Why Do Americans Work So Much?

HughPickens.com writes Rebecca Rosen has an interesting essay at The Atlantic on economist John Maynard Keynes' prediction in 1930 that with increased productivity, over the next 100 years the economy would become so productive that people would barely need to work at all. For a while, it looked like Keynes was right: In 1930 the average workweek was 47 hours. By 1970 it had fallen to slightly less than 39. But then something changed. Instead of continuing to decline, the duration of the workweek stayed put; it's hovered just below 40 hours for nearly five decades. According to Rosen there would be no mystery in this if Keynes had been wrong about the economy's increasing productivity, which he thought would lead to a standard of living "between four and eight times as high as it is today." Keynes got that right: Technology has made the economy massively more productive. Now a new paper Benjamin Friedman says that "the U.S. economy is right on track to reach Keynes's eight-fold multiple" by 2029—100 years after the last data Keynes would have had. But according to Friedman, the key reason that Keynes prediction failed to come true is that Keynes failed to allow for the changing distribution of wealth.

Comments

distribution of wealth and

[ILongForDarkness]

Greed. Family's in my experience at least have gone from being happy with 1 TV and one stereo in the "family" room to wanting fridges with TVs on them, each person having a cellphone and a tablet etc, each "adult" > 16 wanting their own car etc. We have more stuff. If we lived with the stuff you had in 1930's yeah we could work a lot less.

Re:distribution of wealth and

[Opportunist]

If we lived with the stuff we had in the 1930s you would not have had the economy boom you experienced in the second half of the 20th century. The economy was soaring and people had good jobs exactly because we started to become consumers. Because we wanted that second car and that third TV, because we wanted leisure air travel and electronic gadgets.

Without that demand, nobody would have had a job and no economic growth would have happened. Look around you, this is what you would have had for half a century now if people did not only develop the desire to consume but also have the money to do so. Today the desire remains, what's lacking is the money to actually do it, and as soon as the money for consumption was gone the economy plummeted.

Re:distribution of wealth and

[nukenerd]

in my experience at least have gone from being happy with 1 TV and one stereo in the "family" .... If we lived with the stuff you had in 1930's yeah we could work a lot less.

But a pre-1980's TV was built by hand while today robots do most of the work. The effort that went into that 1950's TV or 1930's car would make a dozen today.

The real reason for more work today is that most of it is non-productive. As automation has replaced much real work, new non-jobs have been created. It is doing stuff like safety inspections, progress chasing, advertising (half the cost of some stuff today goes to its advertising), making financial cases (that can cost more than the work) and so on ad nauseum. In the book "How to be a Wally" it gives a "Wally's" job description : - "To liaise with other Wallys". That's it, in in a nutshell.

I am a power station engineer and I spend hours sitting in meetings with a dozen other qualified engineers discussing eg whether to replace a slightly leaking seal on a large valve, whether it is cost-effective, whether we have a safety case, whether we can spare a fitter to do it. I generally take the line "Just give me a fucking spanner and I'll go down and do it this morning"; but I am treated as if that would be spoil the meeting.

Re:distribution of wealth and

[ILongForDarkness]

But the demand for more stuff is what consumed the extra labor made available by productivity improvements. Yeah wanting more stuff is what kept enough work for 40+ hours a person while women entered the work force. There would be less work if people wanted less stuff but they also would need to work less since they need less stuff. The problem IMO is the assumption that growth in sales, GDP etc is inherently good. Society needs to work enough to provide for the needs and desires of their members. So at some point you only get growth by convincing people they need more stuff. They then have to work more and have less happiness till they get their new "thing". This is psychotic. We're programmed (using that loosely since I'm from Canuckistan but close enough culturally) to be like Tazmanian devils and keep eating till we can't walk anymore rather than just say enough.

Re:distribution of wealth and

[JoeMerchant]

Military spending, infrastructure, the economic competition-wars, "medical miracle" spending, rather than kicking back with a baguette and a glass of Bordeaux, Americans are inventing new ways to keep busy, "stay on top", keep up with the Joneses, satisfy their ancestor's work-ethics, and exploit what's left of the third world.

What will be interesting is when we run out of third world labor pools to exploit - if minimum wage keeps getting kicked up it may not happen, but if conservative forces hold it down for a couple more decades, Asia and Africa's standard of living will catch up with "the West," and we won't have any substance to support our superiority complex anymore.

Re:distribution of wealth and

[Daemonik]

I live in a house built by my own hands on land I claimed after killing the Indians living here. I'm typing this on a telegraph because I'm not the kind of greedy bastard that has to have a newfangled computer. I'm only using the telegraph until I figure out how to make the internet work with an abacus. I keep my food in the root cellar instead of wasting money on one of those refrigerators and keep the house lit by candles made with fat rendered from the animals I raise. TV is shadow puppets on the wall and I ride a horse buggy into town.

YOU sound like the greediest asshole ever with all your modern conveniences! How dare you buy things??

Re:distribution of wealth and

[AthanasiusKircher]

If we lived with the stuff we had in the 1930s you would not have had the economy boom you experienced in the second half of the 20th century.

There's certainly some truth to this, but it oversimplifies things.

Without that demand, nobody would have had a job and no economic growth would have happened.

But take the premise in TFA seriously for a second. Keynes's prediction should have the average work-week around 20 hours by now. To have our current productivity, we would therefore need twice as many jobs as we currently have. But we were reach full employment long before that, so we would have to have significantly lower productivity and consumption while still having enough jobs to go around.

