This is a ridiculous exaggeration: the average US household was 3.7 people in the 1960s, not over 6[1].
There are good reasons to hold politicians to task for recent abnormally high inflation. But this comment is more of an atavistic fever dream of the past than an expression of those reasons.
Edit: another source puts it at 3.3[2].
[1]: https://www.statista.com/statistics/183657/average-size-of-a...
[2]: https://www.statista.com/statistics/183648/average-size-of-h...
On the topic, I found this informative: https://www.in2013dollars.com/us/inflation/1963?amount=1
“ $1 in 1963 is equivalent in purchasing power to about $10.21 today, an increase of $9.21 over 61 years. The dollar had an average inflation rate of 3.88% per year between 1963 and today, producing a cumulative price increase of 920.69%.”
Also: https://www.census.gov/library/publications/1964/demo/p60-04...
“ The median income of all families in 1963 was about $6,200; but for families headed by college graduates, the median was $9,700. The median for all families was about $290, or 5 percent, higher than in 1962. Consumer prices rose during this period by about 1 percent; therefore, not all of this amount represented a net gain in purchasing power for the average family.1
Median family income in current dollars has more than doubled in the postwar period (from about $3,000 in 1947 to about $6,200 in 1963). This rise was accompanied by a gradual upward shift of families on the income scale. However, consumer prices have risen substantially during this period so that only about three-fifths of the increase in current-dollar incomes represented an increase in real income. In terms of constant (1963) dollars, median family income increased from $4,200 in 1947 to $6,200 in 1963. This increase was less pronounced than the increase in current-dollar income, but it was nevertheless substantial.”
Averages are lossy to begin with.
My whole point is using multiple indicators to build an understanding.
You can keep repeating yourself but you only come off as naive.
Truer words have never been spoken. Fiscal conservatism died with Reagan.
https://www.pbs.org/wgbh/commandingheights/shared/minitext/e...
Democrats controlled the House the whole time, so how’d he manage that?
> while running on a hideously bigoted platform
What a remarkable assertion.
Out here in the wider world, American elections are more terrifying every time they come around.
Their goal is simply to live their life as richly as they can at the expense of those they consider less than themselves. They are the wealthy and they act accordingly.
Why anyone sees Republicans as anything else boggles my mind.
Anyone who isn't a billionaire and is voting Republican may as well be a turkey voting for Thanksgiving.
pretty wild to think that surplus was in part driven by the internet boom. now we have some kind of stock market boom while the federal deficit is 10% of total GDP and national debt is growing by a trillion dollars (a million times a million) every 100 days or so.
The first is a kind of economic engineering with trade-offs and conditions and acknowledged edge-cases, the second is a brand supported by some rather culty dogma.
Which is why Italy and France have such strong economies, right? What’s really standing in the way of economic growth is that the government isn’t paying for people to get free degrees in left wing studies.
remember not to conflate a strong economy with an economy that is worth living in. you can possess minimum paid jobs in order to make profits for shareholders and never see a dime of that wealth yourself, but alas, you live in a strong economy.
Do they? PPP they all have lower disposable income than the US and they are not even at the top in Europe (including social transfers). Germany, Switzerland, Austria and the Netherlands are above Norway and Sweden is even lower than France.
It’s not true Scandinavian countries have more spending power. The OECD keeps very detailed economic data. The US has the highest PPP disposable income in the OECD: https://www.statista.com/statistics/725764/oecd-household-di.... It’s about 67% higher than Sweden and Denmark.
Now you might say, but Swedes and Danes live longer and are happier. That’s true! But as far as I can tell, Americans would rather live shorter lives and have more TVs and trinkets. My parents came back from traveling in Australia. My mom was ranting for weeks about how small and close together the houses are and nobody can get really rich. We are immigrants from a third world country. All of my family members that have come here think that “making it” means living in a McMansion and driving an SUV. I don’t know if it’s something in the water, or the people who come here are just that way, or maybe a bit of both. But it’s worth contemplating that Americans are making rational choices based on their particular utility functions.
Then you pulled in "libertarian" out of nowhere. Which is an obvious set up for another strawman, so lets lean into it. Whats a "libertarian"?
You can be wrong without being a strawman. When every example you have of X is Y, it's not a "strawman" to say "all X are Y" — when you're wrong like that, it's a black swan.
Sometimes yes, but not always.
> but if every example you have of X is Y
Is that actually true though? Are you not assuming perfect rationality on behalf of the poster, and that they have an adequate sample size, which tends to be subject to who the individual associates with.
> it's not a "strawman" to say "all X are Y"
That depends on the truth of the matter.
>when you're wrong, it's a black swan.
Only if the initial guess was correct.
You may be describing appearances. That which cannot be seen does in fact exist, it just doesn't seem like it because it exists in a different realm, and how our culture is trained to think about such problems spaces.
No it doesn't, user exclaims their ignorance and your follow up emboldens their ignorance does not make a QED.
> When every example you have of X is Y, it's not a "strawman" to say "all X are Y" — when you're wrong like that, it's a black swan.
Either way, I don't appreciate you putting words in my mouth, I hope you don't go around proclaiming you're the arbiter of all that's right in the world.
The very thing you quoted demonstrates that mine allows for people to make errors without condemning them as deliberately weak setups.
> I don't appreciate you putting words in my mouth
If you do not like how your words are perceived by others, you should consider choosing them more carefully.
Despite your lack of appreciation, this comment is one which I am still only able to read in a way which suggests that you are stuck with this false dichotomy:
> No it doesn't, user exclaims their ignorance and your follow up emboldens their ignorance does not make a QED.
No.
> If you do not like how your words are perceived by others, you should consider choosing them more carefully.
Lets see, you deliberately trolling and being bad faith is somehow my issue. Interesting.
> Despite your lack of appreciation, this comment is one which I am still only able to read in a way which suggests that you are stuck with this false dichotomy:
No. You lack the fundamentals.
It all comes down to the cost of housing, at least in the UK where housing has been ridiculous for over 20 years. That housing is driven up to soak all available income by artificially constrained supply.
All available income has increased on a household basis because of egalitarian reasons -- more women work now, which means that more women have to work now. The excess income is lost to housing costs.
It seems to me that the whole equality propaganda mostly comes from less desirable women who would have a much harder time finding a highly valuable man that would be able to bring a lot to the home (either in the way of money or skills, craftmanship, etc). They wrongly determined it would be better for them if they could be like a man. But reality doesn't care much about feelings and what happens is that those women still get the less desirable man and if they go at it solo, they find out the hard way that there are many things a man provide that are very costly if you have to pay for it in the market. One thing too often overlooked is the importance of a man in children upbringing and there are some nasty statistics about single women raising kids that pretty much depict that very painfully.
In the end it doesn't matter, everybody's got much poorer for it, the only winners are the bourgeois women who started it all, who already had a lot of power in the first place. But I guess it was the intended result even if it came at the expense of all the lower social class...
Well, maybe 25% for the budget deficits. The Fed is responsible for 75%. They keep over-goosing the economy. They keep saturating the money supply. That devaluing is what inflation reflects. That is your money is worth less (and appears like prices going up).
