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April 02, 2016

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California is raising its minimum wage to $15 an hour. More Californians will move to Texas. More robots will move to California.

The problem with the "learn to code" line is that it has passed its "use by" date. 25 years ago, it was a gateway to a great job. Today, not so much. My suspicion is that the way to figure out what is the best career to aim for is to look at which industries are at the point today that IT was in the early 1990s.

One obvious idea would be bio-tech. I don't know enough about the field to know what kinds of workers are in short supply there. Could be lab techs. Could be something else. But I am confident that there are some.

The personal service industry also has a lot of growth potential. I understand why you made that comment about "home health aides . . . [a]t $15/hour". But think about it a little.

First, it's a job which requires very little advanced education. In that, it resembles the manufacturing jobs which have moved overseas. (Except that you can't do these jobs over the Internet. ;-) Second, the demand is set to explode, as us Baby Boomers require ever more senior care. That's going to mean that salaries aren't going to stay at $15/hour.

What it will require, however, is a psychological/cultural shift. At the moment, there seems to be something of a stigma in the US when it comes to service jobs. Which can discourage people from looking at them, even when there are positions going begging. It is perfectly possible to have a world-view that considers someone being, as you put it, "some rich family's butler' to be not just an acceptable job, but even one with some status attached. We certainly aren't there now; no reason why we couldn't be.

The butler position will become attractive once there is again the downstairs pyramid of servants with he butler on top of the heap. And don't forget that the butler is the true power in the house, his master's puppeteer.

I assume that good service technicians (i.e. the guys that know tangible stuff in and out) will always be in need, maybe even more so than today, since fewer and fewer people have any idea about mechanics beyond changing a lightbulb.

I think a true future would be in an education that combines old-fashioned hands-on skills with a basic understanding of science and engineering. What we have now are guys that can repair a motor but have no idea about thermodynamics and kinetics and guys that can simulate and design the high-tech motors of to-morrow but can't do an oil change on their own car.

10 best jobs of the future

"Just learn to code" is rubbish. As a software engineer with 10+ years in the game, the "Just" is doing a lot of hard work in that sentence. You can't write enterprise code after a week long course in JavaScript, hell, you can't even build an SEO-friendly brochure website without years of specialist knowledge anymore.

The idea that the kids are the technical experts is ready to die - we don't expect young doctors to be super effective, why should we expect the same from our programmers?

The funny thing about the supposed internationalization of programmer skills is that it's happening much more slowly than many pundits expected it to. Most programming languages still depend upon English tokens and are surprisingly linked to English idioms. More than that, the people with the money are here, and they want their developers here too.

Today's software is so complex that it takes a team of eight to ten people, and managers to oversee those people, and c-suite to oversee those people, and they want them all in the same room. "Distributed" companies have an inherent disadvantage: they can get "the thing" done (that's actually the term we use today), but they're not going to have the cross-pollination that allows for advantages in the development process to blossom.

Programming requires social skill. The story of the lone guy in the basement is twenty years out of date. Between language barriers, cultural difficulties (Russian developers created idioms so wildly different from American developers that sometimes our code is unreadable to the other, and vice-versa), and the unquestionable need for face-time to get the best out of people, programming will not be off-shored very much for at least another decade.

the supposed internationalization of programmer skills is . . . happening much more slowly than many pundits expected it to. Most programming languages still depend upon English tokens and are surprisingly linked to English idioms. More than that, the people with the money are here, and they want their developers here too.

Part of this is a matter of "once bitten, twice shy." A lot of companies which embraced the idea of hiring cheap programming staff in India, etc. made a painful discovery: you have to have people with actual experience. Without it, things break (as they inevitably do), and take forever to fix. While the users fume.

And when those cheap programmers overseas gain the necessary experience, they get just as expensive as the people you have here. (Sure, they live extremely well in India, compared to what they could afford here. But . . . supply and demand still prevail.)

"Distributed" companies have an inherent disadvantage: they can get "the thing" done (that's actually the term we use today), but they're not going to have the cross-pollination that allows for advantages in the development process to blossom.

I work for a distributed company: 6 employees spread across 4 states, coast-to-coast. And even with extremely limited funds to us, we still annually spring for flying everybody to one place for a long weekend. Just because you can get some things done in person which are difficult to impossible to do across the Internet.

oday's software is so complex that it takes a team of eight to ten people

on my current team, we have a dozen people (programmers, testers, a manager), we're writing the top layers of an application that uses an essentially unknown number of layers from an unknown number of teams from across the company (plus frameworks and utilities from countless other companies). and this bit of software will be used by multiple web-based applications as well as being accessible from the proprietary programming language (anagram of SSA) that our company is known for.

it's code on top of code on top of code (x∞) so that users somewhere can write their own code, using a language another team at this company develops and maintains, to better analyze their data.

i seriously doubt that anyone in the company could diagram all the modules the user's data will flow through.

and we're not even a HUGE company like MS or Apple (let alone IBM).

More than that, the people with the money are here, and they want their developers here too.

What I find is that the "people with money" are often not all that interested in whether it's hard to manage a distributed team or not, or whether the programming idioms used by Ukrainians are different from those used by Americans.

A Slovenian developer makes about $20-30K. And they're pretty good. And, they have their own teams of 8-10, who they are happy to hire out, as a team, to "people with money" for what it would cost to pay 2 Americans.

Want everyone in the same room? They're all in the same room. In Slovenia.

It's a compelling argument, especially to folks who manage by spreadsheet. Which many "people with money" do.

All of that aside, I basically agree with the point of view in the article - "high tech" is not going to be a magic wand that we can wave over the crappy economy and make a thousand flowers bloom.

Bio-tech and robotics probably have a career's worth of a future to them, for a young person starting out. Assuming they have the skill sets to do useful work in bio-tech or robotics. Security - information security and other forms - is also likely to be strong.

If your mind doesn't work in any of those ways, what are your options?

I'm not seeing home health aides wages advancing to anything like middle-class levels. There was the one worker-owned home health aide co-op that I cited in another thread, those folks make out OK, but that's relative to the industry as a whole, and they live in the Bronx.

As far as it being "skilled" vs "unskilled" labor, I challenge anyone on this board to be responsible for the physical care of old, feeble, disabled, frequently disoriented or otherwise mentally or cognitively challenged, not-infrequently obstreperous or otherwise non-cooperative and non-compliant people, for 40 or more hours a week, and call it "unskilled".

Not all of the truly useful knowledge and skills in the world are taught in college.

Most folks that comment here are, I think, generally pretty smart, capable, and well-educated. And, generally fairly successful. What I don't understand is how average people - regular folks - are going to make a living, in sufficient numbers to not need regular infusions of relief of one sort or other.

"Unskilled" vs. "skilled" is not really a matter of actual skills. Nobody characterizes janitorial work as "skilled." But just try doing it, outside the very lowest levels, without a lot of information that outsiders wouldn't be aware of, and see what happens. Hint: it ain't pretty.

Ditto, if not more so, most agricultural work. It takes an array of skills to do it right. They just don't happen to be part of the standard definition of "skills".

On the other hand, those skills do tend to be something that people without academic learning abilities can learn. Which is the point I was trying (extremely badly, in retrospect) to make. Not everybody is geared to learning stuff from books and classes. But not all jobs, specifically not all jobs paying (at least potentially) reasonable wages, require that kind of learning/skills. And those are the jobs which our current economy needs more of.

And those are the jobs which our current economy needs more of.

But a lot of those jobs have huge barriers to entry or are flat out illegal.

