We’re Measuring the Economy All Wrong
nytimes.com
nytimes.com
There is 0 value given to the experience of visiting a natural space or to forests which take thousands of years to grow which quite literally could not be reconstructed for any amount of money (for example) ... we need something more at a philosophical level from economics than we are getting. I’ve been pondering a two dimensional monetary system — dollar amount representing how much you want something and another number for representing how much it costs the world for you to have it ... the one dimensional notion of value claims to merge these things but it clearly does not — investment which produces growth by satisfying ever more wants _should_ hit a point of diminishing return far sooner than our current metrics are able to represent ... if we had a 2d monetary system where pricing models were segregated, actuarial efficiency could be arranged to mean something entirely more meaningful than the current optimization paradigms can ever hope for ...
The challenge is that real interactions are very different from a free market, and human agents are far from rational (for any operational meaning of rational that isn't tautological), unless in very narrow settings.
Economics doesn't have an answer to that, which is understandable, because it is a hard problem. The annoying things is when people pretend that there is nothing missing, and that everything is fine and dandy with economic metrics and tools. (EDIT: Economics is nowhere close to the physical sciences in its level of empirical rigor. Comments implicitly comparing economics to the sciences only serve as proofs illustrating my previous sentence.)
This is not true at all. There is no conflation between "how much you want it" and "how much it costs the world to let you have it". Even the models taught in introductory undergraduate courses on economics are capable of addressing the "problems" you're describing.
forests are like annuities (small payments forever), rather than lump-sums, but our brains respond vastly more to lump-sums. this bias is also why terrorist attacks lead to action, while vehicular deaths, which kill way more people, don't.
we have ways to objectively (if imperfectly) value things like forests, but we just don't intuitively believe in that number. for example, the concept of a carbon tax makes objective sense, but this kind of bias is its achilles heel.
(this subject came up in a number of my business school classes, which i found quite useful for learning how to think about such things)
GDP only measures standard of living. Various economists have proposed scales that are more weighted towards quality of life.
The problem is when money is your only hammer, the only nails are things that can be measured in money.
Impact investors are also starting to look into "ESG investing" -- making their investments not on profits alone, but incorporating standardized Environmental, Social, and Governance metrics as well.
I have a project which map the gift economy onto web-of-trust style key distribution. Moving the value from a numerical token, to relations between people, seems like a step in the right direction. https://www.wired.com/2014/07/document-coin/
This is a different kind of problem than you think. It's not that we don't value it, it's that the value is diffuse. Every person in the area values the forest an average of $100, there are a million people in the area, therefore the value of the forest "should" be a hundred million dollars.
The problem is that the government has to fill a budget hole and there is a logging company that would pay ten million dollars to log the forest. The government could also get the same money by reducing the defense budget, or replacing some government employees with less expensive contractors, or replacing corporate income tax with VAT so international corporations have to pay their taxes, but all of those groups have better lobbyists than the public at large. So the public (and the forest) loses.
But the problem wasn't that we couldn't calculate the value, it was that knowingly destroying ninety million dollars in value in order to have ten million somewhere else is a thing that happens when you have a collective action problem like that, because the value destroyed is spread across a million people and none of them have enough incentive or power as an individual to stand up and stop it.
So the problem isn't the valuation, it's how do we solve the collective action problem?
I’m not sure exactly what the rules for this shared resource currency would look like but I think there is room in the design space to integrate the shared resources available to humanity into a pricing model that would be more explicit and coherent than what we have now. I'm imagining a monetary system which includes a diffuse resource value for all resources -- with transaction rules updated so that trade/consumption became a two dimensional exchange involving two private parties, and the diffuse account. For the transaction to be legal, it must preserve the 'value' of the world's 'diffusely owned resources' either by not consuming anything or by the issuance of a 'debit' from the defuse balance of one of the parties (no creditor for that -- it just disappears, but the point is that the party has to have sufficient diffuse value credit to be able to destroy the required amount of diffuse value) ... I think the design space of rules governing production/inflation/transactions of diffuse value units could yield a lot of flexibility for helping to encourage that actuarial optimization over the transaction space be likely to efficiently produce broadly meaningful uses for resources -- perhaps more so than the setup we have now ...
The greedy could still act in their own self interest but would by design be more constrained in how they harm the rest of us and the relative amounts of harm of different practices would be more easily discernible as part of the public record and understanding ...
Setting explicit prices may help in theory, but there are two major problems. The first is that the price is inherently subjective. There are no market transactions to look at to see what "forest continues to exist" is currently trading for. It's the existing state and self-perpetuates without anybody having to do or pay anything until such time as someone actively expends resources to change it. So at best you're speculating, and choosing the wrong value -- whether too low or too high -- is costly. Too low and we haven't solved the existing problem, too high and we can't have a transportation system because no one can mine steel to build trains or cars or ships. So accuracy matters, but accuracy is expensive. Getting the valuation right is a detail-oriented labor-intensive process.
And in theory we already have this. It's supposed to be the job of our representatives in the legislature to do this. Which brings us to the second problem, which is that because the value is subjective, we still have the collective action problem. The logging company lobbies to have the value of the forest set low, the diffuse general public doesn't strongly object, and we're back to square one.
One of the strong options to solve at least some of this is to require all budgetary issues to be put up for public referendum. Not just "entire government budget, yea or nay" but at the line item level. The government proposes to sell the forest to the logging company for ten million dollars, yea or nay? Then the public votes nay and the legislature has to come up with the money some other way.
Naturally that isn't very popular with lobbyists because then the public tends to vote down the harmful but politically expedient revenue generation methods, so there is always strong lobbying pressure not to do things like that, and we're back to the collective action problem. It also has the general direct democracy problem of people not having enough time to evaluate issues carefully, but in principle there shouldn't have to be that many different or complex revenue generation methods. The existing tax code is unnecessarily complex and people could plausibly make time to understand a much simpler one -- which would also remove a large number of the existing harmful carve outs for groups with strong lobbyists.
What do you propose to use instead?
I think that's a shame, because externalities can be measured (not perfectly, probably much less accurately than current economic measures -- but something is probably better than nothing). And people care about them -- arguably, today people are more concerned politically with externalities than traditional economic growth. But the dialogue regarding these externalities is generally driven by emotion rather than facts, because no one is really incentivized to do thorough objective research on them at a really large scale (tragedy of the commons)
This “barks” toy example is definitely not the precise idea I want to capture and not at all fully fleshed out — but suppose a more developed version where there is a mechanism for estimating the externality costs of any transactions and where there are different rules that apply when paying for the “externalities cost” vs paying for its dollar price ...
