That doesn't explain why inequality within the US keeps growing. As a whole the country is doing well but somehow the benefits go a small number of people while everybody else is stagnating.
We’ve also had a combination of tax and regulatory policy that has encouraged capital formation and increasing returns to capital, so labor’s share of returns has decreased.
To add to that, capital is exponentially more portable than labor. With globalization, capital in the form of investments can move wherever it needs to to grow, it's borderless. Labor however, in order to grow wealth has to physically move. Remote jobs for basic labor doesn't exist - that's almost exclusively knowledge work.
So if you're a coal miner, your ability to create wealth is extremely limited to certain physical places. If you're a remote Java dev, you can code from anywhere and grow wealth much easier, but there is a serious time cost to switching work. If you're an investor and just need to drop money into an account, not only can you do it from anywhere, you can move things around more or less immediately with little (relative) cost.
It's about portability of the thing that is growing the wealth. Labor = slow, Capital = fast.
Sure it does. US consumer demand rises after WWII because of GI bill & repurposing of capital -> competition drives prices down -> Securities & Exchanges Act essentially mandates firms optimize for returns to capital as a fiduciary duty to shareholders -> producers look to countries where standards of living demand lower wages to maintain market positions -> US jobs decline but shareholder value grows -> wealth concentrates in the hands of those who have the opportunity to be a shareholders
AndrewKemendo|6 years ago
We’ve also had a combination of tax and regulatory policy that has encouraged capital formation and increasing returns to capital, so labor’s share of returns has decreased.
To add to that, capital is exponentially more portable than labor. With globalization, capital in the form of investments can move wherever it needs to to grow, it's borderless. Labor however, in order to grow wealth has to physically move. Remote jobs for basic labor doesn't exist - that's almost exclusively knowledge work.
So if you're a coal miner, your ability to create wealth is extremely limited to certain physical places. If you're a remote Java dev, you can code from anywhere and grow wealth much easier, but there is a serious time cost to switching work. If you're an investor and just need to drop money into an account, not only can you do it from anywhere, you can move things around more or less immediately with little (relative) cost.
It's about portability of the thing that is growing the wealth. Labor = slow, Capital = fast.
zebrafish|6 years ago
moorhosj|6 years ago