The Top 1% of Americans Have Taken $50 Trillion From the Bottom 90%

[ZiprHead]

And to add to your points:

CEOs see pay grow 1,000% in the last 40 years, now make 278 times the average worker

Since 1978, CEO compensation rose 1,007.5% for CEOs, compared with 11.9% for average workers, according to the Economic Policy Institute.

Another case of data taken out of context.

Plot CEO pay vs company size, you get a very different story. What you're seeing here is far more due to consolidation.

Yeah, because there were no big huge companies in 1978.

 

[DBT]

Yeah, no. I already posted the chart showing that "rising inequality" is a tribalist myth.

No, you haven't. Your chart represents improving condition for those in poverty, which is fine, but is not relevant to the issue of stagnating incomes and a growing gulf in income and wealth between ordinary workers and a small percentage of very, very rich in developed nations.

Some reasons why gross inequality in wealth distribution is bad for society and economic activity:

''One political consequence of inequality that turns into an economic liability is that it creates a feeling that everyone is only out for themselves. This impression undermines the social cohesion that lubricates economies and societies. As people become more fearful, selfish and insecure, corruption flourishes, crime jumps, anti-social behaviours increase, labour unrest stirs and legal disputes tied to commerce rights rise. When people feel they no longer live in a fair society or one where they have much opportunity they will eventually react.

''A second economic liability created by the political fallout from inequality is that the resentment against economic injustice epitomised by globalisation nurtures an environment ripe for populist policies''

''A third political threat from inequality that carries economic costs is that the concentration of economic power can undermine democracy because it gives the mega rich too much political power. As the wealthy use this muscle to expand their economic interests (via, for instance, subsidies or anti-competitive moats around their assets), the core political institutions of society are eroded.''

''Lastly, inequality imposes direct long-term economic costs because unequal societies prove to be faulty and inefficient economies. When too much income and wealth gushes to the top, the middle and lower classes are incapable of marshalling the purchasing power needed to fan sustainable economic growth.''

 

[Canard DuJour]

In the long run, employers won't pay more for workers than the marginal increase in revenue from adding workers.

But they can always pay less than the marginal increase in revenue from adding workers while there is less than full employment.

But if they do that, then that means each worker they add increases revenue by more than what they pay for the worker, i.e., it means each worker they add increases profit. So why wouldn't they just keep hiring more and more workers until the law of diminishing returns brings the marginal increase in revenue from adding workers down to what they're paying for labor?

Because demand for output is finite. Most firms report producing well within capacity because they don't anticipate being able to sell additional output.

The rest of what you wrote would appear to assume otherwise.

 

[Bomb#20]

But they can always pay less than the marginal increase in revenue from adding workers while there is less than full employment.

But if they do that, then that means each worker they add increases revenue by more than what they pay for the worker, i.e., it means each worker they add increases profit. So why wouldn't they just keep hiring more and more workers until the law of diminishing returns brings the marginal increase in revenue from adding workers down to what they're paying for labor?

Because demand for output is finite. Most firms report producing well within capacity because they don't anticipate being able to sell additional output.

The rest of what you wrote would appear to assume otherwise.

Um, do you understand the concept of "marginal increase in revenue"? Demand for output being finite is one of the reasons for the diminishing returns on adding employees. To my "Why wouldn't they?" question, you are not giving a reason why they wouldn't. You are describing the mechanism by which they would.

 

[Bomb#20]

"by itself". I.e., saving increases the deposits or funds available for banks to lend, in combination with some other processes.

Not that involve saving, i.e. forgoing consumption. Saving does not create savings. The words are similar and often conflated, but that confuses a flow and a stock variable, which aren't commensurable. As the BoE says, "when households choose to save more money in bank accounts, those deposits come simply at the expense of deposits that would have otherwise gone to companies in payment for goods and services."

Whether A pays B $100 for goods/services or forgoes the purchase and saves the $100, the total quantity of money in Banks A and B is exactly the same - as is the total quantity of reserves Banks A and B have in their accounts at the central bank. The difference is that B has less incentive to produce and if A saves, and would have to borrow that $100 at interest from Bank A in order to do so.

