The paper itself: “The Fading American Dream: Trends in Absolute Income Mobility Since 1940.” Raj Chetty, David Grusky, Maximilian Hell, Nathaniel Hendren, Robert Manduca, Jimmy Narang. Graphs are in the back. http://www.equality-of-opportunity.org/papers/abs_mobility_p...
never got behind the paywall, so i have to ask:
What about the distribution? Is it more of an general stagnation or did the wealth concentrate more? Also, if the gap widened, got the few lucky (high-earners reproducing itself) or is social mobility intact?
Of course they don't; every time wages rise in a particular sector, this is seen as a "labor shortage" that has to be corrected. In order to differentiate themselves into a higher "class" of labor equivalent to what their parents were doing, those same 30-year-olds were forced to spend another 4-8 years in expensive schooling before they could enter the job market.
The solutions in the article are laughable. "Better education", ie more expensive & longer. More transfer payments (how does this address wage growth?).
Reduce entrance to the labor pool and allow people in that labor pool access to jobs regardless of the paper they hold.
Compound that with the percentage of income 30 year olds spend on housing, education, health care and child care compared to their parents and we have a recipe for disaster.
Price per square foot for housing has remained remarkably constant over time. People are spending more on houses than they used to because they are buying bigger houses.
Got data on this? In my anecdotal experience price per square foot has shot up in urban places, which is where the jobs for young people tend to be concentrated.
It looks like they applied CPI directly to the cost of housing. That is not correct.
CPI has a component of "owner's equivalent rent", which should be removed before cost-correcting the price of housing. Otherwise, you are removing the increase of the item you are searching for an increase of (Housing accounts for 1/3 of the CPI correction.) Their graph is instead showing that the buying power of a dollar is roughly constant when 1/3 of the CPI basket-of-goods is corrected with CPI.
Calculated Risk has a more sane analysis, you will note that the graphs are corrected with "CPI less Shelter": http://www.calculatedriskblog.com/2016/11/real-prices-and-pr... He doesn't include price/sqft, but note that there is a 44% increase in real prices between the 90s and now. Square footage has not gone up by that much in 20 years.
As a side note: AEI is a fairly political org, I wouldn't rely on their accuracy for anything involving stats, or math in general.
Maybe true in aggregate, but not true of many cities these days. For example, you can't touch a new home of any size in the Bay Area for less than about 750k, and that's even a long stretch. 250k for 2,000sqft would be a dream for many here.
That's simply not true, at least on the west coast in any reasonably active real estate market.
It was never $1,455/sq ft like it is today in Palo Alto, nor $500/sq ft or even $200 per sq ft. This is a recent phenomena.
Furthermore, price per square foot actually tends to increase nowadays on smaller homes, where you'll pay even more per square foot if you're trying to buy anything under 2000sq ft, and it gets really crazy when you approach 1200sq ft.
Yep, anywhere within a 2-hour drive of San Jose or San Francisco is crazy. You're lucky to get a single-family home for under a million, or a condo for under about 600. It's a big question of "do you have the right to live in a city you grew up in if you can no longer afford to live there", property tax laws, etc. It creates a situation where people are buying run-down houses I'd consider unlivable for close to a million dollars, and have neighbors who couldn't afford the smallest apartment in a 30 mile radius, but get to stay there and inflict their blight upon the neighborhood from which they are now very much priced out of.
One would think it's a kind move to not tax them on the actual value of their property, but everything else gets more expensive too, so now a quesadilla is $15 at the corner store and they can barely afford to eat, and their options for other housing are in a different state. It's very strange to me that people aren't taxed out of their homes, since if they can no longer pay for anything else in the area, their quality of life goes down dramatically , in a community who mostly just wants them gone, fighting against the merciless tide of economic "progress" just because they grew up there (and sometimes not even).
If you can't afford the rent, you have no say. Property tax is a form of city rent, from my perspective. Why are the rules different? It seems like people just like to pretend they can still afford to be in a place and resist the change for as long as possible rather than accept the world around them.
As houses become less affordable, there appears to be much more demand at the "entry level" range of $1-1.4M out here. So you have much higher $/sqft often times on a smaller home than on much larger, nicer homes at higher prices. In fact, those have been leveling off lately as there are only so many buyers at higher levels.
I think you know that in any kind of major metropolitan area with a strong economy that price per square foot is much, much higher (adjusted for inflation) than previously.
Taking the aggregate is deceptive because housing is much cheaper in economically depressed areas of the country.
Edit: Looked at the source of your data. It includes only new homes, and ignores existing housing stock. Your entire argument is deceptive and wrong. I regret wasting my time reading the source and realizing that you are cherry-picking.
30 year olds are buying larger houses because typically those are the only options.
It comes down to NIMBY local regulation enacted by the boomers with their FU I got mine attitude. Municipalities enforce size restrictions, ie you can't build too small, in order to ensure there isn't housing poor folk can afford. They enact parcel size restrictions which means a piece of land that could have 20 homes on it can only fit 5. They enact stricter and stricter building codes that the only way to make a profit for a builder is to build big and cram in features so the real estate agents can beat you over the head with them so you feel as though you'd be an idiot not to buy this massive house with things you don't need.
Say's law was the most counterintuitive concept I was exposed to in undergrad econ classes. After consideration it does make sense but runs counter to an entrepreneurial view of the world where products are created to serve a need.
My uncle lives in an area where a new house must be on a minimum sized lot of 1 acre. A nearby area requires 5 acres for a new house! I'd never heard of those kinds of restrictions before.
I live in Seattle and while I am aware that not everyone lives in a similar environment the concept of a minimum 5 acre lot staggers me. I consider myself lucky to have 600 square feet.
What kind of area has these rules and who sets them? To me a lot with 5 acres is officially "the country" where I would expect very little to zero regulation of what you can build.
He's in Western Washington, but not too close to Seattle. To him it's "in the country" but it's right next to town. I live in a rural place, "in the country" means something entirely different to me.
My definition of "country" is having a yard big enough to throw a tennis ball for your dog as hard as you can, as far as you can, within your property, and not have it hit something. Just any linear stretch of maybe 150'. People in cities very rarely have that, unless it's some kind of billionaire hilltop mansion type situation. Many people can't even own a pet because their apartment disallows it.
Same thing would apply to shooting a gun on your property. If you can do it without the cops coming, you live in "the country" as far as I'm concerned.
For example, here is a zoning map for New Canaan, Connecticut a suburb of New York in south western Connecticut. About a 25% of the town is zoned for 4 acre lots, 50% for two acre lots, and 25% for smaller lots (just my estimates from looking at the map).
We have that here in Portland, it's the urban growth boundry. To control the growth of sprawling suburbs and encourage higher density construction, outside the boundary you cannot get sewer service and so must build on a 1+ acre lot with a septic field. It works pretty well for us. I'm sitting less than 100 feet from our boundary right now (on the inside), and just the other side is acres and acres of open farmland.
To expand on that a bit: Supply and demand in houses doesn't work on the price. Supply works on the price; demand works on the monthly payments. When interest rates go down, the same people can now spend more on a house for the same monthly payments, and so the price rises.
It would also be worth looking at the geographic distribution. I suspect that most of that growth is from urban areas. Which, then, would also reflect the ongoing urbanization (and corresponding rise in demand).
Anecdotally, this is not the case, even in more rural areas. My parents bought 5 acres and built a house for $100,000 (adjusted for inflation). I recently bought a house with half the square footage and 1/10th of the land for double the amount. And I got a great deal in the current market by being willing to live even further from town.
Yep. Moved to high cost of living city almost a decade ago. Always lived frugally, even though I'm now making decent money. The plan was to get the hell out of this overpriced, over crowded area with a stash of cash and head back to Midwest to pick up a nice home.
It's terrifying watching Zillow on a few Midwestern cities that had avoided the bubbles so far. It seems as if the coastal cash and / or Chinese money has now trickled its way inward. 25% price increases in 2 years for some of the newer condos I'm interested in.
I don't want to move just yet cause I like my job and wouldn't be able to find something similar in a smaller city, but now I fear I'll be priced out again. This sucks.
This is only going to get worse with software eating the world and automation of every possible task that we can. It has already started with companies like Amazon (in their warehouses) using robots extensively.
That isn't going to happen easily. My experience: I've talked about this to many people (highly educated, smart people) - most of them are adamant on the idea that human beings absolutely have to work to deserve anything, even food and water. This might very well be anecdotal, but very few people get ideas like Basic Income intuitively. It would likely take tremendous amount to first make people understand, then accept radical ideas.
I'm all for doing work, but never understood worship of hard work for hard work's sake.
I agree that it won't happen easily. Which is why I phrased it the way I did. But I do think that it must happen eventually (and really, it's just a stepping stone on the path to a post-scarcity society).
All humans have a psychological need to be needed. The current way to best feel this is to provide income for yourself and your family through work, and provide a service for your employer. This is extremely satisfying for a majority of people. Take away work and these two things collapse.
To get UBI to work, we need a new way for people to feel needed.
I disagree entirely that work is the best way to feel needed, and that feeling needed is necessary. I work because I have to, not because I care about working. If I didn't have to work, I wouldn't. I would spend time on personal projects and enjoying my life with my friends. Relationships are far better than work for "feeling needed".
To be honest though, I don't care about being needed. I don't need to exist. I like existing, and I don't want that to change any time soon, but not being needed doesn't affect my enjoyment. I like when my existence is appreciated by someone else, but my happiness and mental wellbeing is not predicated on that.
Yep, +1000. This is apparently very hard to grasp for some, or they just really love working (which I have my own doubts about). It's crazy to me that in this age of bounty, everyone is positively required to sell at least 40 hours per week of their time or face social exile, starvation, homelessness, etc.
I think another aspect of it is that people want it to feel fair, and that's a complicated thing. It doesn't take much hunting to find videos of someone chastising another customer at Walmart for paying with a government assistance card. We have this strange animosity toward anyone we deem doesn't work as hard as we do for the same result. Well, it's literally true that some people in this country make 1000x what others make while working less hours, doing less "hard" labor. Personally, construction, food service, mechanical maintenance, etc work much harder than I do, even though they might not have a clue how to do what I do (I would also likely suck at their job initially).
I love my work, and hanging out w/ the other coders on slack, but I would prefer not being forced to work, I'd much rather it be a 'choice' not something thrust upon me, or that I could live off 20 hours per week and spend the other 20 working on prototypes for web and mobile apps.
There are a number of reasons why health declines after retirement, said Dave, but, mental and social stimulation are a large factor. For many people, work is where they are the most social and do the most physical activity. When that core social network is removed, health declines.
Specifically, this.
For many people, work is where they are the most social and do the most physical activity. When that core social network is removed, health declines.
By that notion, are all young Remote workers -- think 99% of the Wordpress core team -- declining in health and dying? I'm not buying this.
I understand what you’re saying but I wouldn’t completely dismiss the psychological effect that a sense of feeling needed or the pride you can gain from work has on many people. The sense of being needed may not be important to you, and to be clear I make no negative judgement about that, in fact I’m glad to hear from anyone whose own self worth or happiness isn’t tied to their job as this probably leads to much richer lives, but for many people this doesn’t hold true.
I often see the sentiment shared on HN that if posters here didn’t have to work for a living they would be equally or more fulfilled working on their own projects or spending more time with friends/family, but in some ways I think this feeling at least partially correlates with intelligence, creativity, ambition, or simply being a confident well adjusted adult. I definitely get the impression that HN is filled with people on the higher end of the intelligence/creativity/entrepreneurial spectrum and that might be resulting in a particular narrative that doesn’t always hold true for the rest of us.
I would say that I definitely fall into the very bottom portion of intelligence/creativity among the readership here. I don’t really have much to contribute to this community beyond personal anecdotes, and I’m frequently in awe of the projects and overall knowledge I see on display here. As someone who isn’t smart or creative, never did well in school and has no formal education beyond high school, grew up in poverty and has been homeless for extended periods (12 months or more) twice in my life, doesn’t have a whole lot of self confidence or things to be proud of, my work (which involves machining and precision manufacturing) is pretty much the main thing that gives me a sense of self worth. For many people that statement may seem sad or somewhat pathetic, but it’s honestly how I feel.
I live in LA county, not exactly a low CoL area, and as a single person without dependents I can very comfortably survive on $1100-$1200 per month. BI could easily fulfill my financial needs but it wouldn’t do much to provide for the other things that my work provides for me, namely the sense of purpose and pride it gives me. I understand that BI doesn’t mean the end or work, or that people wouldn’t be allowed to work or seek out volunteer opportunities, so my comment isn’t a general critique of BI, particularly as the more I learn about it, increasingly from HN, the more optimistic and supportive I become of it, but a realization that while I think it’s effects would be very positive overall, I don’t think it would solve all of our problems. As a society we will still need to find ways to make people feel wanted. And as of now for many of us work is what fulfills that role.
Thank you for sharing, it's good to get outside perspectives on issues like this. I'll share a bit about myself as well, so you can get a better idea of where I'm coming from.
I don't consider myself on par with most of the stuff I see here either. I consider myself above average intelligence, but nothing special. I'm not particularly creative, but I love being part of the creative process with other people. If there's something I pride myself on, it's my ability to facilitate meaningful and effective conversation. I'm not very confident in myself; I think my above average intelligence lead me into contact with enough people who are simply smarter and work harder than me that I don't have any false notions of grandeur.
I get how work can provide you with a sense of purpose, I really do. One of the things I would do, assuming I didn't have to work, is volunteer for a non-profit that tackles an issue/issues I feel are important (like clean water for everyone). My personal projects would basically be two lifelong ones and whatever else caught my fancy. The first would be a music recommendation system that works differently from most others I've seen (any I've seen? copyright Jeff Holland, 2016): it would let you find music in genres you normally don't or have never listened to. The idea is, you can say "I like Queens of the Stone Age. What rap artists do QotSA fans like?" and it would suggest artists (and songs) accordingly. The great thing is, the sky is the limit when it comes to refining and expanding something like that, the challenges are technical and algorithmic. The second project would be a traditional roguelike with a different progression model for characters and story than is usual, with a technical focus on being truly cross-platform and providing a means of playing games via TLS on a central server (a la DCSS).
I know that was probably way more information than you wanted, but I wanted to give you some background on me. I'm not amazing or confident, but I do have a few things I'm passionate about. If either one of my personal projects was successful I would be incredibly happy. It doesn't even have to make me money if it makes enough to be self sustaining and the users find it worthwhile. All to say, I understand the feeling you can get from producing something valuable for others, and even enjoy it. I made a conscious decision when I was young(er) to disconnect that from my sense of self-worth, and it's now ingrained in me.
Essentially, my hobbies take the place of where the need to feel wanted would be. There's so much out there to enjoy that I don't mind if I'm not necessary (are any of us, really?); I can share the things I love and appreciate with others.
There are numerous ways to satisfy one's urge to "feel needed". To give two very different examples, volunteering for various projects (trust me, there's a lot of stuff that needs doing), and contributing to open source.
Amen to this. We need basic income if for no other reason than to bring one parent home, I don't care if it's the father or mother, there should always be a parent available and at home.
I very strongly agree. In the very much socially just rush to get women in the workforce we've lost sight of the damage done to children by separation from their parents, and the damage done to relationships by the staggering workload of managing children and a household with both partners working full-time. I would very much love being able to fluidly transition between periods of being a house-husband and employment, and my girlfriend feels likewise.
Basic Income does not mean people cannot work. What it does mean is people can choose to work at whatever brings them joy, rather than working at whatever job is available to have the money to meet basic necessities. And for people who don't actually want to work, they have that option too.
One can choose to work on whatever they want, however they want. Believe it or not, most people have an innate desire to want to contribute to society and/or improve/create things. Basic income is not communism, you'll still get compensated for doing paid work. As long as that incentive to make money is there, there will always be people working.
Basic income should be the solution we, as an organized group, give to all individuals to be able to express themselves.
All human beings have basic needs and the State have to provide this.
The State here is the expression of the will of the population.
Do not take the State as something socialist or communist, taking from someone and giving it to someone for free; no,this is provided by us, the population, for us, the population. We care of each other and we want that our kids have good education, we want to have accessible health care for everyone. And definitely, we want that, if in a few years, a lot of jobs are automated or done by someone in the third country, no one is left behind.
This is a common argument for basic income and, even though you say "Do not take the State as something socialist or communist", your argument is the same as it is for socialism and communism.
You say, "Do not take the State as something socialist or communist, taking from someone and giving it to someone for free; no, this is provided by us, the population, for us, the population."
---
Here's the problem.
Can you think about what, exactly, "the population" is? Is it tangible? Is it a singular physical entity?
The answer is no, "the population" is merely a collection of individuals! Individuals, of course, exist-- they are tangible, singular, physical entities. You are one. I am one. Individuals exist.
Populations, on the other hand, are abstractions.
My point is this: when an abstraction needs to be represented, it cannot do so itself. In this case, individuals are required to represent the population because, well, individuals are the only ones with the actual ability to do so.
Under your proposed system in which the State provides basic income to each and every individual, who decides how much each is given? Who will be the ones to actually control the means of production; and who will be the ones to actually control distribution of goods? Only some will.
If you think democracy as it exists today already performs poorly in representing the ENTIRE population (i.e., representing each individual fully to their individual desires) (think of the surprising amount of people who feel conned by the election results), then just imagine the extent by which people will likely feel when the State is responsible for just about E-V-E-R-Y-T-H-I-N-G in E-V-E-R-Y-O-N-E-'-S life!
Under your proposed system in which the State provides basic income to each and every individual
who decides how much each is given?
Hopefully economists, mathematicians, business & social services leaders. It's extremely complicated.
Who will be the ones to actually control the means of production, and who will be the ones to actually control distribution of goods?
Will largely be decided already at that point, we're well on our way already.
As for your final question, as automation increasingly destroys jobs, there is going to be increasingly severe social unrest - only then will basic income start to be seriously discussed, and by that time many people will likely be worrying for their safety, even wealthy people.
When I say the population I am referring to a set of people who actually believes that colaboration and resource sharing is the best way to success.
This 'population' (countries), are the places I want to live. For example, I would never live in the USA, because you dont take care of each other, you are an individualist society.
People feel a natural obligation to be rewarded for their work. "Don't work, don't eat". The fact is, giving people a small income makes them inherently lazy. Lazy people don't like to work, but they will do just enough to get by, so if you give them a min amount of $, they'll do nothing. Others will look at that and say, "How come they get money for being lazy?" It actually acts as demotivation for people who would work some. The guy who isn't making much to begin with isn't rewarded - it only makes his labor less valuable. Does it make him strive harder to gain opportunity? Not really. People who have tried multiple times to jump over the hurdles in their economic careers won't feel that obligation to continue to jump if they have their precious safety net.
Is a safety net nice? Sure, but as much as it's nice, I know full well I wouldn't be sending out resumes or even looking for what I should be doing if I didn't feel some obligation to work, whatever that be from.
The idea of giving people a flat income sounds nice in theory, but that's all it is: in theory. Practically, I believe it fails to account for the basics of human nature after that point, which is why the idea wouldn't work in practice. That doesn't mean it isn't humanitarian, which is where I guess it shines for some people. After all, it's nice to think everyone is taken care of, much like social medical plans. But in both cases (income and medicare) I think it's the reverse solution to the problem: It's trying to raise people up rather than lowering the bar. Vague analogy, sorry, but maybe it makes sense?
> I'm all for doing work, but never understood worship of hard work for hard work's sake.
I'm not sure what you mean by this, so let me try to answer this in a general way, for the sake of practice if nothing else. Personally, I view the body as being made to do work. It's very functional, well designed "equipment" - or at least better for all-purpose usage than anything humanity has ever created. Some people feel like they wouldn't be fulfilling their purpose without work. They wouldn't feel complete I guess. Notably, it is a personality-type thing, as there are types of people who enjoy doing much more than thinking, but everyone enjoys doing something, even if not work related. We'd get bored otherwise. Some people naturally associate the doing of things with working for a living. Some people find work to be therapeutic.
I'm rambling alot here trying to toss out ideas. Maybe I already answered the question in my feeble way.
What would you suggest to Walmart, Krogers, McDonald's workers and all Truck Drivers who will be displaced by automation in the next decade? Learn to code? Not everyone is cut out to be a coder, or has the money for education in the first place or the mentality to learn it online on their own.
Truck driver is probably the first job to disappear, this is also the #1 job in about 30 states. Truck drivers also touch many communities by travelling through po-dunk towns who's whole industry be it a couple mom and pop shops and a gas station IS because of truck drivers who frequent their route.
All of those communities will dry up, millions of truck drivers will be out of work. What do you expect people will do when they are starving, and the unemployment rises from 6% to 40-50%, by 2040?
There's currently an 83% chance that workers earning less than $20/hour will lose their job to automation in the future, and a 40% chance that those who earn between $20-40/hour will lose their job (forever to automation) in the not-to-distant future. Do you know anyone who falls in those ranges? Would you risk it all on 40-83% chance that your job will be here in 20-30 years?
What happens to the graduate who ends up graduating from medical school only to find out all doctors have been replaced by robots? They still have gargantuan loans and all, but zero employment options.
Source: http://www.geek.com/tech/middle-class-workers-are-losing-the...
Truck driver is probably the first job to disappear, this is also the #1 job in about 30 states.
That's not really true. This misconception came about from an NPR journalist who drew an infographic that appeared to show that truck drivers were the most common job in each state[0]. In reality, that infographic used BLS data - the BLS subdivides other professions to provide more granularity. In other words, all that infographic showed was that the BLS considers "truck driver" to be a less specialized profession than "teacher" (which is separated into different roles of teachers).
If you actually look at the number of truck drivers in each state and compare that to the size of the labor force in each state, it's a lot smaller.[1]
If we look at data that is consistently disaggregated into the most detailed nonfarm occupations, retail salesperson is the most common job in 42 states. In four other states (Alabama, Louisiana, Maryland and Vermont), cashier is the biggest occupation. Fast-food worker is tops in two states: Kentucky and Ohio.
Wow, seems like worse news to me. The number of self-driving trucks on the road today is probably low to zero, but the number of non-grocery retail stores closing every year, largely due to competition from Amazon (but also stagnant wages keeping demand low), is clearly in the thousands. I don't think it would be crazy to predict closings and automation within the stores that remain (e.g. Amazon Go) driving a collapse in jobs over the next decade.
I've met very very few genuinely lazy people. I've come to realise that people who may appear lazy are usually somehow impaired or beaten down. In one way or another, they have lost or never gained faith in their ability to push through, and have fallen into "don't expect much, try to survive" mode.
People feel a natural obligation to be rewarded for their work ...
If people are actively demotivated by seeing others idle and surviving, who cares? Provided that we as a society can afford basic income (including after it's been established and it's having various impacts on the workforce), it's no loss if people stop working. And there's only so much basic income could ever give you; it'll make the necessities of life free (or rather paid for), but if you want things beyond necessities (including any positional good), you'd still want to look for work.
Is a safety net nice? ...
If we can afford to provide a basic income, you don't need to work -- unless the economy goes so pear-shaped that we stop being able to afford a basic income. (And this seems unlikely, since automated factories won't be offered a basic income. If anything, basic income might increase consumer demand...)
The idea of giving people a flat income ...
I'd emphasize that this income will grow if you work -- and that it won't be enough to buy positional goods, by definition. You can keep body and soul together on a basic income, but to live better you'll have to find a way to engage with the economy. (And the presence of a hammock-grade safety net will give you more options, not fewer. Live on oatmeal and vegetables, and buy stock with your food savings; or work for years on a project that might or might not pay off.)
I'm not sure what you mean by this ...
"Made to do work" could mean any number of things. Tribal warfare, hunting, gathering, and social climbing are certainly things humanity has evolved to do; subsistence farming, artisanal crafts, and management are close enough that we're pretty good at them; but factory work, we're just plain not adapted to. Keeping strict schedules, doing small parts of a large whole, and repeating a single task for a long period of time: these are learned skills at best for humanity, and that's why such jobs get automated.
Some people feel like they wouldn't be fulfilling their purpose ...
They can find jobs and keep working. UBI isn't the end of employment, just the provision of support. Think of it as reverting to the economic structure of the classical world or the American South, except that this time the only slaves are robots.
I guess our ideas of how it would be implemented are different. Let's consider it from a practical perspective. What's the basic level of income? Right now, minimum wage helps some people (where cost of living is low) and not others (where cost of living is high), so asking this quantitatively, how much would you propose basic income be, assuming the dollar stays put? Of course, we have to get Congress to even pass such measures in a way that actually helps society, but let's ignore the government problem for our theorizing.
Second, what do you project would be future salaries? I know, that's very difficult to say, but let's toy with the idea since it's important that such salaries have an impact on whether people actually step out into the workplace... or if the sorts of jobs available are even something they can do.
