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 Post subject: 2019 - A Look Back at a Strange Economic Year
PostPosted: Sun Dec 29, 2019 12:49 pm 
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With the end of the year a few days away, it's inevitable that the news will be filled with retrospectives on both 2019 and the 2010's as a whole.

Of the ones I've seen so far, this one from Reason.com caught my eye for it's take on the economic state of the US over the last year. I thought it did a fair job in raising questions regarding the contrasts and disorienting directions that we can see in both economic activity as well as public political reactions to it. To borrow from Dickens, we seem to have a tale of three economies that represent the best of times, the worst of times as well as the weirdest of times. There is the economy according to Trump and his acolytes, the economy according to the Democratic Presidential candidates, and the economy as it seems to be operating that isn't reflected exactly in either of the former. Within each of those are the variety of ways people perceive the economy as it affects them which are too numerous to count. But overall, it has been a strange year with likely unavoidable consequences that will come due in the future.

https://reason.com/2019/12/26/was-2019- ... mentality/

Was 2019 the Year of Peak Entitlement Mentality? - Veronique de Rugy

Looking back at 2019 is incredibly disorienting. The country is horribly divided. In fact, the president of the United States was just impeached along partisan lines. The government is running $1 trillion (and growing) annual budget deficits, even though the economy is doing well. Still, listening to many politicians and pundits, you'd think the nation is doing terribly and the government isn't spending a dime. That's 2019 in a nutshell.

The economy is entering its 11th year of expansion. Poverty is at an all-time low; so are African American and Hispanic unemployment rates. The 3.5% overall unemployment rate hasn't been that low since 1969. The unemployment rate for women hasn't been this low since 1952. The employment rate for workers ages 25 to 54 is finally back above its pre-Great Recession level. Wages are on the rise, especially at the bottom of the income distribution. The stock market is on fire. Small businesses and many industries are complaining that they can't find enough workers to fill all the jobs they have.

Not everything is perfect, of course. There's still relative poverty, but that's an immutable fact of life—and of the way we define poverty. Many economists are concerned that productivity isn't growing as fast as it could. This matters because productivity growth is an important source of rising living standards. Manufacturing isn't doing great, either, thanks to the president's self-destructive trade war. Farmers are hurting badly due to the tariffs, as are many of the companies downstream of the tax. Yet the economy continues to show resilience in spite of this.

So what explains the gargantuan budget deficits? During good times, spending on many programs meant to alleviate poverty and economic hardship typically goes down. But not as much anymore. Ever-easier eligibility for programs like food stamps has deviated from the program's original intent. Medicare and Medicaid expansion have guaranteed that the programs will continue growing and adding to the deficit, whether times are good or bad.

Both political parties are carelessly spending on a whim. They just passed a spending package of $1.4 trillion alongside $500 billion in irresponsible tax breaks. And Democrats are actively trying to restore the state and local tax deduction, or SALT, a handout to rich people in high-tax states.

More intriguing is the political discourse. Listening to Democratic presidential candidates, you'd think that Americans are living in abject poverty that can only be remedied by government taking over all student debt, all medical costs and boosting the incomes of a politically powerful group who are already overrepresented in the top income quintile—namely, seniors. Listening to Republicans, you'd think that it's never been as hard to be a woman or raise a family in America. In fact, GOPers today call for programs like mandated paid leave—which they assert is an idea whose "time has finally come"—and large increases in the child tax credit. Others condemn the free-market system as if it hasn't delivered anything but grief to low-skilled workers and destruction to the environment.
The truth is quite different. When the economy is doing well, most people do well, including women and their families. More importantly, it's the same free-market economy that Republicans and Democrats today so vociferously condemn that has produced the wealth that everyone takes for granted.

According to research from the Massachusetts Institute of Technology, in order to get the standard of living that ordinary Americans enjoyed in 1975, today we would only have to work 23 weeks out of the year. To achieve 1950s standard of living now requires a mere 11 weeks of work! People were fairly content back then. In fact, many who complain that the free market has failed us point to those decades as America's golden age. This is an illusion, of course. Most of us make the choice to work more and acquire a significantly better living standard. Yet, few people realize and appreciate how very much more we have now.

At the end of this year, then, I'd venture to guess that the problem in 2019 isn't that free markets don't work but that we may have reached peak entitlement mentality. Let's hope we come back to Earth in 2020 and start to appreciate that while all isn't perfect, we're incredibly lucky to be alive today.

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 Post subject: Re: 2019 - A Look Back at a Strange Economic Year
PostPosted: Mon Dec 30, 2019 10:52 am 
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And Democrats are actively trying to restore the state and local tax deduction, or SALT, a handout to rich people in high-tax states.