And of course the objection is -- "But don't people who work 20-hour weeks get paid less?" And the point of TFA is that NO -- they still get paid a living wage. The difference in the Keynes future prediction and what we actually got is that that extra money has been siphoned off to the richest folks, rather than rewarding average workers, who might then have to work less hours to still live comfortably.

(Of course, whether that could actually happen given human nature is a separate issue...)

Today the desire remains, what's lacking is the money to actually do it, and as soon as the money for consumption was gone the economy plummeted.

This is also far too oversimplified. Our economy doesn't just depend on consumption -- it depends on irrational assumptions of continuous and perpetual GROWTH of consumption.

You can't have a large corporation today and just continue making the same stuff every year and getting moderate profits that keep up with inflation. Well, you can, but nobody's going to invest in you, because Wall Street has taught us that speculation in growth is normal. Thus, if you're going to attract investors, you need to promise them an irrational and illogical perpetual growth machine that will always beat inflation in its returns.

The consequences of this logic are profound, because it's simply impossible for businesses to sustain such growth over any extended period. Once market saturation occurs, where else do you go? Well, you start doing what we see big corporations in America doing for the past few decades -- you need to keep up the illusion that profits are going up, but you can't get more revenue due to market saturation, so how do you keep up the GROWTH demand of investors?

First, you have the cost of employees. Those darn Americans and their unions cost too much. So, you send manufacturing jobs offshore. Nowadays with the lower cost of global communication, you send service jobs offshore too. And those effects continue to trickle up the offshore game -- to save money, to make greater profits, to satisfy the investment illusion that perpetual growth is possible.

But then you need more money, 'cause you've already sent all your manufacturing (and JOBS! don't forget that's what we were trying to keep in the US!) to China or whatever. But you've exhausted the revenue increases from offshoring, so you make cheaper products, which will break. You make them in such a way that they can't be repaired. Repair shops (which used to be a significant service elements in most American cities) also go out of business... more jobs lost.

You create "planned obsolescence." You spend more and more money on marketing to convince people that they need the newest gadget every year. That marketing money doesn't go to support middle or lower class workers (JOBS!) -- instead it goes to white-collar advertising agencies and such.

Eventually, you need to start tricking people into spending huge amounts of money on your products -- so, you expand the "razor/razorblades" model to products that cost hundreds of dollars. Yeah, you get a "free" iPhone every few years, but it comes with a commitment to a $100+/month phone plan. People wou

Re:distribution of wealth and

[tverbeek]

The medical profession has a term for something that doesn't simply maintain itself but instead keeps on growing: cancer. They don't consider it healthy.

Re:distribution of wealth and

[ILongForDarkness]

But I ask: why do we want economic growth? It is the demand for more stuff that demands economic growth. Or do you/we have some sort of fetish for larger numbers?

If consumers stopped demanding more/newer and better toys sure the GDP wouldn't grow but it wouldn't need to because no ones asking for more junk.

Re:distribution of wealth and

[Xyrus]

And of course the objection is -- "But don't people who work 20-hour weeks get paid less?" And the point of TFA is that NO -- they still get paid a living wage. The difference in the Keynes future prediction and what we actually got is that that extra money has been siphoned off to the richest folks, rather than rewarding average workers, who might then have to work less hours to still live comfortably.

(Of course, whether that could actually happen given human nature is a separate issue...)

This is key. Keynes thought that as things improved, everyone would get a share. Not in some socialist/communist way, but as in a "rising tide lifts all boats" kind of way. The problem is, this didn't happen.

Instead, corporate execs siphoned all those gains into their own wallets while shafting the average worker in as many ways as they can get away with. Average wages have remained mostly flat (or dropped) when accounting for inflation while Mr./Mrs. CEO's bank account keeps getting fatter. It's not really sustainable, and people are going to find that out the hard way when the GCEE (Great Consumer Economic Engine) suddenly runs out of fuel.

But Mr./Mrs. CEO doesn't really care. They don't have to. They're million and billionaires EVEN IF THEY FAIL. Once there's nothing left to siphon off, they'll just move on.

Re:distribution of wealth and

[Catmeat]

The real reason for more work today is that most of it is non-productive. As automation has replaced much real work, new non-jobs have been created. It is doing stuff like safety inspections, progress chasing, advertising (half the cost of some stuff today goes to its advertising), making financial cases (that can cost more than the work) and so on ad nauseum.

While you have a point about advertising and so on, don't write off safety inspections as "non productive".

Compare the rate of industrial accidents 70 years ago with the current rate, per person-year in a given industry. Calculate the cost of a person who was formerly a productive part of the economy becoming a lifetime drain on it if, through no fault of their own, they're unable to work thanks to a work-related injury.

Even if a particular safety inspection only reduces the chances of an accident by a trivial amount, it still represents an overall economic gain, given the costs of an accident.

You now why he failed to account for that.

[Anonymous Coward]

Because no one would have believed anyone would believe it will trickle down just give it all to the rich.
People did not use to be that fucking stupid.

Re:Income inequality has *RISEN* under Obama?!?!?

[Opportunist]

Income inequality has risen since at least Reagan, don't act like it's something new.

We COULD get by working 10-20 hours a week

[Opportunist]

If we could survive on what we earn in that time, that is.