Third, exactly where does this money come from? The rich have money, but it's awfully hard to get them to part with it. They're usually crafty enough to manipulate the system. The government can't keep printing money (without taking it out) because that makes it worthless. Money doesn't just magically appear when the economy "gets going". Let's not assume imports are going to decrease (at least not for this theorizing, even if Trump gets his way), or at least we should pretend that imports and exports balance out. I say this assuming that we might apply Basic Income at a global level, at which point "import" and "export" become meaningless. Money can't just cycle because the fact is, some people are in control of the resource supply and others aren't. On a small, small level, capitalism is like this: If we have two people, Mr A and Mr B, and Mr A has the resource supply, the way Mr B gets anything is if he works for Mr A, and Mr A pays him for the resources. Basic Income at this level would be taking from Mr A to give to Mr B some small, but significant amount, for just existing. Does Mr A get a stipend/basic income? And supposing Mr B works more. I wonder at what point would Mr B become like Mr A where he gets taxed more. Already we've seen companies move their headquarters to places like Singapore to avoid the heavy corporate taxing. I have no doubt that the rich (who can afford to move) will be glad to leave this country to find havens where their wealth is unaffected but from which they can still suck the wealth of other nations. Taxing laws here are critical because there are usually loopholes to get around it.
Fourth, how would this look with immigration? Seems - just from my observations - a number of liberals would like both immigration and things like Basic Income. These ideas seem opposed to me, since immigration doesn't necessarily bring much wealth, as it's often the poor who immigrate (assuming no wars or famine and such that drive people from their homeland, and those could be factored in, at least with Basic Income on a national scale). (I'm ignoring here, the fraction of people who immigrate just 'cause they like the country).
Why do you think it doesn't? If I'm getting a free hand-out, I don't need to work as hard to get the necessities, which is why I go to work in the first place.
His labor from his point of view, not from the economy's point of view. Certainly labor from him is good for the economy. But for him, he already has what he needs, so there's not as much incentive to get more. Sure, there will always be people who want more, but they may pursue alternatives to [what I'd call] standard, ethical labor in order to gain those ends.
I honestly feel basic income is a MUST have. I so much believe in it that I WANT the automation to come, I want to see the jobs disappear, I live for the day when robots do all the physical work and a job is optional--and we can pick and choose what we work on because having a roof over our head and food on the table, and healthcare is just a given.
We can be entrepreneurs, etc.. I have a ton of app ideas, but I work 45-50 hours a week and just don't have much time to implement anything. -- Even if we moved to 20 hours / week w/ lots of time for family, and leisure.
Mankind is supposed to rule the world, not be beasts of burden, and many are just that. Some horses live better than mankind. We have a friend who works at walmart and two other jobs, so his wife can stay home and take care of the kids. It's sad and pathetic - nobody should have to work over 40 hours just to have a house and home.
I think before that day comes there will be unrest and revolts, maybe even French revolution style, but in the end there has to be a better way.
So far automation has not resulted in net fewer jobs, but more productive jobs replacing more mundane ones. That has been the story throughout human history.
I see no evidence that is going to change. Indeed "AI" has so far only created jobs, not killed them.
So far automation has not resulted in net fewer jobs
Yes. Yes it has. Manufacturing has seen hundred of thousands of jobs replaced. And the amount of software developers or maintenance jobs created to make that work doesn't even begin to cover what has been lost.
As far as job creation goes, guess you'll have to check that up with the ever growing percentage of unemployment throughout first world countries.
yes there's less manufacturing jobs. There's also less farming jobs, and less clerical jobs, and fewer blacksmiths, cobblers, seamstresses and about a 1,000 other professions too. But the developed world is at near full employment.
Having a worldwide population of more than 10000 people ?
What I don't get about basic income is the incentives this would bring, which invalidate the whole thing. It's not a Nash equilibrium. What this would create is a huge class of 100% dependent people who have no power, entitlement and are in a very unfair relationship (to their advantage) with the rest of humanity (by current standards).
The productive group will hate the basic income receivers because they "steal" money. And the basic income receivers will hate the productive group because they'll be the ones constantly saying "no you can't have any more", "no we can't do that", "no we can't save your little girl by dedicated 50 medical personnel to just her", "no no no no no no" ... And while I don't believe in Ayn Rand, I do believe that the productive group can leave.
This will bring tensions and hate between the productive side of the population, which will be only a few, and the rest. The government, of course, will be in the pocket of the productive side, because they represent (and control to some extent) the limits of what is realistically/economically possible. The smaller the productive group, the more clout they'll have.
Eventually they will get rid of the basic income receivers.
That's not the case though because THEY are basic income receivers too -- EVERYONE receives even the 1% and elites. That's one thing that makes it better than current welfare. People on welfare KNOW they're 'leeches' and with that comes a stigma of being a trashy person because you can't get enough jobs to supply enough income for your family.
Take away welfare, give everyone the same amount monthly, and it's a citizenship 'right' or contract for being a good citizen of the United States. The only stipulation is you HAVE to have a physical address to mail the checks to -- meaning if you still for some reason want to be homeless even w/ the added income then you're sol. The goal should be 100% end to starvation and homelessness.
On top of that it spurs growth of the economy. When robots do take over and 50% are unemployed -- who will shop at walmart, or amazon? Absolutely nobody. The money will still flow up to the 1% in droves, for the absolute necessities, but eventually even that will drip dry. Give money to the poorer people though and they end up spending 100% of whatever they make usually.
This goes right back to the Walton's most likely, but it increases economic power, and gdp. I also think if you give everyone enough to be across the poverty line, then we could move to a flat SALES tax over income which would have lower tax for legal citizens / etc and more for those who are undocumented, or travelling through the states. Then we could alter and adjust the national sales tax every year or so based on whether we have a surplus or deficit. We can also do away w/ the IRS completely and end more bureacracy.
The incentive to make money and be rewarded for work is still there.
Regarding the unfairness concern, this is why I prefer rebranding it as a citizen's dividend funded by a land value tax. See my other comment in the thread: https://news.ycombinator.com/item?id=13141203 . Essentially this makes it morally justifiable. Not to mention our system is already unfair in that rentiers profit off the earth's land, and rich people don't have to work.
We're already seeing the same tensions due to automation reducing the number and quality of jobs. We have a 1% class that have orders of magnitude more than what everyone else has while the plebeians barely scrape by and can't find steady, quality, decent paying work. Basic income is the solution to reducing this tension. Another option would be guaranteeing jobs, but I think that would be extraordinarily inefficient, and it perpetuates this notion that people without money have to work for people with money to justify their existence.
We're already highly dependent on each other. Chances are you work in an office and aren't growing your own food, building your own homes, maintaining your own plumbing, building your own cars, manufacturing your own products, and so on. Basic income just says that we have enough wealth to go around and we're all shareholders of this land, so here's your dividend for permitting others monopoly ownership of our land and its resources. It also says that in an advanced enough society, nobody should starve and go homeless.
Without a basic income, mass job automation and extreme income inequality will lead to a French Revolution.
Excuse me? I don't work because I think I should have to. I work despite that. I work so other people can someday benefit from, you know, FULLY AUTOMATED GAY SPACE LUXURY COMMUNISM and all that.
That's why I think basic income supporters should also be advocating for a land value tax to fund the basic income, which should really be rebranded as a "citizen's dividend". This shifts the source of funding from coming off "the backs of hard workers", to compensation for allowing others the privilege of denying you monopoly ownership over our collective land and natural resources. Rather than an "us vs. them" mentality, we're all collective shareholders of our land, and basic income then become's the dividend.
Regarding "hard work", we need to start seeing work as a means to an end rather than an end in itself. We need to focus more on what it is that's actually being accomplished rather than whether or not somebody's working hard. If society can operate without you needing to work hard, then hard work should be a choice.
The word is "serf", but your claim makes no sense anyway. A serf is not someone who receives money from their government. In fact, the whole point of Basic Income is you get the money even if you don't do any work at all, which is basically the complete opposite of a serf.
You're actually paying them to not riot. Serfs provided the core of a relatively stable body politic. They could be called on for war. They didn't have much economic power individually. They could be pushed around by the powers that be. They were also largely disarmed (Hillary and Obama).
BI == Serfs until the government can implement either forced sterilization or State assisted suicide.
For those down voting, picture the US if there was no welfare state. What would all of those people do if they didn't have the state to keep them fed just enough to not riot or declare war on their government? The answer to that question is not improve policies to balance environmental stewardship with pro-business expansion.
In practice, I think many of those people would probably just die of starvation or exposure, unless some charitable NGO picked up the tab. I don't have enough statistics to say whether it'd be most such people.
I'm a supporter of basic income as an experiment but it is interesting to think about alternatives. Is basic income simply a stepping stone to some kind of Star Trek post-scarcity utopia where there is no concept of money or wealth at all?
We survived the industrial revolution, is it not just human nature to adapt?
One example I recently discussed with friends was the idea that most truck drivers may soon be out of jobs due to automation. Since this is a highly specialized skill it would be hard for those workers to find alternative work without learning an entirely new skill set. But would it be feasible for those drivers to simply buy self driving trucks much like they already buy their conventional trucks and simply enjoy their lives while the truck drives itself? So even if self-driving trucks show up tomorrow is it necessary to pay truck drivers just to live? Can we offer an incentive like retraining to those drivers?
Is basic income actually the solution or do we need to take a harder look at things like the income gap and a tax structure that strongly favors investment in creating actual value (goods and services) instead of wealth for the sake of wealth (investments).
Truck drivers can't simply buy self-driving trucks and kick back while the truck does all the work. That would require them to still be paid the same amount, and if trucking companies still had to pay everyone the same amount then why even bother with the self-driving trucks? Or more generally, why would the trucking company even keep the truck driver on as an employee, when it would be cheaper for them to just buy the self-driving truck and use it, instead of leasing it from the truck driver?
Many truck drivers own their own trucks and contract for the carriers so those are the ones that could buy self-driving trucks.
Regarding pricing I'm not so sure. If you run a trucking company and contract out driving to individual drivers that own their own vehicles you are paying for the service to get the cargo to its destination, you aren't paying for a person as much as a service.
I do agree though that in this situation truck owners would make less money but they would also have more opportunity to do something like purchase additional trucks or do other work such as last-mile driving to supplement the loss in long-haul income.
Many truck drivers own their own trucks and contract for the carriers so those are the ones that could buy self-driving trucks
Except they probably couldn't, because the carriers are going to lease self-driving trucks from specialized agencies that will exist exactly for that purpose, as they won't want the administrative costs of dealing with individual owners (which makes some sense when it's an owner/operator as an alternative to hiring a driver and buying/leasing a truck separately, but none when the truck is self-operating.)
So, since no one is going to be likely to pay them for use of the self-driving truck, there's no anticipated income stream with which to finance the purchase.
Somebody has to make those leasing agencies. That will create some jobs, but it is easy to see how 1 person can easily handle 3 fully automated trucks even without the typical logistics that big companies bring to the table. If this cost reduction causes 3x as much stuff to be shipped it won't be a short term problem, but I find that unlikely.
Flatbed and LTL freight prices will fall through the floor. You can't yet automate those kinds of freight because the cargo is so diverse and handling isn't something AI can do yet.
In my opinion, massive automation of tasks is going to cause a massive demand of programmers, developers and QA engineers, so no robot apocalypse yet.
Basic income is not the solution to this problem because this is not a problem. The solution to this 'problem' is having a better education and making tech more accessible for everyone.
In my opinion, massive automation of tasks is going to cause a massive demand of programmers, developers and QA engineers, so no robot apocalypse yet.
The question is not how massive it is in absolute numbers, but how does it compare to the amount of jobs that are replaced by automation?
And you know the answer to that question. If all jobs so replaced would create an equivalent number of "programmers, developers and QA engineers", nobody would automate, because it would cost more than human laborers.
The only resource conserved in this case is the amount of time spent to produce some good - it's not like robots can magically make more out of the same chunk of steel, say.
But if you need the same amount of people to produce the same quantity of product (jut in different roles), then, by definition, your automation does not conserve time.
On the other hand, if your automation does decrease amount of time spent per unit of output, and you run it at full capacity, then where do all the extra units go? If you say "other people", then that would imply that there was some heretofore unsatisfied demand that the market couldn't satisfy due to a labor shortage.
Automation is a great way to solve the labor shortage problem, but it's not always present. And when it's not present, you're just adding more goods without adding new workers (or increasing wages for existing workers) to afford those goods - so you'll end up with an overproduction crisis.
Note, this is not an automation issue. This is a capitalism issue, because in capitalism, the only demand that matters is the one that lets you make a profit. People who may need what you make, but cannot pay above cost of production for it, don't matter. Automation tends to increase the size of that category.
There will be more demand for a short while but a lot of that will also be automated away. Think about a period of 100 years aka your children and grandchildren. Not the coming 3 years as we programmers tend to do. Even if we will have another AI winter after this spring and summer; 100 years gives enough time for another spring and summer. Not only can not everyone do everything; many people cannot learn programming and QA. I would say by far most will not be able to. That is a difference with the industrial revolution; something like a horse carriage to bus driver transition is vastly different than a truck driver to a dev.
Sure for jobs like lawyer or doctor to programmer you can imagine but there are not many compared to physical labour anyway.
For both reasons, I do not see your opinion happening in the 100 year and after span. Maybe over the coming 10 but not 100. Wether I like it or not, my brain does not get over the choice of letting people perish, basic income or boycotting the future. Someone like Trump can bring jobs by just banning robots ; for instance by changing regulations so they cannot drive vehicles on public roads. But that would pretty quickly (again look at 100 year spans) lead to the US being no longer competitive on the world market for those particular (related) services.
Well, it is really hard to think about what is going to happen regading jobs in 100 years. I dont think that human mind is going to be removed from the equation. And if human intervention is, in fact, removed from most of the jobs, then what alternatives to get the basic needs are they going to have? Also, we have to be extremely careful because, even if we are not going to be there, we are paving their destinies now.
I agree we will need the human mind but for less and less jobs. And indeed my point is that we are paving that destiny now and therefor we need to work towards some kind of solution now.
I wouldn't be surprised if QA is completely automated right about the time that facial recognition becomes viable. I guess that means many years from now, but if the hitch to automating QA is having person-eyes looking at a page and using the site in order to find problems, then I think they might ultimately converge their tooling because there's similarities in there. Something you can throw your PSDs or Balsamiq URLs at it and wait for the notifications. Web page recognition rather than facial. Heck, it might be simpler...or already exist.
Massive automation of tasks performed by humans is pretty depressing because it indicates that some combination of technology focus/funding can't aim higher than what people are doing already.
What's massive though? Programmers currently make up approximately 0.8% of the workforce. You could increase the size of the industry by an entire order of magnitude and you still would only be employing 8% of the workforce. About the same rate as manufacturing today; a sector often scrutinized for no longer providing enough jobs for the populace.
This feels correct, anecdotally ... but is there data to support this claim? For example, savings rates going down, credit/debt going up, and consumer spending going down?
Note that this is savings rate net of taxes. It has been on a mostly steady decline since it has been calculated, with some spikes and a leveling out slightly higher than the rate before the last recession.
You also have to watch for savings going up and credit going down, to reflect people who are sick of being in debt and shying away from it wherever possible.
Sure, take a look at student loan debt for one glaring example.
Or the debt-to-income ratios required to get a home today versus 30-40 years ago. Credit card debt growth, medical debt growth, saving rates declines, etc.
The cherry on top is that our parents generation, who made more and had access to cheaper house, education, healthcare, etc., still barely saved for retirement. Unless, god forbid, your parents drop dead early, we are going to be stuck supporting them for a long time.
If the 0.1% can successfully convince people to blame their grandparents and magical robots for stealing all of the country's wealth then this trend is likely to continue.
It's not their fault we make less, but they should have personal responsibility for their own retirement, especially since the massive amount of growth in housing value and the stockmarket over their lifetime.
You make it sound as if before Social Security, people saved for retirement because they recognized they had to.
But of course they didn't-- because they didn't earn enough to save-- just like people nowadays.
Social Security is insurance against destitution in old age. It really doesn't function to take away any saving incentive. It just keeps old people from being homeless and starving.
Is someone wealthy just because the house they own has grown in value? Practical wealth is how much you have relative to the cost of living. Someone in a $1M house is not necessarily more wealthy than when their house was $100K if all their other living expenses have also grown 10x.
I think the idea is that we won't have the option to help us support our parents, because we'll need to keep living in the house (and haven't finished paying for it so we don't have the equity to borrow from anyway).
Because the increasing trend is that it is not financially viable for younger families to buy a home. So they would thus not have a mortgage to reverse in the first place.
Rather, they would be stuck paying rent and hopefully have enough savings/Social Security/other income to cover it as long as they needed.
We're talking about people who fall within a certain age range. Personal responsibility is something that makes sense when talking about a person, not a population. To my mind, therefore, personal responsibility doesn't have much to do with good policy.
I wish I could up vote this more. Supporting elderly people, or disabled people? These are good things that are good to do. Corporations paying for the negative externalities they dump on everyone else, and for upkeep on the society they owe their existence to? Also good things that are good to do.
A older friend of mine who structured financial products said that the worst thing we did for the healt of the Social Secuirty fund was the war on cigarettes. He said it in jest... but he wasn't wrong.
The TLDR is: smoking and obesity cause you to die sooner with less total medical costs[1]. This is great for things like social security since you can pay in over your entire life but never collect.
The story I remember hearing (and couldn't find a specific citation) was that anti-smoking groups made up a bunch of big numbers about smokers' high medical costs to scaremonger. To fight back Phillip-Morris did a study and legitimately found that smokers died sooner and total costs were lower. Unfortunately, that's not something you really want to publicize, so anti-smoking people can keep making up scary numbers and cigarette companies can't really fight back.
If I remember correctly he was structuring a derivative contract based on life expectancy/actual life time. The goal was to hedge risks between health insurers and life insurance policies.
Life insurance policies policies want to offset the risk of a group dying prematurely in the defined time window and health insurance companies want to offset risk a group of people living long but with signifiant health problems.
At the time it didn't go anywhere because some folks dubbed it "Death Derivatives" and he was working on it at the mortgage crisis was unfolding.
I don't judge people who didn't or couldn't save enough for retirement and are living on SS and Medicare exclusively. I like Socialist safety nets of those sorts, and am happy to pay into them. One day I will be old and sick too. We all will be, except those who die early.
I judge you if you didn't hold your government representatives accountable for excessive discretionary spending, which was borrowed out of Social Security and will need to be paid back with higher tax rates.
Well said. Critics rarely consider the potential personal benefit of SS in the future. Now, it's not a perfect system, but it has its upsides.
Critics definitely consider the personal benefit. The problem is that they don't trust that it'll actually be there, or that it's a system that actually can work as it has been designed.
For example, in the 80 years that it's been in effect, the OASDI tax rate has increased sixfold and then some. That increase was fairly steady for a period of time - and the reason it's stagnated recently is not because the tax revenue is sufficient (it isn't) but because political ramifications have prevented the tax rates from increasing. Obviously this isn't sustainable. You can say, "well, the solution is just to raise taxes" - but relying on periodic changes to tax rates is not a recipe for creating a system that can achieve a stable steady state without being subject to political meddling in the long-run.
A further problem is that Social Security hinges upon the idea that the current working population will be responsible for paying for the current retiring population. Unfortunately, the respective sizes of these populations can vary dramatically, which means that some generations will end up paying far more than others. People talk about Social Security like it's true time-shifted income (ie, savings), but it's not.
One way we've dealt with this so far is to increase the number of people who are paying into the system while remaining ineligible for collecting benefits from it, but that's also not sustainable (and it's also a really horrible way to treat people).
Once again, getting the state involved just makes things messy. Let people be responsible for their own well-being as they age. Without safety nets, people tend to be much more cautious and thoughtful when spending. Plus, people who are fit to raise smart and healthy children will also be more apt to do so, which is a must for any society!
Nah, screw that. We all deserve comfortable retirements, and we should fund it as a society.
Wealth inequality being what it is, yes, the wealthy can afford to chip in for the well-being of the rest of us. Or rather, we can afford to redistribute our wealth claims as a society in this way.
Why not? Wealth is a logical fiction we've invented, as to who has what monetary claims we enforce, and we can bend this fiction to our goals (including, as stated, the moral imperative to provide comfortable old age for all, regardless of personal means).
Well, I hope you don't judge people for an accounting fiction.
Any treasury bonds held by the federal government (for example, by the Social Security) is money the government owes to itself and has no real-world effect. The only part that matters is treasuries held by private investors.
Less government spending in the past would mean lower government debt (owned by private investors) today. That's only real effect. You can blame people for running up government debt if you like, but might as well skip talking about Social Security.
Any treasury bonds held by the federal government (for example, by the Social Security) is money the government owes to itself and has no real-world effect. The only part that matters is treasuries held by private investors.
I do not agree it has no real world effect. That money will need to be paid back to Social Security to pay people out. Its either paid by taxpayers, or by everyone through inflating our way out of the debt. Regardless, its an obligation to be paid.
Stop wasting taxpayer money and start using it to take care of citizens. That's what the role of government is.
Money has to be lent to be saved, of course. If the money is not invested in the provider or public sector, then the wealth won't exist later to meet the deferred needs.
I'm not sure you understand the implications of the argument you're making.
Any treasury bonds held by the federal government (for example, by the Social Security) is money the government owes to itself and has no real-world effect.
That is 100% correct. Which is the point. Those bonds are not a meaningful asset for Social Security; they have "no real-world effect" because they're an IOU payable by the same entity who offered it.
But the promises Social Security made do have a real world impact, and those promises will need to be redeemed. But Social Security doesn't have any assets of the type you say "matter".
As I understand it, the implication is that it doesn't make a whole lot of sense to think of the government as saving money specifically for the future expenses of retirees. At the level of the federal government, it's a pay-as-you-go system. Current taxes and treasury sales (deficit spending) pay current expenses.
(And it's a bit weirder than that because the Fed can retire government debt if it wants to, just by creating new money out of thin air and buying treasuries.)
Looked at from a certain perspective, federal taxes exist mainly to keep the treasury bond market from getting too big due to deficit spending.
So the financial question is really whether the treasury bond market is bigger than it should be, given anticipated expenses. I don't have any opinion on this. I'm not sure the average voter would have any idea either? Low interest rates seem to indicate that the market isn't too worried?
There's really two (equally valid) ways to look at this, from an accounting point of view.
1) SSA is independent. It has liabilities (the promises made to enrollees), and assets (the trust fund). Liabilities exceed assets in the long run, but until then (currently projected as 2034) the system is fine. The federal government, on the other hand, needs to count those liabilities at full value. This means government debt is significantly higher than generally reported, the Clinton surpluses never actually happened, and a lot of spending decision, in retrospect, look quite reckless.
2) SSA is not independent, but is part of the federal government. Social security has liabilities (the promises made to enrollees), but the trust fund is a wash. This means that the lower "net" totals for government debt are technically correct, and that there was a budget surplus in the 90s...but it also means that no provision was made to cover those liabilities; the system is being run strictly on a pay-as-you-go basis. And while they may not be technically debt, given the scale of the liabilities social security represents to the federal government, a lot of spending decisions, in retrospect, look quite reckless.
What's important to note is that these two stories are completely identical. It's like arguing whether a liter of water weighs 1kg or 2.2lbs; the answer is "both". :) In both cases the money collected via the payroll tax was used to fund general expenditures, leaving an unfunded liability. The size of the liability isn't in question, nor is the matter of who has to pay it. It's really just a qyestion of what you label the boxes.
it doesn't make a whole lot of sense to think of the government as saving money specifically for the future expenses of retirees.
That's not inherent in the concept of a pension system. It could have been run on a funded basis, with actual savings accounts; it was not due to political reasons. I took toomuchtodo to be decrying that fact. Yes, the system we have is a pay-as-you-go system, but in retrospect doesn't that seem like a pretty poor idea?
Also:
the Fed can retire government debt if it wants to, just by creating new money out of thin air and buying treasuries
That is legally impossible. (It also wouldn't work from an economic POV; it's effectively the same thing as just printing money to pay for SSA liabilities directly, and we know that funding government directly via the printing presses doesn't work.)
Medicare is fine, some social security facets are fine, such as disability.
Social security as a general retirement plan? Shitty program.
What it should be AT MOST: mandated investment in a retirement account that you can't touch. Although I would prefer to not even have policy here at all. This is only necessary because people are by and large shit with money and will not save without being forced to.
What is is: take money from workers and transfer it directly. It's not even invested to generate additional wealth.
The disability program is hurting society. You can get disability for having autism.
Once they are on it, they have incentives to stay on it forever. If they make even one dollar working they lose it all, so they make extra cash under the table through committing fraud, selling drugs, etc.
