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Comment by nerdponx | Hacker News Reader

You could also come at the problem the other way. If incomes were keeping up with productivity and cost-of-living, people wouldn't be relying so heavily on their homes appreciating in order to have enough money to retire.

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I agree but there is another factor, that is the ability for income earners to effectively save for retirement. Artificially low interest rates forced savers into the stock market, which caused equities to be artificially high relative to their yields, creating a positive feedback cycle where there was no alternative to 'saving' via stock investments and causing corporations to be able to ride a tidal wave of investment without justifying it via dividends. This is all downstream from cheap credit and a lack of incentive to save money (defer consumption) and now we are faced with the unintended consequences of decades of short-sighted monetary policy.

> If incomes were keeping up with productivity and cost-of-living

Something's got to pay for all that increase in government spending. With all the government spending and government pensions and all the people on the government payroll, sometimes I'm surprised the economy isn't a complete basket case.

The extra productivity isn’t going to the government via taxes on the common person, it’s going to those who already own most of the capital and can leverage that. Maybe the government also spends too much, but that’s not the root cause of the lack of the common person sharing in productivity gains.

It's going to the government one way or another. Taxing the wealthy reduces the amount the wealthy invest and hence can pay employees.

Why do you think government spending specifically is the problem? I strongly doubt there is a crowding-out effect going on with the things that the US government has been spending money on lately. And all that spending has been financed by debt; it's not like income taxes have been going up. The big increases to cost of living have come in the form of energy, housing, and healthcare. I'm not sure how government spending would cause that, unless you are arguing that the spending has been misallocated.

> Why do you think government spending specifically is the problem?

There's no such thing as a free lunch. Government spending always gets sucked out of the economy one way or another. Ultimately, everyone pays for it with a lower standard of living, directly or indirectly.

As for the government financed by debt spending, the cost to you is inflation.

No spending is not sucked out of the economy. The government doesn't take your taxes and light the money on fire. They pay for public works that you use every day. They hire people to create such works and maintain them. Those people take their wages and spend it in the economy and support private businesses.

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