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"Although today high levels of inequality in the United States remain a pressing concern for a large swath of the population, monetary policy and credit expansion are rarely mentioned as a likely source of rising wealth and income inequality. [...]
The rise in income inequality over the past 30 years has to a significant extent been the product of monetary policies fueling a series of asset price bubbles. Whenever the market booms, the share of income going to those at the very top increases.[...]
[F]inancial institutions benefit disproportionately from money creation, since they can purchase more goods, services, and assets for still relatively low prices. This conclusion is backed by numerous empirical illustrations. For instance, the financial sector contributed massively to the growth of billionaire's wealth"
Source: https://mises.org/library/how-central-banking-increased-inequality
I'll leave my comments as comments, but note that The Mises Institute is proudly, one might say almost by definition, Austrian School. Both the Institute and the School have had their fair share of criticism. Which of course doesn't mean that individual author is wrong on this particular matter. -- Ed.(FP)
(Score: 4, Insightful) by fustakrakich on Tuesday August 22 2017, @02:00PM (47 children)
We know that "trickle down" is hogwash, yet it is allowed to continue on the false premise that we all benefit from appeasing the monarchy (financial industry), when in fact we don't even get the leftover crumbs.
La politica e i criminali sono la stessa cosa..
(Score: 1, Informative) by Anonymous Coward on Tuesday August 22 2017, @02:16PM (7 children)
No, trickle down works; they just got one detail wrong. It's not the money that trickles down, it is the cost.
(Score: 5, Insightful) by Runaway1956 on Tuesday August 22 2017, @02:19PM (6 children)
It's not the money that trickles down, it is the rich people pissing on the rest of us.
FTFY
(Score: 5, Insightful) by c0lo on Tuesday August 22 2017, @02:29PM (2 children)
Based on the volume of flow, one can't call it a trickle.
https://www.youtube.com/watch?v=aoFiw2jMy-0 https://soylentnews.org/~MichaelDavidCrawford
(Score: 3, Funny) by Thexalon on Tuesday August 22 2017, @06:46PM (1 child)
That's why I usually refer to it as "tinkle-down economics".
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 2) by arslan on Wednesday August 23 2017, @03:44AM
Golden monsoon economics?
(Score: 0) by Anonymous Coward on Tuesday August 22 2017, @02:51PM (2 children)
Wait a second! That isn't RAIN!
(Score: 2) by Runaway1956 on Tuesday August 22 2017, @03:00PM (1 child)
I suppose that in some rare circumstances, rain drops might be yellow. But, look carefully. Is it yellow tinged? It probably ain't rain.
(Score: 2) by takyon on Tuesday August 22 2017, @09:29PM
https://www.youtube.com/watch?v=e0QhxF4OmhQ [youtube.com]
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 2) by FatPhil on Tuesday August 22 2017, @02:58PM
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 2) by TheRaven on Tuesday August 22 2017, @03:35PM
sudo mod me up
(Score: 2) by PiMuNu on Tuesday August 22 2017, @04:11PM
> monarchy (financial industry)
oligarchy
(Score: 3, Funny) by The Mighty Buzzard on Tuesday August 22 2017, @05:08PM (17 children)
Stating opinion as fact again?
My rights don't end where your fear begins.
(Score: 5, Informative) by https on Tuesday August 22 2017, @06:39PM
How about the IMF? https://www.imf.org/external/pubs/ft/sdn/2015/sdn1513.pdf [imf.org]
"The benefits do not trickle down." [quote from Executive Summary].
Or maybe you think the IMF has too much power to be impartial, to look at things from a cool and academic perspective. Maybe Stanford University [stanford.edu]? The only people whose incomes have been rising since trickle-down became a thing has been the top 20% [stanford.edu]. (figure 2, page 2) It ain't coming down to the rest of y'all.
These aren't opinions you're complaining about, they're observations. Sorry if reality conflicts with your belief systems.
Offended and laughing about it.