No one can sue them and take it away, so they do things like go without insurance, buy things on credit with no intent to pay, titling their car in someone else's name, and hundreds of other tricks they learn in their new 'job'. By day they can do whatever they want. People who work have to pay not only to sustain them but also for the damage that they are causing directly to them.
Seconded. That stood out to me too in his post. Disability seems to be widely abused in the western world. I'm for social welfare, but I'm not for mismanagement and abuse. Disability as it exists today is a concern that needs to be addressed.
You guys have the advantage of being able to work. Your minds and bodies are healthy. Man up and take care of those less fortunate, even if it means a minority game the system.
What is is: take money from workers and transfer it directly. It's not even invested to generate additional wealth.
Its invested, by law, in the safest asset known to man: Special issue US treasuries that can always be redeemed at face value (principal + interest), which come ahead of general issue treasuries.
"By law, income to the trust funds must be invested, on a daily basis, in securities guaranteed as to both principal and interest by the Federal government. All securities held by the trust funds are "special issues" of the United States Treasury. Such securities are available only to the trust funds.
In the past, the trust funds have held marketable Treasury securities, which are available to the general public. Unlike marketable securities, special issues can be redeemed at any time at face value. Marketable securities are subject to the forces of the open market and may suffer a loss, or enjoy a gain, if sold before maturity. Investment in special issues gives the trust funds the same flexibility as holding cash."
Why not invest in bonds or stocks? The amount the US government would need to invest would disproportionally move markets, but most importantly, the losses (when they occur) would be backstopped by the US taxpayer. There is no reason to needlessly invest the Social Security trust fund in equities when its most important asset is the ongoing ability to collect taxes (equities can go to zero; the ability to tax isn't going away under almost any circumstance, barring a complete collapse of the US government).
EDIT:
The treasuries are just an IOU in legal form.
All debts are IOUs in legal form. The reason the US government gets such low rates is because the market believes they're more likely to pay the debt back then Joe Schmoe. And the market would be right, which is why capital scrambles into treasuries at the first sign of global financial trouble.
"Invested". Only the US govt can use that term and mean "borrow" instead. The treasuries are just an IOU in legal form. Given the high debt level in the US, I wouldn't think of the literal term "invested."
I'd rather not live in a dystopic high-tech, low-life society where the elderly and destitute are tossed aside. But, as I walk down the street, I see homeless people sleeping just outside the entrance of Snapchat HQ (latest valuation @ ~$25 billion).
It's hard for me to understand how my ancestors, alive since the beginning of time, reproduced so much that not every person in the family line has a house.
Could you imagine working your whole life and end up with not even a shelter to pass on to the person "replacing" you?
I never plan to have a kid, but if I did I would feel obligated to give them a head start in this shit life. They wouldn't be fucking renting or taking out loans that's for sure.
"the market" (basically everyone) is rationally responding to the state and banks using credit creation via land to appropriate labour. That's killing productivity as people realise working doesn't pay and filching of others does.
Housing: Today's 30yo live in nicer houses, that are on the whole located in nicer places. Eg. in cities that have less pollution and more facilities than they had before.
Education: Okay, that kind of sucks. But in here Australia, as an example, costs of repayments for the education are way less than the reductions in tax rates over the last 30 years. We had a 60% marginal tax rate when I started work...
Health care: again, the amount and level of health care received today is far higher, and it seems that things are now "health care" that were something else 30 years ago... eg. my health fund has rebates for gym, massages meditation etc.
Child care: this is a little odd... have child care workers' earnings increased? Are there less kids/carer in kindergarten? Or are we just putting kids in kindergarten more, instead of leaving them with Grandma?
Finally: I would trade all of the advantages that the previous generation enjoyed for smartphones and internet. The quality of life today is, IMHO, incomparably higher that 30 years back.
I'd argue that education has never been cheaper. Schooling is where the costs have often grown dramatically.
And as far as schooling goes, the interesting thing here is that while the degree attainment rate (in the US, Canada, and I expect even Australia) has effectively doubled since 1980, the supposed benefits, such as a higher income, that prompted more people to attend an institute of higher learning have not been realized. The youth, post-secondary schooled at a much higher rate than previous generations, are not making more money or better off as this article and many other sources of data point out.
With those promises not fulfilled, I am left wondering why the cost of schooling is even found among the likes of housing and health care? It's an enjoyable pastime, for sure, but not something essential to support (a long) life like the others.
The sense of entitlement is a lot higher these days. I grew up in a 900 sqft house with 1 bathroom. Yet all my peers (myself included) seek out homes 2x, 3x or bigger.
Same with cars.... my parents bought used, reliable cars. Today we want fancy things.
Growing up we had cable tv and a phone line. Probably spent $50/month total. The family cellphone bill, home broadband, various tv services easily top out over $300/month.
We went out to eat once a month. Tops. It was a treat. Nowadays people (myself included go out 1, 2 or more times per week.
Earnings aside, current generations are spending way more because they want more.
I don't mean to sound like just being contrary to you, but your anecdote doesn't square with the article. If half earn less than you did then that would mean they wouldn't afford what they want according to you and want you wanted at your age, so either way, they're hosed.
US home ownership has gone up and down between 64% and 69% in the past 30 years, currently at the low end of that. But at the same time, the average new house went from 1,600 to 2,500 sqft.
Thirty years ago, how many people plopped down $5k for a TV? $700 for a phone? $150/month for telecom?
Life expediency has increased by 6 years from 1975 to 2010.
And to top it off, we're working less than we ever have. Average hours per year: 1,900 (1950), 1,800 (1970), 1,725 (1990), and 1,700 (2010).
Despite the "back in my day" doomsaying, on average, our quality of life has never been better.
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My two cents why:
Cent 1: In a globally connected world, we are painfully obvious of the millions of people living more comfortably than us. When it was just Mr. Jones down the block, it didn't feel so bad.
Cent 2: Culture and priorities have changed. Rural population has been dropping for decades. People are more likely to rent a 500 sqft apartment in a large urban center than rent/buy a 900 sqft house in a town of 20k. Not a bad thing, just a different thing, and we have to take into account the whole picture.
And to top it off, we're working less than we ever have
This really struck me. I am going to assume your numbers ar correct, but if you could point me to a source I would love that. (did a quick search on the web, couldn't find exactly what I would like)
My first thought was that it is fascinating that we would be working 12% less hours per person. I wonder how that break down by gender. The number I keep finding is per day men @ 8.4 vs women @ 7.7 which doesn't match your number because it is only talking about full time employment. Hence if you can help me find better numbers that would be great.
Then I realized the horrible truth residing in your numbers: in 1950 it was almost exclusively men who worked. Today women make up almost half of the workforce. On a per capita basis we are working much, much more than we used too. From this Wikipedia entry https://en.wikipedia.org/wiki/Working_time#United_States:
The average working time of married couples – of both husband and wife taken together – rose from 56 hours in 1969 to 67 hours in 2000
Turns out things are worse than they used to be. Nobody spent $700 on a phone but they did spend $600, in 1986 dollars, on a microwave - which is roughly $1300 in 2016. And few people spend $5000 on a tv today. A $5000 dollar tv is likely 75 inches or more - I don't know if I have ever been in a home with a TV that large.
The middle class has disappeared and it is not because they became wealthy, lazy or demanding.
First, homemakers aren't unemployed. They just work at different things.
Second, look at the employment rate charted over the last forty years or so. Some of that may be explained by retiring baby boomers, but it's the following generations that will need to pick up the economic slack to pay for retirement, healthcare, prop up their home values so they can retire, etc.
First, homemakers aren't unemployed. They just work at different things.
So you are agreeing - since before one person was devoted full time to homemaking, and now they must find paid employment - that work still needs to be done so it must be done in addition to the hours worked at an employer.
so instead of one person doing 40 hours at an employer and one person staying home to keep up the house - we have two people working 40 hours each and then working overtime to maintain their house after work. We've added 40 hours of work to the equation.
The average new house is targeted at a small minority of relatively wealthy people, because they're the most profitable market. It's not going to be terribly representative of what normal people want. (Even here in the UK, where new house sizes are effectively capped now, they still cost more than a larger older house because house builders want to make money..)
I hear this sentiment expressed a lot, as well as the sentiment that millennials only loaded up on education debt to fuel a 4-year party. In my experience they are both wrong in 90%+ cases and are typically used to invalidate any calls to pay more attention to growing inequality in this country.
You are probably noticing the people who go out to eat and have nice cars/nice things much more than the people that sit in their cubicle and eat their homemade lunch, etc. Probably don't pay attention to (or don't even have a clue about) the people you deal with on a day-to-day basis that rent a portion of a room (not even a whole room - eat your hearts out boomers).
Also, you are comparing your parents spending WITH A FAMILY to people who are likely single or DINKS. This is not a worthwhile comparison.
Your point with housing is semi-valid, but there are very few small homes where I'm living in southern California. I know tons of people that would jump at the chance to have a tiny house if it meant it was actually affordable.
I certainly don't mean to disparage college education, particularly as someone who has never gone to college but firmly believes that it can be a very rewarding experience, but from my own anecdotal experience it seems that for a not insignificant number of people it does seem to be more or less four years of partying.
I'm fortunate to have a diverse social group with many friends who did go to college, and even count a CompSci PhD among my close friends, but from my interaction with them I get the impression that not all programs are of even remotely equivalent rigor. In particular, I get the impression that for the non science/engineering related disciplines it can be somewhat easy to coast through the curriculum depending on the school.
Again, this is just based on my own observations as someone who has never gone to college so it should be taken with a large grain of salt. Normally I would completely discount my own opinion here as observation bias, the only thing keeping me from doing so is my feeling that if college was as universally rigorous as many say it is, and placed as great an importance on critical thinking and independent thought as I've been led to believe, we should be seeing a much more conscientious and knowledgeable citizenry considering we are living in a time were more people are going to college than ever before. I'm not sure that's the case however.
Agreed. I was merely comparing my situation. I am still (but barely) in my 30's and have a family of 4. And I agree about the SoCal thing (though there are smaller houses to be found, I lived in 1400 sqft in Orange County. But they are building McMansions because that's what people want.
Earnings aside, current generations are spending way more because they want more.
That's certainly true, but nowadays the incentives which nudge you to consumption are also much more intense, subtle and clever. We are tricked into things we do not need.
The ONLY escape is not clever consumption but no/reduced consumption, or actually more precise, any consumption which does not involve money to be transferred.
I absolutely disagree with this sentiment. I'm just at the 30 mark with many of my coworkers and friends in their mid 20s. The only entitlements they ever talk about are work related and that's because it's all we have to turn to when we're sick (like a pit crew on a track, we need to know we can get fixed up and back out there ASAP.)
Growing up I remember similar things as you do. Limited dining out, basic cable, etc. But that was a combined income household, and in my neighborhood, that usually meant the dad was a union guy and the mom was a 9-5'r. Back when there were fruitful jobs outside of the city.
Now, here I am, 10 years after the same point my parents became parents, happy to just now reach a point of self sustaining income that will finally dent my debt. Having now lived through 2 economic collapses, several major terrorist attacks, unpredictable employment, total displacement of entire industries, and a political environment that fuels extremists and extreme actions, I can't imagine making any kind of plans beyond the next 2 years, much less a lifetime.
This logic is flawed in the sense of completely misunderstanding of "progress".
Sure, the 900sqft home argument might be somewhat valid. But in the majority of the situations I've seen, it's the opposite happening. So I'd challenge this one for sure.
As for the cable TV and phone line... Yea. There is something called technological progress. We have more services today because that's the world we live in, a connected world, where work and personal lives merge and access to the internet is paramount.
Your parents bought used reliable cars, great, people still do. But cars are relatively cheaper/easier to produce as well. Are you going to say the same thing when the next generation "rents" car rides as their monthly expense?
Eating out... yep. People eat out more. It's more efficient and frankly cheaper in some scenarios. That's not always the case, but often is. And in larger cities where kitchens are absolutely tiny, cooking is not only inefficient, but sometimes not even possible. So, I'd challenge this as a misunderstanding of the times - again.
Where money is spent vs how it's earned and the cost of living play into all of this. And just because the allocations aren't the same, the idea that it should be attributed to "entitlement" simply puts you on the "out of touch" spectrum.
But they are. Because those are the difference between saving money per month and not. Disposable income is where we make a choice. We save it or spend it.
The increase of housing costs is also a result of double incomes. So while housing is more expensive than a generation ago, at least we have double incomes now. But of course, this increases costs for child care, as nobody is home to watch the kids.
It does mention that it is adjusted for inflation. And as a side you wolframalpha is great for checking. You can do searches like "1 1970 dollar" and you get $6.34 back.
About half earn more, about half earn less. Wouldn't that imply that the average earnings are about the same? If so, I don't know that I'd complain because that indicates stability.
This is true, but I wouldn't say the title is misleading. Especially when earning more than your parents is part of the American dream, that is social mobility. Which is discussed.
About half earn more, about half earn less. Wouldn't that imply that the average earnings are about the same?
Actually no, though this is a fairly standard misunderstanding of statistics. For an easy counter-example imagine generation one being [0, 100] and generation two being [1, 2]. Average wealth goes down, while every element is higher than 50% of the previous generation.
We know that the distribution of wealth is not that extreme (the 1% are not enough to make the 50% change required given that comparisons are relative to parents). I agree with you in principle, but I don't believe that it's a significant factor in this case.
This depends entirely on the underlying distribution of the data. In your example, the distributions are not at all similar, so it makes sense that you can't compare medians or averages between those populations.
I suspect that the distribution of incomes in the US remains fairly similar to what it was 40 years ago. Thus, if the median has remained the same, then the average probably also has.
I suspect that the distribution of incomes in the US remains fairly similar to what it was 40 years ago. Thus, if the median has remained the same, then the average probably also has.
If the distribution of income had gone unchanged, the spread of wealth would also be unchanged. But it has changed, see http://inequality.org/wealth-inequality/ or the source of your choice.
I could go on... but I think that's probably sufficient. While I have you here, quick question: why did you let yourself get away with saying "I suspect" rather than just looking it up? It takes all of 10 seconds to do and once you get in the habit you'll be right way more often.
I suspect that the distribution of incomes in the US remains fairly similar to what it was 40 years ago. Thus, if the median has remained the same, then the average probably also has.
The metric in question isn't the distribution's median. It's the percentage of children earning less than their parents.
These are very different values. So while I'll need to think more about the idea that medians say something about distribution similarities, thankfully those thoughts don't pertain here. For another example, of "earns more" not behaving the way you're expecting: if you set the earnings of everyone's parents to their wage - $0.01, we'd have a 0% "earns more" but extremely similar distributions.
If the distribution of income had gone unchanged, the spread of wealth would also be unchanged.
How so? Let's say I build a popular, free, social media network. My income from the free service is zero, but the popularity has investors (which could even be average Joes pooling their money together) quite willing to buy it for millions of dollars. My wealth has now increased by millions without a respective change in income.
If you click on the only link in the article, you will see they are measuring children’s and parents’ pre-tax incomes at the household level. This absolutely does include retirement account investment income.
While I have you here: why didn't you check that before replying? (I'm actually really confused why this seems to happen constantly on HN. These are really easy things to check before posting.)
I'm not sure I follow? The point is that wealth can be created out of nothing. It does not require income to amass. As such, income can go unchanged, while wealth can concentrate among those producing specific things of value.
Your link does not help clear up my understanding of your premise. Perhaps it would pay to be more specific when composing your comments?
Stability in worker incomes, while total wealth has grown substantially, means a lot of people are getting screwed. When you add in things like how health care costs are greatly outpacing inflation, it means a lot of people are really getting screwed.
That chart is the core of the article and answers several questions from the comments here: yes it's inflation-adjusted, the ratio has gone down over time (90% of people born in the 1940's earned more than their parents at 30, and it's gone down to 50% now).
Is that really that surprising? People born in the 1940's would have lived through a massive economic upswing post WW2. While their parents probably experience the Great Depression through their 30's.
I object to the subtitle "It becomes harder to reverse this trend" like it's an inexorable march without any possible cause. Just look at the difference in context between today and the 1972 reference date for the start of the study. Globalization and automation have taken a huge chunk out of the manufacturing sector, but the US economy has by now (at an aggregate) replaced those positions with knowledge/retail/service sector positions. What did those manufacturing jobs have that the new jobs don't?
Powerful unions, a strong social safety net, and a government that accomplished both because it didn't think taxing rich people was heresy.
United States political parties used to split along Labor/Capital lines until the Civil Rights movement in the 60s shifted politics to a racial fault line. Over the last 50 years Capital quietly co-opted both parties while the populace was duking it out over things like segregation, voting rights, and Affirmative Action, and people have finally realized what happened while they weren't paying close attention.
Trump didn't win "because racism". It's not an accident that a significant subset of voters "somehow" liked Obama, Bernie Sanders AND Donald Trump, while hating all of Jeb Bush, Hillary Clinton, Marco Rubio, John Kasich, AND Ted Cruz.
These people are tired of Capital (aka "globalist elites" or "corporate overlords" depending on the side of the aisle you sit on) winning every battle. They viewed the entire election cycle as a dog-and-pony show between hand-picked corporate surrogate A and hand-picked corporate surrogate B. They chose Option C. "Literally Anyone Else, Yes Even That Guy".
The problem with Trump from that perspective is that Donald Trump is not exactly on the side of powerful unions, strong social safety nets, and taxing rich people. He did leverage anti-elite sentiment, but he did it unfortunately with walls and "keep the Muslims out", not unions, safety nets, and progressive taxation. Donald Trump as far as I know is largely anti-union, not on the side of more progressive taxation, and not on the side of strong safety nets.
I do agree that people are aware of the economic problems (hence the Sanders crossover in particular), I just think that identity politics right now is more powerful than economic politics in the United States. It seems like the issues that dominate the media headlines on "the left" and "the right" -- and, in fact, the angry rants on my Facebook feed, anecdotally, are very identity politics oriented. Unfortunately I think politicians take advantage of this. A classic example of this being North Carolina's "transgender bathroom" controversy. In my opinion, the provision that was far worse of that law was the aspect that limited individual cities from raising the minimum wage (economic politics). But it did not dominate the headlines, the identity politics did.
You are right that people are tired of Big Capital / globalist elites. They have reason to be. But to reverse this trend, we need stronger protection of the service industry (which is in effect the new manufacturing job) and we need stronger education systems to promote knowledge work. As long as identity politics obscures economic policies, I'm not sure how this is possible.
Donald Trump as far as I know is largely anti-union, not on the side of more progressive taxation, and not on the side of strong safety nets.
Actually a big part of his appeal was that he was strongly for attempting to keep existing safety nets. Particularly when compared to the Paul Ryan "true conservative" wing.
His tax policy is a little more mysterious because it's fairly clear from his speeches that he wasn't reading any of the proposals that his campaign was putting out.
He worked in construction, real estate, and running hotels / casinos. And he tried to avoid hiring illegals. So he has a history of working productively with unions. Although I'm sure there are some nasty disputes in his past.
So I'd say he's more pro-union and pro-safety net than a typical Republican nominee.
he's more pro-union and pro-safety net than a typical Republican nominee.
That would be true if he had the first interest in actually governing. So far his approach appears to be "Hand off decisions to existing Republicans and talk shit on Twitter".
Trump was not a labor candidate and if there had been one in the race I think that candidate would have performed very well vs Clinton. Trump's strategy was successful mostly because he was allowed to continue unchallenged.
edit:
To clarify I meant that if there were a pro-labor candidate in the general election Trumps populist message would have been less effective.
Bernie didn't make it to the general election so he never ran against Trump.
Trump won the election by getting votes that mattered. We use an electoral system, not a popular vote. If the popular vote mattered both candidates would have run different campaigns so voter behavior would have also changed. It's possible that Trump would have still won the election if the popular vote were the deciding factor.
Personally, I'm thankful for that. This is exactly the sort of article I like to see on HN amongst the general tech stories, especially for the comments and insight shared by peers. I consider HN readers on the whole to be intelligent and, for the most part, to have insightful things to contribute.
'dang has made clear that changing community rules is not going to be a common thing. There's a lot of insightful discussion from him and other members that will probably answer a lot of questions you may have in the same thread I posted above, and the link provided there: https://news.ycombinator.com/item?id=13131251
Can you please post this on the front page - it's in the collective interest that that gets broad readership, otherwise confusion will reign, particularly if you're pruning threads which ask about it!
People who will have children ("eventual parents" for the purpose of this comment) are healthier, smarter and wealthier than people who will never have children. If the question is whether things have gotten harder for the average person, it is misleading to compare a group consisting only of eventual parents with a group composed of both eventual parents and non-parents. A better comparison would be 30-years-olds of today versus 30-year-olds (whether the 30-year-old has or goes on to have children or not) of the past.
ADDED LATER. A careful study or newspaper article on the question of whether people have it harder or easier than they did 30 years ago or 45 years ago would try to avoid comparing populations that a reasonable person would expect to differ for reason other than things in the country getting harder or easier. Whether or not my sentence above containing the phrase "are healthier, smarter and wealthier" is true, clearly one might reasonably expect systemic differences between people who have children or will go on to have children and people who do not.
Even if the "nonparent" group were on average more intelligent than the "parent" group, that would also be a reason to avoid omitting the "nonparents" from the older cohort in the study.
The fact that the OP does not even try to avoid those systemic differences suggests that either the author is not sufficiently skilled at statistics to be writing about what he or she is writing about or someone is trying to argue for some conclusion he or she is attached to, e.g., "it is awful how hard things have gotten in this country for the average person" or the article author is making the headline more dramatic than the situation actually is in order to get more clicks.
Can you cite a source for that? While there will be cases where that is true, it may also be that those without children have higher willpower (no oopses), for example.
Further, not all of the children's parents were younger than 30 when they had their child. Being childfree at 30 does not mean childfree at 40.
You said "A better comparison would be 30-years-olds of today versus 30-year-olds (whether the 30-year-old has or goes on to have children or not) of the past."
This is exactly what they did and what the data shows. 50% of kids today make more than their parents, vs 90% of kids 60 years ago made more than their parents.
I feel like we're missing each other points though...
It doesn't account for obvious confounding factors to prove it's conclusions of stagflation. Comparing parents to children has a pile of variables during this time frame that the article doesn't examine in the slightest.
For example it doesn't mention birth control once.
1) You have a fine point that it doesn't make sense to compare the percentage of (people who might have children + people who might not have children) to (30-year-olds of a previous era who went on to have children). In isolation, an absolute number like "50%" only has meaning if we assume that there are no significant differences in earnings between parents and non-parents.
2) Others are pointing out that the message of the graph is not the absolute percentage, but the trend line. The graph purports to show that the chance of greater earnings of (30-year-old maybe parents) vs (their own definitely parents at age 30) has decreased relatively linearly from 90% to 50% over the last 50 years. This could be explained by a demographic change in who has children over the same time frame, but it's not absurd to assume that the dynamics have remained constant even though the differences between the groups are unknown.
3) I'd be wondering more about how they accounted for inflation, since the manner in which this is done would drastically effect the results. I think the question essentially boils down to "at a given decile of earnings, does the average person today have a better life than the average person 30 years ago?" I don't know how one could answer this rigorously.
Everyone as a parent, but not everyone has a child. In both instances they are comparing "parents" a subset of the population. To "people" the total population.
Economic pressures can affect the decision to have children. Especially once birth control became widespread.
People who will have children ("eventual parents" for the purpose of this comment) are healthier, smarter and wealthier than people who will never have children.
I can't read the article, as it's behind a paywall. Does the article say that? If not, where does that claim come from?
I agree. I've seen a lot of people who have no intention of "settling down" or "having kids" become surprised when their peers who do exactly that become more "successful" (earn more money, move up in job position, etc.). I think making the decision to have kids instills a bit of discipline to get something stable in life.
vasaulys says> "I think making the decision to have kids instills a bit of discipline to get something stable in life."
I think this is not necessarily so. However...
I've seen a number of persons who have children and who believe your statement (or similar statements, e.g., "Having kids makes you more responsible", etc.) to be true.
And so they promote/hire a younger person who has chosen to pursue a family path rather than a more qualified person with a superior skill set.
I completely disagree with your premise. Can you cite any evidence of the claim that parents are "healthier, smarter and wealthier" than people who will not have children? In my experience the decision to have children is often not even a decision at all and is just something that happens.
The question is also not "whether things have gotten harder for the average person". The article clearly states:
"Economists and sociologists from Stanford, Harvard and the University of California set out to measure the strength of what they define as the American Dream[1], and found the dream was fading. They identified the income of 30-year-olds starting in 1970, using tax and census data, and compared it with the earnings of their parents when they were about the same age."
The question is the viability of an American dream based on opportunity for children exceeding that of their parents.
