Disqus - Latest Comments for UOJim

Re: http://www.willwilkinson.net/flybottle/2009/10/14/3821/

Eric H — Wed, 14 Oct 2009 23:51:01 -0000

I guess what I was clumsily, blindly driving at--in Will's defense--was that consumption ought to be measured--period. No one works merely to pile up green pieces of paper. But the examples Kenworthy gives of what he would do with an extra million if he had it are measurable, aren't they? That paragraph just jumped out at me. It seemed to me like Kenworthy was arguing against his own case.

Kenworthy: Suppose that the rich consume relatively little of their additional income. Should we then conclude that the economic inequality we care about hasn't risen much? No.

This just seems absurd to me. "Relatively little of their additional income?" Kenworthy is piling on fantasy variable after fantasy variable. Whose to say what portion of someone's income is "additional" or marginal? His point that the portion of rich people's income that isn't spent still adds value is fine...but he's saying that that portion accounts for the income gap. I'm saying, no, if you're going to consider unspent wealth as "value adding" then it should count as consumption, not income.

To quibble: Kenworthy adds that "It matters that huge income increases at the top helped propel a housing bubble that raised the price of expensive homes, especially in and around the cities where a disproportionate share of the top 1% live." This is crazy. Cities have a large share of all income strata. And the housing bubble wasn't merely a bunch of latte-sipping, boat-shoe wearing nouveau riche dudes named Sterling foreclosing on their McMansions!

Re: http://www.willwilkinson.net/flybottle/2009/10/14/3821/

willwilkinson — Wed, 14 Oct 2009 23:38:43 -0000

I think Jim's right. Kenworthy's saying there's utility in savings not captured by nominal consumption measures. I think this is obviously true. The question is the extent to which this fact complicates consumption as a proxy for material welfare. As an issue of usage and communication, I think it's confusing to label as "consumption" the utility derived from savings. Judging by his usage, I think Kenworthy would agree.

Re: http://www.willwilkinson.net/flybottle/2009/10/14/3821/

UOJim — Wed, 14 Oct 2009 23:00:51 -0000

Was in reply to Eric H. ;)

Re: http://www.willwilkinson.net/flybottle/2009/10/14/3821/

UOJim — Wed, 14 Oct 2009 23:00:25 -0000

B - b - but sir. This is the internet!

Re: http://www.willwilkinson.net/flybottle/2009/10/14/3821/

Eric H — Wed, 14 Oct 2009 22:58:28 -0000

You're right...and I'm mistaken...

Re: http://www.willwilkinson.net/flybottle/2009/10/14/3821/

UOJim — Wed, 14 Oct 2009 22:39:16 -0000

Forgive me, but I'm genuinely amazed that you seem to have this so exactly backwards. If you believe, as is reasonable, that "all income is used for consumption," then your beef is with Will, not Kenworthy. Kenworthy is not using Austrian vocabulary, but he's the one saying that the income not going toward *measured* consumption is nevertheless "buying" some array of goods, goods that the present reckonings of "consumption" don't capture.

Re: http://www.willwilkinson.net/flybottle/2009/10/14/3821/

Eric H — Wed, 14 Oct 2009 22:27:29 -0000

"The point is that income adds value even if it is not spent right away."

Income doesn't add value by itself--if income is adding value, it's being consumed in some fashion. It is used to produce annuities, change lifestyles, boost self-assurance by getting stuffed in a mattress. Saving for a rainy day is not only deferring consumption but using--consuming--money in the present to satisfy one's need to plan for the future.

I think Kenworthy is pretending that income doesn't get consumed. It is always consumed.

Re: http://www.willwilkinson.net/flybottle/2009/10/14/3821/

UOJim — Wed, 14 Oct 2009 21:49:39 -0000

I think you're restating Kenworthy's point, but in even stronger form.

Re: Yup: Over Seventy Buck per Hour

UOJim — Sun, 23 Nov 2008 10:46:11 -0000

All that said, there should be NO legacy costs in a per-hour comp metric. They should be loaded into per-unit or percent-of-revenue metrics. If you load legacy costs into per-hour comp, then your unit metric and your totals move in opposite directions when you do things like expand or contract your workforce.

Re: Yup: Over Seventy Buck per Hour

Glen Raphael — Sun, 23 Nov 2008 10:40:49 -0000

I think my reasoning was correct but I didn't explain it well. However, there's still a caveat or two. The article says that in in a few years if this new contract takes effect the difference between GM's costs and those of Toyota are $9/hour, largely due to legacy costs.

