New York Times piece (http://www.nytimes.com/2014/08/06/upshot/alarm-on-income-inequality-from-a-mainstream-source.html?_r=1)
Standard and Poor's report (https://www.globalcreditportal.com/ratingsdirect/renderArticle.do?articleId=1351366&SctArtId=255732&from=CM&nsl_code=LIME&sourceObjectId=8741033&sourceRevId=1&fee_ind=N&exp_date=20240804-19:41:13)
Interesting read.
Quote
Is income inequality holding back the United States economy? A new report argues that it is, that an unequal distribution in incomes is making it harder for the nation to recover from the recession and achieve the kind of growth that was commonplace in decades past.
The report is interesting not because it offers some novel analytical approach or crunches previously unknown data. Rather, it has to do with who produced it, which says a lot about how the discussion over inequality is evolving.
Economists at Standard & Poor's Ratings Services are the authors of the straightforwardly titled "How Increasing Inequality is Dampening U.S. Economic Growth, and Possible Ways to Change the Tide." (https://www.globalcreditportal.com/ratingsdirect/renderArticle.do?articleId=1351366&SctArtId=255732&from=CM&nsl_code=LIME&sourceObjectId=8741033&sourceRevId=1&fee_ind=N&exp_date=20240804-19:41:13) The fact that S.&P., an apolitical organization that aims to produce reliable research for bond investors and others, is raising alarms about the risks that emerge from income inequality is a small but important sign of how a debate that has been largely confined to the academic world and left-of-center political circles is becoming more mainstream. Photo (https://languish.org/forums/proxy.php?request=http%3A%2F%2Fstatic01.nyt.com%2Fimages%2F2014%2F08%2F06%2Fupshot%2F06up-inequality%2F06up-inequality-articleLarge.jpg&hash=eedbbbd4ef21bae0b558ef5e49b10bc7e4d43031) Beth Ann Bovino, the chief U.S. economist at S.&P., spoke at a panel of financial market experts, investors and opinion makers in Washington last year. Credit Greg Gibson/Bipartisan Policy Center "Our review of the data, as well as a wealth of research on this matter, leads us to conclude that the current level of income inequality in the U.S. is dampening G.D.P. growth," the S.&P. researchers write, "at a time when the world's biggest economy is struggling to recover from the Great Recession and the government is in need of funds to support an aging population."
To understand why this matters, you have to know a little bit about the many tribes within the world of economics.
There are the academic economists who study the forces shaping the modern economy. Their work is rigorous but often obscure. Some of them end up in important policy jobs (See: Bernanke, B. (http://topics.nytimes.com/top/reference/timestopics/people/b/ben_s_bernanke/index.html)) or write books for a mass audience (Piketty, T (http://www.nytimes.com/2014/05/31/upshot/everything-you-need-to-know-about-thomas-piketty-vs-the-financial-times.html).), but many labor in the halls of academia for decades writing carefully vetted articles for academic journals that are rigorous as can be but are read by, to a first approximation, no one.
Then there are the economists in what can broadly be called the business forecasting community. They wear nicer suits than the academics, and are better at offering a glib, confident analysis of the latest jobs numbers delivered on CNBC or in front of a room full of executives who are their clients. They work for ratings firms like S.&P., forecasting firms like Macroeconomic Advisers and the economics research departments of all the big banks.
The key difference, though, is that rather than trying to produce cutting-edge theory, they are trying to do the practical work of explaining to clients — companies trying to forecast future demand, investors trying to allocate assets — how the economy is likely to evolve. They're not really driven by ideology, or by models that are rigorous enough in their theoretical underpinnings to pass academic peer review. Rather, their success or failure hinges on whether they're successful at giving those clients an accurate picture of where the economy is heading.
In that sense, the new S.&P. report is a sign of how worries that income inequality is a factor behind subpar economic growth over the last five years (and really the last 15 years) is going from an idiosyncratic argument made mainly by left-of center economists to something that even the tribe of business forecasters needs to wrestle with.
I asked Beth Ann Bovino, the chief U.S. economist at S.&P., why she and her colleagues took on this topic. "We spend a lot of time trying to think about what's the economic outlook and what to expect ahead," she said. "What disturbs me about this recovery — which has been the weakest in 50 years — is how feeble it has been, and we've been asking what are the reasons behind it." She added: "One of the reasons that could explain this pace of very slow growth is higher income inequality. And that also might also explain what happened that led up to the great recession."
"From my research and some of the analysis I saw from others, when you have extreme levels of inequality, it can hurt the economy," she said.
Where's the exec summ?
