Author Topic: Is it theoretically possible for the market to NOT go up long-term?  (Read 26168 times)

nobodyspecial

  • Handlebar Stache
  • *****
  • Posts: 1472
  • Location: Land above the land of the free
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #50 on: November 16, 2015, 01:09:30 PM »
By "the" market, I guess we're assuming the S&P500?  Yes, it's possible that, the international markets, the bond markets and nothing else ever go up in the rest of our lifetimes. 
Yes - we were just imagining ways in which an economy could grow without "the market"  going up.

It's unlikely in the short/medium term, but not impossible - large publicly held corporations operating in a single market being stable for decades isn't actually a law of the universe.


adamwoods137

  • 5 O'Clock Shadow
  • *
  • Posts: 69
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #51 on: November 16, 2015, 01:34:19 PM »
So unless you think private equity would be buying up all profitable companies then I don't really see a problem.

That's precisely the scenario I was proposing; a future economy in which the vast majority of companies are no longer competitive due to the growth of megacorporation congolomerates, which are privately held and basically own all economic growth in in a form that is no longer publicly traded.

There is probably an equilibria somewhere between all profitable companies getting bought out, and having all companies be public.  If there are the same number of investment dollars chasing fewer opportunites they will provide those opportunities with more enticing valuations, which should encourage IPO's.  Under current law, I would bet very heavily against a 0 profitable public company world. 

brooklynguy

  • Handlebar Stache
  • *****
  • Posts: 2200
  • Age: 38
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #52 on: November 16, 2015, 01:39:15 PM »
Private equity is a thing, after all.

Private equity is, in essence, public equity only narrower in scope.  The hypothetical scenario under discussion is the extreme concentration of ownership of profitable industry as a whole.  Because this would translate into an extremely unequal distribution of wealth (even in comparison to today's extremely lopsided state of affairs), I agree with your initial assessment that it would also most likely translate into violent revolution.

As a threshold matter, though, in order to materialize, this scenario would first have to overcome practical hurdles of the type discussed above.  This passing reference raises another one:

Take ATT for example, even if they were not broken up by the government...

Extreme concentration of ownership would implicate antitrust laws.  Unless those laws go away or stop being enforced, the extreme concentration of ownership we're positing here could not occur.  Interestingly, as discussed in this thread, a Harvard law professor has argued that the comparatively miniscule level of concentration of ownership of public companies existing today as a result of institutional holders like mutual funds participating in the market may already violate antitrust law).

tesuzuki2002

  • 5 O'Clock Shadow
  • *
  • Posts: 21
  • Location: California
  • Living life and building Freedom Money
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #53 on: November 16, 2015, 06:31:16 PM »
Invest more when the market goes down...   Good chance it will eventually come back up to some nominal level.

mr_orange

  • Magnum Stache
  • ******
  • Posts: 4490
  • Age: 39
  • Location: Round Rock, TX
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #54 on: November 16, 2015, 07:48:24 PM »
Companies do IPOs for a reason.  Even if some are delisted or taken private there will be new ones to replace them.  Access to liquidity for early financiers at retail equity pricing is really a major reason for doing an IPO.  It will be interesting to see how the new securities laws may change all of these dynamics. 

frugal_c

  • Stubble
  • **
  • Posts: 175
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #55 on: November 16, 2015, 08:07:24 PM »
I found a good article on global equity returns, I am including the link here.  http://efinance.org.cn/cn/fm/Global%20Stock%20Markets%20in%20the%20Twentieth%20Century.pdf.   

It tracks 39 global markets from 1921-1996.   To avoid survivorship-bias, it includes markets that essentially went to 0, (Germany,japan, portugal).   Anyways, overall you would have returned 3.4% real over this time period.   So a bit lower than what we are used to but not bad.   If you had been smart enough to only invest in markets that don't completely go to 0, it would have returned 4.1%.   I have a feeling it is not including dividends, which if true means the actual returns were quite a bit higher.  Of course this is over a very long sample period, so actual results would have varied dramatically decade to decade.
« Last Edit: November 16, 2015, 08:09:51 PM by frugal_c »

nobodyspecial

  • Handlebar Stache
  • *****
  • Posts: 1472
  • Location: Land above the land of the free
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #56 on: November 16, 2015, 08:58:12 PM »
Private equity is, in essence, public equity only narrower in scope.
I think that misses  an important point.
The great revolution  of the public markets was that anybody could invest in, and benefit from, the economic success (or otherwise) of the country. You don't need to be titled aristocracy, a freeman of the city, or a member of a guild or some private club.

Returning to the days when JP Morgan and a few friends sat in a smoky room and carved up the economy between them is probably a bad thing.
   

dungoofed

  • Pencil Stache
  • ****
  • Posts: 661
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #57 on: November 17, 2015, 03:37:42 AM »
http://avc.com/2015/11/the-blurring-of-the-public-and-private-markets/ from today. Relevant to the direction this thread has taken.

dividendman

  • Handlebar Stache
  • *****
  • Posts: 1073
  • Age: 36
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #58 on: November 17, 2015, 11:08:22 PM »
Isn't there some law that after the number of equity holders is larger than X the company must go public? So, unless in these super mega corps only a handful of people are equity holders, these large companies will be forced to go public. I don't think you're going to get any mega caps where a bunch of senior execs will work for no equity incentive.

I think that was a factor in Facebook going public if I recall correctly.

mr_orange

  • Magnum Stache
  • ******
  • Posts: 4490
  • Age: 39
  • Location: Round Rock, TX
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #59 on: November 18, 2015, 06:46:32 AM »
Yes....but there really is nothing forcing the private companies to take fewer shareholders unless they need a lot more capital to grow at their desired clip. 

nobodyspecial

  • Handlebar Stache
  • *****
  • Posts: 1472
  • Location: Land above the land of the free
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #60 on: November 18, 2015, 06:50:06 AM »
Isn't there some law that after the number of equity holders is larger than X the company must go public?
Not forced to go public, but they are forced into  a similar set of financial reporting requirements - which is why they eventually go public.

