From that castle on the clouds :
pete_dushenski: “Overall, the fact that the rise of top incomes has been much greater in certain sectors, such as finance, and among senior executives is more consistent with a pattern of rent (excess earnings relative to market-determined earnings) creation and extraction specific to those sectors than with a competitive market for skills.” << Because “market” is now synonymous with “fair”. Donchaknow. And because “competition” means worse people getting more shit free!
trinque: God.. the “fair market” is ripe for use as a propaganda term on their end.i
pete_dushenski: Seems to be moving that way. Another word for socialists to reappropriate. Because “the market doesn’t work unless we make it work.” Fascinating hubris, these guys.
mircea_popescu: You generally know who the retards wish to be by looking whose words they try to misuse. Currently, all signs point to… us.
pete_dushenski: ‘All roads lead to Rome.’ Or Venice, as the case may be.
With that as our primer, let’s delve into the particular form of socialist braindamage proposed by the pair of etatist shills currently suckling on the Government of Canada’s teet at the University of British Columbia’s Vancouver School of Economics – namely the work of Thomas Lemieux and W. Craig Riddell, and their recently previewed paper for the Institute on Research for Public Policy.
It’s sure to provide some lulz. Chenquieh :
Using detailed information from the census master files of 1981 to 2006 and from the 2011 National Household Survey, we find that over the past three decades the incomes of Canadians in the top 1 percent of the income distribution have grown much faster than those of all Canadian income earners. Looking also at what these data tell us about the characteristics of top-income earners allows us to draw conclusions about certain trends that have been under way over that time.
I’m tingling with anticipation over here ! If you thought epidemiology was hard to follow, just wait until you ride the magic carpet that these soi-dissant “economists” will take you on. You’ll be flying on Cloud 9 with Jasmin ! And virgins !
First, as in the United States, executives and individuals working in the finance and business services sectors are the two most important groups driving the growth in top incomes, but in contrast to the United States, the oil and gas sector has also played an important part in income growth at the top, especially in more recent years. A closely related finding is that a disproportionate share of top-income earners now live in Alberta.
Having lived in Alberta for almost the entirety of the period in question, I can attest to the fairly phenomenal level of (fiat) wealth creation stemming from the oil sands. The
increase inflation in housing prices, the build-up of (highway) infrastructure, the expansion of major cities almost entirely in the horizontal dimension, and the number of jacked-up trucks on the road are indicative of multiples decades of low income taxes, low oil royalties, and relatively conservative government policy.ii
The result hasn’t been quite as depressing as flushing money down the Greek toilet, but nor has giving a bunch of humble peasants cum land “owners” resulted in anything that’ll really last once all the fish are gone. Sure, there are a few theatres, stadiums, galleries, and the like, but they were slapped together in an awful hurry, and as is typically the case in boom-and-bust economies, are already showing signs of excessive wear and tear under the strain of the harsh northern climate. Not to mention that we still don’t have gigabit Internet connections. It’s 2015 for crissake. Such first-worlders, such privilege, such opportunity, these guys.
Second, at the other end of the spectrum, individuals with a medical degree are substantially overrepresented among top earners, but in terms of income they have generally lost ground relative to other top earners.
Sucks to have a servile career, eh ?
But what do you suppose “overrepresented” means in this context ? That medical degrees aren’t valued in post-post-modern society ? Given that most welfare states spend about half their budgets on health care, as most in Canada do, and that taxes to fund this “free” system are historically high if not outright egregious, that a decent number of medical professionals find their way into the highest income brackets should hardly come as a surprise. Also given that contemporary doctors are essentially Ch’ing era bureaucrats, you’d sort of expect them to be somewhere in the upper echelons of earning potential.iii But hey, what do I know ? I’m not a “professional economist” like these cocksuckers !
Third, given the prominent role of technological change in the growth of top incomes, it is no surprise that individuals with a natural or applied science degree, including those in the computer sciences, have made substantial income gains relative to other top earners. However, these gains have been smaller than those made by senior managers and those working in the finance and business services sectors.
