On Illiteracy

Reader JohnH writes about the discourse on Econbrowser:

Amazing the Krugman’s minimalist treatment of inequality far exceeds what I see mentioned here!

For his edification, I’ll reprint a 2011 post.

Dismissing the plots of income inequality in previous posts [0] (related posts [1] [2]), an Econbrowser reader asks:

“Do you concur that measures of the wealth distribution have been mostly quiescent since the 1970s and that the distribution of wealth is more even today than it was in the 1940s (the peak for the US modern era)?”

Well, I think that this is an interesting question, and so I went a-searching for data. This is what I found, which led to my answer of “no”.

 

wealthineq.gif

Figure 1: Wealth share of the top one percentile, from Kopczuk and Saez (2004) (blue +), and from Kennickell (2009) (red squares). Source: Kopczuk and Saez [xls] and Kennickell (2009), tables A3a-g.

I don’t see the peak in wealth associated with the top 1% in the 1940’s as the reader asserts (looks like around 1930 to me), but I’ll leave that aside. As far as I can tell, inequality in 2007 exceeds that over most of the 1940’s. A caveat is necessary, because we have a 2007 estimate by Kennickell based on Survey of Consumer Finances, and 1940’s estimates by Kopczuk and Saez based on Estate tax return data. Nonetheless, similar movements and levels over the overlapping time periods suggests that the series are not completely non-comparable.

The last two red squares are at 2004 and 2007, respectively. Note the big jump going from 2001 to 2004, and the plateau to 2007.

It’s interesting to see what the authors concluded from their studies. From the abstract to Wojciech Kopczuk and Emmanuel Saez, “Top Wealth Shares in the United States, 1916–2000: Evidence from Estate Tax Returns,” National Tax Journal 57(2) part 2:

This paper presents new homogeneous series on top wealth shares from 1916 to 2000 in the United States using estate tax return data. Top wealth shares were very high at the beginning of the period but have been hit sharply by the Great Depression, the New Deal, and World War II shocks. Those shocks have had permanent effects. Following a decline in the 1970s, top wealth shares recovered in the early 1980s, but they are still much lower in 2000 than in the early decades of the century. Most of the changes we document are concentrated among the very top wealth holders with much smaller movements for groups below the top 0.1 percent. Consistent with the Survey of Consumer Finances results, top wealth
shares estimated from Estate Tax Returns display no significant increase since 1995. Evidence from the Forbes 400 richest Americans suggests that only the super–rich have experienced significant gains relative to the average over the last decade. Our results are consistent with the decreased importance of capital incomes at the top of the income distribution documented by Piketty and Saez
(2003), and suggest that the rentier class of the early century is not yet reconstituted. The paper proposes several tentative explanations to account for the facts.

Piketty and Saez’s data sample ends in 2000, before the last boom. What do we glean from more recent data? From Arthur Kennickell, “Ponds and Streams: Wealth and Income in the U.S., 1989 to 2007,” Finance and Economics Discussion Series paper No. 2009-13

Much discussion treats the working definitions of wealth and income as if they were self-evident, but definitional choices can make substantial differences in the overall picture. To provide a clear basis on which to examine family wealth and income their interrelationship, this paper begins with a basic discussion of a range of possible measures of those concepts. Using the measures developed, the paper examines the distributions of wealth and income and their joint properties using data from the 1989–2007 waves of the Survey of Consumer Finances (SCF). Among
other things, the data show a complicated pattern of shifts in the wealth distribution, with clear gains across the broad middle and at the top. For income, there is a more straightforward picture of rising inequality. Over this period, wealth as a fraction of income moved up across both the distributions of wealth and income. Nonetheless, their joint copula distributions (a type of distribution with uniform margins) do not show noticeable changes over this time. The consistent pattern is that very high wealth and income and very low wealth and income go together, but in between these poles, the relationship is fairly diffuse. The paper also presents information on the composition of wealth and income over the 18-year period; the general patterns of holdings across the distributions did not
change markedly, but there were some important shifts. For wealth, debt increased as a share of assets across the wealth distribution, the share of principal residences rose mainly below the median of net worth, the share of taxdeferred retirement accounts rose and the share of other financial assets declined. For income, the clearest change was a general decline in the relative importance of capital income other than that from businesses.