That does not indicate that there are secretly a lot more coal miners, it just indicates that people are clinging to and showing off an identity that they like and want to be represented by.
I would rather disagree with GP's:
> My point is that inflation isn’t abstract and it isn’t a law of nature. It’s a deliberate approach to stealing your prosperity while you cheer it on.
A lot of the inflation, including how suddenly a single-income household isn't a viable option for most people in the West, is market working as intended - quickly consuming any surplus money, should it suddenly become greater than 0 on average, and slowly eating into any value that isn't bare-minimum strictly necessary to move a product.
However, when a person is making a post saying "don't trust those dodgy manipulated numbers" and offering alternative numbers, their post is a lot less convincing if their numbers are also dodgy
For example, during the pandemic the UK government set itself a target for covid testing, then proudly announced that they'd hit their target - but it turned out they were not counting the number of tests processed in labs but instead the number of test kits sent out by mail regardless of whether they were received, returned, or processed - allowing them to declare success before increasing lab capacity. It's not outright fraudulent, but it's questionable and errs in a politically convenient direction - that's a dodgy number.
And as I understand it, the claim in this discussion is that the government changed the definition of inflation, in a way that made the number lower? And that it now doesn't accurately reflect what it purports to reflect?
Sounds like dodgy manipulated numbers to me.
What class has shown absolutely insane growth in wealth and income in the face of what looks like crippling inflation?
Your standard retiree on the other hand who holds a lot of bonds that got absolutely hammered by inflation and rising interest rates is not doing so well.
That's not necessarily true. Per FRED (https://fred.stlouisfed.org/series/LRAC25FEUSM156S), in 1963 about 44% of women aged 25-55 were in the workforce. That's obviously much lower than the ≈96% rate for men, but it implies that the average couple had closer to 1.4 incomes. The comparable rate based on today's labour force participation rates would be about 1.66 incomes.
The single-income family may have been the norm, but it was far from a rule. I think that our popular perception of life in the 60s has been filtered through media portrayals, which all tend to reinforce ideals as commonplace norms.
We just dont know what % of those were single mothers, widows, divorcees or single women, etc.
Is a child with a paper route 'in the work force?'
> This is a ridiculous exaggeration: the average US household was 3.7 people
The avg figure in your rebuttal doesn't well reflect the commonality of large US households in the 20th century nor their change during that time.
According to US Census data, the % of US families with 4 or more children fell 10fold during 20th century.
Early 1900s: About 35%
Early 1910s: About 26%
Early 1920s: About 23%
Early 1930s: About 19%
Early 1940s: About 18%
Early 1950s: About 21%
Early 1960s: About 21%
Early 1970s: About 10%
Early 1980s: About 5%
Early 1990s: About 3%
Early 2000s: About 3%
Early 2010s: About 3%
1) the rest of the world was in ruins, so for 50s-60s US was sole industrial power more or less.
2) artificial labor “scarcity” where POC and women were banned from many occupations. The remaining available labor (ie white men) had more leverage.
In order to make a better comparison one should compare what was affordable to the average black family in the 1960s (or whatever previous time period you choose for which we have figures) to today.
There's other factors like the aftermath of WW2, the real and "soft" power the US held back then in comparison to today, and the role women played in the economy.
Today's world is a lot different from then but the truth is that the wealth and power we've amassed since then should have us in a better position, not worse. The factors at play in today's economy are not benefiting the common man nearly as much as they should.
We're beginning to look more and more like a post-scarcity economy every day yet our laws, regulations, and culture are not evolving with the times. The fact that land and homes are vastly inflated compared to regular every day goods and even the "durable" kind is strong evidence that our entire economic system stands on precipice of great change.
Either we're just getting started on a great collapse or a great sea change in politics and economic systems. I very much doubt things are going to go back to the way they were... Ever.
We as a society can decide to spread our prosperity around or we can increasingly suffer for the lack of it by continuing the status quo.
[1] https://www.bls.gov/pir/journal/gj02.pdf
[2] https://twitter.com/darioperkins/status/1770783161330323925/...
A four day work-week would bring us at least a little bit closer to the 1950s situation, and improve the leverage of workers.
4 x 2 > 5, of course, but 4 x 2 is still less than 5 x 2.
With inflation, we want to know about the change in value of the dollar only. We don't want to factor in the change in value of houses, food, etc. There is a place for understanding that too, but inflation is not it. Something like a cost of living index is more suitable to that kind of information.
On that note, houses are unquestionably more valuable today. For one, they are twice the size they were 60 years ago. We can all agree that a bigger house has more value than a small house, at least within reason. You can fit more in it, it is more comfortable, etc. and that is valuable. They are also a lot safer. That too is more valuable.
As such, a housing costing x% more today than as compared to some time in the past does not mean that inflation is x%. Again, we only want to know about how the dollar changed in value, not housing. Of course, if you only have numbers, it is impossible to know what share is due to housing being more valuable and what share is the dollar being less valuable, although we can say with great certainty that it is some combination of both.
CPI tries to tess out what is the dollar portion only by looking at a large basket of goods of things people buy frequently. Where you see common moment in the change in price across all items in the basket, that is assumed to be the change in value of the dollar. It's not perfect. There is no perfect metric. You are quite right that one should look at many different models, even though none of them will be perfect either. It is all good information, none of it great, but at some point you have to pick a single number.
On average, it will be close enough.
We need a concept for debasement / hidden tax that allows people to hold their policymakers accountable.
My point is that CPI isn't it, it underestimates true inflation by 3-5x or more , and it interferes with good governance.
If the govt wants money from the people, they need to tax them and be held accountable for the policy
Regular people understand inflation just fine. How useful it is to them is debatable, but it doesn't have to be for everyone. It's okay if some measurements are only useful to scientists and economists. The measure of the speed of light doesn't mean much in my day to day life either, but we don't have to abolish it because of that.
> We need a concept for debasement / hidden tax that allows people to hold their policymakers accountable.
I think what most people are looking for is simply cost of living measure. They want to know by how much the costs to live (housing, food, etc.) have increased over inflation. Which we have. But that one might actually be a case of being "too dumb to understand", explaining why it is not commonly put to use. Inflation is, indeed, a much simpler concept. Or it may be that the ultimate cost of living measurement comes from one's own personal accounting records[1], negating the need to reach for any 'universal' perspective.
[1] But I suspect most people don't keep any accounting records, so most likely the first one.
You may have cracked the conundrum right there. People use inflation as a gauge of COL. That is incorrect, but understandable given the lack of a well-publicised national COL metric.
Which is interesting as you'd think actually living, and incurring the costs that go along with it, would be a much more useful gauge.
Probably goes along with my suspicion that most people, especially those not already accounting for business activities, don't keep any meaningful record of their transactions. Hard to calculate COL without data.
But at the same time, there isn't much effort in publishing national COL metrics as it is presumed that people will already know their own situation, which is always going to be way more telling. Individual COL can vary widely, even between neighbours, let alone on a national scale.
Not for a monetary authority. Given how much drama we have around even our Census Bureau, this gap makes sense. (Also, for every complaint about a given inflation gauge, one increases the parameter and thus bitchable space by orders of magnitude when it comes to COL.)
