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So here's an explanation SA dismisses: First, can we dismiss all of this as an illusion? Maybe adjusting for inflation is harder than I think. Inflation is an

So here's an explanation SA dismisses: First, can we dismiss all of this as an illusion? Maybe adjusting for inflation is harder than I think. Inflation is an average, so some things have to have higher-than-average inflation; maybe it’s education, health care, etc. I'm saying that in fact, this explanation must be true. SA further says: I’m more worried about the part where the cost of basic human needs goes up faster than wages do. Even if you’re making twice as much money, if your health care and education and so on cost ten times as much, you’re going to start falling behind. The reason is that if this broader worry were true, then consumption should be going down. In fact, consumption has only gone up. Again: find me a good or service that the median or even the poor consume less of than in 1975. If SA were making a very isolated claim that education and transit cost too much, I'd be agreeing with him. But he's actually making a much broader claim, and the broader claim is what I dispute.

themikemachine 10y ago
Your assertion that consumption has increased is compatible with Alexander's article if the quality of the product being consumed has decreased, e.g. people go to the doctor 20x more, but their health is worse than before. Or they go to school for 5 years extra on average, but are worse prepared for a job. In this scenario people are consuming more of an inferior product, and overall getting less utility/dollar spent. 50 years ago you paid $100 to a doctor and $80 of those dollars went towards giving you medical care, whereas now only $10 of those dollars go to giving you medical care. Back then only $20 went to 'overhead', but nowadays $90 goes to 'overhead'. By overhead I mean anything that is not directly germane to giving you care: administrative, taxes, insurance, lawyers, paperwork, even the $15 you spent on driving/parking to get to the hospital. The extra money is thus being destroyed by inefficiencies in the system. I made these numbers up to illustrate my point.
SilasX 10y ago
Then I guess we were reading different articles. The focus here seemed to be "HHE is more expensive and there's no good reason for it". The claim was not "total real consumption is down". If HHE is 10x more expensive for no reason, and technology has reduced the price of everything else, then you can be absolutely correct that consumption of all goods went up ... but that's not the problem under investigation here. The problem is, why must HHE be so much more expensive despite not delivering comparable value and not being that much more expensive in other countries? Even when Alexander brought up the resolution you endorse, he went on to say that it doesn't actually resolve the core dilemma because HHE is still overpriced relative to the value it delivers. So, your comment didn't really justify its dismissive tone if you were essentially saying, "yeah HHE is overpriced for reasons we don't understand, exactly as Alexander is alleging, but it's not big deal because ipads are faster".
gd1 10y ago
Isn't a possible answer that people's (net of tax) incomes are flat, but they can still afford to increase consumption because these services are government subsidized (directly or indirectly)?

themikemachine 10y ago

Your assertion that consumption has increased is compatible with Alexander's article if the quality of the product being consumed has decreased, e.g. people go to the doctor 20x more, but their health is worse than before. Or they go to school for 5 years extra on average, but are worse prepared for a job. In this scenario people are consuming more of an inferior product, and overall getting less utility/dollar spent. 50 years ago you paid $100 to a doctor and $80 of those dollars went towards giving you medical care, whereas now only $10 of those dollars go to giving you medical care. Back then only $20 went to 'overhead', but nowadays $90 goes to 'overhead'. By overhead I mean anything that is not directly germane to giving you care: administrative, taxes, insurance, lawyers, paperwork, even the $15 you spent on driving/parking to get to the hospital. The extra money is thus being destroyed by inefficiencies in the system. I made these numbers up to illustrate my point.

SilasX 10y ago

Then I guess we were reading different articles. The focus here seemed to be "HHE is more expensive and there's no good reason for it". The claim was not "total real consumption is down". If HHE is 10x more expensive for no reason, and technology has reduced the price of everything else, then you can be absolutely correct that consumption of all goods went up ... but that's not the problem under investigation here. The problem is, why must HHE be so much more expensive despite not delivering comparable value and not being that much more expensive in other countries? Even when Alexander brought up the resolution you endorse, he went on to say that it doesn't actually resolve the core dilemma because HHE is still overpriced relative to the value it delivers. So, your comment didn't really justify its dismissive tone if you were essentially saying, "yeah HHE is overpriced for reasons we don't understand, exactly as Alexander is alleging, but it's not big deal because ipads are faster".

gd1 10y ago

Isn't a possible answer that people's (net of tax) incomes are flat, but they can still afford to increase consumption because these services are government subsidized (directly or indirectly)?