Except that's not true. There's been growth; it's just all gone to the very wealthy in the West.
There isn't just some random "exception" among the wealthy. They've very specifically engineered the economy so that they get vastly disproportionate amounts out of it.
But...who would? I mean, that's not the behavior of real people. That's the problem, and the way these things are allowed to happen—people have a hard time understanding that real people, who love their family and tell jokes and have opinions about Game of Thrones, can do terrible, evil things.
It's not that the extremely wealthy actively seek the suffering of those beneath them (mostly; there are probably a few who are weird enough, but it's not enough to make a policy out of). It's that they don't care...or, worse, they see it as some kind of necessary evil to make the pure libertarian utopia they envision. And indeed, the idea that many of them are based in principles of individual freedom is a huge part of how they've sold the whole lot, despite the fact that carrying those principles to any sort of logical conclusion inevitably results in terrible suffering among real people.
But while I agree that there wasn't some intentional conspiracy meeting where they laid out a New World Order-type plot to take 99% of all the world's wealth, that doesn't mean that all the various efforts to enrich the wealthy aren't very deliberate—and to some degree coordinated.
Actions do not have to be taken by cartoonishly evil people to have cartoonishly evil outcomes, and looking around at America today, I can't help but think that's where we've ended up.
The Powell Memo, written in the 1970s by future Supreme Court justice Powell, specifically called on business to reassert power over American politics:
> On August 23, 1971, prior to accepting Nixon's nomination to the Supreme Court, Powell was commissioned by his neighbor, Eugene B. Sydnor Jr., a close friend and education director of the US Chamber of Commerce, to write a confidential memorandum for the chamber entitled "Attack on the American Free Enterprise System," an anti-Communist and anti-New Deal blueprint for conservative business interests to retake America.[14][15] It was based in part on Powell's reaction to the work of activist Ralph Nader, whose 1965 exposé on General Motors, Unsafe at Any Speed, put a focus on the auto industry putting profit ahead of safety, which triggered the American consumer movement. Powell saw it as an undermining of the power of private business and an ostensible step towards socialism.[14] His experiences as a corporate lawyer and a director on the board of Phillip Morris from 1964 until his appointment to the Supreme Court made him a champion of the tobacco industry who railed against the growing scientific evidence linking smoking to cancer deaths.[14] He argued, unsuccessfully, that tobacco companies' First Amendment rights were being infringed when news organizations were not giving credence to the cancer denials of the industry. [14]
> The memo called for corporate America to become more aggressive in molding society's thinking about business, government, politics and law in the US. It sparked wealthy heirs of earlier American Industrialists like Richard Mellon Scaife; the Earhart Foundation, whose money came from an oil fortune; and the Smith Richardson Foundation, from the cough medicine dynasty;[14] to use their private charitable foundations, which did not have to report their political activities, to join the Carthage Foundation, founded by Scaife in 1964[14] to fund Powell's vision of a pro-business, anti-socialist, putatively minimalist government-regulated America as he thought it had been in the heyday of early American industrialism, before the Great Depression and the rise of Franklin Roosevelt's New Deal.
> The Powell Memorandum thus became the blueprint for the rise of the American conservative movement and the formation of a network of influential right-wing think tanks and lobbying organizations, such as The Heritage Foundation and the American Legislative Exchange Council (ALEC) as well as inspiring the US Chamber of Commerce to become far more politically active.[16][17] CUNY professor David Harvey traces the rise of neoliberalism in the US to this memo.[18][19]
> Powell argued, "The most disquieting voices joining the chorus of criticism came from perfectly respectable elements of society: from the college campus, the pulpit, the media, the intellectual and literary journals, the arts and sciences, and from politicians." In the memorandum, Powell advocated "constant surveillance" of textbook and television content, as well as a purge of left-wing elements. He named consumer advocate Nader as the chief antagonist of American business. Powell urged conservatives to undertake a sustained media-outreach program; including funding neoliberal scholars, publishing books and papers from popular magazines to scholarly journals and influencing public opinion.[20][21]
> This memo foreshadowed a number of Powell's court opinions, especially First National Bank of Boston v. Bellotti, which shifted the direction of First Amendment law by declaring that corporate financial influence of elections by independent expenditures should be protected with the same vigor as individual political speech. Much of the future Court opinion in Citizens United v. Federal Election Commission relied on the same arguments raised in Bellotti.
