Steve Randy Waldman[new draft post] Why does wage compression underwhelm? https://drafts.interfluidity.com/2024/03/25/why-does-wage-compression-underwhelm/index.html
Kent Willard@interfluidity I think a lot of growth in the lower wage cohort is from those with higher job mobility. For example, those with lower wages who are older or in a small city or rural area won't change employers or industries. Their employers know it, so their raises are small.
Alon@kentwillard @interfluidity That's every wage increase, though. Growth doesn't mean everyone gets the same 2% real wage increase; it means more productive workers get more. The problem is when populists have latched onto the least productive workers (e.g. ones who won't move to opportunity) as the representatives of the real working class.
@Alon @kentwillard If we are concerned abt welfare, we are concerned abt the welfare of all the humans, not just those willing or able to move to opportunity under current circumstance, even if that wld increase their productivity. If we are concerned abt democratic politics, we are concerned about the humans in proportion to their numbers, and if the fraction willing or able to move to opportunity is modest, don't blame "populism" for the bankruptcy of a politics that slights the place-bound.
@Alon @kentwillard None of this prejudices the solution space. One way to address the disconnect is to make it easier for people to live the dynamism imagined of homo economicus. Another way is to reshape productivity, so that, for example, geographical dynamism is less necessary because remote work. Lots of possibilities!
@Alon @kentwillard But if most of the working class still live within 15 miles of their parents, any "populism" — any functional democracy — will put a great deal of weight on those people as "representatives of the real working class".
@interfluidity @kentwillard *All* reduction in inequality involved moving to opportunity, it was just once called urbanization and today it's called moving to a different city.
The idea that "most of the working class still live within 15 miles of their parents" is just wrong. It comes from a single survey of American women over the age of 50 asking them where their children lived; it's been publicized way past its statistical power precisely because it moralizes against migration.
@Alon @kentwillard Urbanization creates growth, not equality. On the contrary. cf China. We can quibble about surveys, but it remains true that there is a very, very large cohort of people who have and likely will always, absent very sharp changes in our circumstances, remain near family and childhood community, close to the place they were born. Trying to undo this is quite a radical project, utopian or dystopian. Ignoring this cohort is morally indefensible and politically catastrophic.
@interfluidity @kentwillard No, urbanization creates both growth and equality: China has high inequality with fast urbanization, India has even higher inequality with slow urbanization and repeated failed attempts at growth-in-place.
And the cohort that I'm ignoring is not "people who'd like to stay" but "people who'd like the children they abused to stay." It's okay not to give them money, same way it really is okay not to give farmers special welfare when they riot.
@interfluidity @kentwillard Usually democracies have higher taxes and lower inequality than autocracies, because of the median voter theorem (I presume you've seen the paper that made the rounds on this on Econ Twitter pre-Musk?). That India has a Gini of 0.5 (China: 0.41; US: 0.39 pre-corona) is an indictment of an entire strategy of trying to grow without urbanization or labor-intensive industry.
@Alon @kentwillard The relationship between urbanization and inequality is complex, like the relationship between growth and inequality is complex. It is not defensible to say that urbanization creates equality. It is also not defensible to say urbanization always creates inequality, although that is usually its very short-term effect. 1/
@Alon @kentwillard But trying to impose a preference for urbanism and geographic dynamism on the coat tails of egalitarian values is definitely not defensible. There have been more equal and less equal agrarian and urban societies. We don't know what the shape of the future is. Perhaps you have a very particular urbanistic, dynamic, egalitarian development path in mind, but mere "urbanization" is not necessarily, not remotely necessarily, egalitarian. /fin
Misuse Case@interfluidity @Alon @kentwillard Urbanization isn’t necessarily a driver of egalitarianism…but freedom to migrate, either towards a better situation or away from a bad situation, is *definitely* a driver of egalitarianism.
@MisuseCase @Alon @kentwillard I don't think that's true in general. It might be true if everyone were equally situated to be able to move, so everyone would optimize towards equally good situations. But in real life, some people simply cannot move for a variety of reason, so freedom to migrate often exacerbates inequalities. Those who were already relatively well-situated move to even better circumstance. Those who were poorly situated are left-behind in places and circumstances now much worse.
Diego@interfluidity @MisuseCase @Alon @kentwillard In a high migration environment, the "left behind" are an increasingly irrelevant minority. That's how inequality is reduced, a smaller and smaller share of the population living in a persistently poor place.
And I don't think migrating away makes things worse for those left behind, if the process continues to its bitter end everyone left can have a productive job in farming (or services for the farmers).
@DiegoBeghin @interfluidity @MisuseCase @kentwillard Something that I pointed out on Discord and should blog is that in Japan and South Korea, there's very little capital region GDP per capita premium. GDP per capita is not a great figure for measuring domestic regional wealth, but usually it magnifies differences because of where corporations are HQed, so if anything the wage premium should be lower. France has a higher capital region wage premium; the UK has a much higher one.
@Alon @interfluidity @MisuseCase @kentwillard And then we can relate that to Ile-de-France building *some* housing, while London doesn't?
@DiegoBeghin @interfluidity @MisuseCase @kentwillard No, this goes back to before the recent acceleration of housing growth in Ile-de-France. The UK just has more zombie industries in the North; it tried fixing that through place-based subsidies after WW2 and all that did was help accelerate the decline of Birmingham too.