Inequality, Productivity Stagnation and Moore’s Law | Tyler Cowen

Advertisements

Top income shares falling since 1950s @FairnessNZ @CloserTogether

It has become an urban legend in New Zealand that inequality is getting worse and worse.

Brian Easton adjusted the top income share database for New Zealand for the introduction of dividend imputation. This encouraged companies to distribute more dividends.

top income is adjusted for dividend imputation

Once this measurement error was corrected by Easton, there has been no increase in top income shares in New Zealand since the 1950s. It has been a slow taper at best or a flat line.

There is a wages boom from the early 1990s after 20 years of wage stagnation, a period which some people regard as the good old days.

The return of real wages growth, and strong employment growth to boot, came straight after the Ruth Richardson horror budget and the passage of the Employment Contracts Act.

Every ethnic group experienced strong income growth as well as the graphic below shows. The rich got richer and the poor got richer too.

Lazy Australian top 0.1% only increased their income under @AustralianLabour

Australia’s top income earners are a lazy lot. The top 0.1% only ever had a rising income share under a Labor government in the 1980s. Even the top 1% had a pretty lean time until the 1990s.

image

Source: The World Wealth and Income Database.

How to show that unions & income inequality are unrelated when attempting to show a link

Fight for $15 tried to show a link between unions and rising income inequality but all it managed to show that unions went into decline several decades before inequality started to rise.

% Australian top incomes from wages, salaries and pensions since 1954

Australia has had a working rich for a long time now. Australian top income earners are top wage earners. They are athletes, celebrities, business executives and in the professions.

image

Source: The World Wealth and Income Database.

% US top incomes from wages, salaries and pensions, 1913 – 2015,

The rich in the USA long ago became a working rich; most top incomes are from wages and salaries.

image

Source: The World Wealth and Income Database.

The Economist Crony Capitalism Index

image

Few of the top 50 billionaires inherited their wealth

Of the 15 inheritance based billionaires, three are from the Walton family, two are the Koch brothers and another three are from the Mars family.

image

Source: The world’s top 50 billionaires: A demographic breakdown.

The decline and decline of the rentier class in the USA

Looks like the Reagan Revolution coincided with the American rich going out to work for a living. They started earning most of their incomes from wages, salaries and pensions or from entrepreneurial income. The American rich are now working rich; top wage earners, not top income earners.

image

Source: The World Wealth and Income Database.

% of top incomes from wages, salaries and pensions

Everybody from the top 10% to the top 0.01% have to work for their living these days with much of their income coming from wages.

image

Source: The World Wealth and Income Database.

How much do you get paid if you can pick winners? @JulieAnneGenter @simonjbridges

Electric cars have joined the long list of mendicant mendicant businesses that have been backed by the New Zealand government of late. Picking winners again.

The payrolls of entire government departments in New Zealand are not enough to hire a single successful hedge fund manager to pick winners for their political masters. To get on the list of the top 25 hedge fund managers, you need to earn at least $300 million a year.

image

The 25 highest-earning hedge fund managers and traders made a combined $12 billion in 2015, slightly less than the $12.5 billion the 25 top-earning hedge fund managers together made in 2014.

Why do investment advisors sell and often give away their sage advice? If their insights were any good, they could trade on the share market before others caught on and make a killing!

I will give a personal example based on the skills of bureaucracies in picking winners. The test of my hypothesis is based on the transferability of human capital across jobs.

My graduate school professors in Japan included many retired bureaucrats from the Ministry of Finance and MITI. These agencies were heralded by Joe Stiglitz and others for picking winners and guiding Japanese companies to choose the right technologies and what to export.

The skills that my graduate school professors learned at picking winners over their careers with the Ministry of Finance and MITI in the high-growth years in the 1970s would now be available to them in their retirements to trade on their own account.

My graduate school professors should quickly become very rich after retiring because of the skills they learned in picking winners while at the Ministry of Finance and MITI, which should cross over into their private share portfolios. The rich lists world-wide should be full of retired industry and finance ministry bureaucrats.

Instead, my graduate school professors took the train and bus to work and their families lived off their salaries in standard sized Japanese government apartments. All looked forward to their annual bonus of 5.15 months salary.

If governments are any good at picking winners, people should be willing to pay big time to get jobs at ministries of finance and ministries of international trade and industry to get access to their unique and highly secret skills they learn therein on how to pick winners.

I am still waiting for that tell-all book by an insider on these skills. Why is there no Picking Winners for Dummies on Amazon kindle as yet?

Creative destruction in top ICT company pay

I am surprised to see that Yahoo is in business much less competing for top talent. Microsoft is in decline too. Apple does not pay people as much as everybody else.

image

Source: Paysa Company Rank | Paysa.

Some other colours seem to duplicate so you will have to work out which is which by when they exploded in hiring top talent.