You appear to be neglecting opportunity cost. Yes, forgoing consumption creates savings. If A doesn't buy a new set of golf clubs from B, true, that means B has less incentive to produce more golf clubs, and the money sits in A's bank account instead of sitting in B's bank account. But that money in B's account wasn't going to sit there indefinitely; it was going to be withdrawn and spent on somebody using a milling machine to make golf clubs...

Near enough, but this is not some belated form of intermediation i.e. lending A's money to B, which what the term means in finance. The central bank requires commercial banks to have enough reserves in their accounts with the central bank to clear net interbank transactions on an average Tuesday. Any loans have already been made. If a bank attracts a new deposit, the central marks its reserve account up, but not one cent of that depositor's money is used for interbank settlement. ... The purpose is for central bank to restrict the volume of money creation by commercial banks.

... and therefore would not have been causing the central bank to mark B's bank's reserve account up. In contrast, saving -- leaving the money in A's bank -- causes the central bank to mark A's bank's reserve account up. A's bank, not finding itself restricted (more precisely, discouraged by a price rise) from increasing the volume of money creation it does, can charge borrowers a lower interest rate than it could otherwise have charged. This creates lending opportunities by increasing demand for loans. Some third party C, seeing the drop in interest rates, decides it can borrow money, buy a milling machine, and pay somebody to use it to make more milling machine parts instead of making more golf clubs.

At some point all these accounting marks refer back to an economy of physical objects, where forgoing the use of resources to make consumer goods right now frees up resources to make capital equipment, equipment that will eventually increase production of consumer goods down the road.

 

[Canard DuJour]

Because demand for output is finite. Most firms report producing well within capacity because they don't anticipate being able to sell additional output.

The rest of what you wrote would appear to assume otherwise.

Um, do you understand the concept of "marginal increase in revenue"? Demand for output being finite is one of the reasons for the diminishing returns on adding employees.

As I just said.

To my "Why wouldn't they?" question, you are not giving a reason why they wouldn't.

I very much am.

You are describing the mechanism by which they would.

I've no idea why you think so.

 

[Canard DuJour]

You appear to be neglecting opportunity cost. Yes, forgoing consumption creates savings. If A doesn't buy a new set of golf clubs from B, true, that means B has less incentive to produce more golf clubs, and the money sits in A's bank account instead of sitting in B's bank account. But that money in B's account wasn't going to sit there indefinitely; it was going to be withdrawn and spent on somebody using a milling machine to make golf clubs...

What money in B's account? You've just acknowledged that "the money sits in A's bank account instead of sitting in B's bank account."

Near enough, but this is not some belated form of intermediation i.e. lending A's money to B, which what the term means in finance. The central bank requires commercial banks to have enough reserves in their accounts with the central bank to clear net interbank transactions on an average Tuesday. Any loans have already been made. If a bank attracts a new deposit, the central marks its reserve account up, but not one cent of that depositor's money is used for interbank settlement. ... The purpose is for central bank to restrict the volume of money creation by commercial banks.

... and therefore would not have been causing the central bank to mark B's bank's reserve account up. In contrast, saving -- leaving the money in A's bank -- causes the central bank to mark A's bank's reserve account up.

Nope, bank A's central bank reserve balance is unchanged.

A's bank, not finding itself restricted (more precisely, discouraged by a price rise) from increasing the volume of money creation it does, can charge borrowers a lower interest rate than it could otherwise have charged. This creates lending opportunities by increasing demand for loans. Some third party C, seeing the drop in interest rates, decides it can borrow money, buy a milling machine, and pay somebody to use it to make more milling machine parts instead of making more golf clubs.

What drop in interest rates? Bank A's reserve balance is unchanged and there is no aggregate increase in commercial bank reserve balances with the central bank.

At some point all these accounting marks refer back to an economy of physical objects, where forgoing the use of resources to make consumer goods right now frees up resources to make capital equipment, equipment that will eventually increase production of consumer goods down the road.

Then you've yet to identify it.