Rich people are rich because the current economic system rewards them for the goods and services they provide. You have to question how much incentive they have in introducing any major innovations in the current economic system. Why would they want to take the risk that the resultant system might no longer want the things that produce their wealth? Rich people have an incentive to preserve the current economic system not innovate it.
Remember that “job growth” and “economic expansion” are not necessarily the same thing. If the government passes a law mandating bureaucratic paperwork filings that require a million workers to perform, that has increased the number of jobs by a million, but has not increased the value of goods and services by one cent. In many sectors, such as education, health care, finance, public services, this is exactly what has happened.
The extreme example would be giving a million men shovels and paying them to dig holes in the ground and then fill them all back in. You have created a million jobs an moved a billion dollars a month from one person to another, but what has been “created” of economic value?
It is why so many more people are working now, but few are increasing their purchasing power.
You’re partially correct. Total real GDP has increased. There are more physical goods and other non-fake things being produced than ever. This is because there’s computers and robotics so despite those armadas of power point and excel jockeys who are doing little of value, a smaller number of productive workers can produce more than ever.
I’ll repeat once more, manufacturing output in the US is up, manufacturing jobs are down.
I wonder what jobs jtur88 thinks are useless today. Even if you don’t like fast food, fast food workers do add to the economy. As unemployment drops there should be more upward pressure on wages. Perhaps the imbalance of power that has developed thanks to the right trashing unions has something to do with it.
Look at a skyline photo of any city in 1950, then the same city today. What consumer goods and services are being produced by all those people working in all those skyscrapers? Phone one of those big buildings. There isn’t even anybody working in there who will answer the phone.
Why do all the rural folks vote against unions? I bet most of them aren’t wealthy enough that they don’t need to work.
Think about the goods and services available in the 1950s vs today and get back to the rest of us who have already figured it out. Your bank example that we already shat on was long on feels and short on facts.
The most graduate students come up with are ideas. Ideas only become innovations with investment.
The US population was 152.3 million in 1950. It is over 300 million today. More population means more workers. And there are probably a lot more services than goods being produced in those buildings. Like finance. The garment district in NY used to make garments. I worked in a jewelry warehouse on Fifth Avenue in the early '70s. I bet they wouldn’t be able to afford that space any more.
And instead of an operator, a computer answers the phone. If you know who you want to talk to, you can. But no one is taking up valuable real estate redirecting phone calls or taking messages - except for big execs. More productivity, fewer people.
Because the big bad unions will intimidate poor little Megacorp so much that all the jobs will be sent to Asia or Mexico, and that all the workers have to do is to trust nice old Megacorp to look out for their interests.
And when Megacorp sends the jobs overseas anyhow, it is still the unions fault, or the governments, and they will surely bring the jobs back if you give them a tax cut.
Admittedly, I was saying something similar a few weeks ago. I’ve spent the better part of my career doing work for Wall Street firms in one form or another. None of it having much to do with opening a savings account.
But the reality is, pretty much all of what you said is factually incorrect.
First of all, modern “banking” is a lot more complex than George Bailey’s 1950s savings & loan.
In 1950 it took however many minutes to stand in line and deposit or withdraw from the human teller. Nowadays you can do most banking functions anytime day or night from your phone.
Those “government-posed regulations” largely exist to ensure that your money is protected.
And regarding those people - who is more productive: A thousand people producing x with their hands? Or a hundred people running a complex organization that produces 100x?
Yes, doubled. But the number of people working in skyscrapers has increased by at least tenfold, probably more like 20, just by eyeballing skyline photos.
How much of the cost of doing business is simply gobbled up by the higher cost of rent? My bank doesn’t just have to pay many more employees to meet the nation’s banking needs, but has to also pay that much more for the space they work in. How does a thousand dollars a square foot of rental produce more goods and services than a hundred dollars a square foot? They money is paid out, maybe even as wages for a job, but there is no increase in the return.
Bottom line keeps coming back – higher cost of doing business (whether surplus employees or high rents) does not come back as increased productivity of consumer goods and services. It just increases the amount of money that is circulating somewhere above the level of production and consumption.
