Wages keep going up after the 70's

It's not just the Internet

It really, genuinely is. Or, rather, the story you're told isn't complete and the narrative it's meant to support in your head doesn't reflect reality. Total compensation (wages/salary + benefits) only started diverging from productivity in the middle 2000's with the rise of the housing boom (which probably helped cover up what would have otherwise been stagnation) and median personal income (the income of the person at the 50th percentile of income earners, so a statistic entirely deadened to income increases in the top 1%, or even 20%) stopped increasing at about the same time.

More broadly, the idea that 'wages have stagnated therefore there are a lot of people whose lives have never gotten better' is a kind of statistical ignorance that only the general public is capable of on any kind of sustained scale. The truth is that the overwhelming majority of people experience income growth over the course of their life(it has been a very long time since I've run the stats but, the last time I saw anyone do it, the majority of people start out in the lowest quintile, move up to the 3rd highest, then gently decline into retirement on a fixed income), that different income brackets experience tremendous turnover as people move out of them and new people move into them, and that the kind of arguments people are having about wealth and poverty are utterly uninformed by reality.

If you want the 'median wage' to keep growing after the 70's, you need to do a laundry list of things:

1. Divorce health insurance from employment. Health insurance payments make up a huge portion of total compensation and, after a certain point in the 80's, represented a large portion of the growth in total compensation. If people are getting this in monetary payments instead of in-kind payments like health insurance, you're going to see wage/salary growth along with total compensation growth.

2. Prevent the immigration liberalization of the 60's and have continuous crackdowns on illegal immigration. One of the important contributors to the statistical artifact that is wage growth is a composition effect you see when you add a whole bunch of people on the low end of the income spectrum while the people who previously occupied that end move upwards. Wages look like they are stagnating even as most people experience income growth.

3. Have a Federal Reserve that pursues a consistent, responsible monetary policy that expands liberally in times of economic hardship but pulls back as the economy starts overheating. What seems to have been a big problem in the early part of the 2000's, when a lot of labor compensation statistics started diverging from productivity is that the Federal Reserve overshot its attempt to push a recovery from the dotcom bubble. A confluence of factors combined with an overly loose monetary policy to drive a housing boom that sucked income and productivity out of most of the economy and shoved it into housing/construction and related sectors.

4. Fuck China. Seriously, destroy the whole economic miracle in East Asia, make it entirely untenable for manufacturing to move elsewhere. One major driver of actual personal quality of life stagnation amongst lower income Americans has been the need to compete with literally billions of lower income foreigners, primarily in China but also in places like Eastern Europe, South Asia, or Africa. Economic success elsewhere is very important to long-run growth in the US, but in the relatively short run a lot of people can lose badly trying to compete with third-world workers who are willing to do the same job for a tenth of the price. Kill Deng, have the Gang of Four never lose power, anything to really fuck China really fucking hard. Have the License Raj never go away, save the Warsaw Pact in Eastern Europe, and subject Africa to another round of revolution, civil war, and genocide, and things start looking increasingly good for first world workers in the short run.

And that's all really just to start. Just So stories about the power of capital are interesting, but unrelated to this particular media 'statistic'.
 
The first stage of replacing various conditional grants is called guaranteed minimum income. This exists in Sweden and Norway. In Sweden, if you fall below a certain income threshold, the government will pay you the difference; this consists of unrestricted cash grants, plus rent in the area you live in, since the rental market is highly regulated and segmented.


Not yet, but there exist center-left movements in various European countries, including Finland, the Netherlands, and Switzerland, actively pushing for it.

Didn't you say that Sweden implemented it? I am confused.:confused:
 
To keep wages going up after the 70's you need more than "fuck China" (which isn't the cause of problems anyway) and more than UBI or GI or EIC. If you even accept that premise. First, this line looks pretty flat to me.

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Wage_stagnation.png


I think that is pretty good for the amount of social upheaval that's happened... to hear others speak it's like the sky is falling. But let's go with the more pessimistic premise of the article that wages have "either remained flat or declined" and take the "declined" part at face value.

Fixing unions and manufacturing in the 70's is not the answer. The reason is a fundamental misunderstanding why youth seek higher education. It's not because there's no more manufacturing jobs. It's because higher education leads to greater income and life quality on average. In other words, it's a calculated risk. If you want education, you do it early, no matter the cost. Post-millennial jobs need more education than ever, because it gives them the ability to critically think, organize and survive in a high information world.

