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The Bermuda Triangle of Wealth
- jstanley 8y ago> Google tells me that the most common reason for hospitalization in the US is childbirth. Thankfully, here in San Francisco, that would only set me back $15,000 Surely this is not true? Does having kids just bankrupt ordinary people in the US or what? I'm not asking about exceptional cases, like what is the normal way of dealing with having to pay $15,000 just to have a baby climb out of your body, when I'm assuming most people don't have that much money?
- patrickg_zill 8y agoEven with a good health care package, a friend paid $10 thousand dollars (his maximum deductible) for the first year of one of his children, due to infant allergies.
- kasey_junk 8y agoThat is not what most people consider a 'good' health care package. That would be considered a 'high deductible' plan. When people talk about 'good' health care plans in the US they tend to think of traditional low deductible PPO. Those tend to have family deductibles in the $500-1k range. Though the employee premium differences might add up to more than 10K in the face of a 'good' health care plan so its largely not relevant to the argument about health care costs in a nation vs nation way (though you'd want to include tax burden for health insurance in that case).
- nradov 8y agoThere's no real correlation between the "goodness" of an insurance plan and its deductible. In the end all that really matters is the quality of care you receive and how much you have to pay for it. Many employers offer high deductible plans but also contribute into the employee's HSA which can be used to pay deductibles. In theory that incentivizes the employee to shop around and get the best possible deal on care.
- kasey_junk 8y agoAgreed but in this anecdote what do you think would happen in that case? I’d guess the person would complain about the deductible even though in real terms it might be cheaper than premiums on a low deductible plan.
- TomMarius 8y agoIt costs around the same in Europe if you don't have insurance. I'm pretty sure it's the same in the USA - this is the rate that would be charged to your insurance company. Rates are way lower for uninsured people if you ask them and tell them that you're not insured (I got a bill lowered 10 times when I broke my hand); and of course most people have some kind of insurance. To the people downvoting: please read properly. If you move your place of residence outside your country, you're no longer insured, and that's what I'm talking about - I specifically said "if you don't have insurance".
- ludoo 8y agoActually in Italy you don't pay a dime, unless you want to. The level of care you get varies by region, but is generally pretty good, especially for regular, mass events like birth.
- BeniBoy 8y agoSame in France. Standard care is free, extra can be taken care of by your private insurance.
- cronz 8y agoHaha, what? Childbirth costs 0 € in a public hospital
- feistypharit 8y agoIf it's not the birth itself, it doesn't stop there. No protected time off, expensive, subpar childcare options, long work hours if you want to advance your career. One way or another, you are punished for having kids. Unless you're really rich. It's now more of a status symbol amongst the rich. "Oh you have 5 kids? Two nannies, a cook too. That's the life!".
- chrisco255 8y agoAssuming you don't have healthcare insurance, which 90% of Americans do, it would set you back around $3000, according to: https://www.parents.com/pregnancy/considering-baby/financing-family/what-to-expect-hospital-birth-costs/ https://www.parents.com/pregnancy/considering-baby/financing...
- gambiting 8y agoBut if I understand it correctly, for some unfathomable reason American health insurance policies usually have a deductible on them - so even if you are insured, you could still be paying few thousand dollars out of your pocket, no? That's insane.
- vinay427 8y agoLots of insurance plans in other industries have deductibles in other countries, and the US certainly isn't unique in this respect. For example, deductibles are the norm in health insurance plans in Switzerland, which has a system not all that different from that in the US.
- snovv_crash 8y agoIn Switzerland the deductible is annual, not per visit. Once you hit that cap, everything is free (except voluntary cosmetic stuff). Thus, insurance actually acts like insurance, like car insurance or fire insurance, there to catch you in a bad situation, not to give you discounts on your day-to-day expenses.
- s3nnyy 8y agoIt's not like this in the US? In Switzerland there is a deductible for adults but everything connected to pregnancy and child-birth is deductible-free. Also, kids below 18 yrs old have mandatory insurance that is has no deductible, thus treatments for them are free.
- 8y ago
- cowsandmilk 8y agoHealth insurance will cover much of it, but more importantly Northern California is overpriced for medical procedures. Boston is $5,000 less and has equally good hospitals. And St. Louis is down at $6,000 and has really good hospitals as well. I had a friend who got an appendectomy at Stanford that was paid for by Google (she was on business travel, works in the London office) and the price was obscene, far above what should ever be charged, literally 10x what other hospitals charge. That place is crazy.
- lotsofpulp 8y agoIt’s not overpriced if there is no monopoly. No one is stopping other providers from moving to Northern California and stealing business by offering lower prices. If people want to live in a place with great weather, outdoors, food, and career opportunities, then they have to compete for it because lots of other people do too, and hence they have to compete to purchase things like homes and service from healthcare providers.