> there isn't much effort in publishing national COL metrics as it is presumed that people will already know their own situation
But political leaders won’t.
We track this information, though. Anyone doing any economic-related work will be well familiar with the data. We just don't publicize in any grand fashion because who else needs to hear it? I'll grant you that people who write comments on the internet tend to be completely out to lunch, but most people have some kind of handle on their COL situation. They aren't going to learn anything they don't already know, so there is no reason to listen in. You need demand in order for supply to show up.
Inflation doesn't mean much to Average Joe either, to be fair, except it is a leading indicator of interest rates, and Average Joe does care about interest rates, so this is why Average Joe is listening for inflation information.
> But political leaders won’t.
The leaders are the people. The very same people.
If you are trying to imply that the leaders are as lazy about democracy as they are accounting, and are willing to let the hired help do whatever it wants because they don't want to ever have to take the time to talk to them, I'm with you. Not much you can do there. But if they don't care, nobody else is going to either.
And you think the US in general has gotten more dangerous?
So, yes, I think the government has a role in trying to limit inflation (and also increase wages), I just think that some inflation makes sense from those dynamics above.
This is a really good idea and I hope someone popularizes a new measure.
You're running around this thread smugly declaring yourself too smart to fall for the government's lies while failing to spend a few seconds doing the trivial arithmetic that would disprove all of your deeply held beliefs. Which of your other political or economic beliefs will fall apart with a little bit of middle school math?
By "we", you are referring to you and others who want to know only this.
Some people (not many) want to know what is going on comprehensively, and in fact. For example: I would like to know if there is any strategic changing of formulas to improve appearances going on, like there has been at pretty much every single job I have ever worked on.
But to be fair, this is a subjective personal preference, and an unusual one at that. Most people prefer simplistic, memetic representations of reality (though, few can agree on which memes).
Right. I am referring to all those who want to know only this, along with everyone else. Because those who want to know something else would use another measure. Those complaining that inflation doesn't give you some other economic indicator is like someone complaining that temperature is not a good measure of distance. Well... duh.
> Some people (not many) want to know what is going on comprehensively
Absolutely. Which is why we have many different ways to look at inflation. In fact, don't White House economists use 30-some-odd different measures of inflation throughout the course of their work?
But eventually you are going to want to put it to practical use, mathematically, and our formulas require a single number. CPI is the one we picked to standardize on (but, of course, you can choose another if you want). It won't be 100% accurate – determining that is fundamentally impossible and you know that going into it – but it will be good enough.
"along with everyone else" is incorrect, because you have no way of knowing what other people want (and worse, maybe no way to know that). And the only way you "know" what "all those who want to know only this" is because it is a tautology, it is necessarily true. Though, you have no way of knowing what percentage of the population thinks like you do, so it is not particularly informative knowledge.
> Because those who want to know something else would use another measure.
Some people (me) would like to see all methodologies maintained indefinitely on a chart, so we can see how different versions of The Truth vary over time. I am interested to see if changes in methodology tend to correlate with changes in the "vibe" of the cost of making ends meet people are experiencing. I prefer this approach because it is more transparent, and because I do not trust my government, or the perceptions of my fellow Westerners (because of the way they think: how it "is", is how it seems to be....which tends to correlate quite nicely with how it is said (repeatedly) to be).
> Those complaining that inflation doesn't give you some other economic indicator is like someone complaining that temperature is not a good measure of distance.
It is also "like" someone whining about how appliances don't last as long as they used to, but "is likes" are often more misinformative than informative (perhaps why they are so popular?).
> Well... duh.
Are you blaming others for the way you think?
> Absolutely. Which is why we have many different ways to look at inflation.
And also why I do not want historic "truth discovery" methodologies memory holed.
> In fact, don't White House economists use 30-some-odd different measures of inflation throughout the course of their work?
Don't know, but I do not trust them.
Also, "in fact" terminating with "?" is a rather interesting approach.
> But eventually you are going to want to put it to practical use, mathematically, and our formulas require a single number.
Maybe we should get better formulas, because reality does not fit so nicely into simple, reductive, misleading models.
> CPI is the one we picked to standardize on
No, "we" did not pick it, someone else picked it "on our behalf"...according to "democracy" we are trained to believe, though it is not both flawlessly true and not misinformative.
> (but, of course, you can choose another if you want).
I can't get it published as "fact".
> It won't be 100% accurate – determining that is fundamentally impossible and you know that going into it – but it will be good enough.
Good enough to satisfy people that want to be satisfied, but not good enough to satisfy all.
With a gun to your back, eh? We can use whatever source of inflation we want. Nobody is selecting for us. But, as it happens, CPI is the one we've chosen as the default. If we change our minds, we don't have to default to it forevermore. It's up to us.
> Are you blaming others for the way you think?
I don't think. You do enough of that for all of us. No need for me to duplicate efforts.
I relay the state of the world to the thinkers so they don't have to. The efficiency of specialization!
> Good enough to satisfy people that want to be satisfied, but not good enough to satisfy all.
Which, again, is why we have many sources of inflation. Pick a different one if need be. Indeed, there is good reason why there is more than one.
And if inflation isn't the right tool for the job, which is probably the case, use a different economic measure. There are many tools in the toolbox. You don't have to measure distance with temperature.
Let's be real, the only reason we talk about inflation at all is because it is shares a relationship with interest rates. Interest rates are what people actually care about here. As principal value declines with inflation that makes borrowing more attractive, thus interest rates need to compensate, thus a change in inflation rate serves as a useful leading indicator of interest rate movement. If it weren't for that, it is doubtful that anyone, economists and statisticians aside, would even know that inflation is a used measure.
Beyond interest rates, it doesn't mean much to Average Joe. Average Joe is more worried about things like cost of living. Inflation isn't meant to be useful to Average Joe, though, it is for economists who need to look at much more than Average Joe. Average Joe is free to use it if we wants, but it's funny when he starts complaining that it doesn't work right when misapplied.
a) Who, specifically, is "we" in this context?
b) What is your information source for these facts?
> Beyond interest rates, it doesn't mean much to Average Joe.
What is your information source for the meaning contained within the minds of the average Joe? Please be specific, please at least try to speak truthfully.
But in many of these discussions, it is deliberately being presented as equivalent to COL, which is never addressed separately. So, in reality, for the vast majority of people who learn about these numbers from the media, not economics degrees, "inflation" actually refers to COL, except that the numbers they are given are the ones for what economists call inflation.
Given that a word is defined by what the majority of the people using it mean by it, I think inflation in common English is closer in meaning to COL than to the technical economics term inflation.
Edit: typos
It is amazing how effective and resilient these techniques are, if one cannot see the layers within layers. Well, it's still amazing even then.
It kind of is. That's what makes it confusing, I suppose.
If you buy a house of equal value as compared to 60 years ago, then the amount in dollars you will pay, when adjusted for inflation, will be equivalent to 60 years ago (within some margin of error; inflation is impossible to calculate perfectly). If we live exactly like they did in 1960, then inflation and the change in cost of living are the same thing.