I think the issue with this system is that generally the groups imposing the externality are more organized, and often wealthier, than the groups who suffer from it (tragedy of the commons again). Getting the trees cut down may be priority #1 for the company, and opposing it might be priority #30 for a few hundred people. Priorities that low are effectively zero, since most people dont even have time to handle their important priorities
I feel like your idea could potentially tip the balance in the favor of the "commons" by imposing a higher upfront cost to the creator of negative externalities, but I can't really put my finger on whether that is true.
It was about about unsustainable fishing on a large trawler that could set out about a million fishing hooks a day, and catching everything.. large tuna, sharks, etc. They then projected globally; this is the dominant way we go about fishing, and with it halfway this century our oceans will be empty of fish.
Then they brought the example of - I believe - Irish fishermen, who some years ago and seeing hugely diminishing returns, decided on a different system whereby scientists would determine beforehand the minimum shoal size that would lead to sustainable growth of the fish population. The fishermen would then be free to catch the remainder of the population, and divide it amongst themselves based on stake in the game.
This 'share' determines their yearly quota. If next year the total shoal population had grown, their 'share values' had increased. This modern fishing method apparently worked perfectly, and every year they have bigger returns, catching almost as much as in 'old times'.
If we wasted less and took better care of the environment around us, the costs to society would be less, this could be measured as a decrease in spending and a shrinkage of the GDP. You wouldn’t buy new clothes as often if you could maintain your existing wardrobe, and you wouldn’t buy electronics or appliances as often if you could extend the lifespan of your current electronics. Basically there wouldn’t be as big a drive for consumerist spending patterns and this could be measured, by a decrease in the GDP which would of course cause financial markets to panic.
My thoughts on this are far from complete, but that said, I don’t think our market system is really all that efficient from a tangible resource allocation perspective. It might be highly effective from the perspective of the financial and insurance industries, but the assets they hold are intangible, and the market is probably over-optimized for allocation of intangible resources simply because there is more money to be made there. That is still an optimized market for the allocation of resources with the highest rate of return, but maybe it is time to ask ourselves if that is still to our benefit?
I am meaningfully richer and have a more fulfilling life because I don’t have to do those things. Why don’t you think it makes sense to incorporate them into measures of societal wealth?
The idea that hard currency is a universal lingua franca is deeply flawed and you've hit on a very good example of one area that is starkly apparent.
There are a lot of people doing work in this area under all sorts of different terms, but trying to tie in those missing qualities. Terms that might yield interesting reading are: loop economy, circular economy, doughnut economics, sustainable economics (though that seems to be slowly fading as a term..)
https://evonomics.com/ is not a bad place to read to at least start getting some introductions to some of the people trying to push a rebuilding of our basic economic suppositions.
I know some people are uncomfortable with placing a monetary value on nature. But it's a useful exercise because it forces us to be explicit about what we consider important rather than discussing vague platitudes.
Read this article for insight into what's wrong with exactly that approach: https://www.ribbonfarm.com/2010/07/26/a-big-little-idea-call...
More broadly, the problem with trying to be explicit about what we value is that any specification will almost always be broken, due to the "fragility" of value: https://www.lesswrong.com/posts/GNnHHmm8EzePmKzPk/value-is-f...
There are better ways of determining the relative value of nature than using the amount a rich man is willing to pay to save it as a proxy.
I think that parent comment is spot on in saying that value determination based on what people are willing to pay for it, does often come not even close to the real/potential value of complex resource systems. Of course all estimations are still grounded in base prices of less complex resources.
Some people want to be able to put things in purely economic terms to be able to relate the current situation to the past, some want language to reflect the current crisis of natural resources, and then the conversation gets side-tracked by semantics.
The semantics are important, but lens-crafting makes conversations difficult, especially when meta-comments like this one further detract from the goal.
Important note: insulting myself, not any of the posters above.
Sometimes we want to compare complicated but very different things, so we are motivated by need (e.g. politics) to collapse a thing with multi-dimensional values into a thing with a single-dimensional value, so it can be compared with another thing (e.g. via price).
We are willing to engage in commensuration in some areas of life (e.g. this mountain forest is worth $1.2B) but not others (my child is worth $X).
What's interesting to me is the space that is incommensurable--the values in life that we deem so important and so sacred that we are unwilling to bend or collapse the multi-dimensional value of a thing into a simplified "price". This is where economics fails to model life and value properly.
This non-associativity of commensuration seems like an example of a kind of valuation phenomenon that perhaps a two-dimensional pricing system could better approximate -- even in the presence of actuarial optimization ...
It's perfect for the purpose its used though: to justify policies that transfer more wealth and power to the rich, and to not give a crap about externalities...
>There is 0 value given to the experience of visiting a natural space or to forests which take thousands of years to grow which quite literally could not be reconstructed for any amount of money
If you have your own private island you don't care about some state park...
In all seriousness: It's not surprising that it's difficult to project human values onto a single dimension. This is an interesting concept, but seems very challenging -- it would take mass cultural change to take effect.
If you start at 1+0i and multiply twice by 0+1i, you end up at -1+0i. If you try to imagine this in the xy plane (where we pretend x and y are currencies) then this would mean that multiplying a positive amount of one currency (1x + 0y) by a positive amount of another currency (0x + 1y^2) would put you in debt (-1x + 0y). This would be a very strange property to have in your currency!
But there is definitely something lacking from reducing everything down to a one dimensional measure. For instance, there are many pieces of real estate improvements that ought to be torn down and replaced with new improvements (homes, commercial buildings, etc). But the economy rarely offers incentives or even the abilities to tear down and rebuild - despite the huge benefit construction is to an economy. For things like this, I conclude the economic system is not closed. It’s not creating a self sustaining relationship between all participants.
A lot of the confusion in this thread seems to come from people believing that the main idea of complex numbers is that they are just pairs of real numbers.
That is wrong -- pairs of real numbers are just pairs of real numbers. Complex numbers are pairs of real numbers with a particular multiplicative structure.
I should have added that it only becomes circular if you add the point at infinity. Otherwise it’s more similar to a plane. But yes, it’s not simply x,y numbers when you assume y^2=-1. The geometric interpretation of the complex numbers matters, and you have to do it correctly. Gets very hard to imagine quickly.
It's possible for there to be slippage between GDP and whatever metric you imagine, but they're well connected.
That said sick and dead people and climate change are typically not good for GDP.
But aside from economic theory, everyone who has ever cared for a sick relative should have the evidence to see that it doesn't raise GDP. Yes, you spend money on healthcare. That's good for the doctors you buy from. But you give up time at work, you give up vacations, you cut back elsewhere. Every cent that you spend on that healthcare isn't going to wherever else you would've spent it. This isn't a counter-intuitive finding. It's just common sense.
