billion and pay an entry level customer service rep at Facebook $25k, that's his prerogative, not the rep's. You don't get to round up the other employees and decide how much your boss gets paid, particularly if he owns the business. But it's a double edged sword. CEOs don't last forever at their high pay, in fact they tend to get fired quite quickly if they don't deliver excellent results. Large companies pay those amounts to find people with the Midas touch but they're under tremendous pressure, far more than you at a more "reasonable" rate in a lower job. Since I live in Japan now, I will tell you that what I see is the opposite problem here. CEOs aren't paid exorbitantly here but as a consequence, they take no risks and are incentivized to leave companies drifting along on stability rather than growth. A CEO can only be fired if he royally screws up, if the company loses a lot of money or he gets caught committing a crime. That's part of the reason that large Japanese companies have shrunk, particularly in electronics and technology. To put it in perspective, Samsung is 3x bigger than all the Japanese electronics companies put together. I'm not defending US inequality or gross CEO pay. Just pointing out who gets to decide CEO pay (not employees) and the downsides to a world where CEOs have no benefit in pay to take risks. 1: Obviously gross CEO pay is a consequence of workers having no say in the matter. If they did, the inequality would be more in line with how people actually want the inequality to be. I mean, what you're saying here explains why there's such gross pay inequality, but it doesn't justify it or even attempt to showcase that it is in any way societally beneficial. 2: I don't think you can state that lack of exorbidant pay is the sole, or even main reason why japanese CEOs are more risk-averse. I think this also correlates strongly with general societal mentality; japanese CEOs, from my understanding, feel an incredible responsibility for their worker's safety. While I'm not gonna challenge your knowledge of japanese society as you live there and I've never been there, I certainly need some more convincing that the relatively low pay of CEOs is the sole/main reason why they take no risks before I accept that as truth. 3: I don't think what the western world actually needs is continued economic growth. From my perspective, stability should be prioritized over growth. Not that growth is necessarily bad (although I would argue that increased consumption absolutely is - and economic growth is normally followed by increased consumption) - but this is more of an ecological point than an economical one and if somehow increased economic growth caused more ecologically-minded consumption rather than more consumption period then I'd be willing to accept it as a good. But like, all western countries have more than enough resources to supply every inhabitant with their actual needs. 4: From my quick google search, which according to this page (frankly I don't know its credibility but it seems fair enough), the top 327 american companies on average have CEOs earning 350 times entry level pay. In Japan, the number is 67. From my norwegian perspective, 67 times entry level pay is absolutely exorbidant. In Japan, one year of labor for a CEO pays more than a lifetime for a regular employee. It doesn't make sense to me. In USA, three months as a CEO in a large company means you're set for life. I mean, I can see how this type of pay makes people more willing to take risks - because they're already so wealthy that it hardly even matters if they fail. But I don't understand how that is good. Obviously CEOs are people and they want to succeed even without money being a factor, because feeling of accomplishment/mastery is an incredible motivator for humans everywhere, but I fail to see how this incredible income/wealth is in any way beneficial. Like, I've had a part time job in a factory for some years now. I have one boss, who is the boss of like 40 people, and he has one boss, who basically is the boss of like 160 people. My boss makes like twice as much as I do, and the boss above him makes like three times as much as I do. From my perspective, THIS is an actual incentive for them to do an as good job as possible, on a long term basis, because they cannot quickly accumulate so much wealth that the prosperity of the company becomes financially irrelevant to them. At the same time, the difference between around $70k and $140k and $210k is so significant that they themselves feel that the added responsibility and working hours is actually worth it. 5: I don't think there's any quick fix to this problem, but it's definitely not gonna improve if people just accept this degree of income inequality as an inevitability. I actually used to think that there was a huge difference in mentality between the east and west side of the atlantic - but when I see charts where americans state how they ideally think wealth/income should be distributed, they're actually largely in agreement with my point of view. Americans don't want the inequality to be this gross, but somehow they're even more averse towards political changes that could alleviate the problem. The true tragedy is that your politicians have showcased such gross malpractice that people are more willing to entrust the future of your country to absolutely greedy CEOs than politicians whom ideally should want nothing more than to improve your standard of living. Points 1-3 show that you at least implicitly acknowledge some push and pull over incentives though. US CEOs aren't paid monstrous salaries, most of their pay comes from stock options that encourage them to take risks that will help the company grow. Part of the reason that Japanese and presumably Norwegian CEOs are not so unequally paid is that they don't have the same stock options and thus do not have the same incentives to take big risks. According to HuffPo, Norwegian CEOs get paid 58x of the average worker's salary. So we need to reset our expectations a little. All developed countries are technocratic to a certain degree, meaning we find the smartest and most capable people in our society and let them be in charge. And there's inevitably a premium to being a superstar, even in nominally equal societies like Norway or Japan. .