For completeness’s sake, I reprise this graph of income accruing to the top 1% and 5%, calculated in a manner comparable over the period 1913-2008:

plight1.gif

Figure 2: Pretax income shares (including realized capital gains) accruing to top 5% of households (blue line) and to top 1% (red line). Source: updated version of Piketty and Saez (2007).

In addition to that post, I seem to recall discussing a CBO assessment on the topic of income inequality, written about the minimum wage and inequality, had a guest post on the topic, and on monetary policy’s impact, recounted Dr. Yellen’s views, contrasted a democratic vs. plutocratic CPI, presented some information on the BEA’s distributional national accounts, how inequality drives down interest rates, among others. In other words, I find it offensive that JohnH characterizes this blog’s coverage without actually reading its contents.

Recall, this is the same JohnH who thought that the US government did not report information on median real earnings, who thought real wages rose during Cameron, cannot figure what is a record high natural gas price, and thinks one year lagged inflation is a good proxy measure for long term expected inflation.

In any case, I am forced to conclude that this gentleman is illiterate.

 

 

61 thoughts on “On Illiteracy

  1. Macroduck

    George Bernard Shaw definitely had Johnny in mind when he said “Never wrestle with pigs. You both get dirty and the pig likes it.”

    I’m guilty, too, but I’m a sideshow.

    Menzie, you don’t owe Johnny anything. His shtick is built on dishonesty. There is no response that will prevent his next lie.

    Just look at the sentence you’ve quoted:

    “Amazing the Krugman’s minimalist treatment of inequality far exceeds what I see mentioned here!”

    Johnny’s characterization of Krugman’s “treatment of unequality” is dishonest. His comparison of Krugman’s interest in inequality to yours is dishonest. Each is dishonest in the same way; Johnny has set himself up as the judge of all things, and his judgements are completely dishonest, based on nothing but his desire to score cheap points. He judges entire professions, individuals, political movements, countries, industries, publications and pundits with no concern for the truth. Johnny claims not to have watched Tucker Carlson, but behaves just like him.

    You provide a valuable service. No fair-minded person reading this blog needs to be assured of your honesty as an economist or a person. Those of a different frame of mind, and there are several who regularly comment, are unlikely to care one bit that you can back up your claims.

    Let your readers take out the trash, unless you just get a kick out of it.

    And thanks for what you do.

    1. Menzie Chinn Post author

      Macroduck: I want JohnH to keep on posting because he is my prime example for my students of how mendacious and stupid a person can be — I mean after all, who else can claim the government doesn’t publish any median earning series even as it publishes three. I thought I’d seen the limits with CoRev, but JohnH has moved into even.

      1. CoRev

        And there’s even another example of what living in others head looks like. I thought I’d seen the limits with Ole bark, bar, Macroduck, baffled, noneconomist, etc, but Menzie has established himself as a contender for roomiest head for squatting. 😉

        Just refute what I say. The defensiveness of the liberal mind is an amazement.

          1. CoRev

            Menzie, futures or soybean futures? Wasn’t there a product caveat with your model?

            The defensiveness of the liberal mind is an amazement.

          2. CoRev

            Menzie, ” Still waiting for your acceptance that futures have predictive power. Wow.

            and
            “Soybean futures, although you critiqued the use of futures generically as well.
            So you admit of misusing general term “futures” instead of the specific soybean futures. As I’ve said the use of fuzzy definitions/language is not an indication of clarity of thought.

            It reminds of the misunderstanding of use of the term “hiatus” versus climate change.

            Next time teaching a class using examples of those who challenged you, please use this example of YOUR inaccurate, fuzzy, misuse and misunderstanding of basic terms. Something you frequently claim others do.

            Living in these fuzzy, defensive liberal minds is an amazement.

        1. pgl

          You have become worse than Gregory Bott. Learn to write coherently or better – just go away.

  2. JohnH

    It heartens me to see that inequality has been addressed here, even if it was over a decade ago.

    By my reckoning Krugman addresses inequality a couple times a year in his NY Times column, I.e. in about 2% of his pieces—hardly a priority.

