Absolutely not.
If corporate revenue increases, but wages stay the same, GDP per capita goes up, yet the workers aren't any better off. All that extra money is being absorbed by the ones at the top.
Median disposable household income is probably the best measure.
I can set an argument about political influence that's gotten really strong lately but maybe that's better addressed by strengthening the politically system
If a very small percentage of the people own a large percentage of the wealth, it compounds. They literally cannot spend all of their income on consumption, except maybe by lighting piles of cash on fire, but that is not a route to doubling the real wealth of everyone in society.
That means that asset prices rise, and fewer people can afford property. Jobs concentrate near where rich people live, because they are the ones with disposable income to spend, making this worse. Transfer payments (rent) from ordinary people to the remaining property owners are high. Wages stagnate, because wealthy people spend most of their money on assets, not goods and services. Consumer demand decreases. Capital moves away from producing things that ordinary people need, because they can no longer afford them, and is instead allocated to producing luxury goods. Social mobility is low because low wages and high property prices make it impossible to work your way up.
The cycle is self-reinforcing, not self-correcting. Most of history throughout the world has consisted of a few very wealthy feudal lords and a large population of serfs.
Strengthening the political system might be nice, but post-Citizen's United, that does not seem to be the direction the US is headed, at least, nor is it in the interests of those who benefit most from the current system.
Not in terms of the ratio between you, which is the way we normally talk about wealth inequality : "he has X times more wealth than I do", or "she makes X times more than I do".
Anyway, this is not how wealth inequality has grown at all. It has happened by most people's real income barely rising at all over 40-50 years, while the rich have seen theirs rise by huge factors (hundreds to many thousands in some cases).
Meanwhile, real (aka inflation corrected) median household income has gone up: https://fred.stlouisfed.org/series/MEHOINUSA672N
If what you care about is standing real wages why talk about inequality? I'm concerned that it just functions better as rage bait and leads to unproductive policies.
2. real median household income stayed relatively flat between 1970 and 2012. Since then it has risen again in a significant way.
3. despite the gains in real median household income, the rise in the household income (and net worth) of various upper percentiles (20%, 10%, 5%, 1%, 0.1% ... take your pick) has been very, very much larger. consequently, the "double my income, double Musk's income" line is not a description of what has happened.
4. the percentage of GDP that accrues to capital rather than to labor have gone steadily up since 1980.
Look at the graphs of real wages vs productivity that start pre-1970. Yes, it's true that real wages have gone up some since that time, but they remain completely divorced from productivity in a way that's totally different from the time before Reagan.
Meanwhile, the income/wealth of the highest earners has gone up astronomically during the same time.
They are staggeringly wealthy because they have redirected the flow of money from us to them. This is a very clearly visible and uncontroversial fact. The controversy is simply over whether it is a good thing.
At consumption money level at least inequality is also inefficient allocation of resources due to the diminishing marginal utility of money.
Mainstream media companies are owned by very wealthy people, who vote Republican, and put their thumbs on the scales over and over again.
You can see that in a myriad of different ways, but at no time in recent memory has it been more blatant than during the last election cycle, with events like Bezos forcing the Washington Post to issue no endorsement rather than endorsing Harris.
Like, you can agree or disagree with the politics of it, but it should take a monumental amount of motivated reasoning to deny the existence of this bias in our media.
There are also many emerging podcasts which either directly interview candidates or at least discuss the impacts of policy beyond the nonquestions presented by mainstream journalists. For example, how many times have journalists allowed Powell to say that he can't comment on proposed legislation like the BBB? Not once have we seen a follow up asking Powell why he has no comment on the bill considering his job is to offset its effects? His literal job is to comment on policy.
> events like Bezos forcing the Washington Post to issue no endorsement rather than endorsing Harris.
The Washington Post is independent media. It's just dependent on its owner like all media. I have no problem with Bezos' move concerning endorcements; he's maximizing his utility.
If you consider WP to be independent, then which news organizations do you consider not independent? Because I think most people define independent as "not owned or controlled by a billionaire".