But there are lots of ways around it. You can have one fund own many another companies outright and that counts as a single owner, so only the parent has >50 investors. Or you can structure it as a fund where people have part of the fund but not direct shares in the company - as Goldman Sachs did with Facebook before their IPO.



« Last Edit: November 18, 2015, 09:14:22 AM by nobodyspecial »

EarlyStart

  • Stubble
  • **
  • Posts: 116
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #61 on: November 19, 2015, 09:26:22 PM »
From today's valuations? No, no chance.

In the far future I suppose it's possible that the index could rise 1000% in 18 months and then crash and take 30 years to reach those same valuations again, but that's a result of unnaturally high bubbles temporarily inflating the price, not long term negative growth.  That's what happened in Japan.

On the other hand, in the very long term I think negative growth is guaranteed.  Economies and nations will crumble.  The sun will explode.  Eventually the last sentient life form in the universe will die, and at that moment their portfolio will lose its last penny.

But in the meantime, on the scale of our little lives, I don't worry.  A long as humanity continued to strive for something, investment economies will continue to grow despite the inevitable setbacks.

This.

The Japan example doesn't apply to any stock market that trades at even an semi-reasonable valuation. We could debate whether the U.S. market is overvalued or not, but it is undoubtedly nowhere near what Japan was. We're talking about 80-90 x earnings. I'd turn into a gold-bug if we hit 45 or 50 times, and I'm no gold bug. At 60 to 70 times I'd have a bunker with canned foods and ammunition. I'm exaggerating, but only slightly.

frugalGreg

  • 5 O'Clock Shadow
  • *
  • Posts: 10
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #62 on: November 19, 2015, 10:20:59 PM »
This has been an interesting thread to read -- thanks for some really well articulated opinions to what on the surface is a simple question.

I'm always amazed at some people's unbounded confidence that the markets will always go up, that housing prices will only go up, etc.  As someone who is still in their 30s, but who's been investing long enough to have seen some good times and some really bad times, I can personally attest that even a somewhat diversified portfolio can go down over even a several year period (ex. TSX/Canadian markets have been real losers the last 2-3 years).  Echoing others points about global diversification, and about investing regularly to avoid being overly dependent on market-timing.

EarlyStart

  • Stubble
  • **
  • Posts: 116
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #63 on: November 19, 2015, 10:35:36 PM »
This has been an interesting thread to read -- thanks for some really well articulated opinions to what on the surface is a simple question.

I'm always amazed at some people's unbounded confidence that the markets will always go up, that housing prices will only go up, etc.  As someone who is still in their 30s, but who's been investing long enough to have seen some good times and some really bad times, I can personally attest that even a somewhat diversified portfolio can go down over even a several year period (ex. TSX/Canadian markets have been real losers the last 2-3 years).  Echoing others points about global diversification, and about investing regularly to avoid being overly dependent on market-timing.

I guess it really depends how you define "long term". If left unspecified, a "long term" claim can never really be proven wrong because they person who made the claim can just say that they will be right later.

I'm with you on several year (7-10) periods. 30-40 is a different ball park entirely.

CientoUno

  • 5 O'Clock Shadow
  • *
  • Posts: 40
  • Age: 28
  • Location: Roi Et, Thailand
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #64 on: November 20, 2015, 12:25:58 AM »
This has been an interesting thread to read -- thanks for some really well articulated opinions to what on the surface is a simple question.

I'm always amazed at some people's unbounded confidence that the markets will always go up, that housing prices will only go up, etc.  As someone who is still in their 30s, but who's been investing long enough to have seen some good times and some really bad times, I can personally attest that even a somewhat diversified portfolio can go down over even a several year period (ex. TSX/Canadian markets have been real losers the last 2-3 years).  Echoing others points about global diversification, and about investing regularly to avoid being overly dependent on market-timing.

I guess it really depends how you define "long term". If left unspecified, a "long term" claim can never really be proven wrong because they person who made the claim can just say that they will be right later.

I'm with you on several year (7-10) periods. 30-40 is a different ball park entirely.

When I initially asked the question, I meant more in the 30-40 year range instead of the 7-10 range. I was thinking of someone like me, a 20s/30s guy just getting into stock index investing now, with a good number of investing years ahead, and discounting freaking out and selling prematurely. Thank you so much for your answers though, really boosts my confidence a lot actually. Seems like, even in a realistic worst case scenario, regular contributions will negate some of the risks of an underperforming market. And as for the Nikkei, I immediately noticed what sol said: it shot up REALLY high, really fast... and I guess what goes up must come down. Doesn't seem like our numbers are at that point yet.

nobodyspecial

  • Handlebar Stache
  • *****
  • Posts: 1472
  • Location: Land above the land of the free
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #65 on: November 20, 2015, 09:13:15 AM »
I'm always amazed at some people's unbounded confidence that the markets will always go up, that housing prices will only go up, etc.
Long term we assume that the world economy will grow. Unless we all decide to stop making things and go back to living in caves.
It might be that a particular country's market was incredibly overvalued and then stagnates for decades, or a poor country that was devastated by low prices for a raw material - but for a large diverse economy progress happens.

There are arguments in this thread about how this economic growth might not be directly captured by the public markets - but ultimately the money gets spent.
« Last Edit: November 20, 2015, 09:16:20 AM by nobodyspecial »

Tjat

  • Pencil Stache
  • ****
  • Posts: 561
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #66 on: November 20, 2015, 09:15:02 AM »
Is it theoretically possible for the market to NOT go up long-term?