From the article:
“My parents thought that one thing about America is that their kids could do better than they were able to do,” said Raj Chetty, a prominent Stanford University economist who emigrated from India at age 9 and is part of the research team. “That was important in my parents’ decision to come here.”
People who are 30 now were 22-23 in 2008-9 during the Great Recession. This particular cohort (plus/minus a year or two) of graduates will likely have slightly depressed lifetime earnings relative to those a couple years older or a couple years younger. I would expect this year and next to represent the bottoming out of this trend.
This is based on a history of recessions. Unfortunately this one is different (really)... We've never had interest rates so low for so long. It's possible, and I consider it likely, that those younger will be even more affected. Consider the possibility that parents run out of money and living in the basement isn't even an option. Also consider there is a decent chance for another recession before this one is even over.
On paper, yes. Consumer deleveraging lasted for a long while after the 'end' of the recession though. If people are paying off debt with their money, that doesn't really help grow the economy. Google 'debt deflation'
Yes, for large corporations and banks of which directly benefited from the FLOOD of free credit (aka money) and ballooning asset prices provided by the FED, the recession ended. For the rest of us, all we got were higher asset prices and more taxes.
More than 50% of people in this country do not have 1000 bucks to cover an emergency, whether medical (LOL like 1k would do anything here) or a broken water heater, etc. More and more people are living on the edge, while large companies announce stock buybacks and mergers funded with cheap credit printed by the FED paid for with our money and our futures.
What makes me upset is that the economic realities do not match what is taught in large swaths of America. We are taught (at least in my community, and I am 30 now still living within 20 miles of where I grew up) that a very achievable ideal is a middle class existence with one parent working, and a small house in the suburbs. I am in the top 1% income earners for my generation and do not even come close to this.
I think it's important for young parents to start breaking this cliche that economic prosperity is an American standard. Instead we should be teaching that life is hard and you should count your lucky stars if you are able to afford anymore more than an apartment.
You must be exaggerating or living in New York/San Fran.
Here in the midwest is is very reasonable for a top 20% income for 30 yr old age bracket to have only one parent work. If you're top 1% you can definitely afford a house in the suburbs and have one parent stay home.
I guess it depends how you define "large swath". Is it a certain amount of landmass or population, a percent of total landmass or population, or some other metric? I think this line is needlessly pedantic. It's reasonable to interpret rubidium's comment as just meaning "the expensive housing in the NY and SF areas are too expensive to be feasible for top 20% earners, as the OP said, but by and large, a middle class existence is possible for most land in America." Population centers with expensive housing may be inaccessible for the regular middle class (when top 20% income earner means only 60k/year or so based on 2010 data[0]). This isn't really the right data to use, because the pay for people in SF is different than say, somewhere in Missouri. With that being said, it seems clear that the American dream of a middle-class existence with only one working adult, isn't realistic everywhere for everyone.
I might be meandering here, but I think this reasoning is actually flawed or biased, because it was never true to begin with. A factory worker could never afford to live in the upscale street, right? The only difference now is that instead of a factory worker not being able to live on the upscale street, there are whole neighborhoods, downtown areas, and maybe even suburbs that are unaffordable to a typical middle-class family.
I haven't looked for data to support these ideas, and am very open to points for and against.
I'm from Indiana - and that is exactly the problem. Sure, housing is affordable. But wages are a fair amount lower and a fair amount of jobs are low-paying. This is really a major problem with people looking at economic recovery - wages haven't caught up for a fair amount of folks. That all said, it might actually be easier to get to that 'dream' if you plan correctly and are willing to let a few things go: Alternatively, for some it might not be a choice because of the costs of childcare and transportation.
I live about 30-40 miles outside of D.C. The only people I know who have a house earn significantly more, or are dual income top-tier earning households.
The tech sector is this nice bubble where we've seen lots of economic prosperity. If you look at the statistics you'll see that's not the case for a large swath of America.
Life is not hard for the rentiers extracting labour for your right to exist in said apartment.
Where is all your labour going? Food? No. Transport? No. Energy? No. Rent? Bingo.
Why is this happening? Because we came off the gold standard and there is no limit to the expansion of fiat money, therefore it expands via mortgage lending to mop up all productivity gains. Get the women out to work! Land prices up. Efficiency gains? Land prices up.
We bid for land. The more we have available after basic living costs the more we can pass over to the rentiers.
We need land value tax to suppress rentier activity.
A lot of us landlords barely cover the mortgage with how much we can charge in rent. We don't simply get to increase prices and expect tenants to keep paying.
But at the end of it you get a free house for hardly any labour. Yes you have to do a bit now and again but it's hardly a full time job that your tenants have to do to cover your mortgage.
I never understand why you guys are doing it if you don't gain. You are doing it because it is easy money, an easy way to extract labour.
What are you expecting anyway in terms of an ongoing income stream from this endeavor? It's very low skill, to borrow you need a pulse and a job. To administer you need basic numeracy. Hardly any labour required, certainly not skilled. Sounds like minimum wage for the basic admin required, so what, a few hours a month?
The only "value" here is the ability to borrow to exert monopoly control over other wage earners in order to force them to give you a portion of their labour. That is the main ingredient in the majority of cases. Yes we need a rental sector but as I said it's low skill and the rewards should reflect this instead of dividing society into have and have-nots.
The rewards roughly do reflect this. Ordinary investing isn't clearly better or worse than investing in property. The problem is that ordinary investing requires many years of self discipline while paying a mortgage has the bank holding a stick over you to keep you from wasting your income on lattes and holidays.
Gold standard has nothing to do with it. What money is, at a fundamental level, is a promise you can later redeem for real goods and services. Why there's so much mortgage and student loan debt follows directly from the demographic changes - the retiring generation needs promises to provide real goods and services (both directly through saving, and indirectly through pensions and the like), so capital markets seek out the best opportunities to extract these promises and provide them.
By creating credit faster than the underlying wealth creation of an economy banks are appropriating real goods and services and the wealth generation later (or rather now as they lent for decades like this) and they walk off with the goods whilst we all drown in asset inflation.
I would agree that demographics played a big part. Boomers borrowed heavily as though the demogrpahic inversion were not a problem, and banks played along. Now we have the money supply collapse as we have more olds than young, meaning a collapse in credit supply which is a problem as the model requires that principal + interest is paid back which cannot happen unless more debit is issued into the face of loan expiry which destroys the credit but still requires the interest be paid from some other debt source.
Why else do we need constant QE and ZIRP? To encourage more borrowing to try and maintain the rate of credit creation to keep the money supply up as boomers pay down at their end of life.
What a nuts system and also a terrible one as all productivity gains are soaked up by adaptable pricing on land to capture all gains.
excited for my HN "you're submitting too fast" soon when anything about banks or rentiers is mentioned!
Credit is money - there's literally no distinction between the two. Precious metal currencies are only money because it takes way less systemic trust to believe that the bearer of precious metal coins can get things for them later. Gold-backed paper currencies are an interesting intermediate, basically adding trust that you can exchange them for the actual metal at banks.
While money is essential to facilitating purchases and sales of real resources outside the banking system, it is not itself a physical resource, and can be created at near zero cost.
The fact that banks technically face no limits to instantaneously increasing the stocks of loans and deposits does not, of course, mean that they do not face other limits to doing so. But the most important limit, especially during the boom periods of financial cycles when all banks simultaneously decide to lend more, is their own assessment of the implications of new lending for their profitability and solvency. By contrast, and contrary to the deposit multiplier view of banking, the availability of central bank reserves does not constitute a limit to lending and deposit creation. This, again, has been repeatedly stated in publications of the world’s leading central banks.
The current model of understanding is broken. To issue money nothing has to be created, therefore if one issues money whilst wealth creation stands still one appropriates some of the total wealth through inflation.
Before if you wanted more money you had to have more gold reserves, or the govt/central bank had to lower the exchange rate.
Because new production of gold would add only a small fraction to the accumulated stock, and because the authorities guaranteed free convertibility of gold into nongold money, the gold standard ensured that the money supply, and hence the price level, would not vary much.
the availability of central bank reserves does not constitute a limit to lending and deposit creation
Private banks decide how much land costs. And they always lend as much as they can, so land will always be as much as people can possibly pay. This means that no amount of efficiency gains will ever improve life. All you will see is inflation and people who bought just before the jump have a gain, but again the next batch are pushed into servitude. Because we haven't had a big step-change in efficiency for a couple of decades (and in part because it's not passed on due to globalisation / migration) it's misery all round, unless you are a usurer.
Of course a gold standard would limit the creation of money, but the ability of banks to increase the money supply would still exist under fractional-reserve banking.
You know, you could actually study why the gold standard is a terrible idea, rather than just fantasizing about it.
The financial trickery you're talking about is caused by deregulation and would happen on the gold standard just as often, but with probably far more disastrous consequences.
I don't like the gold standard, I agree there. I do however think it provided some break on the unfettered issuance of fiat credit.
In any case it seems you agree that unfettered credit issuance is a huge problem, and perhaps the root cause of the upward pressure on asset prices that inevitably moves in step with productivity gains / more work?
I am 40, and it was a nostalgic conservative thing among my parents' generation. For my parents and their fundamentalist subculture, it was almost a religious obligation, tied up in ideas about gender roles.
I'm more than a decade younger than you and grew up in a single income family, lots of children, solidly middle class, and neither of my parents had beyond a high school education. My dad was a straight C student through school and neither of my parents could help me with my math homework by the time I was in junior high...so hard working people, but not book smart by any means.
Lots and lots of my school mates families were similar.
Northwestern Pennsylvania. Rust belt, Great Lakes region.
Anecdotally, more than half of my peers had both parents working. My mother and both grandmothers had jobs. The attitude was that two incomes are better than one in an age of economic uncertainty - an era that kicked in no later than the 70s.
One thing to consider is that a growing portion of Americans (perhaps a majority, soon) do not want the small house in the suburbs with a white picket fence, 2.33 kids, a stay at home mom, and a 50 minute commute that the baby boomers' parents wanted. People are starting to remember that the reason we created cities is that city living is desirable, and they are willing to pay a premium for that.
If they weren't using inflation-adjusted numbers, I'm pretty sure that would be MUCH bigger news. Assuming people have their kids at 25, that would mean, in inflation adjusted terms, that would correspond to a 40% DROP in inter-generational income for the population mentioned here.
Just assume that all newspaper headlines will use the version that maximizes sensationalism.
"In our baseline analysis, we measure income in pre-tax dollars at the household level when parents
and children are approximately thirty years old,
adjusting for inflation using the CPI-U-RS."
So essentially this whole debate centers around how realistic one thinks the CPI-U-RS rates are... If you think they underestimate the purchasing power of money in 2016, then you'll disagree with the conclusions of the washpost article.
Is it just me, or does this seem like an effort to spin positive news negatively? Why not "Median income for 30-year-olds has increased since their parents were 30"? Or "Over Half of 30-year-olds earn more than their parents did at 30?"
If your child is two feet six inches tall at two years old, and two foot seven at 32 years old, they did get taller, but at a far slower rate than you would expect.
It's as if there had been no productivity gains in 30 years for the poor median 30 year old, while the fictional average 30 year old is doing better than ever.
This is WSJ red meat political controversy stuff. The story devolves into the usual "tax the rich" and anti-welfare state debate as any other political click-bait. I thought HN wasn't doing that for a week...
I actually agree with the premise and many of the conclusions, and if it popped up on Drudge or Breitbart or whatever I'd be fine with it, but why here? Why must every popular site devolve into either a virtual political cage match or another addition to the echo chamber?
We weren't, but since a week turned out to be longer than needed and I was worried about the cost of continuing, we ended the experiment early: https://news.ycombinator.com/item?id=13131251. So it's back to the normal guidelines now.
(The worry about continuing was because there was evidence that some people thought the change was permanent, and that was not the intention.)
Yesterday I reviewed all the headlines and saw none of the usual political click-bait sprinkled among them with their inevitable 200+ post flame wars. It was wonderful; like having a cast removed or getting a tooth fixed. I hope your experiment leads to a similar policy.
I had the same impression that there were fewer inflammatory comments, but am trying to keep two things in mind: one is that I know that I'm biased and would like to see quantitative data, and that there were submissions flagged on which I would have liked to see discussion by those on Hacker News. I think the data would be interesting regardless, but I don't think it would be meaningful because it wouldn't represent the HN that I'd like to see. I'd like to figure out tactics that reduce inflammatory discussion that still permit constructive discussion on contentious submissions.
Just a note: you _have_ to "tax the rich". Nobody else has enough money to pay the bills!
The question isn't whether to "tax the rich" or not - it's "How should we tax the rich" and How much should we tax the rich?" that we need to answer.
Meanwhile the correct answers are:
- Bring back heavy estate ("death") taxes to prevent wealth from being passed from generation to generation,
- Create heavy wealth taxes so that persons who are merely lucky don't monopolize the wealth.
Both the above should be done b/c goverment needs the money. Of course the other thing we need to decide is how much should the government spend, but that seems to have no limit these days.
I don't think you necessarily have to tax the rich. Their share of income should be reduced to the share they had maybe 40 years ago. Stronger unions would help for example. Having the owner class deciding they need more and more money can't work in the long run.
I don't know if it's true or not, but I've heard the claim that even pushing up tax rates to Eisenhower-era levels (without deductions) would still not solve the problem fully.
Instead, we simply have a demographics issue: Too many older folks with unpayable entitlements and not enough younger workers to pay for the bill.
Well. I guess the "No Politics week" wasn't going to last.
This goes to the core of socialized healthcare, Social Security, Universal Basic Income, and the dismantling ofsaid systems that exist.
The Baby boomers pulled the ladder up when they climbed up, and left us all in the lurch paying for them. You know, "Get the government outta my life, but dont you dare touch my medicare".
I'm sure it's got nothing to do with the fact that rich people now pay a lot less effective taxes than in our parents youth and that income inequality is at an all time high... no, of course not, the problem was that our parents "pulled the ladder while going up". Shrug.
I wouldn't be surprised if large number of parents of the 30-in-197X'ers were massively impacted by ww2.
Imagine growing up during the great depression and 'losing' 2-4 years of your young adulthood in the army. You'd expect that'd set you back earnings-wise by the time you hit 30.
It'd be a surprise if the folks turning 30 in 1972 didnt make more than their parents, if you compare depression+world war to the postwar rebound (especially in the USA)
Could my parents afford an iPhone? No of course not. Among many other things.
$$$ isn't the only quality of life indicator.
When doing this calculation, you of course adjust for these things. an iPhone would cost billions of dollars in 1970. Is that the figure we should use? Probably not. But it means that these calculations are largely arbitrary since we don't know the true value of an iPhone to a person in 1970.
No smartphones, no internet, no entertainment-on-demand, fewer rights for minorities, fewer rights for women, less capable medicine, more expensive food and clothing, fewer shopping hours, less safe transport, less safe workplaces, more expensive and shorter-ranged travel, less environmental protections, etc, etc, etc.
All this stuff is conveniently ignored when comparing against previous generations.
Who cares about iPhones? They could afford education, healthcare and housing. These calculations are far from arbitrary. We have a reasonable idea of the sorts of things that people need to live a decent life, and these things have gotten more expensive. (Ok, so another commenter pointed out that maybe housing isn't as expensive as it's made out to be, but it's certainly not cheaper.)
To be fair, they could afford it because they didn't care about it. The degree attainment rate has doubled since 1980. If the student population reverted back to those levels, price would plummet.
Isn't this to be expected? That overall, the population will maintain its purchasing power relative to itself, and inflation will rise to match in a relatively stable environment?
Suppose 30-year-olds make exactly the same as their parents did at 30. Then we would expect that barely half of 30-year-olds earn more than their parents did at 30.
This title is stupid. It implies "oh hur dur the economy is so bad" when in reality it says nothing.
So, really it says that 1/2 the population is flat our worse off. Further, a rising tide lifts all boats is a complitly false analogy, and anyone using that phrase to talk about the economy is lying.
The numbers are in real USD, not nominal. So in reality, it's a huge fallacy to say that we're so much worse off that in the 1970s. We're almost exactly the same as the 1970s.
The main difference to point out here is that the 1970s 30-year-olds made much more real USD than their parents' generation, while 30-year-olds today are making almost exactly the same. Just because income isn't growing as much doesn't mean the 30-year-olds today are worse off.
If the economy was static then zero real growth is fine. However, not all costs rise 1:1 with inflation. Housing for example requires land which is zero sum so when people fall behind they really are worse of in real terms.
Interestingly, I remember in the 90s when offshoring really started to take off beyond just steel and some manufacturing, the response from the politicians was that BS about rising tide lifting all boats.
Then somewhere in the last 10 years, the mantra was that some sectors would be worse off with globalization, but if you got an education, you'd be fine. So everyone went to college and ignored the blue collar guys getting screwed.
Now we see the legions of indebted college grads living at home at 30, PHDs working part time as baristas.
Should have got stem degree, is what we're now told. Tell that to the guys who had to train their own replacements on H1b visas.
I know it's not what's happening...but if we were to close the salary gap between the rich and the poor (so poor people made more money, and rich people make less), instead of keeping the gap the same but shifted up, or widening the gap...wouldn't this happen?
So in theory, it wouldn't be that bad a thing. Now, if it's just that the gap stays the same but things are shifted down, well obviously that's bad.
Well, I just tried to get a job in my company's QA department writing unit tests. Come to find out, my company ONLY hires non-leadership/senior positions in Belarus and Bangalore. I have friends in management, they can't bypass it. Rule was set high up.
The job I interviewed for is managing teams over in those places, and I'm not entirely qualified because I haven't worked in QA. So I'm just left no where. I always thought if I worked hard and did the right things, I could get ahead. It's not true.
I don't know if I'll ever achieve my goals without moving to India to get a job, then working my way back to the USA. But it certainly might be related as to why only half of 30 year olds earn more then their parents did. I'm going to keep trying but I've worked so hard and have a great reputation at work. I've done so much on my own time.
How can they earn more when all the money is at the hands of Trump and others who make up 1%? The current capitalism is not distributing the wealth very well and it's certainly nearing a disaster. I wish the left had an answer but they don't. They're stuck with political correctness and more extreme are can't see that they don't have an answer to capitalism and that everything they've tried in the past has failed, and working class have found a billionaire to be their champion and think that migrants and non-white and non-Christian people are to blame for their suffering. And nobody is willing to attack the current system and inequality it's created. Especially in US.
The left is the 1% as well. How much money do the Clintons have? A lot. How much Wall Street support did Obama have? A lot. If Hollywood isn't the 1%, what are they?
...working class have found a billionaire to be their champion...
Thiel is interesting partly because he's a business leader that talks about politics and isn't explicitly liberal. That is, he's an exception that proves the rule.
...and think that migrants and non-white and non-Christian people are to blame for their suffering...
Some do. But most have more complex motivations involving economics, democracy, and fighting (in their minds) corruption and hypocrisy. The Left won't make any positive progress here unless they try to understand their neighbors.
This is why "Love Trumps Hate" rings really hollow to most of the people I ask about these things.
The problem is the political landscape has lurched so far to the right that we've hit a point where some people actually consider Obama and Clinton to be 'left'.
I wish the left had an answer but they don't. They're stuck with political correctness and more extreme are can't see that they don't have an answer to capitalism and that everything they've tried in the past has failed
Were you paying attention to a guy called Bernie Sanders? He was the first actual leftist to run for high office in the USA in generations.
Clinton was a wishy-washy centrist who could barely even pretend to be throwing scraps to the Sanders movement.
I always forget, what is the workaround for WSJ?
Should be able to click "web" link.
Right click the web link to open in an incognito window. Open the top result of the resulting search.
Actually worked without incognito for me.
Google article and click from Google:
https://www.google.com/search?q=Barely+Half+of+30-Year-Olds+...
The paper itself: “The Fading American Dream: Trends in Absolute Income Mobility Since 1940.” Raj Chetty, David Grusky, Maximilian Hell, Nathaniel Hendren, Robert Manduca, Jimmy Narang. Graphs are in the back. http://www.equality-of-opportunity.org/papers/abs_mobility_p...
This is why I like this site. Multiple answers that are actually different methods. Thanks guys.
Screen capture for those who had trouble with the pay wall.
http://i.imgur.com/9eihuWG.jpg
Click "web" under the article and to the left of "comments" then click the first link on Google.
never got behind the paywall, so i have to ask: What about the distribution? Is it more of an general stagnation or did the wealth concentrate more? Also, if the gap widened, got the few lucky (high-earners reproducing itself) or is social mobility intact?
Of course they don't; every time wages rise in a particular sector, this is seen as a "labor shortage" that has to be corrected. In order to differentiate themselves into a higher "class" of labor equivalent to what their parents were doing, those same 30-year-olds were forced to spend another 4-8 years in expensive schooling before they could enter the job market.
The solutions in the article are laughable. "Better education", ie more expensive & longer. More transfer payments (how does this address wage growth?).
Reduce entrance to the labor pool and allow people in that labor pool access to jobs regardless of the paper they hold.
Compound that with the percentage of income 30 year olds spend on housing, education, health care and child care compared to their parents and we have a recipe for disaster.
Price per square foot for housing has remained remarkably constant over time. People are spending more on houses than they used to because they are buying bigger houses.
Got data on this? In my anecdotal experience price per square foot has shot up in urban places, which is where the jobs for young people tend to be concentrated.
http://www.aei.org/publication/todays-new-homes-are-1000-squ...
It looks like they applied CPI directly to the cost of housing. That is not correct.
CPI has a component of "owner's equivalent rent", which should be removed before cost-correcting the price of housing. Otherwise, you are removing the increase of the item you are searching for an increase of (Housing accounts for 1/3 of the CPI correction.) Their graph is instead showing that the buying power of a dollar is roughly constant when 1/3 of the CPI basket-of-goods is corrected with CPI.
Calculated Risk has a more sane analysis, you will note that the graphs are corrected with "CPI less Shelter": http://www.calculatedriskblog.com/2016/11/real-prices-and-pr... He doesn't include price/sqft, but note that there is a 44% increase in real prices between the 90s and now. Square footage has not gone up by that much in 20 years.
As a side note: AEI is a fairly political org, I wouldn't rely on their accuracy for anything involving stats, or math in general.
"the inflation-adjusted price of new homes has been relatively stable since 1973 in a range between about $105 and $125 per square foot"
However this is only new homes, not used homes.
http://www.aei.org/publication/todays-new-homes-are-1000-squ...
Maybe true in aggregate, but not true of many cities these days. For example, you can't touch a new home of any size in the Bay Area for less than about 750k, and that's even a long stretch. 250k for 2,000sqft would be a dream for many here.
That's simply not true, at least on the west coast in any reasonably active real estate market.
It was never $1,455/sq ft like it is today in Palo Alto, nor $500/sq ft or even $200 per sq ft. This is a recent phenomena.
Furthermore, price per square foot actually tends to increase nowadays on smaller homes, where you'll pay even more per square foot if you're trying to buy anything under 2000sq ft, and it gets really crazy when you approach 1200sq ft.
Shop around for a house, see for yourself.
Yes, there are exceptions to the rule. Palo Alto, home to one of the biggest wealth booms in human history, is one of them.
This applies to any west coast market.
You'll encounter it yourself if you ever shop for a home out here.
Yep, anywhere within a 2-hour drive of San Jose or San Francisco is crazy. You're lucky to get a single-family home for under a million, or a condo for under about 600. It's a big question of "do you have the right to live in a city you grew up in if you can no longer afford to live there", property tax laws, etc. It creates a situation where people are buying run-down houses I'd consider unlivable for close to a million dollars, and have neighbors who couldn't afford the smallest apartment in a 30 mile radius, but get to stay there and inflict their blight upon the neighborhood from which they are now very much priced out of.
One would think it's a kind move to not tax them on the actual value of their property, but everything else gets more expensive too, so now a quesadilla is $15 at the corner store and they can barely afford to eat, and their options for other housing are in a different state. It's very strange to me that people aren't taxed out of their homes, since if they can no longer pay for anything else in the area, their quality of life goes down dramatically , in a community who mostly just wants them gone, fighting against the merciless tide of economic "progress" just because they grew up there (and sometimes not even).
If you can't afford the rent, you have no say. Property tax is a form of city rent, from my perspective. Why are the rules different? It seems like people just like to pretend they can still afford to be in a place and resist the change for as long as possible rather than accept the world around them.
So let me get this straight...
You're saying that because they don't have the financial wiggle room to make their property something you want to look at they should GTFO?
Whew, in places near where I grew up, those are the prices for land by the acre
Yea, west coast real estate has become totally surreal.
New York, DC, Boston, are also insane.
Seattle, Austin, and Portland are quickly getting there as well. Denver kinda already is.