> The Washington Post is independent media.
You wanna run that by me again, chief?
Originally I used it to refer to non mainstream orgs. That was a mistake on my part.
What's this universe that only contains you and Elon? Or do you think that everyone's real wealth has doubled?
> I can set an argument about political influence that's gotten really strong lately but maybe that's better addressed by strengthening the politically system
Citizens United has practically dismissed that possibility in the near term.
The issue with disparity is it's a reflection of the unfair conditions of compensation. Elon Musk's employees make him that money, not Elon. He could make all of his employees multi-millionaires overnight by granting more generous stock plans commensurate with the money they've made the company. Reasonable profit sharing plans basically ensure this, but since companies all collude to not grant them, we see them as relatively rare in the working world. The state should be requiring companies to grant profit sharing. Not gonna bike shed it here, but it needs to be done yesterday.
Please avoid ideological swipes like this on HN. It's covered in multiple guidelines:
The US however have more millionaires per capita and SUBSTANTIALLY more people in poverty per capita.
Sweden’s Gini coefficient is 0.276 (2024), the US’ is 0.418 (2023). The US has a lot more income inequality.
You forgot to mention, also the cost of everything doubles and maybe kicks off some good ole hyperinflation
Wealth inequality means all the investment and excess income goes to the top 0.0001%, rather than the average person. Whereas now this may support he average person's purchase of a home, or retirement, or similar, this now supports the billionaire's purchase of a million homes to rent to the common man, earn a fixed profit, to launch rocket ships with a head, two spheres at the base, and veins, where the billionaire with the biggest, longest, firmest rocketship is the winner! That, instead of people having houses and a retirement.
A healthy economy is one where money is made via wages, and spent via economic activity.
The more active a given dollar is in terms of circulation through the economy, the healthier the economy usually is.
Economies tend to stagnate when a small group of people hoard the vast majority of the money, and don't circulate it back into the economy.
If I used to make $78k as a full time IT employee, but now have to work two jobs to make $78k, I still have same household income but I’m considerably worse than before.
A combination of hours worked, wages earned and household debt together would paint a much more accurate picture.
It's less common to report, but in the aftermath of the financial crisis I remember hearing more about it. You can construct a chart in FRED that covers it:
As nerds we possess unique capacity for generating insights via thinkin real hard about stuff, and everyone else is a great big dummy who could not possibly have thought of it already.
No one is arguing that being a computer programmer gives a person unique insights here.
Obviously people criticize can and should criticize programmers, that's the point.
https://news.ycombinator.com/newsguidelines.html
Notably:
> Be kind. Don't be snarky
> Eschew flamebait. Avoid generic tangents. Omit internet tropes.
#ImAnEconNerd
This would need data to contextualize.
If you lose your job in a depression there will be plenty of people willing to buy assets at a discount. If you have equity in your home then your position will be net positive. About half of all mortgages have an outstanding balance less than 50% of the home's value.
But if you owned a house in Detroit from 2003-2010 it might have dropped 70-80%. Or, more on point for many on HN, if you own a house in the Bay Area worth $2-$3M with 25% equity, and the tech job market collapses, then you might get completely wiped out.
Or for some loan you need to pay monthly 5% of your income (for iphone or car), and other loan need you to pay 50% of your income (mortgages). You cannot count them in the same way...
Or for some loan you need to pay monthly 5% of your income (for iphone or car), and other loan need you to pay 50% of your income (mortgages). You cannot count them in the same way. And mortgage can have 1% interest rate or 6%...
(No comment on the current reality of medical debt, of course. Just a general principle.)
There is a huge quantity of data about the US.
You're right that there is more nuance you'd wish to see, but it's harder to measure, and I don't know how much it's normally worth.
Median economic health strikes me as far more interesting than mean. I don't really care how well rich people are doing.
ahem "people of wealth"
> Household income is adjusted for differences in the needs of households of different sizes with an equivalence scale that divides household income by the square root of household size. The adjusted income is then attributed to every person in the household.
https://www.oecd.org/en/publications/society-at-a-glance-202...