- mikeash 8y agoNothing is stopping them, other than people not shopping medical procedures based on price, partly due to a complete lack of price transparency. Maybe you could move in and set up a maternity ward and advertise it as “only $10,000!” And then people will ask what the competition charges and you won’t be able to answer. They won’t be able to answer.
- lotsofpulp 8y agoI would hope it’s common knowledge nowadays, at least amongst the educated, that you should call your insurance or check their website for in network providers. I can call mine and find out how much certain procedures or codes cost, and if it’s not an exact amount, they can usually give a pretty good estimate. Also, I would expect any service to cost 50% more in the Bay Area.
- mikeash 8y ago
- nelsonic 8y agoThere's a reason for the saying: "The Rich get Richer and the Poor get Children". Perversely having children is a "luxury" many people simply cannot afford. The happiness a "bundle of joy" should bring to the family is often replaced by additional stress of having to work a "better paying" (but often soul-destroying) job to be able to afford the bigger house, school/education, extra curricular activities like sports/music/ballet and eventually college tuition. Conrad Bastable's well-researched post could easily have concluded that having kids "too early" will bankrupt a family. The solution/answer is affordable housing. Housing is the single biggest "expense" for all people/families. Which is why it's the problem I want to tackle personally: https://github.com/dwyl/home https://github.com/dwyl/home The fact that merely giving birth to a child in SF is $15k is mind-boggling. The "Government" needs to fix that or risk population decline catastrophe which will have many knock-on effects! SF should follow the model from Finland where young parents/mothers are given cash incentives and all FREE healthcare: https://www.kela.fi/web/en/families https://www.kela.fi/web/en/families
- expertentipp 8y ago> The fact that merely giving birth to a child in SF is $15k is mind-boggling. The "Government" needs to fix that or risk population decline catastrophe which will have many knock-on effects! The fertility and associated problems of local population can be completely ignored by the government of country like US - country with low population density, predictable steady population growth, and always a large group of people around the world willing to immigrate into the country. If not you, it's going to be someone else.
- berberous 8y agoApologies if this unsolicited advice comes off as rude, but consider easing up on the italicizing and "quoting" of random words. It makes your writing style hard to read and waters down the effect when you do each once per paragraph.
- SmallDeadGuy 8y agoI completely agree. To me, 9 formatting changes in a single sentence, e.g. in the second sentence of that GitHub repo readme, is incredibly excessive. While the comment you replied to isn't nearly as extreme, it still has a similar issue of too many formatting changes per paragraph.
- blihp 8y agoOur medical costs are so out of control it's not funny. Many years ago (i.e. last century) you'd go to the doctor and either they'd treat you on the spot or possibly prescribe something for most common ailments. And if that didn't work, you'd go back and then they'd run some tests and/or send you to a specialist. Today you go to your doctor, who most likely refers you to a specialist, who orders tests from a lab (of course each step racks up costs)... then maybe you get your prescription. Didn't work? Rinse and repeat with a more specialized specialist. Part of it is CYA to protect from liability, part of it is just the health care industry growing out of control.
- Joeri 8y agoMaybe the problem is insurance networks. This incentivizes doctors and hospitals to play by the rules of high-revenue / high-payout insurance providers, whose revenues are high because of those rules.
- lotsofpulp 8y agoNot really, since people would switch to other health insurance providers who have lower premiums. The problem was not forcing everyone into the same insurance market. Letting all the healthy white collar office people stick with their employer chosen health insurance means the leftovers are the poor and unhealthy which many insurance companies can’t handle the losses from since there is no health population to balance it out, so you have places that have no health insurance competition. Even then, the people that make the most money in healthcare are the providers (doctors) and by a significant multiple, so increasing their supply would be necessary to bringing costs down.
- deleted 8y ago[deleted]
- vechagup 8y agoMost insurance plans that allow access to providers in a broad network without a referral (these are often dubbed "PPO" or "high deductible" plans) have an annual out of pocket maximum that the insured will be required to pay before the insurance covers all remaining expenses. E.g., the maximum for "family" coverage on my plan is $5400. It's commonly said that having a baby will result in costs that exceed your out of pocket max, so you can think of the out of pocket max as the real cost to a family on one of these for the medical services from prenatal care through the birth. Caveat: Your accumulation towards this maximum will typically reset to 0 at the beginning of the calendar year, so try to finish your pregnancy before 12/31.
- codingdave 8y agoIt doesn't bankrupt us, but it does cost money. Not really the childbirth itself... that is a one time cost, and it varies greatly with 15K being the high end. But food, housing, education, clothing, and everything else you provide kids, not the least of which is health care.... it all adds up. To about a quarter of a million over time, if you believe the analysts. So with 3 kids, I'm likely $750K down on my wealth. As a tech worker, that is not bankrupt. But if I were living closer to poverty? Then the problem is less about my personal wealth and more about where I choose to cut corners when raising the kids.
