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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

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.
- vkou 10y ago
  If you want to see money going to waste, look into any sufficiently large private company. For all the wailing and gnashing of teeth about government inspectors that inspect inspectors that inspect tools, the private sector is just as full of pointless, or even actively harmful paper-pushers. Which we all get to pay for, through higher costs. This is also the core of the 'pointless jobs' thesis.
  - someguydave 10y ago
    >the private sector is just as full of pointless, or even actively harmful paper-pushers. 1- Maybe. To what degree are these paper-pushers an artifact of government requirements? It's hard to tell the difference between a 'pointless' private paper-pusher and a private paper-pusher who is there because of some perceived liability to the government or hostile lawyers. 2- Even if so. At least private companies can ultimately be punished in the marketplace. Government typically insulates itself throughly from oversight, both economic and from the ballot-box.
    - deleted 10y ago
      [deleted]
    - vkou 10y ago
      1. Most of it is unhelpful middle management and non-productive people providing themselves with job security. There are a million and one incentives for this kind of behaviour in the private sector. Nobody ever got fired for failing to point out that their job is pointless. 2. Government can be punished at the ballot box, I don't have a choice in where my grocer sources its produce from, whether or not property developers in the area will choose to build small, affordable homes or McMansions, or which ISP will take my money, but not provide stable internet (Because all we have here is Comcast.) I mean, technically I suppose I could overpay crazy amounts of money to get my food, my housing, and my connectivity sourced from somewhere else, but at that point, the ~25% of my income that goes into taxes will seem like a drop in the bucket.
- jklowden 10y ago
  The problem with that theory is that it's wrong on the facts. The federal government has consistently been about 19% of GDP since the 1950s. Your wages are no more eaten up by bureaucracy than was your grandfather's. See epi.org. Wage income has been flat for the median earner since 1979, despite 128% productivity growth. Nearly all benefits to increased productivity went to the top 10%; 80% of that went to the top 0.1%. Return on capital is doing nicely. Return on labor, not so much. For the 2/3 of the workforce with no college degree, real wages since 1979 fell 28%. Before you start feeling smug about getting on the right side of that divide, remember they vote, too. Ergo: President Trump, the man who promised to restore their jobs (and wages). How to let everyone participate in a prosperity so unevenly distributed is the central problem of our time. The solution will not be found in flexible work hours. It will require a lot of work, starting with understanding that the capitalists will not give up their winnings easily.
  - someguydave 10y ago
    Except your facts don't conflict with the idea that government expansion in the private sector is causing costs to rise. It's may be true that the total share federal government spending as a share of GDP hasn't changed. I think it's more important to look at the ways government policy has picked winners in the private sector. In other words I regard government intrusion in the market as a cause of inequality you bemoan, not an effect. Another point: did you read yummyfajita's ancestor post? He writes (quoting Elizabeth Warren): "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." [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.
vkou 10y ago
If you want to see money going to waste, look into any sufficiently large private company. For all the wailing and gnashing of teeth about government inspectors that inspect inspectors that inspect tools, the private sector is just as full of pointless, or even actively harmful paper-pushers. Which we all get to pay for, through higher costs. This is also the core of the 'pointless jobs' thesis.
- someguydave 10y ago
  >the private sector is just as full of pointless, or even actively harmful paper-pushers. 1- Maybe. To what degree are these paper-pushers an artifact of government requirements? It's hard to tell the difference between a 'pointless' private paper-pusher and a private paper-pusher who is there because of some perceived liability to the government or hostile lawyers. 2- Even if so. At least private companies can ultimately be punished in the marketplace. Government typically insulates itself throughly from oversight, both economic and from the ballot-box.
  - deleted 10y ago
    [deleted]
  - vkou 10y ago
    1. Most of it is unhelpful middle management and non-productive people providing themselves with job security. There are a million and one incentives for this kind of behaviour in the private sector. Nobody ever got fired for failing to point out that their job is pointless. 2. Government can be punished at the ballot box, I don't have a choice in where my grocer sources its produce from, whether or not property developers in the area will choose to build small, affordable homes or McMansions, or which ISP will take my money, but not provide stable internet (Because all we have here is Comcast.) I mean, technically I suppose I could overpay crazy amounts of money to get my food, my housing, and my connectivity sourced from somewhere else, but at that point, the ~25% of my income that goes into taxes will seem like a drop in the bucket.
jklowden 10y ago
The problem with that theory is that it's wrong on the facts. The federal government has consistently been about 19% of GDP since the 1950s. Your wages are no more eaten up by bureaucracy than was your grandfather's. See epi.org. Wage income has been flat for the median earner since 1979, despite 128% productivity growth. Nearly all benefits to increased productivity went to the top 10%; 80% of that went to the top 0.1%. Return on capital is doing nicely. Return on labor, not so much. For the 2/3 of the workforce with no college degree, real wages since 1979 fell 28%. Before you start feeling smug about getting on the right side of that divide, remember they vote, too. Ergo: President Trump, the man who promised to restore their jobs (and wages). How to let everyone participate in a prosperity so unevenly distributed is the central problem of our time. The solution will not be found in flexible work hours. It will require a lot of work, starting with understanding that the capitalists will not give up their winnings easily.
- someguydave 10y ago
  Except your facts don't conflict with the idea that government expansion in the private sector is causing costs to rise. It's may be true that the total share federal government spending as a share of GDP hasn't changed. I think it's more important to look at the ways government policy has picked winners in the private sector. In other words I regard government intrusion in the market as a cause of inequality you bemoan, not an effect. Another point: did you read yummyfajita's ancestor post? He writes (quoting Elizabeth Warren): "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." [1]https://www.nar.realtor/RMODaily.nsf/pages/News2007032701?OpenDocument https://www.nar.realtor/RMODaily.nsf/pages/News2007032701?Op...