I came into the "can't save, this is why" thread, and threw out some numbers and ideas that weren't well received. I didn't want to highjack the thread, so I'm starting a new one.
I believe the popular press plays with the idea that things are getting worse for the middle class. Usually while blaming the rich.
Some think it's because of political agenda, pushing class warfare against the rich, the conservatives, the repubs. I'm not a big believer in conspiracy, and look for a simpler solution. It's effective and easy. As a writer, you want to hook your audience, and the "injustice hook" works well. Plus many people enjoy the rush of righteous indignation of feeling screwed over. So any survey or study with an easily quotable executive summary that helps you make that case will get free press.
Anyone creating a study or survey is aware of this, and can spin their summary that way, and still get the numbers they were looking for.
This clearly works both ways.
I don't have much interest in any of those. I don't need anymore righteous anger in my life.
I am looking for proof that life is better. Not just my life, and not just through better tech; but economically better overall. Now I know things are anecdotally bad right now. The ones who are hurting are really hurting. My 2 best friends are either facing a layoff, or long term unemployed. Nothing about the rising tide is going to make them feel any drier.
Yet, I still want links to studies, commentary, and surveys about the improvements. Please, link yours in this thread, and discuss.
Here's a few of my favorites to get things started:
www.c-spanvideo.org/program/PoliticalFo ... oliticalFo "Steven E. Landsburg is a Professor of Economics at the University of Rochester, where students recently elected him Professor of the Year. He is the author of The Armchair Economist, Fair Play, More Sex is Safer Sex, The Big Questions, two textbooks in economics, a forthcoming textbook on general relativity and cosmology, and over 30 journal articles in mathematics, economics and philosophy."
And he has some of the best commenters on his blog. Fun for folks who like debate more than "gotcha moments".
http://jewishworldreview.com/cols/willi ... RV66GfivZ8 Walter Williams is a Econ professor and columnist well worth your time.
http://www.jewishworldreview.com/cols/sowell020806.asp Thomas Sowell is another econ prof/columnist. he's a bit more political than I'd prefer, but still a good read.
The Tax Foundation http://taxfoundation.org/ is a good place to check the numbers when someone's claims seem unrealistic.
Please, post your favorites.
Economic Fallacies
We could start with the economic fallacy of basing the term "middle class" on a measurement as dubious and illusory as taxable income.
However, since that is the prevailing measure, I did find it extremely interesting to watch the tone of the various news outlets last August when Pew Research released stats that since 1971, the "middle class" had gone from 61% to 51%. Of that 10%, 6% had become upper class and 4% lower class, yet overwhelmingly the media coverage was negative.
Even Pew's headline read "The Lost Decade of the Middle Class: Fewer, Poorer, Gloomier"
http://www.pewsocialtrends.org/2012/08/ ... dle-class/
However, since that is the prevailing measure, I did find it extremely interesting to watch the tone of the various news outlets last August when Pew Research released stats that since 1971, the "middle class" had gone from 61% to 51%. Of that 10%, 6% had become upper class and 4% lower class, yet overwhelmingly the media coverage was negative.
Even Pew's headline read "The Lost Decade of the Middle Class: Fewer, Poorer, Gloomier"
http://www.pewsocialtrends.org/2012/08/ ... dle-class/
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George the original one
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jacob
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A useful rule is to "remain descriptive whenever it's impossible to be predictive". Without prediction, explaining is just a game of making up arbitrary "narratives". I'd go so far to say that if you can't make up two contradicting narratives of something you can't predict, you don't understand it well enough.
@ George, why do those falling behind have to be the real story?
If we want to work from the assumption that more middle class and up earners is preferable, that most of the mobility out of the middle class was to upper earning levels is the real story to me. Since 1971 the upper class grew by over 40%. That really is incredible mobility I think! Those people who made the trip up are the people most interesting to me. I'd much rather see their survey results.