    I see nothing that refutes my statement that it is “ Amazing that Krugman’s minimalist treatment of inequality far exceeds what I see mentioned here!.”

    What’s also worth noting is that the wealth share of the top 1% has risen from about 23% in the early 1990s to 32% in 2021. Over 10% of that rise occurred in 2020 and 2021 alone.

    We are now much closer to the wealth inequality levels of the 1920s than to those of the 1950s or even of the 1980s.

    To me these numbers are eye popping, even if some people haven’t thought them worth a comment recently.

    1. Menzie Chinn Post author

      JohnH: Gee, more recently, there’s also the 2017 guest post on how trade protectionism hurts low income groups. Or my December post on how wages for low income workers had risen in real terms since the pandemic (something you have failed to note in your many rants).

      Truly, you seem to be blithely ignorant of so much you claim to know.

      By the way, do you now accept that real tax-adjusted mortgage rates are now above zero?

      1. JohnH

        Sure, I’ll agree that using unreliable recent inflation forecasts, you can make the case that ESTIMATED “real,” tax adjusted mortgage rates are now above zero. Deal?

        And, sure, I have no problem acknowledging that wages for leisure and hospitality workers rose as did AVERAGE hourly earnings for production workers. However, you should acknowledge that real wage for ALL employees have been essentially flat since January, 2020, as have median usual real weekly earnings. Deal?
        https://fredblog.stlouisfed.org/2018/02/are-wages-increasing-or-decreasing/

        What’s curious, though, is that there is no reference to how the highest income cohorts fared–the top 10% saw their real factor income rise by 2.6% and the top 1% by 5.6%. https://www.realtimeinequality.org/

        1. pgl

          “I’ll agree that using unreliable recent inflation forecasts, you can make the case that ESTIMATED “real,” tax adjusted mortgage rates are now above zero.”

          Like your forecast is also on the mark? Funny thing – you clearly do not even remotely understand what real interest rates even mean. But keep chirping as it only shows how utterly STOOOPID you really are.

        2. pgl

          “What’s curious, though, is that there is no reference to how the highest income cohorts fared–the top 10% saw their real factor income rise by 2.6% and the top 1% by 5.6%.”

          I guess Jonny boy never heard of the tune ‘Ain’t We Got Fun’ even though it was first performed over a century ago. Something like the Rich Get Richer.

          There have been countless mentions of the rise in income inequality over the past few years but according to little Jonny boy – no one except him has noticed. Yea Jonny boy is SO much smarter than the rest of us. Snicker.

        3. pgl

          “using unreliable recent inflation forecasts”

          Jonny boy starting chirping about real mortgage rates about 3 weeks ago. Now he was using the current 30 year nominal mortgage rate some totally made up BS that expected inflation was 6%. Jonny boy got all emotional when it was pointed out that a lot of smart people were forecasting FUTURE price increases to be running near 3% per annum.

          Now Jonny boy must think he has a crystal ball as Jonny claims to know that FUTURE prices increases will be a lot higher. How does Jonny know this? Does he have a time machine?

          Now since June 2022, prices have risen by 2.4% in a 9 month period, which is an annualized increase just over 3%. Now I ask you – has Jonny boy’s forecast been more reliable than other forecasters. Well if you are dumb enough to think 3.2% is approximately 6% then maybe.

          YEA – Jonny boy is that STUPID.

    2. Noneconomist

      “By my reckoning..”
      Well, when JohnH reckons, Breaking News must be following.
      Get a camera crew ready, gas up the van. The Great One is reckoning.
      As has been apparent for quite some time, if you add a quarter to JohnH’s reckoning, you now have 25 cents.

    3. Macroduck

      There is a silly complaint which, hard as it is to believe, actually predates the internet. The complaint, stripped of blather, is merely “You didn’t write what I want you to write.” It’s common as dirt, and worth less.

      Menzie is a an economist of a particular kind – a specialist. He isn’t a labor economist. He isn’t a transfer pricing specialist. He isn’t a specialist in industrial organization. He’s not an agricultural economist. That is not to say he is unable to offer a good lecture on any of these subjects or publish research on them, but they aren’t his specialty. The same is true for Krugman.

