8 ms·

There is some truth in this article, but a critical point is being missed. > per-capita income has more than doubled since 1972 Actually, per capita income ha

There is some truth in this article, but a critical point is being missed. > per-capita income has more than doubled since 1972 Actually, per capita income has plummeted since 1972. To correctly assess income, you have to know the rate of inflation, and the official inflation figures are effectively lies because they focus on consumer goods, which have indeed become cheaper, while ignoring housing (and in America, college fees and health insurance), which has become drastically more expensive thanks to artificial scarcity created by zoning laws combined with the shortage of remote or rural jobs. That sounds like only one factor of many, but I think it accounts for much of the rest. Real income falling every decade creates negative anticipation which has difficulty finding something to latch onto because we keep being told we are getting continually richer, hence the miasma of fear and hate constantly looking for targets. Nor is the fear unfounded. For centuries, we tried to figure out what destroyed the Roman Empire. Answer: the Romans were not destroyed by any external force. They were wiped out by their own ruling class, via abuse of land ownership law. As for what to do about it, my first suggestion would be to start voting single-issue on repeal of zoning laws.

extradego 8y ago
Because money is, among other things, a massively abstract commodity, determining well-being by monetary measurements is massively contingent, nearly useless, and entirely theoretical.
omgomgomg2 8y ago
Money is a massively abstract commodity, and as such, monetary distribution is an abstract measure of potential commodities. In concrete terms, this has a highly contingent relationship to well-being. Collective wealth is, of course, subject to the same limitations but respectively less precise.
CompelTechnic 8y ago
For anyone interested in the facts of what goes into the cpi-u (or -w) basket rather than opinion, here is a breakdown of the weights going into the basket of goods and services. The date is a bit stale, from 2015-2016, but good nonetheless. https://www.bls.gov/cpi/tables/relative-importance/2017.txt https://www.bls.gov/cpi/tables/relative-importance/2017.txt https://www.bls.gov/cpi/tables/relative-importance/home.htm#Archived%20Relative%20Importance%20Data https://www.bls.gov/cpi/tables/relative-importance/home.htm#... notably, top-level breakdowns are: Food and beverages 14.359 Housing 41.772 Apparel 3.018 Recreation 5.737 Transportation 16.537 Medical care 8.673 Education and communication 6.707 Other goods and services 3.198 Interestingly, if you dig into the data, you can see some interesting patterns of consumer spending. For example, women's and girl's apparel spending is 66% larger than men's and boy's apparel! Also, motor vehicle maintenance and repair is only weighted as 1.123% of spending, which is a lot less than I would have guessed given people's horror stories. Breaking down the housing category, the combined values of rent and owner's equivalent of rent make up more than 30% of the basket. This has risen by about 5% (of the whole basket) since 1987. I doubt that that category is being evaluated too low in a substantial way. Rent by itself is only 7.8% of the basket, which may mean that the basket is fairly insensitive to people being gouged by their landlords. If you live in a fancy metro, your rent will be above average compared to the nation. This is to be expected. I am surprised that medical is only 8-9%. This has risen from 5.8% in 1987. I expect that the reason it is so low is that the average person spends 80% of their life having tiny medical bills and 20% of their life having huge ones. By looking at which categories have shrunk in their weightings over time, you can get a feel for what goods/services are cheaper now than in the past OR that people now choose substitute goods instead of. Certain categories have no substitute, i.e. medical. If you squint at the data real hard you can eke out where you personally are getting reamed more than past-you would have. Some actionable advice would be to consider which services have gotten more expensive due to Baumol's Cost Disease (https://en.wikipedia.org/wiki/Baumol%27s_cost_disease https://en.wikipedia.org/wiki/Baumol%27s_cost_disease) and do your best to DIY them.
- rwallace 8y ago
  > If you live in a fancy metro, your rent will be above average compared to the nation. The problem with this view is that places that a few decades ago would have counted as 'fancy metros' are now more accurately described as 'the only places where there are any jobs (the wages of which are still often insufficient to pay for housing)'. Which leads to another actionable suggestion: we should stop tolerating failure to hire remote workers. (Yes, I know the excuses. We should also stop tolerating those excuses.)
  - deleted 8y ago
    [deleted]
  - crusso 8y ago
    we should stop tolerating failure to hire remote workers What are you suggesting?
    - rwallace 8y ago
      I'm suggesting that we treat discrimination against remote workers the way we treated some other forms of harmful discrimination in hiring: stop doing it, stop accepting or repeating excuses for doing it, stop tolerating companies doing it, and ultimately make it illegal.
      - CompelTechnic 8y ago
