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Old 04-23-2017, 09:05 PM
 
Location: Ruidoso, NM
5,170 posts, read 4,738,304 times
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Quote:
Originally Posted by SWFL_Native View Post
I would love to see that wage curve adjusted for inflation. Not a CPI calc
In case you weren't aware, it is adjusted for CPI.
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Old 04-23-2017, 10:23 PM
 
Location: Kansas City, MISSOURI
5,609 posts, read 1,671,838 times
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Quote:
Originally Posted by rruff View Post
Completely untrue. All wages are related. The unemployed in one sector must find employment in another. When a glut of workers is systemically created by a perpetual trade deficit the whole economy is effected. The deficit is what is important here.
Once again, you are making an assumption that you do not know is true. A glut of workers does not have to be created by a trade deficit - it could be created by a lot of other things. For example: 1) A large cohort of baby boomers reaching working age all at about the same time. 2) An increase of low-skilled Latin American immigrants starting at about the same time. And maybe both. Plus who knows what else.

As further proof that trade surpluses do not create rising wages, Germany has been experiencing stagnant wages for some time even though they run almost perpetual trade surpluses. According to your theory their wages should be rising up up up ... but they are not. Trade surpluses or deficits have nothing to do with wages. There is no evidence they do.

Quote:
Data. Wages fell briefly during wars and recessions, but then quickly rebound.

The Death of the Great American Middle Class – Steve Keen's Debtwatch
Actually, that chart does a great job of demonstrating my point about the postwar exceptional period. The rise post-1972 is not all that different from the 1860-1932 rise (albeit choppier). You're comparing now to a completely unique situation.

Quote:
I never get tired of hearing that one! How do you suppose the US consumer profited from the devastation in the rest of the world? Do you imagine we exported lots of goods? We didn't. US trade was a pittance in those days, ~1% of GDP. The great increase in consumer wages was the result of domestic investment, production, and consumption. Anyway, the rapid rise started in the early 30s not after the war. I explained why in the robotics thread.
US trade was a pittance in those days because transportation was more expensive than it is now. They did not have cargo planes, ships and trains were slower, they did not have big semi trucks, etc. Because transporting things long distances was relatively more difficult back then, they didn't do it as much.

As for the rise staring in the mid-30's, don't forget that WWII started in Europe before it did in the US. Probably some of the rise starting in the Depression was caused by FDR make-work programs. And frankly, when you look at that chart it is obvious that 30's-through-60's time period is clearly an exception. There was nothing that happened to our balance of trade in the mid-30's so you can hardly credit some vast new trade surplus as the cause of that sudden rise. You yourself just noted that trade back then was a pittance, and yet that big rise in wages suddenly started anyway, so you have defacto just stated that trade has nothing to do with wages.

Quote:
I'm well aware of the apologetic nonsense that is flooding our media regarding this. The article you posted is a good example. The biggest whopper in that one is that he adjusted for household size. That's how he massaged the unfavorable wage data to suit his narrative. What possible sense does that make? Income results from jobs not warm bodies, and the number of *workers* per household, and the number of hours worked actually increased!
Here is another analysis that concluded the same thing without resorting to any household size adjustments:

Yes, America’s middle class has been disappearing….into higher income groups
Quote:


Stated differently, the share of American households earning $100,000 or more per year (in 2014 dollars) increased more than three-fold from 8.1% in 1967 to 24.7% in 2014. If the 8.1% share of households in 1967 earning $100,000 or more hadn’t increased over time to 24.7%, there would only be about 10 million US households today (out of 123.2 million) earning $100,000 or more, instead of the actual number of more than 30 million American households in that high income category.
Quote:
I don't live in a big city,
Too bad. Rural areas and small towns are hardly representative of the US these days.

Quote:
and I certainly don't rely on personal observation,
Also too bad. You can learn a lot by just, like, looking around.

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but I've been alive long enough to remember life in the US since the 70s. Back then pretty much any guy who was willing to work could get a good paying stable job with benefits, enough to buy a house and support a family. That's quite a change, don't you think?
Hey guess what? I was alive in the 70's too. I guess the intervening years have made you forgot all about stagflation, multiple recessions, widespread labor strikes, etc etc. You're viewing a past you've practically forgotten through rose-colored glasses.