There certainly isn't enough work for everyone. Well, not quite right, there COULD be enough work for everyone if, and only if, we could sell it. That's the main problem our economy has today, not enough money on the demand side. What drives our economy is consumption, and for consumption you need surplus money to use for it. And that's what's lacking.

Consumption is a self powering cycle. I consume, hence the person whose services I use gets money, who in turn gets to spend that money on consumption. It's amplifying itself. Unfortunately that also works in the opposite direction. If I don't have money, I won't get a haircut. So my hairdresser has to close his business. And can't get his plumbing fixed. Which in turn means the plumber won't get to go on vacation. Which shuts another hotel down. Which leaves that cook without the money to get his car checked. And so on.

We need money in the demand side of our economy. But for that we need people to actually get money for working. Unfortunately we have more and more people working 40+ hours a week and only get enough money to make ends meet with zero surplus at the end of the month. That's not going to work. We have to stop the money accumulation, the only thing this accomplishes is more money on the supply side. There's plenty already, we have more people who would love to invest in something sensible than there are sensible investments.

But for an investment to be sensible, there has to be a market for it. And a market will only exist if you have a demand side with the money to play its part!

Re:We COULD get by working 10-20 hours a week

[mellon]

(a) there isn't enough work for everyone because the people who have work are doing too much of it.
(b) work isn't some virtuous act that we should all do as much of as possible.

The problem we have is that work is the only metric we have for determining how to share wealth. Think about it.

Re:We COULD get by working 10-20 hours a week

[l0n3s0m3phr34k]

There WAS enough money, but most of it has been transferred to .01 of the US population, and they have transferred it into various financial vehicles were it will never get "back" into the actual economy.

Re:We COULD get by working 10-20 hours a week

[Opportunist]

Work is the metric for determining how to share wealth? Really? Wow. No wonder top managers are falling from one burnout into the next. After all they're working an average of 800 hours a day. Right? I mean, they get about 100 times what the janitor gets, and he work about 8 hours, so they must work 800 hours. Right?

In other words: I call bullshit.

On almost everything you said.

a) People don't work so much because they are Spongebob and love flipping burgers. They do it because it's the only way they can make ends meet. When you make like 800 bucks a month from a job and your rent is about 600, overtime is what feeds you.

b) That's the one thing you're actually right about, but again, people don't toil because they hate sitting in front of the TV and loathe sleep. It's something they do because they need money. I even dare say that at the very least 9 out of 10 people, if offered the choice, would toss in their burger flipper, spit in their boss' face and tell him where to stick that damn job if they didn't have to do it because they need to pay bills.

And there are many other ways to determine how to share wealth. Some even less unfair, biased and self serving as the one we use now.

Re:We COULD get by working 10-20 hours a week

[Wycliffe]

If you base it on what people already have, you essentially give them and incentive to spend everything they get to keep their wealth low so they get more basic income. If you base it on what people earn, you given them incentive to keep work less so they get more basic income. Even raising it to support children doesn't make sense because some people will exploit it by having a lot of children for the wrong reasons.
I like the idea of basic income but I think it has to be a flat amount regardless of other factors. It's already a hard sell, particularly among the right and among the libertarians and even among moderates, so it has to be well thought-out in order to prevent abuse or it will never gain traction. IMO we're a long way off from being able to do something like that in the US.

The only way to do a basic income would be to give everyone a basic income of let's say $200/week then say the next $200/week is completely untaxed. If you did this then you might see a large number of people making minimum wage ($290/week) quit immediately but not all of them because although some people might be happy with $200/week without working, many more would also jump at the opportunity to double their income. Most people, even teenagers, like to work. They get bored sitting at home all day every day doing nothing especially if they are too broke to go do fun stuff. That's usually why most teenagers get their first job so they can pay for entertainment. What having a basic income would do though is make it so that workers now had more say. As they don't need a job, if the conditions get too horrible, they are able to quit and look for a better job without starving during the gap in employment.

A basic income would not really help the 40 hour / week problem though as most people make considerably more than $200 per week and still work 40 hours per week. The 40 hour per week problem is caused by the fact that it's easier to train one person to work 40 hours per week than it is to train 4 people to work 10 hours per week and as, again, most people don't mind working and have no problem exchanging time for money so they can buy more stuff, you are always going to find people willing to work 40 hours per week. The only way to reduce the 40 hours / week would be to mandate it. If the government required overtime at 35 hours then you would see hours/week drop. As a side effect, this could be used to easily manipulate unemployment. Reducing the work week by 5 hours per week would increase the number of available jobs as many jobs that require X number of hours to complete would all of a sudden need more employees to get the job done.

Re:We COULD get by working 10-20 hours a week

[Solandri]

No, the problem is loans. The top 1% aren't amassing wealth by stealing it from the other 99%. The 99% are willfully agreeing to hand it over to them in the form of interest on all sorts of loans.

Productivity gains haven't translated into increased real income for two main reasons: Increased cost of housing, and increased cost of education. The market price for homes is determined almost entirely by how much people are willing to pay, not by how much it costs to build. If cost were the predominant factor, homes would depreciate as they got older, like cars. Instead they appreciate because of widespread availability of credit (loans) and increased demand (population is increasing, land area is not).