I believe Rakesh Khurana has made the case that the stock options has actually not helped to retain CEO's and that the search for charismatic CEO's from the outside has created a closed circuit of high profile CEO's that need to be enticed by higher and high incentives as internal promotion just doesn't have the right optics to 'save' a company.
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On November 14 2013 13:13 IgnE wrote:
Nope. I'm saying that if your argument is that the graph of wages vs productivity makes it look worse than it really is, because employees are getting compensated with higher cost health care plans, then a graph of worker compensation vs productivity is misleading. It's not a good deal to have lower wages even if you are in theory getting more compensation (11% more compensation in return for nearly double productivity) just because your healthcare costs have soared (to the benefit of the insurance and healthcare industries) for the same healthcare.
Where does the 11% come from?
To your larger point, the rise of healthcare costs should be represented in inflation figures. As healthcare costs have risen, inflation has risen as well. Also, benefits are more than just whatever healthcare you could get in 1970.
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there's a good book called predictably irrational by a behavioural economist, Dan Ariely, which goes through scientific experiments on peoples behavior. One included was the measure incentives had on people. I dont think the conclusions he made from the experiment were the correct ones but it showed that when incentives were extra good (huge bonuses) or extra bad (extreme punishment) people performed worse.
There was a fatal mistake that imo he made in the experiment, and that was that he tested incentives on rural indians rather than CEO's-he had limits on who he could test on. He also showed that incentives are terrible for creative work but good for manual labor. So with that logic brick layers should get paid more than CEO's.
Personally i dont see why some people in a society should be paid more than others. One could possibly study what monetary incentives or lack of monetary incentives do in an egalitarian society, such as a traditional papua new guinea tribe. But it just seems like it should be common sense to me.
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On November 14 2013 14:03 JonnyBNoHo wrote:Show nested quote +On November 14 2013 13:13 IgnE wrote:
Nope. I'm saying that if your argument is that the graph of wages vs productivity makes it look worse than it really is, because employees are getting compensated with higher cost health care plans, then a graph of worker compensation vs productivity is misleading. It's not a good deal to have lower wages even if you are in theory getting more compensation (11% more compensation in return for nearly double productivity) just because your healthcare costs have soared (to the benefit of the insurance and healthcare industries) for the same healthcare. Where does the 11% come from? To your larger point, the rise of healthcare costs should be represented in inflation figures. As healthcare costs have risen, inflation has risen as well. Also, benefits are more than just whatever healthcare you could get in 1970.
In what world do the costs soar to benefit the insurance and healthcare industries and not make the same healthcare better healthcare? Are you dying from a terrible disease? Well, it was uncurable 20 years ago but now we have the cure that took this large company dozens of scientists and many years to develop and test. They paid their innovators actual money to search for it, and now they have a chance to recoup losses (and insure against future lawsuits). Wonder why you're sick? Welcome to advanced screening procedures available enough to be purchased by hospitals everwhere.
Costs have soared for the same healthcare to the benefit of the insurance and healthcare industries? Hardly.
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Is there statistical proof that looking like an orange person in politics raises your likability? i'm looking at the OPs picture and I can't wrap my mind around looking orange (john boehner) -- does it resonate / connect well with the heartland of america, or something? Are there proven statistical studies that demonstrate the effectiveness of undergoing super-tanning?
im not being shallow, I'm just curious because I know how much thought goes into persuasion and such.