- vishnugupta 8y agoContinuing that sentence... > ...unless of course we needed a C-section, in which case it’ll be a casual $30,000. In India, we got c-section done in a luxurious hospital in a suite ward for slightly over $1K. About 80% of that was covered by insurance. Even if it wasn't that kind of money is a typical middle class family in India can easily afford. Note that I'm talking about top of the line hospital so the median cost for a c-section is somewhere around $500. I guess what I'm trying to say is that I'm really blown away by that kind of cost difference. In a developed country shouldn't health be more affordable? No wonder medical tourism is on the rise in India.
- JetSetWilly 8y agoIn the UK a C-section costs an average of 2219USD to the NHS, This cost disparity is not one of developed world vs undeveloped, it is one of an insane health care system vs a rational one.
- elhudy 8y agoIn the UK, nurses are also hardly paid living wages [1]. Particularly in high cost of living areas like London. About USD15/HR for an experienced band 5 nurse. [1]https://www.rcn.org.uk/employment-and-pay/nhs-pay-scales-2017-18 https://www.rcn.org.uk/employment-and-pay/nhs-pay-scales-201...
- verisimilitude 8y agoThat is correct. To corroborate: my health insurance contract states I must pay $13,600 towards my medical expenses (this is AFTER premiums) per year, before they will begin paying on my behalf.
- maxxxxx 8y agoThat's an extreme deductible. How much are your premiums?
- verisimilitude 8y agoI just got next year's fees: premiums are $911.86 per month for family of three. More than the principal and interest on my house...
- Digory 8y agoIt's patchwork. They can't turn you away in an emergency, and Medicaid covers expenses for the poor. An uninsured family member recently had their unexpectedly complicated delivery written off entirely under the hospital's charity guidelines. But I recall reading a vivid passage about ten years ago, talking about the difference between rich and poor maternity wards: the wailing. Anesthesia is an elective expense in childbirth, not always covered by Medicaid.
- sbinthree 8y agoMy wife and I had a child in Canada with about as extreme a complication as you can get (transferred to Level 3 ICU for the sake of mother and baby). We calculated that it would have cost at least $200k in the US in direct costs, let alone things we couldn't quite get a price for (medication, the hourly rate of the over 20 medical professionals in the room during delivery, etc.). Would have ruined us for sure if out of pocket.
- georgeecollins 8y agoHaving a child is really expensive if you don't have health insurance. You can negotiate that cost in advance, but I don't know if people really do that very often.
- megaman8 8y agoIt's worth noting, the birth rate here in CA has been reducing for the last 30 years and recently has reached a 100 year low. It's currently lower than it was during the great depression.
- InclinedPlane 8y agoAbsolutely true, having kids bankrupts plenty of people in the US, especially if there is a medical issue with the child.
- womitt 8y agoThis happens when you give a lot of data to entities that helps others to empty your pocket...
- noelwelsh 8y agoThat's not the root cause. It shouldn't be the case that you need such a massive loan for education or housing. The government has failed if it cannot control the cost of these basic items.
- randomdata 8y agoAssuming you are, like the article, referring to the USA, the only schooling that may necessitate a massive loan is post-secondary (as in after primary and secondary) schooling. The government has done a great job of controlling costs of schooling up to that point. It is confusing to me why you call that optional tertiary level of schooling a basic item? According to the OCED, only 48% of American adults have post-secondary attainment. The other 52%, a majority, seem to be managing without, living long and fulfilling lives. It is understandable why you call housing a basic item. The small percentage without are often left to parish if the lack of shelter isn't quickly corrected. That is a real problem. But is any meaningful portion of the population actually taking out massive loans to make rent? In my experience, a massive loan is difficult to get even when you have a security to back it with. I am surprised that someone struggling to pay the rent each month has any collateral to put up against the loan.
- noelwelsh 8y agoLoan for housing is just lazy writing on my part. I should have made it clear I meant the cost of housing. For education, OP's article made a strong case for tertiary education (as the only group seeing wage growth). Also, if you believe that inequality and lack of social mobility are bad things then you should believe that all people should have easy access to tertiary education.
- randomdata 8y ago
- mistermatt 8y agoIs this again millenials fault ? /s
- mothsonasloth 8y agoIn the UK people's savings have been shrinking for the last 10 years. Its scary how many people are living hand to mouth, and with banks offering crappy interest rates it is no wonder people are spending rather than saving. cue : rampant consumerism, payday loans, wage stagnation etc.
- pjc50 8y agoYes, and in this case it can't be blamed on healthcare costs and mostly not on student loans - it's mostly housing that's the problem, and relatedly costs of transport (because to some extent you can trade one against the other). For pensioners the top complaint is usually energy bills, but I don't think it's a good idea to make energy too cheap lest people use more of it.