As houses become less affordable, there appears to be much more demand at the "entry level" range of $1-1.4M out here. So you have much higher $/sqft often times on a smaller home than on much larger, nicer homes at higher prices. In fact, those have been leveling off lately as there are only so many buyers at higher levels.
* Because builders choose to make bigger homes to bring in more money.
It is true that suppliers do, to some degree, drive buyer preferences but I am skeptical that it's the primary driver of change.
I think you know that in any kind of major metropolitan area with a strong economy that price per square foot is much, much higher (adjusted for inflation) than previously.
Taking the aggregate is deceptive because housing is much cheaper in economically depressed areas of the country.
Edit: Looked at the source of your data. It includes only new homes, and ignores existing housing stock. Your entire argument is deceptive and wrong. I regret wasting my time reading the source and realizing that you are cherry-picking.
30 year olds are buying larger houses because typically those are the only options.
It comes down to NIMBY local regulation enacted by the boomers with their FU I got mine attitude. Municipalities enforce size restrictions, ie you can't build too small, in order to ensure there isn't housing poor folk can afford. They enact parcel size restrictions which means a piece of land that could have 20 homes on it can only fit 5. They enact stricter and stricter building codes that the only way to make a profit for a builder is to build big and cram in features so the real estate agents can beat you over the head with them so you feel as though you'd be an idiot not to buy this massive house with things you don't need.
Houses getting bigger due to regulatory changes (as opposed to buyer preference) is a perspective I had not considered. Interesting! Thanks!
Say's law was the most counterintuitive concept I was exposed to in undergrad econ classes. After consideration it does make sense but runs counter to an entrepreneurial view of the world where products are created to serve a need.
It's counterintuitive because it is not true.
My uncle lives in an area where a new house must be on a minimum sized lot of 1 acre. A nearby area requires 5 acres for a new house! I'd never heard of those kinds of restrictions before.
I live in Seattle and while I am aware that not everyone lives in a similar environment the concept of a minimum 5 acre lot staggers me. I consider myself lucky to have 600 square feet.
What kind of area has these rules and who sets them? To me a lot with 5 acres is officially "the country" where I would expect very little to zero regulation of what you can build.
He's in Western Washington, but not too close to Seattle. To him it's "in the country" but it's right next to town. I live in a rural place, "in the country" means something entirely different to me.
My definition of "country" is having a yard big enough to throw a tennis ball for your dog as hard as you can, as far as you can, within your property, and not have it hit something. Just any linear stretch of maybe 150'. People in cities very rarely have that, unless it's some kind of billionaire hilltop mansion type situation. Many people can't even own a pet because their apartment disallows it.
Same thing would apply to shooting a gun on your property. If you can do it without the cops coming, you live in "the country" as far as I'm concerned.
For example, here is a zoning map for New Canaan, Connecticut a suburb of New York in south western Connecticut. About a 25% of the town is zoned for 4 acre lots, 50% for two acre lots, and 25% for smaller lots (just my estimates from looking at the map).
http://www.newcanaan.info/filestorage/9490/293/331/02zoningm...
We have that here in Portland, it's the urban growth boundry. To control the growth of sprawling suburbs and encourage higher density construction, outside the boundary you cannot get sewer service and so must build on a 1+ acre lot with a septic field. It works pretty well for us. I'm sitting less than 100 feet from our boundary right now (on the inside), and just the other side is acres and acres of open farmland.
They used to go by the name of Jim Crow.
Miami County, KS requires 20 acres for a new house. That is to halt the urban sprawl from Kansas City.
Real house prices are currently up 44% since the nineties. https://3.bp.blogspot.com/-OOfzxFgh8YE/WD2XUyaZeqI/AAAAAAAAp...
That is not accounted for by sq footage. Interest rates are a much more likely culprit.
To expand on that a bit: Supply and demand in houses doesn't work on the price. Supply works on the price; demand works on the monthly payments. When interest rates go down, the same people can now spend more on a house for the same monthly payments, and so the price rises.
It would also be worth looking at the geographic distribution. I suspect that most of that growth is from urban areas. Which, then, would also reflect the ongoing urbanization (and corresponding rise in demand).
Anecdotally, this is not the case, even in more rural areas. My parents bought 5 acres and built a house for $100,000 (adjusted for inflation). I recently bought a house with half the square footage and 1/10th of the land for double the amount. And I got a great deal in the current market by being willing to live even further from town.
Yep. Moved to high cost of living city almost a decade ago. Always lived frugally, even though I'm now making decent money. The plan was to get the hell out of this overpriced, over crowded area with a stash of cash and head back to Midwest to pick up a nice home.
It's terrifying watching Zillow on a few Midwestern cities that had avoided the bubbles so far. It seems as if the coastal cash and / or Chinese money has now trickled its way inward. 25% price increases in 2 years for some of the newer condos I'm interested in.
I don't want to move just yet cause I like my job and wouldn't be able to find something similar in a smaller city, but now I fear I'll be priced out again. This sucks.
This is only going to get worse with software eating the world and automation of every possible task that we can. It has already started with companies like Amazon (in their warehouses) using robots extensively.
Up until we finally get our collective heads out of our asses and implement something like Basic Income.
That isn't going to happen easily. My experience: I've talked about this to many people (highly educated, smart people) - most of them are adamant on the idea that human beings absolutely have to work to deserve anything, even food and water. This might very well be anecdotal, but very few people get ideas like Basic Income intuitively. It would likely take tremendous amount to first make people understand, then accept radical ideas.
I'm all for doing work, but never understood worship of hard work for hard work's sake.
I agree that it won't happen easily. Which is why I phrased it the way I did. But I do think that it must happen eventually (and really, it's just a stepping stone on the path to a post-scarcity society).
All humans have a psychological need to be needed. The current way to best feel this is to provide income for yourself and your family through work, and provide a service for your employer. This is extremely satisfying for a majority of people. Take away work and these two things collapse.
To get UBI to work, we need a new way for people to feel needed.
I disagree entirely that work is the best way to feel needed, and that feeling needed is necessary. I work because I have to, not because I care about working. If I didn't have to work, I wouldn't. I would spend time on personal projects and enjoying my life with my friends. Relationships are far better than work for "feeling needed".
To be honest though, I don't care about being needed. I don't need to exist. I like existing, and I don't want that to change any time soon, but not being needed doesn't affect my enjoyment. I like when my existence is appreciated by someone else, but my happiness and mental wellbeing is not predicated on that.
Yep, +1000. This is apparently very hard to grasp for some, or they just really love working (which I have my own doubts about). It's crazy to me that in this age of bounty, everyone is positively required to sell at least 40 hours per week of their time or face social exile, starvation, homelessness, etc.
I think another aspect of it is that people want it to feel fair, and that's a complicated thing. It doesn't take much hunting to find videos of someone chastising another customer at Walmart for paying with a government assistance card. We have this strange animosity toward anyone we deem doesn't work as hard as we do for the same result. Well, it's literally true that some people in this country make 1000x what others make while working less hours, doing less "hard" labor. Personally, construction, food service, mechanical maintenance, etc work much harder than I do, even though they might not have a clue how to do what I do (I would also likely suck at their job initially).
I love my work, and hanging out w/ the other coders on slack, but I would prefer not being forced to work, I'd much rather it be a 'choice' not something thrust upon me, or that I could live off 20 hours per week and spend the other 20 working on prototypes for web and mobile apps.
You might believe that but a lot of history and medical studies on retirees says otherwise.
http://www.bbc.com/capital/story/20130813-the-dark-side-of-t...
https://hbr.org/2016/10/youre-likely-to-live-longer-if-you-r...
http://www.reviewjournal.com/life/transition-retirement-can-...
From the BBC article you've linked to
Specifically, this.
By that notion, are all young Remote workers -- think 99% of the Wordpress core team -- declining in health and dying? I'm not buying this.
I understand what you’re saying but I wouldn’t completely dismiss the psychological effect that a sense of feeling needed or the pride you can gain from work has on many people. The sense of being needed may not be important to you, and to be clear I make no negative judgement about that, in fact I’m glad to hear from anyone whose own self worth or happiness isn’t tied to their job as this probably leads to much richer lives, but for many people this doesn’t hold true.
I often see the sentiment shared on HN that if posters here didn’t have to work for a living they would be equally or more fulfilled working on their own projects or spending more time with friends/family, but in some ways I think this feeling at least partially correlates with intelligence, creativity, ambition, or simply being a confident well adjusted adult. I definitely get the impression that HN is filled with people on the higher end of the intelligence/creativity/entrepreneurial spectrum and that might be resulting in a particular narrative that doesn’t always hold true for the rest of us.
I would say that I definitely fall into the very bottom portion of intelligence/creativity among the readership here. I don’t really have much to contribute to this community beyond personal anecdotes, and I’m frequently in awe of the projects and overall knowledge I see on display here. As someone who isn’t smart or creative, never did well in school and has no formal education beyond high school, grew up in poverty and has been homeless for extended periods (12 months or more) twice in my life, doesn’t have a whole lot of self confidence or things to be proud of, my work (which involves machining and precision manufacturing) is pretty much the main thing that gives me a sense of self worth. For many people that statement may seem sad or somewhat pathetic, but it’s honestly how I feel.
I live in LA county, not exactly a low CoL area, and as a single person without dependents I can very comfortably survive on $1100-$1200 per month. BI could easily fulfill my financial needs but it wouldn’t do much to provide for the other things that my work provides for me, namely the sense of purpose and pride it gives me. I understand that BI doesn’t mean the end or work, or that people wouldn’t be allowed to work or seek out volunteer opportunities, so my comment isn’t a general critique of BI, particularly as the more I learn about it, increasingly from HN, the more optimistic and supportive I become of it, but a realization that while I think it’s effects would be very positive overall, I don’t think it would solve all of our problems. As a society we will still need to find ways to make people feel wanted. And as of now for many of us work is what fulfills that role.
I think it's great when there's perspectives from the non-typical-HN reader, it's easy to forget how exceptional most people's lives are here.
So, with that upbringing, how did you end up doing machining and precision manufacturing?
And how'd you wind up on Hacker News?
What brand of CNC machines do you work with?
Thank you for sharing, it's good to get outside perspectives on issues like this. I'll share a bit about myself as well, so you can get a better idea of where I'm coming from.
I don't consider myself on par with most of the stuff I see here either. I consider myself above average intelligence, but nothing special. I'm not particularly creative, but I love being part of the creative process with other people. If there's something I pride myself on, it's my ability to facilitate meaningful and effective conversation. I'm not very confident in myself; I think my above average intelligence lead me into contact with enough people who are simply smarter and work harder than me that I don't have any false notions of grandeur.
I get how work can provide you with a sense of purpose, I really do. One of the things I would do, assuming I didn't have to work, is volunteer for a non-profit that tackles an issue/issues I feel are important (like clean water for everyone). My personal projects would basically be two lifelong ones and whatever else caught my fancy. The first would be a music recommendation system that works differently from most others I've seen (any I've seen? copyright Jeff Holland, 2016): it would let you find music in genres you normally don't or have never listened to. The idea is, you can say "I like Queens of the Stone Age. What rap artists do QotSA fans like?" and it would suggest artists (and songs) accordingly. The great thing is, the sky is the limit when it comes to refining and expanding something like that, the challenges are technical and algorithmic. The second project would be a traditional roguelike with a different progression model for characters and story than is usual, with a technical focus on being truly cross-platform and providing a means of playing games via TLS on a central server (a la DCSS).
I know that was probably way more information than you wanted, but I wanted to give you some background on me. I'm not amazing or confident, but I do have a few things I'm passionate about. If either one of my personal projects was successful I would be incredibly happy. It doesn't even have to make me money if it makes enough to be self sustaining and the users find it worthwhile. All to say, I understand the feeling you can get from producing something valuable for others, and even enjoy it. I made a conscious decision when I was young(er) to disconnect that from my sense of self-worth, and it's now ingrained in me.
Essentially, my hobbies take the place of where the need to feel wanted would be. There's so much out there to enjoy that I don't mind if I'm not necessary (are any of us, really?); I can share the things I love and appreciate with others.
There are numerous ways to satisfy one's urge to "feel needed". To give two very different examples, volunteering for various projects (trust me, there's a lot of stuff that needs doing), and contributing to open source.
Kids need parents.
Amen to this. We need basic income if for no other reason than to bring one parent home, I don't care if it's the father or mother, there should always be a parent available and at home.
I very strongly agree. In the very much socially just rush to get women in the workforce we've lost sight of the damage done to children by separation from their parents, and the damage done to relationships by the staggering workload of managing children and a household with both partners working full-time. I would very much love being able to fluidly transition between periods of being a house-husband and employment, and my girlfriend feels likewise.
Basic Income does not mean people cannot work. What it does mean is people can choose to work at whatever brings them joy, rather than working at whatever job is available to have the money to meet basic necessities. And for people who don't actually want to work, they have that option too.
One can choose to work on whatever they want, however they want. Believe it or not, most people have an innate desire to want to contribute to society and/or improve/create things. Basic income is not communism, you'll still get compensated for doing paid work. As long as that incentive to make money is there, there will always be people working.
Basic income should be the solution we, as an organized group, give to all individuals to be able to express themselves. All human beings have basic needs and the State have to provide this. The State here is the expression of the will of the population. Do not take the State as something socialist or communist, taking from someone and giving it to someone for free; no,this is provided by us, the population, for us, the population. We care of each other and we want that our kids have good education, we want to have accessible health care for everyone. And definitely, we want that, if in a few years, a lot of jobs are automated or done by someone in the third country, no one is left behind.
This is a common argument for basic income and, even though you say "Do not take the State as something socialist or communist", your argument is the same as it is for socialism and communism.
You say, "Do not take the State as something socialist or communist, taking from someone and giving it to someone for free; no, this is provided by us, the population, for us, the population."
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Here's the problem.
Can you think about what, exactly, "the population" is? Is it tangible? Is it a singular physical entity?
The answer is no, "the population" is merely a collection of individuals! Individuals, of course, exist-- they are tangible, singular, physical entities. You are one. I am one. Individuals exist.
Populations, on the other hand, are abstractions.
My point is this: when an abstraction needs to be represented, it cannot do so itself. In this case, individuals are required to represent the population because, well, individuals are the only ones with the actual ability to do so.
Under your proposed system in which the State provides basic income to each and every individual, who decides how much each is given? Who will be the ones to actually control the means of production; and who will be the ones to actually control distribution of goods? Only some will.
If you think democracy as it exists today already performs poorly in representing the ENTIRE population (i.e., representing each individual fully to their individual desires) (think of the surprising amount of people who feel conned by the election results), then just imagine the extent by which people will likely feel when the State is responsible for just about E-V-E-R-Y-T-H-I-N-G in E-V-E-R-Y-O-N-E-'-S life!
You're not wrong.
Hopefully economists, mathematicians, business & social services leaders. It's extremely complicated.
Will largely be decided already at that point, we're well on our way already.
As for your final question, as automation increasingly destroys jobs, there is going to be increasingly severe social unrest - only then will basic income start to be seriously discussed, and by that time many people will likely be worrying for their safety, even wealthy people.
When I say the population I am referring to a set of people who actually believes that colaboration and resource sharing is the best way to success. This 'population' (countries), are the places I want to live. For example, I would never live in the USA, because you dont take care of each other, you are an individualist society.
People feel a natural obligation to be rewarded for their work. "Don't work, don't eat". The fact is, giving people a small income makes them inherently lazy. Lazy people don't like to work, but they will do just enough to get by, so if you give them a min amount of $, they'll do nothing. Others will look at that and say, "How come they get money for being lazy?" It actually acts as demotivation for people who would work some. The guy who isn't making much to begin with isn't rewarded - it only makes his labor less valuable. Does it make him strive harder to gain opportunity? Not really. People who have tried multiple times to jump over the hurdles in their economic careers won't feel that obligation to continue to jump if they have their precious safety net.
Is a safety net nice? Sure, but as much as it's nice, I know full well I wouldn't be sending out resumes or even looking for what I should be doing if I didn't feel some obligation to work, whatever that be from.
The idea of giving people a flat income sounds nice in theory, but that's all it is: in theory. Practically, I believe it fails to account for the basics of human nature after that point, which is why the idea wouldn't work in practice. That doesn't mean it isn't humanitarian, which is where I guess it shines for some people. After all, it's nice to think everyone is taken care of, much like social medical plans. But in both cases (income and medicare) I think it's the reverse solution to the problem: It's trying to raise people up rather than lowering the bar. Vague analogy, sorry, but maybe it makes sense?
I'm not sure what you mean by this, so let me try to answer this in a general way, for the sake of practice if nothing else. Personally, I view the body as being made to do work. It's very functional, well designed "equipment" - or at least better for all-purpose usage than anything humanity has ever created. Some people feel like they wouldn't be fulfilling their purpose without work. They wouldn't feel complete I guess. Notably, it is a personality-type thing, as there are types of people who enjoy doing much more than thinking, but everyone enjoys doing something, even if not work related. We'd get bored otherwise. Some people naturally associate the doing of things with working for a living. Some people find work to be therapeutic.
I'm rambling alot here trying to toss out ideas. Maybe I already answered the question in my feeble way.
What would you suggest to Walmart, Krogers, McDonald's workers and all Truck Drivers who will be displaced by automation in the next decade? Learn to code? Not everyone is cut out to be a coder, or has the money for education in the first place or the mentality to learn it online on their own.
Truck driver is probably the first job to disappear, this is also the #1 job in about 30 states. Truck drivers also touch many communities by travelling through po-dunk towns who's whole industry be it a couple mom and pop shops and a gas station IS because of truck drivers who frequent their route.
All of those communities will dry up, millions of truck drivers will be out of work. What do you expect people will do when they are starving, and the unemployment rises from 6% to 40-50%, by 2040?
There's currently an 83% chance that workers earning less than $20/hour will lose their job to automation in the future, and a 40% chance that those who earn between $20-40/hour will lose their job (forever to automation) in the not-to-distant future. Do you know anyone who falls in those ranges? Would you risk it all on 40-83% chance that your job will be here in 20-30 years?
What happens to the graduate who ends up graduating from medical school only to find out all doctors have been replaced by robots? They still have gargantuan loans and all, but zero employment options. Source: http://www.geek.com/tech/middle-class-workers-are-losing-the...
That's not really true. This misconception came about from an NPR journalist who drew an infographic that appeared to show that truck drivers were the most common job in each state[0]. In reality, that infographic used BLS data - the BLS subdivides other professions to provide more granularity. In other words, all that infographic showed was that the BLS considers "truck driver" to be a less specialized profession than "teacher" (which is separated into different roles of teachers).
If you actually look at the number of truck drivers in each state and compare that to the size of the labor force in each state, it's a lot smaller.[1]
[0] http://www.npr.org/blogs/money/2015/02/05/382664837/map-the-...
[1] http://www.marketwatch.com/story/no-truck-driver-isnt-the-mo...
Wow, seems like worse news to me. The number of self-driving trucks on the road today is probably low to zero, but the number of non-grocery retail stores closing every year, largely due to competition from Amazon (but also stagnant wages keeping demand low), is clearly in the thousands. I don't think it would be crazy to predict closings and automation within the stores that remain (e.g. Amazon Go) driving a collapse in jobs over the next decade.
Some numbers on closings in 2016: http://www.clark.com/major-retailers-closing-stores
I've met very very few genuinely lazy people. I've come to realise that people who may appear lazy are usually somehow impaired or beaten down. In one way or another, they have lost or never gained faith in their ability to push through, and have fallen into "don't expect much, try to survive" mode.
If people are actively demotivated by seeing others idle and surviving, who cares? Provided that we as a society can afford basic income (including after it's been established and it's having various impacts on the workforce), it's no loss if people stop working. And there's only so much basic income could ever give you; it'll make the necessities of life free (or rather paid for), but if you want things beyond necessities (including any positional good), you'd still want to look for work.
If we can afford to provide a basic income, you don't need to work -- unless the economy goes so pear-shaped that we stop being able to afford a basic income. (And this seems unlikely, since automated factories won't be offered a basic income. If anything, basic income might increase consumer demand...)
I'd emphasize that this income will grow if you work -- and that it won't be enough to buy positional goods, by definition. You can keep body and soul together on a basic income, but to live better you'll have to find a way to engage with the economy. (And the presence of a hammock-grade safety net will give you more options, not fewer. Live on oatmeal and vegetables, and buy stock with your food savings; or work for years on a project that might or might not pay off.)
"Made to do work" could mean any number of things. Tribal warfare, hunting, gathering, and social climbing are certainly things humanity has evolved to do; subsistence farming, artisanal crafts, and management are close enough that we're pretty good at them; but factory work, we're just plain not adapted to. Keeping strict schedules, doing small parts of a large whole, and repeating a single task for a long period of time: these are learned skills at best for humanity, and that's why such jobs get automated.
They can find jobs and keep working. UBI isn't the end of employment, just the provision of support. Think of it as reverting to the economic structure of the classical world or the American South, except that this time the only slaves are robots.
I guess our ideas of how it would be implemented are different. Let's consider it from a practical perspective. What's the basic level of income? Right now, minimum wage helps some people (where cost of living is low) and not others (where cost of living is high), so asking this quantitatively, how much would you propose basic income be, assuming the dollar stays put? Of course, we have to get Congress to even pass such measures in a way that actually helps society, but let's ignore the government problem for our theorizing.
Second, what do you project would be future salaries? I know, that's very difficult to say, but let's toy with the idea since it's important that such salaries have an impact on whether people actually step out into the workplace... or if the sorts of jobs available are even something they can do.
Third, exactly where does this money come from? The rich have money, but it's awfully hard to get them to part with it. They're usually crafty enough to manipulate the system. The government can't keep printing money (without taking it out) because that makes it worthless. Money doesn't just magically appear when the economy "gets going". Let's not assume imports are going to decrease (at least not for this theorizing, even if Trump gets his way), or at least we should pretend that imports and exports balance out. I say this assuming that we might apply Basic Income at a global level, at which point "import" and "export" become meaningless. Money can't just cycle because the fact is, some people are in control of the resource supply and others aren't. On a small, small level, capitalism is like this: If we have two people, Mr A and Mr B, and Mr A has the resource supply, the way Mr B gets anything is if he works for Mr A, and Mr A pays him for the resources. Basic Income at this level would be taking from Mr A to give to Mr B some small, but significant amount, for just existing. Does Mr A get a stipend/basic income? And supposing Mr B works more. I wonder at what point would Mr B become like Mr A where he gets taxed more. Already we've seen companies move their headquarters to places like Singapore to avoid the heavy corporate taxing. I have no doubt that the rich (who can afford to move) will be glad to leave this country to find havens where their wealth is unaffected but from which they can still suck the wealth of other nations. Taxing laws here are critical because there are usually loopholes to get around it.
Fourth, how would this look with immigration? Seems - just from my observations - a number of liberals would like both immigration and things like Basic Income. These ideas seem opposed to me, since immigration doesn't necessarily bring much wealth, as it's often the poor who immigrate (assuming no wars or famine and such that drive people from their homeland, and those could be factored in, at least with Basic Income on a national scale). (I'm ignoring here, the fraction of people who immigrate just 'cause they like the country).
I await your thoughts.
No it doesn't. Why do you think it does?
Why do you think it doesn't? If I'm getting a free hand-out, I don't need to work as hard to get the necessities, which is why I go to work in the first place.
What? How does that make any sense? The labor market is a market because supply and demand still apply.
His labor from his point of view, not from the economy's point of view. Certainly labor from him is good for the economy. But for him, he already has what he needs, so there's not as much incentive to get more. Sure, there will always be people who want more, but they may pursue alternatives to [what I'd call] standard, ethical labor in order to gain those ends.
I honestly feel basic income is a MUST have. I so much believe in it that I WANT the automation to come, I want to see the jobs disappear, I live for the day when robots do all the physical work and a job is optional--and we can pick and choose what we work on because having a roof over our head and food on the table, and healthcare is just a given.
We can be entrepreneurs, etc.. I have a ton of app ideas, but I work 45-50 hours a week and just don't have much time to implement anything. -- Even if we moved to 20 hours / week w/ lots of time for family, and leisure.
Mankind is supposed to rule the world, not be beasts of burden, and many are just that. Some horses live better than mankind. We have a friend who works at walmart and two other jobs, so his wife can stay home and take care of the kids. It's sad and pathetic - nobody should have to work over 40 hours just to have a house and home.
I think before that day comes there will be unrest and revolts, maybe even French revolution style, but in the end there has to be a better way.
So far automation has not resulted in net fewer jobs, but more productive jobs replacing more mundane ones. That has been the story throughout human history.
I see no evidence that is going to change. Indeed "AI" has so far only created jobs, not killed them.
Yes. Yes it has. Manufacturing has seen hundred of thousands of jobs replaced. And the amount of software developers or maintenance jobs created to make that work doesn't even begin to cover what has been lost.
