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?

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_P...

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

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.

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.

Because the ability to purchase housing has gone way down and has probably absorbed that.

https://www.cbpp.org/blog/census-renters-incomes-still-laggi...

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!

You could build small houses out of the 4k TVs. And save on the heating, light, and wallpapers :)

>"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.

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

> That's a result of political choices made in many jurisdictions

It definitely makes it more difficult, but a lot of it is a "law of nature" because moving is expensive, time consuming, risky, and you give up your local connections. There's a reason for the metaphor "putting down roots."

That's a very valid point.

But it ignores the extent to which we've deliberately worked very hard to make capital mobile. As noted elsewhere in the thread, feudal societies used to see most wealth accumulated in the form of real estate, which is more or less the definition of immobile capital. We've built huge and complex social institutions around making capital mobile, and even allowed them to suck up a rather notable percentage of GDP.

Imagine what a world would look like that put as much effort into the free movement of labor. And note: not all capital is internationally mobile, and in the same spirit, nobody would sensibly suggest that all labor would or should become mobile. There's plenty of room and benefits for investing both close to home (which is all part of "putting down roots"). It's a question of balance between local, regional, national and global for both capital and labor mobility.

> The EU made a very conscious decision to tie free movement of labor to free movement of capital within its operating zone (probably the only such economic agreement of its kind).

how is this any different for the US?

I'm pretty certain Floridians don't need a work visa if they choose to go and work in California?

When the EU was formed (originally as the European Common Market), it was an agreement between entirely sovereign nations. No federal government, no trans-national legal frameworks.

The US has essentially never existed in this form. From the moment of its founding, it has been a federal, democratic republic.

Before the EEC/EU, investing across Europe was much more difficult, and labor migration was limited to "high skilled" workers. There have never been any such limitations in the US.

> The US has essentially never existed in this form. From the moment of its founding, it has been a federal, democratic republic.

this isn't true at all, what about the first US constitution: The Articles of Confederation?

Article II stated that the States are sovereign (bar delegated powers), and Article IV established freedom of movement and freedom of capital

essentially the same structure as the current EU (with many of the same flaws)

err, excuse me .. before the first US constitution (barring a few years when things were really up in the air), the "united states" was a wholly owned colony of Great Britain. If you're a historical revisionist, you could make the claim that the separate colonies constituted separate nations before the AoC, but I wouldn't agree with you. The AoC formed a nation, post-revolution, and formed it out of states. I would read Article IV as preventing the elimination of freedom of movement and capital, because when it was enacted there was honestly little to no barriers to either already in place.

The EEC/EU was preceded by nations, continues to feature nations (1) and still has no actual federal structure (though quite a lot of Europeans wish it had more, and quite a lot of other Europeans wish it had less).

(1) consider how easy it was for even the Schengen zone nations to close their borders and think about how difficult it would be for a state to do the same.

> err, excuse me .. before the first US constitution (barring a few years when things were really up in the air), the "united states" was a wholly owned colony of Great Britain

I don't remember claiming otherwise

> If you're a historical revisionist, you could make the claim that the separate colonies constituted separate nations before the AoC, but I wouldn't agree with you

I didn't claim this either

my only point was EU is not unique, it's a confederation and there have been many throughout history, several with freedom of movement and capital, including the rather well known United States (post-AoC but pre-federalisation)

you may disagree, but that would be historical revisionism

pre-1776: no independent nations, just colonies of GB 1776: revolution 1777: AoC draft complete 1781: AoC adopted by all 13 states 1789: Federalization

I hate to quote Wikipedia, but:

Little changed politically once the Articles of Confederation went into effect, as ratification did little more than legalize what the Continental Congress had been doing. That body was renamed the Congress of the Confederation; but most Americans continued to call it the Continental Congress, since its organization remained the same

So basically we're disagreeing over whether or not a 12 (or 8) year period between 1777 (or arguably, 1781) and 1789 represents a confederation in which the concepts of free movement of labor and capital existed in a way at least somewhat analogous to the way they do in the EEC/EU.

I'd say they do not. Given that Wealth of Nations was only published in 1776, I'm not even sure that these concepts existed clearly in the minds of most of the people it would have to existed in in order for the post-AoC-pre-federal USA to be usefully said to be anything like the EU.

> I'd say they do not

so you're disagreeing that the following sentence establishes freedom of movement and capital?

> the free inhabitants of each of these states, paupers, vagabonds and fugitives from Justice excepted, shall be entitled to all privileges and immunities of free citizens in the several states; and the people of each state shall have free ingress and regress to and from any other state, and shall enjoy therein all the privileges of trade and commerce, subject to the same duties, impositions and restrictions as the inhabitants thereof respectively

ok

(replying to grandchild ...)

if the AoC did nothing more than codifying what was already the case when the land was just a bunch of GB colonies, I don't see how the AoC can be seen as analogous to the EU, which started from a set of distinct nations. it seems that all you're saying is that "within the colonies, there was free movement of labor and capital, and that continued after the revolution". that doesn't seem even remotely suprising - they were all colonies of a single nation.

we haven't mentioned the currency side of things - when the EEC/EU began, there wasn't even a common currency in use.

I'm saying that this text did nothing more than codify what was already true. If I have that wrong, please let me know.

never said otherwise (again)

In 1789 the US made a very conscious decision to tie free movement of labor to free movement of capital within its operating zone (probably the first ever economic agreement of its kind). The US is a union of sovereign states.

The US (other than for 8-12 years after the revolution) is a federal republic. The EU is not federal and is not a republic.

The Union of States made that mistake too in 1781.