Quote:
If you actually pay attention to the outside world (all of it, not just your corner), then it looks about like you'd expect based on the statistics compiled by government agencies and economic experts, who certainly have no reason to fudge numbers to make things look worse than they really are.
I have just quoted multiple economic experts and government statistics. For example, notice on my chart above it says: Source: Census Bureau, and the guy who wrote the article is a professor of economics and finance. The article I posted at the outset of this thread was a study by the Federal Reserve Bank of St Louis, and the other study which you just dismissed was written by a guy with the following qualifications:
Quote:
Stephen J. Rose is an affiliated scholar in the Income and Benefits Policy Center at the Urban Institute. He is a nationally recognized labor economist and has spent the last 35 years researching and writing about the interactions between formal education, training, career movements, incomes, and earnings. His book Social Stratification in the United States was originally published in 1978, and the seventh edition was released in 2014. His book Rebound: Why America Will Emerge Stronger from the Financial Crisis addresses the causes of the financial crisis and the evolving structure of the US economy over the last three decades.Before coming to Urban, Rose held senior positions at the Georgetown University Center on Education and the Workforce, Educational Testing Service, the US Department of Labor, Joint Economic Committee of Congress, the National Commission for Employment Policy, and the Washington State Senate. His commentaries have appeared in the New York Times, Washington Post, Wall Street Journal, and other print and broadcast media. He has a BA from Princeton University and an MA and PhD in economics from the City University of New York.
Even a PhD in economics! Why do I have a feeling he's a helluva lot more qualified than you?

Last edited by James Bond 007; 04-23-2017 at 10:33 PM..
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Old 04-23-2017, 11:55 PM
 
Location: Ruidoso, NM
5,170 posts, read 4,738,304 times
Reputation: 4206
Quote:
Originally Posted by James Bond 007 View Post
A glut of workers does not have to be created by a trade deficit - it could be created by a lot of other things. For example: 1) A large cohort of baby boomers reaching working age all at about the same time. 2) An increase of low-skilled Latin American immigrants starting at about the same time. And maybe both. Plus who knows what else.
I'm not trying to explain a glut. I'm explaining how wages could be flat for 40 years while the top .01% gets a 1000% raise, and GDP/capita rises as it always has.

Your economic knowledge is very lacking. The glut is cause by the fact that we produce less than we consume. Production is jobs. When workers enter the labor force they actually increase demand in excess of their wages. In other words, that would tend to result in an economic boom. The same goes for debt escalation, that boosts the economy as well. That's why it seemed like the 80s were pretty good while our economy was really going down the toilet.

Quote:
According to your theory their wages should be rising up up up ... but they are not. Trade surpluses or deficits have nothing to do with wages. There is no evidence they do.
A lot of things can influence wages. Trade deficits and surpluses are just one. Germany manipulates their economy to create trade surpluses, and wages are controlled by unions. Since they share a currency with their main trading partners, this gives them a competitive advantage, a strong economy, and the lowest hours worked of any industrial country.

Quote:
Actually, that chart does a great job of demonstrating my point about the postwar exceptional period. The rise post-1972 is not all that different from the 1860-1932 rise (albeit choppier). You're comparing now to a completely unique situation.
You must be fooled because you don't understand that a steady %/yr increase results in an exponential curve.

1864 to 1928 real wages rose an average of 1.6%/yr.
1932 to 1976 they rose ~2.9%/yr.
1976 to the present they've risen ~0.0%.


It's also instructive to note the following. I said earlier that consumer capitalism requires that consumer wages and capitalist profits rise together. They are dependent.

From 1864 to 1976, wages rose an average of 1.9%/yr.
From 1870 to present, GDP/capita also rose 1.9%/yr.