But, people expect more today. As mentioned in several comments up-thread, take housing: They are bigger, safer, more energy efficient, more attractive, more comfortable, etc. Alongside that, the married family unit is quickly dying – people are more likely to be single nowadays, so we place more value on being able to live alone. Land is more valuable too. This is particularly noticeable anywhere near agricultural areas, where climate instability and more mouths to feed in the world has made food more valuable, making farmland more valuable, making urban sprawl out into the farmland more expensive. It goes on and on and on. So, even if the dollar was of constant value, you would unquestionably paying more for a house today as compared to in the past. But you're getting more! People are willing to pay more, in constant dollars, because it is worth it.
Only on the dollar side are you getting less. The so-called 'hidden tax'. This is what inflation tries to find. If you are a politician speaking to the people, especially on a national scale, this is the only thing in your control, the only thing that is relevant to you. People choosing to buy bigger and better things is not really of your concern. Why shouldn't someone be able to buy something nicer if they want to?
> Given that a word is defined by what the majority of the people using it mean by it
In the absence of any other definition, that is true. If a speaker defines a word, though, then that new definition takes force while they are speaking. And economists and the President have most definitely provided a specific definition for "inflation".
> I think inflation in common English is closer in meaning to COL than to the technical economics term
I'm quite sure the most common definition is "that single number they talk about on the news", which is equivalent to CPI, which is most definitely not a cost of living measure.
They also have better insulation and construction, they’re all wired for electricity and plumbing, they all have advanced HVAC. Fancier kitchens with more plumbing, appliances and nicer materials. People have access to more furniture and fixtures and appliances to fill more home - no one needed laundry rooms before a washer/drier was invented. Few had garages. Don’t let survivorship bias fool you - the 1950s homes that working class families had were not that nice.
The homes today cost more because more goes into them. We could all live in stuck huts we made ourself like in 1750 and everyone could afford two houses in 2024. Instead, housing has gone up because the utility of that housing has gone up.
Oh and of course we’re not making nearly as many per-capita as we used to. So the scarcity is going up.
I would posit - admittedly without data - that outside of major metros where land is the clear dominant cost, most costs for housing increase is labor.
There are houses and empty lots available within 15min of downtown Cleveland that are selling for <50k. If you go up to $100k, there are dozens of houses. They’re all empty lots or houses that need renovations. If you want a new construction in the same neighborhood, it’s $300k. The cost difference is labor or materials.
Obviously Cleveland is a cherry-picked example but I used to live there so I picked my old neighborhood. San Francisco, Boston, Seattle, etc are obviously mostly driven by land costs due to demand and very high incomes.
All that said, some parts are gentrifying. Though mostly where developers can get large enough plots.
The point is that most of the cost of these homes are labor - even when land is nearly free (<50k in a city), you can’t get a “cheap” home that’s made to modern standards. If the land is free, there is no demand and high supply, but the house is expensive- it’s labor or materials driving the cost.
1) Materiels
2) Labour
3) Land
Perhaps housing is important enough to see the people do that. But even if you could somehow faithfully recreate the entire supply chain, the house won't be up to code. That 100-billion dollar company is going to spend all that money in the courts. Why bother?
Okay, sure, if the people can come together to recreate the supply chain they can also change the code. But then who actually wants to live in a 1960s home? Even the homes actually built in 1960 that are still standing, which is generally going to be those that were built to a higher standard, have been upgraded to modern standards, at significant cost, over the years because nobody actually wants to subject themselves to the 1960s.
And even if you could build the perfectly equivalent house with modern supplies and people actually wanted to live in them, there is still that pesky labour cost, which is a significant portion of the building cost. Yes, the median income of a full-time male in 1960 is almost exactly the same as the median income of a full-time male today, but the median income of the population at large doesn't tell the story of those building houses. Someone who would have worked on a job site in the 1960s is more likely to work in something like a restaurant today. As a result, of those who still are willing to build houses, you have to pay a lot more to get them to show up. "The trades are where the money is now" may have become somewhat of a meme, but there is also a kernel of truth to it.
Now, a business that can make modern houses less valuable will be on to something. That's a 100-billion dollar company. But also a hard problem to solve.
Keep in mind, demand was higher with the baby boom than it is today. Houses also used to be built to much higher specifications. Old houses were made with tons of premium timber that is still valuable even 50+ years later.
As for housing quality, post war tract homes were wildly worse. My wifes family still owns the tract home they lived in growing up. It was exposed concrete, exposed roof and no ductwork until a HUD funded remodel in the 70s. It’s also 750 sq feet. A modern double wide trailer is higher quality.
Have you ever seen an old 2x4? This isn't "large beam" but it's obviously higher-quality than new 2x4s.
>As for housing quality, post war tract homes were wildly worse. My wifes family still owns the tract home they lived in growing up. It was exposed concrete, exposed roof and no ductwork until a HUD funded remodel in the 70s. It’s also 750 sq feet. A modern double wide trailer is higher quality.
There used to be some homes built to low specifications. But most were built super solid. Ductwork, insulation, and just about anything else can easily be upgraded. Compared to classic European houses, ours are temporary trash.
>A modern double wide trailer is higher quality.
You just discredited yourself there to everyone who knows even a little bit about houses. Go find a 50 year old trailer and see how that looks lol. American houses are optimized for size at the expense of permanence, and trailers are no different. They are cheap for a reason. Although they can be good for some people (no judgement here), it's just not on par with either a new house or an old one.
The 2x4 was decreased in size below 2x4 in the 1920s because shipping costs started dominating lumber prices because we’d depleted the forests near the cities where demand was greatest. It was further reduced during the second world war because building of necessity became standardized and again shipping volume was of primacy.
The US forest labs did tons of tests on this in the 1920s fwiw proving there was no quality difference.
Now there are many fine homes left from prior to these changes, but there are many many more crap homes that are gone because they weren’t capable of lasting. These are the homes you should be comparing to the average home built today.
But you mostly can’t. When you can, as in my example, you will find the older homes were built to similar specs as today from a structural stand point but much lower spec on systems, finish and especially size.
This doesn’t even touch on tenement apartments where most of the population lived in cities (the place housing costs have swelled the most).
These would quite literally be considered incapable of being housing now.
I am certainly not an expert on housing but my father was professionally and I did help my grandfather add an addition to our family farm house that was from the 1910s, when it was literally 1 room without plumbing (they’d done a previous remodel in the 60s to add bedrooms and plumbing, the materials from that remodel were not significantly different than the materials we used in the 90s).
Lol if you see old 2x4s and new 2x4s first-hand you'll know immediately that this is wrong.
>Now there are many fine homes left from prior to these changes, but there are many many more crap homes that are gone because they weren’t capable of lasting. These are the homes you should be comparing to the average home built today.
In many cases perfectly salvageable homes were demolished to make room for new stuff. Don't forget about those.
>I am certainly not an expert on housing but my father was professionally and I did help my grandfather add an addition to our family farm house that was from the 1910s, when it was literally 1 room without plumbing (they’d done a previous remodel in the 60s to add bedrooms and plumbing, the materials from that remodel were not significantly different than the materials we used in the 90s).