If Democrats are trying to do that, then I disagree with them on that. That is about the only real good thing from the Tax Act law of 2017.

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 Post subject: Re: 2019 - A Look Back at a Strange Economic Year
PostPosted: Mon Dec 30, 2019 8:15 pm 
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Yet, few people realize and appreciate how very much more we have now.


That's an interesting thought. Do we have more stuff because we buy more cheap stuff from China than people did in the 1950s?

On the other hand did people not earn significantly better wages (adjusted for inflation) with a high school degree or less in the 1950s versus what that level of education qualifies them to earn today?

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 Post subject: Re: 2019 - A Look Back at a Strange Economic Year
PostPosted: Mon Dec 30, 2019 10:35 pm 
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ajax18 wrote:
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Yet, few people realize and appreciate how very much more we have now.


That's an interesting thought. Do we have more stuff because we buy more cheap stuff from China than people did in the 1950s?

On the other hand did people not earn significantly better wages (adjusted for inflation) with a high school degree or less in the 1950s versus what that level of education qualifies them to earn today?

What are the causes of either?

Here's a hint:


Image

Image

Image


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 Post subject: Re: 2019 - A Look Back at a Strange Economic Year
PostPosted: Mon Dec 30, 2019 11:34 pm 
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ajax18 wrote:
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Yet, few people realize and appreciate how very much more we have now.


That's an interesting thought. Do we have more stuff because we buy more cheap stuff from China than people did in the 1950s?

On the other hand did people not earn significantly better wages (adjusted for inflation) with a high school degree or less in the 1950s versus what that level of education qualifies them to earn today?

The average poor family in the 1950s had the same number of personal computers, iPhones and flat screen TVs in their home as the wealthiest families did. Pretty sure that's socialism.

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 Post subject: Re: 2019 - A Look Back at a Strange Economic Year
PostPosted: Tue Dec 31, 2019 6:58 am 
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The average poor family in the 1950s had the same number of personal computers, iPhones and flat screen TVs in their home as the wealthiest families did. Pretty sure that's socialism.


I think you mistook my question for an attack.

Technology definitely seems to have improved life for about everyone, at least a little. I remember it cost my mom $150 to talk to me on the phone during my mission in South America. Now people can skype for next to nothing. Of course you need a computer, internet access, etc.

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 Post subject: Re: 2019 - A Look Back at a Strange Economic Year
PostPosted: Tue Dec 31, 2019 8:39 am 
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It was meant as a joke, ajax. Look at that sentence in context -

According to research from the Massachusetts Institute of Technology, in order to get the standard of living that ordinary Americans enjoyed in 1975, today we would only have to work 23 weeks out of the year. To achieve 1950s standard of living now requires a mere 11 weeks of work! People were fairly content back then. In fact, many who complain that the free market has failed us point to those decades as America's golden age. This is an illusion, of course. Most of us make the choice to work more and acquire a significantly better living standard. Yet, few people realize and appreciate how very much more we have now.

Put simply, it's saying your 40 hour work week today is getting you a lot more than the average work week in the '50's afforded. The comment in the article is pointing out people lived with less back then, were content if most likely because they perceived it as living quite well compared to how we'd perceive living life that way today, and most of us don't realize how much life has changed for the average person in the United States over the last 60-70 years. It touches on both sides of your question, pointing out that the average family today has the benefits of technologies making their lives easier that were science fiction at best in these eras people imagine to be the golden years of American civilization. Within the statement, "To achieve 1950s standard of living now requires a mere 11 weeks of work!" is the fact the average person in the 1950's didn't own a television, maybe owned a single car shared by the family, may not have owned a refrigerator or washing machine, likely lived in a family with more kids than we do today, had a stay at home mom whose full-time job was to do the things most of us use machines to do today. The average home was less than 1000 sq. ft. Today we'd say the person living like the average person in the '50s was living in poverty.

It has nothing to do with cheap goods from China.

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 Post subject: Re: 2019 - A Look Back at a Strange Economic Year
PostPosted: Tue Dec 31, 2019 8:58 am 
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I still think there were some things that were better in the 1950s and even 1970s. Our quality of life now is better but I disagree with the blanket statement that everything was worse in the past.

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 Post subject: Re: 2019 - A Look Back at a Strange Economic Year
PostPosted: Tue Dec 31, 2019 9:07 am 
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ajax18 wrote:
I still think there were some things that were better in the 1950s and even 1970s. Our quality of life now is better but I disagree with the blanket statement that everything was worse in the past.