Managers, financiers, and businessmen are leaders of industry – that is, they say “Yes” to this and “No” to that because that’s their job – and as such they command and control the flows of capital to ensure its optimal allocation in the moment.iv Given the increasingly technological environment that we find ourselves in, who do you think these leaders are giving orders to ? Undoubtedly, some such underlings will include the code monkeys with computer science degrees, but to imagine that these replaceable wrenchers are going to keep economic pace with theirs far more irreplaceable overseers is pure lunacy.v Not when sheep are multiplying like flies on shit while established leaders are dying of old age and potential leaders are being physically crushed under the obscene weight of the socialist mind cage. Nuh-uh. Not a chance.
Fourth, although there are many more computer scientists among the top 1 percent than there were 30 years ago, this group still constitutes only a small share of top earners. In addition, the greater presence of computer scientists among top earners mostly reflects a general increase in the share of all income earners who hold a computer science degree. Although technological changes can affect the earnings of different groups of workers in different ways, the results for scientists and computer scientists in particular suggest that such changes are only a modest part of the explanation of what has happened at the very top of the distribution. If the IT revolution had been the main driver of income growth at the very top, the group of IT specialists at the very core of this revolution should have accounted for a larger share of top-income earners.
Here’s an alternative explanation for
Lemieux and Riddell Lederp and Riderp : the “IT Revolution,” if that’s what you want to call the unprecedented individuation enabled by strong encryption, is most certainly happening, on that score there’s little question, but the idea that the labour of “IT specialists” is being used for anything other than to produce the tools for people who actually call the shots and make the money is nonsense in the first degree. “IT specialists” aren’t capitalists, they’re poorly paid carpenters.vi They’re not living in the house and making world-changing business decisions while smoking a cuban and getting a blowjob from their secretary, they’re cobbling together the echafaudage, which lest we forget they didn’t even design themselves, so that real people can make their ding in the universe.
That “IT specialists” were paid as well as they were over the past 30 years was merely a function of the mental limitations of the soon-to-be-derobed-and-dethroned “capitalists” employing them, psychologically rooted in physical space as they were and largely are, ignorant of “dem beige boxes” as they were and largely are, and therefore prone to accept over-payment and under-delivery as par for the course, thereby enriching and morally rotting out what was once a princely grounds for dignified study : computer science. Alas.
Although there is an ongoing debate about the ability of top executives to extract rents, it is difficult to believe that rents are not part of the reason executives have done much better than doctors in terms of top-income growth in recent decades.
Y’know what else is difficult to believe ? That “climate science” is mere interventionist state policy disguised as holy water and stale crackers – that is, if you’re a spineless idiot who thinks that his government-stamped scrip is worth the toilet paper it’s printed on and that his dreams of living off the pension he sucked cock so hard to “earn” is anything but a hopeless fantasy. But hey, faith is faith.
Although it is difficult to be definitive, several factors appear to have been more consistent with rent creation and extraction than with the competitive market view. For example, our finding that the growth of top incomes has been much greater in a few sectors (especially finance) and occupations (especially senior executives) is consistent with rent extraction associated with opportunities that are specific to those sectors.
“Here at Suckers ‘R’ Us, we firmly believe and are committed to proving beyond all shadow of a doubt that facts aren’t as important as feelings and that ‘the competitive market view’ is really whatever our two-bit back-of-napkin computer model shows after we carefully curated the inputs so as to demonstrate the need to increase redistributive taxation.” Uhuh. Right then. Anyone else hearing “Bankers are the bad guys, mkay” ?
In the case of finance, deregulation and lack of oversight have created opportunities for finance professionals to earn extraordinarily large incomes by taking substantial risks with other people’s money — and in some cases, by camouflaging the nature of those risks.
Don’t want bankers gambling with your money ? Don’t fucking give it to them !!! C’MON !!!1 This isn’t rocket science, people, this is 2015 and you have options other than PayPal and TD Ameritrade. Don’t want to trust someone else to handle your wealth ? Do it yourself or stfu already ! You can’t just live under a fucking rock and pretend like Bitcoin doesn’t exist, waiting for blockchain teckmologees or “Bitcoin 2.0” to come. Let’s get with the program here ! Chop chop !!