[0] 10 million or more people, by my current arbitrary definition of "large".
That's when my generation ("boomers", we're called, or maybe the "worst generation" to compare us to the WWII "greatest generation") decided that taxation was theft and younger people should suck it up and pay through the nose for their own college and housing.
We've been successful. We've grabbed all the cookies. Some of those cookies could have gone for education, for infrastructure, and other things. Some of them could have gone into urban development to make sure the growing population had decent living quarters. Some of them could have gone into paying for sensible oversight of pharma, finance, and other vital business.
But no. Those cookies are mine, MINE I tell you! And you can't have any. And by the way, no new apartment buildings in MY neighborhood. We're too special to have any riffraff who can't afford to pay most of a megabuck for a place to live.
<irony><snark /></irony>
Do you mean returned to being bad? Inequality was much greater leading up to the great depression. The great depression wiped out a lot of the inequality that had existed. Once that had passed, and the economy restored to a more stable state, the inequality naturally came back.
By all accounts, 2008 probably should have been another depression that would have helped wipe out that inequality again. But it seems not even those on the losing end of that inequality are comfortable with living through the conditions that the equalization process results in, and thus we, as a society, took steps to maintain the status quo.
My generation had great stuff in the 80s like Star Wars and Nintendo, but it also got saddled with just awful stuff like AIDS and the war on drugs. So we grew up naive and sheltered (what I imagine the 1950s to have been like) until the hedonistic days of the late 90s when some of the best of us were lost to excess. Then we lost the 2000s to the dot bomb, the global war on terror and finally the housing bubble. I don't feel like Gen X really got a foothold until Obama's election. So we've generally had little or no say in politics or our economic situation our entire lives. Gen X may very well be one of the most disenfranchised and lost generations in modern history.
AAAnnnddd that's why I think the economy stinks. The best and brightest minds of my generation got snowed under by ADHD drugs and work in tech now, making money for rich people. The ones that know what's going on get mocked by the pretty people - the Paul Ryans of the world, the modern day snake oil salesmen. The populist wave washing over the world right now might be seen as a total accident if one doesn't have the context I've described above. There's a relentless, untiring machine of sexism/racism/classism that seduces the unwary with colorful notions like trickle down economics, which don't stand up to scrutiny. And unfortunately I see a lot of "the government is the enemy" propaganda popping up on Hacker News because of its indentured servitude to the wealthy and their libertarian talking points.
If you want to fix the economy, it's so trivial as to almost be a joke. Just do the opposite of everything we've done since 1980. Raise taxes on the rich, publicly fund healthcare and education, empower the disenfranchised. When you remove the terror from people's lives, they'll work in harmony together and we could have things back on track in 5 or 10 years. Europe's doing it. Australia has an $18 minimum wage.
And since none of this is likely to happen in the US, ask yourself who stands to profit in a culture of angst. Which slippery officials do marginalized people elect, which extractionary industries profit, which people/plants/animals are tread over by multinational corporations too big for any government to control? If you grok that, then you have a glimpse into the indignation of Gen X.
This is a pretty significant error in the article. The Brookings blog post specifically talks about men rather than adults. U6 unemployment is has fallen to the same level it was prior to the dot-com crash.
There's a solid argument that looking at U3 rather than U6 understated the severity of the great recession, but by any sort of unemployment metric the great recession is over.
https://www.brookings.edu/blog/up-front/2016/08/15/men-not-a...
https://www.macrotrends.net/1377/u6-unemployment-rate
The Brookings blog post also makes no attempt to compare unemployment/marriage rates among men and women, so its entire tone is severely misleading since it's basically trying to paint a simple equalizaton between women and men as a crisis.
Going from 100/0 to 50/50 is a crisis, for at least 25% of the population.
We're moving to a world where it's more acceptable for men to choose to be homemakers and more common for women to have professions other than homemakers, both of which are good. But we've also moved from a world where the typical family had one income and one adult's full-time labor to support the household to a world where the typical family has two incomes and zero adult's full-time support without an equivalent jump in standard of living that would allow them to comfortably hire out for all the previously uncompensated labor.
In other words, typical working age adults used to only have one full-time job (as either a homemaker or a member of the formal labor force). Now adults of both genders have a full-time formal job plus a part-time job maintaining the household but without the equivalent real income increase that would imply. That's the crisis.
That would require a doubling of how much work needs to be done - while possible, that's not what the grandparent was hypothesizing. Unless exactly 50% of the population wants to be homemakers, there's going to be a problem for the people who used to have a job but now don't. So, whether or not 100/0 --> 50/50 is happening, it would be a crisis for 25% if it did.
I agree that the "men not working" vs unofficial unemployment rate isn't that's helpful, but mostly because the official unemployment rate has become such a silly metric, as outlined in this (old) article from Harper's: https://harpers.org/archive/2008/05/numbers-racket/
The Harper's article may be same-song-second-verse after reading your links and the parent article, but when I read it ten years ago it made a strong enough impression on me that I remember it now.
Thanks for the macrotrends link.
Schumer only recently decided he wanted GPD reported differently for the same reason politicians always want to change the measuring stick, because current numbers don't support the message they want the public to hear.
It is very evident we are going to get swamped with all sorts of "new economics" and "fair economics" stories leading up to 2018 because the current numbers being reported look that good. The key is filtering this political campaign driven noise.
Real wage, laborforce participation and deficit numbers disagree.
e.g. the BLS already releases all manner of alternative unemployment statistics (see "discouraged workers"): https://www.bls.gov/news.release/empsit.t15.htm
e.g. for income inequality, a crude but well known measure is the Gini index which measures how dispersed incomes are in a population: https://fred.stlouisfed.org/series/SIPOVGINIUSA#0
e.g. Consumer price index is another approach measuring access to basic goods: https://www.bls.gov/charts/consumer-price-index/consumer-pri...
Household net worth is another one that the article mentions.
The matter of which number is chosen as the official measure of "goodness" is the real issue and that is a political matter, and because depth of public (and shockingly often policymaker!) discourse on the matter is stuck at "did the thing go up or down". I'm dubious that switching to a different indicator will solve the problem per se - perhaps make it harder to game.
Not an auspicious start, David. People believe lots of things that aren't true, for example that crime is going up. That's why reliance on objective measures is crucial.