What I don't understand is how average people - regular folks - are going to make a living, in sufficient numbers to not need regular infusions of relief of one sort or other.

The question seems to me to be where is GDP growth going to come from, and what needs to happen so that workers down the line start getting a bigger share of it in the future.

Your comment about home health care workers describes lots of other jobs as well. I think we seriously underestimate how hard people work in lots of jobs.

The trouble with the whole personal service idea is that it relies on glaring inequalities. The only way to have lots of servant jobs is to have people wealthy enough to hire servants. I don't find that appealing as a general state of affairs.

a lot of those jobs have huge barriers to entry or are flat out illegal.

With a few exceptions, e.g. those with artificial licensing requirements (fairdressers leap to mind), I'm not sure what jobs you are thinking of. Especially the illegal ones. Care to share some clarifying examples?

Russel,

American companies have tried that. What they've found is unless you relocate management (all of management) overseas, it ends up costing the same or more than doing it here. The savings don't materialize -- what you save in costs gets eaten up in extra development time.

Indian coders (to use a common example) coding for an American company take forever, because of the back and forth between the American side and the Indian side -- everything from time zone issues to cultural issues.

Which is why most companies abuse H1 visas instead. Get Indian coders over here -- you pay more, but less than you would for native Americans.


"learn to code" is BS, it's like "MORE STEM JOBS!" (most STEM jobs pay crap, and there's not a huge pent-up demand for them either) -- it's a slogan instead of a solution. It sounds good and forward thinking though.

I'm not sure what jobs you are thinking of.

Sex workers?...

For many states, artificially high licensing requirements for many occupations seems to be the rule rather than the exception.

American companies have tried that.

While I think offshoring is not seen as the genius move that it used to be, it's still pretty common.

I just changed jobs, but prior to this month I was working on a code base written largely by Indians and Ukrainians. We traced one bug back to a handful of database tables that had been defined with a Cyrillic collation sequence.

My last month in my previous job was spent training my Slovenian replacements.

There are costs involved in offshoring that are real, but which are not always obvious to the people making decisions. Even if the costs and risks are known to them, the difference in the cost of labor can outweigh other factors.

It's still pretty common. I don't know a single shop that doesn't have offshore developers involved at some level.

To be honest, I don't really have a huge problem with it. It is what it is, if I'm willing to pay less for tube socks because they're made in Pakistan, I can hardly complain about competing with South Asian and Eastern European software developers. Many of them are pretty damned good.

In my experience, it's become a ubiquitous part of the industry.

"learn to code" is BS, it's like "MORE STEM JOBS!" ... it's a slogan instead of a solution.

Precisely.

The question seems to me to be where is GDP growth going to come from, and what needs to happen so that workers down the line start getting a bigger share of it in the future.

Again, precisely, and precisely.

Russell,

You cannot separate your question from the current array of public policies that subsidize wealth accumulation for the few.

byomtov @ 4:15 above pretty much nailed it.

I do not disagree

If "we" could get past the "idea" that people "need" to "work," "we" wouldn't "need" to ask the "question" in the first place. (Yes, I'm being flip with the quotation marks.)

Seriously, though, if creating value doesn't require labor (or at least doesn't require labor within a given national economy), how is it that claims on resources are to be allocated? I wish robots could do all the crap humans don't like to do and we could all be musicians, athletes, comedians, actors, painters, scientists, mathematicians, writers, brewers, gardeners, dancers, florists, potheads, drunks, or any combination thereof just for the hell of it.

Seriously, though, if creating value doesn't require labor (or at least doesn't require labor within a given national economy), how is it that claims on resources are to be allocated?

If I recall correctly, the basic premise of 'economics' is this: "assume scarcity".

The math doesn't work too well, otherwise :)

HOme health aides usually don;t make fifteen dollars an hour. I have been doing that job for seven years and I'm only up to thirteen dollars (plus very good health insurance). I am in a union state. In non-union states the pay i slower and the benefits non-existent.

If we continue to elect politicians who support budgets like the ones proposed by the HOuse, the question of what people do for a living will be.. many won't. They will die. Others will turn to crime. Some will work off the books so that they don't lose any current income to Social Security because they can't afford think about the future. Some will work sixty or eighty hours a week. Many will starve or die of treatable diseases or conditions related to malnutrition. Some will die of conditions that come from chronic exhaustion. Some will group up, six people with lousy jobs in one house...What did people do in the 1890's? That;s the direction we are headed, but with out the access to homesteading.

After 18 years running my own business I had to look for employment as a programmer and got lucky. After 4 hours over 2 interviews I was offered a great position as a 'research programmer' with the number one cancer center (ok, maybe number two depending on the year) in the country.

Then corporate inertia took charge. I had studied CS back in the early 90's but left to take a great job before graduation. I never implied I'd gotten my BS. Needless to say the HR bureaucracy decided that the lack of a degree they thought I had earned 25 years ago disqualified me.

Because there was so much I didn't learn back in the early 90's.

Some days I think that HR departments are the worse impediments to getting the right people to get a job done. Because their utter ignorance of the field reduces them to checking boxes -- they have no clue that "equivalent experience" might be a valid alternative to a degree. (Actually, in most cases in IT, it is superior to a degree.)

But I suppose that's because they have no clue. "Equivalent experience" isn't a box that someone can just check. So HR can't cope with the concept.

/rant

it's more like someone a long time ago in an office far far away decided that the Standard for the company shall require all candidates for positions X - Z to have a minimum degree. and there's no shortage of candidates with the degree (especially when you can just import than from Asia) - and nobody in hiring (who are probably all contractors or outside agency people on the first line) can override the Standard anyway - so what's the problem?

I work in a public high school. The "code" and "STEM jobs!" nonsense is widespread and fully embraced by many, including most of the administration. It's absolute garbage, but there's a whole ocean of grifters out there happy to siphon public education funds into their pockets. "Code/STEM" seems like one of the less offensive grifts, honestly.

Our society does love itself a shiny magic bullet, especially one that reassures us all we have to do is something extra we weren't doing before rather than changing what we've been doing.

If I were starting over today, I'd go for "precision machinist." Starting with all of the old-school skills for doing things manually, up through many-axis CNC milling and now 3D printing. Build up a trade specializing in one-off and small-batch jobs.

Experienced US programmers with specialized skills are still doing fine, pulling down six-figure salaries. So are bright computer-science graduates with a lot of theory chops who will work for cheaper than the old guys. There's value in being present on the continent, and in having specialized knowledge.

But new programmers, maybe retraining from another profession, who learned to code just to be a coding body... I'm not so sure they can compete.

wj: good points about the baleful influence of "big HR". Not sure if it's just a matter of organizations growing to the point that they *have* to centralize HR operations, whether you can blame ISO-9000, or it's all because of Telephone Sanitizers.

You've diagnosed the illness. Amputation?

If I were starting over today, I'd go for "precision machinist."

it sure looks like fun.

the building a clock series is fascinating.
https://www.youtube.com/watch?v=qOHSTxxAjFs

and this is... odd
https://www.youtube.com/watch?v=QTbfiTrOtg4

Anyone else can code badly.

Snarki: You've diagnosed the illness. Amputation?

I suspect, from the individual company perspective, what is needed is to do something that companies have gotten out of the habit of doing: grow your own people, making sure that they know what their job actually entails.

