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Economics
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Economics hasn't seemed to change at all. Competition is what drives improvement in society. Everyone who is freaking out over why certain numbers aren't doing what they should be doing based on other numbers are still looking at society as if we have perfect competition or close enough to. The reality is that society is much less competitive now than it has ever been and that's why nothing is aligning properly with expectations.
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Economics
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Nah. Fed can't be labeled truly successful until they normalize interest rates and their balance sheet. The Keyensian theory they are attempting to employ is two pronged solution to recessions. Low rates and debt spending during a downturn. Higher rates and paying down debt in an upturn. The Fed has done plenty of the first part and very little of the second. So to say they've been successful? Way too soon to honestly say.
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Economics
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But hasn't the Fed has become an extension of libertarian policy, leading to counter-productive timing? Greenspan cut rates during good times, until there were no more rates left to cut, leaving Bernanke with little to fight the Great Recession, and now his Republican successors refuse to sufficiently raise rates after good times have returned, while Trump whines loudly about the slightest rise.
As the Republican monopoly over national politics has steadily strengthened over the past forty years, the Fed chairmanship has become an increasingly political appointment.
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Economics
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> If I were a millennial looking for a job, I would stay the hell away from any job with a pension
Ha. Good luck finding a job that offers the good pension plans. Most places have shifted to much less generous plans for new hires.
> knowing that I was almost certainly not going to get it.
Ha. Not even close. The law of the land and historical precedent clearly shows that everything possible (and impossible) will be done to make pensioners whole at the expense of the tax payers.
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Economics
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> The only thing keeping pensions from being changed is state laws. But the state can just change the laws.
This is precisely the reason why there are independent branches of the government. Judicial branch would shut down this kind of nonsense immediately.
The only way municipalities can get out of this is bankruptcy. And it's pretty much the nuclear option. Detroit pensioners got a 4.5% benefits cut. Pensioners will be at the very top when things get distributed in a bankruptcy.
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Economics
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That’s actually not true in a majority of states. The traditional view of pensions was as “mere gratuities” that could be retroactively cut. That sucked.
In order to get away from that certain states enshrined them as a contract right. But that was INTENDED to only apply to earned benefits, not the future growth in benefits. So if you’re getting a $3k monthly check it can never go down to $2,800.
Unfortunately, in some states, including Illinois, the courts have awarded them super contractual status. Not only can you not take away what’s been earned, you can’t reduce the growth rate through things like COLA.
It’s all in the report here:
https://www.illinoispolicy.org/reports/tax-hikes-vs-reform-why-illinois-must-amend-its-constitution-to-fix-the-pension-crisis/
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Economics
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I won't argue on this anymore, but I think you are wildly optimistic. California alone is hundreds of billions of dollars deficient and the contribution obligations are already pushing many localities in California to cut services, which has as a secondary result the effect of eliminating employee positions so the pension pot gets older and older with fewer young people paying in.
And that's today, with an insanely bubbly stock market and rosy projections. Let's assume the situation is only going to get worse, because that's how every other public finance problem goes. What do we think the situation will look like in forty years? What makes you think bankruptcy rules will matter when there just isn't enough money to pay what people promised themselves at the expense of their children? State laws don't need to follow bankruptcy rules. They can do whatever they want as long as there is political will.
Edit: here's some reporting on some California retirees already having pensions slashed by as much as 2/3. http://www.latimes.com/politics/la-pol-ca-loyalton-calpers-pension-problems-20170806-htmlstory.html
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Economics
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Detroit's pension cuts were closer to 35% in net present value terms for a new retiree, due to the elimination of health care subsidies and pension COLA.
States will raise property taxes to the equilibrium point where prices start to fall and offset the hikes and people start to move to other states. At that point, they will head into a very controlled bankruptcy process. I wouldn't call it a "nuclear" option since half a dozen or so states are almost inevitably headed there within the next couples decades. Remember that everybody said Puerto Rico wasn't allowed to declare bankruptcy because there was no statutory provision for territorial bankruptcy. One day the Feds passed PROMESA, and now Puerto Rico is in bankruptcy court; it will be the same for the states. Also remember that a major % of municipal debt is held by other public and private pension funds, so to the extent defaults start, they can start an infectious, downward spiral. There's also the question of moral hazard - if we bail out public sector workers, why not blue collar workers whose private pension plans are broke as well? Make no mistake, it will be a political process reminiscent of 2008-2010 rather than an economic or legal one.
People love to hate on California but in my opinion they will be fine since they are an incredibly desirable place to live and they have a lot of room to move up on property taxes via the incremental repeal of proposition 13. It's the less desirable states with severe debt loads who have already maxed out income, property, sales, and other taxes (relative to their attractiveness) that are in trouble - Illinois, New Jersey, Kentucky.
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Economics
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Not all municipal bonds are tax free. Build America Bonds which were very popular in the last decade are typically taxable, for example. Taxable represents a relatively small % of the overall municipal debt market, but of course that overall market size is massive - about four trillion USD. By way of comparison, that's almost half the size of all outstanding mortgage debt.
For traditional tax free munis, you have banks and insurance companies as major holders, so widespread defaults or haircuts would potentially create follow on problems in those markets. It's back to dominoes circa 2008 and ultimately the Feds will have to pick winners and losers, which is why I call it more of a political problem than an economic one.
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Economics
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Yeah yeah,, and I should instead be grateful for a job that pays sub-par wages with no benefits? Amirite?
This sub has turned to garbage. A bunch of paid hawk shills spouting drivel about a topic most of you know nothing about.
Unions are and will continue to be a driving force in ensuring Capitalism doesn't run amok. You don't need farcical data to prove that, as you hawk shills claim. Furthermore, as an Illinoian, I know for a fact that the reason the state is broke is due to GOP mismanagement. Every GOP governor the idiots here elect ends up screwing the budget much to the chagrin of the those of us who understand what they are doing. After all, this has been the GOP's plan for decades. So, it comes as no surprise to see pensions and other benefits needing to be cut.
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Economics
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So, I take issue with your parenthetical, and I agree with the rest. I don't think it is reasonable to use total compensation as the metric to compare to productivty, as Feldstein suggests. Total compensation includes benefits, like healthcare. It seems to me that the massive increase in healthcare costs (a large portion of which are paid for by employers) makes it SEEM like total compensation has kept up with productivity, when really it's just a cash transfer from employers to insurance companies. I have no data for the assertion, and I would like to see a comparison between "productivity vs (total compensation - healthcare benefits)" to really parse out if what I'm suggesting is true. Furthermore, my second argument against your parenthetical is that total compensation also includes bonuses, but the "productivity vs total compensation" comparison doesn't parse out the distribution. So, if I'm thinking about this correctly, large wall street bonuses skew the comparison in the direction of being more balanced when really it's just because, in total dollars, a long of money is being moved around on wall street that just happens to fall into the category of wages. Again, as before, a "productivity vs (total compensation - finance bonuse)" comparison could negate or confirm my position.
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Economics
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If you take out healthcare from compensation, you also need to take it out of productivity statistics. Especially considering healthcare and its cost is becoming so much more of an issue partially because there's quite simply more healthcare being done these days due to ageing populations and improving treatment for various conditions.
In many cases, that healthcare contribution from the employer acts like company housing. If expanding company housing during this real estate conundrum became as common as expanding company health insurance during this healthcare boom, it would be just as disingenuous to take it out of compensation. Just because the money is going from employer to provider directly rather than through me doesn't make the final outcome any different. The problem is in the markets for these necessities, not in people's total compensation.
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Economics
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It's reasonable to use total compensation because the way the argument is usually phrased is "greedy employers are keeping in penury," which is clearly refuted by the TC data. It's not like employers particularly care what the distribution of compensation is for their employees; a dollar spent on benefits is a dollar that can't be spent on wages (I know tax incentives change this slightly, but broadly speaking this is true).
The argument against bonuses is also a bit off-base, since most bonuses are paid due to hitting performance/sales targets. It makes sense that the employees contributing the most to a firm's productivity would take home larger total compensation, no?
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Economics
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I saw some data where they compared each generation by age from 30 years ago to today. Something like 35% of young adults under 25 got their first home. Now it's 9%
Meanwhile 35% of old people owned a home, and now it's almost 80%.
The boomers are buying up everything to grow their wealth. As they age into retirement, they are going to start unloading, which will crash the market.
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Economics
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Except foreign investors have almost nothing to do with the US housing market. Not even in downtown NYC.
The real issue is
* Parking minimums for businesses, which ensure that 30-40% of some cities is parking
* Parking minimums for residences, which ensures that ~30% of your condo rent is paying for a parking spot
* Excessive road building. 6 lane, 8 lane, etc. If you build roads somewhere you can't build housing. Most streets should be no wider than 30 feet, with a few 90 feet arterial roads.
* Zoning laws, which prohibit developers from building high density housing. For example like 70% of SF is zoned for single family homes. Literally not allowed to build a apartment building there.
* There being a finite supply of land. The main problem is not building more housing, it's that housing is limited in desirable places because land is limited. A 25-100% Land Value Tax (LVT) would help a bit by reducing the upfront cost of land and ensuring that land is used efficiently.
* Immigration which causes a near-infinite demand for housing. Which would normally not be an issue, but it is because of all the aforementioned things.