I'd also like to know, how much of that downward mobility was based on the demographics of the Baby Boomers downshifting/retiring.
If we want to work from the assumption that more middle class and up earners is preferable, that most of the mobility out of the middle class was to upper earning levels is the real story to me. Since 1971 the upper class grew by over 40%. That really is incredible mobility I think! Those people who made the trip up are the people most interesting to me. I'd much rather see their survey results.
I'd also like to know, how much of that downward mobility was based on the demographics of the Baby Boomers downshifting/retiring.
Debt creates fragility. Decreasing debt decreases fragility.
Students are looking more fragile. Everyone else is looking better.
The housing boom/crash was caused in large part by the conventional-wisdom-fallacy that home ownership is good and more home ownership is always better.
The student loan boom is caused in large part by the conventional-wisdom-fallacy that education is good and more education is always better.
Students are looking more fragile. Everyone else is looking better.
The housing boom/crash was caused in large part by the conventional-wisdom-fallacy that home ownership is good and more home ownership is always better.
The student loan boom is caused in large part by the conventional-wisdom-fallacy that education is good and more education is always better.
"I am looking for proof that life is better. Not just my life, and not just through better tech; but economically better overall."
Don't mean to nitpick, but what is your definition of "economically better"? I do not find the terms "life is better" and "economically better" to be equivalents, which is implied in the statement above.
But I think that your observation that life is good for some and not for others (the friends you mentioned) is more perceptive and meaningful. Not to sound like an old-guy broken record, but almost nobody lives in the aggregate. Either you are much better off or worse off and it probably has little to do with the weather, the price of corn, the value of AAPL or whether your neighbor won the lottery, got a job or lost one. And you can almost always find a better or worse economic condition in the past than that of the present, which means "better" is just a relative term, even in the aggregate.
For example, if we took a survey of the people reading this blog, I would bet you dollars to donuts that a great majority would say their lives are better off now than when they started reading this blog. Now do we really think that that result has very much of anything to do with the aggregate economy? I should think not.
People are as happy as they make up their minds to be.
Don't mean to nitpick, but what is your definition of "economically better"? I do not find the terms "life is better" and "economically better" to be equivalents, which is implied in the statement above.
But I think that your observation that life is good for some and not for others (the friends you mentioned) is more perceptive and meaningful. Not to sound like an old-guy broken record, but almost nobody lives in the aggregate. Either you are much better off or worse off and it probably has little to do with the weather, the price of corn, the value of AAPL or whether your neighbor won the lottery, got a job or lost one. And you can almost always find a better or worse economic condition in the past than that of the present, which means "better" is just a relative term, even in the aggregate.
For example, if we took a survey of the people reading this blog, I would bet you dollars to donuts that a great majority would say their lives are better off now than when they started reading this blog. Now do we really think that that result has very much of anything to do with the aggregate economy? I should think not.
People are as happy as they make up their minds to be.
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Riggerjack
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The thing I find fascinating about the middle class is the varying descriptions.
I remember someone quoting a survey saying that 80% of Americans self identify as being middle class. Descriptions vary from 25k to 100k income, some descriptions go to work responsibilities, or education. How you define it has everything to do with the story you are telling, rather than any objective class.
Now, clearly, ERE isn't about class, but the subject seems to always come up when we're talking about the general population, or most anything that is nationwide...
@dragline: existentially better vs economically better... Happiness is as happiness is. I don't think a economic discussion has much to do with happiness beyond meeting a bare threshold. The world is full of unhappy millionaires, and there are those who are happy in poverty. However, I don't think those are the rules, as much as exceptions.
That being said, the bottom 20% of Americans in income, are deluged with messages of how they are victims, getting screwed by the rich. I think that sense of righteous anger interferes with changing things for the better.
Not that this thread will in any way change that.
I remember someone quoting a survey saying that 80% of Americans self identify as being middle class. Descriptions vary from 25k to 100k income, some descriptions go to work responsibilities, or education. How you define it has everything to do with the story you are telling, rather than any objective class.