      Do we insist that bakers make soup or that electricians install plumbing? Not of we’re smart. But somehow, idiots like you think economists are required to write on whatever subject suits you. You’re nobody, Johnny.
      You don’t matter, no matter how many tantrums you throw. If you don’t like what’s on offer here, go someplace else.

      1. pgl

        All true but on this particular topic of income inequality, Dr. Krugman has written a lot of excellent discussions. That little Jonny boy has not read those discussions is Jonny’s fault – not Krugman’s.

    4. pgl

      Over a decade ago? Dude – everyone here knows you are a worthless liar. Find another blog to pollute.

    5. King John's Return

      For someone so concerned with this issue, perhaps you should start your own blog and post about it daily.
      I’m sure some of the regular commenters here would be glad to opine on your blog.

      1. pgl

        Even if little Jonny did not want to start a new blog, we have invited him to write posts for Princeton Steve’s blog. After all – one could not get worse than the garbage Stevie writes.

    6. Anonymous

      I stopped reading Krugman. Easier and far more profitable to watch CNBC ‘s Jim Cramer and buy/sell the opposite.

      I come here to vicariously experience posts and comments by people that are allergic to hard data.

      1. Noneconomist

        There are those who come to vicariously experience your posts, some of which are written in English.

  3. Econned

    Menzie Chinn,
    I may be illiterate because I don’t see where this post provides compelling evidence countering the assertion made by JohnH that got your tighty-whities all bunched up. It should be obvious to anyone that providing evidence of mentioning inequality on this blog is not the same as showing that Krugman’s treatment of inequality does not far exceed your treatment of inequality on this blog. JohnH’s claim may be wrong (or right… but honestly only a Trump-sized ego would care to write a blog post about it) but this egomaniacal blog post is nothing short of a miserable failure in an attempt to prove such. What an absolute hack job. Again.

    1. Menzie Chinn Post author

      Econned: He made the assertion of little discussion of inequality on Econbrowser, as I read the comment. You may disagree.

      Boy, you have a lot of time on your hands to write such comments.

      1. Econned

        Menzie Chinn,
        He made the assertion that “Krugman’s minimalist treatment of inequality far exceeds what” is “mentioned here”.
        It took me 2 minutes of time while sitting on the toilet to write that comment. Your ego is my toilet comedy.

        1. Menzie Chinn Post author

          EConned: Entire line: “Amazing the Krugman’s minimalist treatment of inequality far exceeds what I see mentioned here!” Hence, I think my rejoinder is apt.

          I really think you need to visit with your therapist more often.

          1. Econned

            Menzie Chinn,
            Your rejoinder is a failed attempt to respond to a claim. How are you unable to see it is a comparison of Krugman vs Chinn?
            I really think you need to visit with a logician more often.

          2. pgl

            “a failed attempt to respond to a claim.”

            What claim is that Econned? That you are a total waste of time? We knew that already.

        2. pgl

          You comment should have flushed down your toilet. Come on Econned – get a life and find another blog to pollute.

    2. pgl

      Come on Econned. Either you have not read the serial BS JohnH spews routinely or you are the dumbest troll God ever created. Which is it Econned? You are either ignorant or just incredibly stupid.

  4. pgl

    Whenever we see garbage like this “Krugman’s minimalist treatment of inequality” we must remember Jonny boy not only is a serial liar but he also has deep emotional issues.

  5. pgl

    While we are on the subject of people who lie, an update on the saga Florida Surgeon General Joseph Ladapo and his disinformation regarding the COVID vaccine (ala Kevin Drum):

    https://jabberwocking.com/the-florida-surgeon-general-scandal-explained-for-nerds-who-want-to-know-what-really-happened/

    ‘In other words:

    The vaccine had no effect on cardiac deaths.
    Ladapo knew it had no effect.
    He knew exactly which parts of the report to excise to make it look like there was an effect.’

    Read the entire post for the technical details.
    He excised those parts.