- maccard 8y ago> For pensioners the top complaint is usually energy bills, but I don't think it's a good idea to make energy too cheap lest people use more of it. I agree with you, but I don't know what the solution was. I've still got my thermostat set to "off" from summer, and am turning it on periodically. Last night it hit 14 degrees before I got home. Telling a pensioner to "use less energy" because their home is 14 degrees seems a little too far.
- dagw 8y agoI don't think it's a good idea to make energy too cheap lest people use more of it. Have a tiered pricing system. Make the first N kWh cheap and then gradually increase the price.
- noelwelsh 8y agoModern societies are supposed to be organised for the benefit of all in society (broadly speaking; obviously there are cases when different people have desires that cannot be reconciled). This is why the government usually sponsors education, for example. All of society benefits from an educated population and hence all of society contributes to the cost of that education. This seems to have been lost in the US (and, increasingly, the UK) and is, I think, the root cause of the problems. I believe the start of the problem was the rise of neo-liberalism, holding the market and competition above all else.
- realusername 8y agoI think personally that the main problems in the developed world were globalisation + large scale automation, it completely destroyed the power the average worker had, and power directly means money. Inflation is only low because better technology and bigger markets are now available which automatically makes everything cheaper to make, but even that isn't enough to compensate the loss of power of the middle class.
- oldsklgdfth 8y agoI tend to agree with that. Globalization has acted in very interesting ways. I wonder how it will affect the standard of living on a global scale. My guess is that it will have a normalizing effect.
- qubax 8y ago> Modern societies are supposed to be organised for the benefit of all in society That's a nice sentiment to hold, but that's simply not true. All societies are formed by the elite for the benefit of the elite. If others benefit in the endeavor, it's simply an accidental side effect. Industrialized human society is no different than the industrial animal farm. The industrial animal farm doesn't exist for the benefit of the animals. It exists for the benefit of the people who own, run or rule the farm. > This is why the government usually sponsors education, for example. Modern education system in the US and UK and everywhere was created to indoctrinate the students into a particular belief system of the elite, produce future factory workers and to keep child labor from competing against adult laborers. It was one part to serve as innoculation against "wrongthink", one part to produce factory workers who can read simple instructions and to remove labor supply ( child labor ) from a society which couldn't produce enough jobs for its adults. A reason for the constant increase in education demands from jobs is simply because there aren't enough jobs to go around. A solution is to keep successive generations longer and longer in school and out of the work force. But a side effect of this is that students are indebted more and more. And debt is slavery as adam smith pointed out. > I believe the start of the problem was the rise of neo-liberalism, holding the market and competition above all else. The problem predates neoliberalism. Neoliberalism ( and neoconservativism ) is just national industrialism writ large ( international ). It's the natural progression from national industrialization of the past 200 years.
- expertentipp 8y agoOne clearly hits a salary ceiling and starting from a certain timepoint one becomes only more vulnerable by switching the jobs. One has no means to push back rising prices other than picking something else but sooner or later the prices simply unify upwards.
- billyggruff 8y agoThe writing of this article seems a bit 'choppy'.
- NTDF9 8y agoThe biggest trick that the FED has pulled is that it convinced the world that inflation is at 2% yoy. What a disgraceful joke! Had they been real about the inflation, the interest rates on savings would've been higher. Sure, it would crash the stock market but the stock market only benefits the rich disproportionately. Not teachers, admins, nurses etc. Oh btw, has anyone noticed that 20% of the 20 trillion dollar US GDP is healthcare? That's 4 trillions spent on healthcare every year!!
- realusername 8y ago> The biggest trick that the FED has pulled is that it convinced the world that inflation is at 2% yoy. What a disgraceful joke! I don't believe it either, or they are counting the wrong things.
- mrnobody_67 8y agoI use this for inflation: https://www.forbes.com/sites/andreamurphy/2017/10/18/the-price-of-the-good-life-the-forbes-400s-cost-of-living-extremely-well-index/#4c83403e32ad https://www.forbes.com/sites/andreamurphy/2017/10/18/the-pri... 5% avg inflation
- 80386 8y ago> The sticker price of college pre-loan or pre-financial-aid is about the same as the median net worth of married couples in America. Just enough to hit the reset button on those savings. I know someone who works in a warehouse. She's done that for a while, she's good at her job, and management wants to promote her but can't -- because she doesn't have a degree. They told her as much: if she gets a degree, they'll promote her, but without one they can't, because HR says managers need degrees. I have a degree, but it isn't a degree from a good college in a useful field, which it seems you need nowadays to get a job better than warehouse manager. I didn't know this, and neither did my parents; they just figured that you need the piece of paper, and that's it. But people with a higher-class background did know that. And for those people... well, class mobility isn't in their interests, now is it? (It's worth remembering that colleges themselves switched from academic performance to "holistic admissions"... to ensure that they remained a preserve for the hereditary upper class.)
