4 ms·

Sincere question: why is purchasing power not the defining characteristic of wage growth at least post-gold standard? If I can buy more stuff with the same sala

Sincere question: why is purchasing power not the defining characteristic of wage growth at least post-gold standard? If I can buy more stuff with the same salary, hasn't my salary effectively gone up? Or is your point that only some stuff is cheaper, but the total standard of living supportable by average wages has nevertheless dropped?

ClumsyPilot 6y ago
>"If I can buy more stuff with the same salary, hasn't my salary effectively gone up?" That would be deflation, but we've actually had inflation over the past decades. We can ofcourse discuss how wrll we are measuring it, but generally speaking some life necessities like housing have skyrocketed in price.
chickenmonkey 6y ago
It makes sense if their point is that only some stuff is cheaper. It's cheap in the US to buy processed food and appliances but college and healthcare costs are pretty high, and it's hard for young people to find good housing.
dpoochieni 6y ago
Only some stuff is cheaper, but the important stuff is the same or more expensive than before (housing, education, stocks).
dtech 6y ago
Because purchasing power is quite hard to quantify. It requires you to define a set of goods the "average" consumer uses. This leaves much more wiggle room for manipulation and politicization. [1] Wage in currency is a lot simpler. The only real manipulation possibility is currency value and some minor tinkering in the definitions. [1] For example a major criticisms of the euro-zone inflation index is that it excludes housing cost: https://en.wikipedia.org/wiki/Harmonised_Index_of_Consumer_Prices#Controversy_on_housing_prices https://en.wikipedia.org/wiki/Harmonised_Index_of_Consumer_P...
- LudwigNagasena 6y ago
  Nominal wage is almost meaningless. Using something simple but meaningless instead of something meaningful but harder to calculate is nonsensical.
wilde 6y ago
Because the ability to purchase housing has gone way down and has probably absorbed that. https://www.cbpp.org/blog/census-renters-incomes-still-lagging-behind-housing-costs https://www.cbpp.org/blog/census-renters-incomes-still-laggi...
- PaulDavisThe1st 6y ago
  Housing, healthcare, education ... ya know, the very basic stuff of modern life. But hey! US$200 4k TVs! Portable handheld computing devices with access to a good chunk of human knowledge (and humanity) ! No problem!
  - LargoLasskhyfv 6y ago
    You could build small houses out of the 4k TVs. And save on the heating, light, and wallpapers :)
Arnt 6y ago
Noone's going to read this, but I'm going to answer, differently. Because procrastination. There used to be "white-collar cost of living comparisons", maybe there still is. The headline in the newspaper would be "Copenhagen most expensive city in the world" or somesuch. The major reason for that was that hiring a full-time nanny to look after your children was expensive in Copenhagen, and a full-time nanny was included because that was considered necessary for white-collar professionals in some of the cities om the survey, and for fairness it was included everywhere. But in Copenhagen, there are excellent creches and kindergartens. Only a kook hires a nanny, so those attempts at fair comparisons compared kooky behaviour in Copenhagen with sensible behaviour in, say, Pune or Bangalore, and found that being a kook in Copenhagen is expensive. But how can you do it better? How can you compute the cost of living (which is tightly connected to purchasing power) so well that you can compare year-over-year and capture 2% changes reliably? If the city provides more/better creches, should you start counting 19.2% of the cost of a nanny instead of 19.4%? People don't need a car where I live. I know areas nearby where a family like mine would have at least one, perhaps two cars. Cars are cheaper there (renting off-street parking space costs a fortune here) but how would you factor the cost of a car into purchasing power and compare fairly? If the city builds new metro rail, how do you change the weight of the family's first car in your calculation, and the cost of the second car? This is difficult stuff.

ClumsyPilot 6y ago

>"If I can buy more stuff with the same salary, hasn't my salary effectively gone up?" That would be deflation, but we've actually had inflation over the past decades. We can ofcourse discuss how wrll we are measuring it, but generally speaking some life necessities like housing have skyrocketed in price.

chickenmonkey 6y ago

It makes sense if their point is that only some stuff is cheaper. It's cheap in the US to buy processed food and appliances but college and healthcare costs are pretty high, and it's hard for young people to find good housing.

dpoochieni 6y ago

Only some stuff is cheaper, but the important stuff is the same or more expensive than before (housing, education, stocks).

dtech 6y ago

Because purchasing power is quite hard to quantify. It requires you to define a set of goods the "average" consumer uses. This leaves much more wiggle room for manipulation and politicization. [1] Wage in currency is a lot simpler. The only real manipulation possibility is currency value and some minor tinkering in the definitions. [1] For example a major criticisms of the euro-zone inflation index is that it excludes housing cost: https://en.wikipedia.org/wiki/Harmonised_Index_of_Consumer_Prices#Controversy_on_housing_prices https://en.wikipedia.org/wiki/Harmonised_Index_of_Consumer_P...

LudwigNagasena 6y ago
Nominal wage is almost meaningless. Using something simple but meaningless instead of something meaningful but harder to calculate is nonsensical.

wilde 6y ago

Because the ability to purchase housing has gone way down and has probably absorbed that. https://www.cbpp.org/blog/census-renters-incomes-still-lagging-behind-housing-costs https://www.cbpp.org/blog/census-renters-incomes-still-laggi...

PaulDavisThe1st 6y ago
Housing, healthcare, education ... ya know, the very basic stuff of modern life. But hey! US$200 4k TVs! Portable handheld computing devices with access to a good chunk of human knowledge (and humanity) ! No problem!
- LargoLasskhyfv 6y ago
  You could build small houses out of the 4k TVs. And save on the heating, light, and wallpapers :)

Arnt 6y ago

Noone's going to read this, but I'm going to answer, differently. Because procrastination. There used to be "white-collar cost of living comparisons", maybe there still is. The headline in the newspaper would be "Copenhagen most expensive city in the world" or somesuch. The major reason for that was that hiring a full-time nanny to look after your children was expensive in Copenhagen, and a full-time nanny was included because that was considered necessary for white-collar professionals in some of the cities om the survey, and for fairness it was included everywhere. But in Copenhagen, there are excellent creches and kindergartens. Only a kook hires a nanny, so those attempts at fair comparisons compared kooky behaviour in Copenhagen with sensible behaviour in, say, Pune or Bangalore, and found that being a kook in Copenhagen is expensive. But how can you do it better? How can you compute the cost of living (which is tightly connected to purchasing power) so well that you can compare year-over-year and capture 2% changes reliably? If the city provides more/better creches, should you start counting 19.2% of the cost of a nanny instead of 19.4%? People don't need a car where I live. I know areas nearby where a family like mine would have at least one, perhaps two cars. Cars are cheaper there (renting off-street parking space costs a fortune here) but how would you factor the cost of a car into purchasing power and compare fairly? If the city builds new metro rail, how do you change the weight of the family's first car in your calculation, and the cost of the second car? This is difficult stuff.