(Score: 1) by fustakrakich on Tuesday August 22 2017, @07:04PM (15 children)
It is fact. I watched what happened when it went full throttle. I mean, sure there were benefits, all going one direction, to the people that implemented it and their specific benefactors and 'contributors', but it's entirely bogus. The spoils aren't shared, they are hoarded. It's not a thing really. It's a perfectly natural, so arguing about it is silly.
La politica e i criminali sono la stessa cosa..
(Score: 2) by The Mighty Buzzard on Tuesday August 22 2017, @07:43PM (13 children)
Strange, it took my family from eating government cheese to driving fancy cars and living in nice houses for most of a decade.
My rights don't end where your fear begins.
(Score: 0) by Anonymous Coward on Wednesday August 23 2017, @12:23AM (11 children)
Empires always need a percentage of well off citizens, gives everyone hope, makes it easier to divide society. There are only so many high paying jobs, bootstrapping is a myth. But I wouldn't expect your narrow minded viewpoint to understand.
(Score: 1) by khallow on Wednesday August 23 2017, @05:58AM (7 children)
Wow, that's pretty clueless. The automobile industry was not the bicycle or wagon industry repurposed to make cars. It came from nothing. The modern computer and high tech industries came from almost as little.
Don't care can look a lot like don't understand to the ignorant.
(Score: 2) by urza9814 on Wednesday August 23 2017, @12:13PM (5 children)
That's just outright bullshit. It wasn't the *same* industry, but it certainly replaced most of it. There were a hell of a lot more wagons being sold before the automobile was invented. There were a hell of a lot more jobs as secretaries or computers before the digital computing industry took off. Displacing one industry with another does not magically create a larger employment pool.
(Score: 1) by khallow on Wednesday August 23 2017, @01:24PM (4 children)
Bootstrapping isn't about creating multiple independent industries that don't compete with each other, though that can happen as with the case of some of the web services created in the past two decades (though these do often compete with existence services). It's about creating iteratively more and more complex systems and infrastructure from what came before. Automobiles in the beginning did rely on technology knowledge and infrastructure derived from the construction of wagons and bicycles and it eventually replaced much of these older technologies as a mode of transportation.
But the bootstrapping effect is in the creation of infrastructure capable of building tens of millions of cars per year today from a collection of workshops in specific locations (such as Detroit or the Ruhr) capable of building thousands of wagons per year in the distant past not in the non-replacement of older technologies.
It's worth noting here that secretaries and human computers simply couldn't be anything resembling a modern website. They can't iteratively design better secretaries and such. They can't react fast enough.
I agree. Creation of more and better jobs is the end result even in a lot of places with high regulation of labor, but it doesn't have to be that way. There are a number of countries, such as Greece, Venezuela, and North Korea, that are finding out that you need more.
My take is that somewhere around half the world's population is currently engaged in labor that is directly connected to our global trade network. That wouldn't have happened without massive job creation from technology development. But some countries are faring much better at this process than others. China, for example, fares better than India, even though the latter has a natural advantage with the widespread use of English, the current lingua franca, not being in economic isolation till 1989, and a head start back in the 1950s and 60s on wealth, technology, and infrastructure from being in peace for a long time before independence. Yet now, China is the powerhouse and India is playing catch up.
As a final note, in this thread, one side spins vague fairy tales about how bad things are, while the other side points out real life counterexamples. Sure, maybe some day all this technology will replace us. But it hasn't happened yet. And I can't take seriously people who don't even know what's going on in the world like the AC I replied to earlier. How can that AC make any useful observations when they get basic principles so wrong?
(Score: 2) by urza9814 on Wednesday August 23 2017, @04:41PM (3 children)
I'm not arguing that these advances don't create jobs; I'm merely saying that, as the AC said, there IS a limited number of high paying jobs. And that's provable with nothing more than basic logic -- if *everyone* has a high paying job, then it's not high paying anymore, because "high paying" is a relative measure. No amount of hard work and intelligence can change that. Nor can creating new industries. Nor can technological advances and automation. Not everyone can "pull themselves up by their bootstraps" -- even the ones lucky enough to have boots can't all do it unless we're going to break the laws of mathematics.
