|
On March 11 2013 05:31 JonnyBNoHo wrote:
OK, it's not a statistical artifact. But it's not something that belongs in the original discussion.
Workers get paid relative to their production not relative to their consumption.
What was the original discussion? That there's a gap between worker productivity and worker compensation?
If so, it's wholly relevant to the discussion, as it's part of the gap and has been a major driver for decades. Dismissing it as a technicality is incorrect.
Depending on the phrasing, your last sentence could be strictly true, half-true, or completely false. Total income is, in the crudest models, solely a function of production. However, the wage a company must offer is partly a function of the cost of living in an area. And, in the really long run, total worker consumption must necessarily equal total worker wage.
|
Cayman Islands24199 Posts
workers get paid relative to labor market conditions too, as well as 'labor rent' in the sense of labor rights and such leverage enhancers.
insisting on this mythical marginal productivity = wage idea is just sheer dogma in the face of overwhelming evidence to the contrary that other factors that affect wage have taken a huge hit.
|
On March 11 2013 05:52 acker wrote:Show nested quote +On March 11 2013 05:31 JonnyBNoHo wrote:
OK, it's not a statistical artifact. But it's not something that belongs in the original discussion.
Workers get paid relative to their production not relative to their consumption. What was the original discussion? That there's a gap between worker productivity and worker compensation? If so, it's wholly relevant to the discussion, as it's part of the gap and has been a major driver for decades. Dismissing it as a technicality is incorrect. Depending on the phrasing, your last sentence could be strictly true, half-true, or completely false. Total income is, in the crudest models, solely a function of production. However, the wage a company must offer is partly a function of the cost of living in an area. And, in the really long run, total worker consumption must necessarily equal total worker wage.
The core problem here is that there's no reason for wages to be tied to consumption rather than production. If OPEC raises the price of oil that the US imports than income in the US will decline. It's just a matter of whose income will decline. Unless something else changes there's no way around that. Something needs to offset it - something else must drive income higher (increase production or export prices), consumption must fall or assets must be sold (money borrowed from abroad to finance consumption).
So we're talking about many things here: wages, production, consumption and trade.
Originally we were just discussing wages. If we are just concerned with wages and we want to view them along side productivity than we should look at wages and productivity exclusively and in an apples to apples context. That means wages and productivity using the same price index. Like this:
+ Show Spoiler +
Or if you insist on using a deflator for consumer prices than why not substitute CPI for PCE? If we use PCE the wage / productivity gap closes by almost as much as using the GDP deflator for both wages and productivity as in the above graph.
+ Show Spoiler +
The point here is that if we want to discuss wages and productivity than I want to focus on those two items as much as possible. For me that's taking wages and productivity and putting them in an apples to apples context which means ignoring deflator differences. If you want to do differently, go right ahead, but bear in mind what you are doing when you draw your conclusions.
|
Wages should be tied to production,but in reality they are often tied to consumption.
People get just enough wage to pay the monthly bills wich come with a lower middle class living style.
Thats why someone in china, who has the same productivity as someone in the usa,makes less, and why people in new york earn more then people in other parts of the states.
Living in china is a lot cheaper then in the usa,(and new york a lot more expensive then other parts of the country) The company can afford to pay him less (this is verry important) because the worker will do anny work as long as he can pay his basic expenses (and sometimes even for less then that). There is no incentive for the company to reward the low skilled worker for his production at all.
Your chart is a verry nice one btw, and your chart also clearly shows a growing gap between worker production and reward in the last years.
Am also somewhat suprised by the chart, i thought (and hoped) our productivity did go up more past 40 years then just by 90%. Computers have increased productivity enormously but apearently not as much as i thought.
Maybe all these investments needed to increase productivity are substracted from the productivity, i am not sure what is measured here.
|
On March 11 2013 08:12 Rassy wrote:
Wages should be tied to production,but in reality they are often tied to consumption.
Marx agrees with you! The (equilibrium) price of labor-power is the cost of the reproduction of the laborer at a given socially-determined standard of living. Class struggle is the battle over what "society determines".