Sure. It's also theoretically possible you get hit by a bus tomorrow or solar flares fry the grid. Is it probable for the market to not go up? No, but depending on how you quantify this likelihood, there are various ways to hedge this possibility.

ArtX

  • 5 O'Clock Shadow
  • *
  • Posts: 7
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #67 on: November 20, 2015, 05:07:53 PM »
Kaspiant, that's the perfect description!
I will add my 2 cents.
John Templeton suggested in 1993 that the Dow may go up to 6000 by the beginning of the 21st century. Look at the chart 18 years later, the blue chip index is at 17000. Templeton was a great investor and if you are new to this reading his 16 rules sure worth your time. You can find them at Franklin Templeton's website.
Also it may be not the best idea to put all your money into one asset, because noone can predict the future. (that's another Templeton's rule) Consider diversifying: buy not just stocks or index-funds, but also some other assets (metals or equities)

EarlyStart

  • Stubble
  • **
  • Posts: 116
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #68 on: November 20, 2015, 08:28:39 PM »
This has been an interesting thread to read -- thanks for some really well articulated opinions to what on the surface is a simple question.

I'm always amazed at some people's unbounded confidence that the markets will always go up, that housing prices will only go up, etc.  As someone who is still in their 30s, but who's been investing long enough to have seen some good times and some really bad times, I can personally attest that even a somewhat diversified portfolio can go down over even a several year period (ex. TSX/Canadian markets have been real losers the last 2-3 years).  Echoing others points about global diversification, and about investing regularly to avoid being overly dependent on market-timing.

I guess it really depends how you define "long term". If left unspecified, a "long term" claim can never really be proven wrong because they person who made the claim can just say that they will be right later.

I'm with you on several year (7-10) periods. 30-40 is a different ball park entirely.

When I initially asked the question, I meant more in the 30-40 year range instead of the 7-10 range. I was thinking of someone like me, a 20s/30s guy just getting into stock index investing now, with a good number of investing years ahead, and discounting freaking out and selling prematurely. Thank you so much for your answers though, really boosts my confidence a lot actually. Seems like, even in a realistic worst case scenario, regular contributions will negate some of the risks of an underperforming market. And as for the Nikkei, I immediately noticed what sol said: it shot up REALLY high, really fast... and I guess what goes up must come down. Doesn't seem like our numbers are at that point yet.

I'm in my 20s as well.  You're on the right track. Just plow your money into those funds and live your life. I hold 40% international just in case our country doesn't provide the nice returns that it usually has historically. Beyond that, I don't give it much thought.

obstinate

  • Pencil Stache
  • ****
  • Posts: 806
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #69 on: November 20, 2015, 09:22:07 PM »
Yes, of course. For example, if world war three starts, everyone nukes everyone, and humanity goes extinct, the market's value will trend toward zero. More generally, if capital becomes less productive on a long term basis, you could expect a long-term downward trend in market values.

SwordGuy

  • Magnum Stache
  • ******
  • Posts: 4262
  • Location: Fayetteville, NC
    • Flipping Fayetteville
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #70 on: November 21, 2015, 07:42:44 AM »
Productivity and technology increases will occur that will allow companies to squeeze more profits out of less workers.  Bad for employees, good for investors.

Having lived in Ethiopia, where there are few productivity and technology increases throughout the country, and the USA, where such increases are all over the place, I'll tell you I prefer our approach.

Goods are much cheaper here so people can afford many more items than they could without those productivity increases.

adamwoods137

  • 5 O'Clock Shadow
  • *
  • Posts: 69
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #71 on: December 03, 2015, 10:42:43 AM »
Productivity and technology increases will occur that will allow companies to squeeze more profits out of less workers.  Bad for employees, good for investors.

Every academic study I've seen seems to show the opposite.  Could you point me to a paper that shows productivity and technology increases are generally bad for employees.  (Obviously any technological change hurts someone somewhere, but I'd be absolutely stunned if you could show that it hurt labor in general.)

Kiwi Mustache

  • Stubble
  • **
  • Posts: 180
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #72 on: December 03, 2015, 07:23:38 PM »
The value of an index is made up of individual companies.

Companies stock prices are influenced predominantly from earnings/profits.

Therefore, if companies make more profits, the index goes up.

If we continue to have inflation, not deflation in everyday prices of goods, then one can assume the index will continue to rise.

Only way I see this not happening is if the total world population declines. Less demand = lower prices. Don't see this happening in our lifetimes.

Accounting and economics 101.


doggyfizzle

  • Bristles
  • ***
  • Posts: 301
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #73 on: December 04, 2015, 05:22:17 PM »
Productivity and technology increases will occur that will allow companies to squeeze more profits out of less workers.  Bad for employees, good for investors.

Every academic study I've seen seems to show the opposite.  Could you point me to a paper that shows productivity and technology increases are generally bad for employees.  (Obviously any technological change hurts someone somewhere, but I'd be absolutely stunned if you could show that it hurt labor in general.)

It seems that for hi-tech workers, advanced technology helps, rather than hurts labors role in the marketplace (think engineers, computer programmers, biologists, etc).  For manufacturing and semi-skilled labor however, it seems to be another story:

1) In 1990, the American auto industry produced 7.15 vehicles per auto employee.  In 2010, it produced 11.2 vehicles per employee, with far fewer total employees producing roughly the same number of vehicles.
2) US Steel's Gary Works in Indiana produces the same amount of steel today is it did in the 1950, but with 5,000 workers instead of 30,000 workers.

Real manufacturing output in the US is at a historical high, but total manufacturing employment is at multi-decade lows due to both low-skill foreign labor arbitrage as well as technological innovation.  A piece of anecdotal evidence: my grandfather worked in a blast furnace at a steel mill for 42 years which was closed down shortly after he retired in the mid 70s.  Production was moved from Massachusetts to a brand new electric-arc mill in Alabama (IIRC) that could match the old mill's output with a fraction of the energy input and labor costs.

adamwoods137

  • 5 O'Clock Shadow
  • *
  • Posts: 69
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #74 on: December 04, 2015, 05:34:45 PM »
Productivity and technology increases will occur that will allow companies to squeeze more profits out of less workers.  Bad for employees, good for investors.