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Economics
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> Total compensation includes benefits, like healthcare. It seems to me that the massive increase in healthcare costs (a large portion of which are paid for by employers) makes it SEEM like total compensation has kept up with productivity, when really it's just a cash transfer from employers to insurance companies
Not really, since insurance profits are less than 0.5% of healthcare spending.
The cost of delivering care is higher for numerous reasons, but profits is nowhere near the top.
> So, if I'm thinking about this correctly, large wall street bonuses skew the comparison in the direction of being more balanced when really it's just because, in total dollars, a long of money is being moved around on wall street that just happens to fall into the category of wages. Again, as before, a "productivity vs (total compensation - finance bonuse)" comparison could negate or confirm my position.
Much more importantly is that productivity is GDP per capita and GDP includes war spending and foreign aid *AND* GDP is adjusted using the GDP deflator and wages the CPI, so it's not even an apples to apples comparison.
This setting aside the fact that productivity increases aren't even necessarily due to labor and skills, but can be due to production being more capital intensive, so it's fallacious from the get go that labor wages necessarily should follow productivity.
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Economics
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Google helped me a lot when I went to Europe (Germany and the Netherlands). Never had to check the schedules. I asked google maps to make an itinerary with public transit and it even told me on which platform/spoor to wait. The most confusing thing was finding the platforms when I had to switch trains at Hengelo.
To be frank though, I wasn't the usual tourist. One of the reasons I went there was to try high speed trains, which we don't have where I live.
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Economics
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I booked tickets from Deutsche Bahn and the website was in English. Never had to print it, just showed the QR code to the inspectors, as I do back home. Maybe I'm the exception because I already use trains where I live but it wasn't much more complicated than buying an airline ticket.
Or maybe it's different with trains in other European countries like France or Italy. I see a lot of Germans whine about DB but to be honest, it's nothing compared to the level of service and late trains we have here back in Canada.
EDIT: Just tried to book trains in France, Italy and Spain. They all have websites in English (the SNCF one is a bit incomplete though) and you can book tickets fairly easily. Are people just not even trying and assuming it's gonna be shitty?
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Economics
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Booking trains on the DB and ÖBB apps (entirely in english) when I travelled in Germany and Austria for the first time was unbelievably simple. I say this as someone who has very rarely ever taken a commuter train. And the process was easy enough to figure out except one time where they changed a platform number near Salzburg without really making it obvious. That ended up as a $60 cab ride to make an appointment. Nonetheless, all. The. Trains. Came and went exactly on time. Amazing.
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Economics
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I mean... Trains are marginally more complicated, but I'd rather take a train than a plane any day if it's less than a day. I just got back from a trip to France and we flew business-class over there but we damn sure took a train from Nice to Paris. So much easier and nicer. It was probably more expensive than some cheap-ass Ryanair flight, quite frankly, but you can get up and walk around, you've got a huge seat with a table, it's so comfortable.
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Economics
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Yes, in Western Europe, trains are a far more enjoyable way to travel. Just show up at the train station 15 minutes before your train (or for common connections anytime you want because they leave so often). No TSA, no check in, usually just some restaurants and a short walk to the platform. Scenery the whole trip, dining car, bar, usually internet, leg room.. And for most connections in Western Europe it’s actually faster to take the train when you calculate in time to get to/from airport and time at the airport. And it’s cheaper..
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Economics
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>Train operators could make it easier by having interactive websites, online booking, multi-lingual options etc.
All that won't make things easier when the UI/map layout is crap. I mention this as I wager this is likely the biggest issue tourists have. Where as locals know what train to take and where, out of town tourists do not. So it doesn't matter if you offer more booking options really when a more user friendly map is needed.
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Economics
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Reading the comments and the replies, I guess it depends on what type of tourists we're talking about. I mean, more than domestic vs international.
English is not my first language and I do not expect people in another country to accommodate me by knowing it. Specific terms were easy to learn. Spoor for platform in Dutch and eingang/ausgang for entry/exit in German. I also use public transit back home, can do research and look on maps. So I guess I specifically look for that kind of "adventure" when I travel. I want to do what the locals do. I'm willing to bet that you would also find your way, by that simple reply.
But on the other hand, I also realize a lot of tourists couldn't do any of that. Some don't even know how to use public transit or trains in their own country. I guess they just want to go there, visit the touristic places and go back home. Hassle free. No learning involved. This can be understandable up to a point. They're on vacation after all.
I would be curious to know if the study divided those tourists in different categories but the preview doesn't mention any of that.
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Economics
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On the contrary Paris to nice flight is 1.5 hr (plus 1.5 hr of security and commute) and train is 5-6 hrs. And air France has flights to both CDG and ORLY. I would say the flight saved me time, but train might be more comfortable.
In addition there are 6 flights each way vs 2 trains per day. (Correct me if I am wrong). I left Paris at 8:30am, out of nice airport with rental car around 12:30 / 1 pm. Train wasn’t getting there till 4pm.
Edit: one good thing about train is the stations are in the center of city.
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Economics
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Yeah. As mentioned, I already use "trains" in Canada so the whole thing was easier online than at the counter when I departed to Germany from Schipol.
The prices were indeed a bit difficult to understand but this is also true here. It's cheaper if you buy a ticket that can't be refund or if you book in advance, for example. I managed to get an ICE from Hamburg to Berlin with the return included for something like 80 Euros. It's pretty much the same price here for the same distance and you'll be lucky if the train hits 150 km/h so I was satisfied with that! It also included public transit in Berlin while I was there.
All in all, even if it's not cheap, I wouldn't have taken a plane anyway. The time I passed in a cramped airplane over the Atlantic was already enough.
Oh, now that I think about that, I got over it now but here seats are always reserved. Not with DB. I was cheap and didn't reserve a seat and couldn't find a DB employee that could clearly explain where I could sit.
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Economics
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I unfortunately didn't get the chance to try a high speed train in the Netherlands. Next time I'm going to take the time to go to Rotterdam. I only stayed one day but my hotel was in/at Sloterdijk so I used the Intercity and/or Sprinter depending on which one was convenient. No complains whatsoever. Much more efficient than what I'm used to.
My only surprise was that they're not all high speed lines. So the trip from Amsterdam to Hamburg was a bit longer than I thought it would be. The only real confusion was when I needed to switch train at Hengelo. I couldn't find the platform and got a bit nervous. Luckily, I followed a group of Americans trying to find the same platform and we got there in time.
As for the bikes. I can only be jealous and impressed. I come from Montreal and we're steadily slipping down the ranks of the Copenhagenize index. I didn't try a bike in the Netherlands either but I nearly got hit by one!
Although I suspect I would have had a few difficulties. I cycle at least a 1000 km a year here but the culture is different. I rented a bike in Hamburg but I think it was a fixie, sitting straight with high handlebars. I usually ride an hybrid so I pretty much hated that one. I was fine on the paths but I got really afraid in the streets. I felt so out of place. Like I didn't know the local unwritten rules.
I know both cities can't be compared bike-wise and I'll also try a bike next time I visit your country but I think I'm going to need some time to adjust.
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Economics
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Come and try ours. You will have all the comfort of a 1970s wagon to patiently watch the fixed landscape while you wait for the late freight train to pass before your passenger train, as they have priority over people here. At roughly the same price and twice as slow! They even give water bottles when your train is more than 30 minutes late.
Seriously though, I know we always want to get better than what we're used to and you're right to keep the pressure on your train operators but compared to where I'm from, you got it real good.
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Economics
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Yerah that's abour right.. But if you life in someplace like Paris, you can get to most of Western Europe in 4 hours by train. If you are in central or Eastern Germany, it's far less possible.
For me, however, I'd still rather take a 6 hour train than do a 2 hour flight (4 hours total). I can sit and work the whole way, walk around, see scenery, eat in the dining car, sleep if I want.. I live in Prague where the train connections are abysmally slow, but I still take a train when I need to go to Vienna, Budapest, Brno, or Bratislava despite them being longer trips.. Way batter experience and I waste less actual time because I'm getting things done on the tain that I wouldn't screwing around in the airport.
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Economics
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While I use Google Maps' transit direction frequently, at least here in NYC it seems to sometimes get the schedules incorrect due to maintenance or sometimes wants to route me on connections that don't exist.
For example, it has sometimes wanted me to get off at certain stations and transfer to another direction when the station physically doesn't allow those sorts of transfers without exiting one side and entering the other.
Overall, though, it does a reasonable job and I use it when traveling.
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Economics
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Is the American definition of middle class even a useful economic concept? I had kind of thought it was a propaganda term to socially split the working class.
They address it a bit in the piece. *"I think once you realize that you’re part of a precarious class, you might vote with others that are also precarious."* But then she seems to fail to realize that the American definition of middle class is specifically meant to prevent that, specifically meant to make people forget how close to the bottom they really are.
Made really apparent when she says *"Middle-class and working-class people voting together and finding common cause–that’s the hope."* What? Does the middle class in America not have to work for a living or something? I understand that Americans view "working class" as meaning "poor losers", but that's exactly the issue. As long as the working class views the working class as beneath them, the problem won't be fixed.
A lot of the analysis is fair, but the terminology is still pushing the division.
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Economics
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>*"Middle-class and working-class people voting together and finding common cause–that’s the hope."*
My understanding of middle class versus working class is that the working class are paycheck to paycheck and will be nearly immediately destitute if they lose their jobs, while those in the middle class earn enough to generate actual savings and could survive at basically their same quality of life for some period of time after losing their job.
If you actually divided it like that I think thew majority of Americans (and Canadians) who think of themselves as being in the middle class are actually in the working class. It makes a lot more sense to divide it by savings vs not savings rather than blue vs white collar work. The average plumber, pipe fitter, electrician, etc makes enough money to handle periods of unemployment. Can the average low-seniority / low-skill office worker say the same? I bet not.
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Economics
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> My understanding of middle class versus working class is that the working class are paycheck to paycheck and will be nearly immediately destitute if they lose their jobs, while those in the middle class earn enough to generate actual savings and could survive at basically their same quality of life for some period of time after losing their job.
Those are the American definitions. The normal definition of working class means you work for a living (it's in the name), as opposed to the capital class who can afford to buy and sell things for a living, without necessarily having to work. In this sense, the middle class is made of people who own maybe 1 or 2 small businesses, such that the majority of their income is from buying low and selling high, but they still have to work to manage and maintain it. They're in between the working class and capital class.
So I'd agree with you but go further. Nearly every single person who considers themselves middle class is actually working class. Savings is a useful metric, but that seems like a gradient of quality of life, not a delineation of distinct economic strategies.
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Economics
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>so asking everyone else to vote together is asking 99% of the population to vote as one.
Well, there are enough personal factors splitting the vote in other ways that even a perfect system wouldn't be that one-sided. Religious differences, safety vs freedom, tradition vs progress, etc. There are a lot of different attitudes towards running government that would divide that 99% further, but not economic strategy. Humans mostly just work for a living.
Less "vote as one" and more "this shouldn't be a partisan issue". We all vote as one when it comes to other things 99% of us agree on, for instance not letting canaries be doctors. It's not even a debate. Who the hell would even think like that?
It's a real accomplishment that we managed to cultivate a whole group of workers whose beliefs are distinctly anti-worker. That took some creativity.
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Economics
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The working class is, in general use, a leftist term to separate the "owner class" and those who work for the "owner class." The bourgeoise vs the proletariat, etc.
The middle class is on it's own separate spectrum, I would suggest. It's a rightwing concept of having society organized by a tier system. Made most effective post ww2 era. Where everyone starts as a lower class individual upon adulthood, but with a little work ethic, can build themselves into living a comfortable life as a middle class person, with the most skilled and intelligent becoming upper middle class, and so forth.
Leftist ideologies believe society is organized by the wealthy and powerful, the wealthy class, to exploit the labor of everyone else, the working class, to maintain it's power. As the wealthy class hoards it's wealth and builds a vast infrastructure, it makes it intentionally harder for the working class to move into the wealthy class. Then lesser people who are of the "owner class," mainly small business owners/management, are then reduced to being of the working class, being that they can not compete with, and have to rely on the infrastructure built by, the wealthy class. The wealthy class then monopolizes it's individual power, giving it the power to control wages, and quality of goods. Society then reverts back to feudalism, I guess, however, instead of kings, we have Jeff Bezos', and Mark Zuckerbergs, etc.
Weird stuff.
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Economics
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>My understanding of middle class versus working class is that the working class are paycheck to paycheck and will be nearly immediately destitute if they lose their jobs, while those in the middle class earn enough to generate actual savings and could survive at basically their same quality of life for some period of time after losing their job.
Except you can look at at two people in the "middle class" and one might be saving while the other consuming within their means, but far more than the former.
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Economics
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That's sort of the point, is it not. The reason the capital class propagandizes the working class into thinking there are multiple working classes is explicitly to split the vote. We should be voting as a block of 99% working class to eliminate the choke hold the capitalists have on us. Then we can start voting as special interests within a society of the people, by the people, and for the people. But if we split ourselves before we oust the capitalists, we'll always be wage slaves and always be manipulated.
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Economics
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Hmmm. Reflecting on it overnight though there really is 3 classes. A 1% who do not need to work to maintain their or their children's lifestyles. A further layer - upper middle class - that needs to work but will accumulate enough personal funds to eventually retire on their own means. And a final layer - the precariate - that needs to work and will need to rely on the state when they retire / if they lose their job.
That said the precariate and the upper middle class both still need to work. And depending on how you cut the numbers I'm sure you could say that some upper middle class thinkers are actually unwitting precariate workers..
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Economics
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R/economics (ie people that (should) understand the following points better than most):
(1) financial crises are uniquely devastating and generally only happen once a generation. Talking about “the next financial crisis” ten years after the last one is presumptively hyperbole
(2) too much leverage and shaky corporate and individual balance sheets alone aren’t enough to trigger a financial crisis. Banks might suffer losses, bankruptcy courts might be much busier and equities might be wrecked, but the global economic system can handle that pretty well.
Both the Great Depression and the bear/Lehman debacle were triggered by a loss of confidence in an imploding financial system. Don’t call something a potential “financial crisis” unless you can point to a factor akin to the trillions of hopelessly complex mortgage backed structured products that infected the entire global financial system 10 years ago.
This might be sound like Greek to most people but hopefully someone knows what I’m talking about lol
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Economics
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>(1) financial crises are uniquely devastating and generally only happen once a generation. Talking about “the next financial crisis” ten years after the last one is presumptively hyperbole
I see where you're coming from with this, and while it's a good point, it's worth pointing out the financial sector isn't what it used to be. Banks (both central and not) increasingly operate in a manner that seem to make crises more common.
​
​
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Economics
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Dean baker
Perhaps it has something to do with the ten-year anniversary of the Lehman crash, but we seem to be seeing more financial crisis stories in the media lately. Today's version comes to us from the New York Times in a [column](https://www.nytimes.com/2018/09/01/opinion/the-next-financial-crisis-lurks-underground.html) by Bethany McLean, headlined "the next financial crisis lurks underground." The subhead tells us the basic story:
"Fueled by debt and years of easy credit, America’s energy boom is on shaky footing."
The piece looks to be a very reasonable discussion of the fracking boom and points out that most fracking operations are not profitable. It describes fracking as essentially a Ponzi scheme, where fracking companies are able to survive by finding suckers to buy their stock. Most frackers don't actually make enough money to repay their debts and generate a profit.
All of this sounds very plausible, although a jump back to 2014 type oil prices ($100 a barrel or higher) would presumably change this picture. (That's not a prediction, just noting the arithmetic.) But the problem is that if the Ponzi game ends, where is the financial crisis? We are told:
"Amir Azar, a fellow at the Columbia University Center on Global Energy Policy, calculated that the industry’s net debt in 2015 was $200 billion, a 300 percent increase from 2005."
Okay, so suppose two-thirds this debt goes bad and investors get back fifty cents on the dollar, both pretty extreme assumptions. That comes to $67 billion in losses on $134 billion in debt, and amount equal to 0.34 percent of GDP. Perhaps there is a world where this gives us a financial crisis, but not this one.
Just to be clear, the New York Times picks the headline, not the author of the column. The column is a perfectly reasonable piece on fracking, the headline is not.
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Economics
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> (1) financial crises are uniquely devastating and generally only happen once a generation. Talking about “the next financial crisis” ten years after the last one is presumptively hyperbole
Maybe that was true in the pre-2008 world. Today, however, crisis is the new normality. A disaster was avoided in 2008 only at the expense of preparing the ground for a much worse crisis in the future. The world economy has been on a very shaky ground ever since 2008, anything can topple it over.
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Economics
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Not sure about that. Aren't we seeing an emerging currency crisis? And why do we have near 0 rates for so long? What's up with our pensions and states budget problems such as in IL?
And Argentina? Turkey? Spain? What about Japan's never-ending stagnation?
We're also seeing erection of tariffs and bad economic indicators in the U.S. (labor participation, lowering life expectancy, inequality.)
I know I'm cherrypicking but I think overgeneralizing doesn't help, either.
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Economics
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Your first point is some real “End of History” hubris. You act as though financial crises are governed by some natural law that allows them to erupt, like a volcano, only seldomly.
Finance and economies are changing so rapidly that I see no reason to believe your assertion is true, especially since we have a historical precedent of repeated major financial crises throughout the 19th century in Europe and America. From the long point of view, the post-WWII stability of our financial system is aberrant.
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Economics
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Rubbish is spewing from your mouth.
The Dodd–Frank Wall Street Reform and Consumer Protection Act was enacted in response to the crisis.{1}
U.S. Treasury Secretary Timothy Geithner testified before Congress on October 29, 2009. His testimony included five elements he stated as critical to effective reform:{
Expand the Federal Deposit Insurance Corporation (FDIC) bank resolution mechanism to include non-bank financial institutions;
Ensure that a firm is allowed to fail in an orderly way and not be "rescued";
Ensure taxpayers are not on the hook for any losses, by applying losses first to the firm's investors and including the creation of a pool funded by the largest financial institutions;
Apply appropriate checks and balances to the FDIC and Federal Reserve in this resolution process;
Require stronger capital and liquidity positions for financial firms and related regulatory authority.
The Dodd–Frank Wall Street Reform and Consumer Protection Act was signed into law by President Obama in July 2010, addressing each of these topics to varying degrees. Among other things, it created the Consumer Financial Protection Bureau.
Significant law enforcement action and litigation resulted from the crisis. The U.S. Federal Bureau of Investigation probed the possibility of fraud by mortgage financing companies Fannie Mae and Freddie Mac, Lehman Brothers, and insurer American International Group, among others. New York Attorney General Andrew Cuomo sued Long Island based Amerimod, one of the nation's largest loan modification corporations for fraud, and issued numerous subpoenas to other similar companies.The FBI assigned more agents to mortgage-related crimes and its caseload dramatically increased. The FBI began a probe of Countrywide Financial in March 2008 for possible fraudulent lending practices and securities fraud.{3}{4}{5}{6}
Several hundred civil lawsuits were filed in federal courts beginning in 2007 related to the subprime crisis. The number of filings in state courts was not quantified but was also believed to be significant. In August 2014, Bank of America agreed to a near-$17 billion deal to settle claims against it relating to the sale of toxic mortgage-linked securities including subprime home loans, in what was believed to be the largest settlement in U.S. corporate history. The deal with the U.S. Justice Department topped a deal the regulator made the previous year with JPMorgan Chase over similar issues. Morgan Stanley paid $2.6 billion to settle claims in February 2015, without reaching closure on homeowner relief and state claim.{7}{8}
President Obama's Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to investigate and prosecute financial crimes. The FFETF involves over 20 federal agencies, 94 U.S. Attorney's offices, and state and local partners.{9}
CNBC reported in April 2015 that banking fines and penalties totaled $150 billion between 2007 and 2014, versus $700 billion in profits over that time.
The Housing and Economic Recovery Act of 2008 in the United States included six separate major acts designed to restore confidence in the domestic mortgage industry.The Act included:{10}
Providing insurance for $300 billion in mortgages estimated to assist 400,000 homeowners.
Establishing a new regulator, the Federal Housing Finance Agency via the merger of two existing authorities, The Office of Federal Housing Enterprise Oversight (OFHEO), and the Federal Housing Finance Board (FHFB), endowed with expanded powers and authority greater than the sum of its predecessors, to supervise operation of the 14 housing government-sponsored enterprises (GSEs): (Fannie Mae and Freddie Mac) and the 12 Federal Home Loan Banks.{11}
Raises the dollar limit of the mortgages the GSEs can purchase.
Provides loans for the refinancing of mortgages to owner-occupants at risk of foreclosure. The original lender or investor reduces the amount of the original mortgage (typically taking a significant loss) and the homeowner shares any future appreciation with the Federal Housing Administration. The new loans must be 30-year fixed loans.
Enhancements to mortgage disclosures.
Community assistance to help local governments buy and renovate foreclosed properties.
An increase in the national debt ceiling by US$800 billion, to give the Treasury the flexibility to support the secondary housing markets and the 14 GSEs, if necessary.
Source: the wiki on the 2007 2008 financial and subprime mortgage crisis,sections regulatory response.
Edit: Expanding on my sources as people are morons.
{1}https://legcounsel.house.gov/Comps/Dodd-Frank%20Wall%20Street%20Reform%20and%20Consumer%20Protection%20Act.pdf
{2}https://financialservices.house.gov/media/file/hearings/111/geithner_-_treasury.pdf
{3}http://www.foxnews.com/story/2008/09/23/fbi-investigating-potential-fraud-by-fannie-mae-freddie-mac-lehman-aig.html
{4}https://web.archive.org/web/20081015071159/http://www.fbi.gov/page2/june08/malicious_mortgage061908.html
{5}https://www.cbsnews.com/news/fbi-cracks-down-on-mortgage-fraud/
{6}https://money.cnn.com/2008/03/08/news/companies/countrywide_FBI/?postversion=2008031003
{7}https://www.philadelphiaherald.com/news/224972439/bank-of-america-to-pay-nearly-17-bn-to-settle-mortgage-claims
{8}https://web.archive.org/web/20080921230708/http://www.boston.com/business/articles/2008/02/15/subprime_lawsuits_on_pace_to_top_sl_cases/
{9}https://www.justice.gov/opa/pr/president-obama-establishes-interagency-financial-fraud-enforcement-task-force
{10}https://www.congress.gov/bill/110th-congress/house-bill/3221
{11}https://en.wikipedia.org/wiki/Federal_Housing_Finance_Agency
|
Economics
|
[Economist Admanti from Stanford on Dodd-Frank](https://www.nytimes.com/roomfordebate/2016/04/14/has-dodd-frank-eliminated-the-dangers-in-the-banking-system/the-financial-system-remains-too-fragile-too-distorted-too-dangerous)
If you think for a second the too-big-to-fail institutions are in any danger of taking the hit for another proceeding crashes, you are naive. They have grasp over the 2 parties. Their control is to such a point that Citi Bank literally told Obama who to have in his administration, which Obama followed almost to a T (the other picks were I believe big donors, so not an improvement).
Since the crash, the government did nothing to break up the too-big-to-fail institutions, even though they pose a systemic risk. What's more, the Dodd-Frank bill helped the too-big-to-fail institutions get larger, by stifling small banks.
Needless to say, the Bill being named after Barney Frank, he's well-liked by the banks enough to have continued to be given fundraisers by them after Dodd-Frank, and is now sitting on a bank board.
|
Economics
|
The thing is, you said nothing was done, not insufficient things were done. I will argue now that Title I and II of the Dodd-frank is sufficient
Also Timothy Geithner did point out that the bill needs to be set in a way so that ''Ensure that a firm is allowed to fail in an orderly way and not be "rescued"''.
The law works to prevent banking bailouts or deposit guarantees from burdening the taxpayer or encouraging "moral hazard" which is when awareness of the safety net encourages excessive risk-taking. For instance, there is moral hazard when large financial institutions take excessive risks under the assumption that the government will deem them "too big to fail" and will come to their rescue in order to prevent a more widespread financial sector collapse. The banking provisions under the financial reform include higher capital requirements to make sure the bank is unlikely to get over-extended. The Federal Reserve in 2014 announced an extra “capital surcharge” on the 8 biggest banks. And provisions also require regular stress tests, for financial institutions with above $50 billion in assets to try to make sure that the cushion is thick enough to protect the solvency of the bank even in the event of major unforeseen adverse shocks. If a bank has trouble under the stress tests, it may be required to hold off from share buybacks or dividend payouts and, if necessary, to raise additional capital financing.
Dodd-Frank also established the Consumer Financial Protection Bureau to give households the same sort of protection against misleading or abusive provision of financial services as they have for consumer goods. The CFPB was originally proposed by now Senator Elizabeth Warren in response to the 2007-09 subprime mortgage crisis. (But some had warned of the lack of regulatory protection for homeowners against unscrupulous lending practices even before the crisis, for instance Fed Governor Edward Gramlich in 2007.) Proponents of Dodd-Frank consider the activities of the CFPB so far to have been among the most successful aspects.
The reform improved regulation and transparency of derivatives, particularly by having standardized derivatives traded on centralized exchanges. These are just four major examples of ways in which Dodd-Frank works to reduce future crises.
Reducing the Systemwide Loss Given Default of Systemic Financial Firms
It is neither possible nor desirable to regulate large financial institutions so that they literally cannot fail. But regulation can limit the systemwide impact of such a failure. Let's review what has been done since the crisis to reduce the damage to the system from the failure of one of the very largest firms.
Under Dodd-Frank, nearly all financial institution failures, including those of large, complex institutions, will continue to be addressed as they were before passage of the new law. The holding company will be resolved in bankruptcy. Operating subsidiary failures will continue to be treated either under bankruptcy or, where applicable, under specialized resolution schemes, including the Federal Deposit Insurance Act for banks and the Securities Investor Protection Act for securities firms.
Dodd-Frank eliminated the authority used by the Federal Reserve and other regulators to bail out individual institutions during the crisis, including Bear Stearns, Citicorp, Bank of America and AIG. But Congress also recognized that there may be rare instances in which the failure of a large financial firm could threaten the financial stability of the United States. To empower regulators to handle such a failure without destabilizing the financial system or exposing taxpayers to loss, Dodd-Frank created two important new regulatory tools.
First, the Act requires large bank holding companies and nonbank financial firms designated by the Financial Stability Oversight Council to submit a resolution plan or "living will" for their rapid and orderly resolution under the Bankruptcy Code. Second, the Act created a new Orderly Liquidation Authority (OLA) as a backup to resolution in an ordinary bankruptcy.
Single point of entry approach. This approach is a classic simplifier, making theoretically possible something that seemed impossibly complex.
Under single point of entry, the FDIC will be appointed receiver of only the top-tier parent holding company of the failed financial group. Promptly after the parent holding company is placed into receivership, the FDIC will transfer the assets of the parent company (primarily its investments in subsidiaries) to a bridge holding company. Equity claims of the failed parent company's shareholders will be wiped out, and claims of its unsecured debt holders will be written down as necessary to reflect any losses in the receivership that the shareholders cannot cover. To capitalize the bridge holding company and the operating subsidiaries, and to permit transfer of ownership and control of the bridge company back to private hands, the FDIC will exchange the remaining claims of unsecured creditors of the parent for equity and/or debt claims of the bridge company. If necessary, the FDIC would provide temporary liquidity to the bridge company until the "bail-in" of the failed parent company's creditors can be accomplished.
It is crucial to recognize how this approach addresses the problem of runs. Single point of entry is designed to focus losses on the shareholders and long-term debt holders of the failed parent and to produce a well-capitalized bridge holding company in place of the failed parent. The critical operating subsidiaries would be well capitalized, and would remain open for business. There would be much reduced incentives for creditors or customers of the operating subsidiaries to pull away, or for regulators to ring-fence or take other extraordinary measures. If the process can be fully worked out and understood by market participants, regulators, and the general public, it should work to resolve even the biggest institution without starting or accelerating a run, and without exposing taxpayers to loss.
Single point of entry has important features in common with Chapter 11 bankruptcy reorganization. The principal differences in favor of OLA are the greater speed at which a firm can be placed into a resolution process and stabilized, the ability to avoid disruptive creditor actions, and the availability of temporary backup liquidity support to continue critical operations.
Two provisions of existing law already impose size caps on U.S. banking firms. One limits acquisitions of banks by any bank holding company that controls more than 10 percent of the total insured deposits in the United States, and a second, added by Dodd-Frank, forbids acquisitions by any financial firm that controls more than 10 percent of the total liabilities of financial firms in the United States. In addition, Dodd-Frank added a new requirement that banking regulators consider "risk to the stability of the U.S. banking or financial system" in evaluating any proposed merger or acquisition by a bank or bank holding company. Critics argue that these restrictions are inadequate and nothing short of destroying big banks is sufficient. I think that's bullshit.
Some critics want to get right to the business of breaking up the big banks into smaller, more manageable, more easily resolvable pieces.12 At the heart of this proposal is the thought that no financial institution should be so large or complex that it cannot be allowed to fail, like any other private business, with losses to its equity holders and creditors, and consequences for senior management. If the largest institutions were too big to fail during the financial crisis, why not make them smaller?
Today, the market still appears to provide a subsidy, of changing and uncertain amount, to very large banks to account for the possibility of a government bailout in the event of failure.13 This subsidy, in the form of lower funding costs, may encourage "too-bigness." There would be substantial externalities to a large bank failure as well.
The market needs to believe--and it needs to be the case--that every private financial institution can fail and be resolved under our laws without imposing undue costs on society. The current reform agenda is designed to accomplish just that, through two channels. First, it is intended to substantially reduce the likelihood of failure through a broad range of stronger regulation, including higher capital and liquidity standards, stress tests and recovery planning among other reforms. Second, it is intended to minimize the externalities from failure by making it possible to resolve a large financial institution without taxpayer exposure and without uncontainable disruption. If these reforms achieve their purpose, in my view they would be preferable to a government-imposed break-up, which would likely involve arbitrary judgments, efficiency losses, and a difficult transition.
It is easy to agree that Dodd-Frank can be improved upon and even easier to acknowledge that no financial regulation will ever eliminate completely the boom-bust cycle that seems to be an intrinsic element of human social psychology.
This is the opinion shared by [Jeffrey Frankel, Harvard](https://econofact.org/the-dodd-frank-financial-reform) and [Jerome Powell, 16th chairman of the federal reserve.](https://www.federalreserve.gov/newsevents/speech/powell20130304a.htm)
|
Economics
|
If you're talking the global economy this is obviously false. If you're talking exclusively about the US market/economy, then sure(maybe).
You don't have to look far to see a financial crisis. There's a financial crisis going on right now! Just look at emerging markets! I understand that the words, "This time is different" can be dangerous, but at the same time the yin to that yang should be; "The more things change, the more things stay the same".
|
Economics
|
> On one side, wages have stagnated for many; adjusted for inflation, the median male worker earns less now than he did in 1979. On the other side, some have seen their incomes grow much faster than the income of the nation as a whole. Thus C.E.O.s at the largest companies now make 270 times as much as the average worker, up from 27 times as much in 1980.
I respect Krugman, and if we can actually measure this data well I'm all for it, but comparing the median male worker to CEOs just screams of punditry from the start. Why not link to the data for [median females as well](https://fred.stlouisfed.org/series/LES1252882800Q). Or the [combined stat](https://fred.stlouisfed.org/series/LES1252881600Q).
I'm not so worried about CEOs as some because their compensation just isn't that big of a factor in the big picture. Last year [CEO pay](https://aflcio.org/paywatch/highest-paid-ceos) at all s&p 500 companies combined was only 7 billion dollars. That's a lot for just 500 people, but it's only a drop in the bucket compared to the nearly [9 Trillion](https://fred.stlouisfed.org/series/A576RC1) paid out in wages and salaries US wide. You could take all that CEO pay and hand it out, but you would only have 21 dollars for each American. The potential for harm is higher in my opinion then the potential for good.
[This study](http://online.wsj.com/public/resources/documents/van_reenen_paper0824.pdf?mod=article_inline) was posted here the other day. The author had this to say about wages and CEO pay:
> “Just about all of the increase in earnings inequality has happened between firms rather than within firms (except maybe for the top percentile, dominated by the CEO),”
The most productive firms are doing great things right now and their workers are all benefitting together, and maybe some CEOs are getting a little extra. My concern is that Krugmans proposed data is going to be used to paint a picture that more taxes and spending are needed, rather then that we need to figure out why innovations aren't diffusing to other firms as fast as before, and how we can help them spread faster without damaging the motivation to innovate.
|
Economics
|
Comparing male and female wages is a a spin anyway.
Women were in more low wage jobs. Now they are moving to higher wage jobs. That's great!
This would be relevant if, overall, there was wage growth and more demographic groups had access to that wage growth.
However, I have not seen any data to show that this is the case. Overall, wages are stagnating despite economic growth. Simply put, the growing wealth of a demarcated economy (i.e., the USA) is being siphoned away from wages to other areas. The economy is investing less in human resources and the human resources, i.e., people are not benefiting (proportionately) from economic growth to the same extent that they were three decades ago.
|
Economics
|
I think you're misreading his point. He's emphatically not stating that purely the pay of CEO's is a big problem in itself. He's arguing that inequality is growing rapidly, and uses CEO's of Fortune 500 as an example of that wider problem.
If you disagree with his assertion that inequality is growing, that growing inequality is a problem, or that CEO compensation illustrates growing inequality, that might be an interesting discussion to have.
But to argue that a small example of a larger problem does not in itself encompass the larger problem as a whole... well, no shit Sherlock.
|
Economics
|
> Precisely for this reason.
>
>This picking on CEOs reeks as bad as the speeches by all communist revolutionaries of the last century.
>
>It's such low grade demagoguery that it doesn't even deserve to be counter-argued.
The article discusses the disconnect between overall growth and individual experience. The only reason why he is comparing median male workers to CEOs is to show the differences in their individual experience. What of that, and why, do you consider demagoguery ?
|
Economics
|
>and more demographic groups had access to that wage growth
Are women not a demographic group? Also why only wage growth? Why ignore bonuses, paid time off, healthcare compensation greater than healthcare inflation, and increased consumption across the board? [Compensation per hour](https://fred.stlouisfed.org/graph/fredgraph.png?g=jYb6) looks very different then wages per hour, and considering that wage increases get a \~15% federal flat tax when other forms of compensation don't this isn't that surprising to me.
You say people aren't benefiting proportionately from economic growth to the extent they were three decades ago but half those people are women who are more equal then ever with their male counterparts, if not perfectly equal yet. Looking at national income brackets such as when he links to Picketty shows percentiles, but will ignore how people more throughout those percentiles during life. [Over 70% of Americans make it to the top 20%](https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0116370), and 61% remain there for at least 2 years. The top 1% sees a good deal of churn and about 5% of Americans make it there for two years as well.
|
Economics
|
>How would you defend a 1000% value increase for a CEO's work versus a negative value increase of the median worker?
I would say that the characteristics of both have changed considerably over the past 50 years, and using the CPI-U to deflate between 80s workers and 18 workers (as the Fred charts do) is going to be a flawed argument from the start because of compounded overestimation of the metric. [Other research](https://www.dartmouth.edu/~bsacerdo/Sacerdote%2050%20Years%20of%20Growth%20in%20American%20Wages%20Income%20and%20Consumption%20May%202017.pdf) shows a considerably different picture when you attempt to account for the changes in the median American household:
> The finding of zero growth in American real wages since the 1970s is driven in part by the choice of the CPIU as the price deflator (Broda and Weinstein 2008). Small biases in any price deflator compound over long periods of time. Using a different deflator such as the Personal Consumption Expenditures index (PCE) yields modest growth in real wages and in median household incomes throughout the time period. Accounting for the Hamilton (1998) and Costa (2001) estimates of CPI bias yields estimated wage growth of 1 percent per year during 1975-2015. Meaningful growth in consumption for below median income families has occurred even in a prolonged period of increasing income inequality, increasing consumption inequality and a decreasing share of national income accruing to labor.
​
|
Economics
|
Yes. Artificial scarcity and regulations. But those work by cutting out competition, which means you're not going to get an optimal result in most cases, and you're basically back where you started.
The other option is to even the field by raising all boats. That means increasing education levels, quality of life, and so on world wide. You can limit how much of this is necessary through specialization in different areas (bitcoin miners in areas with cheap electricity, for instance), but that's not going to go very far with the basic stuff you normally see in the gig economy.
Basically, to compete we're all going to have to up our game and offer something the other guy is not. Otherwise, the race to the bottom is inevitable.
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Economics
|
A Universal Basic Income could act as a *race to the top* in both technological and employment terms, especially if the sum were raised in line with productivity:
* in tech terms: as employment costs continually rise, there would be much more investment in techs that replace work that people don't want to do.
* in employment terms: the jobs left therefore have to be worthwhile enough to attract applicants. Employers need to court employees, so job standards rise.
|
Economics
|
This is why it's so important to engage younger individuals on the importance of compound interest, and understanding why it's important to start saving early. I know a lot of people that live off of social security, and in especially high cost areas in the United States it's not too uncommon to see people living in rooming houses in order to afford to save, or pay off bills they've gathered over the years. Most of an individual's medical expenses tend to be towards the end of their life as well which will eat a large chunk of their retirement savings depending on the circumstances. Truly an unfortunate set of circumstances.
|
Economics
|
“The intelligent investor shouldn’t ignore Mr. Market entirely. Instead, you should do business with him- but only to the extent that it serves your interests.”
\- Benjamin Graham
​
Investment could be a number of things. There are people that invest in rental real estate, starting small businesses, etc. It's up to the individual to decide their risk tolerance to certain endeavors. There is different ROI in every investment whether that be negative or positive. Paying yourself first I feel is a good financial goal to set for everyone even if it's sitting in a saving account for a "rainy day" compared to the alternative.
|
Economics
|
There are some real advantages to living in the US, I have to admit that. But I also like living here in Africa. It's really a matter of weighing what you like against being able to tolerate the downsides of wherever you live. Quality of life is very high in northern Europe, for example, but I can't deal with the cold, grey weather. That's a deal-breaker for me. On the other hand I can tolerate not having 200 TV channels here in Africa because I don't even own a TV. But for some the reverse situation (cold grey weather and lots of TV channels) is preferable. Trade-offs at work here.
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Economics
|
I traveled a lot and lived most of my life outside of my home country. But Africa is something special. I was in Gambia for 2 weeks and I was never so sad to leave a place. When I was sitting in the plane to leave and the crew sprayed the disinfectant, it was the only time I was bawling to leave a place. I know people that feel/felt the same and there is something about that continent.
|
Economics
|
People complain that the rich "live off of the labor of others." They do so, for the most part, by investing in publicly traded corporations via the stock market. They put in (more than $1) and earn a quarter of a percent or so in dividends, but... the value of their stocks grows by 8-10% per year. So, if you put $25 per week in the stock market, and that money doubled every 8 years, after 40 years you'd have a little bit of cash to spend. After a month, you have $100. After a year, you'd have more than $1200. After 2 years, you'd have more than $2500. After five years, you'd have close to $6000 in the bank. Maybe at that point you could start putting in $50 per week? After 5 more years, you're up nicely into the tens of thousands. After 20 years, your compounded earnings are contributing more every month than your paycheck is.
If you put $100 per week into the market (that's a stretch for many, I know), it would be possible to actually make enough to prevent one from being old and broke.
Or, you could spend every penny you make. At the end of the year, you will have saved... nothing. After 5 years you will have saved... nothing. After 20 years you will have saved... nothing. After 40 years of work you will own... nothing.
So, it's either, "after 70 years, you'll have $2" or it's "after 50 years, you'll have all the money you need to live the rest of your life, and thank God you decided to save."
|
Economics
|
Are you being flippant on purpose? I don’t personally enjoy the idea of contributing $7800 a year toward a safety net for myself or anyone that is a annually compounded financial loss. I support SS as a system and benefit for the purpose it was created for. But to suggest the government can just print money to save it - like that’s a valid long term solution - I thought this was r/economics.
|
Economics
|
As a former dental professional, please don't encourage this. I've seen too many nasty cases where people go over the border to get work done cheaply, and when things fail, the patient has zero recourse. And then they end up paying for treatment in the US, usually after losing a few teeth along the way (and suffering a lot of pain).
You know why it's more expensive in the US? Malpractice insurance, board certifications, paying assistants and hygienists a decent wage.
|
Economics
|
Even worst case scenario projections have everyone stabilizing at getting something like 70% of what they'd be owed on paper. And that assumes poor economic growth and low population growth (which can come from either births or immigration).
Even under the worst case scenario, a simple influx of cash into the program (from the general treasury funds) would fix the problem overnight, and acknowledge that Social Security is a tax and spend program (like Medicare, the military, the national park system, and ICE), instead of pretending that it's totally separate from other government spending and revenue programs.
|
Economics
|
If you have a salary that is close to western levels then life in Africa can be very nice indeed. You can afford a housekeeper and a driver if you like (each will cost you \~$2500 a year where I am). Same with full-time day care in your house if you have young kids.
If you are poor then it's not so easy, though it isn't as bad as what the media makes it out to be. The real advantage is the social component-- loneliness isn't really a thing here. On the other hand social outcasts do exist.
|
Economics
|
Put $1 in a low cost S&P 500 index fund at an estimated inflation adjusted growth rate of 7% in 70 years you'll have $114.
If you put an extra dollar in each year you'll have a little over $1,800.
Save more. Save early. It's not a panacea to poverty but it is an important thing to know about and understand. I wish I'd started seriously saving and investing in my early twenties instead of my late twenties.
|
Economics
|
These bankruptcies aren't a savings issue, they're a healthcare issue. When you can afford to live to 100 as long as you can foot the bill of multiple $10k, 100k, 1mil, surgeries-drugs-nurses-specialist visits, people are going to want to live and not going to be able to afford all the treatment.
America needs to decide whether we are letting people live according to how much they can afford or we are socializing healthcare and the gov't decides what aging problems are worth footing the bill for, but either way Old people will die. In the former way, we accept bankruptcies in the elderly
|
Economics
|
And many people I know wished they had immigrated to the U.S sooner and they had the options to go to europe as well.
That is hiliarious isn't it?
Tell me a place where there is no:
1. for profit insurance
2. greedy corporation
3. corrupted government
4. skyhigh real estate
Aren't these the source of demise of the u.s that people like you love to rave about?
More healthy food option. Gimme a fucking break /u/papiavagina
|
Economics
|
>First, I'm not an American. And I know a thing or two about poverty thats why it vexes me when Europeans like you or even some extremely out of touch Americans on this sub pretend to know what it's like to be poor.
Yeah, I'm sure Americans know much more about being poor as fuck, because I am literally seeing people recommending the Mexican healthcare system to each other, and traveling to developing countries so they can afford healthcare. Pretty screwed up, holmes.
|
Economics
|
"We don’t call Social Security “welfare” because it’s a pejorative term and politicians don’t want to offend. So they classify Social Security as something else, when it isn’t. Here’s how I define a welfare program: first, it taxes one group to support another group, meaning it’s pay-as-you-go and not a contributory scheme where people’s own savings pay their later benefits; and second, Congress can constantly alter benefits, reflecting changing needs, economic conditions, and politics. Social Security qualifies on both counts."
https://www.newsweek.com/social-security-middle-class-welfare-66119
|
Economics
|
The quote is a part of a larger analogy that I think is very profound. Mr. Market, in this case, is not exactly what economists would call "the market", it is a representation of the pricing behavior of equity markets.
The idea is that once you own an equity, it doesn't necessarily matter what the price of that equity is. The price that Mr. Market tells you every millisecond of the trading hours only matters if you are considering buying or selling that equity. Mr. Market may set the price of a share of stock as $4 a share one day, and then $2.50 the next day, but if you are an intelligent investor, that shouldn't concern you too much unless you need to or want to buy or sell in the near future. He writes a whole chapter on this, and it is the best of the whole book, in my opinion.
|
Economics
|
>If we could have, we would have.
This is possibly true for you. I don't know your situation.
In general, it's false. If you look at the savings rate data, the storyline is pretty clear: people don't save in good times. [Savings rates](https://fred.stlouisfed.org/series/PSAVERT) reliably go up during recessions, even though workers have less money to work with.
Extremely many people have the ability to save but don't. For an obvious example, [Nielsen](http://www.nielsen.com/us/en/insights/news/2015/saving-spending-and-living-paycheck-to-paycheck-in-america.html) reports that 24% of surveyed people making low six figures live paycheck to paycheck. Much of the story here is about overconfidence in the financial future.
>A lot of people try and get their savings wiped out by life any way.
"A lot" is a vague term, but I still believe that you're overestimating this one. Very few Americans have anything I'd be comfortable calling "their life savings". [Median net worth in America is $70k, of which about $55k is home equity](https://www.businessinsider.com/heres-the-average-net-worth-of-americans-at-every-age-2017-6). With that remaining $15k, it's mostly invested quite poorly. [Only about half of Americans own even a single share of stock](https://www.npr.org/2017/03/01/517975766/while-trump-touts-stock-market-many-americans-left-out-of-the-conversation).
|
Economics
|
"Extremely many people have the ability to save but don't. "
What is wrong with you? Take your data home and stop insulting the rest of us.
What people who make over 6 figures do or don't do is irrelevant to most Americans. Anyone who makes over 6 figures can at the very least squirrel away at the last minute. Us people who have averaged less than half of that don't have that luxury.
I can't believe you don't understand this.
Clearly a problem of looking at the "data" and not looking at how people really live. Wake up, man.