|
On March 11 2013 04:23 JonnyBNoHo wrote:Show nested quote +On March 11 2013 02:49 aksfjh wrote:On March 10 2013 17:17 BirdKiller wrote:On March 10 2013 14:53 aksfjh wrote:On March 10 2013 04:51 JonnyBNoHo wrote:On March 10 2013 04:05 acker wrote:On March 09 2013 02:45 JonnyBNoHo wrote:CEO to average worker pay has been declining in the US, though you can still argue that it is still excessively high. It's also a somewhat misleading stat - generally it's computed by looking at CEO pay at the largest companies where the ratio would naturally be higher. In those cases it's possible that the CEO really does do more for the company that 300 workers (or the reverse, a bad CEO could cause more damage than 300 bad workers though he'll still get a nice paycheck). As for the productivity / compensation gap, I'd recommend reading this from the BLS. A good chunk of the gap is explained by technical differences in the way that wages and productivity are calculated in the indexes. Post 2000 is where labor really took a hit though I'm not sure that there's a quick and easy explanation for that. The first graph doesn't show that CEO pay is declining overall, it shows that CEO pay falls during recessions...which makes sense for obvious reasons. Note the recovery in CEO:worker compensation, which is the point of the article. The graph in page 59 of the linked article is log-adjusted, and shows a divergence in productivity to compensation starting in...1979, from page 60. Not the 2000s. 1979-1990 was even more divergent in productivity:compensation than the 2000s... One big disclaimer should be put on this; this is all data from the United States, not international data. The CEO to average worker pay graph shows a secular decline. If you look at the cyclical aspect the high of the mid 2000's was lower than the high of the late 90's and the recent low was lower than the post dot-com low. Lower highs / lower lows - that's a decline. As to the BLS article please see page 61. From '79 to 2000 the bulk of the divergence between productivity and compensation was due to technical differences in how productivity and compensation are calculated over time. •There are two components that account for the gap between real hourly compensation growth and productivity growth. The first is the difference between the price indexes used to account for inflation in the BLS productivity and hourly compensation measures. The second is the change in “labor share,” which, as explained earlier, is the share of output that is accounted for by workers’ wages, salaries, and benefits.
•Before 2000, the difference between the growth rates of the CPI and the IPD—that is, the difference in inflation rates—explained most of the gap Edit: On March 10 2013 04:20 aksfjh wrote:On March 09 2013 02:45 JonnyBNoHo wrote:On March 09 2013 01:24 Roe wrote:On March 08 2013 14:37 yandere991 wrote:On March 08 2013 14:20 aksfjh wrote:
[quote]
I don't really want a state mandated overhaul, just more oversight of the entire thing. It's one of those instances where you see blatant problems, like CEO compensation being 300x+ more than average worker pay, and you KNOW it's wrong for it to be that way. There should be something that is actively and strongly looking to correct those problems that have societal consequences and not sitting back with a "the markets will fix it themselves!" attitude. I really don't see anything wrong with it. If cash flows are strong and the company is growing at a healthy rate then who cares if they are earning 300x the average worker. Most companies that I have seen (basically the top half of the ASX 500) have a MAJOR component of their exec pay in equity which vests in tranches, usually 3 year vest with 5 year lock period. Most of the time half the tranches has relative TSR (50th percentile min 75th percentile stretch) as the KPI and the other half has absolute EPS as the KPI. STI has a whole set of different KPIs which usually involve EBIT, safety, and discretionary. Generally when times are good bonuses are big and when times are bad multiple years of bonuses have their current tranches nullified. you forget the popular graph, which shows corporate pay at 300x, productivity going up, but employee pay actually decreasing slightly if not just stagnating. Now, you're going to have a hell of a case trying to prove CEOs are working 300x as much as their workers. This is the problem with corporate style business. The money isn't proportional to who worked for the revenue. CEO to average worker pay has been declining in the US, though you can still argue that it is still excessively high. It's also a somewhat misleading stat - generally it's computed by looking at CEO pay at the largest companies where the ratio would naturally be higher. In those cases it's possible that the CEO really does do more for the company that 300 workers (or the reverse, a bad CEO could cause more damage than 300 bad workers though he'll still get a nice paycheck). As for the productivity / compensation gap, I'd recommend reading this from the BLS. A good chunk of the gap is explained by technical differences in the way that wages and productivity are calculated in the indexes. Post 2000 is where labor really took a hit though I'm not sure that there's a quick and easy explanation for that. On March 09 2013 02:31 aksfjh wrote:On March 08 2013 14:37 yandere991 wrote:On March 08 2013 14:20 aksfjh wrote:
[quote]