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On November 14 2013 10:49 JonnyBNoHo wrote:Show nested quote +On November 14 2013 10:21 IgnE wrote:On November 14 2013 05:22 JonnyBNoHo wrote:On November 14 2013 04:36 IgnE wrote:
Yes, I know what you meant. Then I don't understand why you made your comment. I was disputing the posted gap between wages and productivity, not the well-being or purchasing power of an average worker. What is the basis of your disputation? You must mean that while wages have not gone up, compensation for labor has. Explain how that is so. Employers pay employees with wages and benefits. Benefits have risen as a share of total compensation. Some of the loss of wages have been gains in benefits. There's also an issue with how productivity and real compensation are calculated. Productivity is typically calculated using the price deflator, while real wages are calculated using CPI. One isn't necessarily better than the other, but both measures should be converted to real terms the same way, otherwise you aren't comparing apples to apples. There's an explanation of this in the article WhiteDog linked to here. Or a NEBR working paper explanation here.
The main shift in the increase in non-wage benefits occurred during WW2 which happened well before the 1970's. however.
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On November 14 2013 14:34 Danglars wrote:Show nested quote +On November 14 2013 14:03 JonnyBNoHo wrote:On November 14 2013 13:13 IgnE wrote:
Nope. I'm saying that if your argument is that the graph of wages vs productivity makes it look worse than it really is, because employees are getting compensated with higher cost health care plans, then a graph of worker compensation vs productivity is misleading. It's not a good deal to have lower wages even if you are in theory getting more compensation (11% more compensation in return for nearly double productivity) just because your healthcare costs have soared (to the benefit of the insurance and healthcare industries) for the same healthcare. Where does the 11% come from? To your larger point, the rise of healthcare costs should be represented in inflation figures. As healthcare costs have risen, inflation has risen as well. Also, benefits are more than just whatever healthcare you could get in 1970. In what world do the costs soar to benefit the insurance and healthcare industries and not make the same healthcare better healthcare? Are you dying from a terrible disease? Well, it was uncurable 20 years ago but now we have the cure that took this large company dozens of scientists and many years to develop and test. They paid their innovators actual money to search for it, and now they have a chance to recoup losses (and insure against future lawsuits). Wonder why you're sick? Welcome to advanced screening procedures available enough to be purchased by hospitals everwhere. Costs have soared for the same healthcare to the benefit of the insurance and healthcare industries? Hardly.
I figured you would say that. There is some truth to it but not enough. Average life expectancy has stopped going up. Quality of life into old age isn't much better either. The American health care system is designed to treat symptoms not disease. The great innovators make anti-depression meds that only work about as well as regular physical exercise. As for what world I live in, I live in the world where Quest Diagnostics charges $433 for a regular yearly physical blood panel and the hospital charges $105 for a dose of antibiotics on top of a $408 "medical care" fee for looking at a patient for 15 minutes. Most people don't have uncurable diseases. Most people go to the doctor for common ailments whose treatments haven't substantially changed in the last 20 years. Go on talking about new treatments for previously uncurable diseases if you like (and ignore the fact that those treatments probably cost about $100k a year), but access to run-of-the-mill healthcare doesn't quite make-up for wages that are negative while productivity is rising and corporate profits are soaring.
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On November 14 2013 15:12 tshi wrote:
Is there statistical proof that looking like an orange person in politics raises your likability? i'm looking at the OPs picture and I can't wrap my mind around looking orange (john boehner) -- does it resonate / connect well with the heartland of america, or something? Are there proven statistical studies that demonstrate the effectiveness of undergoing super-tanning?
im not being shallow, I'm just curious because I know how much thought goes into persuasion and such.
Lacking whiteness is not the Republicans' biggest problem.
