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I am tired of this: "the CPI overestimates inflation by underestimating the value of improvements in product quality and variety" The extreme right-wing has b

I am tired of this: "the CPI overestimates inflation by underestimating the value of improvements in product quality and variety" The extreme right-wing has been making this argument since the early 1980s. I used to believe this argument, as it once sounded believable. But Newt Gingrich used this issue (among others) to engineer a Republican resurgence in 1994, and one of the first things they did was force the Bureau of Labor Statistics to change the way it calculates the CPI, so that more attention was paid to quality improvements of goods and services. What surprised me was that the right-wingers continued to use this argument, as if nothing had changed. It was then that I realized they were arguing in bad faith. No matter how many changes were made to the CPI, they were going to keep repeating the mantra "The CPI overstates inflation". Regarding what the Republicans achieved during 1994-1995, here are some articles worth reading: http://www.shadowstats.com/article/no-438-public-comment-on-inflation-measurement http://www.shadowstats.com/article/no-438-public-comment-on-... http://bluemassgroup.com/2010/11/the-1995-gop-revolution-screwed-the-seniors-out-of-cola-this-year/ http://bluemassgroup.com/2010/11/the-1995-gop-revolution-scr...

e40 14y ago
The WSJ has lost all credibility with me. This and the picture of sad faces of people that will pay more in taxes, but all of them had ridiculously high incomes, were the last straws. They have moved from somewhat impartial to full-on a promoting the GOP agenda.
- fokov 14y ago
  Did you expect anything less from Rupert Murdoch? As soon as I saw the news of him buying the WSJ, I knew it was just a matter of time until it was filled with propaganda.
yummyfajitas 14y ago
If real compensation remained constant since 1970 (or whenever), then basket of goods available to Americans would today would be the same as in 1970 (or with substitutions of equivalent value). That's simply the definition of real compensation. Do you believe this is actually the case?
twoodfin 14y ago
Over the long term, in a society where technology has been improving at the pace that ours has, something like the CPI is almost forced to overstate inflation. Things like my iPhone weren't available at any price 10 years ago, and certainly had such a useful device been available, it would have cost several times what it does today. But you have to put it in the CPI basket as telecommunications or what have you, and it's being compared to an old AT&T Princess. Similar issues crop up in industry after industry, and are basically impossible to "normalize" into something objective. The best you can do if you're worried about making sure folks on COLA-adjusted assistance don't starve is weight for the essentials (bread, milk, gasoline, housing square footage). But now you're not capturing huge swaths of quality of life improvements.
Symmetry 14y ago
It wasn't the extreme right wing making that argument, it was the broad consensus of the economics profession and the 90's reform reflected that. Williams himself (the guy behind Shadowstats) claims that our inflation figures are the result of a conspiracy among the political class in both parties to deceive voters rather than being the fault of just right wingers. Personally I think he's a crank, so here's the BLS's rebuttal of his charges: http://www.bls.gov/opub/mlr/2008/08/art1full.pdf http://www.bls.gov/opub/mlr/2008/08/art1full.pdf
youngtaff 14y ago
Yeh this bit is bogus too: "Bill Gates in his private jet flies with more personal space than does Joe Six-Pack when making a similar trip on a commercial jetliner. But unlike his 1970s counterpart, Joe routinely travels the same great distances in roughly the same time as do the world's wealthiest tycoons." Completely ignores the convenience that a private jet can take off and land closer to destinations, less messing about with immigration and security which all add significantly to journey times.

e40 14y ago

The WSJ has lost all credibility with me. This and the picture of sad faces of people that will pay more in taxes, but all of them had ridiculously high incomes, were the last straws. They have moved from somewhat impartial to full-on a promoting the GOP agenda.

fokov 14y ago
Did you expect anything less from Rupert Murdoch? As soon as I saw the news of him buying the WSJ, I knew it was just a matter of time until it was filled with propaganda.

yummyfajitas 14y ago

If real compensation remained constant since 1970 (or whenever), then basket of goods available to Americans would today would be the same as in 1970 (or with substitutions of equivalent value). That's simply the definition of real compensation. Do you believe this is actually the case?

twoodfin 14y ago

Over the long term, in a society where technology has been improving at the pace that ours has, something like the CPI is almost forced to overstate inflation. Things like my iPhone weren't available at any price 10 years ago, and certainly had such a useful device been available, it would have cost several times what it does today. But you have to put it in the CPI basket as telecommunications or what have you, and it's being compared to an old AT&T Princess. Similar issues crop up in industry after industry, and are basically impossible to "normalize" into something objective. The best you can do if you're worried about making sure folks on COLA-adjusted assistance don't starve is weight for the essentials (bread, milk, gasoline, housing square footage). But now you're not capturing huge swaths of quality of life improvements.

Symmetry 14y ago

It wasn't the extreme right wing making that argument, it was the broad consensus of the economics profession and the 90's reform reflected that. Williams himself (the guy behind Shadowstats) claims that our inflation figures are the result of a conspiracy among the political class in both parties to deceive voters rather than being the fault of just right wingers. Personally I think he's a crank, so here's the BLS's rebuttal of his charges: http://www.bls.gov/opub/mlr/2008/08/art1full.pdf http://www.bls.gov/opub/mlr/2008/08/art1full.pdf

youngtaff 14y ago

Yeh this bit is bogus too: "Bill Gates in his private jet flies with more personal space than does Joe Six-Pack when making a similar trip on a commercial jetliner. But unlike his 1970s counterpart, Joe routinely travels the same great distances in roughly the same time as do the world's wealthiest tycoons." Completely ignores the convenience that a private jet can take off and land closer to destinations, less messing about with immigration and security which all add significantly to journey times.