Yeah, remember the good ol' days when you could be openly racist and it was acceptable?

*sigh*

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 Post subject: Re: 2019 - A Look Back at a Strange Economic Year
PostPosted: Tue Dec 31, 2019 10:44 am 
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ajax18 wrote:
I still think there were some things that were better in the 1950s and even 1970s. Our quality of life now is better but I disagree with the blanket statement that everything was worse in the past.

Saying a person today with the life circumstances of someone in the 50s would be considered as living in poverty isn't the same as saying things were worse in the past.

But for the sake of discussion, what do you have in mind?

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 Post subject: Re: 2019 - A Look Back at a Strange Economic Year
PostPosted: Tue Dec 31, 2019 11:45 am 
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honorentheos wrote:

According to research from the Massachusetts Institute of Technology, in order to get the standard of living that ordinary Americans enjoyed in 1975, today we would only have to work 23 weeks out of the year. To achieve 1950s standard of living now requires a mere 11 weeks of work! People were fairly content back then. In fact, many who complain that the free market has failed us point to those decades as America's golden age. This is an illusion, of course. Most of us make the choice to work more and acquire a significantly better living standard. Yet, few people realize and appreciate how very much more we have now.

Put simply, it's saying your 40 hour work week today is getting you a lot more than the average work week in the '50's afforded. The comment in the article is pointing out people lived with less back then, were content if most likely because they perceived it as living quite well compared to how we'd perceive living life that way today, and most of us don't realize how much life has changed for the average person in the United States over the last 60-70 years. It touches on both sides of your question, pointing out that the average family today has the benefits of technologies making their lives easier that were science fiction at best in these eras people imagine to be the golden years of American civilization. Within the statement, "To achieve 1950s standard of living now requires a mere 11 weeks of work!" is the fact the average person in the 1950's didn't own a television, maybe owned a single car shared by the family, may not have owned a refrigerator or washing machine, likely lived in a family with more kids than we do today, had a stay at home mom whose full-time job was to do the things most of us use machines to do today. The average home was less than 1000 sq. ft. Today we'd say the person living like the average person in the '50s was living in poverty.

It has nothing to do with cheap goods from China.

Honorentheos,
I am truly puzzled by this picture, it strikes me as profoundly warped. How could such things be said?

First I do not really hear people saying free enterprise has failed us.

This picture of the 50s is bizarre. I was there living in a modest neighborhood. People had homes car television washingmachine refrigerators etc. Yes they did not have computers and the tv was smaller. Some homes would be under 1000 ft but at least in the areas I was familiar with most were definatly larger.

What might matter is whose wage could live comfortably from 11 weeks work? Does this mean current wages or just upper middle class wages?Sure minimum wage was dollar and quarter hour now ten dollars or so. Then you could buy a home for 16000 then which now costs like 250,000.

The comment about food assistance rules getting looser and looser to cost more s might be true compared to 1955 but not for the past 35 years.

The federal deficit is expanded more by tax cuts and wars. Blaming food assistance is a sure political tell.(or is it views shaped by membership in upper income groups?)

I think that despite cheap electronics there are a sizeable number of people these days seriously troubled by the high price of housing. People are staying in tent Hoovervilles or their parents basement.


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 Post subject: Re: 2019 - A Look Back at a Strange Economic Year
PostPosted: Tue Dec 31, 2019 12:59 pm 
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Hey Huck,

Stats being what they are, tv ownership in the 50s was supposedly around 50% of households. Refrigerator ownership was supposedly around 85% of households in the US, and washing machines were close to TV numbers. And the average size of a home is identified as less than 1000 sq. ft.

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 Post subject: Re: 2019 - A Look Back at a Strange Economic Year
PostPosted: Tue Dec 31, 2019 1:32 pm 
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honorentheos wrote:
ajax18 wrote:
I still think there were some things that were better in the 1950s and even 1970s. Our quality of life now is better but I disagree with the blanket statement that everything was worse in the past.

Saying a person today with the life circumstances of someone in the 50s would be considered as living in poverty isn't the same as saying things were worse in the past.

But for the sake of discussion, what do you have in mind?


I still think people had higher wages in the 50s but many things (like appliances) were more expensive and manufactured more often within the US.

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 Post subject: Re: 2019 - A Look Back at a Strange Economic Year
PostPosted: Tue Dec 31, 2019 2:33 pm 
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Trump has announced more tariffs on Chinese goods. I thought they were coming to an agreement.