As far as job creation goes, guess you'll have to check that up with the ever growing percentage of unemployment throughout first world countries.
yes there's less manufacturing jobs. There's also less farming jobs, and less clerical jobs, and fewer blacksmiths, cobblers, seamstresses and about a 1,000 other professions too. But the developed world is at near full employment.
The average adult hunter-gatherer only worked about 22 hours [1]
We've advanced so much technologically, yet we're working more than hunter-gatherers were hundreds of thousands of years ago.
What are we working towards again?
[1] https://www.psychologytoday.com/blog/freedom-learn/201611/in...
Having a worldwide population of more than 10000 people ?
What I don't get about basic income is the incentives this would bring, which invalidate the whole thing. It's not a Nash equilibrium. What this would create is a huge class of 100% dependent people who have no power, entitlement and are in a very unfair relationship (to their advantage) with the rest of humanity (by current standards).
The productive group will hate the basic income receivers because they "steal" money. And the basic income receivers will hate the productive group because they'll be the ones constantly saying "no you can't have any more", "no we can't do that", "no we can't save your little girl by dedicated 50 medical personnel to just her", "no no no no no no" ... And while I don't believe in Ayn Rand, I do believe that the productive group can leave.
This will bring tensions and hate between the productive side of the population, which will be only a few, and the rest. The government, of course, will be in the pocket of the productive side, because they represent (and control to some extent) the limits of what is realistically/economically possible. The smaller the productive group, the more clout they'll have.
Eventually they will get rid of the basic income receivers.
That's not the case though because THEY are basic income receivers too -- EVERYONE receives even the 1% and elites. That's one thing that makes it better than current welfare. People on welfare KNOW they're 'leeches' and with that comes a stigma of being a trashy person because you can't get enough jobs to supply enough income for your family.
Take away welfare, give everyone the same amount monthly, and it's a citizenship 'right' or contract for being a good citizen of the United States. The only stipulation is you HAVE to have a physical address to mail the checks to -- meaning if you still for some reason want to be homeless even w/ the added income then you're sol. The goal should be 100% end to starvation and homelessness.
On top of that it spurs growth of the economy. When robots do take over and 50% are unemployed -- who will shop at walmart, or amazon? Absolutely nobody. The money will still flow up to the 1% in droves, for the absolute necessities, but eventually even that will drip dry. Give money to the poorer people though and they end up spending 100% of whatever they make usually.
This goes right back to the Walton's most likely, but it increases economic power, and gdp. I also think if you give everyone enough to be across the poverty line, then we could move to a flat SALES tax over income which would have lower tax for legal citizens / etc and more for those who are undocumented, or travelling through the states. Then we could alter and adjust the national sales tax every year or so based on whether we have a surplus or deficit. We can also do away w/ the IRS completely and end more bureacracy.
The incentive to make money and be rewarded for work is still there.
Regarding the unfairness concern, this is why I prefer rebranding it as a citizen's dividend funded by a land value tax. See my other comment in the thread: https://news.ycombinator.com/item?id=13141203 . Essentially this makes it morally justifiable. Not to mention our system is already unfair in that rentiers profit off the earth's land, and rich people don't have to work.
We're already seeing the same tensions due to automation reducing the number and quality of jobs. We have a 1% class that have orders of magnitude more than what everyone else has while the plebeians barely scrape by and can't find steady, quality, decent paying work. Basic income is the solution to reducing this tension. Another option would be guaranteeing jobs, but I think that would be extraordinarily inefficient, and it perpetuates this notion that people without money have to work for people with money to justify their existence.
We're already highly dependent on each other. Chances are you work in an office and aren't growing your own food, building your own homes, maintaining your own plumbing, building your own cars, manufacturing your own products, and so on. Basic income just says that we have enough wealth to go around and we're all shareholders of this land, so here's your dividend for permitting others monopoly ownership of our land and its resources. It also says that in an advanced enough society, nobody should starve and go homeless.
Without a basic income, mass job automation and extreme income inequality will lead to a French Revolution.
Excuse me? I don't work because I think I should have to. I work despite that. I work so other people can someday benefit from, you know, FULLY AUTOMATED GAY SPACE LUXURY COMMUNISM and all that.
That's why I think basic income supporters should also be advocating for a land value tax to fund the basic income, which should really be rebranded as a "citizen's dividend". This shifts the source of funding from coming off "the backs of hard workers", to compensation for allowing others the privilege of denying you monopoly ownership over our collective land and natural resources. Rather than an "us vs. them" mentality, we're all collective shareholders of our land, and basic income then become's the dividend.
Regarding "hard work", we need to start seeing work as a means to an end rather than an end in itself. We need to focus more on what it is that's actually being accomplished rather than whether or not somebody's working hard. If society can operate without you needing to work hard, then hard work should be a choice.
Then you're just a serf of the State. Do we want to go back to feudalism?
-- edited for spelling --
The word is "serf", but your claim makes no sense anyway. A serf is not someone who receives money from their government. In fact, the whole point of Basic Income is you get the money even if you don't do any work at all, which is basically the complete opposite of a serf.
You're actually paying them to not riot. Serfs provided the core of a relatively stable body politic. They could be called on for war. They didn't have much economic power individually. They could be pushed around by the powers that be. They were also largely disarmed (Hillary and Obama).
BI == Serfs until the government can implement either forced sterilization or State assisted suicide.
For those down voting, picture the US if there was no welfare state. What would all of those people do if they didn't have the state to keep them fed just enough to not riot or declare war on their government? The answer to that question is not improve policies to balance environmental stewardship with pro-business expansion.
In practice, I think many of those people would probably just die of starvation or exposure, unless some charitable NGO picked up the tab. I don't have enough statistics to say whether it'd be most such people.
I'm a supporter of basic income as an experiment but it is interesting to think about alternatives. Is basic income simply a stepping stone to some kind of Star Trek post-scarcity utopia where there is no concept of money or wealth at all?
We survived the industrial revolution, is it not just human nature to adapt?
One example I recently discussed with friends was the idea that most truck drivers may soon be out of jobs due to automation. Since this is a highly specialized skill it would be hard for those workers to find alternative work without learning an entirely new skill set. But would it be feasible for those drivers to simply buy self driving trucks much like they already buy their conventional trucks and simply enjoy their lives while the truck drives itself? So even if self-driving trucks show up tomorrow is it necessary to pay truck drivers just to live? Can we offer an incentive like retraining to those drivers?
Is basic income actually the solution or do we need to take a harder look at things like the income gap and a tax structure that strongly favors investment in creating actual value (goods and services) instead of wealth for the sake of wealth (investments).
Truck drivers can't simply buy self-driving trucks and kick back while the truck does all the work. That would require them to still be paid the same amount, and if trucking companies still had to pay everyone the same amount then why even bother with the self-driving trucks? Or more generally, why would the trucking company even keep the truck driver on as an employee, when it would be cheaper for them to just buy the self-driving truck and use it, instead of leasing it from the truck driver?
Many truck drivers own their own trucks and contract for the carriers so those are the ones that could buy self-driving trucks.
Regarding pricing I'm not so sure. If you run a trucking company and contract out driving to individual drivers that own their own vehicles you are paying for the service to get the cargo to its destination, you aren't paying for a person as much as a service.
I do agree though that in this situation truck owners would make less money but they would also have more opportunity to do something like purchase additional trucks or do other work such as last-mile driving to supplement the loss in long-haul income.
Except they probably couldn't, because the carriers are going to lease self-driving trucks from specialized agencies that will exist exactly for that purpose, as they won't want the administrative costs of dealing with individual owners (which makes some sense when it's an owner/operator as an alternative to hiring a driver and buying/leasing a truck separately, but none when the truck is self-operating.)
So, since no one is going to be likely to pay them for use of the self-driving truck, there's no anticipated income stream with which to finance the purchase.
Somebody has to make those leasing agencies. That will create some jobs, but it is easy to see how 1 person can easily handle 3 fully automated trucks even without the typical logistics that big companies bring to the table. If this cost reduction causes 3x as much stuff to be shipped it won't be a short term problem, but I find that unlikely.
So the opportunity for the current owner/operators is to pool their resources and become the specialized self-driving truck agency.
Flatbed and LTL freight prices will fall through the floor. You can't yet automate those kinds of freight because the cargo is so diverse and handling isn't something AI can do yet.
In my opinion, massive automation of tasks is going to cause a massive demand of programmers, developers and QA engineers, so no robot apocalypse yet. Basic income is not the solution to this problem because this is not a problem. The solution to this 'problem' is having a better education and making tech more accessible for everyone.
The question is not how massive it is in absolute numbers, but how does it compare to the amount of jobs that are replaced by automation?
And you know the answer to that question. If all jobs so replaced would create an equivalent number of "programmers, developers and QA engineers", nobody would automate, because it would cost more than human laborers.
That's actually not true. The effect would be an increase in productivity. More things get built/done with the same resources.
The only resource conserved in this case is the amount of time spent to produce some good - it's not like robots can magically make more out of the same chunk of steel, say.
But if you need the same amount of people to produce the same quantity of product (jut in different roles), then, by definition, your automation does not conserve time.
On the other hand, if your automation does decrease amount of time spent per unit of output, and you run it at full capacity, then where do all the extra units go? If you say "other people", then that would imply that there was some heretofore unsatisfied demand that the market couldn't satisfy due to a labor shortage.
Automation is a great way to solve the labor shortage problem, but it's not always present. And when it's not present, you're just adding more goods without adding new workers (or increasing wages for existing workers) to afford those goods - so you'll end up with an overproduction crisis.
Note, this is not an automation issue. This is a capitalism issue, because in capitalism, the only demand that matters is the one that lets you make a profit. People who may need what you make, but cannot pay above cost of production for it, don't matter. Automation tends to increase the size of that category.
There will be more demand for a short while but a lot of that will also be automated away. Think about a period of 100 years aka your children and grandchildren. Not the coming 3 years as we programmers tend to do. Even if we will have another AI winter after this spring and summer; 100 years gives enough time for another spring and summer. Not only can not everyone do everything; many people cannot learn programming and QA. I would say by far most will not be able to. That is a difference with the industrial revolution; something like a horse carriage to bus driver transition is vastly different than a truck driver to a dev.
Sure for jobs like lawyer or doctor to programmer you can imagine but there are not many compared to physical labour anyway.
For both reasons, I do not see your opinion happening in the 100 year and after span. Maybe over the coming 10 but not 100. Wether I like it or not, my brain does not get over the choice of letting people perish, basic income or boycotting the future. Someone like Trump can bring jobs by just banning robots ; for instance by changing regulations so they cannot drive vehicles on public roads. But that would pretty quickly (again look at 100 year spans) lead to the US being no longer competitive on the world market for those particular (related) services.
Well, it is really hard to think about what is going to happen regading jobs in 100 years. I dont think that human mind is going to be removed from the equation. And if human intervention is, in fact, removed from most of the jobs, then what alternatives to get the basic needs are they going to have? Also, we have to be extremely careful because, even if we are not going to be there, we are paving their destinies now.
I agree we will need the human mind but for less and less jobs. And indeed my point is that we are paving that destiny now and therefor we need to work towards some kind of solution now.
You are assuming you cannot be automated away, why?
I wouldn't be surprised if QA is completely automated right about the time that facial recognition becomes viable. I guess that means many years from now, but if the hitch to automating QA is having person-eyes looking at a page and using the site in order to find problems, then I think they might ultimately converge their tooling because there's similarities in there. Something you can throw your PSDs or Balsamiq URLs at it and wait for the notifications. Web page recognition rather than facial. Heck, it might be simpler...or already exist.
Update: Here's a guy doing text recognition for localization: http://www.jebriggs.com/blog/2013/04/imug-computer-vision-an...
Also: http://browserbite.com/
Comparing screenshots from Selenium is a pretty nice way of doing it.
Massive automation of tasks performed by humans is pretty depressing because it indicates that some combination of technology focus/funding can't aim higher than what people are doing already.
What's massive though? Programmers currently make up approximately 0.8% of the workforce. You could increase the size of the industry by an entire order of magnitude and you still would only be employing 8% of the workforce. About the same rate as manufacturing today; a sector often scrutinized for no longer providing enough jobs for the populace.
Didn't it start with auto makers using assembly line robots or long before then?
Most consumers are tapped out, bad news for a consumer driven economy. There can only be so much more debt accrued.
This feels correct, anecdotally ... but is there data to support this claim? For example, savings rates going down, credit/debt going up, and consumer spending going down?
Here's savings rate data: https://fred.stlouisfed.org/series/PSAVERT
Note that this is savings rate net of taxes. It has been on a mostly steady decline since it has been calculated, with some spikes and a leveling out slightly higher than the rate before the last recession.
What happened from December 2012 to January 2013 for the personal savings rate to drop from 11% to 5%?
You also have to watch for savings going up and credit going down, to reflect people who are sick of being in debt and shying away from it wherever possible.
True that. I was like this for a good number of years, and it's only been recently that I've started using credit for a few things.
Sure, take a look at student loan debt for one glaring example.
Or the debt-to-income ratios required to get a home today versus 30-40 years ago. Credit card debt growth, medical debt growth, saving rates declines, etc.
Don't you mean "bad news for a debt driven economy"?
You can always inflate debt away (if you control your currency).
The cherry on top is that our parents generation, who made more and had access to cheaper house, education, healthcare, etc., still barely saved for retirement. Unless, god forbid, your parents drop dead early, we are going to be stuck supporting them for a long time.
If the 0.1% can successfully convince people to blame their grandparents and magical robots for stealing all of the country's wealth then this trend is likely to continue.
It's not their fault we make less, but they should have personal responsibility for their own retirement, especially since the massive amount of growth in housing value and the stockmarket over their lifetime.
Social Security lifted the responsibility of saving for their own retirement. It's not much use to blame them for following incentives.
You make it sound as if before Social Security, people saved for retirement because they recognized they had to.
But of course they didn't-- because they didn't earn enough to save-- just like people nowadays.
Social Security is insurance against destitution in old age. It really doesn't function to take away any saving incentive. It just keeps old people from being homeless and starving.
http://www.wsj.com/articles/SB109520630433518093
http://query.nytimes.com/gst/fullpage.html?res=9B0CEFDE1E38F...
Good point. Those lazy bums can just sit in furnished rooms and sell apples in the street.
Um, what? (No seriously, wtf? Is this a reference to something?)
Should have included a sarcasm tag.
Pre social security, it was common for the elderly to end up like that.
Is someone wealthy just because the house they own has grown in value? Practical wealth is how much you have relative to the cost of living. Someone in a $1M house is not necessarily more wealthy than when their house was $100K if all their other living expenses have also grown 10x.
If they are near retirement they could always reverse mortgage it. Our generation will not have that option.
Why won't we?
I think the idea is that we won't have the option to help us support our parents, because we'll need to keep living in the house (and haven't finished paying for it so we don't have the equity to borrow from anyway).
Because the increasing trend is that it is not financially viable for younger families to buy a home. So they would thus not have a mortgage to reverse in the first place.
Rather, they would be stuck paying rent and hopefully have enough savings/Social Security/other income to cover it as long as they needed.
We're talking about people who fall within a certain age range. Personal responsibility is something that makes sense when talking about a person, not a population. To my mind, therefore, personal responsibility doesn't have much to do with good policy.
I wish I could up vote this more. Supporting elderly people, or disabled people? These are good things that are good to do. Corporations paying for the negative externalities they dump on everyone else, and for upkeep on the society they owe their existence to? Also good things that are good to do.
Maybe we should hope for more declines in life-expectancy then:
https://www.washingtonpost.com/national/health-science/us-li...
Why should we consider life expectancy in the dialysis, nursing-home and hospice era to somehow be a positive measure of societal health?
A older friend of mine who structured financial products said that the worst thing we did for the healt of the Social Secuirty fund was the war on cigarettes. He said it in jest... but he wasn't wrong.
Oh, I'd love to hear more detail on this if you remember any?
Probably because smokers tend not to live as long, and therefore draw fewer benefits.
The TLDR is: smoking and obesity cause you to die sooner with less total medical costs[1]. This is great for things like social security since you can pay in over your entire life but never collect.
The story I remember hearing (and couldn't find a specific citation) was that anti-smoking groups made up a bunch of big numbers about smokers' high medical costs to scaremonger. To fight back Phillip-Morris did a study and legitimately found that smokers died sooner and total costs were lower. Unfortunately, that's not something you really want to publicize, so anti-smoking people can keep making up scary numbers and cigarette companies can't really fight back.
[1] http://www.nytimes.com/2008/02/05/health/05iht-obese.1.97488...
If I remember correctly he was structuring a derivative contract based on life expectancy/actual life time. The goal was to hedge risks between health insurers and life insurance policies.
Life insurance policies policies want to offset the risk of a group dying prematurely in the defined time window and health insurance companies want to offset risk a group of people living long but with signifiant health problems.
At the time it didn't go anywhere because some folks dubbed it "Death Derivatives" and he was working on it at the mortgage crisis was unfolding.
You'll be supporting all the old people through Social Security/Medicare anyway.
I don't judge people who didn't or couldn't save enough for retirement and are living on SS and Medicare exclusively. I like Socialist safety nets of those sorts, and am happy to pay into them. One day I will be old and sick too. We all will be, except those who die early.
I judge you if you didn't hold your government representatives accountable for excessive discretionary spending, which was borrowed out of Social Security and will need to be paid back with higher tax rates.
Well said. Critics rarely consider the potential personal benefit of SS in the future. Now, it's not a perfect system, but it has its upsides.
Critics definitely consider the personal benefit. The problem is that they don't trust that it'll actually be there, or that it's a system that actually can work as it has been designed.
For example, in the 80 years that it's been in effect, the OASDI tax rate has increased sixfold and then some. That increase was fairly steady for a period of time - and the reason it's stagnated recently is not because the tax revenue is sufficient (it isn't) but because political ramifications have prevented the tax rates from increasing. Obviously this isn't sustainable. You can say, "well, the solution is just to raise taxes" - but relying on periodic changes to tax rates is not a recipe for creating a system that can achieve a stable steady state without being subject to political meddling in the long-run.
A further problem is that Social Security hinges upon the idea that the current working population will be responsible for paying for the current retiring population. Unfortunately, the respective sizes of these populations can vary dramatically, which means that some generations will end up paying far more than others. People talk about Social Security like it's true time-shifted income (ie, savings), but it's not.
One way we've dealt with this so far is to increase the number of people who are paying into the system while remaining ineligible for collecting benefits from it, but that's also not sustainable (and it's also a really horrible way to treat people).
Good points and very interesting, thanks.
Once again, getting the state involved just makes things messy. Let people be responsible for their own well-being as they age. Without safety nets, people tend to be much more cautious and thoughtful when spending. Plus, people who are fit to raise smart and healthy children will also be more apt to do so, which is a must for any society!
I am of the opinion there are very few people who can be thoughtful, at least in that long-term sense..
Nah, screw that. We all deserve comfortable retirements, and we should fund it as a society.
Wealth inequality being what it is, yes, the wealthy can afford to chip in for the well-being of the rest of us. Or rather, we can afford to redistribute our wealth claims as a society in this way.
Why not? Wealth is a logical fiction we've invented, as to who has what monetary claims we enforce, and we can bend this fiction to our goals (including, as stated, the moral imperative to provide comfortable old age for all, regardless of personal means).
Well, I hope you don't judge people for an accounting fiction.
Any treasury bonds held by the federal government (for example, by the Social Security) is money the government owes to itself and has no real-world effect. The only part that matters is treasuries held by private investors.
Less government spending in the past would mean lower government debt (owned by private investors) today. That's only real effect. You can blame people for running up government debt if you like, but might as well skip talking about Social Security.
I do not agree it has no real world effect. That money will need to be paid back to Social Security to pay people out. Its either paid by taxpayers, or by everyone through inflating our way out of the debt. Regardless, its an obligation to be paid.
Stop wasting taxpayer money and start using it to take care of citizens. That's what the role of government is.
Money has to be lent to be saved, of course. If the money is not invested in the provider or public sector, then the wealth won't exist later to meet the deferred needs.
I'm not sure you understand the implications of the argument you're making.
That is 100% correct. Which is the point. Those bonds are not a meaningful asset for Social Security; they have "no real-world effect" because they're an IOU payable by the same entity who offered it.
But the promises Social Security made do have a real world impact, and those promises will need to be redeemed. But Social Security doesn't have any assets of the type you say "matter".
And that's a problem.
As I understand it, the implication is that it doesn't make a whole lot of sense to think of the government as saving money specifically for the future expenses of retirees. At the level of the federal government, it's a pay-as-you-go system. Current taxes and treasury sales (deficit spending) pay current expenses.
(And it's a bit weirder than that because the Fed can retire government debt if it wants to, just by creating new money out of thin air and buying treasuries.)
Looked at from a certain perspective, federal taxes exist mainly to keep the treasury bond market from getting too big due to deficit spending.
So the financial question is really whether the treasury bond market is bigger than it should be, given anticipated expenses. I don't have any opinion on this. I'm not sure the average voter would have any idea either? Low interest rates seem to indicate that the market isn't too worried?
There's really two (equally valid) ways to look at this, from an accounting point of view.
1) SSA is independent. It has liabilities (the promises made to enrollees), and assets (the trust fund). Liabilities exceed assets in the long run, but until then (currently projected as 2034) the system is fine. The federal government, on the other hand, needs to count those liabilities at full value. This means government debt is significantly higher than generally reported, the Clinton surpluses never actually happened, and a lot of spending decision, in retrospect, look quite reckless.
2) SSA is not independent, but is part of the federal government. Social security has liabilities (the promises made to enrollees), but the trust fund is a wash. This means that the lower "net" totals for government debt are technically correct, and that there was a budget surplus in the 90s...but it also means that no provision was made to cover those liabilities; the system is being run strictly on a pay-as-you-go basis. And while they may not be technically debt, given the scale of the liabilities social security represents to the federal government, a lot of spending decisions, in retrospect, look quite reckless.
What's important to note is that these two stories are completely identical. It's like arguing whether a liter of water weighs 1kg or 2.2lbs; the answer is "both". :) In both cases the money collected via the payroll tax was used to fund general expenditures, leaving an unfunded liability. The size of the liability isn't in question, nor is the matter of who has to pay it. It's really just a qyestion of what you label the boxes.
That's not inherent in the concept of a pension system. It could have been run on a funded basis, with actual savings accounts; it was not due to political reasons. I took toomuchtodo to be decrying that fact. Yes, the system we have is a pay-as-you-go system, but in retrospect doesn't that seem like a pretty poor idea?
Also:
That is legally impossible. (It also wouldn't work from an economic POV; it's effectively the same thing as just printing money to pay for SSA liabilities directly, and we know that funding government directly via the printing presses doesn't work.)
Medicare is fine, some social security facets are fine, such as disability.
Social security as a general retirement plan? Shitty program.
What it should be AT MOST: mandated investment in a retirement account that you can't touch. Although I would prefer to not even have policy here at all. This is only necessary because people are by and large shit with money and will not save without being forced to.
What is is: take money from workers and transfer it directly. It's not even invested to generate additional wealth.
The disability program is hurting society. You can get disability for having autism.
Once they are on it, they have incentives to stay on it forever. If they make even one dollar working they lose it all, so they make extra cash under the table through committing fraud, selling drugs, etc.
No one can sue them and take it away, so they do things like go without insurance, buy things on credit with no intent to pay, titling their car in someone else's name, and hundreds of other tricks they learn in their new 'job'. By day they can do whatever they want. People who work have to pay not only to sustain them but also for the damage that they are causing directly to them.
Seconded. That stood out to me too in his post. Disability seems to be widely abused in the western world. I'm for social welfare, but I'm not for mismanagement and abuse. Disability as it exists today is a concern that needs to be addressed.
Everyone is for rugged individualism until they're incapacitated. Good luck.
You guys have the advantage of being able to work. Your minds and bodies are healthy. Man up and take care of those less fortunate, even if it means a minority game the system.
Autism can be a severe disability, not just the mild "geeky asperger" type. One could literaly not be able to communicate at all...
Its invested, by law, in the safest asset known to man: Special issue US treasuries that can always be redeemed at face value (principal + interest), which come ahead of general issue treasuries.
"By law, income to the trust funds must be invested, on a daily basis, in securities guaranteed as to both principal and interest by the Federal government. All securities held by the trust funds are "special issues" of the United States Treasury. Such securities are available only to the trust funds.