I don't really want a state mandated overhaul, just more oversight of the entire thing. It's one of those instances where you see blatant problems, like CEO compensation being 300x+ more than average worker pay, and you KNOW it's wrong for it to be that way. There should be something that is actively and strongly looking to correct those problems that have societal consequences and not sitting back with a "the markets will fix it themselves!" attitude. I really don't see anything wrong with it. If cash flows are strong and the company is growing at a healthy rate then who cares if they are earning 300x the average worker. Most companies that I have seen (basically the top half of the ASX 500) have a MAJOR component of their exec pay in equity which vests in tranches, usually 3 year vest with 5 year lock period. Most of the time half the tranches has relative TSR (50th percentile min 75th percentile stretch) as the KPI and the other half has absolute EPS as the KPI. STI has a whole set of different KPIs which usually involve EBIT, safety, and discretionary. Generally when times are good bonuses are big and when times are bad multiple years of bonuses have their current tranches nullified. It doesn't really matter how you calculate a number when the result doesn't sensibly line up. We have mountains of statistics that tell us the same thing: workers have gotten much more productive and yet are paid roughly the same real wages as 30 years ago. Hell, right now we have figures that show full-time workers working longer hours for smaller raises, more people that are unemployed/underemployed, and company profits and cash reserves at all time highs. You don't need to through around a bunch of bullshit analysis to see that the average worker is being swindled while the top executives line their pockets. Worker's are not getting paid the same as 30 years ago. On March 09 2013 01:50 Rassy wrote:
So how do these bund holders unload their huge stock of bunds without crashing the market? Hold to maturity :p I apologize again for rounding and you not understanding what I mean by "roughly." A real increase of 10% of income (about $45k to $50k in 30 years) and a productive output increase of 200-250%. That's just a finer detail, though, but still paints the same picture. Where are you getting the $45K to $50K figure from? http://www.davemanuel.com/median-household-income.phpThat's referenced to the Census Bureau. 1981: $45,260 2011: $50,054 You are aware that according to Bureau of Labor Statistics Data, productivity hasn't increased 200 - 250% since 1981 but almost in line with inflation? The average productivity increase has been about 1 - 2% per year and that's not accounting for inflation like you've done with household income. http://data.bls.gov/pdq/SurveyOutputServletA lot of it is over the fact that there are more employees working in the U.S. in 2013 than in 1981 with better and sophisticated technology and infrastructure. That said, the overall increase in productivity from 1981 to 2013 is generally proportional to the inflation, maybe a little over, but definitely not high as you claim. Also, household income, even inflation adjusted, is a terrible statistic to use to measure individual income. Using household income is a good way to make the point that CEO compensation has become unbound in an economy that produces at least 2x what it used to. Meanwhile, consumers aren't able to buy 10% more without credit. Population doesn't come close to explaining it all away. The median household doesn't produce 200%+ more output. You are making apples to oranges comparisons. If you want to look at CEO pay compare it to average worker pay. If you want to look at household buying power keep in mind the effect of government taxes and transfers, non-cash benefits and household size.
And keep in mind that buying power is part of inflation adjusted figures. Businesses have cut pension programs from 30 years ago, which wasn't figured into income, but is now adjusted for in government "non-cash" transfers. Household size probably hasn't changed much in the past 3 decades, and I doubt it would play a large factor anyways. I don't see anything that could account for only a 10% increase in median wages and a current 350x multiplier on CEO wages over average worker pay than a gross injustice.
|
On March 11 2013 08:29 aksfjh wrote:
I don't see anything that could account for only a 10% increase in median wages and a current 350x multiplier on CEO wages over average worker pay than a gross injustice.
because Jonny is trapped in the commodity fetish and believes that the wealth was "created" by the CEOs and therefore belongs to them originally. questions about social inequality are therefore simply questions about many pennies "wealth creators" want to toss from their carriages to the undeserving masses 
On March 06 2013 07:29 JonnyBNoHo wrote:
Wealth was redistributed to the top? The new wealth that was created primarily went to the top. That's still a concern, but a different beast altogether.
|
On March 11 2013 08:02 JonnyBNoHo wrote:
The core problem here is that there's no reason for wages to be tied to consumption rather than production. If OPEC raises the price of oil that the US imports than income in the US will decline. It's just a matter of whose income will decline. Unless something else changes there's no way around that. Something needs to offset it - something else must drive income higher (increase production or export prices), consumption must fall or assets must be sold (money borrowed from abroad to finance consumption).
I...just...addressed this. And you just ignored it all. There are perfectly good reasons why wages can be tied to consumption, why they can be tied to production, and why they can be perfectly tied to consumption, depending on the framing of your statement.
What you're trying to say is that we shouldn't care when wages depend on consumption. This is more complicated, and is half of the wage : productivity question. But you would have to assume that no control whatsoever exists in the difference between wage and consumption inflation in order to say this, and that's an impossible case to make. But you aren't assuming this, so I'm not sure what point you're trying to make by listing various policy proposals; correct policy will probably be complicated to find anyways.