Finally, the declining bargaining power of many workers due to the globalization of economic activity, and institutional changes such as dramatic declines in private sector unionization and lower real minimum wages, might have reduced economic rents that would otherwise have flowed to workers lower down the wage distribution and increased rents received by those at the very top.
I said it once and I’ll say it again : the rich know when to head for the exits. It’s poor people that get fucking steamrolled by inflation, not me. It seriously doesn’t impact my quality of life, nor that of Warren Buffett, nor those Rothschilds dudes, in the slightest. If inflation were reported at 15% and actually twice that at the supermarket, I’d be right as rain. I really dun give a shit.
So when I say that government debt is fucking CRIMINAL because the political incentives of a popular democracy dictate that overt and therefore unpopular taxation will always take a backseat to covert taxation, namely currency devaluation, I don’t say it because I’m the victim here. I’m not. I can read the writing on the wall and all-too-easily sidestep the subtle traps that lie in patient wait for fools who (quite possibly) get what they deserve. At the same time, that doesn’t mean that I want to live in a world where unnecessary burdens are placed on the unprepared, particularly when the affected continue to fail at passing the lessons of history down to their children while also living too short of lives to have a second chance themselves. Really, why put yourself through all the bother ?
Not only that, but global wage rates are converging and there’s nothing your pretend-borders can do to stop your labour from being worth no more than that of a guy with the same skills in Croatia. That’s the Internet for you.
It is not clear, however, why people at the very top in this sector (CEOs and senior managers, in particular) should benefit to an even greater extent, as is evident in our data. Bertrand and Mullainathan (2001) use changes in oil prices as a prime example of CEOs’ compensation based on “luck” — on factors beyond their control — rather than on performance. As the authors explain, if CEOs were paid in a way that serves the interests of shareholders, they would be rewarded based on their effort and performance, as opposed to factors like world oil prices, which are beyond their control. The fact that top incomes went up substantially in the oil and gas sector is consistent with a “skimming” model of pay setting, where top executives are able to capture some of the large rents created by higher oil prices.
“Our socialist model said that unfairness isn’t fair ! Herpaderp !” Seriously, you guys, CEOs aren’t magical alien dragons of pure energy. They’re just smarter than you, so yes, that means they make more money too. Deal with it already. You can start by calling a spade a spade and come out of the jealousy closet.
On balance, we think that our findings are more consistent with a rent–extraction story than with a market-based explanation. It is important to stress that we do not mean to suggest that top-income earners are “rentiers” in the traditional sense of the word. Like the rest of Canadian income earners, people at the top earn most of their income from work — indeed, if anything, their work effort has increased over time, as evidenced by the growing share working more than 50 hours a week. Nonetheless, although some high incomes are surely compensation for hard work, the growth in top incomes over time has been so large that rent extraction must be the major contributing factor.
Hold on a minute, maybe the “more intelligent people make more money” theory isn’t even the whole picture… these 1%ers are actually working more hours too ! Sweet Mother of Holy Ineptitude, how can Lemieux and Riddell say that managers, financiers, and businessmen are undeserving of their pay ? Does the sacrificed time away from their family and loved ones, to say nothing of the risk and responsibility of managing capital in the face of violent bezzle headwinds from every direction, not deserve some serious recompense ? If this wasn’t the case in the 1980s, it’s about time already.
In summa :
What the market is : A system of trade and exchange for determining prices as a means of resource allocation.
So you want a fair and competitive market ? Then stay the fuck out of the way. Because that’s how that works.
Any questions ?
___ ___ ___
- Not unlike, say, “progress.” [↩]
- The disease industry being one notable exception in Alberta. How conservative can a state really be when half their budget is spent on “free” health care ? [↩]
- And it’s no wonder that Chinese medical students and doctors are
overwell represented as a result, they’ve only been training for this for the past thirteen centuries. [↩]
- Optimal allocation of resources is whatever those with capital say it is, making it sort of like art, in that sense. [↩]
- In the exact manner and in the exact same way, a child is fungible relative to his parent, which is why we have the saying “You can’t choose your parents” but not the converse ; the converse isn’t true ! [↩]
- Yes, carpenters make more money, use their bodies just as much as their minds, and aren’t cramped up in front of computer screens for 10-15 hours a day. Think about that before you choose your trade. [↩]