I feel like this is an appropriate time to link to the story of Manna.
In short, it will require a major societal shift to take use of the new technology gains we have.
Two pieces of data seem to indicate that the poor aren’t getting richer:
Minimum wage has pretty much sucked since the early 80s:
http://oregonstate.edu/cla/polisci/sites/default/files/faculty-research/sahr/inflation-conversion/pdf/minimum-wage_1938-2013.pdf
Three years of 11+% percentage of families under poverty level, worst since the early 90s (Table B3):
http://oregonstate.edu/cla/polisci/sites/default/files/faculty-research/sahr/inflation-conversion/pdf/minimum-wage_1938-2013.pdf
Unless they worked for free how is it that they got none?
One thing you absolutely have to consider when looking at lifestyle improvements is the role of online living.
The richest person in the world may have slightly better internet access than the average person, but it probably doesn’t make much difference. Bill Gates’ online experience is not markedly different than yours or mine.
As we spend more of our lives online, this has a great lifestyle leveling effect. It’s very egalitarian even down to class differences. There are people who live in multi-million dollar homes protected by security gates and armed guards, but online they’re just another person who communicates with everyone else. I’ve chatted with movie stars and famous writers online whereas in the brick and mortar world we remain separated by class - and physical barriers.
This is a trend that is accelerating. As people turn to the online world for their social interaction and recreation, their need for physical goods diminishes. People are moving into smaller homes, they’re traveling less, and they’re less likely to desire expensive consumer goods.
I can see this trend in myself. When we bought our current house 10 years ago, I had certain physical requirements that mattered to me - I wanted to design and build my own home theater, I wanted a hobby room for building projects, and I wanted a space big enough for a pool table. That dictated a house of a certain size. But if I was making the same choice today, I would choose something much smaller. My prime requirement now is a decent home office where I have a comfortable space for computing. I could see myself retiring into a small 800 sq ft apartment and being totally happy with that, so long as I have a good internet connection.
This trend is going to accelerate. My opinion is that we’re on the verge of true artificial reality. There is a convergence of technologies just coming into the market now that are going to transform the way we live, work, and play. Headsets like the Oculus Rift, sensing technologies like Microsoft’s Kinect, small display and sensor technology coming out of the cell phone industry - all of this is combining into something really great.
So what does it do to class and wealth divisions when even the poorest people in America can own VR gear that gives them experiences just as good as what the wealthy can experience, when we’re spending maybe 60%-80% of our lives in that environment?
As a related issue - looking at wealth merely in terms of dollars is not really accurate any more. You also have to look at the variety and quality of goods that are available for those dollars. Today, an entry-level car has features that only high-end cars had a decade ago. Computer power has grown in importance, and the difference in performance between the best computers available to the rich and the cheapest ones available to the poor is just not that great - rich people and poor both use iPads and iPhones, after all. There are no uber-iPads that provide orders of magnitude better experiences for the wealthy.
Likewise, poor people may have had a TV 20 years ago, and still may have one now. But the TV of 20 years ago was likely a 20 inch tube TV that got a handful of channels. Today the same money will get you a 50" LCD or plasma display. Or if you want to go crazy, the same money will get you a projector that will give you almost the same home theater experience as what a rich guy will get in his $100,000 home theater.
So once you look past absolute income levels, you see a lot of convergent trends between the rich and the poor.
This started about 25 years ago for many workers. Money that used to go into salary increases instead went into bonuses. Assuming some nominal expectation of a bonus, bad times which resulted in smaller or no bonuses did create an effective cut in salary.
Except that lower paid workers who often do not have a lot of resources get laid off in this situation - which represents risk in my book. They also don’t have the luxury of controlling the level of risk they accept, since no place they can work is really safe these days. Unlike the investor, they are unable to diversify their income stream, and thus face greater risk. Of course really stupid investors can lose it all, but they are stupid.
I doubt many managers are allowed to twiddle with layout. But often workers do contribute to productivity. Back when I started secretaries could type and file. Today admins need significant computer skills.
Of course they are far more productive, and some of that is from the company investing in automation and some of that comes from their ability to handle this automation. Shouldn’t they get a cut of that?
Actually a painter working in an area of rapidly rising home prices is likely to be able to raise his rates since there will be more homes on the market and thus more demand.