You need to consider multiple metrics. Any one metric by itself is going to have holes.
Folks at the bottom of the pile are perfect economic bellwethers.
Median disposable income won’t meaningfully capture OP’s case of losing a high-paying job and having it replaced by a low-paying one. For that you need to look at the distribution of household disposable income.
We have terrific economic metrics in America. It really should be part of a mandatory civics class to learn how to read them.
If corporate revenue increases and is spent (as most revenue is), then the workers will be better off in the most bland "raising all boats" sense of the word - there will be more competition for their labor and more opportunities for them to jump ship.
GDP gets a bad rap but if I had to pick a single metric, that's the one I'd choose.
But it's still a waste of their talents and society as a whole will be worse off than if they did heart surgery. You can measure that because a waiter makes minimum wage and a heart surgeon does not - the heart surgeon contributes more to the GDP than a food service worker.
That's the meaning of that metric and that's why it's useful.
Your argument is the exact reason why the media focus on a single metric is bad - because some but-whataboutism will always pop up and use it as pretext to debate an unrelated issue not covered by the metric.
It's also the exact reason why we shouldn't measure economic health as a single metric at all - it's not that to whom value accrues doesn't matter, it's that it's a different metric than how much value is generated in the first place.
It also explains why there isn't a single best economic policy - the absence of a single metric means there is no strict ordering.
(You can easily construe a counter-argument why median disposable household income isn't the best metric, either: "Median wage is stagnant, everybody needs to take a second job so disposable income goes up". And you can do that for every single metric in isolation)
If GDP goes up and the velocity of money drops, it means that real economic gains are not being realized by those who actually spend the majority of their income versus saving it.
Not that there's anything wrong with saving money - it's just that the more money that is being spent regularly, the healthier the entire economy is. Generally.
Not necessarily. If most of the difference in pay goes to shareholders and/or executives, then the GDP per capita doesn't change. This could be because technology increases productivity, but in a way that increases wealth inequality, and results not only in greater wealth for the already wealthy, but less wealth for workers who are no longer needed.
This is what I'm getting at. I recognize there are more detailed measures, but they also never seem to inform the public discourse.
It's why I recently have been convinced that we need something like election my jury
This is convincingly (to me) explained by the removal of critical thinking courses in public schools, at least in the US. I never experienced them myself but I've heard they included exercises like determining if a statement is fact or opinion, true or false, etc. There was very little of that when I was in school and it was certainly never a dedicated hour-block in high school.
I think this is how the electoral college was intended to function. This is a hard problem to solve, especially when some of the players aren't operating in good faith.
There are small outlier countries like Singapore that have extremely well but at scale democratic countries have greatly outperformed other systems
I do work that social media will change this though
You see this on smaller scales as well. Most of people's complaints about "capitalism" are really about the short sighted decisions corporate leadership often make because it has to answer to an anonymous mob of shareholders.
The only thing that actually works is good leadership with long term vision and if anything democracy gets in the way of that.
You say Democracies have a short track record. While this is true in the grand scheme of things, each individual non-Democracy that came before did as well. Rulers conquered each other's countries, usurped the current leaders etc. quite regularly. I'm not sure I'd count that as stable and longer-lasting.
I actually said the exact opposite.
Most people keep very shallow knowledge of most subjects, but this doesn't mean things shouldn't be reported. It just means they(media) shouldn't spend a ton of time explaining how said numbers are calculated. Most people read, hear, or otherwise know the current inflation rate, but not exactly how it's calculated.
All that to say, if some metric isn't being reported, there's a reason - likely for some agenda being pushed.
One example: Ireland's GDP grew a staggering 25% in 2015 [0], mainly because Apple decided to book more of their profits there. It does lead to higher tax revenue, but creates relatively few jobs or other income there. The profits go to Apple shareholders, who mainly live outside Ireland. Household income would more adequately reflect where those benefits go than GDP.
Plus, with household income it's more natural to look at the median in addition to the mean, which is the more robust metric, statistically speaking.