        Remote workers are not a protected class, and there is no reason to make them a pretected class, considering the reality that lots of jobs require a physical presence. Calling it discrimination implies that there is a permanent population of people who are capable of working, but can only possibly work if they do not have to commute, and that they are being oppressed because of this. It is not discrimination so much as it's a case of society having a different set of preferences than you.
        ben_w 8y ago
Isamu 8y ago
>Actually, per capita income has plummeted since 1972 I'd like to see that in a time series graph some day, rather than just an assertion.
- dredmorbius 8y ago
  The Maddison Project has global GDP data imputed to the year 1. https://www.rug.nl/ggdc/historicaldevelopment/maddison/ https://www.rug.nl/ggdc/historicaldevelopment/maddison/
  - occamrazor 8y ago
    I checked data for a few developed countries there and all show an increase in GDP per capita.
    - dantheman0207 8y ago
      I think the parents’ point was that even though GDP per capita has increased, the cost of living has increased disproportionately. Because of the rise in housing and healthcare costs, net income in real dollars has gone down even as GDP continues to rise.
      - jeffreyrogers 8y ago
        I've seen that claim made but have not seen evidence for it other than anecdotal or for subsets of the population. It does not seem to be true for the population as a whole.
      - dredmorbius 8y ago
        Another argument might be made that income variability is now more significant, as any break or disruption is likely to be highly disruptive: loss of housing, family relocation, disruption of children's education and environment, etc. I'm notaware of any specific study of same, offhand,but the notion has a name: The precariate. It's what Yonatan Zunger (not an economist) describes as "your financial shock wealth": https://shift.newco.co/your-financial-shock-wealth-4845e6dc1d2f?gi=86c25dc27bcf https://shift.newco.co/your-financial-shock-wealth-4845e6dc1... "All hollowed out" does reference several related studies: https://www.theatlantic.com/business/archive/2016/01/white-working-class-poverty/424341/?single_page=true https://www.theatlantic.com/business/archive/2016/01/white-w...
wazoox 8y ago
I was quite astonished, reading a vintage car magazine recently. In an article about the 1972 For Mustang "Olympic" series, I've learnt that this high-end model cost then $3200 (basic Mustangs started at $2400). Average US worker salary was $800. Now compare with any brand, any model, and the average salary today...
- abecedarius 8y ago
  Did you make a typo? US salaries in 1972 were way more than $800.
  - pimlottc 8y ago
    Presumedly that’s per month.
    - superhuzza 8y ago
      per hour, bro
  - supyrest 8y ago
    Citation? That figure sounds perfectly realistic for average monthly US salary in 1972
WhompingWindows 8y ago
Is there an inflation metric you know of that contains all of those other costs (college, housing, health, etc)?
- rwallace 8y ago
  No. Closest I've come across, though I can't find the link now, is one set of figures that just looked at housing, and found by that metric, real income in the U.S. peaked in 1959. Which, I will claim, was the main cause of the opening up of society in the sixties, with the subsequent drop in real income being the main cause of the end of this phenomenon.
thrav 8y ago
We have to remove incentives for holding / renting property. I think it’s Germany that taxes the shit out of you if the owner doesn’t live in the residence. This would immediately rid the United States of all of these “investment property” owners and people buying up houses to rent with million dollar cash offers to diversify their portfolio. The stock of available homes would go up. This would also lead to the sale of any prop (?) houses being held onto indefinitely because of cheap taxes that are being rented out to fund their life actually living somewhere else. It would cut down on vacation property ownership, which again increases housing stock. It would cut down on career AirBnB-ing. The downsides are a decrease in rental stock, and potentially less investment in any given property since a landlord is no longer maintaining it. I feel like we could find some easy fixes here with things like tax rebates for non-cosmetic home improvements.
- posixplz 8y ago
  British Columbia does this. The Vancouver housing market has seen major shifts because of their vacancy tax.
  - DjiboutiJon 8y ago
    Any sources I can read about this?
    - posixplz 8y ago
      https://www.google.com/search?q=vacancy+tax+vancouver https://www.google.com/search?q=vacancy+tax+vancouver
      - thisacctforreal 8y ago
        ddg: https://duckduckgo.com/?q=vacancy+tax+vancouver https://duckduckgo.com/?q=vacancy+tax+vancouver From a CBC article; Under the new rules, homes that are not occupied for at least six months of the year are subject to a tax of one per cent of the property's assessed value. The deadline to rent out empty dwellings was July 1.
toss1 8y ago
Also, tho per capita income may rise, that does not account for (re)distribution of income, in this case drastically upward. The portion of US GDP going to workers who earn a living (vs capital holders) has never been lower in modern times. https://fred.stlouisfed.org/series/W270RE1A156NBEA https://fred.stlouisfed.org/series/W270RE1A156NBEA
rwallace 8y ago
While I still haven't been able to find an actual time series graph, a Google search for 'Old Economy Steve' gives some indicators of what has been lost. And remember, the new scarcity is all artificial. There was a time when most people had to be poor because our species did not have the technology to do better. Now, most people are poor in the middle of plenty, because those in power are deliberately making them that way.

