Inflaaaaaaaation

[dismalist]

Two people working would get the family over poverty and take away food stamps.

Two people working was definitely not needed in the 1950's. Doesn't that in fact help somewhat confirm what paultuttle stated?

One can have a 1950's standard of living today quite easily: Let's try 1950's medicine at 1950's prices and incomes compared to 2020's medicine at 2020's prices with 2020's incomes. Let's try 1950's wives as cooks compared to take-away food today. Hell, McDonalds was an improvement in many places! [though not in New York :-)] Nobody ever bothered to measure household productivity and compare it to market productivity. And 1950's cars at 1950's prices with 1950's income and so on ... . One gets the picture.

Be that as it may, productivity and earnings [not wages, which are only a part of earnings], properly deflated, as I expounded upthread, have moved together since the 1950's.

One of the problems IMHO with your take is housing availability. Even if a family of 4 were satisfied with the equivalent of the 1953 median income of $4200 (just under $48,000 now), you have a problem finding a house. My hypothetical family qualifies for a $300,000 mortgage, which means that IF you live in one of the urban areas you have trouble finding a home at all. If you move to where the cheaper homes are (if you can afford the upfront moving costs), you can't get a job. Sort of a Catch-22 for hordes of people.

Good question, jimbo. Standard of living -- well-being -- depends upon income and all relative prices. Has nothing to do with inflation, except as something that depresses real incomes.

Still, we can ask why houses cost so much. As usual, the answer is: us! Homeowners have made it politically difficult to build more houses in places people want to live, so as to have an increase in the prices of their houses.

But even here,  towns and cities emerge which do not have restrictive zoning. Some exist already. I think Houston is one, but that doesn't matter so much as many, many little Houstons. That's actually quite easy technologically even if you don't have desert all around you: Build up! That's dirt cheap.

So long as there is political competition, no bad deed goes unpunished.

We've never had it so good!

[ciao_yall]

Two people working would get the family over poverty and take away food stamps.

Two people working was definitely not needed in the 1950's. Doesn't that in fact help somewhat confirm what paultuttle stated?

One can have a 1950's standard of living today quite easily: Let's try 1950's medicine at 1950's prices and incomes compared to 2020's medicine at 2020's prices with 2020's incomes. Let's try 1950's wives as cooks compared to take-away food today. Hell, McDonalds was an improvement in many places! [though not in New York :-)] Nobody ever bothered to measure household productivity and compare it to market productivity. And 1950's cars at 1950's prices with 1950's income and so on ... . One gets the picture.

Be that as it may, productivity and earnings [not wages, which are only a part of earnings], properly deflated, as I expounded upthread, have moved together since the 1950's.

One of the problems IMHO with your take is housing availability. Even if a family of 4 were satisfied with the equivalent of the 1953 median income of $4200 (just under $48,000 now), you have a problem finding a house. My hypothetical family qualifies for a $300,000 mortgage, which means that IF you live in one of the urban areas you have trouble finding a home at all. If you move to where the cheaper homes are (if you can afford the upfront moving costs), you can't get a job. Sort of a Catch-22 for hordes of people.

Good question, jimbo. Standard of living -- well-being -- depends upon income and all relative prices. Has nothing to do with inflation, except as something that depresses real incomes.

Still, we can ask why houses cost so much. As usual, the answer is: us! Homeowners have made it politically difficult to build more houses in places people want to live, so as to have an increase in the prices of their houses.

Yes, this is true. The same people living in developer-built homes that was once open space are now howling about evil developers taking away remaining "open space."

Also, investors are buying up large tracts of developer-built homes and converting them to rentals or long-term investments which also reduces the supply of housing.

Still, I would also make the point that homes built today have a lot more intrinsic value than homes built in the 1950's so construction costs are higher. Insulation, higher and safer electrical services, cable connections. More so than compared to homes built in the 1900's which didn't even have plumbing.

But even here,  towns and cities emerge which do not have restrictive zoning. Some exist already. I think Houston is one, but that doesn't matter so much as many, many little Houstons. That's actually quite easy technologically even if you don't have desert all around you: Build up! That's dirt cheap.

So long as there is political competition, no bad deed goes unpunished.

We've never had it so good!

Let's also consider that food took up a much larger portion of the household budget back in the 1950's. And, quality and quantity have improved... though one might make the case that the growth in factory farming hasn't really helped quality.

[Stockmann]

We've never had it so good!

Well, young Americans (and in plenty of other countries), when it comes to paying for stuff like housing or college, are actually poorer than their parents were at their age - first time that's happened since probably the Great Depression. Young people finding it harder to afford housing than their parents did is a nearly global phenomenon. Add in loss of job security, and there's a reason for the coining of the word "permacrisis."