Of course, the larger point about using the right measures is well taken. But switching to new measures to validate your preconceived gut feeling is fraught with peril. For example, labor force participation rate, which measures the non-institutional population 16 and older, is down to 62% from a peak of 67% in 2000: https://www.bls.gov/opub/mlr/2016/article/labor-force-partic... (from 67% to 62%). Is it because discouraged workers are leaving the workforce? Not really--the labor force participation rate of high-school and college-aged people (ages 16-24) is down dramatically. But the rate among those aged 25-55 is down just a few points.
I don't think that the particular example that you're giving is "fraught with peril". Note the lack of an upper bound on the labor force participation rate that you cite - 16+ includes people of retirement age, whereas the measure given in the article shows that the official unemployment rate for men 25-55 is just 1/3 of the "true" unemployment rate that includes disaffected workers. This is significant.
Using that as the "true" unemployment rate is, frankly, bullshit. The number they're citing is the OECD "employment rate"[0][1], defined as the employed share divided by the total population in that demographic. Thus it includes the disabled, stay-at-home-parents, the leisure class, those enrolled in education, and anyone else who is not working but has no desire to do so. The decline is almost entirely driven by the reduction in labor force participation rate from 97+% in that demographic in the 1960s to 88.8% today.[2] Is it unreasonable to expect males may on average voluntarily spend 3 years outside the labor force during their prime years?
If you want to count discouraged workers, use U4 — which currently stands at 4.1% vs. the U3 at 3.9%.[3] (U3 is 3.0% for the demographic in question.[4]) U6, which adds all other marginally attached workers and those employed only part-time who'd like to be full-time, stands at 7.4%.
If your concern is falling LFPR, say so. If your concern is discouraged workers, use U4/U6. But don't change the denominator on the unemployment rate from the labor force to the whole population and act like it's some huge hidden increase the authorities have been concealing from us.
[0] https://data.oecd.org/emp/employment-rate.htm
[1] https://fred.stlouisfed.org/series/LREM25MAUSA156S
[2] https://fred.stlouisfed.org/series/LRAC25MAUSM156S
No it doesn't. Aside from it being a nonsensical measure of 'health', the overall 'employment rate' is well above pre-1990 rates (as women have continued to enter the workforce).[0]
>If you deny this, then you're forced to argue that somehow the number of "disabled, stay-at-home-parents, the leisure class, those enrolled in education, and anyone else who is not working but has no desire to do so" has increased within the same demographic (25-55 males, so generally post-school),
Of course it has. Being a stay-at-home-dad was unthinkable in 1950. Post-graduate education is increasingly common, as is mid-life career switching. I can think of many reasons why we shouldn't expect a 98% labor force participation rate from that demographic in this century.
>Of course it has. Being a stay-at-home-dad was unthinkable in 1950. Post-graduate education is increasingly common, as is mid-life career switching. I can think of many reasons why we shouldn't expect a 98% labor force participation rate from that demographic in this century.
All of the points that you raised should not show such a sudden effect in the past < 10 years.
I don't know how the statistics are gathered, but I wonder if they separate those who wish to/need to work from those who don't. For those who have given up searching, that is.
Indeed they do. The rate you most commonly see tries to measure unemployment in the active labor force. If you're not actively looking for work, you're not counted as unemployed. There are other measures which do count "discouraged workers" and others not usually included. They're much higher.
This article[1] gets into a bit, but
"Some men choose not to work and can afford not to. That’s great, Furman says. But for many, probably most, dropping out of the work force not only means a lack of income but also a loss of the dignity that comes with not working."
still sounds like conjecture, to me.
[1]: https://www.brookings.edu/blog/up-front/2016/08/15/men-not-a...
I don't know if I agree with this. I mean okay, if your house is on fire and your thermometer is showing a comfortable 75 F, you should probably question your thermometer. But in the overwhelming majority of situations, especially involving extremely complex phenomena such as a national economy, one should absolutely not trust their perception or use it to question the validity of empirical evidence that has been collected.
On the first Friday of every month when the Employment Situation report is released, we get new analysis on jobs created, hours worked and hourly wages. This is great information, the only issue is that the hours and wage information is an average, not a median [2].
If economic reality changes to a point where citizens/politicians/economists become concerned with income inequality, this measure begins to lose it's significance. Average wages could increase while median wages fall. It is still "empirical evidence" but it isn't necessarily measuring what we think or want, labor force participation rates before/after women joined the workforce is an example. We should always be questioning the validity of our economic measures over time.
[1] https://www.cnbc.com/2018/09/07/us-nonfarm-payrolls-aug-2018... [2] https://www.bls.gov/news.release/empsit.b.htm
This was explored, but most of the article was about enhancing existing stats:
> She argues — rightly, I think — that the government should not focus on creating wholly new statistics. It should instead change and expand the ones that are already followed closely.
This is basically Anscombe's Quartet -- https://en.wikipedia.org/wiki/Anscombe%27s_quartet -- four completely different sets of points that have the same mean, variance, linear regression, and other stats but plotted out represent drastically different realities.
But instead of abstract datasets, we're saying drastically different underlying economic circumstances for different populations may be reported with the same GDP number.
So a single summary statistic "GDP is up!" without more detailed breakdowns can mean either "everyone is doing better!" or "the investor-class is making bank while everyone else is stagnant or falling behind". The point of the article is one of those seems to explain the populist anger, and our focus on the single summary statistic creates cognitive dissonance and makes the problem worse when people say to themselves "hey, this shit doesn't match what I'm struggling with everyday."
Or perhaps their parents are better off, more people are going to college, so fewer of them are forced to work menial jobs to pay the bills. I have no idea if that's true, but that's kind of the point; you have to dig deeper.
https://www.epi.org/publication/charting-wage-stagnation/
suggests that, in inflation adjusted terms, most workers wages are up a modest amount (6%) since 1979, while the 10th percentile workers have declined by 5% in that period.
The employment to population ratio has fallen 5-6% over the same time period (and 10% from its peak) . It may be recovering somewhat now, but it's not part of the charts and not close to the peak.
https://en.wikipedia.org/wiki/Employment-to-population_ratio
Worse still, comparing to household income, you see that a higher employment ratio is necessary just to maintain the income. That causes childcare, prepared food, and transportation expenses to rise faster than inflation... because even if prices are constant, more people need them. That's ignoring the falling percentage of jobs with insurance and pensions that that also reduce total compensation... it also ignores stock options.
It was common for 12-18yr olds to work part time at groceries, fast food, retail, theaters, delivery to earn gas money or save for a car or college/trade. That is largely gone. Those jobs seem to have been taken by desperate adults and seniors.
That's literally the exact opposite of what the author did. In fact the author painstakingly laid out how the government is doing exactly what you've accused the author of doing.