  6. pgl

    Sergey Lavrov and JohnH are the masters of BS such as this howler:

    https://www.msn.com/en-us/tv/news/russian-foreign-minister-insinuates-tucker-carlson-was-fired-on-orders-from-the-u-s-government/ar-AA1alAzc?ocid=msedgdhp&pc=U531&cvid=6063940ca8fd4b12ae991b95ef308405&ei=52

    Russian Foreign Minister Sergey Lavrov implied that Tucker Carlson’s firing by Fox News was done at the behest of the U.S. government. Speaking at the United Nations on Tuesday, Lavrov brought up the matter unprompted. CNN’s Erin Burnett aired the snippet on OutFront. “Perhaps it would be useful to consider how things are with freedom of speech in the United States,” Lavrov said. “I’ve heard that Tucker Carlson has left Fox News. It’s curious news. What is this related to? One can only guess. But, clearly, the wealth of views in the American information space has suffered as a result.” Carlson has been more than a critic of U.S. aid to Ukraine since Russia invaded the country in February 2022. He has demonized Ukraine’s leadership, including President Volodymyr Zelensky by calling him a dictator. Not surprisingly, clips of Carlson have appeared on Russian state-run media. “That’s the foreign minister for Vladimir Putin, Sergey Lavrov,” Burnett said. “With all that’s going on here in the United States, coming here, talking about the loss of Tucker Carlson. It’s unbelievable, right?”

    1. GREGORY BOTT

      Tucker is a Lukudist first. Zionism has been his passion since 1990’s. Like most Kosher Nationalism, it’s true goal is of world domination. The idiots that fall for his speel are the problem. Zionism is in their hearts as well. Tucker has a lot of Jerry Sandusky in him.

      Larov, your boy Putin in early December 2020 complained and whined. Demanded what became known as “stop the steal”. Under Tucker Carlson’s support, Rupert Murdoch would against his best judgement, start lying, instigating false flags and doing anything in their power to “steal” the election. A billion dollars + was loss. So, Larov, that wasn’t the reason Tucker got fired???? Here is another question. Will you exist in 6 months…….Larov???? Will Putin be alive???? Will a new regime control Russia????

  7. Bruce Hall

    Part of the change… not the entire cause… may be due to the decline in manufacturing labor as the primary driving force for creating wealth for the lower and middle classes in the US. The computer age has made information increasingly the source of wealth. Just ask Mark Zuckerberg, Bill Gates, and the like. Online stock trading has opened up realtime information for everyone, but it is primarily those with enough wealth to take advantage of it. Computer driven logistics information systems have simplified and expanded import and export business… again for those with enough wealth to take advantage of it. But it has opened up a world of opportunities for those willing to work for it.

    It’s not that real incomes for the lower and middle class have declined; it’s that real incomes for the upper income group have benefited more or actually have been created by the computer revolution. My two younger sons started a website development company on a shoestring while they were in college. They picked up a large hospital system as a client and that opened some doors within that client’s operations where they saw an opportunity to build a better database information system which they did and which the client bought… but they kept the rights to the software. Long story, a venture capitalist saw the potential and bought their company for cash and stock in the larger venture. This last year as their software sales began to rocket meant that they each got bonuses approaching seven figures.

    They were risk takers and spent years making low incomes, but stuck with it. Now that risk and long hours and deferred income has paid off. The question is: were they evil capitalists who simply made money off the backs of the poor because of their greed and should be penalized by confiscation of their earnings? They’ll be paying 1/3 of that bonus in taxes that go to those who didn’t work as hard in school or gained marketable skills or took risks and deferred income. How much more should be taken until they’ve paid their “fair share”?

    Have we “progressed” to the policy of “to each according to his need; from each according to his ability”? And how did that work in the past?
    https://www.newsweek.com/biden-raises-costs-homebuyers-good-credit-help-risky-borrowers-1795700

    1. Macroduck

      ‘Have we “progressed” to the policy of “to each according to his need; from each according to his ability”? And how did that work in the past?’

      Pretty well, apparently:

      “And all that believed were together, and had all things common…”

      “And sold their possessions and goods, and parted them to all men, as every man had need.”
      Acts 2:44, 45

      “Then the disciples, every man according to his ability, determined to send relief unto the brethren which dwelt in Judaea…”
      Acts 11:29

      Christians are the world’s most numerous religionist, and were early practitioners of the idea you question:

      https://en.m.wikipedia.org/wiki/List_of_religious_populations

      It is remarkable how little regard some commenters have for anything beyond their own narrow prejudices.