[dismalist]

We've never had it so good!

Well, young Americans (and in plenty of other countries), when it comes to paying for stuff like housing or college, are actually poorer than their parents were at their age - first time that's happened since probably the Great Depression. Young people finding it harder to afford housing than their parents did is a nearly global phenomenon. Add in loss of job security, and there's a reason for the coining of the word "permacrisis."

That's not correct. Here is median [better than mean to care about distribution] real household income since 1990

https://www.statista.com/statistics/200838/median-household-income-in-the-united-states/

To go back further, there is a beautiful graph

https://www.russellsage.org/sites/all/files/chartbook/Income%20and%20Earnings.pdf

The top graph tells us that, amidst fluctuations, all categories of groups counted by the Census were better off in 2012 than in 1950.

As for the rest of the world, I linked upthread to the dramatic decline in absolute poverty during the last thirty to fifty years.

We've never had it so good!

[Anselm]

dismalist, your 2nd link shows that median household income has stagnated since 1980.  I also don't trust official inflation statistics where the methodology keeps on changing to understate inflation.   One example is how they don't include the price of a house but rather use imputed rent.   

[dismalist]

dismalist, your 2nd link shows that median household income has stagnated since 1980.  I also don't trust official inflation statistics where the methodology keeps on changing to understate inflation.   One example is how they don't include the price of a house but rather use imputed rent.

I know, I know! Median household size has also been diminishing, though. :-) Seriously, I wish such data in that beautiful chart were readily findable for more recent years.

This house price vs. imputed rent bothers everybody. 'Ya gotta have have a flow expense for housing to get to a cost-of-living. Buying a home is not a cost of living; it's a choice of assets. What that asset yields each year, called rent, has to be figured out somehow.

The official inflation statistics are not trying to cheat us, they're only trying to get closer to the change in the cost-of-living. All this for the mean consumer, a well off individual. The personal weighting is far more of a measurement question than anything else.

[kaysixteen]

Exactly how did Wallyworld improve those lower-income folks' lives by buying all that cheap crap, causing the factories they depended upon for work to go belly-up, and by using those (usually temporary) low prices to run all the mom and pop and small chain competition out of business?

[kaysixteen]

I confess it concerns me that you use the fact that unfettered free trade improves the lives of factory workers in places like Vietnam-- which it unambigiously does do-- to justify a blase attitude towards, ahem, your countrymen whose lives have emphatically and without the shadow of any doubt been eviscerated by that selfsame free trade.   Most elite academic types have little if any experience in recent years, perhaps recent decades, with places like Rusty City, where I have been living for 15 years.  Rusty City here has lost 30k people from its all time high maybe 40-50 years back, and the only reason it has maintained even this level of pop is because of the large quantity of 3d world immigrants it has been receiving over the last decade or so, along with people recruited by the local housing authority to move here to fill up vacancies in extensive housing projects built during the 60s and 70s-- these folks are largely folks from the long-term welfare underclass, and their housing vouchers and welfare bennies work as well here as they did in Boston.   The city itself used to be a huge textile town-- my own great-great grandfather was one of a number of skilled weavers recruited from England in 1870s to come work in the mills here-- the WM in which I now work sits on a site which until the 1990s was a large factory complex employing 2k people with ft, union jobs, and now WM provides only about 200, mostly pt, and all emphatically non-union low-paid position.  Essentially all the factories are out of business, most of them just collecting dust or torn down.   And conditions here are much better than in many such places in flyover country.   And money problems notwithstanding, the deaths of despair, opioids, etc, that are engendered by this 'free trade' and its effects demonstrate that, ahem, we have indeed not never had it so good.  One wonders why anyone would hold to such a nonsensical opinion, unless one is a bad actor, a troll, senile, or just plain dumb as a box of rocks.

[dismalist]

Oh dear, let's keep Walmart and unfettered free trade separate.

--Given whatever else happens in the universe, Walmart is good for poor people. Walmart does not dictate wages, it adjusts to them. Walmart is good at stuff aside from wages that keeps its costs low.

--Free trade creates winners and losers. The benefit of free trade is that the winners win more than the losers lose. The political system has not been astute at compensating losers from the winnings of the winners so as to leave everybody better off. That's one reason why Trump caught on. The present administration has not revoked Trump's restrictive foreign trade policies vis-à-vis China. That keeps unskilled workers' wages higher than otherwise, and skilled workers' wages lower than otherwise. Rejoice.