In the case of HR, that means having folks who know what the departments they are responsibile for actually do. Get them beyond just checking boxes on resumes. At minimum, have them able to look at a resume and say: "This looks odd. We need to ask a question in the interview about it." When, for example, the guy says he knows mainframe assembler, but all his jobs since college look to have been on Windows systems. It might be true, somehow. But at least it should be pursued. (And that applies even if your job doesn't really need mainframe assembler. Just on the grounds that someone who will lie about one point may have done so about others.)

I suspect that the same problem exists for jobs outside IT. Perhaps not for the ones which have been around forever, where HR itself has traditions to guide them. But certainly for any new technologies.

I should note that I have known one or two (OK, one) HR folks who actually had a clue what an IT job involved. But they are d*mn thin on the ground.

Here's a little something from the Bay Area. Specifically the local paper serving San Jose and Silicon Valley (among other local places). It's the kind of media people looking for work might be expected to be aware of.

http://www.contracostatimes.com/business/ci_29719783/bay-area-job-market-shifting-away-from-high

Still talking about software IT jobs....

my wife is a technical recruiter. so if you're trying to get a job at (HAL >> 1) these days, you might run into her - or any of the other hundreds and hundreds of recruiters they employ. she wasn't hired there because she knows anything about IT, though. she was hired because she knows the recruiting process, which turns out to be vastly more complex than you would think. there are laws and absurd company procedures and bureaucracy and nonstop office politics to deal with, as well as being able to conduct first-line interviews and handle things like compensation and benefits.

she used to work in biotech as a recruiter, and that's what her degree is in. so, she knew the tech and what all the acronyms meant and how to speak the lingo. so it's certainly possible to come across recruiters who know the stuff the candidates should know. but mostly, recruiters are hired because they know how to navigate all the other stuff that goes along with hiring other people.

I got my first job at TI as an electronic technician with no degree. After a year or so I got promoted and my boss congratulated me for being the only person in the test group to last a year, unknown to me I was one of 5 that had gotten hired to test non-degree hiring. That was several decades ago, and I was fully trained by the Army. But they never hired a second batch.

The problem with HR today is not so much the people as the computer between the candidate or employee and the HR person. The process has become so keyword focused in hiring that most companies simply don't screen very many resumes. The systems do it for them, send out the rejection notices, and that's for the few that bother to acknowledge you have been rejected.

Software engineers with any network, os or db interface experience are in pretty good shape today, In 2000 the average rate for a VB contractor in SF went from $90/hr to $25, if you could find anyone that wanted one. In the most devastating downturn for tech ever, there were tens of thousands of programmers that went out to be retrained in other fields. The lists of majors to avoid became any technology major, and it was that way for years. As the market started back the jobs that many programmers used to get, coding on a project team of 30 people from a spec never really came back, they were offshored.

Small development shops and internal systems groups required onsite help and people who could work in real agile environments, so those jobs remained.

But in 2009, the average cost of a contract .Net developer dropped from $125 to $75 (or less)based on a glut of people going independent in an offshoring economy. SharePoint devs were incredibly scarce, but still rates were pressured due to the downturn.

So we get to today, there is slowly more and more offshoring, as the collaboration systems get more effective, remote work gets more normal even in the US and DevOps creates better operational control of the end to end dev process. The long term saving grace is there will eventually be no more new countries to get cheap technology work from (not to mention the ongoing offshoring of everything else from financial services to engineering design). The downside is by then much of these tasks will be so highly automated there wont be jobs to bring home.

Trading work for sustenance is a dying proposition, we just happen to be on the leading edge as the tide starts to go out. Eventually there will need to be a baseline standard of living that everyone gets, with barter available to add value on a personal basis. The .1% will own all resource allocation, the rest of us should be lobbying for enforcement of limitations on what they withhold.

When people are no longer required to build or make anything we, as a species, will be thankful that we have spent generations coming to grips with that as an ok lifestyle. Then we can all play music and dress in togas and talk about the beauty of the flowers we planted on our climate controlled world. Or explore space for something to do.

That's all.

Russell,

If we somehow came up with a robot society that met "all our physical needs", then there would be no need to ask, "What are people going to do for a living?" Distribution would be, as it always has been, a political issue.

It would also seem to follow that we would have to ditch our current economic ethos of endless accumulation as it would no longer serve any useful social purpose.

Perhaps Marx was, in fact, correct! ;)

As usual, Dean Baker has some wise things to say on this matter:

http://cepr.net/blogs/beat-the-press/folks-worried-about-robots-taking-our-jobs-need-to-learn-arithmetic

and,

http://www.huffingtonpost.com/dean-baker/the-attack-of-the-robots_b_4719661.html

Agatha Christie had the comment late in life that, in her youth, she never imagined that she could become wealthy enough to afford an automobile, or so poor as to not be able to afford servants.

Luxuries turn into necessities, necessities turn in to luxuries. The specific work I do today, transcoding digital video formats from various types of cameras to the format used by the internal systems at a certain cable network, did not exist 20 years ago. It is extremely unlikely that it will exist in 5 years, no more than 3 and probably less. Replaced, not by robots exactly, but automated processes that can be initiated by non-technically savvy people. Then it will be time to open the barbecue+Southern-style seafood restaurant.

That may be the single way in which IT folks differ dramatically from thegeneral population. For most of us, our entire careers have consisted, over and over again, of doing jobs which did not exist a decade before we started doing them.

We may not be that much more fond of change than the next guy. But we are not under the illusion that change will stop, whether we like it or not. Let alone that it might be possible to roll it back. Reality doesn't come with back-out provisions. Heck, reality doesn't even come with Change Control. (Clearly God is not an IT guy....)

To tie things together: with AI, robot labor, etc, it's becoming clear that our Economics 2.0 (v1 was pre-corporatism) will have to be converted to Economics 3.0. But just like previous 'big changes', it'll be completely obvious...after it happens, but not before.

It is yet another reason that I find goldbugs amusing. I'm betting there's some overlap with flat-earthers also, too.

It would also seem to follow that we would have to ditch our current economic ethos of endless accumulation as it would no longer serve any useful social purpose.

*Endless accumulation* is not our current economic ethos, but if you want to maintain market activity and therefore jobs, you need a market.

Has it occurred to anyone that offshoring is immigration without the direct load on our social infrastructure? Rather than bring people in to do the work, we send the work to the people wherever they might be. The Left, such as it is, deplores this, or seems to, yet advocates fiercely for more immigration, apparently unaware of the irony, although for those on the Left taking the long view, this may be a short term price worth paying. If, in the long run, sufficient immigration gives the Left a large enough slice of the electorate to achieve a permanent one party state, it will all have been worth it. In the meantime, if someone can explain why the tears over offshoring isn't a gross double standard, I'm all ears.

The mega-corp part of our economy is perfectly fine--today--with offshoring what it can and stagnating middle and lower echelon wages where it cannot (thanks, Immigration!). In the long run, it will kill the very market it needs to buy its products. Stupid, short-sighted thinking, but that's what you get when, by law (Go, SEC!), everyone's focus is the next quarter and whether X Corp will beat the earnings forecast.

The regulatory state promotes this kind of silliness. The Left's (currently) leading candidate may someday be canonized as the patron saint of crony-capitalism. So, expect more of the same.

As a footnote, for those who think market forces don't work, the discussion above about IT people is worth re-reading (supply/demand). Of course, we could ask gov't to limit the number of IT people, maybe issue licenses: would that work? Scarcity drives demand which drives prices.