Now, clearly, ERE isn't about class, but the subject seems to always come up when we're talking about the general population, or most anything that is nationwide...
@dragline: existentially better vs economically better... Happiness is as happiness is. I don't think a economic discussion has much to do with happiness beyond meeting a bare threshold. The world is full of unhappy millionaires, and there are those who are happy in poverty. However, I don't think those are the rules, as much as exceptions.
That being said, the bottom 20% of Americans in income, are deluged with messages of how they are victims, getting screwed by the rich. I think that sense of righteous anger interferes with changing things for the better.
Not that this thread will in any way change that.
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LuckyMoneyCat
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That being said, the bottom 20% of Americans in income, are deluged with messages of how they are victims, getting screwed by the rich.
Really? Who are sending those messages? The mainstream media here seems occupied with primarily bullshit in my opinion.
http://www.bloomberg.com/news/2012-12-1 ... y-gap.html
"The disparity [between fast-food workers from their chief executive officers] has doubled at McDonald’s Corp. in the last 10 years, according to data compiled by Bloomberg."
What would you call that?
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Riggerjack
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@ luckymoneycat: That is exactly the kind of tripe I'm talking about. Here's a guy working 2 part time minimum wage jobs. Of course the right comparison to him is the CEO. I mean, they work for the same company, surely they should be paid about the same, right?!?
MCD is a franchise, so not only are you not comparing wages with the business owner's profits, you are comparing with the CEO of a real estate/advertising multinational corporation.
But that is the way to set the hook deeper. See? He's a perfect case to feel sympathy for. Oh, and just soaked in righteous gravy!
There is a purpose to minimum wage jobs, it is to teach the basics of employment, show up on time, everytime, and do what you are told, and get you ready for better. Better wages, better hours, better work. Whatever it is that you want to change, you will change. Unless, all your energy is focused on the injustice of it all.
Unionization! Yes! Of course he should put his spare time toward unionizing a field that hasn't had a success in 50 years of trying. Much better than developing skills and networking for a better job.
Now, I don't want to come off as uncaring (although I am), so I'll tell you what I would tell this guy. Get a job. Not another MCD job, if you want a union job, go get one. Even in the middle of the great recession, unions were dispatching apprentices. Go sign up, make whatever sacrifices you need to, to get to work on time. Don't suffer lifestyle inflation when you make more money, retire early.
The world is full of opportunities to develop valued skill sets. You have to be ready to jump on opportunities when they present themselves, and learn to actively hunt them down.
I truely do wish they taught these basics in schools, but as the teachers and staff are all liberals, who got their jobs by going to school and then getting a union government job, most don't even know it.
MCD is a franchise, so not only are you not comparing wages with the business owner's profits, you are comparing with the CEO of a real estate/advertising multinational corporation.
But that is the way to set the hook deeper. See? He's a perfect case to feel sympathy for. Oh, and just soaked in righteous gravy!
There is a purpose to minimum wage jobs, it is to teach the basics of employment, show up on time, everytime, and do what you are told, and get you ready for better. Better wages, better hours, better work. Whatever it is that you want to change, you will change. Unless, all your energy is focused on the injustice of it all.
Unionization! Yes! Of course he should put his spare time toward unionizing a field that hasn't had a success in 50 years of trying. Much better than developing skills and networking for a better job.
Now, I don't want to come off as uncaring (although I am), so I'll tell you what I would tell this guy. Get a job. Not another MCD job, if you want a union job, go get one. Even in the middle of the great recession, unions were dispatching apprentices. Go sign up, make whatever sacrifices you need to, to get to work on time. Don't suffer lifestyle inflation when you make more money, retire early.
The world is full of opportunities to develop valued skill sets. You have to be ready to jump on opportunities when they present themselves, and learn to actively hunt them down.