extradego 8y ago

Because money is, among other things, a massively abstract commodity, determining well-being by monetary measurements is massively contingent, nearly useless, and entirely theoretical.

omgomgomg2 8y ago

Money is a massively abstract commodity, and as such, monetary distribution is an abstract measure of potential commodities. In concrete terms, this has a highly contingent relationship to well-being. Collective wealth is, of course, subject to the same limitations but respectively less precise.

CompelTechnic 8y ago

For anyone interested in the facts of what goes into the cpi-u (or -w) basket rather than opinion, here is a breakdown of the weights going into the basket of goods and services. The date is a bit stale, from 2015-2016, but good nonetheless. https://www.bls.gov/cpi/tables/relative-importance/2017.txt https://www.bls.gov/cpi/tables/relative-importance/2017.txt https://www.bls.gov/cpi/tables/relative-importance/home.htm#Archived%20Relative%20Importance%20Data https://www.bls.gov/cpi/tables/relative-importance/home.htm#... notably, top-level breakdowns are: Food and beverages 14.359 Housing 41.772 Apparel 3.018 Recreation 5.737 Transportation 16.537 Medical care 8.673 Education and communication 6.707 Other goods and services 3.198 Interestingly, if you dig into the data, you can see some interesting patterns of consumer spending. For example, women's and girl's apparel spending is 66% larger than men's and boy's apparel! Also, motor vehicle maintenance and repair is only weighted as 1.123% of spending, which is a lot less than I would have guessed given people's horror stories. Breaking down the housing category, the combined values of rent and owner's equivalent of rent make up more than 30% of the basket. This has risen by about 5% (of the whole basket) since 1987. I doubt that that category is being evaluated too low in a substantial way. Rent by itself is only 7.8% of the basket, which may mean that the basket is fairly insensitive to people being gouged by their landlords. If you live in a fancy metro, your rent will be above average compared to the nation. This is to be expected. I am surprised that medical is only 8-9%. This has risen from 5.8% in 1987. I expect that the reason it is so low is that the average person spends 80% of their life having tiny medical bills and 20% of their life having huge ones. By looking at which categories have shrunk in their weightings over time, you can get a feel for what goods/services are cheaper now than in the past OR that people now choose substitute goods instead of. Certain categories have no substitute, i.e. medical. If you squint at the data real hard you can eke out where you personally are getting reamed more than past-you would have. Some actionable advice would be to consider which services have gotten more expensive due to Baumol's Cost Disease (https://en.wikipedia.org/wiki/Baumol%27s_cost_disease https://en.wikipedia.org/wiki/Baumol%27s_cost_disease) and do your best to DIY them.

rwallace 8y ago
> If you live in a fancy metro, your rent will be above average compared to the nation. The problem with this view is that places that a few decades ago would have counted as 'fancy metros' are now more accurately described as 'the only places where there are any jobs (the wages of which are still often insufficient to pay for housing)'. Which leads to another actionable suggestion: we should stop tolerating failure to hire remote workers. (Yes, I know the excuses. We should also stop tolerating those excuses.)
- deleted 8y ago
  [deleted]
- crusso 8y ago
  we should stop tolerating failure to hire remote workers What are you suggesting?
  - rwallace 8y ago
    I'm suggesting that we treat discrimination against remote workers the way we treated some other forms of harmful discrimination in hiring: stop doing it, stop accepting or repeating excuses for doing it, stop tolerating companies doing it, and ultimately make it illegal.
    - CompelTechnic 8y ago
      Remote workers are not a protected class, and there is no reason to make them a pretected class, considering the reality that lots of jobs require a physical presence. Calling it discrimination implies that there is a permanent population of people who are capable of working, but can only possibly work if they do not have to commute, and that they are being oppressed because of this. It is not discrimination so much as it's a case of society having a different set of preferences than you.
      - ben_w 8y ago

Isamu 8y ago

>Actually, per capita income has plummeted since 1972 I'd like to see that in a time series graph some day, rather than just an assertion.