In the past, the trust funds have held marketable Treasury securities, which are available to the general public. Unlike marketable securities, special issues can be redeemed at any time at face value. Marketable securities are subject to the forces of the open market and may suffer a loss, or enjoy a gain, if sold before maturity. Investment in special issues gives the trust funds the same flexibility as holding cash."
https://www.ssa.gov/oact/progdata/fundFAQ.html
Why not invest in bonds or stocks? The amount the US government would need to invest would disproportionally move markets, but most importantly, the losses (when they occur) would be backstopped by the US taxpayer. There is no reason to needlessly invest the Social Security trust fund in equities when its most important asset is the ongoing ability to collect taxes (equities can go to zero; the ability to tax isn't going away under almost any circumstance, barring a complete collapse of the US government).
EDIT:
All debts are IOUs in legal form. The reason the US government gets such low rates is because the market believes they're more likely to pay the debt back then Joe Schmoe. And the market would be right, which is why capital scrambles into treasuries at the first sign of global financial trouble.
"Invested". Only the US govt can use that term and mean "borrow" instead. The treasuries are just an IOU in legal form. Given the high debt level in the US, I wouldn't think of the literal term "invested."
I'm personally hoping for Basic Income, myself.
I'd rather not live in a dystopic high-tech, low-life society where the elderly and destitute are tossed aside. But, as I walk down the street, I see homeless people sleeping just outside the entrance of Snapchat HQ (latest valuation @ ~$25 billion).
Frak it, bring on the Guilted Age!
Let them eat memes!
The ines that worked for decent companies had a pension.
Hell, my grandfather had a defined benefits pension plan for his bar employees.
It's hard for me to understand how my ancestors, alive since the beginning of time, reproduced so much that not every person in the family line has a house.
Could you imagine working your whole life and end up with not even a shelter to pass on to the person "replacing" you?
I never plan to have a kid, but if I did I would feel obligated to give them a head start in this shit life. They wouldn't be fucking renting or taking out loans that's for sure.
Isn't a lot of that problem due people moving to cities in the last few decades?
Hacker news says: become a landlord! Yet amazingly compsci grads can't extrapolate this out and see that it cannot work at scale.
Hey, distributed systems is hard. The network is reliable // the market is rational.
"the market" (basically everyone) is rationally responding to the state and banks using credit creation via land to appropriate labour. That's killing productivity as people realise working doesn't pay and filching of others does.
Don't forget student loan payments and smart phones.
Don't forget the vast expansion of government spending. That wealth it dissipates has to come from somewhere.
Housing: Today's 30yo live in nicer houses, that are on the whole located in nicer places. Eg. in cities that have less pollution and more facilities than they had before.
Education: Okay, that kind of sucks. But in here Australia, as an example, costs of repayments for the education are way less than the reductions in tax rates over the last 30 years. We had a 60% marginal tax rate when I started work...
Health care: again, the amount and level of health care received today is far higher, and it seems that things are now "health care" that were something else 30 years ago... eg. my health fund has rebates for gym, massages meditation etc.
Child care: this is a little odd... have child care workers' earnings increased? Are there less kids/carer in kindergarten? Or are we just putting kids in kindergarten more, instead of leaving them with Grandma?
Finally: I would trade all of the advantages that the previous generation enjoyed for smartphones and internet. The quality of life today is, IMHO, incomparably higher that 30 years back.
I'd argue that education has never been cheaper. Schooling is where the costs have often grown dramatically.
And as far as schooling goes, the interesting thing here is that while the degree attainment rate (in the US, Canada, and I expect even Australia) has effectively doubled since 1980, the supposed benefits, such as a higher income, that prompted more people to attend an institute of higher learning have not been realized. The youth, post-secondary schooled at a much higher rate than previous generations, are not making more money or better off as this article and many other sources of data point out.
With those promises not fulfilled, I am left wondering why the cost of schooling is even found among the likes of housing and health care? It's an enjoyable pastime, for sure, but not something essential to support (a long) life like the others.
The sense of entitlement is a lot higher these days. I grew up in a 900 sqft house with 1 bathroom. Yet all my peers (myself included) seek out homes 2x, 3x or bigger.
Same with cars.... my parents bought used, reliable cars. Today we want fancy things.
Growing up we had cable tv and a phone line. Probably spent $50/month total. The family cellphone bill, home broadband, various tv services easily top out over $300/month.
We went out to eat once a month. Tops. It was a treat. Nowadays people (myself included go out 1, 2 or more times per week.
Earnings aside, current generations are spending way more because they want more.
Good luck finding a 900 sqft house now.
I don't mean to sound like just being contrary to you, but your anecdote doesn't square with the article. If half earn less than you did then that would mean they wouldn't afford what they want according to you and want you wanted at your age, so either way, they're hosed.
You seem to think that income always corresponds to expenses.
A 900 sq ft condo let alone home will run you $750k+ lots of places.
It's really not that many places when you take the whole US into account.
This.
US home ownership has gone up and down between 64% and 69% in the past 30 years, currently at the low end of that. But at the same time, the average new house went from 1,600 to 2,500 sqft.
Thirty years ago, how many people plopped down $5k for a TV? $700 for a phone? $150/month for telecom?
Life expediency has increased by 6 years from 1975 to 2010.
And to top it off, we're working less than we ever have. Average hours per year: 1,900 (1950), 1,800 (1970), 1,725 (1990), and 1,700 (2010).
Despite the "back in my day" doomsaying, on average, our quality of life has never been better.
---
My two cents why:
Cent 1: In a globally connected world, we are painfully obvious of the millions of people living more comfortably than us. When it was just Mr. Jones down the block, it didn't feel so bad.
Cent 2: Culture and priorities have changed. Rural population has been dropping for decades. People are more likely to rent a 500 sqft apartment in a large urban center than rent/buy a 900 sqft house in a town of 20k. Not a bad thing, just a different thing, and we have to take into account the whole picture.
This really struck me. I am going to assume your numbers ar correct, but if you could point me to a source I would love that. (did a quick search on the web, couldn't find exactly what I would like)
My first thought was that it is fascinating that we would be working 12% less hours per person. I wonder how that break down by gender. The number I keep finding is per day men @ 8.4 vs women @ 7.7 which doesn't match your number because it is only talking about full time employment. Hence if you can help me find better numbers that would be great.
Then I realized the horrible truth residing in your numbers: in 1950 it was almost exclusively men who worked. Today women make up almost half of the workforce. On a per capita basis we are working much, much more than we used too. From this Wikipedia entry https://en.wikipedia.org/wiki/Working_time#United_States:
Turns out things are worse than they used to be. Nobody spent $700 on a phone but they did spend $600, in 1986 dollars, on a microwave - which is roughly $1300 in 2016. And few people spend $5000 on a tv today. A $5000 dollar tv is likely 75 inches or more - I don't know if I have ever been in a home with a TV that large.
The middle class has disappeared and it is not because they became wealthy, lazy or demanding.
First, homemakers aren't unemployed. They just work at different things.
Second, look at the employment rate charted over the last forty years or so. Some of that may be explained by retiring baby boomers, but it's the following generations that will need to pick up the economic slack to pay for retirement, healthcare, prop up their home values so they can retire, etc.
So you are agreeing - since before one person was devoted full time to homemaking, and now they must find paid employment - that work still needs to be done so it must be done in addition to the hours worked at an employer.
so instead of one person doing 40 hours at an employer and one person staying home to keep up the house - we have two people working 40 hours each and then working overtime to maintain their house after work. We've added 40 hours of work to the equation.
Data from FRED. Graphs: http://www.businessinsider.com/average-annual-hours-worked-f...
You're correct that more people working per household is a likely cause of less hour per employee, larger houses, etc.
The average new house is targeted at a small minority of relatively wealthy people, because they're the most profitable market. It's not going to be terribly representative of what normal people want. (Even here in the UK, where new house sizes are effectively capped now, they still cost more than a larger older house because house builders want to make money..)
Televisions themselves have come way (way!) down in price.
Bigger, better televisions cost 1/2 as much before accounting for inflation.
There was certainly a brief period where medium sized flat screens were a little bit pricey.
I hear this sentiment expressed a lot, as well as the sentiment that millennials only loaded up on education debt to fuel a 4-year party. In my experience they are both wrong in 90%+ cases and are typically used to invalidate any calls to pay more attention to growing inequality in this country.
You are probably noticing the people who go out to eat and have nice cars/nice things much more than the people that sit in their cubicle and eat their homemade lunch, etc. Probably don't pay attention to (or don't even have a clue about) the people you deal with on a day-to-day basis that rent a portion of a room (not even a whole room - eat your hearts out boomers).
Also, you are comparing your parents spending WITH A FAMILY to people who are likely single or DINKS. This is not a worthwhile comparison.
Your point with housing is semi-valid, but there are very few small homes where I'm living in southern California. I know tons of people that would jump at the chance to have a tiny house if it meant it was actually affordable.
Right. It can't reasonably be said that people aren't interested in small houses.
I certainly don't mean to disparage college education, particularly as someone who has never gone to college but firmly believes that it can be a very rewarding experience, but from my own anecdotal experience it seems that for a not insignificant number of people it does seem to be more or less four years of partying.
I'm fortunate to have a diverse social group with many friends who did go to college, and even count a CompSci PhD among my close friends, but from my interaction with them I get the impression that not all programs are of even remotely equivalent rigor. In particular, I get the impression that for the non science/engineering related disciplines it can be somewhat easy to coast through the curriculum depending on the school.
Again, this is just based on my own observations as someone who has never gone to college so it should be taken with a large grain of salt. Normally I would completely discount my own opinion here as observation bias, the only thing keeping me from doing so is my feeling that if college was as universally rigorous as many say it is, and placed as great an importance on critical thinking and independent thought as I've been led to believe, we should be seeing a much more conscientious and knowledgeable citizenry considering we are living in a time were more people are going to college than ever before. I'm not sure that's the case however.
Agreed. I was merely comparing my situation. I am still (but barely) in my 30's and have a family of 4. And I agree about the SoCal thing (though there are smaller houses to be found, I lived in 1400 sqft in Orange County. But they are building McMansions because that's what people want.
That's certainly true, but nowadays the incentives which nudge you to consumption are also much more intense, subtle and clever. We are tricked into things we do not need.
The ONLY escape is not clever consumption but no/reduced consumption, or actually more precise, any consumption which does not involve money to be transferred.
I absolutely disagree with this sentiment. I'm just at the 30 mark with many of my coworkers and friends in their mid 20s. The only entitlements they ever talk about are work related and that's because it's all we have to turn to when we're sick (like a pit crew on a track, we need to know we can get fixed up and back out there ASAP.)
Growing up I remember similar things as you do. Limited dining out, basic cable, etc. But that was a combined income household, and in my neighborhood, that usually meant the dad was a union guy and the mom was a 9-5'r. Back when there were fruitful jobs outside of the city.
Now, here I am, 10 years after the same point my parents became parents, happy to just now reach a point of self sustaining income that will finally dent my debt. Having now lived through 2 economic collapses, several major terrorist attacks, unpredictable employment, total displacement of entire industries, and a political environment that fuels extremists and extreme actions, I can't imagine making any kind of plans beyond the next 2 years, much less a lifetime.
This logic is flawed in the sense of completely misunderstanding of "progress".
Sure, the 900sqft home argument might be somewhat valid. But in the majority of the situations I've seen, it's the opposite happening. So I'd challenge this one for sure.
As for the cable TV and phone line... Yea. There is something called technological progress. We have more services today because that's the world we live in, a connected world, where work and personal lives merge and access to the internet is paramount.
Your parents bought used reliable cars, great, people still do. But cars are relatively cheaper/easier to produce as well. Are you going to say the same thing when the next generation "rents" car rides as their monthly expense?
Eating out... yep. People eat out more. It's more efficient and frankly cheaper in some scenarios. That's not always the case, but often is. And in larger cities where kitchens are absolutely tiny, cooking is not only inefficient, but sometimes not even possible. So, I'd challenge this as a misunderstanding of the times - again.
Where money is spent vs how it's earned and the cost of living play into all of this. And just because the allocations aren't the same, the idea that it should be attributed to "entitlement" simply puts you on the "out of touch" spectrum.
Good day.
No kidding. The big three expenses in life are home (rent or mortgage), education, and health care. Those three expenses have gone through the roof.
Fancy TV set? Eating out? Smartphone? That stuff isn't why people are poorer these days. Not even close.
But they are. Because those are the difference between saving money per month and not. Disposable income is where we make a choice. We save it or spend it.
The increase of housing costs is also a result of double incomes. So while housing is more expensive than a generation ago, at least we have double incomes now. But of course, this increases costs for child care, as nobody is home to watch the kids.
Is this in inflation adjusted dollars? Maybe I missed it, but I don't think the article specified.
It does mention that it is adjusted for inflation. And as a side you wolframalpha is great for checking. You can do searches like "1 1970 dollar" and you get $6.34 back.
About half earn more, about half earn less. Wouldn't that imply that the average earnings are about the same? If so, I don't know that I'd complain because that indicates stability.
Yeah, the title seems sensationalized relative to the actual data.
It looks like a stable regression towards the mean.
Was the title changed? Says "Barely Half of 30-Year-Olds Earn More Than Their Parents". Which is exactly what the article talks about...
Though earning more than your parents was part of the American dream.
If you reword the title to "More than Half of 30-Year-Olds Earn More Than Their Parents" it sounds completely different.
This is true, but I wouldn't say the title is misleading. Especially when earning more than your parents is part of the American dream, that is social mobility. Which is discussed.
Actually no, though this is a fairly standard misunderstanding of statistics. For an easy counter-example imagine generation one being [0, 100] and generation two being [1, 2]. Average wealth goes down, while every element is higher than 50% of the previous generation.
We know that the distribution of wealth is not that extreme (the 1% are not enough to make the 50% change required given that comparisons are relative to parents). I agree with you in principle, but I don't believe that it's a significant factor in this case.
This depends entirely on the underlying distribution of the data. In your example, the distributions are not at all similar, so it makes sense that you can't compare medians or averages between those populations.
I suspect that the distribution of incomes in the US remains fairly similar to what it was 40 years ago. Thus, if the median has remained the same, then the average probably also has.
If the distribution of income had gone unchanged, the spread of wealth would also be unchanged. But it has changed, see http://inequality.org/wealth-inequality/ or the source of your choice.
If the distribution of income had gone unchanged, the percentage of the population receiving minimum wage would have gone unchanged. But it has changed, see http://www.weeklystandard.com/bls-percentage-of-hourly-worke... or the source of your choice.
I could go on... but I think that's probably sufficient. While I have you here, quick question: why did you let yourself get away with saying "I suspect" rather than just looking it up? It takes all of 10 seconds to do and once you get in the habit you'll be right way more often.
The metric in question isn't the distribution's median. It's the percentage of children earning less than their parents.
median: sup k : { Count(xi >= k) / Length(xi) <= 0.5 }
earns more: Count(xi >= pi)/Length(xi)
These are very different values. So while I'll need to think more about the idea that medians say something about distribution similarities, thankfully those thoughts don't pertain here. For another example, of "earns more" not behaving the way you're expecting: if you set the earnings of everyone's parents to their wage - $0.01, we'd have a 0% "earns more" but extremely similar distributions.
How so? Let's say I build a popular, free, social media network. My income from the free service is zero, but the popularity has investors (which could even be average Joes pooling their money together) quite willing to buy it for millions of dollars. My wealth has now increased by millions without a respective change in income.
If you click on the only link in the article, you will see they are measuring children’s and parents’ pre-tax incomes at the household level. This absolutely does include retirement account investment income.
While I have you here: why didn't you check that before replying? (I'm actually really confused why this seems to happen constantly on HN. These are really easy things to check before posting.)
I'm not sure I follow? The point is that wealth can be created out of nothing. It does not require income to amass. As such, income can go unchanged, while wealth can concentrate among those producing specific things of value.
Your link does not help clear up my understanding of your premise. Perhaps it would pay to be more specific when composing your comments?
Only if you assume that there has been no wealth created by those people and no economic growth in that period.
Stability in worker incomes, while total wealth has grown substantially, means a lot of people are getting screwed. When you add in things like how health care costs are greatly outpacing inflation, it means a lot of people are really getting screwed.
This chart from the article is rather painful:
https://si.wsj.net/public/resources/images/BN-RD331_CHETTY_1...
(I think that'll work without the workaround)
That chart is the core of the article and answers several questions from the comments here: yes it's inflation-adjusted, the ratio has gone down over time (90% of people born in the 1940's earned more than their parents at 30, and it's gone down to 50% now).
Is that really that surprising? People born in the 1940's would have lived through a massive economic upswing post WW2. While their parents probably experience the Great Depression through their 30's.
It would be interesting to see the same chart extended back another 50 years...
I object to the subtitle "It becomes harder to reverse this trend" like it's an inexorable march without any possible cause. Just look at the difference in context between today and the 1972 reference date for the start of the study. Globalization and automation have taken a huge chunk out of the manufacturing sector, but the US economy has by now (at an aggregate) replaced those positions with knowledge/retail/service sector positions. What did those manufacturing jobs have that the new jobs don't?
Powerful unions, a strong social safety net, and a government that accomplished both because it didn't think taxing rich people was heresy.
United States political parties used to split along Labor/Capital lines until the Civil Rights movement in the 60s shifted politics to a racial fault line. Over the last 50 years Capital quietly co-opted both parties while the populace was duking it out over things like segregation, voting rights, and Affirmative Action, and people have finally realized what happened while they weren't paying close attention.
Trump didn't win "because racism". It's not an accident that a significant subset of voters "somehow" liked Obama, Bernie Sanders AND Donald Trump, while hating all of Jeb Bush, Hillary Clinton, Marco Rubio, John Kasich, AND Ted Cruz.
These people are tired of Capital (aka "globalist elites" or "corporate overlords" depending on the side of the aisle you sit on) winning every battle. They viewed the entire election cycle as a dog-and-pony show between hand-picked corporate surrogate A and hand-picked corporate surrogate B. They chose Option C. "Literally Anyone Else, Yes Even That Guy".
The problem with Trump from that perspective is that Donald Trump is not exactly on the side of powerful unions, strong social safety nets, and taxing rich people. He did leverage anti-elite sentiment, but he did it unfortunately with walls and "keep the Muslims out", not unions, safety nets, and progressive taxation. Donald Trump as far as I know is largely anti-union, not on the side of more progressive taxation, and not on the side of strong safety nets.
I do agree that people are aware of the economic problems (hence the Sanders crossover in particular), I just think that identity politics right now is more powerful than economic politics in the United States. It seems like the issues that dominate the media headlines on "the left" and "the right" -- and, in fact, the angry rants on my Facebook feed, anecdotally, are very identity politics oriented. Unfortunately I think politicians take advantage of this. A classic example of this being North Carolina's "transgender bathroom" controversy. In my opinion, the provision that was far worse of that law was the aspect that limited individual cities from raising the minimum wage (economic politics). But it did not dominate the headlines, the identity politics did.
You are right that people are tired of Big Capital / globalist elites. They have reason to be. But to reverse this trend, we need stronger protection of the service industry (which is in effect the new manufacturing job) and we need stronger education systems to promote knowledge work. As long as identity politics obscures economic policies, I'm not sure how this is possible.
Actually a big part of his appeal was that he was strongly for attempting to keep existing safety nets. Particularly when compared to the Paul Ryan "true conservative" wing.
His tax policy is a little more mysterious because it's fairly clear from his speeches that he wasn't reading any of the proposals that his campaign was putting out.
He worked in construction, real estate, and running hotels / casinos. And he tried to avoid hiring illegals. So he has a history of working productively with unions. Although I'm sure there are some nasty disputes in his past.
So I'd say he's more pro-union and pro-safety net than a typical Republican nominee.
That would be true if he had the first interest in actually governing. So far his approach appears to be "Hand off decisions to existing Republicans and talk shit on Twitter".
Trump was not a labor candidate and if there had been one in the race I think that candidate would have performed very well vs Clinton. Trump's strategy was successful mostly because he was allowed to continue unchallenged.
edit: To clarify I meant that if there were a pro-labor candidate in the general election Trumps populist message would have been less effective.
Um, Bernie? He was quite pro-labor, he just couldn't get enough votes to beat Clinton.
Then again, neither could Trump, but here we are.
Bernie didn't make it to the general election so he never ran against Trump.
Trump won the election by getting votes that mattered. We use an electoral system, not a popular vote. If the popular vote mattered both candidates would have run different campaigns so voter behavior would have also changed. It's possible that Trump would have still won the election if the popular vote were the deciding factor.
Isn't this article/this thread explicitly what we have been told not to discuss this week?
I am really confused as to what is considered political or not.
I suppose it actually means "politics we disagree with"?
The week-long experiment was terminated early. See https://news.ycombinator.com/item?id=13133855
Personally, I'm thankful for that. This is exactly the sort of article I like to see on HN amongst the general tech stories, especially for the comments and insight shared by peers. I consider HN readers on the whole to be intelligent and, for the most part, to have insightful things to contribute.
Likewise. I'm now just very confused. What is going to be the next censored topic of the week?
'dang has made clear that changing community rules is not going to be a common thing. There's a lot of insightful discussion from him and other members that will probably answer a lot of questions you may have in the same thread I posted above, and the link provided there: https://news.ycombinator.com/item?id=13131251
Can you please post this on the front page - it's in the collective interest that that gets broad readership, otherwise confusion will reign, particularly if you're pruning threads which ask about it!
For instance, could have saved me several posts.
Good idea. I can't post it or pin it to the front page, but I created a submission with a link to the thread:
https://news.ycombinator.com/item?id=13137864
I can't comment on the submission to give it any context, so if you want to add some, please do.
'dang: if this was inappropriate, please let me know and take it down.
People who will have children ("eventual parents" for the purpose of this comment) are healthier, smarter and wealthier than people who will never have children. If the question is whether things have gotten harder for the average person, it is misleading to compare a group consisting only of eventual parents with a group composed of both eventual parents and non-parents. A better comparison would be 30-years-olds of today versus 30-year-olds (whether the 30-year-old has or goes on to have children or not) of the past.
ADDED LATER. A careful study or newspaper article on the question of whether people have it harder or easier than they did 30 years ago or 45 years ago would try to avoid comparing populations that a reasonable person would expect to differ for reason other than things in the country getting harder or easier. Whether or not my sentence above containing the phrase "are healthier, smarter and wealthier" is true, clearly one might reasonably expect systemic differences between people who have children or will go on to have children and people who do not.
Even if the "nonparent" group were on average more intelligent than the "parent" group, that would also be a reason to avoid omitting the "nonparents" from the older cohort in the study.
The fact that the OP does not even try to avoid those systemic differences suggests that either the author is not sufficiently skilled at statistics to be writing about what he or she is writing about or someone is trying to argue for some conclusion he or she is attached to, e.g., "it is awful how hard things have gotten in this country for the average person" or the article author is making the headline more dramatic than the situation actually is in order to get more clicks.
Can you cite a source for that? While there will be cases where that is true, it may also be that those without children have higher willpower (no oopses), for example.
Further, not all of the children's parents were younger than 30 when they had their child. Being childfree at 30 does not mean childfree at 40.
While I appreciate you pointing out a potential source of sampling error, the data accounts for this. See: https://si.wsj.net/public/resources/images/BN-RD331_CHETTY_1...
How does that chart have any bearing on my previous comment?
I am completely mystified by your reply.
You said "A better comparison would be 30-years-olds of today versus 30-year-olds (whether the 30-year-old has or goes on to have children or not) of the past."
This is exactly what they did and what the data shows. 50% of kids today make more than their parents, vs 90% of kids 60 years ago made more than their parents.
I feel like we're missing each other points though...
Do see any material difference between these next 2 statements?
"50% of people today make more than their parents"
"50% of people today make more than people a generation ago made."
If yes, do you see how the difference might be relevant to whether people today have it easier or harder than people in the previous generation?
Do you see any worth in noting these two statements?
"50% of people today make more than their parents."
"90% of people 60 years ago made more than their parents."
If yes, what is the problem that you have with this study again?
It doesn't account for obvious confounding factors to prove it's conclusions of stagflation. Comparing parents to children has a pile of variables during this time frame that the article doesn't examine in the slightest.
For example it doesn't mention birth control once.
1) You have a fine point that it doesn't make sense to compare the percentage of (people who might have children + people who might not have children) to (30-year-olds of a previous era who went on to have children). In isolation, an absolute number like "50%" only has meaning if we assume that there are no significant differences in earnings between parents and non-parents.
2) Others are pointing out that the message of the graph is not the absolute percentage, but the trend line. The graph purports to show that the chance of greater earnings of (30-year-old maybe parents) vs (their own definitely parents at age 30) has decreased relatively linearly from 90% to 50% over the last 50 years. This could be explained by a demographic change in who has children over the same time frame, but it's not absurd to assume that the dynamics have remained constant even though the differences between the groups are unknown.
3) I'd be wondering more about how they accounted for inflation, since the manner in which this is done would drastically effect the results. I think the question essentially boils down to "at a given decile of earnings, does the average person today have a better life than the average person 30 years ago?" I don't know how one could answer this rigorously.