Never mind the contribution of free trade to growth. We're surely all rich enough. :-)

[quasihumanist]

I confess it concerns me that you use the fact that unfettered free trade improves the lives of factory workers in places like Vietnam-- which it unambigiously does do-- to justify a blase attitude towards, ahem, your countrymen whose lives have emphatically and without the shadow of any doubt been eviscerated by that selfsame free trade

Let's face it - poor people in Vietnam need it a lot more than poor people in America, because they're poorer.

Now, I would like the lives of poor people to be improved everywhere.  I'm willing to sacrifice in various ways to do it.  I'm happy for various political measures to be taken for it.

But - frankly - almost everyone wants society as a whole to have to put as little effort as possible in the drudgery of keeping us fed and housed and clothed, because we all want to have more time and resources to do other stuff.  Most mom-and-pop stores just create extra unnecessary drudgery.  I agree that a lot more of the gain in productivity should go to workers, both in Vietnam and here, but there's no point in make-work.

There's also the problem of having more people who can only do drudge work than necessary drudge work.  It's a problem, but I'd much rather pay people to do nothing than pay people for the equivalent of digging holes and filling them back up, and the people working mostly feel the same way too.

Finally, to say that poor Americans should be more important than poor Vietnamese to me because I'm American - that strikes me as plain wrong.  Even sinful - there is neither Jew nor Greek et c.

[ciao_yall]

We can't separate Wallyword and "free trade," because at worst, "free trade" means businesses being permitted to find the lowest cost way of doing business and sell into areas where there is a cost advantage. Unfortunately it turns into a race to the bottom, where

Free trade can work for everyone if we set high minimum wages and environmental standards, so a middle-class American isn't competing against a Vietnamese teenager earning poverty wages working next to an river full of sewage and industrial waste.

It might mean fewer overall goods but better quality of life for everyone in the USA, Vietnam and anywhere else.

That would be nice.

[dismalist]

Mixing the notion of  free trade and Walmart leads to muddled thinking. One loses sight of cause and effect.

High minimum wages leads to unemployment, reduced work time, lower benefits or all three. Those hit hardest are the least productive -- young black males. Minimum wage laws are structural racism.

Free trade raises wages in poor countries. With the higher incomes, people there prefer a cleaner environment and they can afford it.

[ciao_yall]

Mixing the notion of  free trade and Walmart leads to muddled thinking. One loses sight of cause and effect.

High minimum wages leads to unemployment, reduced work time, lower benefits or all three. Those hit hardest are the least productive -- young black males. Minimum wage laws are structural racism.

No, they don't. Studies show the opposite, in fact.

Free trade raises wages in poor countries. With the higher incomes, people there prefer a cleaner environment and they can afford it.

And yet, strangely enough, that doesn't happen in real life. Why is that?

[dismalist]

Mixing the notion of  free trade and Walmart leads to muddled thinking. One loses sight of cause and effect.

High minimum wages leads to unemployment, reduced work time, lower benefits or all three. Those hit hardest are the least productive -- young black males. Minimum wage laws are structural racism.

No, they don't. Studies show the opposite, in fact.

Free trade raises wages in poor countries. With the higher incomes, people there prefer a cleaner environment and they can afford it.

And yet, strangely enough, that doesn't happen in real life. Why is that?

Alas, that's wrong. Two centuries of thought on some of this and a half century of empirical evidence contradict all this. Arguments and evidence are wanted. I'm sticking to assertions so  long as everyone else is. Less work. :-)

[kaysixteen]

Random points:

1 why aren't you willing to sacrifice some things to increase the prosperity of your fellow Americans?   What I said about the decimation of large quantities of working-class post-industrial America is absolutely true, even if the level of *absolute* poverty in various 3d world locales is greater.   

2) I am going to ask you to do something-- look up the Bible verse you cited, about 'there being neither Jew nor Greek', *in context*, and tell me what it means *in context*, and use your scholarly skills to ascertain whether it could reasonably be interpreted in the way you are doing.   As an added bonus, look up various other verses regarding charity starting in "jerusalem', and working eventually to the ends of the earth, charity being first given to those of the household of faith, etc., and various other verses that, taken as a whole, demonstrate what the bible's attitude may actually be wrt allowing one's own people in large measure to become impoverished, in order to save money on cheap consumer goods at Big Box America.

3) Now, dismalist, this is reality, the real world.   It is not an Econ 101 seminar at George Mason in 1975.  Put away your Ayn Rand playbook and realize that all is not best achieved through unfettered John Galt-esque leave me alone hyperindividualism.