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Economics
|
As someone who actually lives near the border, let me tell you what the real concern is. *It's the border violence.* Let me tell you, the actual care you get in Mexico is virtually indistinguishable from what you get in the US. A lot of border areas on the Mexican side of the border are rife with drug violence.
Having said that though, because Mexican dental and health care providers are aware of the negative perception that Mexico has in regards to safety, they are further motivated to provide excellent care.
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Economics
|
https://www.forbes.com/sites/nextavenue/2018/01/03/international-livings-top-10-places-to-retire-abroad-in-2018/#30bb09646c3e
malaysia is extremely nice. its islamic so most dense americans, would shit themselves before stepping foot in that country, which is just fine by me. Its just overthrown last corrupt government (you can thank them for Wolf of WallSt) and making democratic reforms, but just dont ever try to scissor another woman in public if u are a girl....
My personal preference is vietnam, but i wouldnt want to get sick there and spend time in hospital, or, get in trouble and spend time in jail. both are equally as bad.
Sometimes, insurance isnt needed - there is a thing called "medical tourism". It isnt illegal (yet) and many procedures easily afforded out of pocket especially with favorable exchange rates.
Malay and viet are cheap to live in - i dont get the "skyhigh realestate" complaint, and looking at your comment history, you seem to have been to viet or know something about it.
Every country is greedy corp, but i argue USA is in a league all its own.
Every country is corrupt, and again, usa has a special place in this category too.
I didnt say EVERY country is desirable to live in. There are plently of places i dont want to go (syria - home of teddy bear hampster) or many of the South African countries.
People make up their own mind where they want to live - im clearly done in USA. I know the mustard shit they pump the populace with and im all done playing that game.
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Economics
|
>Really? What is wrong with you? Only 5.4% of Americans make this much.
The point I was making is that even people with extremely high incomes live paycheck to paycheck. It's not so simple as "Americans are too broke to save". Some Americans are, but even many those who obviously have enough income don't save.
Would you care to cite a source for this figure? The [2016 CPS](https://www.census.gov/data/tables/time-series/demo/income-poverty/cps-pinc/pinc-01.html#par_textimage_18) puts the prevalence of $100k or higher incomes at about 13% of the population.
>In the real world, most Americans are living paycheck to paycheck.
I agree that most Americans do this. I disagree that saving is impossible for most Americans.
The personal savings rate has gone up in every recession since at least 1960. That is, most people's incomes will shrink, and they will still manage to save more than they do today. This is considerably less efficient than saving now, during the good times, but demonstrates the possibility of saving.
I think [this article](https://www.theatlantic.com/business/archive/2016/04/why-dont-americans-save-money/478929/) provides good coverage for potential reasons why Americans save so much less than people from comparably wealthy nations.
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Economics
|
If they botch the dentistry in Mexico, people aren't going to sue them because they cant, they aren't likely to fly back and get the work redone, and many times American dentists wont even touch the work because it's a lawsuit waiting to happen. If an American doc touches the site at all they could potentially be held liable for all of it going wrong.
So the people get seriously boned when things go wrong. Yet everyone in this chain is encouraging more dental tourism.
If you want things different tell your Congressman, but dont act like dental tourism is a safe or viable answer.
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Economics
|
Research, stop buying shit you don't need, sell everything you have, get job where u can work online (skype, travelingmailbox, etc), give family hug, but 1 way ticket and go.
Quite simple actually.
AIRBNB until u know place then find cheaper rental someplace.
Vietnam and Malaysia are my top 2. Malay is 90 day visa, viet is 30, but u can get 1year business visa from travel shop in town.
PM me if you need more info.
EDIT: dont forget you need usa government permission to leave country. (passport) if you convicted felon or owe back taxes your travel may be restricted.
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Economics
|
If you're interested I would encourage you to check out the /r/personalfinance wiki:
https://www.reddit.com/r/personalfinance/wiki/commontopics
The people on that sub have done a great job of collecting the most basic, fundamental, information beginners need when it comes to managing your personal finances. These articles helped me a lot.
The Bogleheads wiki is also a great resource if you're looking for information specific to investing.
https://www.bogleheads.org/wiki/Main_Page
It only takes a few afternoons of reading and you'll have a good enough understanding of this stuff to make solid, long term decisions about your financial health.
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Economics
|
That's a bad idea for the same reason that the gold standard was a bad idea: you lose the ability to inflate your way out of debts and increase the price competitiveness of exports, which can be an important policy tool. The only alternative that remains is internal devaluation and austerity, which will create unnecessary suffering and a great deal of political and social instability. The best solution if you're looking to deflate a currency is to just take some of it out of circulation and/or renominate it. That way you don't lose access to the printing press for when you do really need it.
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Economics
|
Governments have two arms to manage the economy. Their right arm which is fiscal policy and left arm which is monetary policy. You quit on your own currency you basically chop off your left arm forever. Now you have to manage the economy handicapped. Argentina once had triple digit inflation rates and managed to get through it without being so drastic. They will get through this eventually. Abandoning their currency would absurd.
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Economics
|
We couldn't compete internationally to begin with, so exports were low, specially in manufactured products that we used to export to other latinoamerican countries and the agricultural sector too. So we basically didn't have enough money, there wasn't enough money in the country to pay our debt or for paying anything really.
Second our industry couldn't keep up with the salaries and investments other companies could make, as you had to pay in dollars. So most jobs, laws at the time gave lots of benefits to big companies, were given by these foreign companies that had no reason to keep revenue in the country, and salaries weren't even high as you would expect from this situation.
So we basically we were left with nothing in the country that could make money. And how could we get money if we couldn't print it? EASY, debt... but wait, how do we pay that debt? Nothing in this country makes money... I know! Debt! And so we defaulted in 2001.
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Economics
|
Anecdotal here. I see so many employers that dangle carrots to their employees. Employees take jobs that work them like crazy with absolutely terrible pay all for a potential opportunity to maybe get that really good job they're looking for one day. Then that job never becomes available or they don't get picked for it. The employee has already invested so much trying to get the good job that they keep chasing the carrot similar to a Nigerian scam where you've already lost so much money you have to believe the prince is going to give you that money if you just spend another 2 years at some other role you're totally overqualified for getting underpaid.
What I'm saying is that employees are being gamed by employers in the same manner people who fall for scams get gamed. The difference is that when it comes to jobs, someone does eventually get that one good job which is why so many people are easily abled to get gamed. They think if they take that lower level role for $40k/year for 10 years that they will eventually have that great job. In reality it seems to me that there exists a class system and certain people simply come into those roles without having to have worked from the bottom up. People need to stop believing in corporations and the carrot they dangle.
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Economics
|
Is it a possibility wage increases have not increased due to costs related to governmental compliance?
For example we have seen a general increase in the use of 1099 contract workers since government regulations mandated companies over a certain size provide health care insurance to their employees. Is it a possibility that due to this new compliance cost, potential increase in wages for employees are now going to pay for this cost instead?
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Economics
|
I used to have this discussion with a buddy of mine all the time! I had loans, he did not. He always strutted around as if his shit didn't stink.
Then I met his dad... who paid for his college, got him his cush job, and paid for his down payment on his house!
All in, I'd say he had a good 200K head start on me...
He still asserts that I didn't have to get loans, and I'm paying too much on my mortgage. My home loan rate is lower than his, btw.
All this to lead up to this comment:
I consider myself privileged to have what I have, and when I hear shit comments like "were you conscripted into loans..." it pisses me off because the answer is yes. In order to go to the same school as a bunch of lucky spoiled TRULY privileged fucks whose parents take care of the REAL obstacles, yes,I needed loans! And even though I make the same money as those chodes, I'll never catch up. Ergo, I lower my standards.
Personally, I don't blame the privileged... I blame those LIKE ME, who borrowed but didn't finish. Or, who borrowed to attend too ambitiously... now, tuition is artificially inflated, and an education under delivers on opportunity. But, at the heart of that, is the same naivete that I think exists in your comment.
And no, the buddy and I aren't really buddies anymore... it became too much of a bother to not punch him or see him as a silver spoon fed punk... and my bitterness is clear in this post!
I guess I'll do some YouTube yoga to find harmony... can't afford the in-person classes, got student loans to pay!
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Economics
|
Yes. The cost of full time employees went up so the amount of full time employees went down.
Minimum wage did something similar. In a roundabout way, the cost of your least skilled workers went up so the amount of your least skilled workers went down. Basically some people on the bottom of the totem pole suddenly got paid more but others suddenly got paid nothing (because they were fired). The ones who remained had to pick up the slack of the ones who were fired. Across the board, jobs that paid the minimum wage thus became more challenging which made them harder for the least skilled members of society to qualify for. They then either leech of the taxpayers via welfare or they leech off their families which reduces discretionary income and traps their families in positions where they can't afford to take risks with changing employers which gives them no bargaining power for their wages
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Economics
|
I decided to go in for an interview because the starting salary was actually stated before hand. I get there and as the interview is about to start they said, "idk if you'd be interested in this because the starting pay is actually xxxx" which was $12,000 below what they previously claimed was the starting salary. I wonder if that's a common strategy to try and get people who are in need of a job to accept for lower pay.
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Economics
|
I don't blame those who took the loans and didn't finish. They were told they *had* to get a BA or a BS to be middle class, got started, realized for whatever reason that path wouldn't work for them personally, and dropped out.