(Score: 1) by khallow on Thursday August 24 2017, @12:13AM (2 children)
Then what's the point of the argument? It's just circular reasoning.
Bootstrapping doesn't mean high paying (in the relative sense) jobs. A serious hole in your argument is that you don't give a reason why "high paying" jobs are at all relevant. It's certainly not relevant to bootstrapping.
No offense, but it sounds to me like the argument is a) circularly arguing that not everyone can have a "high paying" job with the implicit connotative assumption that "low paying" jobs are bad, b) then leaping to the assumption that having a "high paying" job is necessary for economic bootstrapping. This leads to conclusion c) that there's a lot of people who can't bootstrap because being on the lower end of the wage scale (no matter how high that low end turns out to be) somehow precludes that. I think that is all bunk.
(Score: 2) by urza9814 on Thursday August 24 2017, @01:39PM (1 child)
Huh? This conversation started with you asserting that the claim that there's a limited number of high paying jobs is "pretty clueless", that's what I was responding to...
(Score: 1) by khallow on Thursday August 24 2017, @09:36PM
Well, that's because I think "high paying job" should mean something useful, like say a job that pays well in excess of what you need to get by. Using that definition, it is quite possible for most or all jobs to be high paying and similarly, it possible for most or all jobs to not be high paying. Thus, you have a distinction of relevance.
(Score: 1) by fustakrakich on Wednesday August 23 2017, @02:22PM
The automobile industry was not the bicycle or wagon industry repurposed to make cars. It came from nothing. The modern computer and high tech industries came from almost as little.
:-) *golf clap* [wikimedia.org].
One minor correction, it was the airplane industry that arose from the bicycle company, and fat government contracts.
La politica e i criminali sono la stessa cosa..
(Score: 2) by The Mighty Buzzard on Wednesday August 23 2017, @12:33PM (1 child)
My father did it. I did it. Some of my brothers have done it. I fail to see how you have disproven what I have directly experienced and witnessed. Mostly I see the mediocre who refuse to learn anything of value to an employer being paid like exactly what they are.
My rights don't end where your fear begins.
(Score: 1) by khallow on Wednesday August 23 2017, @01:34PM
(Score: 0) by Anonymous Coward on Wednesday August 30 2017, @02:52PM
All economists bootstrap to calculate non-parametrically the standard errors in hypothesis testing.
- Just an economist geeking out...
(Score: 1) by fustakrakich on Wednesday August 23 2017, @12:50AM
Oh, man... You're not gonna go all anecdotal on me, are ya?
La politica e i criminali sono la stessa cosa..
(Score: 1) by khallow on Wednesday August 23 2017, @06:09AM
My sharing agreement with my employer is working fine for me. Maybe you're just doing it wrong?
As to the Reagan era, I think a lot of people are forgetting just how messed up the 1970s were economically for the US. By the mid 1980s, Japan was looking to overtake the US. That lead, for example, to a bunch of bad science fiction which is interesting now mostly for reflecting the fears of the US at the time. But in the stretch from 1980 to 2000, we saw a remarkable improvement in the US economy which in turn led to decent improvements for the US citizen. That all started with trickle down and a variety of policies for reversing some of the bureaucratic and political excesses of the previous decade.
(Score: 1, Funny) by Anonymous Coward on Tuesday August 22 2017, @09:16PM
That wasn't REAL "trickle down." REAL "trickle down" has never really been tried!
(Score: 3, Insightful) by JoeMerchant on Wednesday August 23 2017, @01:36AM (16 children)
We don't get the crumbs, we bake the bread, we even get a slice of every loaf for our labor. The other 19 slices of course go to others more deserving of remuneration due to their position of ownership, risk of their capital, etc. etc.
🌻🌻 [google.com]
(Score: 0) by Anonymous Coward on Wednesday August 23 2017, @07:05AM (1 child)
Actually for every loaf of labour, the govenment takes a part, directly in income taxes. Indirectly they take some more because the taxes that employers pay mean that employees are competing with government for the rest of the loaf. And the government has the IRS and men with guns.