McTx: it makes perfect sense for " The Left" to be anti-outsourcing yet pro-immigrant, and not for your tinfoil "we're doing it so they must be doing it too" reasons. When you outsource, you use non-citizens to do work that citizens had been doing in order to increase Capital's profits while shifting they balance of power away from Labor through your beloved Market Forces via radically increasing the availability of labor which can afford to accept a lower wage than your fellow citizens. And being "pro-immigrant" isn't about maximizing immigration, no matter how much you'd love to pretend it is so you can blow off steam by trolling about The Left's totalitarianism. It's about ensuring protection and/or citizenship for what The Right would love to have as a disenfranchised borderline slave caste in order to fulfill their regressive feudal fantasies (crude, dismissive strawmen really are THE BEST for encouraging civil, rational discourse, amirite?)...

Of course, we could ask gov't to limit the number of IT people, maybe issue licenses: would that work? Scarcity drives demand which drives prices.

Like for lawyers and doctors?

Stupid, short-sighted thinking, but that's what you get when, by law (Go, SEC!), everyone's focus is the next quarter and whether X Corp will beat the earnings forecast.

Did you not take Securities Regulation in law school? Are you arguing that less disclosure is better, or less frequent disclosure? Isn't The Right™ all about people making their own decisions with access to all useful information? Indeed, isn't that the basis for the efficient market hypothesis in the first place?

In the meantime, if someone can explain why the tears over offshoring isn't a gross double standard, I'm all ears.

You mean like The Right's gross double standard of being "pro-life" and "pro death penalty"? Or that life begins at conception and ends at birth (to echo NV's note on dismissive strawmen...)?

sufficient immigration gives the Left a large enough slice of the electorate to achieve a permanent one party state

this is one of the funniest tales in the right's mythology. the "left" is trying to import more Democratic voters! FFS.

Has it occurred to anyone that offshoring is immigration without the direct load on our social infrastructure?

no, because that's crazy.

offshoring is the IT equivalent of sending manufacturing to China. jobs disappear and the only people who benefit here are shareholders and management. workers lose and people who depend on those workers lose.

*Endless accumulation* is not our current economic ethos, but if you want to maintain market activity and therefore jobs, you need a market.

But the basis for "endless accumulation" isn't really economic. And hasn't been (at least in the US) for half a century or more.

Rather, it's psychological. Accumulating more is a way to show that you are important and successful. It's the same reason that people who are making over $1 million a year bargain so hard for a bigger raise. It's not that they have any real use for the money. But it allows them to say to their peers, "See, I'm making more than you, so I am a better and more important person."

Which means, changing the economic ethos won't address the problem. You have to change the cultural psychology. Probably by providing some alternative way for the ambitious/insecure to prove themselves -- to themselves, as much as to the rest of the world.

On free trade - the basic economic theory of gains from trade is that Country X is more efficient at producing Good 1 and Country Y is more efficient at producing Good 2, so instead of having both countries produce both goods, they each produce only (or relatively more of) the good they are more efficient at producing and then trade - thus there is more of both goods and everyone is better off. In theory.

Needless to say this is not necessarily how things play out in the real world. While it may (may) be the case that the world is richer from the trade, the gains are not (and in fact are probably never) distributed evenly, and indeed many people are net losers from trade, hence the idea of setting up a system whereby people who lose their jobs because of trade. See, e.g., NAFTA Transitional Adjustment Assistance (permitting affected workers to apply to the government for compensation/retraining).

Outside of the purely economic, free trade also means a loss of control. As a society, the U.S. has collectively decided that we aren't willing to permit certain things, or place restrictions on certain activities. Thus, prohibitions on slave and child labor, limitations on unsafe working conditions, implementation of environmental regulations, tort liability for wrongdoing, etc. To the extent that "free trade" deprives people of a measure of control over these things by moving them "overeseas" (out of sight out of mind, so to speak, unlike immigration), then the idea that our society has "decided" that these things won't be allowed or will be limited is eroded. This in exchange for a marginal increase in U.S. wealth, most of which ends up in the hands of the capital owning/managerial class as cleek notes, while "labor" is or likely to be a net loser. "Labor" being the majority of the working age population and voters.

This is some of what's animating Trump and Sanders supporters, ISTM. YMMV.

Yes, but Ugh, the ability of the government to exert control over how corporations act isn't something we really want, now is it? Or to put it another way, "The regulatory state promotes this kind of silliness." Freedom to is Real Freedom™; freedom from is totalitarian tyranny.

The economic theory behind why countries are better off if they specialize is pretty solid. What the theory doesn't address is who, within the country, pockets the gains from that improved position.

If the gains are spread evenly, then everybody is better off. But the gains aren't spread evenly. So the relevant question is, how to address that.

The good news is, whatever way we came up with to address that would also address the issue that some see with the way economic gains from purely domestic activity are distributed. Because even if we cut off all trade (which seems to be what some are looking for as a solution), the inequalities which are driving the campaigns of Trump and Sanders will not go away. In fact, they may get worse.

"Just learn to code" is, as pointed out by everyone here, silly. However, "learn to code" is smart. We don't need that many professional programmers, but going forward, everyone will need to be able to guide the automated tools that will be part of every non-menial job. A basic understanding of procedural coding and database queries will allow you to leverage the computers that will to be inside everything.

The Left, such as it is, deplores this, or seems to, yet advocates fiercely for more immigration, apparently unaware of the irony...

and The Right, such as it is, deplores immigration, yet advocates fiercely for the unrestrained movement of capital across borders, apparently unaware of the irony....

bobbyp: ...and makes sure that there is almost ZERO penalties for employers that knowingly hire undocumented immigrants.

If they USA would only adopt MY plan (which is mine): "undocumented immigrants get automatic citizenship by turning in the head of their employer", the illegal immigration problem would be OVER within a year.

Basically, the Right, such as it is, wants cheap labor, but not labor that can vote.

But, as we know, their manifest incoherence does not stop there...because they basically advocate public policies that protect certain sectors of the economy (these are called "market interventions" when you don't like them) at the expense of others.

So when you see Tex or others throw terms around like "markets" and such, be very aware that they are as protectionist about their favorites as any other participant in the public contest about who gets what.

*Endless accumulation* is not our current economic ethos, but if you want to maintain market activity and therefore jobs, you need a market.

If I'm not mistaken, consumer spending accounts for something like 70% of GDP in the US today.

What percentage did it account for 50 years ago?

Has it occurred to anyone that offshoring is immigration without the direct load on our social infrastructure?

No.

Among the differences:

People hiring immigrants in the US are obliged to obey US labor laws, including minimum wage laws. Even when they fail to do so, they are still obliged to pay immigrants at a rate that is multiples of what they could pay offshore labor.

When people immigrate to the US, they contribute to the community in ways that offshore folks do not. They pay taxes here, when they buy houses or rent apartments they do so here, when they buy shoes cars and lunch they do so here. The money they are paid results in increased demand for goods and services *here*. That paid to offshore workers does not.

The regulatory state promotes this kind of silliness.

Naturally.

"Basically, the Right, such as it is, wants cheap labor, but not labor that can vote."

Basically, the vast majority of businesses want the cheapest competent labor they can get I suspect that They mostly don't care whether they can vote or not. Except on unionization. I'm not sure its only the business owners on the Right.

wj says: "It's the same reason that people who are making over $1 million a year bargain so hard for a bigger raise. It's not that they have any real use for the money."

Maybe a million is the cutoff - but as somebody living just across the hypotenuse from cleek and making in the low six figures, I'd love to double my salary, because it would mean I could retire early while I still have some health, or spend some time happily unemployed before retirement age without having to neglect my kids' educations.

(My genes suggest that before the time I hit federal retirement age I'll lose a lot of my ability to enjoy travel, to loop in Dr. Science's thread about the frailty of man.)

