Professors Piketty, Saez, and Zucman!
Have a minute? A minute to talk about rentiers, retirement, growth, and sharing?
Seems some sixty-percent of Americans think that things are going pretty well. For them, things are going pretty well. But, for the lower forty, things aren’t going well at all. Surely, this sixty – forty ratio is not a healthy economy? What’s worse; it’s getting worse.
Fifty, maybe even as few as thirty, years ago, one could lease a commercial space for, what at the time, seemed a princely sum and start a business. Today, upon comparison, that princely sum seems a mere pittance. Today, more than half of what one could possibly gross in a small start up goes to the landlord, the rentier. Between the rent, insurance, utilities, …, and the bottom line; one winds up paying their employees less than they deserve. Hardly anything left. Plunge taken, the budding entrepreneurs, and their employees, winds up working for the rentiers, the insurance company, the utility company, …; wind up working for next to nothing, or even worse.
Another example, s’il vous plaît: These days, the waiters, chefs, dishwashers, bus boys, … in neighborhood restaurants don’t get paid a living wage. Only undocumenteds, willing to work for less than a living wage, take these jobs. Even in very expensive restaurants, too much of what the diner pays, too much of the gross, goes to the rentier. All these workers wages, and business owners incomes, are being reduced in proportion to the increases being seen in rents.
As yet another twist on the rentier’s take: People with high incomes buy homes as investments and rent them out through an outfit calling itself ‘Airbnb’. Airbnb markets these rentals to tourists, travelers, and others, at rates substantially below the hotel/motel market rates. An arrangement with Airbnb allows investors to invest in residential real estate, rent it out through Airbnb, and then use the income to make their mortgage payments – to pay for the investment. As a result: Rental properties are taken off the market. Rents go up, homelessness rates go up, available housing is reduced, existing hotels and motels go under. A good investment opportunity for investors, a break for the wealthy traveler, a back-breaker for working-class renters. Airbnb is but another twist on the Uber and Lyft scams, but it is one with some even more serious consequences.
Are these examples only a matter of greedy landlords? Perhaps, more a case of expectations on a hamster wheel. The top sixty percent expect to make at least two-hundred thousand a year; and, to retire — on about two hundred thousand a year. One way or another, this two-hundred thousand a year retirement comes off the backs of others as rent. It comes off the backs of the would be entrepreneurs, off the backs of all America’s workers.
Back when, there might have been enough to go around; may be enough even now. Problem is with the sharing. When those no longer contributing, those who never contributed, want to take out a lot, that lot comes at the expenses of those on the bottom; the lower forty. Sitting home rocking while watching the world go by, is not the same as traveling the world. One of these costs way less. Since for a while now, more and more people don’t want to share.
Whenever some someone thought about growth back in the 18th century, chances are that they did so with an eye on exploiting the world outside of Scotland, England, and Europe. Africa was there for the taking. As for the rest of the New World; The Americas, Australia, and New Zealand? There was hardly even anyone there. Unlimited growth as far as the eye could see. Enough growth to absorb the retirement problem; the disabled veteran, expense of war, problem; …. All worked fairly well for the first two hundred years, then the old shoe of limitations began to pinch. Wasn’t too bad at first. But, lo of late!
Have to admit, this living off the future worked pretty well. Until it didn’t. Pensions backed by employers worked until employers started closing their doors. Municipal pensions based on economies based on a municipal population made up of well paid unionized workers worked well until there was no longer a large well paid unionized workforce living in the municipalities, but rather a population of people working at jobs that paid less than a living wage. Pensions backed by savings and loans worked until expectations and commitments exceeded all the savings in the world. Stocks and bonds to the rescue? Not enough return left after the CEOs, the hedge funds managers, and the big 401Ks all got first dibs. Then there is the price increase because of price increase loop. Any real return left over comes at the expense of — the workers; including any would be entrepreneurs amongst them.
Still, today’s politician says, “Grow the pie.” Sounds good, “Slice of cherry, a la mode, please.” Back in the 18th century, growing the pie meant more extraction and exploitation. By hook or by crook, this model worked fairly well for the developed nations well into the 20th century. But, you know, growth was always pie in the sky; always at someone else’s, or at the environment’s, expense.
So, good Professors, what do we do now?
Don’t ask professors Piketty, Saez, and Zucman; ask Jimmy Hoffa! 🙂
Do you think the above well described tale of woes would have taken place if America had the same general labor outlook/ideology as Germany, France, Denmark, French Canada, Italy, etc., etc., etc? IOW, if America were thoroughly unionized — backed by sector wide labor agreements (to protect those not unionized)?
Don’t want to over load with (two) questions but doesn’t it seem the sure and easy way to that heavily unionized condition to enact federally mandated, cert/recert/decert union elections at every private (non gov) workplace? Most Americans that I know would kill for regularly scheduled union elections.