Every academic study I've seen seems to show the opposite.  Could you point me to a paper that shows productivity and technology increases are generally bad for employees.  (Obviously any technological change hurts someone somewhere, but I'd be absolutely stunned if you could show that it hurt labor in general.)

It seems that for hi-tech workers, advanced technology helps, rather than hurts labors role in the marketplace (think engineers, computer programmers, biologists, etc).  For manufacturing and semi-skilled labor however, it seems to be another story:

1) In 1990, the American auto industry produced 7.15 vehicles per auto employee.  In 2010, it produced 11.2 vehicles per employee, with far fewer total employees producing roughly the same number of vehicles.
2) US Steel's Gary Works in Indiana produces the same amount of steel today is it did in the 1950, but with 5,000 workers instead of 30,000 workers.

Real manufacturing output in the US is at a historical high, but total manufacturing employment is at multi-decade lows due to both low-skill foreign labor arbitrage as well as technological innovation.  A piece of anecdotal evidence: my grandfather worked in a blast furnace at a steel mill for 42 years which was closed down shortly after he retired in the mid 70s.  Production was moved from Massachusetts to a brand new electric-arc mill in Alabama (IIRC) that could match the old mill's output with a fraction of the energy input and labor costs.

Sure, and in 1870 50% of the population was in agriculture.  Today it's about 3%.  47% of the population isn't worse off than in 1870.  Manufacturing employment being at multidecade lows doesn't seem to have anything to do with how well workers in general are doing. The great thing about people is that they aren't born with a stamp on their head that says future-blast furnace worker. In turn this means that, even though the technology for cutting hair has been largely unchanged and requires the same amount of work as in 1920, the compensation of hair stylists has changed drastically.  You have to pay a hairstylist enough so that they won't decide to become a nuclear engineer instead.  It sounds crazy, but since all prices are determined at the margin, the pay for all hairstylists is set by the most nuclear engineer-capable hairstylist. 

doggyfizzle

  • Bristles
  • ***
  • Posts: 301
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #75 on: December 04, 2015, 07:26:46 PM »
I think you might have misunderstood my post; for people who live in regions of the US that had a high historic manufacturing labor pool, the future outlook for continued sustained manufacturing emoyment levels in those regions is murky at best.  I wasn't trying to imply that technology has made workers better or worse off, just obsolete in many cases.  And as far as the marginal cost determining the base pay rate, many former blue collar workers are at the mercy of both rapid technological change and low-wage workers in third-world countries, which puts downward pressure on wages for positions vulnerable to foreign-sourcing in the US.  Don't get me wrong, I tend to think nearly everyone has it great in this country, largely because I've been to some truly forsaken parts of the world as part of my work in the oil industry (Kazakhstan, Nigeria, etc), but there are regions in our country that had a very stable middle class for about 30 years post WWII (as people accelerated the transition from rural to urban living like you pointed out) that rapidly decayed as manufacturing technology improved dramatically in the late 1970s-1990s and US corporations were able to take advantage of a huge low cost labor pool in Central America and Asia.

And as far as your hairstylist pay goes, if everyone took MMM's advice and bought a pair of electric clippers where does that leave all the hairstylists?  If their skill set is not easily transferable to another industry (like nuclear engineering), you end up with a generation of workers stranded by a simple technology.  I think that was the point I was trying to make with manufacturing.

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 27156
  • Age: -999
  • Location: Traveling the World
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #76 on: December 04, 2015, 08:18:25 PM »
Switches rarely happen overnight. Industries decline, but people transition.

Hairstylists would find other work.

Since you seem to agree that most are better off than before, who cares if certain jobs (buggy whip manufacturers) are obsolete?
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (occasionally) blog at AdventuringAlong.com.
You can also read my forum "Journal."

serpentstooth

  • Handlebar Stache
  • *****
  • Posts: 1217
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #77 on: December 04, 2015, 08:43:11 PM »
Nothing lasts forever. The Western Roman Empire collapsed and took with it much of the economy and probably would have tanked the stock market, had there been one. Technological progress backslid for centuries. Of course, at that point, you're more worried about the barbarian invasions from the north than your FIRE plans going awry. As someone mentioned, at that point your biggest assets would be guns, ammo and food stores, not VTSAX.

Given what I've read about global birthrates, migratory patterns and IQs, I'm probably more bearish than many here on long-term returns, but there's a long stretch between that and TEOTWAWKI.

markbike528CBX

  • Pencil Stache
  • ****
  • Posts: 745
  • Location: the Everbrown part of the Evergreen State (WA)
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #78 on: December 04, 2015, 11:49:40 PM »



....Given what I've read about global birthrates, migratory patterns and IQs, I'm probably more bearish than many here on long-term returns, but there's a long stretch between that and TEOTWAWKI.

 Whatever IQ means, it seems to be rising. 
The same tests have to be rescored for later generations to ensure the average = 100.

The Rising Curve: Long-Term Gains in IQ and Related Measures    Edited by Ulric Neisser

Of course, that may have been serpentstooth point, as everyone gets smarter (nutrition?) the playing field is leveled, and the 1st world has no advantages.

Over very long term (>lifetimes as they currently exist), birthrates will go down and the "first-world" demographic shift to aging populations will dampen many industries.  I'm not too worried about this being a major factor in my lifetime (<45 years left probably).