However, "learn to code" is smart.

Or some software systems analysis, or something. When I was on the legislative budget staff here, I was (by design of the staff director) the stuckee for explaining such to assorted legislative committees and caucuses. I recall one ugly morning where I was stuck in front of a committee who had accepted the assertion by one of the members that there was no fundamental difference between a PC spreadsheet that tracked 50 clients of a county-only program and a system that tracked upwards of a million clients across dozens of state/federal programs on a system subject to binders and binders full of federal rules.

I got phone calls from the executive-branch department after that one telling me what a good job I had done. "Good" was measured primarily by "The committee didn't demand that the department send people to testify."

The money they are paid results in increased demand for goods and services *here*.

One of the (often unstated) assumptions in economic trade theory is that the dollars they are paid will eventually be used to buy US goods and services. As opposed to buying dollar-denominated paper worth some trillions of dollars at face value. Seriously, a treasury or corporate bond in Chinese hands is worthless except as an indirect call on the future US production of goods and services.

(1) Accumulating more is a way to show that you are important and successful. (2)It's the same reason that people who are making over $1 million a year bargain so hard for a bigger raise. It's not that they have any real use for the money. But it allows them to say to their peers, "See, I'm making more than you, so I am a better and more important person."

I don't have time to address all of the risibles here--not that every comment is off base, but plenty of them are. So I'll pick on WJ.

I've numbered these two statements because each deserves its own take-down. First, applying common sense to the question of"how does one earn a million dollars in a year?", one part of the answer might include, "by not being a dumbass." Leaving aside entertainers, athletes, trust fund babies and politicians, most people who have money had to go out and earn it. Earning a lot of money takes a lot of work and a lot of risk. So, Job One after making a lot of money is hanging on to the money one has managed to make. Conspicuous consumption is the polar opposite of Job One.

(1) Most millionaires and most people making north of 500K a year emphatically do not go in for conspicuous consumption. For the same reasons those people do well in life--decent level of intelligence, hard work, economic prudence--they don't waste their money. I do pretty well as do most of my equity partners and most of the people my wife and I know. All up, it's a representative group of maybe 150-200 people. Almost all are over 55, most started out in entry level positions, none are trust fund babies. We met our closest friends 25 years ago as neighbors in the burbs--the very most outer burb at the time because that's all we could afford. Over time, most of us have done, relatively speaking, anywhere from well to quite well.

Unless you think a mid price Lexus, belonging to a club of some kind and owning a 3-4 bedroom house is some kind of extravagant living, then your statement is just flat wrong. Because that is pretty much the lifestyle of everyone I know, or know of (a much larger circle, probably on the order of 1000 or more).

Aside from waste being stupid, flaunting success produces resentment, social approbation and too many calls from people with great investment opportunities. The wife and I belong to a fairly nice golf and country club in Austin. On a busy Saturday, you will see plenty of mid-range Lexus, Toyota, Mercedes, etc. Mid-range, not the super high end. You might see one Italian, super expensive sports car. That's the one guy who can't find a game. No one wants to hang around with a shithead who likely drives his net worth.

If you're talking about poorly guided and mismanaged professional athletes or foolish, nouveau riche douche bags who got lucky on one deal, then sure, there is plenty of show boating. But, you are way too broad in your statement and exhibit a fundamental misunderstanding of what it takes to acquire and hold a reasonable amount of financial security.

(2) Seriously? Who do you think funds their own retirement, pays their own healthcare, signs on the company's line of credit and who doesn't get paid when times are tough (as they inevitably will be if you stay in business long enough)? And are you under the impression that high income people have been that way all of their lives?

The income one percent is a fluid group. I'm in it right now, but won't be in three years when I retire. My income will fall significantly.

If someone makes a million a year for five years, net of federal, state and local taxes, the net is around 570K. If that person lives on 150K a year, and if that person is not paying for one or more college educations, the savings over five years is 420K a year X 5 = 2,100,000. That's a nice chunk of change, no doubt, but assuming a steady 5% annual rate of return (I'd like to have that!) and no reduction in principal due to market fluctuations (I'd really like to have that!), that's 105K a year, pre-tax. Not shabby, but not exactly Clinton level wealthy.

You, and others here, have a remarkably ignorant view of high wage earners. It may fit your narrative, but it is miles off from reality. Miles off.

105K a year, pre-tax. Not shabby

Not shabby indeed! The average US family gets by on about half that annual income. Gosh, how can they possibly do it?

About 40 million US households have no retirement savings at all, and the average Soc Security check is around $1,400/mo.

You're not going to get a lot of sympathy with your example.

Not shabby indeed!

Are you deliberately missing the point? Read what WJ said (I quoted it, so it's not hard to find), and read my detailed explanation of why he is dead wrong for the most part.

People who make a million a year do so for a finite period, for the most part, then they retire and live off of their savings, at which time they have a decent income, but nothing extraordinary. If they live in the NE, they are barely above average.

[ The average US family gets by on about half that annual income. Gosh, how can they possibly do it?

So, more immigration and off-shoring then? Because that drives up demand for labor. And besides, the average figure is BS because it averages urban and rural, NE and South, and a lot of other apples to oranges.

As for how they do it, recalling our own experience at and below the average income level, first you calculate your after tax income and then you find a place you can afford to live. Then you budget for food etc and see what, if anything, is left over. If you are at or below average, you are probably younger, so you look to see how you can improve your circumstances. There is a lot that can be done, depending on a number of factors.

You're not going to get a lot of sympathy with your example.

Did it look like a pity party? I was responding to WJ's nonsense about people who make good money.

And, I was not describing my personal circumstances. FWIW.

McKinney,
I agree wj did not make much sense, but for much different reasons than you do.

Your demonstration of how "not really rich" somebody is who knocks down $1m/yr was, IMO, not a blazing success.

Immigration is not germaine to this, but yes, more immigrants would probably make us better off. What we need is to correct some terrible distributional imbalances and abolish a lot of economic rents. The dictatorship of the proletariat can wait a while longer.

I was not, in any way, referring to your (unknown to me) personal circumstances.

[McKinneyTexas] And, I was not describing my personal circumstances. FWIW.

Too bad, I had a great investment opportunity to offer you. :-)

Your demonstration of how "not really rich" somebody is who knocks down $1m/yr was, IMO, not a blazing success.

This is not unusual for members of certain strata of income. That "not shabby" 105k is just below top quintile for combined household incomes. But they're jus' folks, see.

I am strongly reminded of a friend from undergrad who argued that the Fair Share/Buffet rule tax change proposal a year or three back was aimed at the middle class, based on a perception that they and their peers could be affected by it...

You, and others here, have a remarkably ignorant view of high wage earners.

My wife and my household income this year puts us in the 'high income-ish' category. I live in a town where our income is basically low-average. There are a relatively high number of wealthy people here.

Folks who live in my town who are pretty wealthy fall into a couple of broad types.

There are serious old money folks. They are not extravagant, exactly, they simply surround themselves with really expensive perfect things that are very tasteful and not ostentatious. They live in three or four bedroom houses that cost multiple millions of dollars, and that often feature things like ocean waterfront or a private dock and beach. So they can get to their unostentatious, perfect, extremely expensive boat.

Frugality to those folks means not replacing the old 300 square foot oriental carpet that is getting a bit threadbare, and continuing to drive the 80's vintage Mercedes with a newer model. Not because they can't afford it, they just don't see the point in wasting money. They will drop large dollars - $50, $100 - on a nice bottle of wine, because that's good value for the money spent.