As for all the people, surely there will be some workers who contribute almost nothing to productivity, but there will also be some who make very effective use of new tools and contribute more than their share. In an ideal world they will get big raises and the guy who does nothing will get a small raise, but in our existing world neither will be getting much. So, averages across everyone is about the only way we can look at this without falling into extreme anecdote-itis.
The people who invented, build, trained for and implemented those devices did not see much/any economic gains anymore than the people who used them. Most of the wealth gains have gone to the top 5% and the top 1%. You need scientists, engineers, inventors and middle managers to make those things happens. By and large those people have been left behind in the new economy too.
And there were a lot of technology and productivity increases pre-1973, and those led to higher standards of living for the bottom 90%, so why should post-1973 technology gains be different in how they affect the economy and the people in it? These debates always end up the same.
During the same time period of the last few decades health care costs have doubled every 7-10 years while more of the cost fell on employees. At the same time the need for higher education went up while higher education costs also grew at roughly the same rate (maybe 5-7% a year, doubling every 10-15 years). Plus fuel costs are much higher. Real estate was higher, but post bubble I don’t know how it compares to a few decades ago.
Plus people today are expected to fund more of their retirement. Pensions are gone, replaced with matching 401ks. Those are not as common either, now you just have 401ks with no match in more and more places.
Plus regressive taxes have gone up and up (while progressive taxes like income, corporate, dividend, capital gains, estate, etc have gone down). The sales tax, sin tax, payroll tax, etc have all gone up. Corporate profits and income for the top 1% are skyrocketing while their tax rates are cut.
Add in the rise of permatemp work without benefits, and that extra $5000 isn’t nearly as impressive when you factor in that many people today have much higher expenses than in the past.
So our sense of security and standard of living is going down for many people.
The central part of your argument that I have a problem with is the fact that you live in Canada. In Canada they have a functioning health care system, affordable higher education and income inequality has not grown. The gini coefficient of Canada is 0.324 after taxes and transfers, roughly what it was decades ago. US inequality has grown while Canadian inequality has really not.
I don’t even know what your retirement situation in (your = Canada’s) but I assume it is more humane and egalitarian than what we have in the US.
A 50" LCD TV is small consolation when you can’t afford to see a doctor, fund your retirement or go to school. As a Canadian, you don’t have to worry about those things. Those of us in the US do. For many of us those are the issues. Consumer goods are cheaper and better, no argument there. But the truly important things (job security, vocations that offer a living wage, affordable housing, accessible health care, affordable education, comfortable retirement) are becoming less and less common here in the US.
I don’t know tons about your tertiary educational system, but I thought it was only 3-5k a year in tuition for a 4 year degree.
Oh, how did we ever survive! 20, or even 30, years ago our TVs were fine. We had an explosion in channels with the move from VHF to UHF before, and we had more of an explosion with the advent of VCRs. For almost nothing you could rent as many movies as you had time to see. And for many of us we had more time, since we did not have Internet at home and thus didn’t more or less have to check our mail in the middle of the night.
TVs had this advantage over computers of not being obsolete after two or three years.
That is a “let them eat cake” statement. People at the bottom of the income distribution don’t feel better because they have a computer or even a big tv. I suspect they spend more time worrying about food and rent. They spend more time worrying about getting sick and going bankrupt. They spend more time worrying about finding a job after being unemployed for a year. They spend more time worrying about unemployment benefits running out. And they spend more time worrying about Republican scumbags cutting food stamp benefits.
The “everything is fine because they have TVs” argument you guys always trot out makes me sick.
They keep forgetting the “bread” part of “bread and circuses”…
Just to be clear, this is exactly what happens in the real world right now.
Yes, and a worker in an area with rapidly increasing opportunites is likely to be able to command a better salary. But it’s still a salary and is entirely different from the post I was responding to which implied that workers should be entitled to some % of the profits. Ant that’s not even to mention the fact that sometimes the “profit” is negative, and then the workers are not going to be so excited about their share (of the loss). My question to that poster is whether he is willing to put his money where his mouth is when it comes to his own financial transaction wrt to the people he employs. Or, is he just another evil capitalist exploiting the labor of the oppressed.
I don’t know what an “ideal world” is. I only know what the world that we actually live in is like.