Migratory patterns of humans are not predictable, as we are not locked in like geese, and black swan events will surprise everyone.

doggyfizzle

  • Bristles
  • ***
  • Posts: 301
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #79 on: December 05, 2015, 12:08:22 AM »
Hairstylists would find other work

But not necessarily better (or even equal) paying work.  What concerns me most about the rapid pace of technological change is we eventually may reach a tipping point where more people of working age receive public assistance due to a lack of available jobs due to global automation (Think Halderman's Forever War Earth) that results in mass public unrest and a collapse in investment in public equities.  I don't think this will happen in my lifetime, but that's the only likely scenario I could see resulting in global markets stagnating.

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 27156
  • Age: -999
  • Location: Traveling the World
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #80 on: December 05, 2015, 02:07:52 AM »
Or we reach a time of peace and prosperity.

I'm a big fan of a basic income. Let people do work that's not "profitable," like creating art.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (occasionally) blog at AdventuringAlong.com.
You can also read my forum "Journal."

adamwoods137

  • 5 O'Clock Shadow
  • *
  • Posts: 69
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #81 on: December 05, 2015, 11:11:27 AM »
Hairstylists would find other work

But not necessarily better (or even equal) paying work.  What concerns me most about the rapid pace of technological change is we eventually may reach a tipping point where more people of working age receive public assistance due to a lack of available jobs due to global automation (Think Halderman's Forever War Earth) that results in mass public unrest and a collapse in investment in public equities.  I don't think this will happen in my lifetime, but that's the only likely scenario I could see resulting in global markets stagnating.

No, this is precisely the point.  On average they will find better paying work.  Renumeration in all fields that continue to exist has to increase as productivity increases because at least a tiny portion of people in those fields are capable of switching to the work which productivity has improved the renumeration of directly. 

Also, I'd be willing to wager $1,000 against anyone who wanted to argue that we'd have mass public unrest and a collapse in investment in public equities due to global automation.  Comparative advantage ensures that no matter how good robots get at doing ANY job, mass unemployment will never be the result.  Further the average person would be far better off.  They may make a rational choice not to work because now that everything is automated goods are too cheap to be bothered working in some industry where humans have a comparative (but not absolute) advantage.  This is essentially the beauty of the free market system.  Even if AI were better than humans at literally every imaginable endeavor, humans would still have ways to make money.

Equities may fall substantially over the next 30 years if profits as a percentage of GDP mean reverts if multiples also drop. Automation doomsday is about as worrisome as the shift from agrarian society to industrial society.  The bad bits will be obvious, but the good bits will be overwhelmingly better.

Or we reach a time of peace and prosperity.

I'm a big fan of a basic income. Let people do work that's not "profitable," like creating art.

A basic income is probably better than current welfare schemes, but I'd be willing to bet that even absent a basic income it'll be easier to make a living being an artist due to increasing productivity rather than harder.

doggyfizzle

  • Bristles
  • ***
  • Posts: 301
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #82 on: December 05, 2015, 01:31:17 PM »
No, this is precisely the point.  On average they will find better paying work.  Renumeration in all fields that continue to exist has to increase as productivity increases because at least a tiny portion of people in those fields are capable of switching to the work which productivity has improved the renumeration of directly. 

This is not true for the manufacturing labor pools in the US.  If you look at most publicly-released data from Ford, GE, Boeing, GM, etc most major union-negotiated contracts in the past 2 decades have resulted in dramatically lower entry-level wage bases for manufacturing/skilled trade workers.  Because many of these factories are located in Rust Belt states that have an abundant under-utilized labor pool, these positions are over-subscribed (despite the wage cuts) because there is no shortage of labor demand in these regions.  If all of the people out of jobs (due to cheap foreign labor and technology) had been able to find similar jobs after being fired, the term "Rust Belt" probably wouldn't exist, and cities like Detroit and Gary and Youngstown would look dramatically different compared to their present state no?

I'm a big fan of a basic income. Let people do work that's not "profitable," like creating art.

Me too, I think a standard basic income of some multiple of the EITC for a dual-income household with two dependent a would provide a fair amount of stability for our society.

Yankuba

  • Handlebar Stache
  • *****
  • Posts: 1303
  • Location: Long Island, NY
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #83 on: December 05, 2015, 01:45:13 PM »
Also, I'd be willing to wager $1,000 against anyone who wanted to argue that we'd have mass public unrest and a collapse in investment in public equities due to global automation.  Comparative advantage ensures that no matter how good robots get at doing ANY job, mass unemployment will never be the result.  Further the average person would be far better off.  They may make a rational choice not to work because now that everything is automated goods are too cheap to be bothered working in some industry where humans have a comparative (but not absolute) advantage.  This is essentially the beauty of the free market system.  Even if AI were better than humans at literally every imaginable endeavor, humans would still have ways to make money.

The labor force participation rate is in a free fall and only a small portion of that is due to boomers retiring. We may avoid the unrest due to NBI or welfare plus the anesthetizing effects of video games, marijuana, 24-7 football, Internet pornography and Netflix. But millions of jobs are at risk over the next few years and the loss of those jobs should be enough to tip us into recession, which will hurt equities. There are more than 1 million long haul truckers and the technology to replace 98% of their job (highway driving) is already here. And the belief that truckers will retool and become nurses or computer programmers doesn't sit well with me. I don't see the future hiding a myriad of $50K jobs for us - we're going to see fewer jobs or lower wages or a combination of both.

adamwoods137

  • 5 O'Clock Shadow
  • *
  • Posts: 69
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #84 on: December 05, 2015, 09:07:14 PM »
The labor force participation rate is in a free fall and only a small portion of that is due to boomers retiring. We may avoid the unrest due to NBI or welfare plus the anesthetizing effects of video games, marijuana, 24-7 football, Internet pornography and Netflix. But millions of jobs are at risk over the next few years and the loss of those jobs should be enough to tip us into recession, which will hurt equities. There are more than 1 million long haul truckers and the technology to replace 98% of their job (highway driving) is already here. And the belief that truckers will retool and become nurses or computer programmers doesn't sit well with me. I don't see the future hiding a myriad of $50K jobs for us - we're going to see fewer jobs or lower wages or a combination of both.