There are folks with lots of new money. They have pretty much standardized on Range Rovers, at about $85K, or at least some other very upscale SUV. One per adult driver, the kids get the mid-range Lexus, or maybe a nice Jeep for the boys. For other-than-Range-Rover SUVs, women seem to favor the BMW's and men seem to like the Porsche.

I will never understand the point of a Porsche SUV, but I digress.

The new money folks tend to also own three or four bedroom homes that cost multiple millions of dollars. Instead of having stuff that the older money folks have, like 100% teak porches and lots of bespoke built-ins, they go for stuff like ultra-blingy kitchens and bathrooms.

Did you know that you can spend $4K on a Japanese toilet?

The funny thing about all of this stuff is that it's not "conspicuous" in the sense of Scrooge McDuck lighting his cigar with a $100 bill. It's a little more understated.

You have to know that a Toto toilet costs thousands of dollars to be impressed by it. If you're not hip to what this year's perfect thing is, it just looks like a toilet.

But among folks who have a lot of money, there is an awareness of stuff like this.

Private clubs in my area - golf, or boating, mostly - are probably $15-20K to join, then single-digit thousands per year dues. For the one around the corner from me (golf), of which I am not a member, you can only become a member by being sponsored by an existing member.

Really wealthy people also travel, a lot.

I'm not even getting into the private school / international travel at school break / fund my child's internship at a chi-chi non-profit stuff.

People with a lot of money have really, really expensive things, and really, really expensive lifestyles. Not necessarily conspicuous, just really f**king expensive.

At least around here, maybe TX is totally different.

Not to pile on McKT, but I was, when I thought about it, struck by this paragraph:

If someone makes a million a year for five years, net of federal, state and local taxes, the net is around 570K. If that person lives on 150K a year, and if that person is not paying for one or more college educations, the savings over five years is 420K a year X 5 = 2,100,000. That's a nice chunk of change, no doubt, but assuming a steady 5% annual rate of return (I'd like to have that!) and no reduction in principal due to market fluctuations (I'd really like to have that!), that's 105K a year, pre-tax. Not shabby, but not exactly Clinton level wealthy.

The unspoken assumption there is that one should be able to live on one's interest, without touching the principal. Nice if you can afford it, but most of the rest of us have to survive retirement by - at some time, to some extent - drawing down on the "nest egg" we have accumulated, not simply leaving it intact for our heirs, as this example would do.

It's a classic strategy, even an aphorism ("never touch your capital"), of the wealthy, but it just isn't applicable to the 90(+) percent.

Sorry to be slow responding, but I'm not into airplane WiFi.

Let me note for openers that the 1 million dollar figure was (lazy) shorthand. Pick a different large number if you prefer.

McK, let's start here. Is there level of income where you would agree that more serves no really useful purpose? (Beyond, perhaps, letting your kids be trust fund babies.) If not, then there really isn't much basis for discussion.

But if you are with me that far, then I think all we are arguing about is what that threshold ought to be. I would say that several others have made the point about how "comfortable, but not excessive" shifts. Just as the definition of "middle class" looks different as your income rises.

To expand on Russell's comment, what constitutes conspicuous consumption depends on who you are trying to impress. It is entirely possible to have stuff that the masses will not recognize as expensive, but your peers will. And that's part of the way any sensible elite acts: don't be in your face to the folks whose opinion you don't much care about -- envy from them only leads to the pitchforks coming out.

That kind of conspicuous flaunting of wealth is why there is so much anger at those, like Hunt brothers, who can and do toss around hundreds of thousands of dollars each election season. They (or perhaps you) might see that as merely advocating for a philosophy of government. But to those at a somewhat lower wealth level it looks like buying congressmen for personal advantage.

I did also want to say something about what it takes to "fund your own retirement". Even during the 15 or so years that my wife and I were both working full time, our household income never even got close to 200k. Yet we managed to put aside enough to retire on by my mid-50s. Putting a couple of kids thru college and grad school would have delayed getting to that point, of course. But it doesn't take making a million a year for 5 years to accomplish. Unless your definition of "enough to retire on" is very different from what the overwhelming majority of the population, including most of us here, considers enough.

"Unless your definition of "enough to retire on" is very different from what the overwhelming majority of the population, including most of us here, considers enough."

What is the minimum desirable amount of cash? Or the minimum income? Those numbers are also higher as your income rises. When I worked at TI I made 12k a year. My goal was 24k. Anything above that was being greedy. (I was still a hippie then). So retirement was almost covered by SS. Not so much anymore. But, I could manage on 100k a year.

on a slight tangent....

how can Sanders have made a Congressional salary (~$150K) for 25 years, with a wife who retired making something in that range, and still have an estimated net worth of ~$300K ?

i don't make that much, and i'm much younger than Sanders, but simply buying a house and having a 401K for a while puts me in the $300K range.

did he invest it all in Pets.com ?

I should add that, considering all things, planning for retirement should be based on NOT spending the principal. In reality some will get spent but planning on spending it requires an assumption of how long one will live. While my lifespan is really estimable, anyone much younger than me is likely to outlive their current expectation. Thus keeping the principal is a sage hedge against living too long. The inheritance factor is just a pleasant upside if it works out.

Estimatable? Ok predictable.

Your demonstration of how "not really rich" somebody is who knocks down $1m/yr was, IMO, not a blazing success.

Did I use the phrase "not really rich"? I don't think so. The point, which seems to have eluded many here, was that WJ's cavalier view of who makes a million a year and what motivates them is way off base, for the most part.

The million dollar metric was lifted from WJ's comment. I used that as my data point. While we do make a good living, for the record, we've never hit the 1mm mark and I have 3 maybe 4 more years at more or less full speed. A lot of things would have to break my way for me to cross that threshold.

And, having experienced married life at the opposite end of the economic spectrum for the first 4 years of our marriage, I can confirm that making good money is much better than living at poverty level. For the class warriors, I've been there, done it and didn't like it. Don't want to do it again.

Too bad, I had a great investment opportunity to offer you.

You and a lot of other people. One of two things is true for me: either I will someday make a bunch of money in the stock market or I will die with a substantial unused, long term capital loss carry forward. I've owned stock in just about every company that has tanked in the last 20 years. Indymac, AIG, you name it. I'm a money magician when it comes to investments.

There are serious old money folks.

I excepted trust fund babies from my discussion.

The new money folks tend to also own three or four bedroom homes that cost multiple millions of dollars. Instead of having stuff that the older money folks have, like 100% teak porches and lots of bespoke built-ins, they go for stuff like ultra-blingy kitchens and bathrooms.

Yes, the nouveau riche douche bag. I believe I specifically addressed that as well. That is a sustainable lifestyle at 700K and up if nothing is put back but when the job ends or the company folds or what have you, so does the money. A feature of the income 1% is that people move in and out of that patch with great regularity.

It's not a recipe for long term financial stability unless the person is making millions and has a really good money manager. People like that exist, a fairly common example being Fortune 500 senior officers. They get huge stock bonuses and big severance packages that put them in a different class from people who peak for a finite number of years at a very decent level and then retire.

People with a lot of money have really, really expensive things, and really, really expensive lifestyles. Not necessarily conspicuous, just really f**king expensive.

At least around here, maybe TX is totally different.

"A lot of money" can mean a liquid net worth of 2 million or annual after tax income of a million, all of which gets spent on high living. One has nothing in common with the other and therefore the statement is hard to address. I don't deny that there is a segment of the well to do that live lavishly. If you think that is the rule and not the exception, based on my experience of being in the top marginal rate for the last 15 years or so, you are mistaken.