That was not my argument and you know it. It’s not just that poor people have TV’s - it’s that the quality of almost everything they have has improved, but those improvements don’t show up in poverty statistics. Moreover, those improvements are ‘progressive’ in that they matter to poor people far more than rich people. Rich people could have cars with advanced safety and comfort features a long time ago, so the availability of these features in lower end cars means nothing to them, but it means a lot to poor people.
The larger point is that we are spending more and more of our lives online, and the online world is far more egalitarian than the brick and mortar world. This is important and is not at all similar to ‘let them eat cake’ or ‘hey, they have a TV too’. The online world is enabling work-at-a-distance, it’s allowing people with poor transportation options to shop online, it’s providing education to people who otherwise couldn’t afford it, and it’s providing a whole new world of entertainment and social options that do not require much in the way of wealth to enjoy at an equal level.
These are important trends. They are in fact critical trends for poor people stuck in inner cities or out in Appalachia where they simply don’t have access to ‘real world’ items you and I might take for granted.
University has priced itself out of reach of the very poor - but not online. We’re rapidly reaching a point where you will be able to get accredited quality education for very little money from online sources. Inner city kids trapped in lousy schools can go online and find all sorts of free educational resources to help them learn at the pace of wealthier people.
The virtual world also gives people access to art that only the rich could experience in the past. It’s giving them access to the world. New technologies like real VR will give them experiences that even the rich don’t have today.
The only reason you want to reject these trends with a sneer and a comparison to ‘let them eat cake’ or simplify the argument down to "they should be happy they have a television’ is because it doesn’t fit the narrative of the poor getting poorer while the rich take all the goodies. This is a growing segment of our lives, and it’s pretty damned egalitarian.
Research has shown that happiness does not depend on absolutes, but on comparison to others. One example.
You assume that poor people buy new cars. A ten year old beater might be better and safer than a 20 year old beater, but I don’t think that is going to affect a guy pulled up to a new Lexus much. Because they see the new features in the new car.
I see. In other words, on the internet nobody knows you live in a hovel. Except you.
Work at a distance? How many of the service jobs the poor do can be done at a distance? Shop on line? Sure, if they can afford anything. And if they have a credit card. Education? Don’t make me laugh. Going to school is tough, going to school while working is tougher, and going to school while working without much of a background is way tougher. Sure some will do it, but I’d rather restore decent funding to community colleges which give the training they need and some support. Or do you think that the average minimum wage worker who went to a crappy high school is going to get a lot out of on-line MIT and Harvard classes?
4 year colleges, but not 2 year colleges, which are still fairly cheap, but can be cheaper. A smart high school student in a lousy school can find plenty of resources now - I trust you have some cites about how this has helped.
So did TV.
No, it is because having access to the internet doesn’t really make up for not enough food and rats running through your little apartment.
Is your next step going to be saying it is all their fault because they have this great internet, just like rich people, but don’t use it to get a degree? Because teaching is not the same as throwing a bunch of books at a person and telling them to read and learn. The internet is not the equivalent of a doctor you can go to without having to skip a meal or two. The internet is not an answer to being one car breakdown or illness away from ruin.
Let’s solve those problems and not expect the internet to solve them for us.
As I mentioned there are people who do take a salary hit, and that workers risk their jobs when the company is doing badly but get no upside (except a job) when the company is doing well. If we still had lifetime employment, then I could see no upside, but that isn’t what we have today.
No one is arguing that the current situation doesn’t suck. The question is what can we do about it? My comment addressed your apparent dislike at looking at averages.
I have no problem with averages. It’s just that you’re going off on a different direction that what I was talking about in the post you quoted.
As for this direction, my response would be: If you want to be a wage earner, with no investment in the ups/downs of the company, then them’s the breaks. If you don’t want to be in that position, then get yourself a job where you can have a skate in the ups/downs of the company as a trade-off for better job security. But that means sometimes you have a job, but no salary. If you’re cool with that, but just can’t find anyone willing to employ you under those circumstances, then either update your skills so you can do that or start your own company. If none of those appeal to you, then I’m not sure I can help you. I suppose you could lobby the legislature to mandate companies work the way you want them to, and I’ll wish you all the luck in the world with that.
People’s expenses are higher because they are getting more for their money. Medical care is much better than it was was 40 years ago. All of the laws outlawing cheap insurance are insane, but health care is so much improved you can’t say that standard of living is going down due to having to pay more for vastly improved healthcare. For example the modal age of death in the US in 1970 was 75 years old. Today it is almost 85 years old. (pdf)
Government involvment in college financing has led to huge price increases but the rate of return on a college degree is still huge.
Pensions were a nice thing but the economy changes too fast now for them to be realistic for most people. Your 401k is something you own while a pension is just a promise from a company that may not be around in a few years. I am not willing to bet that my company will be in existence in thirty years. The way tax rules work is that a company can not put aside extra money for the pensions during good years because that would be considered hiding money from the IRS. Then in bad years they don’t have the money to put in, so every company is a couple of bad quarters away from an underfunded pension. As a result the PBGC, which is supposed to guarantee some of the pension benefits of bankrupt companies, is underfunded by 26 billion dollars.
The bigger picture is that it might be true that while the 1% might be doing better than everyone else, if you look at the chart in the OP the middle class is doing very well and the poor are not getting poorer. The middle class is not getting rich quite as fast as I think it should is just not that compelling an argument. Especially since the american middle class is already a part of the richest 5% of people on the planet and in the richest 99.99% of people who have ever lived.
Today every employee has a stake in the company. When I started in AT&T we still had the concept of lifetime employment. We didn’t get stock, we didn’t get bonuses, but we had stability. That is now gone everywhere, including in government. That is exactly why we are advised not to have our 401Ks tied up in company stock.
So who has job security today? And I’m not saying lack of security is a bad thing - with growth and a dynamic market it is good for the economy for companies who can’t hack it to close. But the market should provide an upside for this risk - that it does not shows that it is not working on pure market principles. For instance, governments attacking labor unions. Owners whining about unions is just like owners whining about their competitors undercutting them on price. The market is tough - they should deal with it.
An argument Atul Gawande made was that health care costs roughly doubled from the period of 1998-2007 (give or take). Did the quality of health care double during that period? Not really. The rate of return on these growing expenses is getting to be too much. Is an additional 2 years of life expectancy or a 15% lower disability rate worth a system that cost 400% more?
The modal age of death for men was 75, now is 85. For women it went from about 84 to 89, so only about half as big a jump. And that article doesn’t say why it went down, but much of it could be from heart disease. I would assume a big part of that (although I don’t know what percent) comes from people quitting smoking. That is a public health initiative, and has nothing to do with our health care system getting more and more affordable. In fact when you extract the public health initiatives (which tend to be pretty cheap) or genetic cardiovascular medications (which weren’t always generic but now are. Many CVD medications are currently $5/month or less) I would assume expensive health initiatives played a very small role in the increase in those charts.
Life expectancy at 60 for both men and women has only grown 3-5 years since 1970. Health care costs have grown almost 35 times since 1970 (from $75 billion to about 2.6 trillion), not adjusting for inflation. Is a health care system that is factors of times more expensive worth it? The rate of return diminishes.
The central factor is that cost of living for most people is growing faster than income. Some goods and services go down in cost and up in quality (consumer goods, automobiles, the pool of generic drugs, etc) but these savings seem offset by the higher medical, education, energy, taxes, retirement, child care, real estate expenses people face.
The concept of a middle class is predicated on the ability to afford those things. If wages do not go up as fast as expenses, then middle class security goes down. As for your argument that ‘middle class is not growing as fast as I’d like’ that is a valid argument. There are various things the government can do to increase the size of the middle class by lowering expenses and increasing income.
Make it easier to join a labor union
Increase progressive taxation
Increase the minimum wage
Create a functioning health care system
Expand social security (higher taxes, higher/no cap, higher benefits, lower retirement age)
Invest more in energy R&D to alternatives to oil or require higher MPG cars (which the Obama admin did)
Create public child care like they have in France
Regulate the financial industry to prevent a real estate bubble
The fact that neoliberal economics says we aren’t ‘supposed’ to do those things doesn’t matter. I’m not supposed to eat honey according to Jainism, but I do anyway. Many developed nations (virtually all of them actually) do these things and their economies function. So like Spain do worse, some like Germany or Sweden do better.