    2. Noneconomist

      Bruce, how would you know who did and didn’t work hard? Who did or didn’t gain marketable skills? Who took risks? Who didn’t?
      Or, did the venture capitalist use funds borrowed from_________to purchase their product? (As many venture capitalists seem to do ) How was the hospital funded? How was the hospital enabled to make such purchases?
      Congrats to your sons on their success. Evil capitalists? Who said?
      But, if their success moves them to higher tax brackets, more power to them.
      They make more. They pay more. I count myself fortunate I’m not in the 10% marginal bracket. The saving/investment changes we made 40 years ago ensured that.

  8. pgl

    Bank of England’s chief economist Huw Pill has created a hornet’s nest with his comments on UK inflation:

    https://www.msn.com/en-us/news/opinion/the-bank-of-england-is-wrong-again-workers-aren-t-to-blame-for-inflation/ar-AA1ancLT?ocid=msedgdhp&pc=U531&cvid=a111566478bf4cd887917924c9f8f7bd&ei=381

    The Bank of England’s chief economist Huw Pill provoked derision this week when he claimed that inflation means those in Britain need to accept that “we’re all worse off, and we all have to take our share”. Echoing comments made last year by the Bank’s governor, Andrew Bailey, on the need for pay “restraint”, Pill claimed the “pass-the-parcel game” of wage and price rises was “generating inflation”.

    James Meadway disagrees and makes his case. I’m with Meadway on this one.

    OK we are beating up on JohnH in this post but something tells me he is with Meadway and not Pill – today. But can we go back to the EconomistView days when the same JohnH was harping on the need to reduce inflation as if that was the magic pill to get real wages to rise. Of course THAT JohnH never got basic macroeconomics. Not that I’m saying this JohnH does either.

    1. pgl

      What no one needed – your little whining. Read the room Stevie – this was about someone who lies repeatedly.

      Oh wait – that is your forte as well. Carry on.

      1. pgl

        Awww – CoRev was called out for being even more dishonest as JohnH. Poor little baby CoRev. Awww!

    2. baffling

      free dialogue comes with responsibility. you are not protected from blistering commentary if your make stooopid statements.

      on the other hand, let us take a look at florida. the state government has weaponized itself against disneyland, for making commentary against state politics. desantis is using the state as a cudgel to suppress first amendment rights at disney. and not a peep from the republican crowd. talk about bad manners and corrosive effects on society.

  9. Macroduck

    Off topic, what’s doing with consumers?

    Here’s a picture of bank deposits plus retail money market funds:

    https://fred.stlouisfed.org/graph/?g=12SFx

    Looks like there is still a big lump of spending power on the sidelines. Here’s more or less the same picture, broken down by relative wealth:

    https://fred.stlouisfed.org/graph/?g=12SGF

    I’ve left out the top 10% to simplify the picture, though we know the top 10% account for lots of spending. Feel free to add them, if you wish. Here’s a breakdown of consumer durables ownership (closely related to consumer durables consumption) by wealth category:

    https://fred.stlouisfed.org/graph/?g=12SL5

    Just prior to Covid, the 50%-90% wealth category owned 1.8 times as many durable goods as the bottom 50%. In the latest quarter (Q3, 2022) that ratio was 1.7 – the less wealthy made up some ground. Those changes aside, the top 50% account for about 75% of consumer durable goods ownership – so something like 75% of durables spending.

    Compare the bank accounts and money market holdings of the above-50% crowd to their share of spending. They’re still flush and they account for most durables (and all other) spending. The American Express quarterly filing indicates that better-off households are spending gobs of money which is in keeping with their ready cash holdings:

    https://www.sec.gov/Archives/edgar/data/4962/000000496223000015/q123exhibit991.htm

    Meanwhile, employment is still growing better for lower-wage jobs, and that should keep them spending until that growth stops.

    So we have two buffers against a consumer-driven recession. Meanwhile, New Deal Democrat has updated his assessment of the labor market based on tax data, and it ain’t pretty:

    https://angrybearblog.com/2023/04/income-tax-withholding-payments-stumble-again

    I’m not willing to ignore NDD’s tax analysis. It suggests hiring has stumbled. Revisions to employment data erased much of last year’s jobs mystery, but tax data till suggest a problem. I can’t think of a way that structural change would account for a divergence between hiring and income/FICA taxes, but what do I know? Anyhow, there’s an evident risk to the economy in NDD’s analysis which stands in contrast to the consumer spending outlook. None of this relies on bank shocks, the Fed or the yield curve – all consumer/labor stuff.