Quote from: garbon on August 06, 2014, 02:07:40 PM
Where's the exec summ?
Apparently we need to get more people in college.
Quote from: garbon on August 06, 2014, 02:07:40 PM
Where's the exec summ?
The poors are holding back the wealthy.
Quote from: garbon on August 06, 2014, 02:07:40 PM
Where's the exec summ?
Quote"From my research and some of the analysis I saw from others, when you have extreme levels of inequality, it can hurt the economy," she said.
:lol:
Quote from: derspiess on August 06, 2014, 02:12:43 PM
Quote from: garbon on August 06, 2014, 02:07:40 PM
Where's the exec summ?
Apparently we need to get more people in college.
it's the only politici policy they aim at. the rest is just fact figures.
The fed is pumping up the stock market but not wages. And holding down bond rates. What did we expect would happen?
Quote from: MadImmortalMan on August 06, 2014, 03:06:24 PM
The fed is pumping up the stock market but not wages. And holding down bond rates. What did we expect would happen?
The Fed doesn't raise wages, employers do.
And why should employers raise wages, or hell, even hire people: that impacts profit maximizationalism and shareholder value. They've been cheating American workers for decades against the cost of living, so why start now, especially when they're sitting on record historical amounts of cash reserves?
Employers have the right not to elevate wages.
I think S&P is playing kissy face with the White House to mitigate the upcoming bond fraud trial. :ph34r:
Quote from: CountDeMoney on August 06, 2014, 03:16:38 PM
Quote from: MadImmortalMan on August 06, 2014, 03:06:24 PM
The fed is pumping up the stock market but not wages. And holding down bond rates. What did we expect would happen?
The Fed doesn't raise wages, employers do.
And why should employers raise wages, or hell, even hire people: that impacts profit maximizationalism and shareholder value. They've been cheating American workers for decades against the cost of living, so why start now, especially when they're sitting on record historical amounts of cash reserves?
Employers have the right not to elevate wages.
Maybe the Fed should stop pumping up stock market then.
Quote from: derspiess on August 06, 2014, 04:06:34 PM
Maybe the Fed should stop pumping up stock market then.
No shit, not like that rigged system needs any help.
Quote from: garbon on August 06, 2014, 02:07:40 PM
Where's the exec summ?
That presumably educated people cant read a short article in the first post of a thread.
The Fed neither targets the equities markets nor does it buy stocks.
It depresses bond rates, which drives investment capital into stocks because investors are seeking yield. This increases buying demand in the market, pushing prices higher.
Stock market 101. Not even 101. You have to know that to get into preschool.
Still has nothing to do with companies suppressing wages.
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fwww.killingtime.com%2FPegu%2Fwp-content%2Fuploads%2F2012%2F05%2FBaghdad-Bob.jpg&hash=59eaa03bb8a85c6a65cb02d65a06fd45ca4aaba8)
Quote from: The Minsky Moment on August 06, 2014, 05:03:55 PM
The Fed neither targets the equities markets nor does it buy stocks.
The real thing to ask is not whether the easing was bad or helpful (it seems to have been nearly universally helpful) but what happens when bond rates normalize.
On a global perspective, we've been at historically large rates of debt for a historically long period of time. We're already outside of the normative historical range by a significant factor. The question about that is, will it normalize or is this a new normal? Is this time different?
Maybe everything will settle down and grow out of it or maybe there will be a 21st century Napoleputin and everyone will default.
Quote from: MadImmortalMan on August 06, 2014, 06:54:49 PM
It depresses bond rates, which drives investment capital into stocks because investors are seeking yield. This increases buying demand in the market, pushing prices higher.
Stock market 101. Not even 101. You have to know that to get into preschool.
Except like most stock market related nostrums you learn in preschool, it doesn't necessarily hold. If it did the S&P would not be stalling right now even though everyone recognizes there is a bubble in high yield debt and Treasuries yield squat. The rotation is stalled.
Historically the correlation between interest rates and the S&P is not unambiguous. Lower rates do tend to drive up P/E ratios because it implies a lower discount to future earnings, but of course the "E" part still has to be strong. The circumstances matter. Are low rates spurring investment or are they a symptom of flight to safety?
The yield channel you mention is problematic because what matters for asset class selection is directional movement - i.e. yields may be "low" but if the expectation is that bond prices will continue to rise, then it doesn't make sense to switch. But the effect on discount rates still holds, so it is possible for bonds and stocks to do well at the same time. It is not a simple binary choice.
I repeat - the Fed doesn't target the stock market. They target inflation and employment. If inflation is low the priority is growth. If people believe the Fed will be successful then stocks will go up because that implies higher future earnings. The Fed is not "pumping up the stock market". Investors bid up stock higher because the Fed action is changing the perceived underlying fundamentals.