> Though written confidentially for Sydnor at the Chamber of Commerce, it was discovered by Washington Post columnist Jack Anderson, who reported on its content a year later (after Powell had joined the Supreme Court). Anderson alleged that Powell was trying to undermine the democratic system; however, in terms of business's view of itself in relation to government and public interest groups, the memo only conveyed the thinking among businessmen at the time. The real contribution of the memo, instead, was its emphasis on institution-building, particularly updating the Chamber's efforts to influence federal policy. Here, it was a major force in motivating the Chamber and other groups to modernize their efforts to lobby the federal government. Following the memo's directives, conservative foundations greatly increased, pouring money into think-tanks. This rise of conservative philanthropy led to the conservative intellectual movement and its increasing influence over mainstream political discourse, starting in the 1970s and '80s, and due chiefly to the works of the American Enterprise Institute and the Heritage Foundation.[22]
https://en.wikipedia.org/wiki/Lewis_F._Powell_Jr.#Powell_Mem...
Further details of this assault on worker interests by corporate power can be seen in the following books:
https://whorulesamerica.ucsc.edu/
https://en.wikipedia.org/wiki/Winner-Take-All_Politics
https://en.wikipedia.org/wiki/Dark_Money_(book)
https://secure.epi.org/event/the-one-percent-solution-how-co...
In Sweden, the median household disposable income doubled in the last 20 years.
Wrong. According to ourworldindata.org the world population in extreme poverty fell by half since 1990. I'm sure there are other sources to match this data as well.
But that doesn't fit your narrative.
We've had to ask you this before, and eventually ban accounts that keep ignoring such requests, so if you'd please review https://news.ycombinator.com/newsguidelines.html and take the spirit of the site more to heart, we'd appreciate it.
"In the West, it's just all gone to the very wealthy" is the intent. Not "All the growth in the world has gone to the wealthy in the West."
Of course those who pay attention to these sorts of things know that the reality is more complex than that, even if you limit your analysis to "The West," which isn't a unified bloc. See the differences exhibited by the change in income inequality by these nations: https://ourworldindata.org/uploads/2018/07/Top-Incomes.png . You can't make a generalized statement about "wealth in the West," because it has exhibited different patterns in different countries over different timeframes. You have to specify all of those parameters before an intelligent conversation can even be started.
Even if the grandparent was worded too vaguely to communicate the poster's actual point, the grandparent turned out to be making a statement that was too low resolution to actually communicate anything beyond hand-waving anti-Capital rhetorical sentiment.
Kind of, but the trends are similar if the magnitudes are somewhat different. States with more distributive policies have less inequality, surprise surprise.
> Even if the grandparent was worded too vaguely to communicate the poster's actual point, the grandparent turned out to be making a statement that was too low resolution to actually communicate anything beyond hand-waving anti-Capital rhetorical sentiment.
I guess technically that's true, but it's also not far off. Because the West is back into relatively low growth, capital's influence is growing [2]. When you consider the only way to get capital is income or returns on capital, this is a simple recipe for inequality growing. And it indeed is the likely trend without (again surprise surprise) more redistribution policies [3].
[1]: https://boingboing.net/2017/12/14/oligarchy-on-ice.html
[2]: https://voxeu.org/article/capital-back
[3]: https://voxeu.org/article/new-globalisation-and-income-inequ...
The entire book is available free on his website: https://deanbaker.net/images/stories/documents/Rigged.pdf
In terms of US policy, the state of American inequality, and the domestic movement of corporate interests to create policies to favor the rich - the book Winner Take All Politics is a concise overview of this history since the 70s: https://en.wikipedia.org/wiki/Winner-Take-All_Politics
A USA blue-collar worker can't possibly expect to compete for labor in the global market and keep their current lifestyle - for an illustrative example, many such workers can afford cars and houses, which is a relative luxury if they would have to compete with workers who live in dormitories next to the factory. Someone who's earning $35000/year is in global top 1% in income; and adjusting for purchasing power doesn't change it that much, they'd still be in top 10% globally, and they can stay so relatively wealthy only because (and until!) they don't have to directly compete with all the much poorer laborers of other countries. Any increase in global labor mobility will only make it much worse for Joe Iowa.