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On November 14 2013 11:18 JonnyBNoHo wrote:Show nested quote +On November 14 2013 10:47 WhiteDog wrote:On November 14 2013 10:39 JonnyBNoHo wrote:On November 14 2013 10:15 WhiteDog wrote:On November 14 2013 10:08 JonnyBNoHo wrote:On November 14 2013 09:14 WhiteDog wrote:On November 14 2013 03:10 JonnyBNoHo wrote:On November 14 2013 03:00 WhiteDog wrote:On November 14 2013 02:56 Liquid`Drone wrote:
yes. the notion that a CEO needs 600 times entry level salary to be motivated to do a good job is absolutely ridiculous. Some inequality is not bad though, and hardly anyone claims that some inequality is bad. That's why the chart with "this is how americans want wealth to be distributed - this is how they think it is - this is how it really is" chart is so powerful, because how americans want wealth to be distributed is actually very sensible, whereas the reality is so incredibly different from that. (and yes I know wealth distribution is very different from income distribution and the income distribution chart wouldn't be equally as top heavy, but whatever, wealth one was linked and debated recently. )
I don't mind my boss making twice as much as I do. He has more responsibility, he occasionally needs to have some really emotionally taxing meetings, he's not done with his job when he goes home. But would he want to trade jobs and salary with me? No way. He likes his wealth, and twice my pay actually makes him wealthy. Would he prefer 300 times as much as he's getting now? sure, but he does a great job even with just twice my salary, and if he was getting 300 times more, then that would either mean taking 10% of the paycheck from 6000 people, or it would mean that 599 people are out of a job, or somewhere in between those numbers. In the US, and well, many other parts of the world (but I only ever see non-wealthy americans actually defend this system), the salaries of the most wealthy are completely blown out of proportion, there's no reason why your top earners need to make so much, and it greatly hurts your society. CEO's of big companies could literally slice away 99% of their income and they would STILL be rich. And to add to your point, this idea of incentive is also empirically wrong because when the average workers becomes more productive, more efficient in their work, they are not paid more anymore in the US (and in many developped countries). Proof http://www.washingtonpost.com/blogs/wonkblog/wp/2013/07/17/higher-productivity-used-to-mean-higher-wages-has-that-broken-down/ The graph is incorrect in terms of the economic theory. It should be productivity vs labor compensation (not wages) and compensation should use the same deflator as productivity (not CPI). There's still a bit of a breakdown, but not as dramatic. You're spouting nonsense, read the graph you are talking about is below in the article I linked, and it is not more "true" than the first graph. Everything you say just shows how fragile your knowledge of economy is. All indicators are imperfect, and thus imperfectly reflect reality. For exemple, I could say that average wage or average compensation also is wrong as it is indirectly diminishing the fact that "people are not paid more when they work more efficiently" because one could think high income workers might hide part of this process (something median wage or compensation would be able to see). You can question indicator all you want, but even with a different indicator (labor compensation) the fact still remain : there is a gap between productivity gain and disposable income in most developped countries and this gap is specifically touching middle class worker. Also the fact that inequality has "positive effect on the economy" doesn't mean shit too. It is just an ideological justification, but it says nothing about the degree of inequality nor about the type of inequalities. Some are acceptable, others are not, some might have positive impact on the economy, some certainly not. We're reaching the same point, were you cannot justify your arguments and your ideology just shows up, just like that time when you argued that market are efficient because market are efficient, without - I'm pretty sure of it - actually understanding what economists means when they say that market are "efficient". There is supposed to be a link between productivity and compensation, not productivity and wages. The link should be expressed in apples to apples terms. That is, they should both be deflated using the same index. Moreover, as I already stated if you use the correct terms, there is still a gap. Refuting me on the grounds that there is still a gap is not refuting me at all since I already pointed out that a gap remains! As for my comment on the positive effects of inequality, I wrote that it has both positive and negative effects. Refuting me on the grounds that "some [types and degrees] are acceptable, others are not" is, again, not refuting me at all! Really, is something lost in translation here? Read what I write. Then what's the point of the discussion if you're only pointing out small things that doesn't contribute at all to the main point ? When you asses that there are "positive effect" to inequality, you stay vague and don't explain your point, while you go into the detail of the indicator when something does not go along with your own vision of "the economy". That's why I'm bothered by your answers, nothing is lost in translation. To clarify, I'll just quote Krugman : Larry Mishel has a systematic breakdown of the reasons for worker income stagnation since 1973. He starts with the familiar divergence: productivity up 80 percent, the compensation (including benefits) of the median worker up only 11 percent. Where did the productivity go?