Look at the long-term inflation-adjusted home prices. From the 1890s to 1930s the average real home price decreased as you'd expect from technological progress making them cheaper to construct. But in 1934 the National Housing Act was passed, then Fannie Mae was created in 1938, then the GI Bill after WWII. Real home prices began climbing until they stabilized at nearly double what they were pre-1930 (the graph is a log scale). All of these programs allowed people to cheaply borrow money. If you double the amount of money people are able to use to bid on a home, of course the price of a home is going to double. It happened again during the housing bubble of the 2000s. Extremely low interest rates and relaxed lending standards meant a lot of money was borrowed cheaply, and when lots of people can borrow lots of money, they bid up the price of large purchases like houses.

The same thing has been going on with college education. People wring their hands over the increasing cost of college tuitions which have been vastly outpacing the rate of inflation, asking why is this happening? It's damn obvious why it's happening - the widespread availability of college loans. We've got a perverse positive feedback loop where college gets expensive, people argue that students need assistance to pay for it so we make programs to provide them low-interest loans. That borrowed money allows students to bid up the price of tuition (the school raises the price beyond a point where the student would normally decline to attend because of the high tuition, but instead they get a student loan and pay the higher tuition). That allows tuition to increase even more, leading to people arguing for more student assistance.

So it's the loans which are causing the rise in price of these non-commodity big-ticket items, which are eating up a huge portion of our productivity gains since the early 1900s. The next question is, who is the beneficiary of all these loans? Well to loan someone money, you have to have money. In other words, the 1%. You get a 30-year mortgage whose amortization means half of your total payments will go to principal, half to interest. Basically you're buying a house, and agreeing to pay for an identical house for a 1%er. (Slightly less due to inflation, but we're in a low-interest rate period. At an 8% interest rate, it's 62% interest, 38% principal. At the 16% interest rate of the early 1980s, its 79% interest, 21% principal.)

You want to stop the transfer of wealth to the 1%? Get rid of the loans. Ratchet back the maximum duration of a loan to 15, then 7 years, and make it harder to roll over balances from end of one loan to the start of another. Cap the interest rate so the percentage that's paid to interest over the life of the loan can't exceed 25% or 33%. Yes this will make it harder to buy a house or get an education - that has to happen if you want the price of those things to drop. People will have to learn to save first, buy later; instead of buy now, pay for it later. If you want to assist low-income people trying to buy a home or go to college, do it with supply-side subsidies. Build more government-funded or government-sponsored housing to increase the supply of housing. Create more public universities with capped tuitions to increase the supply of education. Don't do it with things like loans which create more demand.

Re: Income inequality has *RISEN* under Obama?!?!?

[Anonymous Coward]

Everything is new under Obama. Before Obama there was no terrorism, no debt, no healthcare premium increases, no illegal immigration, no deadlock in government, no economic downturn, no corporate welfare, no cronyism and more.

Truly we lived in Paradise until Obama made us eat that apple. Which stands for abortion, which Obama also invented.

Transfer of wealth from the middle class

[Ozoner]

I'm surprised at the comments so far.

Surely the thrust of the article is that the benefits of the increase in productivity have not gone to the workers and the middle class, but to the super rich.

Re:Income inequality has *RISEN* under Obama?!?!?

[bluegutang]

It's really simple. Reagan entered office in 1981. China opened its economy to the West starting in 1978. Ever since then, the Chinese economy has grown at about 10% per year, and inequality has increased in the US as lower-wage jobs go to China. Any questions?

Re:distribution of wealth and_______

[rmdingler]

Guess what... if we distributed all that concentrated wealth, we'd still need to work.

Sure we would, and I'm not implying that it is a bad thing to have an obligation to fulfill that separates a person's free time from *his labors.

Look, redistributing wealth entirely and evenly is a dream that spawns in pipes. Economically, someone will always climb to the top of the food chain, but we've let it get way out of hand.

The present concentration of wealth is so dire that we run the risk of consolidating the World's power into a few hundred families.

Re:70s

[Sique]

The Gold standard wouldn't help very much, actually it would have made things worse.

Since at least for 100 years, the amount of gold added each year to the available gold reserves doesn't keep pace with the productivity increases, which means that there is less and less gold available to distribute between the creators of wealth. With the Gold standard, there wouldn't be any incentive to increase productivity at all, as the available wealth increase is limited by the amount of gold mined, not by the available productivity.

Until the First World War, there was an accepted way to get out of the Gold trap: War against someone who has gold and get hold of his gold to distribute between your local creators of productivity. Since then, conquering other countries and robbing their gold has been frowned upon. Thus there is simply not enough gold available to pay for the possible productivity increases, and keeping the gold standard would just strangle any economy.

Re:Income inequality has *RISEN* under Obama?!?!?

[Anonymous Coward]

Yes, the Chinese and a few wealthy Americans are colluding to fuck over all other Americans.

Women+Boomers+Immigrants = "Labor Shortage"

[Baldrson]

The baby boom started increasing the supply of entry level labor about 1970.

Women's liberation started increasing the supply of entry level labor about 1970.

The Immigration and Nationality Act of 1965 started increasing the supply of labor (not just entry level) about 1970.

The Donor Party liked this because it lowered labor costs. Oh, did I say "Donor"? I meant "Republican".

The Elect A New People Party liked this because 2 of the 3 sources of new labor would vote to Elect A New People. Oh, did I say "Elect A New People"? I meant "Democratic".

So you have a huge influx of labor and this is interpreted as a "labor shortage" by both parties.

