5 ms·

See the Two Income Trap (TL;DR: there is limited housing in good school districts and there are limited places at good universities, so when it became possible

by ashark 10y ago

See the Two Income Trap (TL;DR: there is limited housing in good school districts and there are limited places at good universities, so when it became possible to compete for these with two incomes, it gradually became the case that you had to have two incomes to compete for them, as prices were driven up) and the recent post on here about the bizarre cost disease affecting the West, and especially the US, making basically everything but imported cheap plastic/electronic crap cost more in real terms than it did the year before, every year, for the last few decades, including construction, infrastructure, health, and schooling. There may also be something to do with globalization turning out to be not so much "rising tide lifts all boats" as "rising tide lifts the average elevation of all boats"; the latter is very different for someone working for a living in an already-affluent, globalizing state than the former.

mattmanser 10y ago
I agree with the general gist of this, but I think you're down playing how much stuff people can buy now. Furthermore, if everyone's getting paid more, isn't it natural that person intensive activities like construction, infrastructure, health, and schooling will cost more? But stuff, stuff is ridiculously cheap at the moment. Perhaps you yanks didn't see it so much as you were already rich in the 80s/90s, but compared to my childhood in the UK, all the children I know get mountains of presents. Literally so many they get bored opening them. I can get cheap salad any time of year. Cheap fruit, milk, bread, etc. I can buy mounds of rice, pasta, etc. for literally pence. TVs in every room, not just one per household. People have espresso coffee makers in their kitchens! Everyone has at least one computer, if not one per child, and another in their pocket. Everyone's got at least one console or some such device. Everyone can afford Sky or Virgin or whatever cable channel.
- Arizhel 10y ago
  You're massively overvaluing toys and other consumer goods, and you're massively undervaluing real estate. Having nice TVs doesn't make your quality of life that much better now than back in the 80s. Living in a terrible neighborhood with crime because you can't afford to live in a decent neighborhood on a single income makes your quality of life much worse than back in the 80s when a single income could afford a nice house.
  - yummyfajitas 10y ago
    Perhaps it's worth asking why preventing crime is so much harder today than in the past. That might lead to uncomfortable conclusions, however. Apart from the crime prevention, what does the terrible neighborhood lack that the nice neighborhoods in 1970 had?
    - enjo 10y ago
      Perhaps it's worth asking why preventing crime is so much harder today than in the past It's not tho is it? In the United States at least crime is much lower than it was since like the 50's.
    - watwut 10y ago
      Good school. Employment opportunities. Cleanness.
  - occamrazor 10y ago
    By almost every metric, crime has gone down in the last 30 years.
    - didibus 10y ago
      True, though that seems unexplainable. Vox had a good piece on it a while back, concluding that it's probably the sum of a lot of small factors.
    - Arizhel 10y ago
      On average, sure. In specific places, no. These days, if you can't afford more than a crappy apartment, you're going to be living in a place with drug dealers and occasional murders. And with the high rents, having a single income (and worse, having to support a family on that) means that the crappy apartments now cost what, 30+ years ago, a decent but modest home in a decent neighborhood cost. So maybe living in downtown areas isn't nearly as dangerous as it was back in the 70s-80s (when NYC's Times Square was full of prostitutes and muggings were common), but affording a place that doesn't have you surrounded by drug dealers and ex-cons is more out-of-reach and costly (and those once-seedy downtown areas are now completely unaffordable if you don't make $150k+).