I truely do wish they taught these basics in schools, but as the teachers and staff are all liberals, who got their jobs by going to school and then getting a union government job, most don't even know it.
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secretwealth
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"Here's a guy working 2 part time minimum wage jobs. Of course the right comparison to him is the CEO. I mean, they work for the same company, surely they should be paid about the same, right?!?"
Straw man fallacy. The point is that the gap is widening. "has doubled" is the key phrase.
"as the teachers and staff are all liberals"
Please refrain from ideological finger pointing on this forum. We try to rise above that.
Straw man fallacy. The point is that the gap is widening. "has doubled" is the key phrase.
"as the teachers and staff are all liberals"
Please refrain from ideological finger pointing on this forum. We try to rise above that.
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Riggerjack
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@ secretwealth:
I (heart) income inequality.
Is that what you want me to say? I don't, but it doesn't in any way bother me.
The rich are getting richer, and the poor are not. That's the story you hear over and over. And repetition is truth, right?
On the world stage, America's poor are world's the middle class, and they are getting richer, just not as fast as the rich.
This is to be expected. If I make 10k/yr and you make 1 million, and over a decade, the economy doubles that, I'm making 20k per year, and you 2 million. Well that's not fair! I got a 10k raise, and you made an extra million dollars! Our income inequality grew by 99%! But wait, it's even worse: since I live paycheck to paycheck, and you have an abundance of spare money, you invest the excess to make even more!
This is an injustice that could only be inflicted on me by a global conspiracy of the megarich. They must be scheming away in their penthouses rubbing their hands together and gloating about screwing me over in their best Mr Burns voices...
Or, "The Rich" could be doing exactly what we're doing. Living on less than they make, and investing the rest. Sometimes with leverage.
What I like about ERE is that it teaches the money handling skills of the rich, just at a more common scale.
How anyone could be on this forum, wailing about the evils of the investment class, and not see the hypocrisy is just dumbfounding to me.
I (heart) income inequality.
Is that what you want me to say? I don't, but it doesn't in any way bother me.
The rich are getting richer, and the poor are not. That's the story you hear over and over. And repetition is truth, right?
On the world stage, America's poor are world's the middle class, and they are getting richer, just not as fast as the rich.
This is to be expected. If I make 10k/yr and you make 1 million, and over a decade, the economy doubles that, I'm making 20k per year, and you 2 million. Well that's not fair! I got a 10k raise, and you made an extra million dollars! Our income inequality grew by 99%! But wait, it's even worse: since I live paycheck to paycheck, and you have an abundance of spare money, you invest the excess to make even more!
This is an injustice that could only be inflicted on me by a global conspiracy of the megarich. They must be scheming away in their penthouses rubbing their hands together and gloating about screwing me over in their best Mr Burns voices...
Or, "The Rich" could be doing exactly what we're doing. Living on less than they make, and investing the rest. Sometimes with leverage.
What I like about ERE is that it teaches the money handling skills of the rich, just at a more common scale.
How anyone could be on this forum, wailing about the evils of the investment class, and not see the hypocrisy is just dumbfounding to me.
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Riggerjack
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On the subject of CEO pay, I had an idea.
I don't have a problem with how much money they make, it's pretty much a lifetime achievement position anyway. You only get there by dedicating your life to that goal. There should be a fine award for the effort.
I believe the biggest lie in America is that corporations act in their own self interest. This is clearly not the case, they act in the perceived best interest of the few at the top. I'm OK with that, except when it results in risky behaviors that cause lasting harm for short term gain. Enron, MCI and others come to mind...
The reason for this, in my opinion, is that CEO's are compensated with stock options, sometimes exclusively. That is the ultimate leveraged position. At that point, if you have an option on a million shares at $25, and you raise the stock price to $26, you get a million dollars by cashing it in. But if you get the price to $27 dollars, you get 2 million. This is a very strong incentive to do whatever you need to in order to pump up the short term price. If you succeed, you're rich, if the company folds, you are only out your time and reputation.