There are statistics that are being ignored because it does not fit the narrative.
Is to be expected. Easier access to college, general push to get a degree no matter what, plus raising cost of labour (minimal wage, healthcare regulations, etc.) equals drop in participation from youngsters.
There are two ways to spin that; the first and usual way is that we've entered an enlightened new era of services and efficiency where we do not need energy to achieve desired outcomes. The negative spin is that from 1970 GDP growth ceased to be a strong indicator of real improvements.
Maybe the difference is made up in embedded energy in imports; but the US population isn't behaving like a group experiencing exponential growth. Given the industrial base currently in existence, even 2% growth should be crazy improvements on quality of life. Like, for everything an ordinary person had 10 years ago they should have 1.2 things now. Instead the situation could be interpreted as a slow-burn voter revolt brewing against the establishment who run the country. Or I could be clueless.
US was under 2/3 the population in 1970 on top of that stuff like cellphones, cars, etc really have significantly improved. But that stuff generally uses less power to do the same things.
As for the growth story, well. The ordinary person 10 years ago didn't have a smart phone. That's a pretty significant impact on our way of life. Whether it actually improves the quality of our lives is a different question.
Unemployment has a long-known flaw cited in the article, especially relevant in this economy: the significant number of adults who have simply given up looking for work, considering it hopeless, and who are therefore not counted in the unemployment statistics.
Any metric gives you just a tiny, keyhole-like view on the world. A big part of the battle is then to understand what your metrics are blinding you to.
Iraq http://atlas.cid.harvard.edu/explore/network/?country=108&pa...
vs
Vietnam http://atlas.cid.harvard.edu/explore/network/?country=239&pa...
Each node here is a specific product being exported "significantly" for a country of that size.
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So by a similar argument you could look at how similar the population that goes in and out of unemployment (seems likely to me) is every year, and what that implies about policies and job opportunities in the US.
I'm 1,000% for the idea of a statistic that captures a more holistic view of economic improvement.
The problem is, nobody's come up with a single number that feels ideologically neutral, because there's no agreement on what the "right" level of inequality is.
GDP is a sum you can't argue with (and easy to argue that more = better, even if not always true), and likewise unemployment is a percentage you can't argue with (and easy to argue that less = better, again even if not always true).
But even if we separate out GDP by class... it isn't clearly actionable. There's no obvious equivalent of "more = better", because it's clear that wealth increases should be spread out, but it's not clear they should be spread out equally.
The puzzle piece that seems to be lacking is some kind of rigorous justification for what the right level of inequality is in a society. But no political scientist, economist or philosopher has yet developed/proved that in any way that people generally accept.
We can't measure the economy all "right" until we collectively decide what "right" even is.
Also, we need to stop expecting a single number to track. Any metric will always be flawed or managed. People need financial literacy and critical thinking to see the picture from altitude or I suspect many will be easily manipulated via relevant powerbrokers touting message appropriate single statistics.
...but at the same time could be virtually unaffected by bringing the bottom 5% completely out of the worst poverty, which some people argue is the top priority, so I'd be worried about adopting this.
I think we do need a single number though. As soon as you have multiple metrics, nobody knows how to balance them anymore. And it's infinitely easier and more realistic to ask our 'intelligentsia' to develop a more easily digestible metric, than to somehow turn all citizens into financially literate critical thinkers. Most people are too busy earning their salary to support and raise their families, to be able to spend the significant time investment required for that kind of critical financial thinking. It's too much of a burden to ask.
Actually one can. Increase in productivity often comes from an increase in efficiency.
More efficiency means you have spare resources, as you can now do the same work with less effort.
What we do with these spare resources, that's a matter that isn't even discussed, they are pretty much always fully invested in furthering "economic growth" as in GDP, by investing all that spare time we now have, thanks to increased efficiency, into being even more productive for even longer periods.
But how sustainable is all of this? Can Earth sustain a population of 10+ billion humans, the majority of them working full time and for longer times, using up resources at a rapidly increasing rate?
It's a problem of thinking too short term on a global scale, everybody acts like this is some kind of race. But I don't think anybody will like what the finishing line will look like, there won't be prices there for anybody, there will be pretty much nothing.
The alternative view is that all this activity generates innovation and problem solving, which increases th carrying capacity of the planet.
They have their place to drive expansion, and as you say innovation, but I fear we are giving it too much weight. It's a bit like the "super long-term view", we just assume that we will be constantly able to expand and grow.
What lacks in this perspective are the resource restrictions of physical reality. By insisting on constant growth, with barely any considerations for sustainability, it's very likely that at some point in the future we will end up in a resource dead end with no escape.
Case in point: Many of us realize Earth only has finite resources, the common counter-argument to that is that we need to innovate and expand into space, to get at these resources.
By just assuming "We will get there anyway, so let's keep using up Earth resources at increasing rates" we are acting rather irresponsibly because there are no guarantees we will be able to be a sustainable space-faring species.
That's tone deaf. The manipulation to change how it's calculated (always upward!), means it's a sum without meaning in every major world power.
Uh... I think 9/11 may disagree. The financial crisis didn't spawn wars and ISIL.
9/11 made it harder for me to fly, but the financial crisis cost friends jobs.
Global cultural impact of 9/11 and what followed is huge.
And crisis... You can always make more money.
If you were a factory worker in Indiana, it probably hurt a lot to lose your job in the recession and see your home value plummet. If you were supposed to retire in 2008, you also saw your 401k plummet as well. You may not have even fully recovered your net worth at this point. That would be something that weighs on you everyday.
There's a definition of terrorism i've never heard before, probably for good reason.
Terrorism is one of those, but also is negligent greed or general recklessness or other things. All those cost lives and cause property damage.
When you frame it like that you can get out of atavistic mindset of ascribing agency to random things and vengfully looking for reasons why god of oceans hates you. Then you can focus on researching best ways of mitigation and prevention.
ISIL is really a function of the Arab spring, spawned by a general popular Arab uprising, which was spawned by a singular uprising in Tunisia, spawned by a single man committing suicide, spawned by Manning's blind cable releases.
The financial crises was global, and nearly brought the American economic system down, I don't think people realize how close we came to serious disaster. The President handed out 1 Trillion dollars in 'magic dollars' to quelch the system it was crazy. It affected everyone in the world. Almost every American was directly affected.
9/11 surely the biggest geopolitical event.
Your Arab Spring argument is nonsense - ISIL was around in various names before the Arab Spring. A simple look at the calendar for the events shows this.
ISIL and the various other groups from whence they came had no material presence until the Syrian uprising, which was part of the Arab spring. They were a small band of angry nobodies before that.