There is a high degree of variance in the quality of old construction, I have to admit. But from what I've seen, prior to the 70s (and maybe even later) even simple homes were built with materials that would be considered premium today. Hardwood floors, solid wood walls, tongue-in-groove planks everywhere. If it's a brick house, it's actual solid brick instead of a brick facade on cheap trash wood. Very rare to see drywall or plywood, or the other flimsy materials people use now. Even old plywood is premium compared to the new composite crap all glued together.
The “simple” homes you’ve seen that have tongue in groove planks or solid wood floors were the exception in housing. It was literally the very good stuff. Most housing prior to ww2 had dirt floors! Post ww2 it was concrete slab. Solid brick housing was a huge luxury item. Most housing in the US was wood plank.
In cities solid brick apartment buildings were more common prior to ww2, but they’d have aesthetic brick in the front and “common” brick on the sides. Interior walls would just be the exterior wall. Dry wall and insulation was effectively unheard of.
You are literally describing survivor bias.
No. They are better, not necessarily more valuable.
Simple example:
Today you can get a phone with a chip more powerful than the best supercomputers 50 years ago. Is today's chip more valuable (ie. price-value) than that supercomputer? No. An equivalent supercomputer back then would cost WAY more. You're bringing other variables into play and confusing things. Technology has improved, manufacturing costs have gone WAY down for higher quality products. The fact that we can get higher quality things nowadays has little to do with purchasing power and everything to do with science and technology. The fact we can afford a better quality house nowadays, is also much more related to material improvements, manufacturing, logistics, overall system efficiency (transportation, company competition,...) improvements than purchasing power.
What we can compare is what other poster's are doing: time vs functions. For example, working time needed to have an average place to live in by the time's standards. And if you do that, you'll see today it requires A LOT more working time.
I think this isn't a measure of inflation per se, because productivity changes are big over the decades. But I do think looking at costs in terms of hours of work is really helpful.
I think back to an event in some HS extracurricular when a group of students got to ask questions of a gubernatorial candidate, and one kid asked if he was going to do anything to make college more affordable at state schools, and this candidate (perhaps keenly aware that almost none of the students could vote) basically laughed it off and talked about working at restaurants to put himself through school (I think in the 70s). How many hours of (unskilled?) labor was a semester of tuition then, versus 30 years later? How many hours was a tankful of gas, or rent for half an apartment, or a heating bill? How feasible is it really to work one's way through even a public school?
In real terms, however, the cost of a tank of gas is about what it was in the 1960s[1]. Today's average is $3.63[2], which is about $0.34 in 1960 dollars.
How much was an iPhone or Xbox in 1960 dollars? What was the typical cable TV bill? What did a typical American pay for a California roll or a burrito in 1960? Alternatively, given your 10x price boost, why isnt the cost of a television set or vacuum cleaner in the multiple thousands?
Anything that is manufactured has a multitude of factors that will reduce cost of a product significantly over time. If the circuitry in an Xbox were constructed in 1960 no government on the planet would have been able to afford it. It would also be difficult to find enough power to run it or a place big enough to build it with the technology of the time.
It's then interesting to see how that looks in different economic brackets. Maybe in one bracket a car costs 1000 hours, and in another the same car costs 350 hours (so might as well get a 700 hour car. Still cheaper).
Obviously the question is kind of nonsensical and yet on the other hand, if you were to try and quantify the price of our ability to work from home, for instance, we have a way better deal going than they did in 1960. You could retort that this is the inevitable march of technological progress, but could it be the result of hard work and innovation including the hard work and innovation of women in the work force?
I would gladly trade WFH to be the one person supporting a family of 6. (Me, partner, two kids, two grandparents.)
The Internet's great and all (although sometimes it seems like it was a mistake), but we're so far from 1 very average person being able to support a middle class life style for 6 people.
Median income in 1960 was $5,600, which is equivalent to $60,000 today, but according to the EPI*, to provide for a family of 6, I'd need to make about $150k/yr to live in Cincinnati, Ohio (in SF it's $280k). Which isn't a lot in the FAANG world, but the point is that a very average not-very-smart person was able to provide for that many people back then.
How many very average not-very-smart unskilled people do you know make $150k/yr; how many smart people do you know that make less than that?
They weren't. The average household income in the 1960s (i.e., from a single breadwinner) was supporting a household of 3-4 people not 6[1][2]. The claim that you could support a family of 6 on a single breadwinner's income in 1960 and achieve anything close to 2024's quality of life is an egregious misrepresentation by the GGP.
[1]: https://www.statista.com/statistics/183657/average-size-of-a...
[2]: https://www.statista.com/statistics/183648/average-size-of-h...
this is after we decry the other ills of there 1960's, of racism and sexism, which hopefully it's obvious I don't want to go back to, but letting both parents work somehow became both parents need to work for middle America and I'm just tired of my friends living at the edge.
The US Post is great and all, but I would gladly trade the US post for a large beaver-hunting territory!
Horses are too fast! Walking is better.
Or whatever... come on!
I was going to say this typo was accurate, but now I realise I've never actually seen a detailed analysis of how much people worried in the past, just confident claims it was so.
When was this chill time when we could just take off fishing for a week or two?
Random breakdown of time :) * 1800s * 1900-WW1 * WW1-WW2 * WW2-1980 * 1980-Now
And yeah, single breadwinner households were a thing back in the day it was generally because women didn't have a choice at all.
I'm pretty sure you have more options and choice today as to how you want to live your life, but if you want a family you gotta feed the little bastards one way or another, that has always been a "worry".
That’s what I was making a decade ago in SoCal with a college degree (slightly more with OT).
Ohh to live the life of an uneducated violent offender in the 70’s.
https://en.m.wikipedia.org/wiki/Lawrence_Bittaker_and_Roy_No...
Home entertainment has more options, we spend more time at the TV and computer.
Other aspects of life have declined.
It's challenging because there are qualitative and aesthetic aspects to the process, so it takes some discussion to come up with a good understanding.
Regardless CPI is misleading. The amount of time spent working over a lifetime to support the family and cover taxes has grown significantly, at a higher rate than CPI suggests.
1. No flying on vacation and only simple camping as vacation 2. No technology: Computers, phone, television. Nothing, and no associated costs with subscriptions, etc. 3. Eat like it was the 60s, mainly potatoes (I am from Northern Europe).
That said: I truly believe in the parent commenters key idea. We need to create more real prosperity for people. But in order to do that, we need to adjust the activities – Marketing and expensive dead-end projects (read: projects that occupy a lot of person-hours) does not achieve real prosperity.
I agree with the larger point about prosperity, and I think there are ways in which the US (and other developed countries) have gone backwards in QoL metrics. But a serious conversation about that needs to start with numbers rooted in reality, not a rose-glass view of the past.
Are they living in a 1,500sf house (median size in 1960)? Without AC, no cable TV, no computers, 1 car, no exotic / organic foods except from the garden, few toys, 60’s era medicine. Do they actually repair or even make clothes? How about home repairs?
My mother was a teen in the 60’s and while objectively they were well above the median income for the time period in many ways they lived like extremely poor people do in 2024. Some of that was actually saving money for retirement, but mostly it was just far lower expectations.