Details to be had here:
Again, Americans-who-would-kill would include lots and lots of Obama-switched-to-Trump voters. Keep in mind that a virus saved us from America’s Mousallini this time. The only thing that will save the forty percent and the sixty percent next time is for Democrats to actually do something for the switchers. They see the Democrats as doing nothing for them and they are right — restore unions (overnight — see link) or we do nothing.
AirBnB is a cancer on residential neighborhoods, especially in neighborhoods close to the center of tourist oriented cities. We had a house in an historic neighborhood about a mile from the downtown historic district. Someone bought a house next door to us across a side street and turned it into a non-owner occupied bnb, renting out the 4 bedrooms individually, which was contrary to zoning as well as hotel regulations. It took us 2 years for the city to finally shut it down.
don’t forget to eat black-eyed peas today! if you forget you won’t have good luck this year. remember, eat black eyed peas!
HAPPY NEW YEAR
Happy New Year to you. We will have our black-eyed peas on the 1st of the New Year. I make them in a crock pot with the addition of a pork loin half after the first four hours of cooking. My wife will not eat greens. She is from CT. We live in VA.
Happy New Year. Good luck.
Thanks, Ron. A very Happy New Year to you, and to all @ AB.
Here’s wishing everyone who wants a COVID vaccination an early shot of their vaccine of choice (or the first that becomes available to them).
VA has been testing since March and the number of test is about half the population, which does not tell us much since most of that is weekly tests for healthcare and long term care workers and patients. The general population gets tested in drive through clinics. I imagine that part will go much the same with shots. The over either 75 or 65 cohort has been mentioned, but no date given. General population is expected to get shots March or later. Vaccine supply is not the drag. Plugging the big hole in healthcare and long term care is the overriding objective now since adequate social distancing is really not an option in those environments. Also they are a naturally occurring captive demographic for healthcare access.
P.S. If shots are outside, in or out of cars, and shoulders need to be bare, then colder states will need to wait a while. Maybe something can be set up in vacant school auditoriums, but mass immunization for a contagious disease is a logistics nightmare.
Last night I saw a report that England will give one shot to twice as many people — for now. Interesting thought is that we now know that people who get two shots may get infected (5%) but they don’t die; none of them — if people who get one shot also get much less severe illness and death, then, that sets up a whole new equation on whether to give one shot to twice as many people for now; depending on the the extent of protection it gives from severe illness.
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Originally I was for inoculating teachers before us old folks (76 here) so kids could go back to school and resume normal life; time running out to start spring semesters — most of us would take one more chance for the kiddies to return to normal life, to rescue them from the crazy lives they lead now; most of us are pretty good at protecting ourselves by now. But then I realized that since we represent 80% of the deaths that we may be mainly responsible for clogging up ICUs and COVID wards; I don’t know the figures. Biggest take away here is that vaccinating the elderly has the potential to quickly clear out hospitals and relieve the pressure on the health staffs.
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In 1947, New York City dispensed 6 million small pox shots in one month to stave off an epidemic — started by one sick Mexican business visitor.
good thoughts here. but while waiting for the rulers of the universe to catch on, here are a few suggestions;
start unionizing ALL workers, don’t worry about which “industry” don’t wait for the politicians. unionize around a living wage, not a “middle class” wage. and
reasonable protections against unemployment: worker paid unemployment insurance, premiums adjusted to meet circumstances.
bare arms in cold weather? put on a shawl or through a blanket over your shoulders for as long as it takes.
don’t need to sit in a rocking chair if you can’t take a world cruise. plenty of interesting and useful things to do.
ken is absolutely right about “rents.” i don’t much like language like “rentier class”.. “class” thinking does not help. but as for fifty years ago, the problem was discussed in a 1039 book (America in Midpassage, by Charles and Mary Beard) a book you probably won’t find, but it looks to me like there is nothing much new under the sun. Roosevelt helped us for a three score and ten years. maybe all we can expect of the human race, but the record is there if anyone cares to give it another try.
I don’t like the desperate need to get kids back in school. any education that is going to do them any good can be made up in six months. i do think they need the society of other kids… but that is often a mixed bag at best…and again can be made up by individual choices in making friends outside of the particular monkey group you find yourself in the middle of because of your parents choice of neighborhood or school.
as for growing the pie: don’t gorget that GDP is a money statistic. you can put a price to anything and call it growth. the problem is what are we willing to value. more freeways and bigger cars is not a good choice. neither is 700 billion dollars in “defense” (but half of that might be a reasonable price to pay in an evil world).
thing is, all these things are solvable…easily… if people can forget what they were taught in school about “economics” and just solve the problems in front of them.
Do you know what the most limiting factor was for vaccinations in England, vaccine supply or the logistics of vaccination?
The UK’s NHS model has probably given them a bigger head start than the six day lead that they had on administering vaccinations.
We Came All This Way to Let Vaccines Go Bad in the Freezer?
America did not sufficiently plan for how to get millions of people vaccinated.
[Yep, the UK was able to vaccinate quickly enough that vaccine supply became the limiting factor.]