Quote from: Malthus on August 06, 2014, 02:36:06 PM
Quote from: derspiess on August 06, 2014, 02:12:43 PM
Quote from: garbon on August 06, 2014, 02:07:40 PM
Where's the exec summ?
Apparently we need to get more people in college.
[Ide] JDs for all! [/Ide]
How about rich families for all? That's the Malthus way, and it's worked out for you.
JDs for some, tiny microscopes for others?
Quote from: Ideologue on August 07, 2014, 07:23:03 AM
Quote from: Malthus on August 06, 2014, 02:36:06 PM
Quote from: derspiess on August 06, 2014, 02:12:43 PM
Quote from: garbon on August 06, 2014, 02:07:40 PM
Where's the exec summ?
Apparently we need to get more people in college.
[Ide] JDs for all! [/Ide]
How about rich families for all? That's the Malthus way, and it's worked out for you.
You tell 'em, Ide. :mad:
We all can't win the "Lucky Sperm of the Month Club" lottery.
Quote from: CountDeMoney on August 07, 2014, 08:51:30 AM
We all can't win the "Lucky Sperm of the Month Club" lottery.
Check your privilege.
Quote from: Ideologue on August 07, 2014, 07:23:03 AM
Quote from: Malthus on August 06, 2014, 02:36:06 PM
Quote from: derspiess on August 06, 2014, 02:12:43 PM
Quote from: garbon on August 06, 2014, 02:07:40 PM
Where's the exec summ?
Apparently we need to get more people in college.
[Ide] JDs for all! [/Ide]
How about rich families for all? That's the Malthus way, and it's worked out for you.
My family was rich enough to get me a JD. :D
Quote from: derspiess on August 07, 2014, 08:57:50 AM
Quote from: CountDeMoney on August 07, 2014, 08:51:30 AM
We all can't win the "Lucky Sperm of the Month Club" lottery.
Check your privilege.
Check my ballsack luxuriously resting upon that massive forehead of yours, like the sun bathing the Bonneville Flats, but with pubes.
:rolleyes: Spoiled white boy.
Spoiled pubes. Please, partake of them.
You have some odd fantasies.
Quote from: Malthus on August 07, 2014, 09:00:01 AM
Quote from: Ideologue on August 07, 2014, 07:23:03 AM
Quote from: Malthus on August 06, 2014, 02:36:06 PM
Quote from: derspiess on August 06, 2014, 02:12:43 PM
Quote from: garbon on August 06, 2014, 02:07:40 PM
Where's the exec summ?
Apparently we need to get more people in college.
[Ide] JDs for all! [/Ide]
How about rich families for all? That's the Malthus way, and it's worked out for you.
My family was rich enough to get me a ____. :D
Fixed your post. <_<
My family is like a vortex that pulls all my cash into it. All I can do it make it faster than they suck it in. :P
Quote from: MadImmortalMan on August 07, 2014, 05:16:05 PM
My family is like a vortex that pulls all my cash into it. All I can do it make it faster than they suck it in. :P
So the thread title should be - US: Family members causing slower growth :unsure:
Quote from: derspiess on August 06, 2014, 02:12:43 PM
Quote from: garbon on August 06, 2014, 02:07:40 PM
Where's the exec summ?
Apparently we need to get more people in college.
But you can't give jobs to even those who have been, right?
Quote from: Tyr on August 08, 2014, 06:39:20 AM
Quote from: derspiess on August 06, 2014, 02:12:43 PM
Quote from: garbon on August 06, 2014, 02:07:40 PM
Where's the exec summ?
Apparently we need to get more people in college.
But you can't give jobs to even those who have been, right?
What's the point if nobody's hiring anyway. College is just the new Midnight Basketball.
Keep 'em off the streets.
Quote from: Tyr on August 08, 2014, 06:39:20 AM
Quote from: derspiess on August 06, 2014, 02:12:43 PM
Quote from: garbon on August 06, 2014, 02:07:40 PM
Where's the exec summ?
Apparently we need to get more people in college.
But you can't give jobs to even those who have been, right?
Doesn't matter. People with degrees tend to have higher salaries. Ergo the solution: MOAR COLLIDGE
Quote from: derspiess on August 08, 2014, 12:13:16 PM
Quote from: Tyr on August 08, 2014, 06:39:20 AM
Quote from: derspiess on August 06, 2014, 02:12:43 PM
Quote from: garbon on August 06, 2014, 02:07:40 PM
Where's the exec summ?
Apparently we need to get more people in college.
