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Great article, but I find it only takes the "wage" side of the equation and not the "cost" side. I'm not an economic expert but the biggest line items for most
by Ozzie_osman 7y ago
Great article, but I find it only takes the "wage" side of the equation and not the "cost" side. I'm not an economic expert but the biggest line items for most people seem to be housing (high and regular), healthcare (high and irregular), education, and childcare.
If we fix these I'm sure the equation changes a lot for many, many, people.
If the market is broken for pricing these main things, then even if everyone suddenly gets an income increase, it probably wouldn't matter much.
- pytester 7y agoIt would still make these things more affordable. And, save perhaps childcare, increasing the cost of low waged labor would not have an outsized inflationary effect on them. Certainly not on housing. The cost of housing/rent is predicated on a shortage of hoarded, largely untaxed land.
- dfilppi 7y agoUntaxed? Where? Got the car gassed up.
- pytester 7y agoUntaxed as a verb. E.g. California reducing property taxes to absurdly low levels with prop 13, diverting the spoils of the land to the owners instead (in the form of ridiculously high valuations and streams of rental income).
- Agathos 7y agoIf it's a DeLorean, just head back to 1978 when Proposition 13 passed in California.
- Ozzie_osman 7y agoWouldn't be the opposite? Supply-constrained, limited housing. Everyone is suddenly twice as rich competing for the same fixed number of units. Price has to go up.
- tyrust 7y ago>Everyone is suddenly twice as rich Not everyone makes makes minimum wage.
- Gatsky 7y agoThe standard macroeconomic approach is to keep inflation low so that wages will ‘catch up’ to costs. This isn’t working though, low wages seem to be sticky. This implies that there aren’t enough new jobs, and there are plenty of people who will take whatever they can get.
- therealdrag0 7y agoBut if costs come down, that is effectively a raise in wages. The cost of many goods has come down (for some of the same reasons wages are down!), but as OP said housing/education/medical have gone up. So if we can target those rising costs, that can be very effective, without raising wages.
- majos 7y agoAgreed, this is mostly unsupported conjecture, but I think people underestimate how far mitigating healthcare costs would go. Since healthcare costs can be unpredictable (a sudden severe injury, or even just the opacity of health insurance) and costly, they force people to maintain more savings, take less risk, and generally constrain freedom as economic actors. Do away with, or at least reduce, this bogeyman and I wonder how much economic activity we’d unlock.
- MuffinFlavored 7y agoI don’t think you’ll fix high housing costs. There’s a supply and demand problem. Limited supply (real estate), lots of demand, therefore prices go up. Those who can afford it do pay it and are competing with each other to pay for the property they want. Why would New York or Bay area housing ever go down? Time for more people to admit they can’t afford to live in the best + most popular places and instead move to “less desirable” places, like Iowa.