- ashark 10y ago
  > Furthermore, if everyone's getting paid more, isn't it natural that person intensive activities like construction, infrastructure, health, and schooling will cost more? Yes, more. Not disproportionately more (except for certain things with natural limits like land and education at high-name-recognition universities). Not wildly disproportionately more. The blog post[1] I mentioned (prominently linked on HN when it came out) covered the phenomenon pretty thoroughly, without offering much in the way of explanations, though ruling some out. [1] https://slatestarcodex.com/2017/02/09/considerations-on-cost-disease/ https://slatestarcodex.com/2017/02/09/considerations-on-cost...
yummyfajitas 10y ago
Actually, Warren's data and the Two Income Trap shows nothing of the sort. The Two Income Trap shows that income rose 75%. Mortgage expenses rose 70% (for a 66% bigger house [1]), two cars cost 55% more than 1 car, health insurance cost 60% more, etc. In fact, the main expense that rose faster than income was taxes (140%) - everything else rose more slowly. http://www.volokh.com/posts/1185883980.shtml http://www.volokh.com/posts/1185883980.shtml http://volokh.com/archives/archive_2008_04_27-2008_05_03.shtml#1209323112 http://volokh.com/archives/archive_2008_04_27-2008_05_03.sht... https://www.wsj.com/articles/SB118705537958296783 https://www.wsj.com/articles/SB118705537958296783 It's not really your fault that you made this mistake, however. Warren chose a really strange way to report tax increases - she reports them as a percentage of before and after income - a 9% increase from 24% of family income to 33%. I place the blame for this confusion on her strange data presentation choices - nearly everyone who read her book gets confused by this, not just you. But all her other increases are in inflation-adjusted dollar percentages. If she reported taxes this way, they'd be up 140% from $9,288 to $22,374. If she reported housing expenses the way she reported taxes, they would be down 3%. Health care would be down 9%. She sure made such a strange choice in how she presented the data. I wonder why she did that? [1] https://www.nar.realtor/RMODaily.nsf/pages/News2007032701?OpenDocument https://www.nar.realtor/RMODaily.nsf/pages/News2007032701?Op...
- someguydave 10y ago
  Indeed. A big chunk of the "cost disease" can be explained by this in my opinion. The unaccountable administrative state - largely peopled by the "knowledge worker" class - has effectively pirated a big chunk of the income of the country and redirected it to its class friends via direct government employment, government licensing, government regulation and government spending. Nearly all western governments demonstrate symptoms of this disease.
  - ashark 10y ago
    As someone who'd been a skeptic of "lawsuits are killing us!" arguments, I actually thought the most convincing explanation of the many that were offered up after that SSC post is that uncertainty bred by too little (or too inconsistently enforced) regulation that leaves too much of enforcing good behavior up to litigation is the biggest driver of the problem. It neatly explains why the US suffers from it far worse than other OECD states, I'd say—uncertain, relatively weak regulatory environment, easy lawsuits. The uncertainty encourages, at both the personal and institutional levels, extreme risk avoidance (CYA, if not actually risk reduction) throughout private industry and government, adding a percentage to costs at every stage of any project while also slowing things down (so, more costs there too) and killing innumerable potentially-cost-saving innovations in process before they can even be attempted.

