Comment by eru
1 month ago
If you use price levels measures that grow at different rates, indexing to set them equal at one point in time doesn't save you. Do you understand what your 'indexing' does?
To give a really silly example to explain: just because I can scale f(n) = n^2 and g(n) = n^3 to give the same value at n=1 (or any other arbitrary n), doesn't mean they will forever grow at the same rate.
You are weakening your own point by screwing up the stats: even after we correct for the difference in inflation measures, there _is_ a widening gap between mean and median worker income. (Where, yes, worker includes Elon Musk as CEO of Tesla.)
> This is a big part of the reason why I think lifestyle descriptions are so much more useful than numbers. The stories of the boomer generation sound like fairy tales now a days - somebody putting themselves through college, buying the first car, and even having enough squirreled away for the down payment on their first house - all on the back of a part time job that didn't even require a college degree.
Well, see Caplan's Case Against Education (https://www.amazon.sg/Case-against-Education-System-Waste/dp...).
Of course, the kind of crappy cars that boomers were driving aren't legal to buy anymore. Their houses were also much smaller, etc. It's a separate discussion of whether we should legalise crappy cars and small houses again. (I'm against the former but in favour of the latter.)
You'd want to correct for these quality differences to make your point stronger.
Also keep in mind that the boomer's "Golden Age" was the pinnacle of inequality. In the decades since, inequality has drastically shrunken. Mostly thanks to people in India and China moving from dirt poor and starving to merely poor (for India) and medium income (for China).
I would not want to go back to that supposed Golden Age, just because super-rich Americans were slightly less well off comparatively than today. Median and average Americans are still better off in absolute terms; and approximately everyone else on the globe is massively better off in absolute terms today.
The whole point is that the values aren't growing at the same rate. You can certainly compare the growth of n^2 vs n^3 though it probably would not be especially shocking if I told you that n^3 is growing exponentially more quickly. Yet in our case there is no logical reason that real gdp/capita would grow exponentially more quickly than real median wages. In fact it's rather indicative of a severe flaw in the economic system because the difference between the two is accelerating at a dangerously quick rate. Basically - project these values into the future (though it's already a major problem in the present). If they don't begin converging, hard, at some point you're well on your way to creating an extremely broken society.
Boomers weren't driving crappy cars. Even today things like the classic Dodge Charger is a car enthusiast favorite. It's a beast of a muscle car, and retailed for about as much as you pay for a Honda Civic now a days. Similarly the stuff about smaller houses is misleading. Lot sizes over time have actually decreased. In the past you might have had a larger yard, gazebo, shed, and outdoor work area - now you have some walk in closets primarily motivated by selling the house for more, based on square footage, than meaningful utility. And of course now far more people now live in apartments and other non-housing domiciles than in the past.
And yes, obviously education is completely broken. America's greatest intellectual achievement was likely putting men in the Moon that happened, unsurprisingly, in the 60s - as we now struggle to try to just send a man around the Moon. And they did this on the back of a far more limited educational system, with costs a small fraction of what they are today. We pay far more, and get far less, in just about every single way.