On March 11 2013 08:02 JonnyBNoHo wrote:So we're talking about many things here: wages, production, consumption and trade. Originally we were just discussing wages. If we are just concerned with wages and we want to view them along side productivity than we should look at wages and productivity exclusively and in an apples to apples context. That means wages and productivity using the same price index. Like this: + Show Spoiler +Or if you insist on using a deflator for consumer prices than why not substitute CPI for PCE? If we use PCE the wage / productivity gap closes by almost as much as using the GDP deflator for both wages and productivity as in the above graph. + Show Spoiler +The point here is that if we want to discuss wages and productivity than I want to focus on those two items as much as possible. For me that's taking wages and productivity and putting them in an apples to apples context which means ignoring deflator differences. If you want to do differently, go right ahead, but bear in mind what you are doing when you draw your conclusions.
Looks like you went online and started Googling for stuff to support yourself with. Link your papers next time.
http://www.resolutionfoundation.org/media/media/downloads/Decoupling_of_wages_and_productivity.pdf
Your "evidence" works by definition, not by strength: net decoupling is literally the change in size of the labor force relative to the size of the market (page 1). It's the same thing as the last paper you linked.
Nor does your explanation for an apples-to-apples comparison make sense. The entire point of wages is to consume stuff or invest in stuff. The point of output is...output. If you use the same deflator on both as a measure of the wage : productivity gap, you're trying to paint apples orange.
PCE generally runs below CPI, that's common knowledge. From what I can tell, the difference has to do with computational issues in healthcare and housing, as well as the general model. I do, however, find it strange that you waited until now to say this, while also ignoring CPI-U-RS mentioned a page above your posted figure.
|
On March 11 2013 10:12 acker wrote:Show nested quote +On March 11 2013 08:02 JonnyBNoHo wrote:
The core problem here is that there's no reason for wages to be tied to consumption rather than production. If OPEC raises the price of oil that the US imports than income in the US will decline. It's just a matter of whose income will decline. Unless something else changes there's no way around that. Something needs to offset it - something else must drive income higher (increase production or export prices), consumption must fall or assets must be sold (money borrowed from abroad to finance consumption). I...just...addressed this. And you just ignored it all. There are perfectly good reasons why wages can be tied to consumption, why they can be tied to production, and why they can be perfectly tied to consumption, depending on the framing of your statement. What you're trying to say is that we shouldn't care when wages depend on consumption. This is more complicated, and is half of the wage : productivity question. But you would have to assume that no control whatsoever exists in the difference between wage and consumption inflation in order to say this, and that's an impossible case to make. But you aren't assuming this, so I'm not sure what point you're trying to make by listing various policy proposals; correct policy will probably be complicated to find anyways.
Over the long run? Please explain how that's supposed to work. Where's your income supposed to come from if not production?
Show nested quote +On March 11 2013 08:02 JonnyBNoHo wrote:So we're talking about many things here: wages, production, consumption and trade. Originally we were just discussing wages. If we are just concerned with wages and we want to view them along side productivity than we should look at wages and productivity exclusively and in an apples to apples context. That means wages and productivity using the same price index. Like this: + Show Spoiler +Or if you insist on using a deflator for consumer prices than why not substitute CPI for PCE? If we use PCE the wage / productivity gap closes by almost as much as using the GDP deflator for both wages and productivity as in the above graph. + Show Spoiler +The point here is that if we want to discuss wages and productivity than I want to focus on those two items as much as possible. For me that's taking wages and productivity and putting them in an apples to apples context which means ignoring deflator differences. If you want to do differently, go right ahead, but bear in mind what you are doing when you draw your conclusions. Looks like you went online and started Googling for stuff to support yourself with. Link your papers next time. http://www.resolutionfoundation.org/media/media/downloads/Decoupling_of_wages_and_productivity.pdfYour "evidence" works by definition, not by strength: net decoupling is literally the change in size of the labor force relative to the size of the market (page 1). It's the same thing as the last paper you linked. Nor does your explanation for an apples-to-apples comparison make sense. The entire point of wages is to consume stuff or invest in stuff. The point of output is...output. If you use the same deflator on both as a measure of the wage : productivity gap, you're trying to paint apples orange. PCE generally runs below CPI, that's common knowledge. From what I can tell, the difference has to do with computational issues in healthcare and housing, as well as the general model. I do, however, find it strange that you waited until now to say this, while also ignoring CPI-U-RS mentioned a page above your posted figure.
CPI is really just concerned with the "consume stuff" portion of that.