I blame the low information people who say things like "were you conscripted into your loans?" Someone who looks at a macro situation, sees x% of middle income people and y% of low income people are acquiring five and six figure debt at 18 years old and don't see a systemic problem that needs to be addressed cooperatively.
"Nope," they think wrongly, "if I'm not personally suffering this problem *right now* then there is no systemic issue that needs to be resolved. I will say something glib and smug and dumb and then pat myself on the back for being smart enough to take credit for all the help other people have given me." And in 10-20 years when the student loan issue triggers the recession after next and they're laid off they'll complain that the government should have done something about all this
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Economics
|
Those 18 year olds taking out 5, even 6 figure loans based on no collateral isn't healthy either. There's a reason why loans normally require collateral. The government stepping in to safeguard loans distorts the market by changing the risk calculation.
Add to that these 18 year olds have been told all of their lives by every adult, every authority figure, and every teach that they must go to college. Can you blame them for thinking they must go to college? They have no experience and don't know any other way.
Normally no one would give an 18 year old with no assets a loan of that size. Its too risky. The kid doesn't know what they're doing and is making a decision based on the information they believe they have, except that all of their lives everyone the kid trusts has been telling them things that may not be true.
Skilled trades are struggling for new hires right now while underemployed college graduates are serving coffee.
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Economics
|
>Oh? Is that what going to college means? I didn't see psychic prediction 101 on my course selection handout.
Well, if you go to school for X subject, you're hoping that you'll have X job after you're done in 4 years, right? Is that a tough concept for you to understand?
>maybe they can take a finance course their first semester.
Right. Because that makes sense, to take on loans to learn how they're going to fuck you later on. Cool concept. But again, kids don't have any idea as to what a 15, 20, 30 year loan looks like. Shit, we're talking about people who we don't deem responsible enough to drink, but we can send them off to war, and we can bury them in debt. Cool stuff right there.
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Economics
|
There's plenty of data that shows those with a college education, over a lifetime, will earn more than those with HS only. So, it's not entirely a misnomer.
But, you're right... 18 y/os with a debt potential of 50K+ before they ever even earn a dime isn't a safe bet.
UNLESS, an educated voting populace is something of a public good... in which case, tuition of any sort yanks higher education out of that classification as it is exclusive.
The problem is that higher education is a speculative investment, that for most people, they have to short in order to even get involved. And is often the case, certainly with inexperienced investors, those who short markets, can lose BIG TIME!
Also, personal financial literacy isn't a high school standard... at least not when it comes to realistic concepts pertaining to assets, liabilities, and speculative investments!
Kids are told by so many trustworthy adults to invest in college, but ARE NOT supported in the process... sink or swim is ok when stakes aren't so long lasting. Rack up 20K in loans... you can feasibly pay that back over 5 years AND those who staked you (investment holders) can also earn returns! But, with how tuition has gotten STUPID over the past couple decades, its more of a feeding frenzy on long term debts... than it is about developing an educated populace.
Because education is speculative (for investors, aka students), a disproportionate amount of risk rests on students! Speculative investments SHOULD NOT be so one-sided. Arguably, colleges would accept fewer students, fewer and smaller loans would be lent, and the return on attained education would be much higher IF this dynamic wasn't so lopsided, predatory even!
The fact that loans cannot be subject to bankruptcy, makes them lopsided as well... AMD THIS is where the "nobody made you take the loan" arguers should place their scrutiny! I guarantee if lenders held more risk, this system would tighten up real quick! It's not because the argument that an education cannot be used as collateral because it's intangible is a joke! An experienced, licensed, plumber can lose their license. Doctors, lawyers, can lose the license to practice... ergo, a person with a liberal arts degree can lose their credentials! Thus, bankruptcy SHOULD include student loans.
So, the point that there MIGHT be a systemic problem shouldn't be dismissed... and, when it comes to the forefront in a few years, THESE will be the SUDDENLY OBVIOUS details.
|
Economics
|
To me the issue is the reduction in middle class wage unskilled jobs. 40 years ago a responsible, hardworking American could go to the local factory, mill, or plant and get his foot in the door with a recommendation from his dad or uncle. He didn't need a Bachelor's degree to raise a family.
But now those jobs are gone and the people who would have gone that a route are piling in to universities. We aren't increasing the number of jobs available to those educated people, though, so here we are.
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Economics
|
I never understood the idea of starting a family before being economically settled.
I can also never understand this excuse. You can still look for jobs while being employed to a less-than-ideal one. People switch between jobs so much nowadays that it’s nothing but the smallest blemish on your resume, if even that.
Based on what I see today, I’m not raising kids until i have about 100-200k in reserve to raise them. Obviously the threshold is up to you, but I would say that 50k is the absolute minimum. If you’re making minimum wage or 15-20$ an hour supporting your family having a kid is absolutely not an option.
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Economics
|
I definitely understand your logic, but people don't plan like you are assuming they do. Shit happens, and not everyone who wants a kid is going to make 200k in their lifetime, let a lone save as much as that. We [as a society] can't just say 'fuck em', and the [mental toll poverty takes on a human is incomparable](http://www.psychiatrictimes.com/special-reports/addressing-poverty-and-mental-illness), so you can't expect people to take tje risk of changing jobs, or going back to school, or any of the 'logical' things we know amounts to individual economic growth. Some people just don't have the mental bandwidth to do those tasks.
You're right, but you're also wrong. Life isn't black and white.
|
Economics
|
If the main problem is underemployment, as this paper seems to suggest, there doesn't seem much that corporations *can* do to resolve the issue. Since workers are underemployed, the productivity they generate from their job definitely is not as high as one that makes full use of their human capital, so increasing their pay in accordance with their education and not what they actually do at their job sets a binding price floor for labour and skews incentives. Corporations need to make profit to survive, after all, and any job is better than no job.
To me, it seems as though the fault lies with the government's inability to secure growth in job sectors that reward higher levels of human capital and therefore pay higher wages.
|
Economics
|
> Corporations need to make profit to give to the shareholders.
Perhaps not even anymore. Shareholders hire executives and the like to run their company the best they can, due to their inability to constantly supervise the daily comings and goings of the business, but they are similarly unable to constantly hover over the shoulders of said executives. This information asymmetry leads to the classic "principal-agent problem", allowing high-level company employees to embezzle funds for their own pleasure.
​
|
Economics
|
> The only reason they don’t generate a profit is because they reinvest everything into expansion, which is what a company should do.
> Profit is an absolute requirement to maintaining and growing a business.
These are actually opposite statements, is what I'm saying. Amazon is not profitable because the investors are happy enough that they haven't fired Jeff Bezos yet. (Although they have let him become a hundred-billionaire, so maybe they're just irresponsible.)
|
Economics
|
Bezos' billions are the stock valuation at Amazon. It's not like he's sitting on hundreds of billions in cash in his McDuck vault.
In the sense you're saying, Amazon is profiting, it's just re-investing their profits into their own company. You can put that down as an accounting cost I suppose, but the net of it is that after expenses are paid, there is money left over. Their choices are to bank it, distribute it to shareholders, or re-invest it into the company.
|
Economics
|
Yes, unions are an appropriate response to the market power wielded by massive super-corporations that are able to artificially suppress wages below what the worker actually deserves. Unions, however, are NOT the answer against **underemployment**. They can lobby for companies to pay workers a salary closer to their actual productive value to the company, but they can't force them to pay in excess of an employee's revenue product or else the firm would be making a loss, pushing them to cut jobs elsewhere. Underemployment is an issue of a worker's current job level being nowhere near what he/she *can actually accomplish*.
Imagine a mechanical engineer forced to resort to cutting deli meats at Loblaws for a living. Unions solve the issue of him being paid $8 an hour when his contribution to Loblaws is worth $12 an hour. Unions **do not** solve the issue of him not having a job as a mechanical engineer. You can't "grow" the wage of the deli meat cutter to rival the wage of a mechanical engineer, even though ideally he would have a job that makes full use of his skills as a worker with a post-secondary education and pays him as such.
|
Economics
|
OP's article makes the claim that low wage growth is "due to widespread underemployment". It's saying that the mechanical engineer at McDonalds cannot make more than he does already because more than a mediocre amount of experience in flipping burgers or punching numbers into the cash register does not increase the quality or quantity of his work to level sufficient to warrant a raise. Perhaps McDonalds employees make more in Denmark, and I'm not disagreeing in that more workers should join unions. What I *do* disagree with is being content to prescribe unions as the be-all, end-all solution to stagnant wages.
We'd much prefer the mechanical engineer to make his living as a mechanical engineer, not as a low-level grunt at a fast food chain. This solution to this underemployment isn't unions, but real and not insubstantial action by the government and the people in looking at what fields or industries we want to value, reward, and grow in a developed country such as the US or the UK. While I may not know much about the situation in Denmark, I do know this -- it's not one that pays minimum wage.
|
Economics
|
Makes the dismal standard of living of people in this country even more unforgivable. Many of the countries listed in this map have things like universal health care, universal access to education, don't have our ridiculous student loan crisis and have programs to help the elderly where needed.
We squander our riches with a bloated military, tax benefits for people who don't need them, and absurd levels of debt service for corrupt deals in the past instead of taking care of our own.
|
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