During the Syrian uprising, those groups coalesced and came to power, taking territory, getting funding, bringing in foreign fighters. Even if they had origins elsewhere, 'they came to be' during this time, in Syria.
Iraq materially comes into the picture later, when Obama withdrew American forces form Iraq, which enabled then Iraqi PM Malaki to purge government of Sunnis, deepening the rift between Sunni/Shia, as you mentioned.
Then ISIL effectively came into Iraq - as the local Sunni tribes in Iraq turned their back on their own antagonizing government, and allowed ISIL in.
If Obama had of left 10K troops in Iraq, behind the wire, giving him enough leverage with the Iraqi PM so as to be able to contain the Sunni/Shia animosity (as they had done up until that time) - then there would have never been any ISIL incursion into Iraq and the state would have remained intact.
Whatever we think about the 2003 invasion, there is no amount of 'US competence' which would completely disable small groups of dudes from forming some degree of insurgency. Any country invading any other always faces this kind of opposition.
Without Manning's cables, there wouldn't have been an Arab Spring, without that in Syria, none of us would have ever heard of ISIL. I'm not promoting or defending Manning, just indicating the course of events.
Genuinely curious, do you have any good sources that explain how the cable releases triggered this set of events? I understand that Manning/Assange have jeopardized some US intelligence efforts (and lives), but not aware of any greater fallout beyond a handful of compromised operations and deaths (no small feat, but smaller than ISIL).
What the cables did however - was demonstrate to regular Arabs how deeply corrupt their own leaders were. Basically, they saw the Americans trying to appease, nudge, console, 'do the best they could' with some corrupt folks.
I'm sorry to not have direct sources, it was years ago when I was abroad, paying attention to all of this. Edit: I added a couple of sources below, it's not a conspiratorial view.
https://psmag.com/news/tunisian-activist-describes-mannings-...
https://medium.com/@ifikra/chelsea-manning-and-the-arab-spri...
http://www.worldaffairsjournal.org/article/wikihistory-did-l...
It is lifeboat "reasoning" at the tribe level.
Econ 201: Immigrants are consumers too. Adding more demand for some thing (consumers of products) will increase the price of that thing (wages of producers).
Almost everyone agrees that growing the economy is good. When a child is born, we don't lament how that infant will be driving down wages when they reach adulthood.
There is nothing different about immigrants. They are full participants in all sides of the economy.
The real reason that immigrants are a threat to American workers is because they will accept shittier jobs. They drive down quality of the average job because they are more willing to suffer. But that's not a problem with immigrants, it's a problem with our worker protection laws and how they are enforced. Neither immigrants nor non-immigrants should have to pee in cups to avoid leaving the assembly line, work full time without benefits, have unreported workplace-caused injuries, etc.
Immigrants are always consumers; they also tend to nearly universally be workers. So, they're not increasing demand for products in isolation; they're also increasing the supply of workers.
So of several problems the propaganda machine picks the most convenient.
FWIW. Just my read on the situation.
Only in the US, which is arguable. Every person in the US is affected by the 2008 events every month. 9/11 is hardly a blip in most of the US, outside of the lukewarm media attention about tangentially related eventualities.
Americans get very upset when they don't opt-in to risk and end up being exposed to violence unwittingly, but that's life. It's no more or less tragic than when you get diagnosed with cancer. 40k people die in car accidents each year. 5-10k die of a terrorist attack almost 20 years ago. It's immoral to worship one single tragedy that pales in comparison to those ongoing. I live with the solace that those who are born after 9/11 will have a saner perspective.
The Lucas critique is the other commonly associated one: https://en.wikipedia.org/wiki/Lucas_critique
Our economic statistics are way too broad and just don't account for the inequality in today's economy.
And now I want to stop reading.
Okay, I still finished it. But it really turns me off to sell a lie by constantly throwing one-off assertions of it into random unrelated places, where it is supposed to feel out-of-place to notice it and argue against it.
The other because macro numbers such as CPI and unemployment rates only tell a high-level story, not the one that mattered - which is, what is happening to ME?
But it should be hypothetically possible nowadays to compute a useful individual CPI based on individual buying habits.
Same goes for taxes - it should be possible to determine how much of one's spending power goes to taxes - income, sales, inclusive taxes such as excise/VAT, etc.
Regarding jobs, it might be possible to develop an "employability" stat based on one's current job, age, and maybe location.
He makes numerous data gathering errors that all seem to make his conclusion stronger. Example: http://piketty.pse.ens.fr/files/capital21c/en/media/FT230520...
His theoretical remarks are so flippantly nonsensical (the difference between growth and interest rates being a secular gravity-like driver of inequality) that the data issues come across as bad faith.
A number of these were caught by the financial press at the same time.
[0] https://www.brookings.edu/blog/up-front/2016/08/15/men-not-a...
http://cepr.net/blogs/beat-the-press/does-france-s-economy-n...
" For prime-age workers (ages 25 to 54), according to the OECD, France's employment rate is actually slightly higher than in the United States, 80.4 percent in France, compared to 79.3 percent in the United States."
https://stats.oecd.org/index.aspx?queryid=36324
Unemployement rate 25-54 year old is 8.1% in France and 3.3% in the USA.
So less than half the "unemployment rate" for less people working relative to this population.
A few decades worth of "inactivity" rise explaining this result (in french but graph subtitles in english):
http://guerby.org/blog/index.php/2010/01/31/211-larry-summer...
Ask your friend studying economics wether they know this data point or not. :)
If we throw away the top 1% of incomes (and the bottom 1% as well to be fair) how well has America actually recovered from 2008? I can't imagine it looks nearly as good.
2000: Enrolled: 31,743,700 | % of country: 11%
2010: Enrolled: 50,314,600 | % of country: 16%
2018: Enrolled: 73,355,220 | % of country: 22%
Although there was an expansion in Medicaid in 2009, these numbers are still showing there are more people who can't afford the basics.
The US does it, and it's used as proof that the US is collapsing. Under your premise, if the US moves to universal healthcare it implies total economic collapse.
Medicaid didn't exist in 1960, that doesn't mean things were great for poor people back then, it was in fact far worse (see the homelessness and poverty rates back then, they were nearly twice what they are today). The US barely had any social safety net 50 years ago. Now it has one of the best social safety nets in the OECD and it keeps getting larger and more inclusive.
So which is it? Do you want free healthcare for more people, or do you want to take that away from everyone so we can pretend nobody actually needs it?