If the created job does not produce consumable goods or services, it has done no more than digging holes and filling them back in again.
This is the opposite of true. According to the BLS Americans in 1950 spent 29% of their income on food, 12% on clothing, and 28% on housing. In 2003 it was 13% on food, 4% on clothing, and 33% on housing. We now spend slightly more on housing than we did in the fifties but houses today are twice as big as they were then.
The only areas that productivity has not decreased prices are real estate, healthcare, government, and higher education. That is because those sectors are controlled by government enforced cartels that keep prices high.
Real estate has “government enforced cartels?”
I thought prices rise in real estate “because they’re not making any more of it”
Puddleglum might have been more specific. He means usable residential/commercial square footage, not the underlying land. It is obviously possible to build 3 or 4 story, narrow houses, with small gaps between structures, and thus provide between 3 and 10 times the density per acre of land that the suburbs offer. These are called “brownstones” or whatever they call the houses in Tokyo.
This makes housing affordable in Tokyo, despite the land costing an exorbitant amount. More affordable than most high cost cities in the US.
You can increase density further if the brownstones won’t cover it. All the way to skyscrapers full of condos or offices or apartments.
The reason developers can’t fix crowding issues in NYC is because of corrupt city governments restricting (like a cartel) the installation of new skyscrapers to relieve high rent prices. There’s about 10 different government policies that all contribute to this in a major way, from unique NYC building codes, to bullshit ordinances about preserving older buildings, to rent control (rent control reduces the incentive to build more structures), to the corrupt subway funding mechanism that prevents the subways from providing a reliable and adequate transportation artery for the city’s residents.
There are similar issues in LA.
Think about it. Those sky high rent prices create enormous incentive to create more usable space because if you demolish a 1 story building and replace it with a 50 story skyscraper, you can charge the market rent rate per square foot and make 50 times the revenue per land. If every developer can just do this, with minimal unnecessary delays and red tape, higher density structures would be built until market rent prices equal the additional cost of building to higher density. (there is a cost - skyscraper real estate construction costs are $200-300 per square foot vs $100 a square foot for stick framed residential)
What I think has happened in these cities is that the local city government is dominated by wealthy locals. Those wealthy people have a dis-incentive for additional usable space to be built, because it devalues the real estate they already own. Though, sometimes the most powerful and influential people on the city council are developers, and in cities where that is the case (like Houston), you see “build build build”.
Unfortunately, Houston has the opposite problem. Real estate is dirt cheap here because there’s almost no red tape and it apparently is legal to build on a vast scale just anywhere. Houston has multiple areas of town where skyscrapers are used, not just a single downtown core. There are whole swathes of town with them. It is also one of the largest metropolitan areas in the world. The problem is that all this development, combined with local geography, makes it very flood prone, and those same developers who want to build all the like with no red tape? Those developers made sure the amount of work they have to do to prepare a new subdivision or apartment block in terms of flood control is minimal and cheap. (and inadequate, it turns out)
The actual fix for all this is Federal or State level control. This is why Japan has sane real estate policies. If these policies were set at the Federal or State level (building codes, zoning limitations, etc), influential locals couldn’t run their corrupt little fiefdoms where they get to monopolize the most valuable land and demand the highest possible rents.
To illustrate how much a difference this makes the average rent for a 2 bedroom in LA is $2,907 a month, and in Houston it is $1,478 a month. Some of that is obviously weather premium but not nearly all. Houston is built on flood plain and on clay so that danger may depress real estate values a little too.
You’re still failing to understand the difference between creating wealth and raising prices. The fact that a landlord can gouge more out of a renter does not mean there has been an increase in wealth, A large part of the higher cost of housing is because increasingly, governments are raising minimum housing standards so that no affordable legal housing exists at all for low-income workers. If the workers’ income is constant but his housing costs rise, where is the growth in the economy?
This thread is about job creation, but clothing costs have dropped sharply. This is not because of job creation, but rather job elimination, replaced by cheaper outsourced labor.
Job growth comes from a demand for labor.
Really?:dubious: