Cluttering up the blogosphere with more glorified chatter on current events, politics, and science.
Search This Blog
Thursday, February 2, 2012
Wage stagnation?
Wow. GMU economist Don Boudreaux destroys the wage stagnation theory
I mentioned a couple of points on my posts on inequality here, and here, but Boudreaux does a much better job of outlining the issues and their implications.
This guy is grasping at straws, and to the untrained eye, doing a good job at it. He is a republican moron elitist. Of course, some people are better off today, but one would have to be blind to say that conditions today are better than before. The boomers in general are the greatest generation of all, the most properous in the history of the world. We can not expect the same, especially with tax increase to come(en masse) over the next 20 years. As the boomers retire, with more pressure on the system, pay increases will be less and less common. It will lead to much poorer pay increases, negative with inflation and taxes. This will continue since it is only the beginning. Inflation is already way under-calculated and mostly corrupt in its inner working. One can replace steak with hamberger meat from one month to the next. Just because it comes from the same animal, doesn't mean it should be calculated as such. Also, job quality is deteriorating-this the many service sector jobs today versus 30 years ago. A greater divide us happening, and will get much worse. It is time to lay low, store your food rations and ammo and head to the woods. Times are a changing, and not for the better!!!
Anon, I don't know where to start. You begin with (a) the boomers are the greatest generation. Based on what? I'm searching your reply for any sort of logic or evidence. NOthing. (b) a rant about the unsustainbility of the social security/pension system. Right, there are valid reasons to be worried about this, it's hardly an argument supporting your incredible claim that the boomers are the greatest generation or or implicit clam that the wage stagnation thesis is right. YOu've only made a prediction about the future. (c) inflation is way under calculated ... yes, I believe that was partially the point of this talk. But as Boudreaux points out, it depends which measure you use. Job quality is deteriorating? Based on what measure? Finally, if this reply seems a little aggressive, it's only because you started your comment with an ad hominem attack "this guy is a moron" and then went on to make series of unconnected baseless points that don't really touch the main issue. Jamie
Yeah anon, I don't even think the guy is a republican (GMU is pretty libertarian, but not small c conservative). Also, your claim that the boomers are the most prosperous generation in history is pretty silly. In fact, our current generation takes that award by ANY measure you might put forward: We are the richest (GDP per capita), healthiest (by lifespan), most secure (as measured by deaths in war or crime) people that has ever lived not only in the 20th century but in history. There is some debate about this abstract notion of the "median worker" - but I don't think anyone, even the biggest proponents of the stagnation thesis argue that the median is actually lower than in the 1970s. So even if you take that to be true, if the average is the same, and the top are richer, we're still better of as a whole. I personally don't buy the stagnation thesis for all sorts of reasons, but I mean... come on.
Boomers=The greatest wealth affect of all time(of any generation-ever, in the whole freaking world-EVER!!)-ask any competent economist. Someone arguing against this fact should know this. It's like saying, do people need to eat to survive. Ah, yup, I think they do. Same reasoning here. Basic knowledge-unnecessay to provide some article backing this point up. Boudreau, if that is his real name, talks about measures and tries to use his bias to grasp at straws, making one metric work in his favor. So, if that metric works in his favor, does that mean that the most widely followed metric is wrong? I hardly think so. And talking about inflation, it is already way understated. So, as per this metric, which is the largest determining factor of wage stagnation in real terms, blows his theory with a capital THEORY out the door. Best case scenario, things have gotten slightly worse. The GEN Xers and Y`s are screwed. Perhaps a little, perhaps a lot. I understand it is not that simple and other variables must be considered here which I have not stated. ex. outsourcing overseas, democratic expansion, tech. revolution have all had an effect and we need to understand this. We can get into many details of how things work etc etc which I might add, I have studied in depth. I just can't get into it all with this short message. It would take a bloody book to explain it in a clear manner. My point is, this guy is plain wrong, doesn't understand the numbers behind his nifty little charts, and seems to be blinded by the job he holds behind his comfy little desk. Quality of life is diminishing and will get worse at the margin.(in north american) There are too many forces at work for it to be otherwise. He doesn't mention competition, input costs, undertstated inflation, greater taxation coming down the pipeline, demographics or any real argument. He just goes on about benefits and put up a few charts, and we are supposed to think he has made an educated remark. Perhaps it sounded educated enough, maybe he majored in english lit. But as a numbers guy and a trend writer, his remarks are absurd and would only be taken seriously by a bunch or overpaid politians desperately scraping together any and all information they can to deceive the public for the betterment of the next election or some other wasteful agenda. Signed
AM, we are arguing the same point. GDP per capita is high since all boomers are STILL working and had an easy time getting employed while young at that. Today, it is not so easy. Of course GDP per capita is high-look at our aging demographics. They won't leave their jobs! It is not this that matters, but the trend. Bad things are coming. Healthiest, perhaps. However, Gen x and y may live less long due to poor diets and an ever growing obese population. Health care costs will cripple us, gold plated government pensions will break the bank, less and less young people will be working for every retiree. Wages will go down in real terms. Taxes will rise substantially, wages will freeze or worse in real terms, and energy costs will rise. Things are dire. Very dark indeed. If you are 20 or 30 years old today young ones, your hope for real wage increases, a fully funded health care system, retiring at 55 or 60 years old will be nothing more than a pipe dream. A though only of better times. We are entering a very dangerous spiral. Many countries and currencies will fail. Nostradamus believed the world would end in 3700 or so. I hope he is right. One thing is certain. The times the boomers enjoyed growing up will be nothing more than a fond memory of the young today. Inspirationly yours,
Ok, I see your point now. But I'd still challenge you a little on that line of argument. Bad things might be coming, I mean, aging population/hc costs/ pension costs are a huge issues so you are completely right there. But I would contest that disaster is far from assured. First, the feds could (will) cut back on the benefits of the three main social programs. Second, there has been no innovation in healthcare (the business model, not the technology) in the last 30 years. It's been ok for now because we've beeen able to afford it, but rising costs may force drastic changes. So I don't know if it's ok to assume that everyone will remain the same, and costs will rise. Costs will rise, and things will change. Maybe disaster, maybe we'll figure it out. I'd say too early to tell.
