Myths

There are many hard-lived myths and new ones continually appear. I will try to collect some references as well as organize the topics.

The conditions of workers

Wage stagnation since the 1970's

The claim is that wages have stagnated and a divide has appeared between wages and productivity.

As Martin Feldstein points out in "Did wages reflect growth in productivity?", the problematic claim is the result of (1) measuring wages as opposed to total compensation, and (2) using different inflation indicators to correct wages and productivity. He finds that after accounting for those total worker compensation in the US and UK has tracked very closely to productivity (with maybe a lag of up to 2 years).

Pointers:

• Boudreaux and Palagashvili on mandated overtime pay and wage stagnation

Unions

The claim is that unions have been an essential factor to improving the lives of workers.

Executive pay

The claim is that while worker wages have stagnated (see above) the executive pay has exploded. This ties into the theme of inequality below.

This is the result of picking a small enough group of top CEOs. See New BLS data show that for all ‘chief executives,’ the ‘average CEO-to-average worker pay ratio’ is less than 5-to-1.

Inequality

The claim is multi-dimensional: (1) inequality has risen dramatically, (2) this change is caused by free-market liberalism, and (3) it has nefarious effects.

Measurement:

• Before vs. after tax/redistribution
• Household vs. individual
• Wealth vs. income vs. consumption vs. core consumption (personal priorities vs. activist priorities, progress in those areas)
• Methods of computing wealth (typically based on income)
• National vs. worldwide (worldwide inequality is shrinking)
• Relative vs. absolute income vs. absolute income with benefits (health insurance, pension/social security, redistribution programs, better working conditions)
• Framing/anchoring (what is the optimal level of inequality you expect?)
• Compositional effects (more immigrants and young means increased inequality; measurement of groups is misleading because income naturally starts low in life, then peaks and decreases again)

Causes:

As pointed out above some of the measured changes are the result of the measurement method. Below are some other factors, some of which are healthy/legitimate and others that are unhealthy/concerning.

• Monetary policy. Contribution of capital to high incomes and contribution of central banks to apparent return on capital.
• To be continued...

Effects:

To be continued...

Proposed solutions:

To be continued...

Other considerations:

• Why is income or wealth inequality so important relative to other forms of inequality (grades, talent/specialization, dating market, beauty/health/smarts/humour, fun, inequality between past/present/future generations)?
• Why is income inequality or relative wealth such a big concern, rather than absolute standards of living?

Slavery

The claim is that slavery is the result of the free-market and government saved us from it.