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Comment by supernovae | Hacker News Reader

I find this disappointing because it basically says "anyone who works for a W2 will cause inflation if they are successful"

That shows to me that capitalism is broken if success means inflation. We should be able to swim in cash reserves and safety and not be penalized for it.

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> it basically says "anyone who works for a W2 will cause inflation if they are successful"

Then take comfort in that armchair analysis being wrong. If it were true, if FAANG employees’ pay were driving inflation, we’d expect to see local inflation correlate with FAANG employment.

It does not. In fact, almost the opposite is true, with inflation in the interior outpacing that on the coasts [1][2]. (Shipping.)

[1] https://www.bloomberg.com/news/articles/2021-11-11/inflation...

[2] https://www.jec.senate.gov/public/index.cfm/republicans/anal...

Isn’t this a result of inflation in the interior finally catching up to the ridiculous pace that the coasts have had as coastal money flees inward due to WFH and unaffordable housing prices?

My armchair analysis is that we have heavy inflation in what were low-mid CoL cities as the big money remote workers cash out of the coasts for cheaper locales

Or in other words, the rest of the country catching up to the big cities

No idea if this is the truth of course

> we have heavy inflation in what were low-mid CoL cities as the big money remote workers cash out of the coasts for cheaper locales

Internal migration is too slow and too small to explain the interior’s price shocks. Also, it’s not like the coasts are withering away. Real GDP growth in California and New York was better than the national trend in Q1 2022; the interior saw the worst of the real economic shock [1].

[1] https://www.bea.gov/news/2022/gross-domestic-product-state-1...

>Internal migration is too slow and too small to explain the interior’s price shocks.

As anyone who paid any attention to the housing market in the past 2yr knows, if you have 10 houses and 11 buyers...

>the interior saw the worst of the real economic shock

That places that have economies that are more dependent on physical goods, services that cannot be performed remotely and high volume low margin types of business (which are heavily affected by supply chain stuff and commodity prices) should not surprise anyone.

How does any of this relate to testing the hypothesis of FAANG employees driving inflation?

My primary point was that the extra demand caused by FAANG driven monopoly money suddenly sloshing into these other markets could easily cause prices to increase far beyond what the dollar values and number of people would make you think because supply for all sorts of things is not elastic enough over a short enough time period.

At least in housing, this seems to be the case... In cities like Seattle, the DMV area, etc., I hear about price decreases and homes sitting on the market for weeks.

Where I'm located(east coast LCOL area), we still compete with ~15 bidders for every house, and they're still reliably selling within 2-3 days for 10% over asking, all cash, with inspections waived.

Obviously part of this is a supply issue, but, I have a strong suspicion the rise of remote work is a contributor to price increases near us. We live a short distance(~1-2 hrs) from several major metros, and with the flexibility to go into the office only a few days a month, It's feasible to take a much higher paying job in somewhere like NYC and commute. Local wages for engineers here are/were also much lower than what was offered for typical remote roles, so I'm sure that's causing an additional upward pressure

That is not at all what is going on here…it’s not the people with all the money, it’s the underlying monetary policy(little to no interest rates for a decade combined with money printing) that led to those people having that money. If a tech company couldn’t borrow cheap money early on, they couldn’t afford those wonderful compensation packages.

Google’s profits have vastly outstripped the money invested into it. They could have borrowed at 20% and still been wildly profitable.

The argument is that without cheap money, Google/FB's customers wouldn't have the cash to plow into ads.

Apple, Netflix, Amazon, and Microsoft aren’t advertising supported and while Google does profiting from cheap money Google’s margins are insane. So, they can take a significant reduction in revenue without changing their business model.

I keep getting YouTube adds for the same kind of things I have seen on TV. Tide pods, dish soap, toilet paper etc alongside Door Dash’s attempt to recruit workers. They would definitely make less money without door dash but not enough to matter. Much like how startups keep splurging on Super Bowl commercials but the Super Bowl would still make lots of money without them.

I would not describe it as broken.

It could simply be a consequence of the parameters of nature not offering humans unlimited energy and resources.

While I agree with the premise of finite energy and resources here, I don't agree that current systems are an inherent consequence of it. It's the way we as societies have allowed things to be structured. They don't have to be structured in such a way. Energy and resources have various allocation models that can be adopted, we just seem to be moving right back to the darwinistic models more and more which makes me question the stability of societies in general, especially as allocation systems tend to deviate away from natural allocation systems yet remain darwinistic.

If we continue along competitive models for allocation to the end, we're right back where humans started before forming societies except in an articicial darwinistic model which I'd say people are increasingly rejecting, so we need to start thinking a bit more about more equitable allocation systems than we currently have. Right now, I'd say the general population is pretty fed up with existing allocation systems.

> While I agree with the premise of finite energy and resources here, I don't agree that current systems are an inherent consequence of it. It's the way we as societies have allowed things to be structured. They don't have to be structured in such a way.

Yes, I do not see a problem with capitalism coexisting with a wealth transfer mechanism to constantly “reset” the game a little bit to prevent extreme disparities. Well, other than the fact that humans would have to allow it to occur.

Any attempts to do that generally end-up with the smaller business owners being "reset" by the .1%, while the W2 class drink kool-aid

> If we continue along competitive models for allocation to the end

Competition is a very strong motivator for progress. Even if you didn’t embed it formally within a society, I bet it would very quickly arise and build upon itself.

Anti-competitive practices are the cornerstone of unregulated societies (via mafias), but it certainly would in the (theoretical) absence of that. It's a fundamental property of entities that try to achieve things, of which humans are the prime example.

You can still have competition and create competitive forces that drive and motivate people, they don't have to be tightly coupled to fundamental energy and material resources needed for survival, or, they can follow classic models that assume necessary baselines for enjoyable survival levels for everyone and then provide luxury allocations for competitive successes. There's all sorts of options out there instead of directly mirroring natural selection in abstract human created systems.

Since when capitalism is defined as a system where governments intevene into the market forces to bail out losers by unbacked printed money?

The argument is about zero interest rates, not success or capitalism.

But perhaps those are somehow related.

Oh, they are perfectly related.

as opposed to China's economy, by example?

The moment a centralised institution controls interest rates, and has the ability to buy government debt (in other words finance government spending without the market buying bonds), you are NOT talking about capitalism, but about government controlled markets.

> finance government spending without the market buying bonds

According to https://www.thebalance.com/who-owns-the-u-s-national-debt-33...:

“The public holds over $22 trillion of the national debt. 3 Foreign governments hold a large portion of the public debt, while the rest is owned by U.S. banks and investors, the Federal Reserve, state and local governments, mutual funds, pensions funds, insurance companies, and holders of savings bonds.”

> The public holds over $22 trillion of the national debt.

This is amazing. A very few seem to realise that it says the public buys and holds a promise on a future productive capacity of that same public. It's as if I paid another person for the privilege of promising myself to behave and work for that person overtime in the future.

Ok, but the fed bought bonds on the market and artificially drove down interest rates doing so. And also financed part of government debt.

I don’t see how the holdings of it matter, that’s completely different to the bonds being sold on the open market, which the fed was buying

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