So, we shouldn't forget history and be shocked that the US is having its economic secrets stolen, as that's happened numerous times in the past.
The laws for copyright and for trade secrets are quite different. In fact, when someone talks about "intellectual property" rather than about one of the specific kinds (patents, trademarks, copyrights, and trade secrets), they often wind up reaching wrong conclusions. They try to apply concepts from one kind of IP on another kind, and it doesn't work.
So: Theft of trade secrets isn't going to fix draconian copyright law, not only because two wrongs don't make a right, but also because copyright and trade secrets don't have all that much to do with each other.
Sadly, neither do people who have the opportunity to get ahead without facing competition in the first place.
Inches and markers exist which never existed before.
All those new workers are consumers for goods and services from America.
America soy beans are famously bought in China, as are American bonds.
Economically- if you get cheaper goods, you do more with the same income, meaning your quality of life goes up.
The issue is not the growth of China- the issue is the distribution of wealth.
As the pie has grown, the share of the pie has changed.
Wrong. Middle-class Americans have captured gains through cheaper, higher-quality products than would have otherwise existed without trade and development. Are you using a phone made in China, or wearing clothes made in Bangladesh, or eat fresh fruit in the winter? Then by definition, you've captured gains from trade.
Sure, we can say that there has been some benefit to the middle class in the West through reduced price on some of the goods but certainly not on big bill items such as housing and education. It's great that I can buy a cheap jacket and keep some of my income, it sucks that my housing expanses went from 1/5 to 1/2 of my income (as an example).
Overall an American worker who lost his well paying manufacturing job and replaced it with a job at walmart lost massively.
Elephant Chart I think tells the whole story[1].
Maybe they went from 1/5 to 1/2 precisely because trade made everything else so affordable? In the world without international trade, housing, education and health care could still be expensive, but cheap jeans would be $100 and cheap jackets $200.
On average, housing expenditures only makes up about 25% of American household income. And education expenditures are nearly a rounding error at 1.8%.
Adjusted for inflation the median cost per square foot of a new home in the US actually fell by 8% from 1992 to 2018. It's true that Americans are spending more on housing than in the past, but that's mostly because they're buying significantly bigger houses.
The median new home saw its square footage increase by more than 50% since 1985. Despite a decline in the average household size. And that doesn't even cover the significant increase in quality in things like central AC, attached garages, fire safety, higher ceilings, high ampere electrical circuits, better insulation, etc.
The HN community is biased on this topic because they tend to live in HCoL metros like the Bay Area and to only recently be out of school.
But the fact of the matter is that the vast majority of middle America in flyover states has not seen any significant loss of affordability in housing. That should tell you that the problem isn't globalization, it's the San Francisco zoning board.
> Overall an American worker who lost his well paying manufacturing job and replaced it with a job at walmart lost massively.
Since 1980 the decline in manufacturing employment have been more than offset by growth in high-paying jobs in healthcare, education, professional services, real estate, and financial services.
American manufacturing output is at an all-time. There's huge job shortages in the industry, and American factories are desperate for workers. That should tell you that manufacturing jobs were never "replaced", rather Americans workers decided to move to other industries.
Manufacturing jobs are good-paying, but dangerous, physically demanding and unpleasant. Most workers who left decided to either go to skilled construction trades or natural resource extraction, where pay is significantly better. Or they decided to become skilled professionals like nurses, teachers, or realtors, where pay is still good but working conditions are significantly better.
[0] https://www.bls.gov/news.release/cesan.nr0.htm [1] https://www.census.gov/construction/chars/ [2] https://www.census.gov/const/C25Ann/sftotalmedavgsqft.pdf [3] https://www.cnbc.com/2018/08/03/job-gains-for-the-manufactur... [4] https://www.reliableplant.com/Read/30044/manufacturing-worke... [5] https://www.bls.gov/opub/mlr/2016/article/current-employment...
Vehicles and apparel alone, without even breaking out any other tradable sector, make up the same percent of household expenditures as healthcare and education.
Housing makes up 25%. But the cost of housing, as measured by the median inflation-adjusted cost per square foot of a new house has actually fallen by 8% since 1992.