Imagine you're living 500 years ago.  You were just told that job losses in the primary industry employing 97% of people were going to be near total.  Would you have been able to figure out what they were going to do?  The primary benefit of economics is that comparative advantage works.  Fortunately the future isn't limited to jobs you can come up with.

Also, declining labor force participation isn't necessarily bad.  Unemployment (people who want to work but can't find work) is the bad thing, not people who don't want to work that aren't working (mustachians are, after all, included in that group.) 1 Million long haul truckers will find other work or be unemployed.  Some unemployed people will find work.  My prediction is that after truckers are replaced with automata unemployment is going to stay under 10% on a five-year average, barring any huge changes to the minimum wage or labor law.  (Here a huge change would be defined as a minimum wage increase 25% higher than the real average of the last 50 years.) 

Betting on lower wages seems to fly in the face of literally all of the data we have.  It would also be one thing if this is the first time someone has seen labor saving devices and assumed that they would reduce the value of labor.  You are literally parroting and argument that has been around since at least the second century BC.  It's been wrong for 2,200 years, though to be fair we've only had the theoretical foundation for why it's wrong for about 150 years. 

Also, I'm definitely not seeing the "freefall" that you're referring to.

adamwoods137

  • 5 O'Clock Shadow
  • *
  • Posts: 69
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #85 on: December 05, 2015, 09:14:35 PM »
No, this is precisely the point.  On average they will find better paying work.  Renumeration in all fields that continue to exist has to increase as productivity increases because at least a tiny portion of people in those fields are capable of switching to the work which productivity has improved the renumeration of directly. 

This is not true for the manufacturing labor pools in the US.  If you look at most publicly-released data from Ford, GE, Boeing, GM, etc most major union-negotiated contracts in the past 2 decades have resulted in dramatically lower entry-level wage bases for manufacturing/skilled trade workers.  Because many of these factories are located in Rust Belt states that have an abundant under-utilized labor pool, these positions are over-subscribed (despite the wage cuts) because there is no shortage of labor demand in these regions.  If all of the people out of jobs (due to cheap foreign labor and technology) had been able to find similar jobs after being fired, the term "Rust Belt" probably wouldn't exist, and cities like Detroit and Gary and Youngstown would look dramatically different compared to their present state no?

Can you link to the data?  Is it total compensation or just wage compensation?  Also, just to clarify no one is claiming that literally every person would find a replacement job, just that on average they are better off.

doggyfizzle

  • Bristles
  • ***
  • Posts: 301
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #86 on: December 05, 2015, 09:36:12 PM »
Yes, I can link to the data, give me a bit to comb through the annual reports for those companies.  And it is indeed total compensation, rather than wage compensation, especially when you factor in the removal of defined benefit pensions and retiree medical care (not for current retirees, but the future benefit of new workers).  GE specifically calls out an entry level wage of around $13 an hour (compared to $20+ under previous contracts) as a reason why they increased their presence in Appliance Park in Kentucky.

doggyfizzle

  • Bristles
  • ***
  • Posts: 301
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #87 on: December 05, 2015, 10:07:12 PM »
Here's a newspaper quote on the GE Appliance Park labor rates:

"American unions are changing their priorities. Appliance Park’s union was so fractious in the ’70s and ’80s that the place was known as “Strike City.” That same union agreed to a two-tier wage scale in 2005—and today, 70 percent of the jobs there are on the lower tier, which starts at just over $13.50 an hour, almost $8 less than what the starting wage used to be."

I'm relatively agnostic on unions, but in this case, keeping some jobs is better than losing all jobs at this facility right?  Jack Welch (who drove outsourcing while leading GE) once predicted that the Appliance Park would not exist past 2000 due to low foreign labor rates.  My concern is mainly for workers in this country (the US), that while tariffs (pre-WWII) and a destroyed Europe and Japan (20 years post WWII) allowed for US workers to adapt somewhat harmoniously to technological innovation in the workplace without competition from cheap foreign labor.  However, since about 1980 the reduction in global trade restrictions coupled with an opening of a global cheap labor pool in former Soviet states and China/Southeast Asia has created an incentive for US corporations to dramatically reduce manufacturing employment in the US.  And again, why are so many cities in the Midwest (Detroit, Gary, Pittsburg, Youngstown, Cleveland, Toledo, Milwaukee) in such bad shape if all of the blue-collar workers who used to work in factories were able to find "better" jobs? 

Yankuba

  • Handlebar Stache
  • *****
  • Posts: 1303
  • Location: Long Island, NY
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #88 on: December 06, 2015, 07:17:10 AM »
The labor force participation rate is in a free fall and only a small portion of that is due to boomers retiring. We may avoid the unrest due to NBI or welfare plus the anesthetizing effects of video games, marijuana, 24-7 football, Internet pornography and Netflix. But millions of jobs are at risk over the next few years and the loss of those jobs should be enough to tip us into recession, which will hurt equities. There are more than 1 million long haul truckers and the technology to replace 98% of their job (highway driving) is already here. And the belief that truckers will retool and become nurses or computer programmers doesn't sit well with me. I don't see the future hiding a myriad of $50K jobs for us - we're going to see fewer jobs or lower wages or a combination of both.

Imagine you're living 500 years ago.  You were just told that job losses in the primary industry employing 97% of people were going to be near total.  Would you have been able to figure out what they were going to do?  The primary benefit of economics is that comparative advantage works.  Fortunately the future isn't limited to jobs you can come up with.