The disconnect occurred after 1980. Wages lagged GDP/capita a little prior to 1929, enough to cause an imbalance resulting in the GD. For 45 years after that wages were higher than GDP/capita. Yes, workers got a higher % of the pie and oligarchs less. But the oligarchs got what they were really after which was world domination.
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Old 04-24-2017, 09:30 AM
 
4,203 posts, read 1,543,373 times
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Quote:
Originally Posted by mathjak107 View Post
...we only buy foreign products for one reason . they represent the better quality and value for our dollars because someone else does it better and cheaper .
Here's some futurism: the trade deficit will decrease because robotics and automation will negate cost advantages from cheap labor. The trend will be towards more local production that offers customization for the customer, through 3D printing, computer-controlled milling and circuit board assembly. Want a Whirlpool dishwasher? Instead of making thousands of them in Mexico, Whirlpool takes the order online, electronic drawings are sent to the local independent fab, who creates it locally. The local fab is a jobber who will be able to make nearly everything from digital plans whether it's a dishwasher, toaster or a bicycle.

The advantage of local production is lower transportation cost -- which could become a major factor when climate change gets worse enough that the world enacts a carbon tax. Overseas container shipping is extremely dirty and carbon-intensive.
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Old 04-24-2017, 09:50 AM
 
Location: Tennessee
21,034 posts, read 15,325,769 times
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On a casual basis, it absolutely is.

I live in a town that is dominated by a Fortune 500 chemical plant and its manufacturing operations. Headcount is about what it was twenty years ago, but a far greater proportion of those jobs are outside of manufacturing and are contract only, often with worse pay and benefits in absolute terms than decades ago.

Smaller operations here have generally gone out of business, offshored production, or sent jobs to major metropolitan areas. A solar glass manufacturer near that chemical plant ceased operations roughly a decade ago. It had an adjacent "corporate services office." Several operators have bought the plant over the years, resumed operations, then folded. The business jobs in the office were gradually sent to Atlanta.

One thing that is frequently forgotten in the "manufacturing is dying" debate is that when a manufacturer leaves an area, you lose more than just manufacturing jobs. Those white collar support jobs, like in the corporate services office, are also gone. In many manufacturing dependent communities, there aren't many other options for white collar employment, so those staff are forced to leave the area.

My city was doing much better twenty years ago than it is now.
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Old 04-24-2017, 12:21 PM
 
Location: Kansas City, MISSOURI
5,609 posts, read 1,671,838 times
Reputation: 4778
Quote:
Originally Posted by rruff View Post
I'm not trying to explain a glut. I'm explaining how wages could be flat for 40 years while the top .01% gets a 1000% raise, and GDP/capita rises as it always has.
You just said there was a glut:
Quote:
Originally Posted by rruff
When a glut of workers is systemically created by a perpetual trade deficit the whole economy is effected.
Quote:
Originally Posted by rruff
Your economic knowledge is very lacking.
Look who's talking?

Quote:
Originally Posted by rruff
The glut is cause by the fact that we produce less than we consume.
How many more times do I have to explain this? YOU DO NOT KNOW THAT. There could be other reasons for a glut of labor that have nothing to do with trade surpluses or deficits. I explained two (very likely) possibilities which you completely ignored. And the funny thing is, just right above you said you're not trying to explain a glut, but right here you're assuming there is a glut. If you're assuming there is a glut of labor (which may or may not be dragging down wages), you have to explore why that glut is there. You're only looking at ONE possibility and completely ignoring other possibilities.

Quote:
Originally Posted by rruff
Production is jobs. When workers enter the labor force they actually increase demand in excess of their wages. In other words, that would tend to result in an economic boom...
Even if we accept this premise you're STILL ignoring 90% of the workforce who are not engaged in manufacturing. Somebody entering the workforce and selling insurance or writing software at $20/hour creates the same demand in the economy as somebody entering the workforce and going to work at a factory for $20/hour. It makes no difference what they're producing as long as there is demand for it. Demand for insurance or software is no different than demand for a car or piece of furniture. You're making the mistake of thinking that a physical good is something "special" economically while a service is not. There is no reason to believe this. For some strange reason your "production" only applies to tradable goods and not services. The result of your thinking is that the US has a technology sector which completely blows away the rest of the world, but which you ascribe no economic value to, while focusing on the production of cars and other widgets. In your mind it seems that the output of Silicon Valley and Seattle are basically worthless because it does little to help our balance of trade, while the output of Detroit is somehow magical - a line of reasoning which is absurd.

Quote:
Originally Posted by rruff
A lot of things can influence wages...
Good, I'm glad you agree. Now that you've said that, why do you keep insisting that the only reason for the recent stagnation of wages is because of our trade deficit?