Anon/Bitter: You think the CPI is accurate? (a) CPI has housing at 7 percent inflation since 2005! Case-shiller has it down 40 percent. Massive discrepency. (b) CPI does not account (well) for changes in technology/improvement: so a car in 1970 cannot be compared to one now. In short, inflation is vastly over stated, and once corrected, the picture looks a lot different. Read up on the Boskin commission study of how the BLS calculates CPI while accounting for these issues. It has been consistely overestimated, not underestimated. Median incomes have been rising, once you take it all into account! Jamie
Source, Jamie? Can you provide me a link, you obviously know lots about this stuff. Hard to imagine a technical discussion of inflation to be interesting, but I am actually enjoying this debate quite a lot.
I agree 100 percent with you, but it's not just the aging population. It's also the massive wealth inequality, corporate power, and decline of unions that are contributing to stagnation. I'm sure there is no way that the rich in the United States are going to accept higher taxes to apy for the welfare state. Rather, we're going to have people in massive poverty, so in that respect I agree with AM's prognostication (which never happens).
This guy is grasping at straws, and to the untrained eye, doing a good job at it. He is a republican moron elitist. Of course, some people are better off today, but one would have to be blind to say that conditions today are better than before. The boomers in general are the greatest generation of all, the most properous in the history of the world. We can not expect the same, especially with tax increase to come(en masse) over the next 20 years. As the boomers retire, with more pressure on the system, pay increases will be less and less common. It will lead to much poorer pay increases, negative with inflation and taxes. This will continue since it is only the beginning. Inflation is already way under-calculated and mostly corrupt in its inner working. One can replace steak with hamberger meat from one month to the next. Just because it comes from the same animal, doesn't mean it should be calculated as such. Also, job quality is deteriorating-this the many service sector jobs today versus 30 years ago. A greater divide us happening, and will get much worse. It is time to lay low, store your food rations and ammo and head to the woods. Times are a changing, and not for the better!!!
ReplyDeleteAnon, I don't know where to start. You begin with (a) the boomers are the greatest generation. Based on what? I'm searching your reply for any sort of logic or evidence. NOthing. (b) a rant about the unsustainbility of the social security/pension system. Right, there are valid reasons to be worried about this, it's hardly an argument supporting your incredible claim that the boomers are the greatest generation or or implicit clam that the wage stagnation thesis is right. YOu've only made a prediction about the future. (c) inflation is way under calculated ... yes, I believe that was partially the point of this talk. But as Boudreaux points out, it depends which measure you use. Job quality is deteriorating? Based on what measure? Finally, if this reply seems a little aggressive, it's only because you started your comment with an ad hominem attack "this guy is a moron" and then went on to make series of unconnected baseless points that don't really touch the main issue.
ReplyDeleteJamie
Yeah anon, I don't even think the guy is a republican (GMU is pretty libertarian, but not small c conservative). Also, your claim that the boomers are the most prosperous generation in history is pretty silly. In fact, our current generation takes that award by ANY measure you might put forward: We are the richest (GDP per capita), healthiest (by lifespan), most secure (as measured by deaths in war or crime) people that has ever lived not only in the 20th century but in history. There is some debate about this abstract notion of the "median worker" - but I don't think anyone, even the biggest proponents of the stagnation thesis argue that the median is actually lower than in the 1970s. So even if you take that to be true, if the average is the same, and the top are richer, we're still better of as a whole. I personally don't buy the stagnation thesis for all sorts of reasons, but I mean... come on.