Yes PCE generally runs below CPI - which is "correct"? Which "should" we use?
|
On March 11 2013 08:29 aksfjh wrote:Show nested quote +On March 11 2013 04:23 JonnyBNoHo wrote:On March 11 2013 02:49 aksfjh wrote:On March 10 2013 17:17 BirdKiller wrote:On March 10 2013 14:53 aksfjh wrote:On March 10 2013 04:51 JonnyBNoHo wrote:On March 10 2013 04:05 acker wrote:On March 09 2013 02:45 JonnyBNoHo wrote:CEO to average worker pay has been declining in the US, though you can still argue that it is still excessively high. It's also a somewhat misleading stat - generally it's computed by looking at CEO pay at the largest companies where the ratio would naturally be higher. In those cases it's possible that the CEO really does do more for the company that 300 workers (or the reverse, a bad CEO could cause more damage than 300 bad workers though he'll still get a nice paycheck). As for the productivity / compensation gap, I'd recommend reading this from the BLS. A good chunk of the gap is explained by technical differences in the way that wages and productivity are calculated in the indexes. Post 2000 is where labor really took a hit though I'm not sure that there's a quick and easy explanation for that. The first graph doesn't show that CEO pay is declining overall, it shows that CEO pay falls during recessions...which makes sense for obvious reasons. Note the recovery in CEO:worker compensation, which is the point of the article. The graph in page 59 of the linked article is log-adjusted, and shows a divergence in productivity to compensation starting in...1979, from page 60. Not the 2000s. 1979-1990 was even more divergent in productivity:compensation than the 2000s... One big disclaimer should be put on this; this is all data from the United States, not international data. The CEO to average worker pay graph shows a secular decline. If you look at the cyclical aspect the high of the mid 2000's was lower than the high of the late 90's and the recent low was lower than the post dot-com low. Lower highs / lower lows - that's a decline. As to the BLS article please see page 61. From '79 to 2000 the bulk of the divergence between productivity and compensation was due to technical differences in how productivity and compensation are calculated over time. •There are two components that account for the gap between real hourly compensation growth and productivity growth. The first is the difference between the price indexes used to account for inflation in the BLS productivity and hourly compensation measures. The second is the change in “labor share,” which, as explained earlier, is the share of output that is accounted for by workers’ wages, salaries, and benefits.
•Before 2000, the difference between the growth rates of the CPI and the IPD—that is, the difference in inflation rates—explained most of the gap Edit: On March 10 2013 04:20 aksfjh wrote:On March 09 2013 02:45 JonnyBNoHo wrote:On March 09 2013 01:24 Roe wrote:On March 08 2013 14:37 yandere991 wrote:
[quote]
I really don't see anything wrong with it. If cash flows are strong and the company is growing at a healthy rate then who cares if they are earning 300x the average worker.
Most companies that I have seen (basically the top half of the ASX 500) have a MAJOR component of their exec pay in equity which vests in tranches, usually 3 year vest with 5 year lock period. Most of the time half the tranches has relative TSR (50th percentile min 75th percentile stretch) as the KPI and the other half has absolute EPS as the KPI. STI has a whole set of different KPIs which usually involve EBIT, safety, and discretionary. Generally when times are good bonuses are big and when times are bad multiple years of bonuses have their current tranches nullified. you forget the popular graph, which shows corporate pay at 300x, productivity going up, but employee pay actually decreasing slightly if not just stagnating. Now, you're going to have a hell of a case trying to prove CEOs are working 300x as much as their workers. This is the problem with corporate style business. The money isn't proportional to who worked for the revenue. CEO to average worker pay has been declining in the US, though you can still argue that it is still excessively high. It's also a somewhat misleading stat - generally it's computed by looking at CEO pay at the largest companies where the ratio would naturally be higher. In those cases it's possible that the CEO really does do more for the company that 300 workers (or the reverse, a bad CEO could cause more damage than 300 bad workers though he'll still get a nice paycheck). As for the productivity / compensation gap, I'd recommend reading this from the BLS. A good chunk of the gap is explained by technical differences in the way that wages and productivity are calculated in the indexes. Post 2000 is where labor really took a hit though I'm not sure that there's a quick and easy explanation for that. On March 09 2013 02:31 aksfjh wrote:On March 08 2013 14:37 yandere991 wrote:
[quote]
I really don't see anything wrong with it. If cash flows are strong and the company is growing at a healthy rate then who cares if they are earning 300x the average worker.