Beside that, healthcare expenses per person have roughly tripled in 20-25 years. Even the immense US median income levels - among the highest on earth - can't sustain that rate of increase. It's hardly an issue of affording the basics: when healthcare costs an average person $10,000 per year, it's clearly far outside the realm of being a basic.
In which developed country can poor people afford that healthcare cost? None. The middle class in most developed countries can't come close to affording $10k per person in healthcare expenses per year. Countries like Britain, Finland, New Zealand, etc. are at less than half that cost. About half of the EU would fall under Medicaid's income line.
What I'm saying is people are not able to afford healthcare and defaulting to Medicaid at a high rate. I think this is an interesting measurement of people who are falling outside of the planned economy. In the US, you "should" be able to afford heathcare, that's what is planned for. But, now we have almost 20% of citizens relying on Medicaid.
In states that adopted Medicaid expansion, that usually means 100% to roughly 138% of the FPL. The FPL for a single individual in the 48 contiguous states + DC is $12,140.
Workers whose income is above the FPL cannot default to Medicaid, even if they cannot afford to buy insurance.
No, it's not. Medicaid (both the original design and the ACA expansion) is exactly a recognition that everyone being able to afford healthcare is simply unrealistic.
The people who spend the most capital (money/time/talent) measuring/sciencing a thing will always be the people who can profit from that thing the most, and they will measure/science it in the capacity that provides the highest returns.
Lots of other people will measure/science the thing, but they either will have their own agenda or do the measury/sciency part less good.
Second, renewables are close to being able to take significant load off of fossil fuels. Already coal use is declining (at least in America), and not because coal got scarce or expensive.
For example, what is the economic value of our coasts and how do you account for their destruction, by sea level rise, when calculating the cost of manufacturing and the value of any resulting economic activity.
- it's good for a company to sell a ton of crappy cloths that don't last long and the production of which has terrible environmental impact
- it's good to produce a ton of low quality eggs and sell them
Sure, externalities are a problem, but the ability of the market to deliver quality doesn't seem to be.
For the US, I propose 3 major indexes of Life, Liberty and Happiness.
Each of these could accommodate a large number of sub-indexes from a variety of political perspectives.
For example, Liberty might include a metric for access to safe, legal and affordable abortion while Life might contain numbers on actual abortions performed.
Life: mortality rate, birth rate, life expectancy, health spending, etc.
Liberty: drug laws, gun laws, people in jail, freedom of press, etc.
Happiness: mental health, life satisfaction, depression, etc.
Thoughts?
What measures would you include?
With this current administration (Trumpy and previous administrations before him) have been ignoring this swamp-filled problem. So much so that in August, the current administration added $214 billion to the deficit.
We are on our way to adding $1 trillion a year to this country's deficit. $1 trillion is an insane number: http://www.pagetutor.com/trillion/index.html
We are now over a 105.4% Debt-to-GDP ratio. If you as a citizen make $1 and spends $2, you're officially bankrupt! The U.S. government can measure all it wants, but we cannot continue to ignore the current situation. The reason Trump got elected in the first place was that his constituents thought he would be the man to address the "swamp." But nope.
Not exactly, if I've got resources banked to cover the gap.
Unfortunately, the resources we're selling to cover the present excesses are the tax receipts of future citizens, and they would probably prefer to have those funds to cover other priorities.
Granted, all your dollars would be buy about 1/20th as much as they did before, but the US would be debt-free. (There are other problems with printing $21tn dollars that I'll leave to actual economists to point out.)
Economist have always known GDP isn't perfect, but it is the best measure we have or that has been devised. That is taught in the first few economic courses if you become an econ major when you're covering GDP.
I think the biggest danger in how we analyze the economy is that we need to be aware that many of our leaders have an incentive to always report good news about the economy.
The core idea behind policies intended to increase employment, credit availability, etc., is that the government should act to help actors in the economy become more leveraged. Or in other words, that a higher output can be achieved if risk premiums are kept in check through policy action.
Why? Because a bunch of unemployed, suffering people will eventually lead to a political revolution, and so political stability is a significant driver for economic stability and long-term planning.
Arguably, long-term planning is the bedrock of the financial system. It allows trading between the present and future, and arbitrage between possible futures. Political risk/instability adds an additional cost to long-term planning.
So as a result we have welfare economics, targeted both at individuals and firms. The political notion of social welfare is used by planners to create a set of meta-strategies that benefit the recipients.
The problem is that when you connect politics to economic policy you end up with groups that gain status (and power to influence the policy) as a result of the policy. So the policy changes and groups of beneficiaries compete for rents.
Why did the 2008 financial crisis happen? Because economic policy-makers believed that they understood the safe bounds for certain systemic risks within the system. They ended up getting those bounds wrong, and so it came to pass that a lot of other "normal" risks were drastically mispriced once the bounds were exceeded, since their prices had been based on the assumption of asset price stability.
The rest of the details have to do with the many other mechanisms that suffered a cascade of failures due to the bounds set by regulators being exceeded.
Normally, firm insolvency/failure can act as a circuit breaker to stop the effects of a price correction from spreading to the rest of the economy... but the key point is that the pricing assumptions were baked into the rules themselves, so securities of mortgage backed securities were allowed to be treated as underwriting capital by financial institutions, etc.
Sadly, there is no free lunch. Growth-oriented policy will always contain some core assumptions about system invariants that are not necessarily actually invariants. The time horizon for policy mistakes is longer than the typical term in office for those making the rules, so there is no incentive to adopt a more risk-averse view.
Of course, what has happened since 2008 is that the financial system has once again figure out ways to use cheap credit to make profits with little apparent risk. But just as it was the case before 2008 there are still many assumptions about systemic risk baked into the pie.
So this article is timely because of Trump's economic populism and the apparent rise of left-wing economic populist candidates. The article calls for more populist economic metrics. But what is not explicitly stated by the article is that the reason for this is simply to reduce the risk of populism-driven economic shocks that might exceed the bounds baked into the core assumptions used by the regulatory regime.
In other words, there is a call to reformulate the metrics so that they better reflect populist sentiments, and the corresponding implication that policies ought to shift to make these metrics show "good" numbers.
This article comes as part of a series of statements by former Fed and Treasury officials warning that the tools are not adequate to address a future crisis.
Since a crisis will come in the form of significant price corrections, and since the interventions post 2008 prevented a lot of price corrections that were probably appropriate, we can infer that a future correction will be larger than the one in 2008. Combine this with rising tides of economic populism, and it is clear why all of these experts are suddenly calling for a fundamentally different approach. They must be quite convinced that the next correction could bring massive social and political upheaval that dwarfs what we have seen post 2008 with Brexit and the rise of Trump.