  10. Macroduck

    Off topic, the outlook for capital spending –

    This article is a couple of months old, but it deals with longer-term issues, so much of it still applies:

    https://www.bloomberg.com/opinion/articles/2023-02-02/the-semiconductor-and-battery-gigafactory-capex-boom?leadSource=uverify%20wall

    The gist is that a handful of developments, such as reshoring of supply chains, semi-conuctor and battery plant construction, LNG port construction and the like, create the prospect of boom in spending on real productive capital over the next few years.

    Capital spending is generally considered a good thing for economies, and a good thing for wages. A few thoughts come to mind in reading the article:

    * McCarthy’s debt ceiling bill would get rid of a god bit of the seed money for this anticipated capital spending boom.

    * Some part of anticipated restoring of supply chains is in response to tensions between China and the U.S.

    * Capital spending is a natural response to labor shortages. The timing is not ideal, but eventually, new capital can reduce demand for labor (relative to the counterfactual situation of no Capex boom) and raise pay for higher wages through higher productivity.

    * As noted in the article, increased capital spending in an era of higher interest rates will reduce profit margins for a time.

    * In a pretty obvious sense, to argue against reshoring supply chains from China is to argue against higher wages.

    * Similarly, to argue against reshoring is to argue against a redistribution of wealth and income.

    So, a stronger productive base, greater income equality, greater wealth equality and a more secure supply chain are among the likely results of the anticipated capital spending boom. Republicans, in their desire to overturn Democrat’s accomishments, want to stand in the way of a significant part of this anticipated Capex boom. Those who argue against the reshoring of U.S. supply chains, particularly from China, are arguing against some part of the benefits of the anticipated Capex boom.

  11. Econned

    Menzie Chinn,
    I see my comment from two days ago has yet to be posted on this thread.
    Maybe it just ‘slipped’ through the cracks?
    I do not recall anything being in violation of the ‘guidelines’ you’ve provided – have there have been unannounced changes to moderation policy?

    1. Menzie Chinn Post author

      Econned: No, but management reserves judgment for at least 24 hours. Checking, I see it’s been 38 hours. I will post once I read through and approve.

      1. Econned

        Menzie Chinn,
        At least you’re now admitting that comment approval is neither objective nor consistent.

        1. pgl

          As usual your little jab was dishonest, disgusting, and dumb. Dude – you have serious emotional issues. Stop wasting our time with your trash and get professional help.

      2. Econned

        Menzie Chinn,
        Speaking of the “judgement” reserved by “management” of this dumpster fire, what happened to the (sparsely -at best- enforced) moderation policy that “Comments should be directed to the topic of the original post, and commenters should restrict themselves to civil discussion of the substance of comments.”?
        I suspect the comments *not* directed to the topic of the original post are off the charts in this blog.
        Also, is it a civil discussion of the substance of comments to suggest one should visit with their therapist more often? As I’ve stated in other posts regarding the comment section of this blog, you receive the exact atmosphere that you seek and foster.

        1. baffling

          and the professional jealousy continues. econned sets the dumpster on fire, then wants to blame prof chinn for having a dumpsters fire. classy.

    2. pgl

      Such whining. I have an idea – you sign up to be Dr. Chinn’s assistant. Oh wait – given your clear incompetence, you would end up destroying this blog. Never mind.

  12. pgl

    We have suggested JohnH has serious emotional issues. I have said he has no friends. Well – he has two friends it turns out. CoRev and Econned – both of which also have very serious emotional issues.

    Maybe we should take out a Go Fund Me page to pay for the professional help this trio of trolls desperately need.

    1. CoRev

      Camping out in your head and more comfortable than a LA street person.

      Liberal minds are such an emotional amazement. Try logic some time.

      1. pgl

        I know a few very good doctors in LA. So if you ever get your worthless homeless self off the streets of LA – I can ask one of them to treat you pro bono – since you already live off the government dole.

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