- kartan 8y agoI very interesting article. This kind of numbers should be on the news all the time (like global warming) so people focus more on them instead of what is the last Twitt from the president. > "Get rich or die trying" I have always seen this as USA's major flaws. You are not supposed to have a good life but to risk everything for riches. This was working when the rest of the world was under-developed. USA citizens had so much more than the rest. As the world catches up and surpases USA its problems are getting bigger and bigger. If ever the dollar stops being the defacto world currency I can't even imagine what will happen. How many TV shows I have seen that people laugh at the janitor looking down to him? There is no pride in a job well done, there is no self-fulfilment on doing what is correct. Money and fame are the only thing that matter. You even have religious groups that see economic wealth as a sign of God blessing! Other countries have different and even bigger problems, but meanwhile the american dream is about economic aboundance and not about having a good life you are doom to a rat race. > The taxman. I’d like 30% please. 40% if you got a bonus this year. Good job. > Medical conditions! Your income means you have to pay out of pocket The fact that your taxes are disconnected from a public health care system is scary. I am very proud of paying taxes that helps people to survive cancer, to get an education or to live with a disability. Your problem is not that you have to pay taxes but that the taxes are not used to give you back services as it was designed to be done (and that rich people does not pay their fair share, and that is something that it is also true in Europe).
- shawn 8y agoHow many TV shows I have seen that people laugh at the janitor looking down to him? Zero? In fact, the Scrubs janitor comes to mind. https://www.youtube.com/watch?v=8v2mEg9Cpvs https://www.youtube.com/watch?v=8v2mEg9Cpvs
- shawn 8y agoNow that is an impressive turnaround time. I noted two days ago that I could edit my comment after it was vouched: https://news.ycombinator.com/item?id=18158475 https://news.ycombinator.com/item?id=18158475 Now I can't: https://imgur.com/4nSRJux https://imgur.com/4nSRJux Amusing that of all the features and fixes to implement, this even registered on an arc hacker's radar. Also happy to see that HN can still ship to production within 48 hours.
- afpx 8y agoDoes anyone know why wages aren’t increasing? Unemployment is almost at a 50-year low.
- lotsofpulp 8y agoSupply curve and demand curves have shifted due to increases in labor supply and decreases in demand, decreasing the price of labor.
- VLM 8y agoCivilians think unemployment means people don't have a job. Reality is its a measure designed in the 30s and heavily gamed and politicized to not mean very much. A somewhat more realistic measure would be something like FREDs EM ratio. About a decade ago 62% of the population was employed, and after the great recession we've slowly climbed back up to 60%. Flat at 58% from the great recession until 2014, then continuous growth since. Sure theres boomers dying off, but that means demand dying off too, in theory the ratio should be fairly constant. FRED is an online product of the St Louis Federal Reserve; at least semi-trustworthy, surely more trustworth than unemployment stats. Its not so much intentional dishonest as changing the definitions of what it means to be unemployed with all kinds of moral and ethical boundaries for welfare services etc. On the other hand, the percentage employed is reported honestly as a simple percentage of the population with a job. To have a job is a honest observational result; to be in the legal and welfare state of qualifying for unemployment benefits is a totally different kind of subjective observation. We could have 0% unemployment simply by not providing benefits anymore, which is kinda what we're doing. Anyway the point is the last time the employment percentage was as low as 60% was after the 1983 recession; the graph is surprisingly not very dramatic and the percentage of employed americans post WWII has never been below 55% and never above 65%. None the less, the current stat of 60% is 3% below the peak in '07, almost 5% below the peak in '99, 3% below the peak in '90... For most of the 80s, all of the 90s, all of the 00s, employment was higher than it is now. Admittedly its better now than at the end of '09, but hardly at a high number. As such, given that about 3% of the population was very recently working and now is not, we have a long way to go before any wage pressure.
- 8y ago
- lr4444lr 8y agoMedical care has arguably gotten better and continues to improve. Housing is vague and controversial, because land is fixed, and people can live in formats that have significant impact on other people, and they continue to prefer modes that cost more for sundry reasons (not all of them good, but there is choice). Food has gone up, but there are savings to be had if you adjust your habits and expectations. No one need starve. But education is the big one: no real net improvement from many decades ago (arguably worse), and in greater supply than ever. Why has cost continued to go up?
- afpx 8y agoHere’s a controversial perspective. Maybe most people’s expectations are too lofty, and their abilities much lower than the think they are. In 2000, less than 25% of the working popultion had a bachelors degree. Today, every young person I talk to expects to finish a Phd, JD, and MBA. And, now everyone wants to live in the trendiest (highest-cost areas). There are plenty of places in the US where a house can be purcahsed for under $100k. Unless you came from wealth, or you’re definitely in the top 1% of your peers, maybe set your expectations a bit lower. Or, at least be patient as you work your way up. Build wealth the old fashion way (like we did 25 years ago) - get a menial job (i.e. “in the mail room”), genuinely try to help your bosses (not compete with them), slowly build your reputation and circle of influence, take night classes at the community college, live below your means, save, etc.