But you can't give jobs to even those who have been, right?
Doesn't matter. People with degrees tend to have higher salaries. Ergo the solution: MOAR COLLIDGE
More to the point more people should be able to attend post secondary educational instutions at a more reasonable cost if society wishes to deal with wage inequality.
Quote from: crazy canuck on August 06, 2014, 04:21:53 PM
Quote from: garbon on August 06, 2014, 02:07:40 PM
Where's the exec summ?
That presumably educated people cant read a short article in the first post of a thread.
When I posted there were only hyperlinks in the OP.
Quote from: garbon on August 08, 2014, 12:26:28 PM
Quote from: crazy canuck on August 06, 2014, 04:21:53 PM
Quote from: garbon on August 06, 2014, 02:07:40 PM
Where's the exec summ?
That presumably educated people cant read a short article in the first post of a thread.
When I posted there were only hyperlinks in the OP.
You are forgiven :)
I haven't gotten round to reading the S&P study, probably never will.
John Cochrane has a pretty brutal takedown: http://johnhcochrane.blogspot.com/2014/08/s-economists-and-inequality.html
I disagree with him on a lot of stuff but he makes some good points here. Don't know how fairly he has characterized the study, though.
The traditional view has been that inequality is *positively* correlated with growth, at least in the developmental stage. A lot of the literature in the area involves attacking that supposed connection and it is no longer widely accepted, at least without big reservation. The argument that inequality is *negatively* correlated with growth because of variances in propensities to consume has been around for a while too, but I think is a misreading of Keynes.
Barring unusual situations, I think the connection between inequality and long-run growth is ambiguous, and there aren't hugely compelling reasons to conclude is it is materially different from zero.
Bullshit. As Reagan said, a rising tide raises all boats.
Inequality is not the problem. Weakeaned economy by retarded regulations and ideological policies are the cause of lack of jobs and poverty.
Which regulations and policies would you like to see changed?
Yi, this is Siege.
Too much alcohol in m=y blood system, break.
Tomorroe I shall answer your bait question, break.
You know already all the answers.
Siege out.
10-4
Haha, are you a fucking cop?
When I was a private, back in 2005, I said 10-4 over the net, and my team leader made me do 100 push ups for saying that.
In the US Army we say Roger, Good copy, Copy that, Wilco, or Acknowledged.
Never 10-4.
10-4. Over and out.
Anyway, I just came back today from JRTC in Fort Polk, Lousiana.
I am stupid after 30 days without light beer.
Quote from: Peter Wiggin on August 09, 2014, 11:17:29 PM
10-4. Over and out.
Haha, over or out.
Not both at the same time.
Over if you want an answer, out if you initiated the com and have nothing else follows.
Yay Siege. :)
Quote from: Syt on August 09, 2014, 11:43:57 PM
Yay Siege. :)
Got some German light beer for me?
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fstatic.wine-searcher.net%2Fimages%2Flabels%2F33%2F37%2Fbecks-premier-light-bier-germany-10143337.jpg&hash=ad9659a39b28e6329dd82e5bca377efc62f6f846)
16oz can. I'm not a huge beer drinker (though ice picked it up more on the east coast...damn peer pressure), and saw it at the store. Since one of my habits here at home near Seattle is to indulge in as many hometown goodies as possible, I added Rainier too the list.
Also, Snoqualmie northwest mountain blackberry (made within Marionberries)ice cream is freakin' ambrosia.
Rainier beer used to have the best add. The one with the motorcyle - do you remember it?
The last one I visited there was Red Hook. I like most of their stuff, but the Long Hammer IPA is very good.
Quote from: crazy canuck on August 10, 2014, 10:21:01 PM
Rainier beer used to have the best add. The one with the motorcyle - do you remember it?
https://www.youtube.com/watch?v=-qXa9oqKL6E
Thats the one, thanks. When I saw the reference to the beer I immediately pictured that motorcycle. I dont know how old that is but some pretty effective advertising.
Fuck you all.
Now I have to try the Rainier Beer.
If I don't like it, I will charge yuor ass.
Quote from: Siege on August 11, 2014, 09:39:35 PM
Fuck you all.
Now I have to try the Rainier Beer.
If I don't like it, I will charge yuor ass.
It's not lite beer. Don't drink it. It'll kick your ass and make you post even dumber drunken posts than you do on the piss you normally drink.
Word to the wise.
Quote from: Siege on August 11, 2014, 09:39:35 PM
Fuck you all.
Now I have to try the Rainier Beer.
If I don't like it, I will charge yuor ass.
Doubt you can find it being that you're not at Lewis anymore.