There’s a longstanding attempt to find a single graph that captures just how stagnant the economic situation of Americans is. Owing to @DBrumus on Twitter I think I’ve found a winner. Here we have the following graph of: (Average hourly pay, private sector employees, production & nonsupervisory)*(average hours worked by these employees) in nominal dollars, set to an index at 1970, vs (inflation) in nominal dollars, set to an index.
Jan 10, 2022·edited Jan 10, 2022Liked by Philosophy bear
Perhaps no one should feel richer due to getting better medical care instead of a bigger house. As a person who has benefited quite a bit (regaining the ability to walk) thanks to expensive medical treatments not invented in 1980, I don't quite agree. Note that the health care portion of CPI is not hedonically adjusted and just treats this improvement as pure inflation.
But if you want to do a fair comparison you need to compare wages to CPI excluding medical care.
A simple numerical example: suppose at t=0 compensation is $1 wage and $1 health care while at t=1 compensation is $2 wage and $3 health care. Suppose the cost of non-health care goods went up 1.5x and health care went up 3x. CPI including health care is now 2.25x (0.5 * 1.5x + 0.5 * 2.25x) while my wages only went up 2x.
In spite of that I can now buy 33% more non-health care goods and the same amount of health care (or the same number of non-health care goods and 10% more health care).
I agree generally, but “no one feels richer, or should feel richer, because their workplace has to pay more in health insurance premiums” is slightly missing it in that health care has also improved over the time period - some of those premiums go into paying for MRIs that prevent cancer deaths or into treatment for COVID.
Your general point is still right though because it’s not like all of that doubling in real GDP has gone into healthcare *and* much of the gains in healthcare go to helping the elderly who are usually on Medicare.
This is some "what happened in 1971" findings, but most only focuses on labor, wage, capital and inflation, rather than surrounding social factors, like family dissolution (Michael Jones), political polarization (Turchin), anti-faith (Douthat), among others. Those needed to be observed more.
I'm never quite sure what "richer" means in this context. Does it count as "richer" if they used to be able to afford a phone, but it was a landline that let them call people, and now they can still afford a phone but it's a little computer that gives them access to knowledge, entertainment, convenience and communication that would have boggled their 1965 minds? It's still just a phone, but it's better. Same with TVs, same with basically anything technological. I'm not sure how far that analysis extends beyond technology, but I expect it covers additional territory.
So yeah, they're still just floating on the surface of the water and it doesn't look like they've risen at all, because we've pegged everything to sea level. But apparently the water level rose under them somehow, and it's floating their boat. So they end up being higher than they were anyway. Is my thought.
Perhaps no one should feel richer due to getting better medical care instead of a bigger house. As a person who has benefited quite a bit (regaining the ability to walk) thanks to expensive medical treatments not invented in 1980, I don't quite agree. Note that the health care portion of CPI is not hedonically adjusted and just treats this improvement as pure inflation.
But if you want to do a fair comparison you need to compare wages to CPI excluding medical care.
A simple numerical example: suppose at t=0 compensation is $1 wage and $1 health care while at t=1 compensation is $2 wage and $3 health care. Suppose the cost of non-health care goods went up 1.5x and health care went up 3x. CPI including health care is now 2.25x (0.5 * 1.5x + 0.5 * 2.25x) while my wages only went up 2x.
In spite of that I can now buy 33% more non-health care goods and the same amount of health care (or the same number of non-health care goods and 10% more health care).
This is what actually happened: https://fred.stlouisfed.org/graph/?g=KJ68
I agree generally, but “no one feels richer, or should feel richer, because their workplace has to pay more in health insurance premiums” is slightly missing it in that health care has also improved over the time period - some of those premiums go into paying for MRIs that prevent cancer deaths or into treatment for COVID.
Your general point is still right though because it’s not like all of that doubling in real GDP has gone into healthcare *and* much of the gains in healthcare go to helping the elderly who are usually on Medicare.
Excellent post
This is some "what happened in 1971" findings, but most only focuses on labor, wage, capital and inflation, rather than surrounding social factors, like family dissolution (Michael Jones), political polarization (Turchin), anti-faith (Douthat), among others. Those needed to be observed more.
I'm never quite sure what "richer" means in this context. Does it count as "richer" if they used to be able to afford a phone, but it was a landline that let them call people, and now they can still afford a phone but it's a little computer that gives them access to knowledge, entertainment, convenience and communication that would have boggled their 1965 minds? It's still just a phone, but it's better. Same with TVs, same with basically anything technological. I'm not sure how far that analysis extends beyond technology, but I expect it covers additional territory.
So yeah, they're still just floating on the surface of the water and it doesn't look like they've risen at all, because we've pegged everything to sea level. But apparently the water level rose under them somehow, and it's floating their boat. So they end up being higher than they were anyway. Is my thought.