Also, declining labor force participation isn't necessarily bad.  Unemployment (people who want to work but can't find work) is the bad thing, not people who don't want to work that aren't working (mustachians are, after all, included in that group.) 1 Million long haul truckers will find other work or be unemployed.  Some unemployed people will find work.  My prediction is that after truckers are replaced with automata unemployment is going to stay under 10% on a five-year average, barring any huge changes to the minimum wage or labor law.  (Here a huge change would be defined as a minimum wage increase 25% higher than the real average of the last 50 years.) 

Betting on lower wages seems to fly in the face of literally all of the data we have.  It would also be one thing if this is the first time someone has seen labor saving devices and assumed that they would reduce the value of labor.  You are literally parroting and argument that has been around since at least the second century BC.  It's been wrong for 2,200 years, though to be fair we've only had the theoretical foundation for why it's wrong for about 150 years. 

Also, I'm definitely not seeing the "freefall" that you're referring to.


LFPR is down from 67% to around 62% over the past fifteen years - that is massive.

The universe of things that humans can do better than machines/software is getting smaller by the day. Document review, medical diagnostics, driving, language translation, journalism - a very large percentage of jobs are at risk. And even if technology can't do 100% of a job it will be able to do enough of the job to pressure wages lower. Luddites may have been wrong in the past but today's technologies border on magic and I'm willing to bet this time it's different.

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 27156
  • Age: -999
  • Location: Traveling the World
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #89 on: December 06, 2015, 07:44:43 AM »
But what do you picture the outcome to be if you're right, and there's no more jobs?

To me, that would merely lead to temporary unrest, and then less people needing to work for a living. It certainly won't sustainably lead to poverty, IMO, as people won't put up with that.

I just don't see it as a problem even if it is different this time.

Like...play out your scenario. What does it look like over the short and long term?
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (occasionally) blog at AdventuringAlong.com.
You can also read my forum "Journal."

mr_orange

  • Magnum Stache
  • ******
  • Posts: 4490
  • Age: 39
  • Location: Round Rock, TX
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #90 on: December 06, 2015, 08:09:57 AM »
Jobs will form.  Every time people think that the jobs will go away and there will be chaos in the streets whole new industries form and put the labor to work productively.  There will always be opportunity for those willing to put forth the effort instead of complaining about how hard things are. 

Yankuba

  • Handlebar Stache
  • *****
  • Posts: 1303
  • Location: Long Island, NY
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #91 on: December 06, 2015, 08:29:08 AM »
But what do you picture the outcome to be if you're right, and there's no more jobs?

To me, that would merely lead to temporary unrest, and then less people needing to work for a living. It certainly won't sustainably lead to poverty, IMO, as people won't put up with that.

I just don't see it as a problem even if it is different this time.

Like...play out your scenario. What does it look like over the short and long term?

Famous economist and blogger Tyler Cowen wrote about his version of the future in Average is Over. He predicts more of the same - extreme income and wealth inequality as the top ten or twenty percent of people thrive while everyone else toils in low wage service jobs or lives off of the government. He thinks Texas will be the model - cheap, abundant housing and low services/taxes. The rich and skilled will live in cities - suburbs for everyone else. People will downsize and live in smaller homes or trailers and they will be happy despite having low incomes because technology will drive down the costs of everything and our leisure sources (the Internet, virtual reality, television) will keep everyone content.

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 27156
  • Age: -999
  • Location: Traveling the World
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #92 on: December 06, 2015, 11:41:18 AM »

But what do you picture the outcome to be if you're right, and there's no more jobs?

To me, that would merely lead to temporary unrest, and then less people needing to work for a living. It certainly won't sustainably lead to poverty, IMO, as people won't put up with that.

I just don't see it as a problem even if it is different this time.

Like...play out your scenario. What does it look like over the short and long term?

Famous economist and blogger Tyler Cowen wrote about his version of the future in Average is Over. He predicts more of the same - extreme income and wealth inequality as the top ten or twenty percent of people thrive while everyone else toils in low wage service jobs or lives off of the government. He thinks Texas will be the model - cheap, abundant housing and low services/taxes. The rich and skilled will live in cities - suburbs for everyone else. People will downsize and live in smaller homes or trailers and they will be happy despite having low incomes because technology will drive down the costs of everything and our leisure sources (the Internet, virtual reality, television) will keep everyone content.

That... doesn't sound terrible?

So what's your worry with this scenario?
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (occasionally) blog at AdventuringAlong.com.
You can also read my forum "Journal."

Yankuba

  • Handlebar Stache
  • *****
  • Posts: 1303
  • Location: Long Island, NY
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #93 on: December 06, 2015, 12:47:00 PM »

But what do you picture the outcome to be if you're right, and there's no more jobs?

To me, that would merely lead to temporary unrest, and then less people needing to work for a living. It certainly won't sustainably lead to poverty, IMO, as people won't put up with that.

I just don't see it as a problem even if it is different this time.

Like...play out your scenario. What does it look like over the short and long term?

Famous economist and blogger Tyler Cowen wrote about his version of the future in Average is Over. He predicts more of the same - extreme income and wealth inequality as the top ten or twenty percent of people thrive while everyone else toils in low wage service jobs or lives off of the government. He thinks Texas will be the model - cheap, abundant housing and low services/taxes. The rich and skilled will live in cities - suburbs for everyone else. People will downsize and live in smaller homes or trailers and they will be happy despite having low incomes because technology will drive down the costs of everything and our leisure sources (the Internet, virtual reality, television) will keep everyone content.

That... doesn't sound terrible?

So what's your worry with this scenario?

My kids - with 17 years of high quality education - living in a trailer somewhere, barely able to pay their bills, working an unfulfilling service job, solely subsiding on beans and rice. No travel, no frills.
« Last Edit: December 06, 2015, 12:55:55 PM by Yankuba »

sol

  • Walrus Stache
  • *******
  • Posts: 7006
  • Age: 41
  • Location: Pacific Northwest
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #94 on: December 06, 2015, 12:50:15 PM »
Jobs will form.