- lotsofpulp 8y agoDue to gains in efficiency and scale, it’s more winner take all than ever before. Look at the public markets, it’s halved in the number of companies even listed on it, and of those listed there’s basically a handful capturing all the gains. The bigger companies will continue to gain pricing power so unless you’re in some regulated niche like doctors, expect to not be in control of your destiny if all you plan to do is work a job.
- watwut 8y agoIsnt that just reflectin of who you talk with? I am pretty sure that 100% of young americans do not plan PhD nor MBA.
- wil421 8y agoThe parent poster has a very skewed opinion. My observations are similar to yours, in fact I’m not sure of anyone outside medical professions who did graduate schools right after a bachelors.
- annabellish 8y agoWhat the linked article is trying to explain is that the opposite is true. It isn't that everyone wants to live in the trendiest areas, it's that they _have_ to in order to find a job that has any hope of paying off their debts fast enough for them to save up enough so that when the next huge expense comes through they can afford it... likely taking on more debt even so. It isn't that everyone wants a degree - certainly not, given the price - but if you don't have one then you don't even have a chance of making enough savings to afford housing, healthcare, education for your children, et cetera. People _can't_ "set their expectations a bit lower". Your options are to have no expectations, and accept that you're not going to be able to provide for your children, or to join the same rat race as everybody else and get locked into this cycle of wildly increasing prices. There isn't a middle ground for people to aim at any more.
- vermilingua 8y agoI've been wondering recently if the economy has shaped to optimally exploit the most readily available and easily renewable resource available: people. There's been an explosion in computing power over the last two decades, and computing power roughly equals the ability to optimise. Has this allowed the economy, through sheer market forces, to reach an equilibrium where people are maximally exploited while still being able to grow, and increase their "value output" over time? Has the economy managed to dodge the malthusian trap with humanity, that it has otherwise fallen into with fossil fuels and rare metals/minerals?
- nerdponx 8y agoI've been wondering recently if the economy has shaped to optimally exploit the most readily available and easily renewable resource available: people. Has not shaped of its own accord, it has been shaped. At least to some extent, this is planned, and governments are mostly complicit.
- cjmb 8y ago(Hey, OP here, thanks for reading I really appreciate it!) Look, on the one hand this can get a bit too cynical, to the extent that you start looking for a "grim cabal" (quoting myself, not you) to blame. There are no lizard people etc. etc. :) So you have to phrase things carefully. On the other hand, this quote from the article is me trying to highlight...exactly what you're saying here about optimizing human output: "The slave works for his owner. The indentured servant for his master. The communist for everyone. The American for himself. It’s a powerful idea, a powerful motivator, and a powerful system. A grand competition, where advancement can be achieved through merit and competence — so don’t be shocked when those with merit and competence flock to compete. And they make perfect competitors." I wanted to dodge the Culture War / Politics questions a bit. This was more about specifying the pain points than proposing My Genius Solution To The Utopia Problem #729. But I didn't want to let it go unsaid that the American system powerfully motivates the sorts of people most-apt-to-compete to do exactly that.
- arunmp 8y agoI read a passage related to this, in a book called 5000 years of trade. Countries can be categorized as rich/scarce in capital, land or labour. Those countries that are rich in say capital, tend to enforce protections on capital while relaxing the policies for land and labour. So coming back to this article, I would say that US being rich in capital has strictly enforced and nurtured conditions on its society by which capital has decent return through investment into student, house debt etc., while meaningly deteriorating the conditions for labour (wages). This is the reason why it is incredibly difficult to become rich nowadays in US through wages alone..
- roenxi 8y ago> But unlike the prophecies of talking cartoon bears, all this money didn’t drive inflation through the roof and crash the stock market. It doesn’t seem to have really gone…anywhere. This essay is obviously backed by a lot of thought, but this specific conclusion is a bit glib. Talking of things which are exponential, 2 trillion dollars is a few magnitudes bigger than 2 million dollars. That is more than the annual GDP of most countries. The banks havn't lost that money under the couch cushions, they will be using it to their advantage. If it is to their best advantage to have it in excess reserves, that probably means something complicated is happening that is letting them make out like bandits. If they aren't using it to influence the wider economy, we really need to ask what exactly they are doing with it. It is an extraordinary claim that it "doesn't seem to have gone anywhere", implying that somehow it isn't doing something.
- cjmb 8y agoHey, OP here. Thanks for reading. For sure, this was a bit intentionally glib. My own understanding of macroeconomics is relatively light, so I linked to two different perspectives on this event and glossed by it a bit. The point I was trying to make (suggest? raise?) was that regardless of your views on printing $2,000,000,000,000, the crazy Cost-Disease-funded-by-debt does not appear to be a symptom of a banking system gone mad chasing risk (ala 2008). Which means it can rationally go higher still, which means it will keep going higher, past the point where all surplus wealth generated by the median Americans is consumed. I was just trying understand what was fueling this fire, and whether it was rational or irrational exuberance.