Combined with the fact that FDR's "New Deal", in effect, nationalized many of the functions previously performed by the labor unions -- turning the national border into a de facto picket line that, for example, that neoNazi Eisenhower enforced with "Operation Wetback" (deporting most of the illegal immigrants) -- and the labor movement effectively collapsed.

Elizabeth Warren, before she got conned into becoming a politician, was the only mainstream academic to come close to documenting even part of this. See her Jefferson Lecture titled "The Coming Collapse of the Middle Class.

Since 1992, I've been advocating replacing taxes on economic activity with what amounts to an insurance premium for the protection of property rights, and distributing the revenue in a citizen's dividend. In that white paper I predicted a lot of what has now come to pass as a result of centralization of wealth and burgeoning welfare state rent seeking.

Here is a link to a recent synopsis of that proposal.

Happiness is relative

[Aviation Pete]

Psychology studies show it's not the absolute material wealth that makes you happy and content but the relative, in comparison to others in your social group. That's why top executives have spiraled up their pay packages, and why the middle class never lowered their work time below what is filling your day.

When Volkswagen experimented with 4-workday weeks 20 years ago, local plumbers and carpenters fell on hard times because everyone now used the extra day to fix things themselves, or even work on the side on that extra day. While the unions keep telling you that workers would relax during the extra time resulting from reduced work, in reality everyone tries to make a little extra on the side.

Also, having a job gives meaning to your life. Being told that you will be needed less is like telling you that you are a burden - nobody wants to hear that. That is also why today both parents work, even though they could enjoy the standard of living of a single-earner household of 50 years ago. But to keep up with the Joneses and to feel better for themselves both are now working, and the downside of less parenting seems to be generally accepted.

Re:Happiness is relative

[Wycliffe]

"That is also why today both parents work, even though they could enjoy the standard of living of a single-earner household of 50 years ago."

You are delusional if you really think so.

I think it depends on how you define "standard of living". If you don't pay for any technology invented in the past 50 years (drugs, cat scans, cable tv, cell phones, internet) and reduce your house to the square footage they had back 50 years ago, move to someplace semi-rural where you chopped your own wood and had a garden, then yes, you could approximate the standard of living 50 years ago on a single income. That doesn't mean the second person is not "working" though as now that second person is tending a garden, chopping wood, etc... but the idea that 50 years ago only one person "worked" is also simply not true. Sure, only one person worked outside the home but the other person still very much worked.

Re:Income inequality has *RISEN* under Obama?!?!?

[Anonymous Coward]

You're mistaking fault with reason, as many people do. There's inherent barriers to entry--capitalism is about capital used to make further capital which is inherently a self-enriching system for the rich. Further, the overall standard of the living of the world has vastly increased if you include all the Chinese who now have (relatively) good paying jobs along with all the (relatively) cheap goods produced as a by-product of a lot of manufacturing being done in China--the last part materially helps everyone.

The real issue with wealth inequality isn't the inequality per se. At some level, it functionally is equivalent to just a number in a bank or a portfolio with a set number of stock. There's still plenty of opportunity to functionally advance into the very-well-off business owner, even if very few can enter the realm of the super rich; the argument that such has to be a real possibility is absurd for the same reason it'd be absurd to think that every musician must have the opportunity to be a mega star or there won't be enough music made.

No, the real issue is how money in politics has a corrupting influence over the process and the mega rich are quite capable of altering the laws so that, oh, we see workers in the US who are compoundedly hurt by the influx of investments from factories (and the like) from China. It's cheaper to buy a smear campaign against raising minimum wage or raising taxes, even by 1%, on the top 1% of earners to offset the massive budget deficits that the 1% so heavily, indirectly, benefit from. Personal dogma of the 1% is enshrined in law above the will of the people. And while all of this will in the long-term being corrected as China's economy moves much closer to a developed state, that still means potentially decades of an oppressive "elite" who have undue influence over the system.

But, again, in the long-term, it doesn't (mostly) amount to a lot. The drug war isn't a by product of this. General "tough on crime" over-sentencing isn't a by product of this. The US won't default on its debts, even if it finally comes to raising taxes on the top 1%, because the 1% doesn't want to move from the tax/regulation paradise it bought. In general, so long as the 1% continue to be focused on numbers in a bank as more of a game, the actual real harm is mostly minimized and doesn't matter a lot*.

* One could argue about the cutting of social services, but I think that's a broader egotistical issue of Americans who subscribe to Social Darwinism and has been, sadly, a cornerstone of the US for a long, long time. The same with racism, issues of gun violence, etc. Cultural issues like that are mostly unrelated to the China/US trade relation.

Re: Income inequality has *RISEN* under Obama?!?!?

[JohnNemesh]

15% of the US trade deficit with China is dur to WalMart ALONE! So yes.

Re:70s

[allcoolnameswheretak]

It has nothing to do with the gold standard. Corporations move their HQ to tax havens like Ireland and pay next to nothing on their profits. Executives collect obscene amounts of bonuses in addition to their ever increasing salaries, and then shove their billions into "charities" that are of course under their control but it makes them look great in the public eye. Meanwhile most of the tax burden has been shoved on to the middle class. All of this thanks to bullshit conservative policy making that protects the wealthy, and thanks to an elitist lock-out culture of Harvards and Yale's only the wealthy can afford, it stays that way. But this is not just a U.S. problem. Every year it gets harder and harder for the middle class to maintain the standard of living, despite the increase in productivity. In Europe it used to be you could use your hard earned, taxed income as an employee to buy a house, or company shares, or other investments as provision and to start building a fortune. Today more and more rocks are placed in your path and when you perform these investments you are taxed again and again, every time money exchanges hands. Meanwhile the super rich have their financial advisor in Monaco handle their financial transactions and don't leave a penny in taxes.
If you are down you are supposed to stay down, and politicians are not interested in changing that as they are eager to curry favor with their rich audience, for when their time in politics is over.