ReplyDeleteBoomers=The greatest wealth affect of all time(of any generation-ever, in the whole freaking world-EVER!!)-ask any competent economist. Someone arguing against this fact should know this. It's like saying, do people need to eat to survive. Ah, yup, I think they do. Same reasoning here. Basic knowledge-unnecessay to provide some article backing this point up. Boudreau, if that is his real name, talks about measures and tries to use his bias to grasp at straws, making one metric work in his favor. So, if that metric works in his favor, does that mean that the most widely followed metric is wrong? I hardly think so. And talking about inflation, it is already way understated. So, as per this metric, which is the largest determining factor of wage stagnation in real terms, blows his theory with a capital THEORY out the door. Best case scenario, things have gotten slightly worse. The GEN Xers and Y`s are screwed. Perhaps a little, perhaps a lot. I understand it is not that simple and other variables must be considered here which I have not stated. ex. outsourcing overseas, democratic expansion, tech. revolution have all had an effect and we need to understand this. We can get into many details of how things work etc etc which I might add, I have studied in depth. I just can't get into it all with this short message. It would take a bloody book to explain it in a clear manner. My point is, this guy is plain wrong, doesn't understand the numbers behind his nifty little charts, and seems to be blinded by the job he holds behind his comfy little desk. Quality of life is diminishing and will get worse at the margin.(in north american) There are too many forces at work for it to be otherwise. He doesn't mention competition, input costs, undertstated inflation, greater taxation coming down the pipeline, demographics or any real argument. He just goes on about benefits and put up a few charts, and we are supposed to think he has made an educated remark. Perhaps it sounded educated enough, maybe he majored in english lit. But as a numbers guy and a trend writer, his remarks are absurd and would only be taken seriously by a bunch or overpaid politians desperately scraping together any and all information they can to deceive the public for the betterment of the next election or some other wasteful agenda. Signed
ReplyDeleteThe Bitter One
AM, we are arguing the same point. GDP per capita is high since all boomers are STILL working and had an easy time getting employed while young at that. Today, it is not so easy. Of course GDP per capita is high-look at our aging demographics. They won't leave their jobs! It is not this that matters, but the trend. Bad things are coming. Healthiest, perhaps. However, Gen x and y may live less long due to poor diets and an ever growing obese population. Health care costs will cripple us, gold plated government pensions will break the bank, less and less young people will be working for every retiree. Wages will go down in real terms. Taxes will rise substantially, wages will freeze or worse in real terms, and energy costs will rise. Things are dire. Very dark indeed. If you are 20 or 30 years old today young ones, your hope for real wage increases, a fully funded health care system, retiring at 55 or 60 years old will be nothing more than a pipe dream. A though only of better times. We are entering a very dangerous spiral. Many countries and currencies will fail. Nostradamus believed the world would end in 3700 or so. I hope he is right. One thing is certain. The times the boomers enjoyed growing up will be nothing more than a fond memory of the young today. Inspirationly yours,
ReplyDeleteThe Bitter One
Bitter one:
ReplyDeleteOk, I see your point now. But I'd still challenge you a little on that line of argument. Bad things might be coming, I mean, aging population/hc costs/ pension costs are a huge issues so you are completely right there. But I would contest that disaster is far from assured. First, the feds could (will) cut back on the benefits of the three main social programs. Second, there has been no innovation in healthcare (the business model, not the technology) in the last 30 years. It's been ok for now because we've beeen able to afford it, but rising costs may force drastic changes. So I don't know if it's ok to assume that everyone will remain the same, and costs will rise. Costs will rise, and things will change. Maybe disaster, maybe we'll figure it out. I'd say too early to tell.
Anon/Bitter: You think the CPI is accurate? (a) CPI has housing at 7 percent inflation since 2005! Case-shiller has it down 40 percent. Massive discrepency. (b) CPI does not account (well) for changes in technology/improvement: so a car in 1970 cannot be compared to one now. In short, inflation is vastly over stated, and once corrected, the picture looks a lot different. Read up on the Boskin commission study of how the BLS calculates CPI while accounting for these issues. It has been consistely overestimated, not underestimated.
ReplyDeleteMedian incomes have been rising, once you take it all into account!
Jamie
Source, Jamie? Can you provide me a link, you obviously know lots about this stuff. Hard to imagine a technical discussion of inflation to be interesting, but I am actually enjoying this debate quite a lot.
ReplyDeleteBitter one,
ReplyDeleteI agree 100 percent with you, but it's not just the aging population. It's also the massive wealth inequality, corporate power, and decline of unions that are contributing to stagnation. I'm sure there is no way that the rich in the United States are going to accept higher taxes to apy for the welfare state. Rather, we're going to have people in massive poverty, so in that respect I agree with AM's prognostication (which never happens).