Most companies that I have seen (basically the top half of the ASX 500) have a MAJOR component of their exec pay in equity which vests in tranches, usually 3 year vest with 5 year lock period. Most of the time half the tranches has relative TSR (50th percentile min 75th percentile stretch) as the KPI and the other half has absolute EPS as the KPI. STI has a whole set of different KPIs which usually involve EBIT, safety, and discretionary. Generally when times are good bonuses are big and when times are bad multiple years of bonuses have their current tranches nullified. It doesn't really matter how you calculate a number when the result doesn't sensibly line up. We have mountains of statistics that tell us the same thing: workers have gotten much more productive and yet are paid roughly the same real wages as 30 years ago. Hell, right now we have figures that show full-time workers working longer hours for smaller raises, more people that are unemployed/underemployed, and company profits and cash reserves at all time highs. You don't need to through around a bunch of bullshit analysis to see that the average worker is being swindled while the top executives line their pockets. Worker's are not getting paid the same as 30 years ago. On March 09 2013 01:50 Rassy wrote:
So how do these bund holders unload their huge stock of bunds without crashing the market? Hold to maturity :p I apologize again for rounding and you not understanding what I mean by "roughly." A real increase of 10% of income (about $45k to $50k in 30 years) and a productive output increase of 200-250%. That's just a finer detail, though, but still paints the same picture. Where are you getting the $45K to $50K figure from? http://www.davemanuel.com/median-household-income.phpThat's referenced to the Census Bureau. 1981: $45,260 2011: $50,054 You are aware that according to Bureau of Labor Statistics Data, productivity hasn't increased 200 - 250% since 1981 but almost in line with inflation? The average productivity increase has been about 1 - 2% per year and that's not accounting for inflation like you've done with household income. http://data.bls.gov/pdq/SurveyOutputServletA lot of it is over the fact that there are more employees working in the U.S. in 2013 than in 1981 with better and sophisticated technology and infrastructure. That said, the overall increase in productivity from 1981 to 2013 is generally proportional to the inflation, maybe a little over, but definitely not high as you claim. Also, household income, even inflation adjusted, is a terrible statistic to use to measure individual income. Using household income is a good way to make the point that CEO compensation has become unbound in an economy that produces at least 2x what it used to. Meanwhile, consumers aren't able to buy 10% more without credit. Population doesn't come close to explaining it all away. The median household doesn't produce 200%+ more output. You are making apples to oranges comparisons. If you want to look at CEO pay compare it to average worker pay. If you want to look at household buying power keep in mind the effect of government taxes and transfers, non-cash benefits and household size. And keep in mind that buying power is part of inflation adjusted figures. Businesses have cut pension programs from 30 years ago, which wasn't figured into income, but is now adjusted for in government "non-cash" transfers. Household size probably hasn't changed much in the past 3 decades, and I doubt it would play a large factor anyways. I don't see anything that could account for only a 10% increase in median wages and a current 350x multiplier on CEO wages over average worker pay than a gross injustice.
I'm not defending CEO pay (which isn't 350X average wages), I'm pointing out that worker productivity hasn't increased by the figures you claim and therefore any short changing to median income is far less than you are supposing.
I'm also pointing out that if you adjust for everything I listed median household income rose more than 10%. That's not to say the rise has been super-fantastic or even fair, just better than what you stated.
|
On March 11 2013 11:18 JonnyBNoHo wrote:
Over the long run? Please explain how that's supposed to work. Where's your income supposed to come from if not production?
In the long run, total income must equal total consumption. Every buyer must have a seller.
It's perfectly possible for someone to produce a bunch of stuff no one will buy. But if someone buys, whatever is being bought must have value. Or apparent value.
On March 11 2013 11:18 JonnyBNoHo wrote:
Yes PCE generally runs below CPI - which is "correct"? Which "should" we use?
I have no idea which index should be used: CPI, CPI-U-GS, or PCE. Given that BLS gives all three and probably a couple extra, I don't think anyone knows which number should be used. That said, all the indexes are concerned with the consumption part of that, as investments are turned into consumption on an ongoing basis.
Where are your productivity numbers coming from, incidentally? I'm getting a productivity increase from 100 -> >200 given initial indexing in 1970, per wiki. Indexing would remove inflation.
|
On March 11 2013 11:35 acker wrote:Show nested quote +On March 11 2013 11:18 JonnyBNoHo wrote:
Over the long run? Please explain how that's supposed to work. Where's your income supposed to come from if not production? In the long run, total income must equal total consumption. Every buyer must have a seller. It's perfectly possible for someone to produce a bunch of valueless stuff no one will buy. But if someone buys, whatever is being bought must have value. Or apparent value.
OK, we're on the same page here. Wouldn't that be the same as over the long run, production = consumption?
Maybe this is what my brain is having a hard time wrapping around (bear with me)...
If consumer prices are rising faster than producer prices, over a long period of time, than aren't producers are either missing out on a golden opportunity or unable to or they're posting some nice profit margins?
That is....
a) Producers are unaware that the discrepancy exists and so haven't exploited it.
b) Producers have exploited it, barred competition from reducing prices and are posting exceptional margins.
c) Producers are unable to exploit it (resources are unavailable).
Or is there something else I'm missing here?
Show nested quote +On March 11 2013 11:18 JonnyBNoHo wrote:
Yes PCE generally runs below CPI - which is "correct"? Which "should" we use? I have no idea which index should be used: CPI, CPI-U-GS, or PCE. Given that BLS gives all three and probably a couple extra, I don't think anyone knows which number should be used. Where are your productivity numbers coming from, incidentally? I'm getting a productivity increase from 100 -> >200 given initial indexing in 1970, per wiki. Indexing would remove inflation.
Eh, what my productivity numbers? I don't remember posting any...
Anyways, as a general statement I'll say that you are right that I shouldn't have casually thrown out this portion of the wage gap so casually. Though I do still see it as a different beast than labor's share of production and so next time I throw it out (likely next time I discuss the gap) I'll do so in a non-casual way 
|
On March 11 2013 11:35 acker wrote:
In the long run, total income must equal total consumption. Every buyer must have a seller.
are you sure about this? Wouldn't income only equal consumption if you weren't reinvesting income? Income only equals consumption if you aren't a capitalist. Right?
At first I thought this was Say's Law, but what you're saying is the opposite of Say's Law, I think.
(edit: wait, no, it IS Say's Law. I think what you're saying is "every seller must have a buyer". You're saying that if a seller makes money from something, that means somebody must have bought it and consumed it, and that means that income must equal consumption?)
(edit: gotta think about this some more and see if know what you're saying)
On March 11 2013 12:32 JonnyBNoHo wrote:
Wouldn't that be the same as over the long run, production = consumption?
This can't possibly be the case, otherwise you would never have any crisis. Some production will not have its value realized in consumption, leading to devaluation.
|
Cayman Islands24199 Posts
there is no crisis in a general equilibrium setup "longrun"
Wouldn't income only equal consumption if you weren't reinvesting income? that's a different equation.
|
so am I right that acker is using say's law to deny the possibility of a general glut?
|
Cayman Islands24199 Posts
i've no idea. i don't remmeber stuff that don't make sense.
i think acker is just saying that eventually all the income the supply side is from consumption. though this ignores interest over previous period savings and whatnot
|
On March 11 2013 12:32 JonnyBNoHo wrote:
OK, we're on the same page here. Wouldn't that be the same as over the long run, production = consumption?
Maybe this is what my brain is having a hard time wrapping around (bear with me)...
If consumer prices are rising faster than producer prices, over a long period of time, than aren't producers are either missing out on a golden opportunity or unable to or they're posting some nice profit margins?
That is....
a) Producers are unaware that the discrepancy exists and so haven't exploited it.
b) Producers have exploited it, barred competition from reducing prices and are posting exceptional margins.
c) Producers are unable to exploit it (resources are unavailable).
Or is there something else I'm missing here?
I don't think about it like that. Thing is, everyone produces stuff that nobody wants to buy, intentionally or not. However, it's only the stuff people want to buy that counts in economics. That's why it's consumption, not production, that matters.
Everyone else:
Yes, what I'm saying is one form of Say's Law (I think). No, that does not mean savings don't exist, demand-side recessions can't happen, or that fiscal and monetary policy do not matter in the short or medium run. The "long run" is when prices and wages and whatnot are perfectly flexible, not some arbitrary amount of time.
|
On March 11 2013 13:49 acker wrote:Show nested quote +On March 11 2013 12:32 JonnyBNoHo wrote:
OK, we're on the same page here. Wouldn't that be the same as over the long run, production = consumption?
Maybe this is what my brain is having a hard time wrapping around (bear with me)...
If consumer prices are rising faster than producer prices, over a long period of time, than aren't producers are either missing out on a golden opportunity or unable to or they're posting some nice profit margins?
That is....
a) Producers are unaware that the discrepancy exists and so haven't exploited it.
b) Producers have exploited it, barred competition from reducing prices and are posting exceptional margins.
c) Producers are unable to exploit it (resources are unavailable).
Or is there something else I'm missing here?
I don't think about it like that. Thing is, everyone produces stuff that nobody wants to buy, intentionally or not. However, it's only the stuff people want to buy that counts in economics. That's why it's consumption, not production, that matters.
Yes we can produce things that don't get consumed but you just don't count that as production. Production would be measured in terms of sales here. Conversely we can consume things that are produced overseas which would lower national income so $100 of imported consumption wouldn't lead to $100 of income domestically.
I'm interested in why a consumer inflation figure would differ over a long 40 year stretch from general inflation in the economy. I'm thinking imports / exports would play a key role in that. Otherwise, where did the money from that portion of the output gap go?
|
On March 11 2013 15:07 JonnyBNoHo wrote:
Yes we can produce things that don't get consumed but you just don't count that as production. Production would be measured in terms of sales here. Conversely we can consume things that are produced overseas which would lower national income so $100 of imported consumption wouldn't lead to $100 of income domestically.
That's the whole point why I think about consumption instead of production. Otherwise you have to represent production as a property of consumption anyways; sales are literally consumption.
Note the lack of the word "domestic" in my previous statements, I refer to total consumption. That said, the GDP calculation still works if you use the net of all US sales; using the net of all US production requires knowledge of the value of the stuff you're producing, which is the above sales issue.
On March 11 2013 15:07 JonnyBNoHo wrote:
I'm interested in why a consumer inflation figure would differ over a long 40 year stretch from general inflation in the economy. I'm thinking imports / exports would play a key role in that. Otherwise, where did the money from that portion of the output gap go?
I'd assume that the primary drivers behind the difference in consumption inflation and output inflation would be differential industrialization in developing/developed countries and Federal Reserve policy shifts in the late 1970s. However, I'd be very surprised if BLS has not written a paper on this topic breaking down the difference into its constituent elements.
|
On March 11 2013 04:24 sam!zdat wrote:Show nested quote +On March 10 2013 21:12 WhiteDog wrote:
but marxism is not really ideas, it is a set of institutions Maybe in France... I'm not really sure what you're saying other than "In France, which wasn't very influenced by the Frankfurt School, Marxism is stultifyingly doctrinaire, so therefore Marxism is, in-itself, stultifyingly doctrinaire"... In America, "Marxism" is pretty much synonymous with "Frankfurt School." (edit: that is, of course, when it isn't synonymous with "Stalinism") edit: I think that any Marxism that is a set of "institutions, not ideas " isn't worthy of the name. I think the necessity of perpetual reinterpretation and "permanent revolution" is inextricable from the Marxist way of thinking about the world. It's not my fault if French Marxists have got the wrong idea about things. I think this is why Laclau and Mouffe talk about the strangling effects of Leninism on the Marxist tradition - am I right that your French orthodox Marxists are Leninists? I am not a Leninist. edit: and I have to say, I think Foucault is more of a Marxist than he really wants to admit.
That's because the US never had any marxism to begin with. Your country is deeply different for various reasons. It's actually quite interesting, but when you watch the history of social movement in the US, far left was represented through some various local actions with deep connections and influences from "utopist socialist" - Fourrierist who were heavily present in the New York Times for exemple, and Owens had his own little experiments here and there in America. You cannot really understand that marxism really refer to "The Party" for europeans (it will certainly evolve through, as I might belong to the last generation that grown up with a strong Communist Party in France, and I'm pretty sure it's the same in Italy and some other european countries).
I have a deep connection to marxism myself because I consider that the class struggle is the number one rule to understand approx 99% of what we consider as politics (correct me if I'm wrong, but I feel it's the same for most people who are attached to marxism in any shape of form). This is actually the sole reason why I feel way more interested in your "Occupy Wallstreet" (1% versus 99% is like a fashionned way to refer to class struggle) than in our "Indignados - Indignés - Indignated" movement who feels pretty empty as political movements since they seems to refute the simple ideas that our society is filled with conflictual interests - like the only problem we have is a problem of negociation, discussion, or economical planification.
On March 11 2013 15:07 JonnyBNoHo wrote:Show nested quote +On March 11 2013 13:49 acker wrote:On March 11 2013 12:32 JonnyBNoHo wrote:
OK, we're on the same page here. Wouldn't that be the same as over the long run, production = consumption?
Maybe this is what my brain is having a hard time wrapping around (bear with me)...
If consumer prices are rising faster than producer prices, over a long period of time, than aren't producers are either missing out on a golden opportunity or unable to or they're posting some nice profit margins?
That is....
a) Producers are unaware that the discrepancy exists and so haven't exploited it.
b) Producers have exploited it, barred competition from reducing prices and are posting exceptional margins.
c) Producers are unable to exploit it (resources are unavailable).
Or is there something else I'm missing here?
I don't think about it like that. Thing is, everyone produces stuff that nobody wants to buy, intentionally or not. However, it's only the stuff people want to buy that counts in economics. That's why it's consumption, not production, that matters. Yes we can produce things that don't get consumed but you just don't count that as production. Production would be measured in terms of sales here. Conversely we can consume things that are produced overseas which would lower national income so $100 of imported consumption wouldn't lead to $100 of income domestically. I'm interested in why a consumer inflation figure would differ over a long 40 year stretch from general inflation in the economy. I'm thinking imports / exports would play a key role in that. Otherwise, where did the money from that portion of the output gap go?
Things that don't get consumed can be counted as production actually. For exemple, in the GDP, stocks are accounted through taxes, since companies pays taxes on those stocks.
|
|
|
|
|
|
EPT![[image loading]](https://dl.dropbox.com/u/72070179/Labor%20GDP%20Deflator.PNG)
![[image loading]](https://dl.dropbox.com/u/72070179/Deflators.PNG)
