Comment by paulpauper | Hacker News Reader

Comment by paulpauper | Hacker News Reader

People have been saying this since 2009, yet the S&P 500 is up 250% since then.

We need to put things in perspective.

The reality is:

The US has greater inflation-adjusted GDP growth than most of the world, including much of Europe, the Middle East, and South America, and Japan http://i.imgur.com/SBqFqtt.jpg

Profits & earnings for tech companies, payment processing, retail, and consumer staples companies have far-outpaced GDP growth. A lot of the lag comes from the chronically weak financial, commodity, and energy sector.

It's much harder to grow a large economy than a smaller one. There's diminishing returns to scale. It's harder to grow an economy at the same rate it was growing when it was 10x smaller.

2% real GDP growth, while slow, is still growth. Most people cannot perceive the difference between 2% growth and 7% growth.

Real GDP is back to 2003 levels, and far fewer people were complaining about slow growth back then

Slow growth doesn't preclude discovery and innovation, things like web 2.0, smart phones, apps, theoretical physics, mathematics, uber, self-driving cars, on-demand entertainment, etc.

So while more growth may desirable, 'slow growth' isn't too much to lose sleep over.

A lot of ppl have mentioned the UBI, but it's worth reminding that the effective income tax for the lowest 20-40% of earners is negative

Of course the S&P 500 has been growing, central banks are buying stocks left and right. What's worth mentioning is that both governments and companies have massively increased their debt during that period, so its really hard to judge what the 250% S&P 500 growth means.

The S&P 500 growth means that companies are confident enough in their future cash flow that they will borrow money against that to buyback their own stock. This has been a trend since the 80s.

We are living in situation where, instead of competition driving profits down to 0, or profits being used to finance investment and growth -- profits are simply returned to shareholders. Low interest rates are only reinforcing this. It's a great time to be a shareholder, and not a great time to be a consumer.

Alternatively, it means that executives that are mostly incentivized by short-term stock price movements via option grants have found a way to juice their compensation.

The S&P is growing because companies are borrowing to buy back their stock. It is illegal stock manipulation but that law is no longer enforced. This makes money that used to be taxed as dividends eligible for capital gains treatment and it taxed at a lower rate than it would be as dividends. this lowers tax income to the government. A downward spiral with no end in sight.

"The US has greater inflation-adjusted GDP growth than most of the world,"

A) If you normalize for immigration, it's not that good. US imports bodies to grow it's GDP

B) It's maybe 'better than most' - but it still stinks.

I'm 42. Most of my life, 4-5% growth was the norm. No more.

We are in a new world for sure.

4% would be much preferable to 2%. 2% barely covers increases in productivity and population growth.

| but it's worth reminding that the effective income tax for the lowest 20-40% of earners is negative

Can you explain why this is so? Interesting way to put it..

Earned Income Credit, for one thing. I can't speak to the accuracy of the 20 to 40 % claim, but I remember getting a significant EIC credit one year in the 80s.

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