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You seem to have missed the point -- I'm saying that only one of the two viewpoints can be true, because they are logically inconsistent, according to real wage

You seem to have missed the point -- I'm saying that only one of the two viewpoints can be true, because they are logically inconsistent, according to real wages. Where the two options are that CPI is accurate, and median standards of living have not improved, viewpoints that often seem to be held in tandem. Since there is other evidence against the accuracy of CPI, and also evidence that Americans are not enjoying a higher standard of living, I'm confident that the first one is not true (CPI does NOT accurately represent inflation).

laidoffamazon 3y ago
No, I haven't missed the point. I'm saying their premise is wrong because people actually are richer than they have been in the past and that their doom narrative is a feeling and not based in reality.
- lend000 3y ago
  I see. It would seem your feeling on that then rests on CPI being accurate, because if inflation has been underrepresented to the point that that median real wage chart would actually show a significant decline with "true inflation", then that's pretty damning against standard of living. And there is plenty of reason to think CPI is underrepresented besides that chart -- that chart is just an effective way to convince someone who already strongly believes living standards are declining. I don't have as strong of an opinion about living standards as I do about inaccurate inflation because I haven't been around long enough to run a household and buy groceries in the 80's, but from someone who talks about facts and feelings a lot, I was hoping for some more facts.
  - laidoffamazon 3y ago
    What evidence is there that Americans have a lower standard of living now than before in American history?
    - lend000 3y ago
      That's your pet issue, not mine. I find the topic interesting enough that I would certainly read any sources or logical arguments you presented, but so far I'm just seeing "feelings". As for CPI, there are two fundamental issues that all result in lower-than-actual reported CPI. 1. If a household spends all of its money, and prices at the grocery store rise, it has to change which items it buys, likely switching to items which experienced lower inflation during that period. The BLS weights are determined by a survey of what median households bought, not what they bought last year before prices rose. That's a mistake that leads to lower reported inflation numbers. 2. Hedonic adjustments are free rein for arbitrary adjustments. For example, new vehicles did not go up in hedonic-adjusted price from 1997 to 2020 according to the BLS [0]. An automatic Toyota Corolla was $12373 brand new in 1997. It was $19700 in 2020. While operating expenses have decreased somewhat (due to better fuel economy), does that cover the 60% price spike to the median purchaser? No, fuel economy only improved 35%, and meanwhile gas prices have tripled so absolute operating expenses have increased. They throw in a bunch of other nonsense justifications like that new cars have bluetooth and other features that counter-act the price change. Our inflation numbers over those years did not incorporate a price increase AT ALL, so it's a fair assessment that real inflation was higher based on that alone. The Big Mac index has probably always been the most accurate assessment, free of political pressures. [0] https://fred.stlouisfed.org/series/CUUR0000SETA01 https://fred.stlouisfed.org/series/CUUR0000SETA01

laidoffamazon 3y ago

No, I haven't missed the point. I'm saying their premise is wrong because people actually are richer than they have been in the past and that their doom narrative is a feeling and not based in reality.

lend000 3y ago
I see. It would seem your feeling on that then rests on CPI being accurate, because if inflation has been underrepresented to the point that that median real wage chart would actually show a significant decline with "true inflation", then that's pretty damning against standard of living. And there is plenty of reason to think CPI is underrepresented besides that chart -- that chart is just an effective way to convince someone who already strongly believes living standards are declining. I don't have as strong of an opinion about living standards as I do about inaccurate inflation because I haven't been around long enough to run a household and buy groceries in the 80's, but from someone who talks about facts and feelings a lot, I was hoping for some more facts.
- laidoffamazon 3y ago
  What evidence is there that Americans have a lower standard of living now than before in American history?
  - lend000 3y ago
    That's your pet issue, not mine. I find the topic interesting enough that I would certainly read any sources or logical arguments you presented, but so far I'm just seeing "feelings". As for CPI, there are two fundamental issues that all result in lower-than-actual reported CPI. 1. If a household spends all of its money, and prices at the grocery store rise, it has to change which items it buys, likely switching to items which experienced lower inflation during that period. The BLS weights are determined by a survey of what median households bought, not what they bought last year before prices rose. That's a mistake that leads to lower reported inflation numbers. 2. Hedonic adjustments are free rein for arbitrary adjustments. For example, new vehicles did not go up in hedonic-adjusted price from 1997 to 2020 according to the BLS [0]. An automatic Toyota Corolla was $12373 brand new in 1997. It was $19700 in 2020. While operating expenses have decreased somewhat (due to better fuel economy), does that cover the 60% price spike to the median purchaser? No, fuel economy only improved 35%, and meanwhile gas prices have tripled so absolute operating expenses have increased. They throw in a bunch of other nonsense justifications like that new cars have bluetooth and other features that counter-act the price change. Our inflation numbers over those years did not incorporate a price increase AT ALL, so it's a fair assessment that real inflation was higher based on that alone. The Big Mac index has probably always been the most accurate assessment, free of political pressures. [0] https://fred.stlouisfed.org/series/CUUR0000SETA01 https://fred.stlouisfed.org/series/CUUR0000SETA01