As an added plus, if you succeed, you get your riches compared to your lowest paid employees by yellow journalists. It makes for great opportunities for Mr Burns impressions...
If you fail, well, it's not like you were poor in the beginning.
This makes for more short term thinking than I, or most of America seems to like. I think the best way to deal with this would be an SEC ruling about time delays on Executive compensation packages. Tying financial incentives to long term goals. Average stock prices after 5 years, or revenue increases 5 years down the line, etc.
Just something to keep the decision makers focused on the long term bottom line, rather than next quarter's results...
What do you think?
I don't have a problem with how much money they make, it's pretty much a lifetime achievement position anyway. You only get there by dedicating your life to that goal. There should be a fine award for the effort.
I believe the biggest lie in America is that corporations act in their own self interest. This is clearly not the case, they act in the perceived best interest of the few at the top. I'm OK with that, except when it results in risky behaviors that cause lasting harm for short term gain. Enron, MCI and others come to mind...
The reason for this, in my opinion, is that CEO's are compensated with stock options, sometimes exclusively. That is the ultimate leveraged position. At that point, if you have an option on a million shares at $25, and you raise the stock price to $26, you get a million dollars by cashing it in. But if you get the price to $27 dollars, you get 2 million. This is a very strong incentive to do whatever you need to in order to pump up the short term price. If you succeed, you're rich, if the company folds, you are only out your time and reputation.
As an added plus, if you succeed, you get your riches compared to your lowest paid employees by yellow journalists. It makes for great opportunities for Mr Burns impressions...
If you fail, well, it's not like you were poor in the beginning.
This makes for more short term thinking than I, or most of America seems to like. I think the best way to deal with this would be an SEC ruling about time delays on Executive compensation packages. Tying financial incentives to long term goals. Average stock prices after 5 years, or revenue increases 5 years down the line, etc.
Just something to keep the decision makers focused on the long term bottom line, rather than next quarter's results...
What do you think?
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LuckyMoneyCat
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@henrik, from Graham's essay:
You need rich people in your society not so much because in spending their money they create jobs, but because of what they have to do to get rich. I'm not talking about the trickle-down effect here. I'm not saying that if you let Henry Ford get rich, he'll hire you as a waiter at his next party. I'm saying that he'll make you a tractor to replace your horse.
Does he have the FIRE sector in mind here? I don't think so.
You need rich people in your society not so much because in spending their money they create jobs, but because of what they have to do to get rich. I'm not talking about the trickle-down effect here. I'm not saying that if you let Henry Ford get rich, he'll hire you as a waiter at his next party. I'm saying that he'll make you a tractor to replace your horse.
Does he have the FIRE sector in mind here? I don't think so.
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secretwealth
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secretwealth
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Riggerjack
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Yes, Paul Graham is brilliant! I love this bit:
"Another approach would be to ask, if you were going back to the year x in a time machine, how much would you have to spend on trade goods to make your fortune? For example, if you were going back to 1970 it would certainly be less than $500, because the processing power you can get for $500 today would have been worth at least $150 million in 1970. The function goes asymptotic fairly quickly, because for times over a hundred years or so you could get all you needed in present-day trash. In 1800 an empty plastic drink bottle with a screw top would have seemed a miracle of workmanship."
I also really like his essay on why nerds are unpopular. An entirely different topic but well worth the time to read.
"Another approach would be to ask, if you were going back to the year x in a time machine, how much would you have to spend on trade goods to make your fortune? For example, if you were going back to 1970 it would certainly be less than $500, because the processing power you can get for $500 today would have been worth at least $150 million in 1970. The function goes asymptotic fairly quickly, because for times over a hundred years or so you could get all you needed in present-day trash. In 1800 an empty plastic drink bottle with a screw top would have seemed a miracle of workmanship."
I also really like his essay on why nerds are unpopular. An entirely different topic but well worth the time to read.
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Riggerjack
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