Backwards movement in QoL metrics is mostly on the left tail: impoverished Americans have access to AC and refrigerators, but often live in food deserts or are subjected to perverse policies in our social safety net (e.g. welfare cliffs that punish people for working by taking away benefits that enable them to work).
I am definitely not trying to paint a rose-glass view of the past. I am saying that we do have more prosperity today than we had 60 years ago.
I am also saying that we pay of a lot of time to have things that provide diminishing returns. (Ie. would you rather have flush toilets or access to facebook - style of reasoning). Maybe the famous 80% value for 20% cost is also inflating?
Should we value technology so much that we cheer on the loss of the real world?
Potatoes are a main staple in many ways outside of the cities even to this day.
1960s - could have a good career without college education and it was inexpensive - can afford a house - can often not have a car
2020s - need bachelors degree to get started, probably also need a professional degree - houses occupy - need cars (likely for all adult family members)
also it is a strawman to mention the poor people has it. the hierarchy of what you spend money on is not settled in a hiatorical occurance of said product. you don't buy a watch before a phone because it was invented first.
also, it is completely irrelevant. my proposition is that if you fix your comforts at the 60s level then you have greater spending power than equivalent people of the 60s
- Education. Include how much education you need and prep (duration increases costs and reduces wages).
- Insurance,
- Health care
- Transportation (gas, cost of vehicles, average commutes).
- Professional services (accounting, law, etc).
- Housing
The point is in 1960 you could be a normal member of society with no health insurance, a high school diploma, one car for your family, and 1000 square foot house downtown.
That game plan is no longer viable.
My maternal grandfather was a school principal and his wife didn't need a job. They went to England and Spain on vacation.
We also of course absolutely loved potatoes. We still do.
I don't think that the cost of a computer should silently get included into basics like rent for a roof over your head, food, and medical treatment.
It's the same house. They put drywall up in the basement and walls around the porch and call it a sun room.
The reason these neighborhoods are exclusive to the wealthy is that housing there is scarce despite growing demand due to job growth. Housing in places like the Bay Area is such a big portion of monthly expenses that stuff like Arby's 4 for $10 or whatever isn't whats hurting people the most.
Lots of these issues just come down to housing and restrictive zoning.
You address the supply side of the "housing crisis", what about demand?
Why the scare quotes especially when no such term was used?
>what about demand?
"...growing demand due to job growth" <- demand side was indeed mentioned.
It's literally illegal to build enough housing in many, many places where jobs are via low height limits, absurd parking requirements, and large setbacks etc.
95% of white suburban zips might have been safe and livable, but nowhere close to 95% of all zips.
I've been trying to give your comments the benefit of the doubt, but now it's abundantly clear that you're fundamentally unserious about having a conversation grounded in reality.
How big (area-wise) were those houses? What kind of heating did they have? How air-tight/leaky/drafty were they (which would dictate OpEx on heating)? Did they have air conditioning? What kind of electrical service could they handle (60A? 100A? 200A?)? Did that include the foundations/footings/slab? Were those parts insulated (i.e., how cold were your feet)? Did they come with sprinklers or even smoke/fire alarms?
> And you weren’t getting an HGTV-approved home in the 1950s. Those cheap homes everyone was buying were 700-900 square feet with two to three bedrooms and one bathroom. Most had no basement, porch or back deck. You were lucky if you got a one-stall garage.
> No open floor plans, granite countertops, stainless steel appliances, walk-in closets, man caves or room to entertain. Most homes were bare bones.
* https://awealthofcommonsense.com/2024/01/americans-are-bette...
I'm not sure how many folks would like to live in a current $1600-equivalent house.
> My point is that inflation isn’t abstract and it isn’t a law of nature. It’s a deliberate approach to stealing your prosperity while you cheer it on.
If you think inflation is bad, try deflation (1930s).
> Summers is right more than he’s wrong. Real inflation has always been higher than the bogus CPI numbers, and the past 5 years it’s been accelerating.
The pre-1983 algorithms were moved away from for a reason: do you know that reason? Was it a good or bad reason(s)? Why?
> In 1983, the government switched from using home prices — which also included mortgage payments and maintenance costs — to using rental prices to gauge the cost of housing.
> The cost of housing for people who own their property is now measured using what is called “owners’ equivalent rent”: how much their house would cost to rent if they did not own it.
> The idea is that homes are an investment. House prices appreciate, and you may eventually sell for a profit a property that you have purchased. Rent, however, represents consumption. It does not leave you with an asset that you can sell down the road.
> Critics often argue that by leaving home prices out of the equation, the inflation metric underestimates the cost of living at moments when home prices are increasing markedly and when it costs first-time buyers more to get a foothold in the market. Some even claim that if the government used the old methodology, its reported inflation rate would be much higher today than it was during the 1980s.
* https://archive.ph/zvtPw / https://www.nytimes.com/2022/05/24/technology/inflation-meas...
Housing prices are not considered in the CPI ("cost of living") because they are mostly an asset:
> House prices are an interesting case. Houses are considered capital investment by the [US] BLS. So, when the value of your home increases that's a good thing as you didn't consume the house. In other words, you don't need to replace the house. Consumption goods are different in that you need to replace the thing you bought. Inflation is very bad for consumption goods because it costs you more to replace that thing each time you need it (food, for instance).
* https://web.archive.org/web/20210929154549/https://www.pragc...
> The BLS views housing as a mostly “investment” item as opposed to a consumption item. So, for instance, when you consume a hot dog and have to replace it then the cost of replacement is a direct reflection on your well-being. A $1 hot dog that costs $2 one year later is a material change in living standards, all else equal, since the hot dog is an asset that you literally consume. A house is much more complex. [...]
> Of course, anyone who owns a house knows that it’s not that simple. You do basically consume your house over time. For instance, my home has appreciated substantially since I purchased it just 5 years ago and underwent a hellish remodel. At that time the cost of replacement was roughly $300 per square foot. But in the ensuing years the cost of replacement has increased to $400 per square foot. As my physical home falls apart over the years I will need to replace it. But the key point is that, as I replace these components the housing market is likely to revalue the total home value to account for this investment. So even though I am consuming my house over time I am very likely to recoup those costs.
* https://www.pragcap.com/should-house-prices-be-in-the-cpi/
Upkeep is a part of the CPI (as is Rent, under the broader Shelter category), but house/land prices are not. The "C" in CPI stands for consumer. Housing assets aren't in the CPI for the same reasons stocks and bonds are not: we don't consume them to live.
'Shelter' is considered in the CPI generally though (and with-in that things like home repair (lumber, plumbing) are accounted for); for Canada:
* https://www150.statcan.gc.ca/n1/pub/71-607-x/2018016/cpi-ipc...
And as the Bank of Canada notes, there is no internationally agreed upon method:
> International statistical agencies have unanimously adopted the net acquisition approach for durables, but there is no consensus about the best approach to the treatment of OA in the CPI16 (Table 1). Rental equivalence is the most popular approach among countries belonging to the Organisation for Economic Co- operation and Development.17 Johnson’s (2015) recent review of the U.K. CPI proposes using CPIH, which includes the costs of OA and is based on a rental- equivalence approach, as the U.K.’s main measure of inflation. Several countries in the European Union have refrained from incorporating OA into their CPI, although Eurostat is currently conducting a pilot study for the euro area based on the net acquisition approach. Australia and New Zealand use a net acquisition approach, while Sweden and Finland—like Canada—are using a partial user-cost approach. No country has adopted a full-fledged user-cost approach.