Note that a map of the US shows that most counties are "red" and likely find the economic populist message of Trump highly appealing and relevant. Economic populism is dramatically more widespread now than it was in 2008. But prior to 2008 real estate price appreciation in a lot of historically red states led to feelings of affluence and contentment with the status quo. I've argued separately that GWB allowed the real estate bubble to grow a few extra years to help sell the war on Terror. The GSEs (primary underwriters of most mortgages) were not held accountable for failing to produce financials for several years in a row during that time.
So policymakers are now realizing that none of those tools to make people feel complacent are at the ready when the next correction comes, and they are fearful of the political consequences which are nearly inevitable at this point unless measures are put in place now.
CNN for example is like some kind of insane clown tripping on acid these days, with its commentators routinely saying the craziest shit I've ever seen out of the mainstream media (eg calling for the President to be coup'd by the deep state, or openly advocating for political violence). Once upon a time, they actually had a good reputation for objective news reporting.
My personal opinion is that the economic crisis make things worse, and made a lot of people discontent with the current system, but that Russia has been very busily trying to make them more discontent, and trying to push them either to the right or left extreme. The concerns are real, the problems are real, but the trolling is making things considerably worse in terms of political stability.
Our goal should be to increase wealth in general and ensure that the median wealth per capita increases or steadily increases for various segments of the population. Ideally, you would have faster median expansions in lower income segments of the population but in my mind, even if the top %1 had an increased wealth per annum of say 0.05% and the lowest had a lesser increase of 0.02%, I would still prefer that (assuming we've controlled for PPP, inflation, etc) than a system where the poorest increased at 2% a year, the richest dropped -2% and our overall economic productivity declined or stayed roughly the same year after year.
Overall, though I agree with the author in that too much emphasis (in the news at least), is put on GDP. Its still a useful indicator of productivity in an economy and from an investment perspective, but there are as he rightly mentions many qualitative properties left out of this one measurement. Which is kind of always the case is it not? Every time we measure something it measures a specific thing which we decide to interpret in a particular way, its funny how often we generalize that act to areas for which the original measurement was never designed.
I agree with you. First, historically speaking, large disparities have led to revolutions and countless atrocities. Also our neural cortex isn't so highly evolved that it doesn't bow to the will of our chimp brain most of the time anyway, which is just to say we have a plethora of evolved intuitions and feelings. However, just because we have some innate biological sense of right or wrong or good or bad, that doesn't necessarily mean we should advocate for that in a normative way.
That was kind of my point. If we are going to build a better society I think it is important what normative values we strive for since we are not completely controlled by our impulses and those values will certainly have an effect on the systems we design and the relative effectiveness or lack thereof.
2. wealth is expanding the fastest for the higher income brackets. the lower income brackets are barely holding ground.
3. i already hinted at this: relative wealth equals relative power. if everyone has $1 that they can disposably donate to a politician's election campaign, the guy with $2 has twice the influence of a person with $1. this means that the guy with $2 has a much higher chance to affect the rules of society such that their $2 becomes $3 at the expense of everyone else. this is the way things work. the higher the economic inequality, the higher the political inequality.
Its hard to discuss any of the things you mention since it all depends on what particular system you are looking at. If we constrain ourselves to the US system we're still going to have massive differences even within states and within counties within states. That doesn't mean many of the subjects you mention aren't issues, but you're confusing a state with a cause IMHO.
We could make ourselves all almost perfectly equal tomorrow by destroying all wealth and living as hunter-gatherers again. That wouldn't solve any of the problems you mention though. So clearly, inequality is not a fundamental issue underlying all these problems.
Personally, I think the major factors will vary depending on the context and problem domain. For access to healthy affordable foods, it could be something as complex as subsidizing or taxing various agricultural products, or as simple as removing all subsidies and tariffs and letting cheaper foreign made produce flood the markets.
With your third point, that certain people attempt to use power - which is a function of many factors not just wealth - to manipulate the laws and the system to their own advantage is something that is remarkably well documented in the political science and sociological literature. I'm not sure what the best approaches are towards mitigating this. Certainly, high degrees of transparency and accountability as well as a swift and well functioning judicial system would be my first guesses at the largest factors, based on my experiences with South American and European economic data. Personally I think the more checks and balances i.e. decentralization of the concentration of power mechanisms (i.e. ability to tax, ability to imprison, etc.) the system allows for is another key factor.
People sometimes look to Star Trek as an example of a utopia, but think about what would really happen. Have you ever thought about the rank and file that spend their life merely taking orders from the captains and admirals, unable to ever make their way up to ever being able to be anything more than redshirts? And we're already talking about the elite there! Imagine the people that couldn't manage to get through Star Fleet! A tiny minority of elite individuals get to spend their days seeking out strange new civilizations and boldly going where noone has gone before, while the rest of society tries to provide some meaning to an empty life in a fake reality in the holodeck before going home to consume fake food from their replicator. There would be huge movements against the inequity and against the privilege of these elite. Star Trek did briefly hit on this issue, once, in the episode Tapestry. A brief clip of it. [1] A longer cut of the ending scene there. [2]
more importantly: who would be the one going to war if the political situation called for it?
inequality isn't something to be brushed off, it's the primary issue assuming we're a democracy. absolute wealth doesn't grant you influence.
Rich and poor are always tied to purchasing power which itself is tied to productivity, efficiency and innovation within an economy. (as well as the traditional price theory, demand/supply, etc.) I used rich/poor because those are simple terms everyone can understand more easily than PPP or Genuine Savings, etc. (however, wealth is a better term I should have probably used in its stead)
For instance, the phone you can buy and hold in your hand today for $200 is vastly more powerful than the most expensive IBM mainframes of just 20 years ago - A CEO of those times could not even afford the simple phone many refuges have in their Rucksacks these days. Are they rich because of this? It depends on what particular measurement for "rich" you are using.
To answer your question. Yes, ceteris peribus if everyone gets more money instantly (i.e. money supply increases) all prices will rise accordingly and there is a net null effect, however, and this is key, if that increase is in wealth i.e. capital assets, productivity, everyone is better off and prices will increase according to traditional demand-pull.
Do you think we should be aiming for something more akin to the labor situation in Europe, or do you think there's a different method by which we could create wealth for everyone more equally than today?
So long as everybody is improving their life, and can see things improving (or say they are not interested in the improvements - like the Amish)
The poor today have different problems than medieval peasants. Their lives are better in a lot of ways but not all ways. Medieval peasants had a much better idea of their place in the world, their relationships to their friends, family, community, and church. Today so many people are isolated and dying of depression.