[0] https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locat...
But a more informative proxy would be median net worth - individual, not household, with married couple net worth divided by two for simplicity - as a fairly simple assets vs liabilities calculation.
The net worth distribution would be even more revealing because it would highlight the difference between owners and renters.
This still doesn't reveal net worth stability. In the US you can - and many people do - go from a seven figure net worth to bankruptcy because of a health crisis or (increasingly) a climate disaster.
So you'd want a supplemental distribution showing how variable net worth is, how many people are reduced to bankruptcy at each decile, and how much movement there is in each decile.
Reducing these kinds of complexities to a single number seems misleading at best.
[0] https://hdr.undp.org/data-center/human-development-index
Unemployment rates are calculated based on surveys. They call many people and ask a series of questions to determine which category they fit into.
And the survey is surprisingly thorough, with around 110,000 individuals surveyed each month. There's a quite good writeup at: https://www.bls.gov/cps/cps_htgm.htm
This is why there needs to be some kind of safety net so that the economy is not a proxy for life and death. In the USA, if you run out of money, you are in real trouble. We need to decouple success/failure in the market from personal safety. You should be able to try opening a hot dog stand, have it tank, and still be able to eat and go to the doctor.
Isn't the media incentivized to keep you watching or reading? The common criticism of media is they like to exaggerate a minor issue to get you to click on a headline.
Indeed. Almost always in these discussions people have already made up their minds about the state of the economy and will just cherry-pick whatever metric best justifies their case (typically that the economy sucks).
There's never been a time in my life where people weren't complaining about how the economy is terrible and how that's clearly obvious if you just look at the real numbers.
The fact that the government printing money and then squandering it on some thing useless makes the GDP go up, should be your first clue.
I don’t think you are a great success in life if you take on debt from organized crime, spend it on hookers and blow, and then tell everyone how rich you are based on how much you spent, i.e., squandered.
I think the following joke encapsulates the problem with GDP pretty well..
---
Two economists go for a walk in the forest, and having a competitive nature, the first economist sees a pile of bear shit and says to the second "I'll give you $100 to eat that bear shit". The second economist, being one that generally does anything for money, eats the bear shit, takes the $100 and they continue on their walk. The second economist wants to get back at the first, sees another pile of bear shit and says "I dare YOU to eat that bear shit for $100" thinking no way they will actually do it. Not wanting to be outdone by the second economist, the first also eats the bear shit and takes $100.
After walking a bit further, the second economist stops and says to the first "Wait.. did we just both eat shit for nothing??" to which the first replies "No of course not, that would be crazy.. we increased GDP by $200".
---
I can't remember the source of the joke but been around for a while and I may have butchered some of the original details.
The fact is, those economists valued watching someone eating shit at $100 dollars. How is that any different than someone paying $100 dollars to watch a concert?
It perfectly illustrates the idea that value is in the eye of the beholder.
GDP or even GDP per capita is not the best metric. You can sell 100 iphones for $1000 or sell 500 cheap androids for $200 and both countries will have same GDP but I think output and outcome is much better in latter case (you produced 5x more products and 5x more people can benefits and be more productive with those 'tools'). Sure iphone for $1000 is better than $200 android phone but is it 5x better? Same with cars you can sell ferrari or more cheaper toyotas for the same value. We would have to measure how much goods we can produce.
We could use metrics such as GINI but it also matters to look at qualitative factors such as worker rights etc. to measure well being
Your scenario would be called out by median household income, or better median disposable household income. Even the good old GDP per capita covers your case.
Workforce participation also can be valuable instead of or in addition to unemployment numbers, since you fall out of the count once unemployment benefits expire. However, we need to look at it by age bracket. Lower workforce participation between 20 and 60 is probably bad whereas higher workforce participation over 60 might also be bad.
IMO the problem isn't that the metrics aren't there but that the public discourse either lacks motivation, understanding or incentive to take a proper look. That every discussion of these numbers on social media has a substantial portion of people not understand the difference between median and mean certainly doesn't give me confidence this will ever improve.