Re:Income inequality has *RISEN* under Obama?!?!?

[tverbeek]

The increase in the income gap began around the same time that trickle-down supply-side economics became national policy in the 1980s. Having one president or another in office doesn't magically change the course of the economy. That's driven largely by tax policy, which (last time I checked the Constitution) is controlled by Congress. Which is controlled by wealthy campaign donors who benefit from income inequality.

Because they are stupid.

[Lumpy]

No really, Not trolling.

If you work more than 40 hours, and you dont own the business you are trying to build, then it's because you are accepting the bullshit your employer feeds you.
if you have so much work you cant get it done in 8 hours a day 5 days a week, then they need to hire more people. You instead by working all kinds of free overtime tell your boss, "i am your slave, please abuse me".

Way too many workers are too stupid or lack the backbone to tell their boss, "no, I will not give up my life because you are an asshole and refuse to hire the workers needed"

When more do this, the problem of companies and bosses abusing the workers will go away.

Re:Because they are stupid.

[Anonymous Coward]

Way too many workers are too stupid or lack the backbone to tell their boss, "no, I will not give up my life because you are an asshole and refuse to hire the workers needed"

Boss, "Ok, fuck you then. I'll hire someone else. I have 30 resumes on my desk with people desperate to work here. Bye bye!"

Re:Because they are stupid.

[Kjella]

Way too many workers are too stupid or lack the backbone to tell their boss, "no, I will not give up my life because you are an asshole and refuse to hire the workers needed"

It's rational under US labor laws where you'll get laid off at the next opportunity, if they don't fire you on the spot for calling your boss an asshole. They'll hire the next guy, the "good" company you find that gets 40 hours/week is out-competed by the "bad" company that gets 60 hours/week and they either change their tune or go bankrupt. As long as it's one worker against the company, the blackmail is going to work. That is why most European countries have mandatory overtime pay where few are exempted.

I don't think I could work at any place without overtime pay, unless it's genuinely management which is exempted here too. It's not about the total compensation, it's about the incentive. One hour isn't free for me, so it shouldn't be free for my manager to ask for another hour. All businesses have something they want to do worth more than $0, so that just mean pile on the tasks until I am working overtime no matter how efficient I am. Sure that means that short term I could stretch my hours and bill overtime. Or more correctly, I have to say to my boss this can't get done in normal time, do you approve use of overtime. Maybe he feels he must approve to reach the deadline, even though he feels I shouldn't have needed it.

But that is not something that should be compensated with free hours, if my boss is not happy with the work/$ he's getting from me the correct time to deal with that is performance reviews and raises. If my work was poor, regular hours or not I should get laid off anyway. So we're talking about the cases where the work is good, but the boss just wants it cheaper. It's like a constant "renegotiation" of your hourly wage, doesn't matter if it's creative work one hour of "software development" is an hour. You get what you get inside that time slot.

Or the tl;dr version:
If you have 120 hours of work that needs doing, hiring 3 people costs 300%.
In the US, hire two and hound them to work 150% and it costs 200% + whatever compensation you manage to get.
In Europe, hire two and pay 150% for the last 20 hours and it costs 200% + 150% = 350%.

That makes it pretty obvious why Americans work so much and Europeans so little. We get more expensive the more you work us, you get cheaper.

Re: Income inequality has *RISEN* under Obama?!?!?

[Opportunist]

Hey, that gives me an idea. Think we can somehow tack global warming onto Obama?

Re: Income inequality has *RISEN* under Obama?!?!

[Anonymous Coward]

No, because global warming doesn't exist. I know this because the weather outside is cold, thus proving once again that Obama lied to us.

Re:Income inequality has *RISEN* under Obama?!?!?

[ArmoredDragon]

So a very small percentage of people owning almost all America's wealth is the fault of the Chinese?

I know this is going to be an unpopular opinion, but in my opinion it's the fault of those who routinely carry debt. Most people in America don't know shit about finances. They borrow heavily, and wonder why they never have any money. You know who profits? People who don't borrow. Not necessarily even the lenders, rather, just people who don't borrow.

And no, no amount of usury laws will change that. Usury laws create loan sharks, and unlike legitimate lenders, loan sharks don't answer to the law. Most people are just plain stupid and will borrow money at insanely dumb interest rates, even from dangerous people if they have to, just because they have no idea how to manage their own finances.

Borrowing also includes renting, by the way. Part of this comes from people who insist upon living in upscale expensive areas (i.e. New York, San Francisco) when it's clearly beyond their means, have a super high rent, and then wonder why they live paycheck to paycheck.

I personally have never made a whole lot (my current income at my IT job is just under $50k) but am already taking advantage of the situation. That is, I just paid cash on a shitty house, fixed it up, and now have renters in it paying me every month. (And no, I am not a slumlord, the last owner was, hence it was shitty, however unlike him I'm still in the process of bringing improvements to the property even while tenants are in it.)