Eventually when you want to spend it the governments takes sales tax. Oh and you have to pay property taxes. Oh and everything you buy the business selling has to pay taxes on, so they charge you more.
I guess the government walks away with most of the loaf. But sure, blame business. It is much easier to go work for somebody else, who pays better, or start your own company, but you have to immigrate to get a different government.
(Score: 3, Insightful) by JoeMerchant on Thursday August 24 2017, @01:11AM
Yes, after I bake 20 loaves for the company I get a loaf of my own, and I (at my level of income) give 2 slices to the government in taxes.
I feel like I get a lot more for those 2 slices than I do for the 19 loaves that the company invests in other places than my personal discretionary fund.
🌻🌻 [google.com]
(Score: 1) by khallow on Wednesday August 23 2017, @01:45PM (13 children)
So what industry is this where labor gets only 1 part of the profit while the owners get 19 parts? It certainly isn't any sector of industry or commerce I've heard of in the developed world.
(Score: 2) by JoeMerchant on Thursday August 24 2017, @12:36AM (12 children)
Let's talk about my most recent project, R&D morphed an existing product onto a new hardware platform, less than a year of development, and now it has transitioned into sales gathering millions per month in profit (above and beyond the cost of production which includes all the sales and production workers' income).
We, as R&D, baked that bread, put together all the documentation and instruction required to bring it to market, a team of ~15 people working for ~ a year, we received approximately $1.5M in collective income for our efforts, and received shiny stars of appreciation for a job well done. 24 months later, the new product has pulled over $30M of gross income for the company, and is on a growth curve projected to reach several hundred million over the lifetime of the product.
There are other worker bees who do the sales, man the production lines, etc. but, when you shake it all out, labor accounts for less than 5% of the income the corporation is getting. The company is "growing income" by ~10% per year, but they do this by rolling up those profits and buying promising young startup companies that can repeat the pattern. The internal processes of the big company are too conservative to break into new markets, they simply protect their high profit margins (if cost of goods is >20%, we're strongly encouraged to engineer that down), and then re-invest those profits into early-stage growing companies that have taken the risk and demonstrated viable new markets. Something over half of the "bread we bake" ends up in the pockets of the investors in the startup companies while we use those acquisitions to fuel continued growth - all while maintaining a net positive cash-flow.
It's very impressive, and depressing, all at the same time.
🌻🌻 [google.com]
(Score: 1) by khallow on Thursday August 24 2017, @03:38AM (11 children)
So right there, that's 5% just from your small group and you indicate that there's a lot more employees out there than just your group. Not looking like 5% to me!
Moving on, this is the new 100 acres. If we are to take your statements at face value (and assume that your R&D group contributed as much as you claim it did), a business has generated a vast amount of value with a modest initial investment of $1.5 million. I guess things look different when you're the tenant farmer rather than the owner of the 100 acres.
I find your cognitive dissonance interesting. It's clear that you think there's something wrong with society that it doesn't continue to support the 100 acres business plan. But in your example, we see that it does and the return on the investment is quite ample. Now, I don't know how much you desire this scheme, but it seems to me that if you're attached to the model, maybe you should figure out how to do it in today's modern world, rather than complain that old tricks no longer work in a changing world.
(Score: 2) by JoeMerchant on Thursday August 24 2017, @11:42PM (10 children)
If this is the new 100 acres, you're putting it up well above my estimate of 2.5M - into the range of tens to hundreds of Billions.