- roenxi 8y ago:D Hey OP. I didn't put it in my comment because I have no evidence, but my first guess was that the cost-disease-funded-by-debt was exactly caused by those 2 trillion. My instinct is as follows: * The reserves for fractional reserve banking are excess reserves at the Fed + other reserves. * Fed is safer than other, so large portions of the banks reserves sit with the fed. * New money is created by the banks as loans. * The excess reserves allow massive lending (the multiplier was something like 20x if I recall). * Banks now have an income stream & massive cash reserves. Actors willing to take on debt push any capitalists smaller than a bank out of capital markets. Basically, I assume these "excess" reserves are misleadingly labeled and are actually in use relative to the fractional reserve system. That is obviously a complicated guess with no evidence, and you look like you've put more effort into research than me, but it fails the sniff test that 2 trillion exists and is having literally no impact. I bet it is and it is just complicated enough that it is hard to pin down.
- adventured 8y ago> But unlike the prophecies of talking cartoon bears, all this money didn’t drive inflation through the roof and crash the stock market. It doesn’t seem to have really gone…anywhere. It sure did drive inflation. It went into asset prices, which have been massively inflated by low interest rates. Absurdly, the article is ranting about the rate at which real estate and rent are increasing, then pretending the inflation from printing all that money didn't go anywhere. From one paragraph to the next, somehow the author managed that disconnect. The Fed's zero interest rate policy, spurred the big recovery in housing prices (intentionally), and has enabled people to spend more on housing via artificially cheap mortgages than they otherwise could have, pushing prices up rapidly.
- apapli 8y agoInflation, at least in Australia where I live is measured as a “basket of goods”. I totally agree that inflation has gone higher than it seems reported, but I think that is due to categories that are not properly captured in the basket. No elected government wants to do a review on a metric that will make them look bad unfortunately if it was corrected.
- ghobs91 8y agoWhat happened around 2000 that caused the accelerated growth in tuition?
- dagw 8y agoI'm guessing more people got easier access to larger student loans.
- randomdata 8y agoI do not know about all jurisdictions, but in my region of the world, the high school completion rate jumped by approximately 20 percentage points right around that time (from ~60% to ~80%). Assuming that holds true elsewhere, it stands to reason that with more people graduating high school, more people are likely to be accepted into higher levels of schooling. With more people attending higher level schools, the increase in demand (without an immediate increase in supply – it takes a long time to build new schools and even longer to recognize them as respected institutions), means price is going to rise.
- poulsbohemian 8y agoThis is purely my unscientific, though information-based opinion... I graduated in 2000. Basically, an arms race started, as elite schools could afford to make it "free" to attend, others jacked up their tuition to become "elite" in their own way, online education was going to eat the bottom end (so to speak), and any college that wanted to stay in business had better ramp up their appeal. I think what you'll observe was beginning in about that time, there was a massive building boom, as each school tried to provide nicer dorms, facilities, etc in order to compete with other schools. Along with this was a significant boost in administrative overhead across schools, for reasons I've not quite understood - my guess is that in a drive to compete on quality, in came the middle management.
- phkahler 8y agoHe misses what I consider a major issue. The price of college education is going up much faster than the cost of providing it. If you look at tuition vs what a professor is paid, one goes up much faster than the other. If you look at housing costs things don't add up either - renting an apartment seems to be a source of revenue for the schools. These are the obvious places the schools are making a ton of money - where does it go? And then there are the absurdities. Where I went to school they now have all sorts of fancy places to eat on campus. I can't imagine students paying $4 a couple times a day for a Starbucks coffee when they're paying with borrowed money. This is just grossly irresponsible. I imagine the justification is "but everybody does it". The problem is nobody is teaching the general public anything about managing their money or evaluating costs of anything. Sure, if you get a good job you can pay off your loan in X years, but that has nothing to do with the fact that you drastically overpaid for what you got (services provided).
- RobertoG 8y agoI don't think he is missing it, it's kind of the point of what is saying: the price is disconnected of the cost, it's a function of the money available to the customers who are, also, a captive market. In standard economic teaching, Is not this what happens when there is a cartel acting?
- cjmb 8y agoHey, OP of the article here, didn't realize someone submitted it here too! Yeah, this is exactly a rephrasing of the point I was trying to get across.
- phkahler 8y agoToward the end you said because you paid off your loans in 2 years instead of 10 that they didn't charge enough. I understand that seems to be how they think, but it's just not right. That's the problem. It reminds me of when I realized that banks have an interest in balancing income from issuing more loans with default rates. Someone responded who was close enough to banking to say that they were aiming for about a 7 percent default rate as optimal. In other words, lower lending standards until you're at that rate for optimal profit. These forces are obviously financially good for the institution, but bad for the public. We need to find a way to fix that and the only thing I can think of is educating people on how they are getting screwed so they can make their own judgements on when to participate in such games.