Re: Actual Reason

[mjm1231]

A rather compelling argument has been made that widening income inequality is an inherent result of capitalism. The topic is covered in some depth in this book. Borrowing a brief summary from here:

...as long as the rate of return on capital (r) is greater than the rate of economic growth (g), wealth will tend to concentrate in a minority, and that the inequality r > g always holds over the long term...

To what extent this is a problem and what solutions there are can be debated. As long as you avoid debating with those who hold the insane position that all inherent effects of capitalism are good by definition.

Re: Income inequality has *RISEN* under Obama?!?!

[khallow]

If you're renting, you're borrowing a property. It's basically the same as paying interest.

I read your earlier post on the matter to determine what you mean by "same". The answer is no, renting is not the same as borrowing. A loan means you borrow money now in exchange for creating an obligation to pay in the future. Renting usually does not. For example, I might be renting a very expensive apartment in Manhattan today, but I can move out. I can't decide that I want a smaller loan and just move out of my old big one.

Re:Income inequality has *RISEN* under Obama?!?!?

[DoofusOfDeath]

I think debt is slavery.

Somewhat. I'd more say that debt which cannot be discharged via bankruptcy is like slavery.

Renting and borrowing have important differences

[dlenmn]

There are definitely similarities between renting and borrowing money, but there are important differences. Borrowing money means a (often long-term) obligation that you can't simply walk away from; you have to pay off the debt. If you're renting, you can just walk away once your contact is up. In my case, I only need to give 30 days notice if I want to move out.

The analogy between rent and interest also has problems. Rent means constant payments over time with a fixed total price and no long-term ownership; if you have a one year contract at $1k a month, then you know that you will pay $12k over the length of the contact and you don't own anything at the end of the day.

Repeated borrowing (like in credit cards or loans to pay off loans) means the price is not fixed, in part because the duration of the loan(s) is not fixed. If you have $1k in credit card debt, that could mean paying $1k immediately or it could mean paying a lot more over time. The flip side is that you do get long-term ownership of whatever you buy with the borrowed money.

Mortgages (and fixed-term borrowing) are closer to renting, but you own the property once the mortgage is payed off. Given the tax incentives for mortgages in the US, mortgages can be a pretty good deal.

Re:Income inequality has *RISEN* under Obama?!?!?

[tnk1]

The world where you actually allow other states to develop is a safer, more stable place. This is why no one seriously believes that the Chinese will attack the US short of some small land squabbles and trade issues.

The Chinese will eventually have to deal with the same issues we had to, and their standard of living will rise which will bring their benefits (and expenses) in line with US standards.

The major problem with that is the situations where countries like the US were riding high on a temporary inflated standard of living have to deal with a retraction of that. For all those who loved the 1950s, that was a windfall for the US because we were the only big country with any real undamaged industrial capacity left. That wasn't going to last forever. It was certainly not going to turn into some permanent prosperity situation were you could pay UAW union rates to unskilled workers and a pension forever. The enormous balance of human history has not really had any sense of "retirement" where you are somehow able to live off of capital built up in your life in Florida. Your only real retirement option was having some children, particularly daughters, around when you couldn't work anymore to take care of you, and maybe you owned your house and land.

Anyway, while the world will probably never completely equal out, a rising tide can lift all ships. As long as the barriers don't go up, prosperity elsewhere will eventually spread out and actual standards of living will rise over time. This may hurt for the West and the US in particular, but we shouldn't find ourselves relegated to the 19th Century again.

Re:Income inequality has *RISEN* under Obama?!?!?

[Micah]

Yep. I know the Bible isn't necessarily the most popular source of wisdom around here, but Proverbs 22:7 nails it:

The rich rule over the poor,
        and the borrower is slave to the lender.

Actually those are CHEAPER than CPI

[raymorris]

> Does that include rent, fuel, insurance, and mortgages?
> Only those are skyrocketing and not recorded

50 years ago, a gallon of gas cost 33 cents. If gas prices kept up with inflation (CPI), it would cost $2.48 today. I just passed a gas station and the sign says $1.87. So today's pay checks can buy MORE gas than the could 50 years ago.

You asked about mortgage / rent. Fifty years ago, the average home was 1,600 square feet. The average is now 2,600 square feet - people can afford much larger homes than they used to.

What's not represented in CPI is that the 1960s car needed a tuneup every few months (points, plugs, etc) while today's cars go 100,000 miles on a set of plugs. It doesn't represent the fact that 50 years ago, you had three channels in black and white while today you have 300 channels in HD.

I guess it's human nature to complain, but the simple fact is today we're spoiled compared to our parents and grandparents. Try wasting some food at an old person's house and you'll see they didn't grow up having plenty to waste like we do.

Re:Renting and borrowing have important difference

[ArmoredDragon]

When I say that, I'm speaking in terms of building your own net worth. Renting a house doesn't do that, instead it adds to somebody else's net worth. Borrowing money and paying interest does the same thing.

Which by the way, my savings alone didn't pay cash for the house I just bought, rather it was the result of having a mortgage on a house in 2011, and selling it in 2014. If I had rented in 2011 instead, I'd have nothing. Instead it was sold at $116,000 above what it was purchased for (after realtor fees, closing costs, and whatnot) and added my monthly savings over the course of a few years to pay cash on another house.

This is exactly why I equate renting to borrowing money. It's also why somebody else is building my net worth. I'm sure some random derp is going to call me out for being greedy, but so be it. Unlike most, I save money, and invest wisely. No amount of me telling this to other people is going to make them change their ways, even when I point out how stupid their status quo is, so I may as well take advantage, and I will.