And what does this mega-capitalized model do with their vast profits? Mostly spend them on new acquisitions which translate to paydays for investors who place large long odds bets. I've worked for a series of these "startups" which the system expect to fail 95+% of the time, in my experience 1 limped along acting not entirely startup-like for 10 years, unable to compete due to lack of capital and unable to attract investment capital without switching to a high risk business plan. Then I spent ~3 years with a very atypical 100M/yr "organic growth" company that only got where they were by attracting a CEO/investor who had personal use for the company's product. Then a series of 5 "high risk" businesses, none of which provided any long term (>2 years) stability for any employees - I don't mind changing jobs, but I do mind having to change towns to get the next job, or spending my life in airports commuting to the work. The last startup I chose got the "golden ring" $100M buyout for the investors who had only put about $10M of seed money into _this_ venture, but easily $90M more into other ventures that hadn't done well - so, now I'm on the other side of the looking glass - in the big acquisition machine.
It feels like the Japanese real-estate bubble, these company valuations are large multiples of projected earnings up to a decade out, and for what? The idea that seems to have gotten traction, lucked it's way past the regulatory minefield and into a decent reimbursement structure.
I find your cognitive dissonance to be a strong tell of Scott Adams fandom. I enjoy _most_ of his humor, but his disconnect from reality has gotten very profound in the last 5 or so years.
What I think is wrong with society is that, while I'm just barely on the comfortable side of the wealth divide, the gap is growing at a crazy pace. Prices I learned growing up in the 1970s have mostly inflated 10x, as has my income, meanwhile the bottom end of the income scale (virtually anyone below me on the job-value ladder) has only grown maybe 3-4x, it's pretty sad for the majority of the population.
🌻🌻 [google.com]
(Score: 1) by khallow on Friday August 25 2017, @01:36AM (5 children)
1.5 million is below 2.5 million and certainly well below tens to hundreds of billions.
(Score: 2) by JoeMerchant on Friday August 25 2017, @02:32AM (4 children)
That 1.5 million is useless in a vacuum, it was a development on existing intellectual property in the context of a system churning billions per year of product sales.
It "takes money to make money" always has, but back in the 100 acres days the amount of "honest work" required to bootstrap up into that realm where you can make money was achievable in a relatively short period - say 10 years of hard work and frugal living. Today it requires multiple lifetimes, or a privileged starting point, or a great deal of good luck along the way. Some people win the lottery, I hear someone won $700M+ recently, but it's not something you can plan your life around - and the odds of business success when starting without a significant stake are getting bad enough to start to feel like hoping for a lottery win. In your "golden years" of the 1960s-80s, $100K or so would buy a franchise on a business that had a high chance of success - the prices are going up and the odds are going down.
The fact that with a multi-billion dollar infrastructure you can turn 1.5M of investment per year into an income stream that nets 100s of millions over a decade is indicative to me that the playing field is too slanted. As you say, it seems like imaginary / insane profit, but I assure you it's real, it's how it's done on this side of the looking glass, and it's how the pointy haired bosses, Wallys and Teds of the world not only survive, but thrive in their crazy niches.
🌻🌻 [google.com]
(Score: 1) by khallow on Friday August 25 2017, @07:37AM (3 children)
So... in other words, your story was bullshit because you deliberately neglected to mention this system and its costs when discussing your contribution to the business's profits. It wasn't 1.5 million dollars made potentially hundreds of millions of dollars. It was 1.5 million dollars, plus the enormous existing labor costs of the business made possible a significant amount of additional income. At this point, I no longer buy your argument that labor costs were a mere 5% of the overall profit of the add on.
You just can't let go of that exploitative scheme. The world doesn't have an obligation to preserve your business model.
Even in December, 1980, $100k would be $280k in today's dollars. Still enough to start businesses. And the 1970s weren't "golden years".
(Score: 2) by JoeMerchant on Friday August 25 2017, @11:29AM (2 children)
Not bullshit, the infrastructure of billions is a sunk cost, existing machine - I work inside that machine and it makes 19x much profit as it shares with me - as you say: I'm the human capital, without me (or an equivalent replacement) it doesn't happen. It's like saying a couple of guys on the deck of an aircraft carrier can sink a fleet of PT boats - absolutely true. And we're letting analogous aircraft carrier groups roam our business arena preying competitively on the small business players.
Sharecropping was certainly an exploitative scheme, but far less exploitative than what's going on today.