Quote:
Originally Posted by rruff
You must be fooled because you don't understand that a steady %/yr increase results in an exponential curve....
This response didn't even come close to what I was commenting about.
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Old 04-24-2017, 12:44 PM
 
Location: Kansas City, MISSOURI
5,609 posts, read 1,671,838 times
Reputation: 4778
Quote:
Originally Posted by rruff View Post
When workers enter the labor force they actually increase demand in excess of their wages. In other words, that would tend to result in an economic boom..
BTW, this is also not necessarily true. If it was, then every nation with a fast-growing population would be rich and booming. Since many - if not most - nations that have fast-growing populations (and thus, fast-growing labor forces) are not rich and booming, then clearly labor force growth in and of itself does not cause booms, and workers entering the labor force do not necessarily create demand in excess of their wages.
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Old 04-24-2017, 12:44 PM
 
Location: Ruidoso, NM
5,170 posts, read 4,738,304 times
Reputation: 4206
Quote:
Originally Posted by James Bond 007 View Post
How many more times do I have to explain this? YOU DO NOT KNOW THAT. There could be other reasons for a glut of labor that have nothing to do with trade surpluses or deficits.
Let me maker it simple.

A trade deficit means that you produce less than you buy. We import more, and produce less, and fill the gap with debt. The "producing less" part has a direct negative effect on the job market.

A common fallacy that people have is a belief that all developed countries suffer this fate, but in reality most of them have a trade surplus. How is this possible? How can they compete with poor countries and cheap labor? It's easy. It isn't in the countries national interest, so they regulate trade so it doesn't happen. Just like the US regulates trade to *cause* a perpetual trade deficit. That's how companies made no-brainer fortunes by moving production overseas. Easy profits. If the US$ wasn't boosted to cause a perpetual deficit, moving production would be much more risky.

BTW, don't be surprised if I don't answer any more of your posts.

Last edited by rruff; 04-24-2017 at 01:28 PM..
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Old 04-24-2017, 01:12 PM
 
Location: Kansas City, MISSOURI
5,609 posts, read 1,671,838 times
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The US doesn't regulate trade to "cause" a trade deficit, the US has a trade deficit because we are rich and can afford to import a lot of stuff from other countries. All those miles after miles of sprawl filled with 3000 s.f. houses with 3-car garages that you're oblivious to because you live out in the boonies somewhere, is a sign of vast amounts of wealth which doesn't exist in Germany, Japan, or any of the trade-surplus nations you seem fond of replicating. In fact, if Germany were a US state it would be poorer than Mississippi. Hardly something you'd want to replicate.

Quote:
Originally Posted by ruff
You obviously don't care to discuss these matters and your rants are devoid of information or rational arguments.
Look who's talking!
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Old 04-24-2017, 05:27 PM
 
Location: NH/UT/WA
283 posts, read 170,007 times
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Quote:
Originally Posted by rruff View Post
Real median incomes have been flat for 40 years. Incidentally this is right when the globalization project began.

When our real wages suddenly flatten like that, you can't pretend we are better off. GDP/capita doubled, it's just that all the gains went to a tiny fraction of the population.

We or any country doesn't want a perpetual trade deficit is because it necessarily depresses wages. Real wages. We aren't better off and we aren't getting cheaper goods, because our loss of income more than compensates.

Why is the US the only country doing this? We absorb the excess production of the entire world, while most other industrialized countries run a trade surplus.



https://www.tutor2u.net/economics/re...ade-imbalances

Someone has certainly gotten rich from this, but it isn't us.
Its because the United States (And some others like Britain) keep basically an open capital account and allow other countries to push their savings into the United States basically at will. If China(Or Japan) buys $100 billion in US assets (treasuries, dollars, etc), then the United States mathematically *has* to run a $100 billion deficit, because they both must add to zero.

Michael Pettis talks about this at length on his blog and his Book, "The Great Rebalancing" I highly recommend both. Here he explains it much better than I can:

Mexico

The US dollar being the world's reserve currency is actually a *huge* cost rather than a benefit. The reason the US is in this mess is because Kennedy allowed foreigners much much greater access to dollars, eventually leading to the collapse of Bretton Woods, and the see-sawing FOREX mess we have today with commonplace currency crises and investment bubbles.
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