The unspoken assumption there is that one should be able to live on one's interest, without touching the principal.

No, that is not the unspoken assumption. What is implicit in my example is that a prudent high salaried person will, if he or she is able, put back enough money so that the principal remains relatively untouched. It is a goal that, I agree, is the exception and not the rule for the vast majority, but it is hardly lavish or extravagant or wealth-flaunting.

McK, let's start here. Is there level of income where you would agree that more serves no really useful purpose? (Beyond, perhaps, letting your kids be trust fund babies.) If not, then there really isn't much basis for discussion.

As a matter of personal preference or public policy? On the personal side, if I was debt free and had liquid assets of 4mm, I'd comment here everyday before and after teeing off. We will be debt free in 3 years. We will not have 4mm in liquid assets and will get by, quite comfortably, on much less.

As a matter of public policy? I have no opinion on what other people should make or how they should spend it. They can make millions and millions, taxed at about 40%, and spend it all on wine, sexual partners of their choosing and song for all I care. I don't spend any of my time worrying about what other people do, including the Hunt brothers, the Koch brothers, George Soros, the Hollywood crowd or the plaintiff's bar (google Steve Mostyn to see what I mean). I don't see the state as the vehicle to outlaw activity I disapprove of.

Even during the 15 or so years that my wife and I were both working full time, our household income never even got close to 200k. Yet we managed to put aside enough to retire on by my mid-50s. Putting a couple of kids thru college and grad school would have delayed getting to that point, of course.

Yes, putting kids through school will definitely delay that point and 100K 20 years ago is not 100K today. If your investments were managed well--mine weren't, tough shit, that's life--then sure, depending on your goals and whatnot, that's do-able.

My illustration that created 2.1mm was just that, an illustration. We've put kids through college (expensive, private college), had setbacks, had some good luck, etc. Over the years, we've pared back our debt and put some money back. We aren't there yet, but we hope to be in 2-3 years. I turn 62 in 2 weeks. Trying lawsuits is a younger person's game, so whether we get *there* or not, I have a shelf life. Whatever happens, we've had a very, very good run.

how can Sanders have made a Congressional salary

One of the great advantages to a life time in congress or the senate is the retirement program. The motivation to save isn't the same, but that doesn't mean Sanders lived profligately. It could be poor investments, but it could just as easily be that he gave a lot of money away because he doesn't need it. If I had a guaranteed six figure income upon retirement and full medical, I'd work less and give away a lot more. Sanders and I are light years apart on most issues, but if anyone seems to walk the walk in their personal lives, it would be him. The polar opposite of HRC, IMO.

I should add that, considering all things, planning for retirement should be based on NOT spending the principal.

Exactly. Clearly, not everyone can do that, but it is a worthy goal worth sacrificing for.

A valuable service that the wealthy perform for the rest of us is that they are first adopters and guinea pigs for new products, services, medical procedures, medicines, etc.

And, having experienced married life at the opposite end of the economic spectrum for the first 4 years of our marriage, I can confirm that making good money is much better than living at poverty level.

IIRC, you experienced a breed of student poverty. That's not really the opposite end of the spectrum. I'm sorry, but it's not. At the top of the list of ways it's not is that it's got a baked-in promise - which may not be true - that this isn't forever, so you're deferring "life" to make it through an austere period.

IIRC, you experienced a breed of student poverty. That's not really the opposite end of the spectrum. I'm sorry, but it's not. At the top of the list of ways it's not is that it's got a baked-in promise - which may not be true - that this isn't forever, so you're deferring "life" to make it through an austere period.

Yes, with a wife and a child. And, yes, it wasn't forever and that was my expectation, so it was not "I'm in this forever and there is no way out." But then, I never said otherwise. We really did experience life at poverty levels. It's live-able, but I don't recommend it. Poor decisions at that level have much greater consequences than at my current level, by orders of magnitude. Being reasonably intelligent and capable of deferring gratification, we were able to get by on very little. I say this only to forestall the "you don't know what it's like" barb. Because I do. Not to mention having lived in rural SW Missouri and spent plenty of time with friends in their homes for whom life on the south side of economic average was a way of life. It was not horrible, but it was a much simpler life. With attributes I still find attractive, or maybe that's just nostalgia.

I think McKinney and I are in sync on one thing: "I've been rich and I've been poor. Rich is better." ☺

In my case, it was the month or so that my diet consisted almost entirely of Ramen. But I knew my first (post school) paycheck was coming, which made it easier to endure.

Where we seem to be diverging is on who, if anyone, is to blame for the fact that some people are poor. Yes, in some cases it is a matter of having made poor choices. But far more often it is a matter of having started behind the curve. A few exceptional people manage to rise above that. But they are exactly that, exceptions.

The next point of divergence (unless I am misunderstanding you) is on whether *any* collective (i.e. government) action is appropriate to help level the playing field. Or do we just say; Look, you made a poor choice of parents. Live with it. Because, in enormous part, who you had for parents makes all the difference. You can get from middle class to rich with hard work and good choices. Getting from poor to even solidly middle class is a much more difficult row to hoe.

until i was ten, i lived in poverty. the real kind. the food stamps and WIC and stale bread and "you're going to have to go live with your grandmother for a while because we are broke" kind, in an endless string of shitty apartments that we kept getting kicked out of for not having rent money.

simpler? oh yes. things are much simpler when your choice of dinner is a bowl of generic brand dehydrated mashed potatoes or nothing.

Or do we just say; Look, you made a poor choice of parents. Live with it.

And a poor choice of what country to be born in.

Where we seem to be diverging is on who, if anyone, is to blame for the fact that some people are poor.

I don't recall this being the topic. And I'm clueless as to how you'd assign blame.

The next point of divergence (unless I am misunderstanding you) is on whether *any* collective (i.e. government) action is appropriate to help level the playing field.

Again, I don't remember this being the topic at all. But, I'm all ears. How do we fix poverty?

simpler? oh yes. things are much simpler when your choice of dinner is a bowl of generic brand dehydrated mashed potatoes or nothing.

Nothing like unwarranted assumptions, twisting words and them taking them out of context. You are consistent, I'll give you that. I didn't describe grinding poverty. I described being south of the income average in rural SW Missouri *at someone's home*. They had a home. Get it? A home.


I thought we were talking about the marginal utility of money, more than anything, in reference to wj's comment that sparked this particular exchange.

I didn't describe grinding poverty

right. but i did.

though, i have no idea why you feel the need to get all pissy about it.

McKinney, I think it all meshes. If we talk about the appropriate level of taxes, we are also talking about the stuff that those taxes pay for. To insist that taxes on the wealthy (defined however you like) should be lower, we are also arguing that less should be done to help those who are not. Which means arguing, as you at least inferred above, that their situation is their own fault -- because they made poor choices. (Not to say that none of their choices were poor. Just that poor choices are generally not the biggest reason for poverty.)

To the question of how we fix poverty, I doubt that there is a simple answer. But we do know that there are some things we can do which will help. Making sure that kids get both decent meals and intellectual stimulation during their first 5 years is extremely important. If the parents can provide that, great. But the reality is that many parents can't. Do we step in and make it happen? Or do we argue that a bit more comfortable retirement for us is more important?

If someone wants to make the latter argument, fine. But let's be clear on what they are saying.