- theandrewbailey 8y ago> $180,000 on a 4-year degree in 2018 would’ve been a $160,000 downpayment on a house for my parents generation, plus the $20,000 four year degree. $160k would buy the whole house! (If not, most of it!) > Success only begins when you build enough wealth to pay for: > Your own continuing education: $0 — $125,000 > A home for your family: $750,000 — $1,500,000 (depending on how far you are willing to move from a major urban center — but don’t move too far because the wages go down too) > Education for your children: $180,000 — $325,000 (start at the bottom of the range if your kids are 18 today, move up accordingly) > Medical expenses: $50,000 guaranteed between childbirth and insurance, more with pre-existing conditions or any large event > Your own medical care as you age: $0 — $LOTS I get the feeling that the author purposefully picked one of the worst places to build wealth with "average" incomes (which so happens to be where he lives). While these are bad, these prices aren't average. I live in the rust belt and might be making some very large (read: expensive!) life changes in the next year or two. There is no way it's going to this expensive.
- sailfast 8y agoI really liked this article as it was thought provoking and motivational, with interesting data to back it up! That said, I don't understand why 750K-1.5M for housing was considered in the one-time expenditure equation. Your home is an asset as well as a monthly liability, and you don't need to have it paid off in order to build wealth, either in prices or in savings while you pay off your mortgage.
- gbustomtv5 8y agoCost of my childrens’ education will much more than $180k. Daycare is 70-80k then private school is 300k+. Public schools are in a very sad state. Children are a true luxury in this day and age.
- frockington 8y agoOut of curiosity where are you living where the public school are so bad the only alternative is 300k+? I live in a larger midwestern city and the public schools are decent. Some students will go to Harvard, most go to a respected state school, some don't go to college
- megaman8 8y agoIn some parts of SF, you don't even have the option of sending your kids to Public school, because they won't let anyone else in: all seats taken. They have a pretty massive shortage of teachers because no one can afford to live there. At that point, your only choice is private school or move.
- poulsbohemian 8y agoWhaaatttt???? I don't doubt what you are saying, but not living in SF / Bay Area I've never heard this. Can you provide a citation / more information?
- gbustomtv5 8y agoIn Bay Area the situation with public schools is pretty dire, in my oppinion. Palo Alto, Cupertino and Los Gatos are ok. The rest are surviving. Housing in districts where public schools are ok comes at a massive premium. The difference between San Jose and Los Gatos is more than 300k. Private schools are 2-3k per month. To afford Bay Area both parents have to work 50+ hours a week with 30+ minute commutes. As a result, the time parents spend with children is very limited. Raising a famility with even 2 children is a big challenge.
- ikeboy 8y agoFocusing on the parts of the inflation index that have gone up the most and implying that's the "real" rate of inflation is misleading. I could write an article pointing out that wages have stayed the same but the cost of a computer has gone down by orders of magnitude - that doesn't imply that we're richer by an order of magnitude just as this article doesn't mean we're poorer
- diogenescynic 8y agoHousing and healthcare are much more significant and frequent expenses than a computer tho. They’re also necessities.
- ikeboy 8y agoMost of his discussion is about education which isn't necessity - and he ignores the subsidies, quoting sticker prices like most people don't get significant discounts Also, looking at average cost is misleading because that includes purchases by people who gladly pay higher amounts because they can afford it. You want to look at the cheapest "reasonable-quality" cost to determine what's "affordable", not average.
- gcb0 8y agoexcept price of computers have been steady or rising. electronics is the one fake anchor in that list. and there are a few. when he says repeatedly that he won't contest the official number, that is an economist joke. the official number is a joke and it only matters that the number can withold by not affecting other numbers the fed have no control. if those other number respect the ramdon number, the random number holds. if not, the random number is adjusted to meet reality as needed. so the "measure measures" joke in the article. inflation index is an index alrigth, but not of what everyone thinks it is.
- ikeboy 8y agoCitation?
- xivzgrev 8y agoI like where his heart is. The article is a bit hard to follow. He mixes broad stats with his own situation and I'm often not sure if he is referring to USA or bay area. I think with another edit, and to tighten prose up a bit, it could be a great post.
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- megaman8 8y agoWhenever people mention real wages, I get the feeling they're not really "real". What I mean is that I don't think they're calculating inflation correctly. Inflation doesn't seem to take into account Housing costs, which often cost significantly more than their constituent building blocks upon which inflation is based. Furthermore, I believe real wages should be calculated based on your ability to afford the necessities of life: shelter, food, water, transportation, medical rather than everything under the sun (most of which won't raise your living standard much). I'd like to see a chart that calculates real "real" wages for the last 50 years,.