[1] https://www.bls.gov/news.release/cesan.nr0.htm [2] https://www.census.gov/construction/chars/
That's a relatively meaningless statistic given that new houses don't account for a significant subset of the housing supply.
A better measure of true housing costs is BLS's annual Consumer Expenditure Survey [1], which shows that just from 2013-2018, average annual housing expenditure has risen from $17148 to $20091, an increase of 17%.
Moreover, according to the source shelter only made up about half the increase in expenditures in the category. Expenditures on shelter grew even slower than housing as a whole, 16%.
From the source, Americans spent 32% more on furniture and appliances (including a whooping 50% increase on major appliances), 28% more on housekeeping services, 30% more on their cell phone bill (which is weirdly part of of the housing category), 23% more on household products, and 20% more on their water bill. In other words Americans are splurging on smart fridges, maid service, mobile data plans, organic cleaners and long showers.
That doesn't really sound consistent with the story of cash-strapped workers struggling in an overpriced housing market. That sounds a lot more consistent with the macroeconomic data, which is tells us that since 2013, the economy has been booming and unemployment is at post-war lows.
The point was that new home construction cost (the stat you used) isn't of significant magnitude to be relevant to overall housing price trends. I wasn't addressing price to income ratio.
But regarding that, averages can hide growing divergences between incomes and home prices. Instead consider the median home price to income ratios over time:
https://www.jchs.harvard.edu/blog/price-to-income-ratios-are...
It is also correct to observe that the divergence is most strongly correlated to large metropolitan areas, but that doesn't make it any less of a problem, since that's where most people live, and where most people are moving.
> In fact, the monthly payment for the median single-family home purchased in 2017, assuming a 30-year loan with a 3.5 percent downpayment at the average interest rate, totaled $1,620 in real terms—slightly below the $1,650 averaged in the 30 years from 1987 to 2016, but more than $900 below the real median in 1981 when interest rates were at an all-time high.
Moreover that doesn't even take into account the rising square footage or quality of the modern housing stock compared to thirty years ago.[1]
In terms of the relative comparison between high and low cost metros, the relevant division isn't large and growing metros. The report finds that two thirds of the 100 largest metros have price to income ratios below 4.0. Add in those outside the major metros, and the sizable majority of the American population lives in low cost housing markets.
Figure 19 of the report also shows that high-cost states like California, New York, New Jersey, Massachusetts and Hawaii have strong net outflows of young people. Whereas predominately low-cost states like Texas, Florida, Georgia, Arizona and Tennessee have strong net inflows.
Since 2010, high cost major metros New York, LA, and Boston have grown significantly slower than the US population. San Diego and San Francisco have barely outgrown the US as a whole. Miami, Seattle, and Denver are the only high-cost major metros to grow faster than the rest of the country.
[1] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4532357/ [2] https://en.wikipedia.org/wiki/List_of_metropolitan_statistic...
Question is how far into the future are we going to keep pulling.
Cheaper products, sure, but higher quality? Retailers like Walmart and Amazon are essentially operating cartels, they dictate the prices they are willing to pay for manufactured goods. For manufacturers to meet these demands, cuts will have to come from somewhere--cheaper materials, less R&D etc. Consumers may benefit in a cheaper price for their widget, but that widget is not as likely to have the service life it would have in the past. Shorter service life results in buying 'cheaper' goods at a higher frequency (which is likely to result as a net loss for the consumer). This is rhetorical, yes, but not hard to defend. Clothing, appliances, electronics (in price-point verticals) all reflect this 'trend'. This is not even going in to 'Planned-Obsolescence', which is another symptom of the same problem.
I don't really hard data for any other major sector, and would be interested in anyone that does.
[1] https://www.usatoday.com/story/money/cars/2019/06/28/average...
This is a huge difference from the sweat-shop in Bangladesh making t-shirts for Wal-Mart or H&M, or the electronics manufacturer in Shenzhen making toasters.
It's all about supply and demand, the demand for a reliable automobile creates a market for that product. Meanwhile, as lower and middle-class people have less purchasing power due to high housing prices, debt, medical expenses etc, the demand for cheap toasters is greater than the demand for a more expensive (but robust) alternative.
The article repeatedly frames the professional class' decision making and motivation as pursuing status or in joining the ranks of the upper-class elite... Perhaps I live in a bubble, but this is not a trend that I observe at all among my peers, most of whom are (young) professionals.