I would have loved to have "bowl of generic brand dehydrated mashed potato(s)". I mean we had one meal a day on the days we had one. Or not. I used to go to the corner fast food restaurant and steal ketchup to make soup. YOU have NO idea what it is really like to sneak out of the latest flophouse residence because your Moms pimp was high and beating her again. Only to flop at another pimps house as they negotiated for her tricks, it wasn't like we had a car to sleep in. Or to sleep in the corner of someones 8 ft fence to block the wind.

Or, the actual marginal utility of money obviously decreases dramatically at varying points in the income strata. However, having been underemployed for a half a decade, circumstances can certainly take a tidy nest egg and burn it up quick, I promise. So there is little below 5M dollars that I would ever find to be "too much". that's 50 years at 100k with the state of the investment landscape you would have to really absorb a lot of risk to make more than 100k and there are very easy ways to get forced into using the principal. Over 5M you are adding to the security, over 20M you are adding to being rich. That is today. In 20 years, when you have only earned investment income for a long time then those number could be a real challenge based on inflation, etc. My Dad told me in 1978 or so that if you had a million dollars you couldn't help but make money so you were set. That is certainly a non trivial amount today, but it assures not such security.

though, i have no idea why you feel the need to get all pissy about it.

Of course you don't.

To insist that taxes on the wealthy (defined however you like) should be lower, we are also arguing that less should be done to help those who are not.

Lower than what? Than 75%? Yes, I insist they be lower than that. I draw the line at 40% of my income.

But the reality is that many parents can't. Do we step in and make it happen? Or do we argue that a bit more comfortable retirement for us is more important?

This is the choice? Deprive young children of intellectual stimulation or have a bit less at the end of 40 years in the fields? How much less and what evidence do you have that your plan will make any difference whatsoever, given the awesome success of the War on Poverty that's been going on for over 60 years?

So there is little below 5M dollars that I would ever find to be "too much". that's 50 years at 100k with the state of the investment landscape you would have to really absorb a lot of risk to make more than 100k and there are very easy ways to get forced into using the principal.

I'm not sure I get exactly what you're saying here. Do you mean you'd want at least $5M on hand so you could spend $100k per year for 50 years?

hsh, I would want to be able to earn 100k a year, but worst case I could eat the principal away at that rate for 50 years. There is no guarantee that either of those scenarios would be enough income to live comfortably 30 years from now. I might need to earn a100 and take a 100 just to have a comfortable living, but it would be enough I would chance it.

Lower than what? Than 75%? Yes, I insist they be lower than that. I draw the line at 40% of my income.

Effective or marginal?

I didn't describe grinding poverty

...you just said you'd lived at the opposite end of the economic spectrum. Which would not be student poverty - especially not student poverty where you have a support network that's as not as bad off as you or worse. It would be generational, grinding poverty. That's the opposite end of the spectrum; where you have a choice to have a family and accept that you can't change your circumstances, or defer that during the prime of your life to try to change your lot, w/o an assurance you will.

Which is, again, to simply say student poverty isn't the opposite end of the spectrum... nor for that matter is being a rural homeowner of somewhat modest means.

You are consistent, I'll give you that.

As are you. What you were talking about at any given moment in time is always a bit more fungible then I'd expect from something been and done...

Which is, again, to simply say student poverty isn't the opposite end of the spectrum

I would ask why this was a point that needed to be made at all. Other than to try and marginalize his personal experience, which was completely consistent with the simple point he was making. There was simply no purpose for this except to attack him. No matter the length or depth of his poverty, experiencing it supported his point that it was bad. Right?

It would appear from the exchanges above that deprivation is relative.

Marty, McKinney:

Let's get back to the start. wj wrote this:

Accumulating more is a way to show that you are important and successful. It's the same reason that people who are making over $1 million a year bargain so hard for a bigger raise. It's not that they have any real use for the money. But it allows them to say to their peers, "See, I'm making more than you, so I am a better and more important person."

McKinney responded with:

(2) Seriously? Who do you think funds their own retirement, pays their own healthcare, signs on the company's line of credit and who doesn't get paid when times are tough (as they inevitably will be if you stay in business long enough)? And are you under the impression that high income people have been that way all of their lives?

Because these extra special people who "fund their own retirement" and "pay their own health care" really do need that million bucks a year...

....unlike the fucking rest of us.

With all due respect, I remain skeptical.

Who you picking for the Masters, McKinney? Looks like Ells is out.

"....unlike the fucking rest of us."

No, the rest of us would like to be able to do those things, and a million a year would make that possible, thank you.

Uh, yes, Marty. That is true. The rest of us would.

We should be debating public policy, not arguing over how a paltry million/year is not what you think it is (but it is, really).

Thanks.

Seems appropriate to post this now

https://www.youtube.com/watch?v=VKHFZBUTA4k&nohtml5=False

especially since there is another Marty in the vid.

LMAO, that was great lj.

I hated having to get up a half an hour before I went to be when I was poor.

Oh, and not for nothing, but more than $1M doesn't mean $1M, and it doesn't necessarily mean $1M + $1. It can mean $10M or $50M. These little shorthands do create a lot of hubbub.

I don't deny that there is a segment of the well to do that live lavishly. If you think that is the rule and not the exception, based on my experience of being in the top marginal rate for the last 15 years or so, you are mistaken.

The point I was trying to make is that what "living lavishly" means depends on the eye of the beholder.

The folks I'm talking about would not necessarily consider themselves to be living lavishly, or engaging in conspicuous or ostentatious consumption. They can afford really really nice things, so that's what they buy. They are the same thing that folks in their peer groups buy. There might be a little bit of competition or keeping-up-with involved, but mostly it's just a matter of doing what other folks who are similarly situated do.

It will, I think, come as no surprise to you that, for a great many people in this country let alone the world, talking about retiring with $100K a year in income, which may sound reasonable to you, or Marty, or whoever, is such a remote concept that it might as well be talking about retiring on Mars.

Likewise the idea of a nice 3 or 4 bedroom house + a mid-range Lexus + a country club membership being a basic, garden variety modest lifestyle.

A mid-range Lexus is a $40K automobile. For a hell of a lot of people, that is a year's wages.

The guy driving a Range Rover is driving a vehicle that costs $85K. An annual income of $85K is at about the 94th percentile for US annual incomes.

You might say the guy driving a Range Rover is just being a new-money douche, but to him he's just driving the kind of car that people like him drive.

The median income in the US is something like $50K. That means half the people in the country make less than that.

The lifestyle that you describe yourself as living looks like the adventures of Scrooge McDuck to them.

And yeah, you're a smart guy, and you have worked hard, and you've been intelligent about socking some away for a rainy day, but quite a lot of them are also smart, and work hard, and do their best to save if they can. By and large they just don't work at jobs that pay what your job pays.

Some people would be shitty lawyers, but are great nurses or plumbers or schoolteachers. Your modest lifestyle is their freaking nirvana.

Wealth, rather than just income, should be under consideration. The Russians, Chinese, and others buying up Central Park view residences in Manhattan, and similar real estate purchases elsewhere aren't earning their fortunes in the US. How to get a slice of that loot (loot probably being the most accurate description), I have no idea. The folks Russell and McKinney describe are merely "comfortable" or "affluent", not wealthy (mostly).

All being relative, of course, I consider myself about as wealthy as anybody who still has to work for a living needs to be, at $55-60k a year income. Net worth in the roughly 75th percentile for people 40 and over. Which means there's a ton of people out there who don't have doodleysquat in the way of savings/stuff. There's money sloshing around out there somewhere, the tear-down/build-ups and infill houses in my neighborhood are listing in the 450K range.

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