* https://www.bankofcanada.ca/wp-content/uploads/2015/11/boc-r...
In the StatCan CPI paper there is some explanation towards the complexities of shelter / owner accommodation:
* https://www150.statcan.gc.ca/n1/pub/62-553-x/2019001/chap-10...
* https://www150.statcan.gc.ca/n1/pub/62f0014m/62f0014m2017001...
It's the convenience/brand power stuff that is really spiked. Fast food falls into that.
If you rely on staple vegetarian food for the bulk of your calories and then “decorate” with fresh fruits and vegetables, you can eat very well for not a lot of money.
The Draper Valley Farms stuff is generally cheaper than the Kroger-branded stuff, no matter the cut. Like right now, boneless thighs are 50c cheaper per lb (no sales). It's $6/lb vs $6.50/lb. Bone-in is $3.79/lb! The Kroger brand doesn't even offer that variety for some reason.
A few lbs of that + some orzo (cheap) + some staple produce (shallot, cherry tomatoes, garlic) can make you 6 very filling and delicious meals. When you compare it to fast food, the difference is staggering - definitely a divergence compared to the diff years ago. It's the convenience stuff that is truly spiking. Groceries are definitely a lower % of my income than half a decade ago.
The barrier to most people is they can't process a whole chicken.
"The thing I have noticed is when the anecdotes and the data disagree, the anecdotes are usually right. There's something wrong with the way you are measuring it". —Jeff Bezos <https://sports.yahoo.com/amazon-ceo-jeff-bezos-explains-2123...>
People think “data” is the conclusion, when in fact it’s just a signal to ask more questions.
Comparing Palo Alto circa 1960 to Palo Alto circa 2020 is frankly bizarre. But if we’re using that logic why stop at 1960? Coulda had that land for almost nothing in 1700, so there was infinite inflation from 1700 to 1960! Gasp!
But what’s the result if we look at the price of a compute that a 1960 worker could buy vs a 2020 person? Let’s see a modern household has the equivalent to a very large number of 1960 mainframe computers, looks like their buying power has gone up infinitely!
Or lots in prime La neighborhoods, super affordable in 1860! That means people have lost so much purchasing power because they’re hard to afford now!
Infinite is exaggerating but the US dollar has lost >95.0% of its value since the 1700s. So that observation is technically wrong but intuitively is fairly reasonable. If you assumed infinite inflation since then you'd be accurate enough for casual conversation.
This was unfortunately a deliberate consequence of the dot com boom, not something that happened in previous tech booms. Until around 2000 Palo Alto actually had a lower median income than some surrounding towns due to a policy of promoting section 8 housing, some SRO residences for the homeless etc. Those prior booms didn't suck in as many outsiders and mostly were nerds making fun tech (think of the mac). NYT amusingly published an article were they said how weird the SV was because people who drove mercedes cars still shopped at Costco rather than at "proper" shops appropriate to their "station".
Dot com sucked in a bunch of people who came only for the money ("I'm starting a company -- need a tech cofounder" is the complete opposite of those days when it was "I'm starting a company -- we're big enough that we need some business people"). Then we started to have fancy restaurants and pretentiously-named magazines about how to spend your money.
And then in 2000 the real estate people got control of the city council. The SROs were turned into boutique hotels and the city was re-organzied for the lucky.
PA used to be a town where the Grateful Dead, Jefferson Airplane, and the like got started. Harold and Maude was (partially) filmed here. But such things are now inconceivable.
With less intention and planning it will take longer, but could still happen, and there are some natural pressures pushing things in that direction.
I remember how in the 80's and 90's there were still movies like Mrs. Doubtfire with characters on minimum wage renting in downtown San Francisco lol
Then in the same dot com boom…well that is well documented. People say SV grew up the peninsula and absorbed SF, but I prefer to think of it as SF was sacrificed as a honeypot.
Yeah, and unless they were like, a doctor or a lawyer, they were living in borderline poverty.
In the last few months we've seen headlines about inflation "levelling off" but that just means prices aren't growing as fast. The 20-30% increases in housing in particular aren't going down. In fact, it's intentional government policy to make sure house prices and rents never go down.
You mention Silicon Valley and others dismiss this as a result of the dot com bubble but it's really not. It's zoning policy. IIRC the smallest lot in Menlo Park or Mountain View is ~10,000 square feet.
But you see it elsewhere. The average house price in London is ~706k GBP. 30 years ago it was ~70k.
Inflation is used to justify wage suppression. Whatever the formula, it doesn't accurately reflect to cost-of-living crisis we're in.
Maybe the likes of Doordash are to blame, at least indirectly. Food delivery companies have proved that people will pay $15 for a lukewarm McDonald's burger if it's brought to their doorstep. So there is obviously some room to increase prices even for in-store purchases.
How much is this related to inflation compared to the complete refusal of the Silicon Valley suburbs to building new housing? If rich people want to move somewhere, and people living in that area dont build houses for them to move into, its going to drive the prices up, because the wealthy people will go there no matter what.
Also your whole bit about the past being so much better is insane. Hard to tell what is you exaggerating and what is a serious argument. My partner and I make ~100k + 40k combined a year, and we rent an apartment in one of the nicest SF neighborhoods, save for retirement, go out and do (paid) things every weekend, and still save a good chunk of money every month. We also have gym memberships, own cars, buy nice groceries, etc.
Inflation does suck, and the sticker shock is bad, but the high inflation also stems from policies that have let us have insanely good unemployment levels. Post 2008 we saw less inflation, but unemployment stayed high for almost a decade. Unemployment is already down to super low levels post 2020, which is better for everyone. Average and lower wage workers have also seen large growths in what they make.
95% + of the recent employment rates have been part time employment.
U3 doesn't account for the historically low participation rate (about 60%)
Things are a lot cheaper if you keep them in a 1200 square foot house
> Today you have 2 people working 100 hours a week to support 1-2 additional people , while living in an apartment and living in a run down and crime infested neighborhood.
Highly doubt people at this income rank were buying houses in 1960 and living comfortably.
> Summers is right more than he’s wrong
Entire argument is whether you should count interest or not. I can see arguments both ways
The average person today has a far higher standard of living than the average person in 1963.
They used older kids to watch younger kids, and generally let the kids fend more for themselves (my boomer dad was the oldest of 8 kids, and that was his experience, but having his grandparents die of spanish flu after WW2 hurt and helped a bit). I actually kind of admire that, and think we've lost something with more hands on parenting.
I totally agree. In a sense, FAANG salaries aren't especially high by historical standards, it is just that everyone else has fallen so far behind. $500k/year household income is firmly middle class, and is like earning $135k in 1980, my dad made more than that contracting in building nuclear plants with an associates degree from Spokane Community College.
You can't be serious.
>$135k in 1980, my dad made more than that contracting in building nuclear plants
That's over six times the median household income in 1980. $135k today would still be nearly twice the median household income.