The largely implies legacy costs are less than $9/hour, but only assuming Toyota's legacy costs are negligible. Which is probably true, but I thought I should point it out. Since this is a difference versus toyota, the true costs are that "largely" - some fraction of $9 - plus Toyota's excess costs, whatever those may be. Which is why I rounded up so much.

A further additional quibble is that this statement was about what the situation would be in a few years if a this new contract takes effect, not what it is right now. Which means one could slant the numbers in various directions with assumptions about what happens in the meantime.

Re: Yup: Over Seventy Buck per Hour

UOJim — Sun, 23 Nov 2008 08:38:03 -0000

Emma, if I were to guess, the retiree health costs are probably what GM didn't fund in advance more than the pensions, though of course I could be wrong about that. Your point stands: bad accruals!

Re: Yup: Over Seventy Buck per Hour

UOJim — Sun, 23 Nov 2008 08:34:21 -0000

Withdrawn! Despite Glen's bad method (you need to add $9 to Toyota's estimated $53), he arrived at a roughly correct answer. So I'll not quibble.

Re: Yup: Over Seventy Buck per Hour

Jim Henley — Sun, 23 Nov 2008 08:24:35 -0000

Glen, you misread. $9/hour comes AFTER an earlier subtraction of part of retiree costs. I recommend you read the article itself.

Re: Yup: Over Seventy Buck per Hour

Jim Henley — Sat, 22 Nov 2008 22:04:04 -0000

Will, as I mentioned back "home," the 45-page document whose intro Perry excerpts makes clear that it includes cost for retirees in a number of areas. (See particularly from page 41 down.) That document is very selective in what expenses it does and doesn't detail: it tells you a fair amount about life and unemployment insurance but essentially nothing about health care costs and pension/retirement income. That in itself seems . . . funny.

What I can say is:

1) the doc Perry quotes conflates costs for retired and active-hourly workers in a number of areas.
2) other docs on that website do the same. See the health care chapter of the same presentation. There are pension outlays in the pensions/401K doc, though nowhere does GM explain how they integrate into the figures in the "Other Benefits" pdf that Perry considers so authoritative. Even though it's an HR document with unaudited numbers. Whatever.
3) Megan, who is a real reporter, seems to allow that the $70/hour figure includes costs per retirees. Felix Salmon makes the same assertion.

Your own suggestion that "pensions" might mean "for current workers" struck me as an important possibility to check out - were that the case, GM's number would be more defensible. With a little poking around, the balance of evidence seems to cut against this explanation.

Re: Yup: Over Seventy Buck per Hour

GilM — Sat, 22 Nov 2008 21:42:44 -0000

I think Megan McArdle's post on this is pretty good.

Re: Yup: Over Seventy Buck per Hour

willwilkinson — Sat, 22 Nov 2008 20:47:45 -0000

Jim, I may be reading the GM document wrong, but I see it as describing "cash compensation and benefits provided to GM hourly workers," not to retirees. Maybe they're being deceptive, but that's not clear to me. I take it that there are contractual pension obligations to current workers, pension benefits are obviously part of total compensation, and the company has to spend money to meet these obligations on an ongoing basis. Funding the pensions of current workers is part of current labor costs. Why are you so sure they're being shady? I'd like to be clear about all this myself.

Re: Yup: Over Seventy Buck per Hour

Jim Henley — Sat, 22 Nov 2008 20:09:36 -0000

Will, it's asinine to do what GM does here and put pension and retiree benefits in a numerator where the denominator is labor hours. It's a metric that has no business meaning. If you put them over number of cars produced or dollars of revenue earned, you'd have a meaningful benchmark. But it is stupid or worse than stupid to divide those dollars by current labor hours because the two numbers have no meaningful relation.

I have no business objection to including any actual current-workforce-related comp in a per-hour metric: insurance premiums for current workers? Payroll tax? Vision care? Hey, go for it. But it's just bullshit to include fixed costs for retirees in a current-labor-hour-cost figure. It's hard to find a good-faith explanation for why GM would put such a meaningless number out there.

Re: Clark on Polanyi (the Bad One)

Jim Henley — Fri, 13 Jun 2008 11:31:47 -0000

I think of it as adorable pedantry. Hm. Must rethink.

Re: Clark on Polanyi (the Bad One)

Jim Henley — Thu, 12 Jun 2008 20:29:55 -0000

My big concern is the redundancy of "from whence."

Re: Kerry Has a Blog

Jim Henley — Tue, 25 Dec 2007 12:03:29 -0000

I discovered this new "internet" "blog" of hers the other day. But I figured I'd wait for at least a third friggin' entry before talking it up.