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Comment by CompelTechnic | Hacker News Reader

If you want to understand wage stagnation in the US, look up the "elephant curve." In a nutshell: middle income of rich countries has stagnated because of the new need to compete with rapidly industrializing poor countries. Everyone's income around the globe tends to increase during this process (a very good thing!), except for middle wage earners in rich countries.

Meanwhile, in local politics, both sides of the aisle blame eachother for this effect, which is totally outside of either of their control.

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Cutting taxes and then cutting government services is totally within their control. Providing assistance to big corporations while denying it to citizens is also under their control.

Saying both sides do it when clearly only one side is doing it does not help.

You say assistance is being denied, but look at the graph of transfer payments by the government, it has been growing fast since the early 70s, and up every year since 1950 except during the financial crisis in 2008/9.

You’d almost think that the increased social spending could be contributing to the increased inequality because it tracks closely.

https://fred.stlouisfed.org/series/B087RC1Q027SBEA

Perhaps more people are qualifying for government assistance, because they're making less money.

Exactly, it's the government subsidizing the labor costs for huge, profitable, companies not paying their workers living wages. [0]

[0] https://www.forbes.com/sites/clareoconnor/2014/04/15/report-...

That graph doesn’t look like it accounts for either inflation or population growth, and so it’s not going to say anything useful. It’s certainly not suitable for making your argument.

Here it is divided by CPI and population: https://fred.stlouisfed.org/graph/?g=kyKl

This isn't really a good argument for the parent IMHO, which deals specifically with middle income workers.

Unfortunately I can't find an exact chart with details on the % of transfer payments devoted to each category, but my best guess is that "middle income workers" are not the biggest target for a large portion of this category. It's pretty clear in various budget charts though that the largest category of "transfer payments" in the United States go to the retired (Medicare and Social Security) and health assistance for the poor (Medicaid). Some of the other big hitters also are more low income oriented (eg SNAP).

There are some programs like unemployment insurance which may help middle income workers, but they only temporarily under a very specific circumstance. Even something like EITC (I'm not sure if it counts as a transfer payment or not in that graph, but it should) tapers off well below middle income if you don't have children.

(There's not necessarily anything wrong with biasing transfer payments to the poor and elderly at all, I'm just saying that if transfer payments have increased a lot, chances are it wasn't caused by any middle income worker except maybe retired ones.)

I find the elephant curve explanation compelling. But I’m not sure it’s fair to then say there’s nothing that can be done to mitigate the impact of that.

Rich Scandinavian countries, for example, have a more redistributive tax system that appears to leave people broadly happier. Fine to argue the relative merits of such an intervention, of course, but worth noting it’s very much an option.

Not really an option. The largest scandanavian country, sweden, is a little larger than Los Angeles and the rest are much smaller. They have little emigration and immigration, and although their gdp per capita is similar, the huge population difference means their economies/gdp are of a totally different scale.

Apples to oranges.

There is more emigration and immigration in Sweden than in the US (relative to the population).

I don't see why scale would matter that much. If it works for 12 millions why wouldn't it work for 2times more, or 10 times more ? Or 30 times more ?

It would require some real argument about why size matters and prevents the policy from working. Because right now the US has an economic repartition similar to Israel, which is even smaller than Sweden.

Your rationale for the Nordic model being inapplicable to the US is a common one among conservatives, but it baffles me.

Of course the Nordics are smaller than the US, but all of the economic variables in question should scale on a per-capita basis. Specifically, what is it about a population difference that makes a strong safety net inapplicable?

"America is bigger than X" is a thought terminating cliche to make people stop asking awkward questions like "why is quality of life better in X?"

Except it's baloney, the EU even has a bigger population than the US and has universal healthcare, public transit, etc.

Anecdata: I work within a large Scandinavian bank. I've met a lot of people (maybe 20?) from our Copenhagen office, but I've yet to met a single Dane among them. It's a mix of Eastern Europeans, Western Europeans, Southern Europeans, other Scandinavians Indians, Chinese, UK, US etc.

These Scandinavian countries may be unable to afford this approach if they were required to provide for their own national defense at entirely their own expense.

In doing so, many countries with these sorts of nation wide programs may become woefully uncompetitive, not to mention quality of services would go down.

Do you have sources supporting this argument?

This is exactly right and something that my fellow American Millennials can't seem to grasp. I do business in many different developing countries where a good wage even for skilled programmers is less than 10% of a normal silicon valley wage.

It really is the whole world competing for information jobs these days and while it will eventually level out, it's bound to cause wage depression in already developed countries.

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