My buying power is essentially worse than my dad's, although I put in a lot more time in school for it, and supposedly made the right career choice, things just suck these days and techies are keeping their heads above water but not much more.
Excellent way to put it.
To put things in perspective if one works for 5 days a week, you are paying the govt (all taxes + inflation) about 3 days of your earnings. You only get to keep what you earn for 2 days.
- People had only one car.
- People ate meat once per week.
- People had way fewer things in their houses.
You gotta consider increases in material possessions as well if you want to calculate inflation properly.
https://twitter.com/Outdoctrination/status/16948423262110437...
https://twitter.com/Outdoctrination/status/16948423228723817...
Prosperity was also growing 1880-1960 at at even faster rate, but inflation was much flatter.
We went from scarse food, horses, no telecomms, no planes, almost-no electricity, moderate running water to nearly modern conditions 1880-1960 with minimal inflation
Is that really true, or is it more a feeling many Americans have? As a Swede it’s a bit hard to relate to.
Also “run down” in reference to cities is just not true outside of a few failed areas like Detroit. NYC today is dramatically nicer than it was decades ago.
https://www.nyc.gov/assets/nypd/downloads/pdf/analysis_and_p...
Okay, it was the McDonald's hamburger that seems to have been $0.15 in 1963. That is $1.53 in CPI-inflated 2024 dollars.
The cost today is $2.19. That's about a 0.6% difference in the compounding inflation rate over 61 years.
This also explains why Palo Alto is so much more expensive these days. Some the things I mentioned were invented around there, which made a lot of those people rich.
Other things have become more affordable too. In 1960, a round trip flight from New York to London cost $550. I can find similar fares right now. In 1984, a Macintosh cost $2500, had 128 KB of RAM and a 9 inch 512 by 342 pixel display. For half as many dollars today, you can buy an iMac with a 24 inch 4.5K display and 8 GB of RAM.
Now, I will admit that many things are needlessly more expensive, and while the reasons for this are complicated, I don’t think it’s any coincidence that many of these cost increases are directly associated with institutions getting taken over by parasitic classes of administrators and bureaucrats. If you go to college, you’re not just paying for the inherent costs of the college; you’re also paying for the growing administrative bureaucracy that has infested the institution. If you go to the doctor, you’re not just paying your local family doctor; you’re paying an entire bureaucracy that has reduced your family doctor—who used to own a private practice—to the status of a corporate employee, plus a completely separate “health insurance” bureaucracy. (It turned out that the doctor who reshaped my corneas with lasers was happy to just take cash though!)
Governments are some of the worst effected. The cost to build the US interstate highway system was, adjusted for inflation, about 618 billion dollars. The 2021 infrastructure bill totaled 1.2 trillion dollars, but are we really getting the equivalent of two complete interstate highway systems? But hey, it could be worse—it’s not like they actually collected all the tax dollars they needed to pay for it! That’s a problem for future America. I don’t envy those guys!
Others have pointed out the flaws in the rest of this, but the labor force participation rate of Women[1] was around 33% in 1950, 38% in 1963, and 60% in 2000; it's 57% now. That's a huge change, but 1963 is a far cry from 0%. See also men[2].
As noted elsewhere, this ignores race. Compare white women under 20 <https://fred.stlouisfed.org/series/LNS11300029> to black women under 20 <https://fred.stlouisfed.org/series/LNS11300032>; dramatically different numbers.
Labor force participation rate isn't ideal, but it gives the picture.
Subway fares for NYC [1]
- 2 fare increases in the first 60 years of operation.
- 17 fare increases in the next 60 years.
Note that even with the fare increases in the last 60 years, once adjusted for inflation, the cost of MTA fares were actually going down until 1984 or 40 years or so, when fares really exploded [2]
[1] https://en.m.wikipedia.org/wiki/New_York_City_transit_fares
[2] https://old.reddit.com/r/nyc/comments/11u0s3z/nyc_subway_far...
The crux of it is, it's generally easy to maintain a pretty new system than an aging one (bathtub curve type scenario like in the hard drives). As such we see China sitting real pretty presently but say 50 years from now it will inevitably be a different tune.
Now in the case of NYC I wouldn't be surprised if some of that had to do with crumbling, very very old infrastructure, and I wouldn't deny either by the same token it had to do with macro-economic factors as well, all shades of grey. First 60 years of operation NYC probably had a lot of "brand new" stuff at any given time.
Of course the inflation model is applicable outside of the purely monetary. The more people you have the larger the labor army, and with each number added to that the less valuable the individual becomes even in terms of highly specialized labor, because ostensibly this can essentially be predicted with a distribution and with the way people are commoditized in most positions and companies these day, excellence is neither expected, sought for, nor wanted. This is still within the realms of the economists wheelhouse.
I would argue there's a third inflation, social inflation, as well. And this essentially hinges on the same principal that the labor army does: more people, less individual value (“a single death is a tragedy, a million deaths are a statistic”). And I would posit that the decrements have been seriously exacerbated in this realm by social media, television, celebrity, and so forth. I would also point out that the civil rights movement and women's lib has also (rightly) had a profound effect on social orientation that has yet to fully manifest itself.
If I recall correctly many developed nations have declining "native" populations. I'm unsure of the causal factors, but I wouldn't be surprised if it was in some ways an instinctual aversion to these sorts scaling laws. If I'm not mistaken Dunbar's number is roughly adhered to in nature, so it makes sense that there is somewhat of a drive to limit pack/civilizations size.
https://www.slowboring.com/p/nostalgia-economics-is-totally-...
And it doesn't account for qualities that have degraded. it assumes that since we have more possessions that life is better.
Hard to believe this example is worth it's weight in freedom units per capitalist product.
The reality is the economy and government were weaponized to enforce the lost of freedom to discriminate.
The memes of Arby’s 5 for $5 becoming 4 for $10 are more informative than the CPI numbers. Don’t let the shock at the grocery store wear off – it’s real and painful despite what the news tells you.
True inflation would measure the amount of prosperity achieved per hour worked.
Take 1963 as an Example. Sears sold entire two story home kits with all materials for $1600. An Italian rifle in 1963 was $20. McDonalds burgers were 15¢ . Postage was 5¢ and had only increased 5 times in the previous 100 years.
You might retort that average household income is $70000 now vs $6200 in the early 60s– a tremendous boon. Remember in 1963 only the man was working, and typically supported 4 kids, a wife and often parents in the home.
In other words you had 1 man working 50 hours a week afford a house and support 5-6 other people. Today you have 2 people working 100 hours a week to support 1-2 additional people , while living in an apartment and living in a run down and crime infested neighborhood.
In case you think this is academic, look at the occupations for those who lived in today’s wealthiest neighborhoods. Today Palo Alto, Menlo Park, and other super zips are exclusively $500k incomes and up. In the 1960 census records you will find these good neighborhoods occupied with plumbers, painters and other blue collar workers.
My point is that inflation isn’t abstract and it isn’t a law of nature. It’s a deliberate approach to stealing your prosperity while you cheer it on.
Summers is right more than he’s wrong. Real inflation has always been higher than the bogus CPI numbers, and the past 5 years it’s been accelerating.