While this might be nominally true, our ability to sell into China is so asymmetric compared to their ability to sell here it might as well be nonexistent.
Well, they used to be.
The we in this case being those who have easy access to capital. Those who have seen their wages stagnate or jobs erased could care less about what happens to the citizens in another country when they themselves struggle to put food on the table.
In a knowledge economy, the winner takes all, and that means more and more education is required to play in the big leagues, even as the big leagues become the only game in town. I believe only aggressive wealth and income redistribution like universal basic income can prevent a dystopian future of stark inequality.
[1]-https://americanaffairsjournal.org/2018/08/the-three-fusions...
That’s been nonsense.
Perot was prescient and he was right. But we laughed him off the stage.
Instead, big biz, some bankers some dealmakers, politicians and other value add service professionals made money.
Joe and Jill Bluecollar and Cindy and Ted Middleclass saw an erosion in job prospects, income, job security and future prospects for their children. These people cannot afford the Chinese au pair to teach their kids Chinese.
These people vote for Bernie and they vote for Trump. The pols made that bed, so don’t cry when people vote for the above. It was a long time coming.
On the other hand he deregulated airlines and telephony which jump started the tech revolution.
Acting like deregulating airlines and busting unions are on the same level is curious. One has created some new companies (and many corporate bankruptcies) while union busting and trickle-down economics helped lay the foundation for the income stagnation the article is largely about.
Some details of his failures can be seen here:
https://prospect.org/health/fabulous-failure-clinton-s-1990s...
https://www.theatlantic.com/politics/archive/2018/02/welfare...
What good does it do you to have a union without members because all work has been sent overseas? None!
That’s Clinton and his MFN and fastracking into WTO. That’s who we have to thank as well as everyone who didn’t dare challenge that world view but rather cheerled it, including the Bushes and Obama.
Is it possible that weakening of unions made it easier for politicians to pass globalization policies which ultimately lead to wage stagnation?
Is it possible that trickle-down economics (lower taxes on the rich) lead to concentrated political power for the wealthy who were able to push policies that benefit them (Citizens United, Right to Work, stock buybacks, carried interest loopholes, NAFTA)?
Treating 40 years of economic history as a simple binary does nobody any favors. These things are very complex and deserve more than a brush-off.
Which was not unexpected, globalization always has losers. But we've failed to help them out.
I think what is happening is that the low-skilled laborers can now earn higher wages in service (such as online shopping delivery) because the higher skilled labor force can now command a higher income and generate demand for more service. The point is while the overall skill level is up it is not necessary for the low-skill section to also have higher skill in order to have higher income. This has already happened in the developed economies, but people here seem to look down on these service jobs and pine for manufacturing jobs.
Was it worth it? I would say no. We all had a feast of our seedcorn and now we will reap what we didn't sow.
You can't add hundreds of millions of Chinese people to the global work force, now at every level of the global economy, without affecting the market for that labour.
I said I'm a globalist, yes I am. My wife is Chinese, I've been going there regularly since 2001. When I first went private car ownership was near unheard of. It's a different country now, near-empty streets with a few donkey drawn carts are now choked with commuter traffic.
The result has been a pause in income growth in the western world. We've benefited from cheap imported goods, but lost out in domestic growth. The upside is that hundreds of millions of people, not just in China but in plenty of other places too, have been elevated out of poverty. I've seen that for myself and it's done an incalculable amount of good, it's just that all the benefits haven't been evenly distributed.
Could we in the west have benefited more if we'd had less globalisation? I really don't know. We have benefited I think, and we've had opportunities to invest and sell into those markets we wouldn't have otherwise had. I don't know, it's hard to evaluate what could have been as it's such a radically different shape for the world economy. Maybe we'd have ended up even worse off, who knows? But we might have been better off, I can't deny it.
For the future, we can already see incomes in China have shot up. Low level manufacturing jobs are moving out of China, because Chinese labourers have more skills now and can command high enough wages in more upmarket jobs that they don't need the low end work any more. I suspect that's why the employment rate in the US and elsewhere, at the bottom end of the economy, is picking up. I hope that continues, and in future growth will be more balanced across the economic and wage spectrum.