by ashark 10y ago

mattmanser 10y ago

I agree with the general gist of this, but I think you're down playing how much stuff people can buy now. Furthermore, if everyone's getting paid more, isn't it natural that person intensive activities like construction, infrastructure, health, and schooling will cost more? But stuff, stuff is ridiculously cheap at the moment. Perhaps you yanks didn't see it so much as you were already rich in the 80s/90s, but compared to my childhood in the UK, all the children I know get mountains of presents. Literally so many they get bored opening them. I can get cheap salad any time of year. Cheap fruit, milk, bread, etc. I can buy mounds of rice, pasta, etc. for literally pence. TVs in every room, not just one per household. People have espresso coffee makers in their kitchens! Everyone has at least one computer, if not one per child, and another in their pocket. Everyone's got at least one console or some such device. Everyone can afford Sky or Virgin or whatever cable channel.

Arizhel 10y ago
You're massively overvaluing toys and other consumer goods, and you're massively undervaluing real estate. Having nice TVs doesn't make your quality of life that much better now than back in the 80s. Living in a terrible neighborhood with crime because you can't afford to live in a decent neighborhood on a single income makes your quality of life much worse than back in the 80s when a single income could afford a nice house.
- yummyfajitas 10y ago
  Perhaps it's worth asking why preventing crime is so much harder today than in the past. That might lead to uncomfortable conclusions, however. Apart from the crime prevention, what does the terrible neighborhood lack that the nice neighborhoods in 1970 had?
  - enjo 10y ago
    Perhaps it's worth asking why preventing crime is so much harder today than in the past It's not tho is it? In the United States at least crime is much lower than it was since like the 50's.
  - watwut 10y ago
    Good school. Employment opportunities. Cleanness.
- occamrazor 10y ago
  By almost every metric, crime has gone down in the last 30 years.
  - didibus 10y ago
    True, though that seems unexplainable. Vox had a good piece on it a while back, concluding that it's probably the sum of a lot of small factors.
  - Arizhel 10y ago
    On average, sure. In specific places, no. These days, if you can't afford more than a crappy apartment, you're going to be living in a place with drug dealers and occasional murders. And with the high rents, having a single income (and worse, having to support a family on that) means that the crappy apartments now cost what, 30+ years ago, a decent but modest home in a decent neighborhood cost. So maybe living in downtown areas isn't nearly as dangerous as it was back in the 70s-80s (when NYC's Times Square was full of prostitutes and muggings were common), but affording a place that doesn't have you surrounded by drug dealers and ex-cons is more out-of-reach and costly (and those once-seedy downtown areas are now completely unaffordable if you don't make $150k+).
ashark 10y ago
> Furthermore, if everyone's getting paid more, isn't it natural that person intensive activities like construction, infrastructure, health, and schooling will cost more? Yes, more. Not disproportionately more (except for certain things with natural limits like land and education at high-name-recognition universities). Not wildly disproportionately more. The blog post[1] I mentioned (prominently linked on HN when it came out) covered the phenomenon pretty thoroughly, without offering much in the way of explanations, though ruling some out. [1] https://slatestarcodex.com/2017/02/09/considerations-on-cost-disease/ https://slatestarcodex.com/2017/02/09/considerations-on-cost...

yummyfajitas 10y ago

Actually, Warren's data and the Two Income Trap shows nothing of the sort. The Two Income Trap shows that income rose 75%. Mortgage expenses rose 70% (for a 66% bigger house [1]), two cars cost 55% more than 1 car, health insurance cost 60% more, etc. In fact, the main expense that rose faster than income was taxes (140%) - everything else rose more slowly. http://www.volokh.com/posts/1185883980.shtml http://www.volokh.com/posts/1185883980.shtml http://volokh.com/archives/archive_2008_04_27-2008_05_03.shtml#1209323112 http://volokh.com/archives/archive_2008_04_27-2008_05_03.sht... https://www.wsj.com/articles/SB118705537958296783 https://www.wsj.com/articles/SB118705537958296783 It's not really your fault that you made this mistake, however. Warren chose a really strange way to report tax increases - she reports them as a percentage of before and after income - a 9% increase from 24% of family income to 33%. I place the blame for this confusion on her strange data presentation choices - nearly everyone who read her book gets confused by this, not just you. But all her other increases are in inflation-adjusted dollar percentages. If she reported taxes this way, they'd be up 140% from $9,288 to $22,374. If she reported housing expenses the way she reported taxes, they would be down 3%. Health care would be down 9%. She sure made such a strange choice in how she presented the data. I wonder why she did that? [1] https://www.nar.realtor/RMODaily.nsf/pages/News2007032701?OpenDocument https://www.nar.realtor/RMODaily.nsf/pages/News2007032701?Op...

someguydave 10y ago
Indeed. A big chunk of the "cost disease" can be explained by this in my opinion. The unaccountable administrative state - largely peopled by the "knowledge worker" class - has effectively pirated a big chunk of the income of the country and redirected it to its class friends via direct government employment, government licensing, government regulation and government spending. Nearly all western governments demonstrate symptoms of this disease.
- ashark 10y ago
  As someone who'd been a skeptic of "lawsuits are killing us!" arguments, I actually thought the most convincing explanation of the many that were offered up after that SSC post is that uncertainty bred by too little (or too inconsistently enforced) regulation that leaves too much of enforcing good behavior up to litigation is the biggest driver of the problem. It neatly explains why the US suffers from it far worse than other OECD states, I'd say—uncertain, relatively weak regulatory environment, easy lawsuits. The uncertainty encourages, at both the personal and institutional levels, extreme risk avoidance (CYA, if not actually risk reduction) throughout private industry and government, adding a percentage to costs at every stage of any project while also slowing things down (so, more costs there too) and killing innumerable potentially-cost-saving innovations in process before they can even be attempted.