I don't believe that jobs just "form".  I believe that jobs are created to fill a demand, usually due to a profit motive.

Like no one ever said "Hey I think I'll create 1000 jobs today" and then went out and hired 1000 people.  People are hired to fill jobs that exist because there is a need for their work.  And while that need can be reduced by improvements in technology and automation, ultimately the need stems from the population's desire to have more and nicer things.  Their desire for fancy cars motivates a car company to make a fancy car, and the company then hires people to make the cars.  The company pays the workers, who can then afford to buy fancy cars.  The cycle starts with the desire for a fancy car, not with a job that exists in a vacuum.

This is standard old economics (as opposed to "supply-side" economics, which has turned out to be mostly a myth) saying that trade happens when people want to trade, not when goods are available to trade.  People will always find ways to trade, and thus create an economy, as long as they want something from each other.  The only real existential threat to this system is reduced desires (anti-consumerism) because no amount of material abundance is ever going to discourage people from wanting more and fancier stuff.  Some folks will always desire, and so some folks will always work.

But I'm still a fan of the basic-income model discussed above, even if it comes with low-grade housing and an xbox for every registered voter.  That's just the modern Circus Maximus throwing bread to the disaffected populace.  People don't revolt as long a they can be placated.
« Last Edit: December 06, 2015, 01:47:27 PM by sol »

mr_orange

  • Magnum Stache
  • ******
  • Posts: 4490
  • Age: 39
  • Location: Round Rock, TX
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #95 on: December 06, 2015, 01:50:40 PM »
But I'm still fan of the basic-income model discussed above, even if it comes with low-grade housing and an xbox for every registered voter.  That's just the modern Circus Maximus throwing bread to the disaffected populace.  People don't revolt as long a they can be placated.

Whatever fits with your world view.  I can promise you that the demonic businessperson is not the person you think they are.  There are plenty of people out there providing value to society and working hard to provide for the lifestyle you malign.  Millions of dollars are trading and forming jobs at the small businesses in the angel networks I frequent.  The profit motive is driving people to develop technology to help doctors identify cancer better, create fuel efficient trucking solutions, or any other number of advances in society.  This, in turn, would spur more jobs if the businesses prove to be successful.  These jobs would be for what needs to be done today and not for manufacturing buggy whips. 

sol

  • Walrus Stache
  • *******
  • Posts: 7006
  • Age: 41
  • Location: Pacific Northwest
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #96 on: December 06, 2015, 03:15:32 PM »
I can promise you that the demonic businessperson is not the person you think they are.  There are plenty of people out there providing value to society and working hard to provide for the lifestyle you malign. 

Where did I malign anyone?  I certainly don't think businesspeople are demonic, but neither are they creating any jobs just because they are altruistic.  They are hiring people to do a job that fulfills a demand in the economy.  They don't create the demand, so they don't really create the job.  More like just facilitate it in a way that generates profit. 

Which is fine.  I'm not knocking capitalism or capitalists by pointing out that "job creator" is a mythical title.  When have you ever hired anyone without the expectation that you would derive more benefit than it costs you to pay them?  Never.  Nobody ever has.  Maybe nepotists?
« Last Edit: December 06, 2015, 07:14:38 PM by sol »

mr_orange

  • Magnum Stache
  • ******
  • Posts: 4490
  • Age: 39
  • Location: Round Rock, TX
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #97 on: December 06, 2015, 03:31:56 PM »
I guess I misinterpreted your post Sol.  It seemed decidedly anti-capitalist to me. 

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 27156
  • Age: -999
  • Location: Traveling the World
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #98 on: December 06, 2015, 03:42:28 PM »


But what do you picture the outcome to be if you're right, and there's no more jobs?

To me, that would merely lead to temporary unrest, and then less people needing to work for a living. It certainly won't sustainably lead to poverty, IMO, as people won't put up with that.

I just don't see it as a problem even if it is different this time.

Like...play out your scenario. What does it look like over the short and long term?

Famous economist and blogger Tyler Cowen wrote about his version of the future in Average is Over. He predicts more of the same - extreme income and wealth inequality as the top ten or twenty percent of people thrive while everyone else toils in low wage service jobs or lives off of the government. He thinks Texas will be the model - cheap, abundant housing and low services/taxes. The rich and skilled will live in cities - suburbs for everyone else. People will downsize and live in smaller homes or trailers and they will be happy despite having low incomes because technology will drive down the costs of everything and our leisure sources (the Internet, virtual reality, television) will keep everyone content.

That... doesn't sound terrible?

So what's your worry with this scenario?

My kids - with 17 years of high quality education - living in a trailer somewhere, barely able to pay their bills, working an unfulfilling service job, solely subsiding on beans and rice. No travel, no frills.

I only see standard of living going up and up and up.

You think standard of living will decline somehow?


I guess I misinterpreted your post Sol.  It seemed decidedly anti-capitalist to me.

No, he's saying capital will always have a motive. No one is going to create jobs for no reason, but if it makes them money. This is usually a good thing, profit is generally a good motivator, and leads to good things (unethical exceptions when profit is the only concern aside).
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (occasionally) blog at AdventuringAlong.com.
You can also read my forum "Journal."

Yankuba

  • Handlebar Stache
  • *****
  • Posts: 1303
  • Location: Long Island, NY
Re: Is it theoretically possible for the market to NOT go up long-term?
« Reply #99 on: December 06, 2015, 03:49:34 PM »
Re: standard of living in the future

I think the median person will have access to most new innovations and advances in healthcare. But I think the percentage of people that will have the "American Dream" (home ownership, 2 cars, 1 annual vacation, paid public college for 2.5 kids) will fall. Tyler Cowen says people will be happier in the future because of the innovations but they will earn significantly less money. He is a happiness optimist and a revenue pessimist.