dredmorbius 8y ago
The Maddison Project has global GDP data imputed to the year 1. https://www.rug.nl/ggdc/historicaldevelopment/maddison/ https://www.rug.nl/ggdc/historicaldevelopment/maddison/
- occamrazor 8y ago
  I checked data for a few developed countries there and all show an increase in GDP per capita.
  - dantheman0207 8y ago
    I think the parents’ point was that even though GDP per capita has increased, the cost of living has increased disproportionately. Because of the rise in housing and healthcare costs, net income in real dollars has gone down even as GDP continues to rise.
    - jeffreyrogers 8y ago
      I've seen that claim made but have not seen evidence for it other than anecdotal or for subsets of the population. It does not seem to be true for the population as a whole.
    - dredmorbius 8y ago
      Another argument might be made that income variability is now more significant, as any break or disruption is likely to be highly disruptive: loss of housing, family relocation, disruption of children's education and environment, etc. I'm notaware of any specific study of same, offhand,but the notion has a name: The precariate. It's what Yonatan Zunger (not an economist) describes as "your financial shock wealth": https://shift.newco.co/your-financial-shock-wealth-4845e6dc1d2f?gi=86c25dc27bcf https://shift.newco.co/your-financial-shock-wealth-4845e6dc1... "All hollowed out" does reference several related studies: https://www.theatlantic.com/business/archive/2016/01/white-working-class-poverty/424341/?single_page=true https://www.theatlantic.com/business/archive/2016/01/white-w...

wazoox 8y ago

I was quite astonished, reading a vintage car magazine recently. In an article about the 1972 For Mustang "Olympic" series, I've learnt that this high-end model cost then $3200 (basic Mustangs started at $2400). Average US worker salary was $800. Now compare with any brand, any model, and the average salary today...

abecedarius 8y ago
Did you make a typo? US salaries in 1972 were way more than $800.
- pimlottc 8y ago
  Presumedly that’s per month.
  - superhuzza 8y ago
    per hour, bro
- supyrest 8y ago
  Citation? That figure sounds perfectly realistic for average monthly US salary in 1972

WhompingWindows 8y ago

Is there an inflation metric you know of that contains all of those other costs (college, housing, health, etc)?

rwallace 8y ago
No. Closest I've come across, though I can't find the link now, is one set of figures that just looked at housing, and found by that metric, real income in the U.S. peaked in 1959. Which, I will claim, was the main cause of the opening up of society in the sixties, with the subsequent drop in real income being the main cause of the end of this phenomenon.

thrav 8y ago

We have to remove incentives for holding / renting property. I think it’s Germany that taxes the shit out of you if the owner doesn’t live in the residence. This would immediately rid the United States of all of these “investment property” owners and people buying up houses to rent with million dollar cash offers to diversify their portfolio. The stock of available homes would go up. This would also lead to the sale of any prop (?) houses being held onto indefinitely because of cheap taxes that are being rented out to fund their life actually living somewhere else. It would cut down on vacation property ownership, which again increases housing stock. It would cut down on career AirBnB-ing. The downsides are a decrease in rental stock, and potentially less investment in any given property since a landlord is no longer maintaining it. I feel like we could find some easy fixes here with things like tax rebates for non-cosmetic home improvements.

posixplz 8y ago
British Columbia does this. The Vancouver housing market has seen major shifts because of their vacancy tax.
- DjiboutiJon 8y ago
  Any sources I can read about this?
  - posixplz 8y ago
    https://www.google.com/search?q=vacancy+tax+vancouver https://www.google.com/search?q=vacancy+tax+vancouver
    - thisacctforreal 8y ago
      ddg: https://duckduckgo.com/?q=vacancy+tax+vancouver https://duckduckgo.com/?q=vacancy+tax+vancouver From a CBC article; Under the new rules, homes that are not occupied for at least six months of the year are subject to a tax of one per cent of the property's assessed value. The deadline to rent out empty dwellings was July 1.

toss1 8y ago

Also, tho per capita income may rise, that does not account for (re)distribution of income, in this case drastically upward. The portion of US GDP going to workers who earn a living (vs capital holders) has never been lower in modern times. https://fred.stlouisfed.org/series/W270RE1A156NBEA https://fred.stlouisfed.org/series/W270RE1A156NBEA

rwallace 8y ago

While I still haven't been able to find an actual time series graph, a Google search for 'Old Economy Steve' gives some indicators of what has been lost. And remember, the new scarcity is all artificial. There was a time when most people had to be poor because our species did not have the technology to do better. Now, most people are poor in the middle of plenty, because those in power are deliberately making them that way.