More than ever you need a "well-rounded" personality and skillset that only higher education can provide. In the 90's and early 2000's it was all about technical skills. Now, it is about ability to process information and take advantage of all the social networks and degrees of separation available, on top of technical and quantitative ability. 40% of the youth now are entrepreneurs, whose goals, dreams and desires are not solved by any sort of basic income or government program because their motivations come from deep within. The job titles of tomorrow and high growth areas right now are related to business services and human resources, because unlike with technical skills these scale directly with population.

So, if you want higher wages after the 70's, one way to look at it is to let the system get even more extreme. Lots and lots of business education in high school, let corporations outsource as much as they want, and so on. What you will find, is that if small business or entrepreneurs have access to the same resources as multinational corporations, they could out-compete them. If an entrepreneur can pick up the phone and for a few hundred dollars, not a few thousand or few tens of thousands produce a prototype in a factory in China, entrepreneurship would have taken off much earlier than the Internet. If you truly accept the premise that things are really horrible and terrible right now, then if you're at the bottom there is nowhere to go but up.

The job titles of tomorrow that are high growth are all related to business in some way shape or form... the golden path seems to be get just enough technical education (an engineering degree suffices) early in your life then shift to business. Even the best government program would not give the quality of life desired, by anyone, in any way.
 
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According to the internet (which may or may not be accurate) median/lower class wages have not gone up much in real (inflation adjusted) terms since the 70's. What would it take to make them go up more? Or is this not true?

Quickest solution is have 1968 succeed in either Czechoslovakia or France, or get Italy to go off. The threat of communisation will spur an alternate attempt to deal with low productivity and a declining rate of profit.

yours,
Sam R.
 
Guys, there's an entire economics literature out there about the decline in US productivity growth, from about 2-3% a year in the postwar era to 1% a year after 1973 (with a short rebound from 1996-2004, which has since receded). If you think you have a simple POD that would've changed that, you're doing the economics equivalent of thinking you've proven Fermat's Last Theorem using elementary arithmetic.
 
My point isn't just big companies but unions, First World governments and general populace. Unions harp more harp on low 3rd World wages more because it wants better salaries for its 1st world members than they give a damn about Third Worlders. They damn well know adding additional costs to Third World countries would decrease their wage advantage over the First World and thus keep more of the jobs/wages for their First World members. Of course it does so largely at the expense of the Third World but that doesn't effect them.


Let's be honest about this, trying to get the Third World to get closer to First World environmental, safety and wage standards is more about protecting First World wages and benefits than helping Third Worlders.
On this last issue, I think I instead go with something Robert Reich said to the effect that functional EPAs, transparency of financial markets, etc, are what create markets. And certainly the way property rights are enshrined in law. I mean, if a person wants a modern economy, they need much of this framework.
 
On this last issue, I think I instead go with something Robert Reich said to the effect that functional EPAs, transparency of financial markets, etc, are what create markets. And certainly the way property rights are enshrined in law. I mean, if a person wants a modern economy, they need much of this framework.

What he (and other Americans and Europeans) keeps missing is that there are already plenty of local environmental and labor regulations in developing countries. Some are terrible (tight zoning restrictions in India are probably the single worst), some aren't enforced very well, some are just right for the local circumstances. For example, it's popular in the US to berate Mexico for its high pollution levels, and by implication for failing to enforce anti-pollution laws, but Mexico City has the hoy no circula program, which no American city would think to do, even back when Los Angeles was as smoggy as present-day Mexico City. Minimum wages in developing countries tend to be highly segmented, mirroring their dual economies, but in the formal sector they're usually high relative to GDP, occasionally even higher than the national GDP per capita, when the modern sector is small and much richer than the traditional sector.
 
I quite agree that most(?) developing countries have dual economies, where between formal and informal, never shall the 'twain meet!

What I have in mind instead is growing the informal economy with healthy feedback between theory and practice, and at times changing the law.

For example, some doctors have been to medical school and some haven't. And when one of these doctors tours a western hospital, it's become a bit of a running joke that they don't initially say whether they've been to medical school or not. He or she is able to consult on cases, able to discuss recent studies, able to easily read blood work and X-rays. At first, the western doctors were floored by which ones hadn't been to med school. But by now they're used to it. In fact, western med schools have even learned a thing or two about how to better teach their own students.
 
On this last issue, I think I instead go with something Robert Reich said to the effect that functional EPAs, transparency of financial markets, etc, are what create markets. And certainly the way property rights are enshrined in law. I mean, if a person wants a modern economy, they need much of this framework.

Eventually , yes. However much of the Third World is far from having modern economies. They can't even begin to compete with Western economies if they have even remotely the same minimum wages and ecology, health and safety regs. They just can't afford it.
 
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