The answer is, it’s two-thirds the inequality, stupid. [...]
What this says is that widening inequality makes a huge difference. Income stagnation does not reflect overall economic stagnation; the incomes of typical workers would be 30 or 40 percent higher than they are if inequality hadn’t soared. http://krugman.blogs.nytimes.com/2012/04/28/where-the-productivity-went/?_r=0 WhiteDog, you made specific comments that I disagreed with on the grounds that I believed them to be factually inaccurate. The article you drew your graph from agrees with me, not you, on that point. If that's problematic to the "main point" you are trying to make - too fucking bad. Put on your big kid pants, admit the error, and stress that the main point is still valid. I'm not sure where you are going with the Krugman quote. Average productivity increases for the entire economy aren't supposed to translate to compensation increases for every job or every industry or every income class. If your main point is that inequality has increased, you don't need to draw odd references to productivity to make that point - just point to the inequality itself. What ? I'm sorry, but I showed post after post, that there is an income problem, that there are rising inequalities, and that there is indeed a correlation between low marginal taxation rate and inequalities. All you did was saying some nonsense about savings, argue indicators - I only quickly copy/paste a curve because, guess what, I'm french and my own curve are in french (and "compensation" doesn't mean anything to me as we use the term "revenue"). So all in all, you argued over nothing and now you're waving a flag like you've conquered the nothing we've been arguing. Can we at least agree marginal taxation rate could lower inequality ? Can we at least agree that middle ground income are suffering ? That working more, when you are a middle class worker, doesn't equal in higher wage ? That mobility in the US is weaker than in most other more equal countries ? Because all those are the facts I have been talking about. This discussion began with my replying to a graph on wealth inequality. You then jumped into an extremely antagonistic and rude discussion over income inequality. Great start. And contrary to your post here, savings does matter in a discussion of wealth accumulation. Way to continue being wrong. I never disagreed that higher marginal tax rates can lower inequality. Why do you think I did? Did you not read my posts? I wrote that marginal tax rates weren't the whole story, that other tax code aspects matter as well. I'm not sure why that's a controversial statement. Does no one complain when the rich pay far less than the statutory rate? I never disagreed that the middle class could be doing a whole lot better. Cyclical issues aside, I do disagree over the phrase "suffering" as middle class incomes have been rising. I didn't disagree that mobility isn't lower in the US. I disagreed that comparing nations is perfectly apples to apples.
Again you are taking a stance on every subject disregarding not only factual evidence but also any of my analysis.
About the start, this was from my second post :
Not to mention your argument means nothing because if the poor actually consume most of the surplus they gain because of the redistribution and even if this money actually goes back in the hand of the rich, the rich will again be taxed and thus the money will go back to the poor : it's a circuit, of course rich gain money from poor's consumption, the goal is not to minimize this flux (because it is beneficial to the economy), but to minimize the accumulation of flux (saving rate, patrimony, etc.) and this is entirely possible if you tax enough.
Yes I'm talking about wealth and since the beginning. Don't make it seems like there are no canals between wealth and income. Your argument is just not enough, at least it's a little sentence one could add to clarify the limits of a short term marginal tax rate increase.
Yes saving does matter, but your point was just out of the picture. You were making a link between the low saving rate in the US and a possible increase in marginal tax rate, saying that one might have a bad influence on the other. Sure but...
The saving problem in the US has nothing to do with taxation, and more to do with the high saving rate in some other countries, the financial system (that permit the mobility of global savings from countries with surplus and high savings to the US), the low interest rate, and the "culture" that has clearly shifted from building up giants to consumption for consumption.
This argument about saving rate just shows how hard you're trying to find some meaningless facts to refute the idea of increasing taxation and this is where we leave economy and enter the world of ideology. But maybe we were already there since the beginning.