Re: Actual Reason

[khallow]

A rather compelling argument has been made that widening income inequality is an inherent result of capitalism.

Which is easily defeated by a consideration of history. Wealth inequality has narrowed under capitalism as well (eg, various times during the Industrial Age when advances in technology were met by uses of that technology).

...as long as the rate of return on capital (r) is greater than the rate of economic growth (g), wealth will tend to concentrate in a minority, and that the inequality r > g always holds over the long term...

This a broken model since it doesn't consider the liquidity or utility of wealth. I call wealth which has a high notational value, but isn't even remotely that valuable in reality (especially in terms of conversion to a liquid form of wealth) "fake wealth". For example, I might have trillions of dollars suposedly = in specialized derivatives. But if that can't be converted to real dollars and used for something, then it's not actually worth trillions of dollars.

This leads to the problem that "r" above is an exaggerated number with little relevance to the real world. You won't care if I decree that every hair on your head is worth a million dollars, unless I begin paying you a million dollars apiece for those hairs. Yet I just created meaningless wealth inequality by my meaningless decree.

This is a real thing because we have a number of cases of trillions of dollars in perceived wealth evaporating overnight. It's a common cause of recessions.

Bottom line is that the growth of liquid wealth is going to be fairly close to economic growth and it can go either way and often does. There's no point to measuring wealth inequality when the wealth being measured is mostly useless.

I call bullshit

[rsilvergun]

Gas is only cheap because the Saudi's are trying to put Shale oil producers out of business. It was $4/gallon until then and the only reason it stopped there is folks were talking about abandoning gas and they got scared.

Rent is climbing rapidly this year. As for houses, that's the suburb effect. Yeah, I can get a 2600 square foot house. With a 3 hour a day commute. If I want a reasonable 30 minute commute I'm looking at 1000 sq ft if I'm lucky, young and rich.

Tune ups were cheap and you could do them yourself. Cars were a _lot_ simpler back then. They also polluted a lot more.

Cable TV doesn't really make my life any better. Americas watch a lot of TV because at the end of a long, shitty day it's all they've got left in them to do.

It's human nature turn a blind eye to the unpleasant realities of life. You've got to justify all the horrible things we do to maintain our meager quality of life in the face of the 1% constant assault. Walmart says it best. You're not destroying Unions and the American Working Class and turning back the clock on 100 years of human progress. You're saving money, living better.

Re: Income inequality has *RISEN* under Obama?!?!?

[ATMAvatar]

The US also had a heavy-handed progressive tax system from FDR until Reagan (at one point the top bracket was taxed at 91%), and we did pretty well. Over time, however, we have made cut after cut in the upper tax bracket and especially capital gains such that the system is now effectively regressive.

Odd that rather than increasing GDP growth year over year like trickle-down economics might tell us, in fact, our GDP growth in the last few years is lower than it was during the 90+% tax years.

Re: Actual Reason

[khallow]

OK. So once we follow your idea and successfully drive wages - ie: costs - down to slightly-more-than zero, who is going to buy the stuff business produces ?

Why would that happen? Is regulation the magic sauce for making sure you don't starve because you forget to ask for a paycheck? This sentiment reminds me of The Incoherence of the Philosophers, a work which among other things proposes that reality itself goes on as it does only because Allah wills it so. So do we have an economy and people getting paid for their work only because the regulators will it so? I'm not feeling it.

You need to consider that there's a revenues side of the ledger as well as an expenses one.

Somewhat lower wages is still better than no wages when it comes to generating revenue, wouldn't you think?

The thing that is missed here is that reducing profits also reduces living standards.

No it doesn't. An economy running on a razor-thin profit but still producing excess of everything it needed would have high living standards.

Here's what's missing: leisure time and spending, risk taking, insurance, research and development, and business expansion. But I'm sure that government will continue to take and squander much more than that razor thin profit margin as is their due.

Er, no. Living standards are declining because all the regulations that protected normal people's incomes have been systemically destroyed. That's why real incomes for almost everyone in the US have gone nowhere for thirty-odd years.

It's a nice story except that it isn't true. The labor regulations haven't changed much; benefits and unemployment regulations haven't changed much; minimum wage is still around; and health care has actually been expanded. What has changed? Well, nothing really. It's just part of the ongoing half century of economic shift to the developing world and growing wage parity between developed and developing worlds.

Everyone knows what works. Post-WW2 USA (until the neoliberals took over in the '70s, brought in the morally bankrupt NAIRU, deregulated everything, started selling off public assets and disassembling the public services - again, a common problem throughout the western world, though some countries had their Reagans and Thatchers much later - here in Australia, for example, we didn't go full retard until the mid-90s) was the quickest and most widespread increase in wealth and living standards in human history. It was a time of increasing real wages, a large and financially secure middle class, relatively high social mobility, large-scale public investment and full employment as a policy goal rather than a bete noir.

In other words, those darn Reagans and Thatchers didn't ban the billions of people who are eating your lunch, labor competition-wise.

And the great incongruity of your post is that the actual quickest and most widespread increase in wealth and living standards in human history happened after the period of time you mention. It is happening now, not in the 1950s. Now is the time of increasing real wages, creation of a global large and financially secure middle, relatively high social mobility, etc. What happened in the developed world then is now happening everywhere. But I guess all those people are kind of hard to see from whatever podunk country you're from.