Everyone as a parent, but not everyone has a child. In both instances they are comparing "parents" a subset of the population. To "people" the total population.
Economic pressures can affect the decision to have children. Especially once birth control became widespread.
I can't read the article, as it's behind a paywall. Does the article say that? If not, where does that claim come from?
Under the title click the web link. The top result should give you a non-paywalled version of the article.
I agree. I've seen a lot of people who have no intention of "settling down" or "having kids" become surprised when their peers who do exactly that become more "successful" (earn more money, move up in job position, etc.). I think making the decision to have kids instills a bit of discipline to get something stable in life.
IIRC there are also studies that suggest employers are more likely to give you raises, promotions, and increased hours if you have a family.
It's anecdotal, but I think my employer does the same thing. If true, it seems strange to reward a person for a personal choice.
vasaulys says> "I think making the decision to have kids instills a bit of discipline to get something stable in life."
I think this is not necessarily so. However...
I've seen a number of persons who have children and who believe your statement (or similar statements, e.g., "Having kids makes you more responsible", etc.) to be true.
And so they promote/hire a younger person who has chosen to pursue a family path rather than a more qualified person with a superior skill set.
This sounds like complete bunk to me, even contrary to every trend I've heard of.
https://personal.lse.ac.uk/kanazawa/pdfs/SSR2014.pdf
I completely disagree with your premise. Can you cite any evidence of the claim that parents are "healthier, smarter and wealthier" than people who will not have children? In my experience the decision to have children is often not even a decision at all and is just something that happens.
The question is also not "whether things have gotten harder for the average person". The article clearly states:
"Economists and sociologists from Stanford, Harvard and the University of California set out to measure the strength of what they define as the American Dream[1], and found the dream was fading. They identified the income of 30-year-olds starting in 1970, using tax and census data, and compared it with the earnings of their parents when they were about the same age."
The question is the viability of an American dream based on opportunity for children exceeding that of their parents.
From the article:
“My parents thought that one thing about America is that their kids could do better than they were able to do,” said Raj Chetty, a prominent Stanford University economist who emigrated from India at age 9 and is part of the research team. “That was important in my parents’ decision to come here.”
[1]: http://www.equality-of-opportunity.org/
What's your reference on this? I've always thought that the smarter and the wealthier had fewer children later. Hence, Idiocracy.
People who are 30 now were 22-23 in 2008-9 during the Great Recession. This particular cohort (plus/minus a year or two) of graduates will likely have slightly depressed lifetime earnings relative to those a couple years older or a couple years younger. I would expect this year and next to represent the bottoming out of this trend.
This is based on a history of recessions. Unfortunately this one is different (really)... We've never had interest rates so low for so long. It's possible, and I consider it likely, that those younger will be even more affected. Consider the possibility that parents run out of money and living in the basement isn't even an option. Also consider there is a decent chance for another recession before this one is even over.
The last recession ended in 2009.
On paper, yes. Consumer deleveraging lasted for a long while after the 'end' of the recession though. If people are paying off debt with their money, that doesn't really help grow the economy. Google 'debt deflation'
Yes, for large corporations and banks of which directly benefited from the FLOOD of free credit (aka money) and ballooning asset prices provided by the FED, the recession ended. For the rest of us, all we got were higher asset prices and more taxes.
More than 50% of people in this country do not have 1000 bucks to cover an emergency, whether medical (LOL like 1k would do anything here) or a broken water heater, etc. More and more people are living on the edge, while large companies announce stock buybacks and mergers funded with cheap credit printed by the FED paid for with our money and our futures.
Yeah, glad the recession is over.
Wages did not start growing until 2015, and that required social movements in the streets demanding $15/hour and a union.
What makes me upset is that the economic realities do not match what is taught in large swaths of America. We are taught (at least in my community, and I am 30 now still living within 20 miles of where I grew up) that a very achievable ideal is a middle class existence with one parent working, and a small house in the suburbs. I am in the top 1% income earners for my generation and do not even come close to this.
I think it's important for young parents to start breaking this cliche that economic prosperity is an American standard. Instead we should be teaching that life is hard and you should count your lucky stars if you are able to afford anymore more than an apartment.
very achievable ideal is a middle class existence with one parent working, and a small house in the suburbs
I guess it depends where? There is a large swath of the mid-West where this is true. Near a big city? Probably not.
You must be exaggerating or living in New York/San Fran.
Here in the midwest is is very reasonable for a top 20% income for 30 yr old age bracket to have only one parent work. If you're top 1% you can definitely afford a house in the suburbs and have one parent stay home.
Living near NYC/SF does include "large swaths of America".
I guess it depends how you define "large swath". Is it a certain amount of landmass or population, a percent of total landmass or population, or some other metric? I think this line is needlessly pedantic. It's reasonable to interpret rubidium's comment as just meaning "the expensive housing in the NY and SF areas are too expensive to be feasible for top 20% earners, as the OP said, but by and large, a middle class existence is possible for most land in America." Population centers with expensive housing may be inaccessible for the regular middle class (when top 20% income earner means only 60k/year or so based on 2010 data[0]). This isn't really the right data to use, because the pay for people in SF is different than say, somewhere in Missouri. With that being said, it seems clear that the American dream of a middle-class existence with only one working adult, isn't realistic everywhere for everyone.
I might be meandering here, but I think this reasoning is actually flawed or biased, because it was never true to begin with. A factory worker could never afford to live in the upscale street, right? The only difference now is that instead of a factory worker not being able to live on the upscale street, there are whole neighborhoods, downtown areas, and maybe even suburbs that are unaffordable to a typical middle-class family.
I haven't looked for data to support these ideas, and am very open to points for and against.
[0]: http://whatsmypercent.com/
In more affordable places are there a lot of jobs that would put you in that 20%?
I'm from Indiana - and that is exactly the problem. Sure, housing is affordable. But wages are a fair amount lower and a fair amount of jobs are low-paying. This is really a major problem with people looking at economic recovery - wages haven't caught up for a fair amount of folks. That all said, it might actually be easier to get to that 'dream' if you plan correctly and are willing to let a few things go: Alternatively, for some it might not be a choice because of the costs of childcare and transportation.
I live about 30-40 miles outside of D.C. The only people I know who have a house earn significantly more, or are dual income top-tier earning households.
what? how is that even possible? what are your debts? how long have you been in the top 1%? something doesnt add up.
most of the people I know are making way more than their parents, and are able to move out of big metro areas and live in the suburbs just fine.
The tech sector is this nice bubble where we've seen lots of economic prosperity. If you look at the statistics you'll see that's not the case for a large swath of America.
Top 1% of income for a 30 year old (in the USA, in 2016) is, per this calculator, $188,000.
https://dqydj.com/income-percentile-by-age-calculator/
In overwhelmingly most parts of the country, that's plenty of money to own a house and support a family.
The people earning that much are (very) disproportionately distributed in those areas which are also the least affordable.
That's what the market in those locations will bear. Rich people, high prices. It's no different than a tourism economy.
Generation isn't the same as age. Being 30 means I'm part of the "millennial" generation which only takes $106,500 to be in the top 1%.
Life is not hard for the rentiers extracting labour for your right to exist in said apartment.
Where is all your labour going? Food? No. Transport? No. Energy? No. Rent? Bingo.
Why is this happening? Because we came off the gold standard and there is no limit to the expansion of fiat money, therefore it expands via mortgage lending to mop up all productivity gains. Get the women out to work! Land prices up. Efficiency gains? Land prices up.
We bid for land. The more we have available after basic living costs the more we can pass over to the rentiers.
We need land value tax to suppress rentier activity.
A lot of us landlords barely cover the mortgage with how much we can charge in rent. We don't simply get to increase prices and expect tenants to keep paying.
But at the end of it you get a free house for hardly any labour. Yes you have to do a bit now and again but it's hardly a full time job that your tenants have to do to cover your mortgage.
I never understand why you guys are doing it if you don't gain. You are doing it because it is easy money, an easy way to extract labour.
What are you expecting anyway in terms of an ongoing income stream from this endeavor? It's very low skill, to borrow you need a pulse and a job. To administer you need basic numeracy. Hardly any labour required, certainly not skilled. Sounds like minimum wage for the basic admin required, so what, a few hours a month?
The only "value" here is the ability to borrow to exert monopoly control over other wage earners in order to force them to give you a portion of their labour. That is the main ingredient in the majority of cases. Yes we need a rental sector but as I said it's low skill and the rewards should reflect this instead of dividing society into have and have-nots.
The rewards roughly do reflect this. Ordinary investing isn't clearly better or worse than investing in property. The problem is that ordinary investing requires many years of self discipline while paying a mortgage has the bank holding a stick over you to keep you from wasting your income on lattes and holidays.
"investing"? What are people who take an existing home to restrict supply, then rent it back out, "investing" in? Extorting more like.
Disipline paying they mortgage! Is that a skill now, taking $1500 from a worker, trousering $300 then handing the rest to a bank.
You are the debt collectors for the banks. Distributed extortion. No skill there yet the rewards for parasites are huge.
Gold standard has nothing to do with it. What money is, at a fundamental level, is a promise you can later redeem for real goods and services. Why there's so much mortgage and student loan debt follows directly from the demographic changes - the retiring generation needs promises to provide real goods and services (both directly through saving, and indirectly through pensions and the like), so capital markets seek out the best opportunities to extract these promises and provide them.
No, banks are creating credit.
https://bankunderground.co.uk/2015/06/30/banks-are-not-inter...
By creating credit faster than the underlying wealth creation of an economy banks are appropriating real goods and services and the wealth generation later (or rather now as they lent for decades like this) and they walk off with the goods whilst we all drown in asset inflation.
I would agree that demographics played a big part. Boomers borrowed heavily as though the demogrpahic inversion were not a problem, and banks played along. Now we have the money supply collapse as we have more olds than young, meaning a collapse in credit supply which is a problem as the model requires that principal + interest is paid back which cannot happen unless more debit is issued into the face of loan expiry which destroys the credit but still requires the interest be paid from some other debt source.
Why else do we need constant QE and ZIRP? To encourage more borrowing to try and maintain the rate of credit creation to keep the money supply up as boomers pay down at their end of life.
What a nuts system and also a terrible one as all productivity gains are soaked up by adaptable pricing on land to capture all gains.
excited for my HN "you're submitting too fast" soon when anything about banks or rentiers is mentioned!
Credit is money - there's literally no distinction between the two. Precious metal currencies are only money because it takes way less systemic trust to believe that the bearer of precious metal coins can get things for them later. Gold-backed paper currencies are an interesting intermediate, basically adding trust that you can exchange them for the actual metal at banks.
Credit costs nothing to produce. Expansion can cover infinite productivity gains to appropriate for the usurers/rentiers.
I think you are talking about fractional-reserve banking, which has been around for hundreds of years. This can exist with or without a gold standard.
Nope, read the bank of england blog above.
The current model of understanding is broken. To issue money nothing has to be created, therefore if one issues money whilst wealth creation stands still one appropriates some of the total wealth through inflation.
Before if you wanted more money you had to have more gold reserves, or the govt/central bank had to lower the exchange rate.
Because new production of gold would add only a small fraction to the accumulated stock, and because the authorities guaranteed free convertibility of gold into nongold money, the gold standard ensured that the money supply, and hence the price level, would not vary much.
http://www.shadowstats.com/imgs/charts/m1.gif
Again the boe blog from above:
Private banks decide how much land costs. And they always lend as much as they can, so land will always be as much as people can possibly pay. This means that no amount of efficiency gains will ever improve life. All you will see is inflation and people who bought just before the jump have a gain, but again the next batch are pushed into servitude. Because we haven't had a big step-change in efficiency for a couple of decades (and in part because it's not passed on due to globalisation / migration) it's misery all round, unless you are a usurer.
Of course a gold standard would limit the creation of money, but the ability of banks to increase the money supply would still exist under fractional-reserve banking.
https://en.wikipedia.org/wiki/Fractional-reserve_banking
You know, you could actually study why the gold standard is a terrible idea, rather than just fantasizing about it.
The financial trickery you're talking about is caused by deregulation and would happen on the gold standard just as often, but with probably far more disastrous consequences.
I don't like the gold standard, I agree there. I do however think it provided some break on the unfettered issuance of fiat credit.
In any case it seems you agree that unfettered credit issuance is a huge problem, and perhaps the root cause of the upward pressure on asset prices that inevitably moves in step with productivity gains / more work?
I'm pushing 40 (upbringing: United States, middle class, medium-sized city) and have never, ever heard of this dream of a single-income household.
I am 40, and it was a nostalgic conservative thing among my parents' generation. For my parents and their fundamentalist subculture, it was almost a religious obligation, tied up in ideas about gender roles.
Where did you grow up?
I'm more than a decade younger than you and grew up in a single income family, lots of children, solidly middle class, and neither of my parents had beyond a high school education. My dad was a straight C student through school and neither of my parents could help me with my math homework by the time I was in junior high...so hard working people, but not book smart by any means.
Lots and lots of my school mates families were similar.
Northwestern Pennsylvania. Rust belt, Great Lakes region.
Anecdotally, more than half of my peers had both parents working. My mother and both grandmothers had jobs. The attitude was that two incomes are better than one in an age of economic uncertainty - an era that kicked in no later than the 70s.
Interestingly, my father did his best to instill this lesson with his persistently defeatist and pessimistic outlook on everything.
I now (in my 30s) make more than both of my parents combined.
One thing to consider is that a growing portion of Americans (perhaps a majority, soon) do not want the small house in the suburbs with a white picket fence, 2.33 kids, a stay at home mom, and a 50 minute commute that the baby boomers' parents wanted. People are starting to remember that the reason we created cities is that city living is desirable, and they are willing to pay a premium for that.
No way you're top 1% when normalized to location.
It's really frustrating that articles like this never state if they are comparing inflation-adjusted numbers or not.
If they weren't using inflation-adjusted numbers, I'm pretty sure that would be MUCH bigger news. Assuming people have their kids at 25, that would mean, in inflation adjusted terms, that would correspond to a 40% DROP in inter-generational income for the population mentioned here.
Just assume that all newspaper headlines will use the version that maximizes sensationalism.
"In our baseline analysis, we measure income in pre-tax dollars at the household level when parents and children are approximately thirty years old, adjusting for inflation using the CPI-U-RS."
It wasn't easy to spot but was mentioned.
So essentially this whole debate centers around how realistic one thinks the CPI-U-RS rates are... If you think they underestimate the purchasing power of money in 2016, then you'll disagree with the conclusions of the washpost article.
WSJ, I heard they did news once.
Is it just me, or does this seem like an effort to spin positive news negatively? Why not "Median income for 30-year-olds has increased since their parents were 30"? Or "Over Half of 30-year-olds earn more than their parents did at 30?"
If your child is two feet six inches tall at two years old, and two foot seven at 32 years old, they did get taller, but at a far slower rate than you would expect.
It's as if there had been no productivity gains in 30 years for the poor median 30 year old, while the fictional average 30 year old is doing better than ever.
This is WSJ red meat political controversy stuff. The story devolves into the usual "tax the rich" and anti-welfare state debate as any other political click-bait. I thought HN wasn't doing that for a week...
I actually agree with the premise and many of the conclusions, and if it popped up on Drudge or Breitbart or whatever I'd be fine with it, but why here? Why must every popular site devolve into either a virtual political cage match or another addition to the echo chamber?
We weren't, but since a week turned out to be longer than needed and I was worried about the cost of continuing, we ended the experiment early: https://news.ycombinator.com/item?id=13131251. So it's back to the normal guidelines now.
(The worry about continuing was because there was evidence that some people thought the change was permanent, and that was not the intention.)
Yesterday I reviewed all the headlines and saw none of the usual political click-bait sprinkled among them with their inevitable 200+ post flame wars. It was wonderful; like having a cast removed or getting a tooth fixed. I hope your experiment leads to a similar policy.
I had the same impression that there were fewer inflammatory comments, but am trying to keep two things in mind: one is that I know that I'm biased and would like to see quantitative data, and that there were submissions flagged on which I would have liked to see discussion by those on Hacker News. I think the data would be interesting regardless, but I don't think it would be meaningful because it wouldn't represent the HN that I'd like to see. I'd like to figure out tactics that reduce inflammatory discussion that still permit constructive discussion on contentious submissions.
Just a note: you _have_ to "tax the rich". Nobody else has enough money to pay the bills!
The question isn't whether to "tax the rich" or not - it's "How should we tax the rich" and How much should we tax the rich?" that we need to answer.
Meanwhile the correct answers are:
- Bring back heavy estate ("death") taxes to prevent wealth from being passed from generation to generation,
- Create heavy wealth taxes so that persons who are merely lucky don't monopolize the wealth.
Both the above should be done b/c goverment needs the money. Of course the other thing we need to decide is how much should the government spend, but that seems to have no limit these days.
I don't think you necessarily have to tax the rich. Their share of income should be reduced to the share they had maybe 40 years ago. Stronger unions would help for example. Having the owner class deciding they need more and more money can't work in the long run.
I don't know if it's true or not, but I've heard the claim that even pushing up tax rates to Eisenhower-era levels (without deductions) would still not solve the problem fully.
Instead, we simply have a demographics issue: Too many older folks with unpayable entitlements and not enough younger workers to pay for the bill.
Well. I guess the "No Politics week" wasn't going to last.
This goes to the core of socialized healthcare, Social Security, Universal Basic Income, and the dismantling ofsaid systems that exist.
The Baby boomers pulled the ladder up when they climbed up, and left us all in the lurch paying for them. You know, "Get the government outta my life, but dont you dare touch my medicare".
We ended it early for reasons I explained here: https://news.ycombinator.com/item?id=13131251.
Ah. I must have missed that.
I'm sure it's got nothing to do with the fact that rich people now pay a lot less effective taxes than in our parents youth and that income inequality is at an all time high... no, of course not, the problem was that our parents "pulled the ladder while going up". Shrug.
While this is interesting, technically it's political.
It is, but having learned as much as we were going to, we ended the no-politics experiment early: https://news.ycombinator.com/item?id=13131251.
Back to the normal guidelines now.
I wouldn't be surprised if large number of parents of the 30-in-197X'ers were massively impacted by ww2.
Imagine growing up during the great depression and 'losing' 2-4 years of your young adulthood in the army. You'd expect that'd set you back earnings-wise by the time you hit 30.
It'd be a surprise if the folks turning 30 in 1972 didnt make more than their parents, if you compare depression+world war to the postwar rebound (especially in the USA)
Could my parents afford an iPhone? No of course not. Among many other things.
$$$ isn't the only quality of life indicator.
When doing this calculation, you of course adjust for these things. an iPhone would cost billions of dollars in 1970. Is that the figure we should use? Probably not. But it means that these calculations are largely arbitrary since we don't know the true value of an iPhone to a person in 1970.
No smartphones, no internet, no entertainment-on-demand, fewer rights for minorities, fewer rights for women, less capable medicine, more expensive food and clothing, fewer shopping hours, less safe transport, less safe workplaces, more expensive and shorter-ranged travel, less environmental protections, etc, etc, etc.
All this stuff is conveniently ignored when comparing against previous generations.
I'm not sure why you're being down-voted so much. It's undeniable that our quality of life have improved dramatically since 1940.
People whose identity is wrapped up in how hard they have it can have trouble when it's pointed out that maybe it's not so bad after all.
Who cares about iPhones? They could afford education, healthcare and housing. These calculations are far from arbitrary. We have a reasonable idea of the sorts of things that people need to live a decent life, and these things have gotten more expensive. (Ok, so another commenter pointed out that maybe housing isn't as expensive as it's made out to be, but it's certainly not cheaper.)
iPhones were just an example =)
To be fair, they could afford it because they didn't care about it. The degree attainment rate has doubled since 1980. If the student population reverted back to those levels, price would plummet.
Isn't this to be expected? That overall, the population will maintain its purchasing power relative to itself, and inflation will rise to match in a relatively stable environment?
And then this generation needs to pay for the entitlements (and debt) that their parents enjoyed.
sigh This week of political detox on HN is not really working out, is it.
it has been cancelled... https://news.ycombinator.com/item?id=13131251
This statement means that they earn the same as their parents, right?
I suppose it means they earn as much as, or less than, their parents.
Suppose 30-year-olds make exactly the same as their parents did at 30. Then we would expect that barely half of 30-year-olds earn more than their parents did at 30.
This title is stupid. It implies "oh hur dur the economy is so bad" when in reality it says nothing.
Wow! Most 30-year-olds are making more than their parents did at the same age!
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I'm more worried about the near universal editorializing of real news than the less common totally fake variety.
Economic growth is not 0.
So, really it says that 1/2 the population is flat our worse off. Further, a rising tide lifts all boats is a complitly false analogy, and anyone using that phrase to talk about the economy is lying.
The numbers are in real USD, not nominal. So in reality, it's a huge fallacy to say that we're so much worse off that in the 1970s. We're almost exactly the same as the 1970s.
The main difference to point out here is that the 1970s 30-year-olds made much more real USD than their parents' generation, while 30-year-olds today are making almost exactly the same. Just because income isn't growing as much doesn't mean the 30-year-olds today are worse off.
If the economy was static then zero real growth is fine. However, not all costs rise 1:1 with inflation. Housing for example requires land which is zero sum so when people fall behind they really are worse of in real terms.
Remember, if 1/2 your costs double then it does not matter how much the rest of your costs decrease. AKA the inverse of https://en.wikipedia.org/wiki/Amdahl%27s_law
You make a good point. I agree.
Interestingly, I remember in the 90s when offshoring really started to take off beyond just steel and some manufacturing, the response from the politicians was that BS about rising tide lifting all boats.
Then somewhere in the last 10 years, the mantra was that some sectors would be worse off with globalization, but if you got an education, you'd be fine. So everyone went to college and ignored the blue collar guys getting screwed.
Now we see the legions of indebted college grads living at home at 30, PHDs working part time as baristas.
Should have got stem degree, is what we're now told. Tell that to the guys who had to train their own replacements on H1b visas.
I know it's not what's happening...but if we were to close the salary gap between the rich and the poor (so poor people made more money, and rich people make less), instead of keeping the gap the same but shifted up, or widening the gap...wouldn't this happen?
So in theory, it wouldn't be that bad a thing. Now, if it's just that the gap stays the same but things are shifted down, well obviously that's bad.
Well, I just tried to get a job in my company's QA department writing unit tests. Come to find out, my company ONLY hires non-leadership/senior positions in Belarus and Bangalore. I have friends in management, they can't bypass it. Rule was set high up.
The job I interviewed for is managing teams over in those places, and I'm not entirely qualified because I haven't worked in QA. So I'm just left no where. I always thought if I worked hard and did the right things, I could get ahead. It's not true.
I don't know if I'll ever achieve my goals without moving to India to get a job, then working my way back to the USA. But it certainly might be related as to why only half of 30 year olds earn more then their parents did. I'm going to keep trying but I've worked so hard and have a great reputation at work. I've done so much on my own time.
I for one, am fairly demoralized.
Note that the median income for males have been in decline since the 70's, it isn't strange that they get frustrated with the current situation.
http://economix.blogs.nytimes.com/2012/10/22/the-uncomfortab...
How can they earn more when all the money is at the hands of Trump and others who make up 1%? The current capitalism is not distributing the wealth very well and it's certainly nearing a disaster. I wish the left had an answer but they don't. They're stuck with political correctness and more extreme are can't see that they don't have an answer to capitalism and that everything they've tried in the past has failed, and working class have found a billionaire to be their champion and think that migrants and non-white and non-Christian people are to blame for their suffering. And nobody is willing to attack the current system and inequality it's created. Especially in US.
Everything you wrote is so true!
The left is the 1% as well. How much money do the Clintons have? A lot. How much Wall Street support did Obama have? A lot. If Hollywood isn't the 1%, what are they?
Thiel is interesting partly because he's a business leader that talks about politics and isn't explicitly liberal. That is, he's an exception that proves the rule.
Some do. But most have more complex motivations involving economics, democracy, and fighting (in their minds) corruption and hypocrisy. The Left won't make any positive progress here unless they try to understand their neighbors.
This is why "Love Trumps Hate" rings really hollow to most of the people I ask about these things.
The problem is the political landscape has lurched so far to the right that we've hit a point where some people actually consider Obama and Clinton to be 'left'.
Nationalized healthcare has always been on the left in America.
And I'd argue that Trump has much more in common with progressive-era Democrats (like Wilson) than he does with "the right" in modern America.
If this isn't the election where we throw away (or at least officially redefine) the concept of "left" and "right", I'm not sure there will be one.
Were you paying attention to a guy called Bernie Sanders? He was the first actual leftist to run for high office in the USA in generations.
Clinton was a wishy-washy centrist who could barely even pretend to be throwing scraps to the Sanders movement.