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On November 14 2013 16:13 IgnE wrote:Show nested quote +On November 14 2013 14:34 Danglars wrote:On November 14 2013 14:03 JonnyBNoHo wrote:On November 14 2013 13:13 IgnE wrote:
Nope. I'm saying that if your argument is that the graph of wages vs productivity makes it look worse than it really is, because employees are getting compensated with higher cost health care plans, then a graph of worker compensation vs productivity is misleading. It's not a good deal to have lower wages even if you are in theory getting more compensation (11% more compensation in return for nearly double productivity) just because your healthcare costs have soared (to the benefit of the insurance and healthcare industries) for the same healthcare. Where does the 11% come from? To your larger point, the rise of healthcare costs should be represented in inflation figures. As healthcare costs have risen, inflation has risen as well. Also, benefits are more than just whatever healthcare you could get in 1970. In what world do the costs soar to benefit the insurance and healthcare industries and not make the same healthcare better healthcare? Are you dying from a terrible disease? Well, it was uncurable 20 years ago but now we have the cure that took this large company dozens of scientists and many years to develop and test. They paid their innovators actual money to search for it, and now they have a chance to recoup losses (and insure against future lawsuits). Wonder why you're sick? Welcome to advanced screening procedures available enough to be purchased by hospitals everwhere. Costs have soared for the same healthcare to the benefit of the insurance and healthcare industries? Hardly. I figured you would say that. There is some truth to it but not enough. Average life expectancy has stopped going up. Quality of life into old age isn't much better either. The American health care system is designed to treat symptoms not disease. The great innovators make anti-depression meds that only work about as well as regular physical exercise. As for what world I live in, I live in the world where Quest Diagnostics charges $433 for a regular yearly physical blood panel and the hospital charges $105 for a dose of antibiotics on top of a $408 "medical care" fee for looking at a patient for 15 minutes. Most people don't have uncurable diseases. Most people go to the doctor for common ailments whose treatments haven't substantially changed in the last 20 years. Go on talking about new treatments for previously uncurable diseases if you like (and ignore the fact that those treatments probably cost about $100k a year), but access to run-of-the-mill healthcare doesn't quite make-up for wages that are negative while productivity is rising and corporate profits are soaring.
Maybe you'd prefer a world where the blood panel was free, and it was a regular every-two-years blood panel instead of every year as well! I grant that your experience with private companies may be less than what you would term 'ideal.' I want to see an abundance of competing options and not a few. Just you wait until you have to convince a government bureaucrat that you deserve one once a year instead of the regulatory normal 18 months. Don't worry, once we make those greedy penny-pinchers move out of the business, the new guys will do such a great job, you won't have reason to fear. It'll be free! And if you're not satisfied with the service, you can go to the other guy go soak your head, there isn't anybody else.
I don't want you to get depressed--God knows you think those anti-depression pills are bad enough already. Go take a walk in the park, the exercise that will keep your outlook chipper, and consider what geniuses you want to put in charge of the Governmental Panel on Treating Disease not Symptoms. We've had such success assembling a website where you can shop around for ACA insurance policies that we are certain you will find your experience enjoyable. If you think most people go to the doctor for the common ailments whose treatments have not been helped by current medical research, keep on hoping you'll continue to be "most people" for 100% of medical conditions that might affect you throughout your life. You wouldn't be interested in effective but expensive treatments that would be available for you if that should happen. I'm positive you would prefer death to helping pad the pockets of the healthcare industry.
Maybe you should open your own clinic that caters to the kinds of people that need your "run-of-the-mill" healthcare and doesn't purchase the costly innovative medical treatments. Make sure you charge enough to cover your insurance for tort--we wouldn't want you to go out of business while trying to help suffering people. Oh and be sure you read up, or pay someone to read up on the thousands of pages of government regulation on your services. We wouldn't want you employing all these people to offer basic medical care and not be reimbursed by Medicare for their time and diligence. Are your costs going up? Are you forced to charge your patients more than you wished? Oh, that's too bad now. Maybe once you've celebrated a decrease in corporate profits after the enacting of your policies, you can similarly celebrate the new efficiencies you must now invent to stay in business.
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EPT