Depends on who you ask about the 1970s, people holding real-estate were very happy when their net-worth tripled.
🌻🌻 [google.com]
(Score: 1) by khallow on Friday August 25 2017, @08:19PM (1 child)
No, it's also recurring costs as well. They have to maintain and use that infrastructure. Let us keep in mind this is like claiming that a grocery is making enormous profit off an employee's activities just because the employee as a part of their work stocked up some snacks at the front counters (which are much higher profit spaces than general store placement). Just because there are a few high profit parts doesn't mean that the whole enterprise is similarly high profit.
You've already given a fair number of indications that this statement is false.
(Score: 2) by JoeMerchant on Friday August 25 2017, @11:42PM
You've already guessed that the 19x statement is false a number of times, with even less information to base your guesses on than I have.
Maintaining an infrastructure of intellectual property is largely about retaining the human capital that understands how to exploit it. As I have already stated, labor costs are far less than 5% of gross income. Cost of goods runs in the 15-20% range, and there's some rent to pay. A significant spend is on travel, most employees who travel regularly cost the company more in travel than they are paid in salary. That travel is to some degree necessary to maintain the relationships that keep the sales rolling. But, what's really driving the machine is the ability to sell large quantities of both capital product at ~80% profit margins, and 3-4x that volume (in dollars) in associated disposables at profit margins closer to 95%.
The competition in sales and twisted reimbursement structures make this equipment fabulously expensive, and yet people continue to pay for it, almost entirely via insurance. The whole system could be deflated to 10% of its costs and still deliver the same products and services, but without highly competitive sales forces and fabulously expensive acquisitions driving overall business growth. And we can't have that - must maintain the expected growth rates to keep the shareholders happy - so the machine continues to suck out over 10x more money from the customers than it needs to to simply comply with regulations and deliver safe and effective products to the users.
Pays the mortgage, and funds the 401(k) - I'm not quitting out of disgust with the system, but I do recognize the Koyaanisqatsi - esque nature of it all.
🌻🌻 [google.com]
(Score: 1) by khallow on Friday August 25 2017, @07:17AM (3 children)
What evidence exists for this? I grant that there is wealth inequality and it has appeared to grow somewhat over the past 40 years. But there is no "crazy pace" to it. For example, we have a Pew Study [reason.com] that shows by their measure, the Middle Class shrinking from 61% in 1971 to 50% in 2015. Roughly, 20% shrinkage in 44 years. That's your "crazy pace". Even worse for your narrative, the upper classes grew more than the lower ones as a fraction of total population. So two thirds of the fraction that were no longer middle class were now upper class.
It seems to me that getting basic facts about the economy wrong would be more of an indication of suffering from a disconnect from reality.
(Score: 2) by JoeMerchant on Friday August 25 2017, @05:41PM (2 children)
Facts are largely where you find them. If you want to be told that things are getting better (whatever your measure of better may be), there are always groups who will tell you that.
🌻🌻 [google.com]
(Score: 1) by khallow on Friday August 25 2017, @08:10PM (1 child)
The Pew Study is interesting because they spun it as negatively as they could, that is, the middle class was shrinking and income inequality was increasing.
Sounds like good advice. Perhaps you ought to listen to it.
(Score: 2) by JoeMerchant on Friday August 25 2017, @11:28PM
How many levels of spin are at play?
The recent "pepper spray canister return, rubber bullet to the crotch" news clip seemed like it was being spun up as a big deal to listen to the airtime, etc. Then "astute observers" point out that there are only a few protesters in the shot, and this is "proof" that the news is blowing up the story to be bigger than it is. However, it was a tight cropped shot, the better to see the protester crumple to the ground when shot, police who were obviously present weren't even shown. So, is this shot "video proof" that we have a small band of protesters making big news, or are there hundreds, or even thousands, out of frame? You can't know what you can't know - if you don't have other sources there's just not enough information being provided to know which way this story is being spun - and "observer reports" of crowd size are notoriously inaccurate - in either direction, usually toward the preference of the reporter.
🌻🌻 [google.com]