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What percentage of the economy is capital investing as compared to the 80s?

Are small businesses which are still mostly labor intensive remain the biggest part of the economy today?

Today’s ecoomy is far more capital intensive
than it used to be. an extended explanation (and some hard numbers) follows, but allow the following true anecdote to illustrate:

THEN: A working couple who could take few months off from work could open a diner in a an old trolley car investing little more than the cost of wiring it, plumibn it etc,

TODAY: Even the cheapest McDonalds (a pared-down retaruant) requires a $1.5 million investmen and must ahve a parking lot, a fenced -n stormwater reteninon basin, a 3-compartment sink, a floor sink, three bathrooms, multiple handwashing stations, etc…)

POINT BEING: Even companies we don’t consider high-tech nor capital intensive require a LOT of capital today.
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Now the numbers

Comparing the actual amount of capital invested is “unsimple.” To do so economists use a subset of investment types "K "as indicator.
(Note: K includes things built on land, and includes factories, office computers, etc. but does not include land prices, prepaid salaries , interest paid, prepaid insurance, marketing expenses etc.)

They then compare two pairs of numbers
and get the following results:
Portions invested in capital vs labor (K/L ratio)

  • 1950s: 0.42 (labor intensive, but almost 50/50)
  • 1970s: 0.54
  • 1990s: 0.67
  • 2020s: 0.82 (Hugely capital intensive ----- 4 parts capital to 1 part labor)

The other pair of numbers theycompare is the elasticies of K and L.
I will forgo the discussion of what they mean and present them below only for completeness.

Here they are (only for completeness)
(α = elasticity of K, β = elasticity of L)

  • 1950: α = 0.30, β = 0.70
  • 1970: α = 0.35, β = 0.65
  • 1990: α = 0.40, β = 0.60
  • 2020: α = 0.45, β = 0.55

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  • Recall from earlier that the traditonal subset of investment measured by economists is “K.” (It does not count land, intellectual property etc…
  • Recall also from earlier that the "traditonal (1950s) mix of “K” ot “L” was 0.42 (roughly 1-to-1), and today is 4 parts investment to 1 part labor.

Well that 4-to-1 thing gets even more intense (like 5-to-1 or 6-to 1) when we attempt to include intllectual property as well as the traditional “K.”

Bottom line?
Get your family in the asset-owning part of the economy now or forever forget about keeping up with the Joneses. Eat rice and pasta and quit taking vacations and use the savings to buy stock or an Air BnB or become partners in your friends dog-walking business . . . or you will be left behind and tehre is nothing Joe Biden or Donald Trump can do about it.

(They call economics “the dismal science” for a reason.)

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Thank you. Very interesting. And as to the second question?

I think you are confusing gdp contribution with wealth shift. Not sure how.

According to the SBA (in 2014) small businesses (under 500 employees) employed 45.9% of the US workforce and contributed 43.5% of the GDP.

That second number is a good rough guide but needs to be considered carefully though because it might be considered only small vs large (and might exclude government, non profits, import-export etc.)

I am not sure what template to use for small businesses.
they seem tobe a mix

  • Buy a car, hire yourself work as an Uber driver.
  • Buy a $200,000 truck work for yourself, maybe with a partner.
  • Doctors and engineers get together with their golf partners and open a $2, McDonalds. Employ 10 full time an 90 part time?

Whicheer way, certain caveats apply.

(I’ll get to those in a few moments and will post seperately.)

I agree with him and I am a minority and see that he is right. Even the civil rights programs is a racist program. And it is not just racist against white males.

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That will be answered by time, on an individual basis.

Indeed. Perhaps even selfishness

It is a world of individuals.

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corrects past injustices.

Allan

Hogwash.

As told earlier one of my HS classmates was a woman whose “didn;t like most black people” because her dad owned a liquor store a it was robbed at gunpoint three times “and all of them were black.”

Q1.
How many black families should we rob at gunpoint to correct this injustice.

Q2.
Should we limit ourselves to robbing the grandchildren of the original thieves, or does justice require we rob black people randomly.
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Your bigotry is as obvious hers.
In fact she was less radical.
Your appaling despicable view point reqires we seek revenge on people who have done nothing wrong.

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affirmative action did a lot of good in both the private and public sector.
and continues in the private sector to this day.

leveling out the playing field.

why do blacks make less then whites on average?

why do blacks have lower graduation then whites?

why do blacks have a higher unemployment rate than whites?

i could go on and on about the inequities in American society.

Allan

If one ethnic group making less money than another ethnic group constitutes an inequity , then perhaps we could also use some affirmative action for white people, right ? :wink:

I am sure most realize that whites are far from the top earning group in this country.

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The past injustices of discriminating against someone based on the color of their skin ? I guess no better way to fight that than… discriminating against someone based on the color of their skin :smirk:

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That is still no reason to punish someone who never committed any wrong.
Joe does something wrong wo we will punish Andy’s grandchild" is not justice. iIt is the opposite of justice

And a host of peer-reviewed academic studies show that immigrants, white, black, latin etc. climb the adader, and their kids climb the ladder more successfully than any a group born in the USA.

—> Black is not holding anyone back.
—> Racism today is not holding anyone back.
→ Racism from 150 years ago is not holding anyone back.
(If it were about being black, then black immigrants and their children would also ahve low success rates, hiring rate etc…)

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“Using data from three waves of the US Census (1980, 1990, and 2000), we assess differences in earnings (and related measures of socioeconomic status) among male and female African Americans and black immigrants from Africa and the Caribbean. Results of the analysis suggest a sizeable earnings advantage for immigrants.”

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people by their skin color of birth are subject to inequities in American society.

affirmitive action helps even it out.

Allan

OK - so as you’ve seen by my graph above, White Americans make less money than Indian Americans, Filipino Americans, Taiwanese Americans, Sri Lankan Americans, Japanese Americans, Malaysian Americans, Chinese Americans and Pakistani Americans - what sort of affirmative action programs would you be in favor of to address these inequities and help White Americans close these gaps and thusly, help correct these injustices ?

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how long has that been occurring, its recent right?

when it reaches 100 years then we can talk?

black people don’t has been behind whites in this country since hector was a pup.

affirmative action helps.

Allan

Not it does not even that out.
It make a person feel happy by getting revenge on an innocent party.
The desire to is a moral failing, the inablity to recognize it as such is an intellectua failing.

“Jim threw mud on me and I could not find him. So I found someone who looked like him and spat in his face.” <— Moral failure.

“I am smart. I am educated. What that guy just did is an act of justice. It evens things out.” <— lack of intelligence

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