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 Post subject: Re: 2019 - A Look Back at a Strange Economic Year
PostPosted: Tue Dec 31, 2019 5:43 pm 
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honorentheos wrote:
Hey Huck,

Stats being what they are, tv ownership in the 50s was supposedly around 50% of households. Refrigerator ownership was supposedly around 85% of households in the US, and washing machines were close to TV numbers. And the average size of a home is identified as less than 1000 sq. ft.


honorentheos, I can try to consider further. I grew up in modest but not really poor circumstances. My picture of what neighbors had did not include ghettos. Areas of serious poverty go along way to explain the percentages you site. Well that and the fact that tv were new and spread through the population gradually.

I am sure there are ways in which our society is richer now than in the 50s. I think it is absurd to suggest free enterprise is not working in general. I suspect some people unable to afford housing may experience doubts about that on occasion. Still the idea of getting rid of free enterprise has tiny to no political presencer. (well there are always a few who wish that)

So I am puzzled as to what sort of thing the article is intending to push back against. Food assistance? (I was offended by the falseness or seriously misleading quality of the passing comment in the article) Is it saying we are doing great (all I have to do is work a quarter of a year and be doing ok) So medicaid or medicare expansion has no social value?

Is the upshot of the article that we should all support Trump to prevent the socialist elimination of free enterprise and wealth?


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 Post subject: Re: 2019 - A Look Back at a Strange Economic Year
PostPosted: Tue Dec 31, 2019 5:51 pm 
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ajax18 wrote:
I still think people had higher wages in the 50s but many things (like appliances) were more expensive and manufactured more often within the US.

Well, I think we need to decide what it is we want to discuss here. The comment out of the article was pointing out most of us are doing incredibly well compared to the average person living back then - if one bases that on such things as material possessions and time for leisure. Whether or not some people's memories of living then say otherwise, a person today living like someone did in the 50s would be considered poor. We don't walk into smallish homes and think someone is doing all right for themselves living without microwaves, dish washers, computers, flat screen TVs, a car for every person of driving age, etc., where the residents spend a fair percentage of their time outside of the workplace on regular chores and can't afford to eat out except on occasions. But that's largely due to perception. The article made a light effort to acknowledge this, while also saying we don't really realize we have it so good in those terms. The facts probably are, most of us would find being transported back to the fifties to be trying. Just like most of us would die within a few days if transported to the middle ages without the benefits of modern technology to take along with us. That comment had nothing to do with our ability to buy cheap goods made in China, and everything to do with our standard of living is improved to the point most people living in poverty today would be doing all right, materially speaking, if compared directly to someone from a generation or two back. We have it pretty good in that sense.

But if you want to talk about relative wages and the strength of the middle class in the '50s compared to today, then we are having a different discussion. I absolutely agree, and believe the data supports the argument wealth was more evenly distributed in the '50s and the idea one's children would likely have it better than you did was very much a reality (See above on that one). You and I have been over that so many times I don't know that it's worth pointing out facts again, but that issue is one largely driven by politics rather than economics or technological advancement, and the worst effects were brought on by conservative policies that shifted the rewards of increasing production and national wealth into fewer and fewer pockets. Trump's tax cuts were just one more example of a policy that exacerbates the very problems you complain about and vote for because...??? Racism is what people point to, but I don't even know if that explains it. I think you just don't pay attention to the facts, favoring made-up stories to explain the world in a way that is in line with your preconceptions about what's going on.

But if you care, here's another attempt at passing on some reading material so you can think about why you vote for folks like Trump while complaining that people in the '50s likely had a better shot at a better life than people do today. Enjoy. Note the link will open a .pdf in case that matters to you.

http://www.paecon.net/PAEReview/issue72/Apel72.pdf

Just a sample for you to chew on: From 1947 until the late 1960s real hourly compensation and productivity increased and followed a very similar trend. However, as of 1973 real hourly compensation and productivity started to diverge. A trend which has continued until today (ILO 2013, 46).

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Last edited by honorentheos on Tue Dec 31, 2019 5:59 pm, edited 1 time in total.

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 Post subject: Re: 2019 - A Look Back at a Strange Economic Year
PostPosted: Tue Dec 31, 2019 5:58 pm 
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huckelberry wrote:
I am sure there are ways in which our society is richer now than in the 50s. I think it is absurd to suggest free enterprise is not working in general. I suspect some people unable to afford housing may experience doubts about that on occasion. Still the idea of getting rid of free enterprise has tiny to no political presencer. (well there are always a few who wish that)

So I am puzzled as to what sort of thing the article is intending to push back against.

That's a good question. Reason has a hobby horse when it comes to the capitalism v. socialism debate, and almost weekly carries an article citing studies where support for capitalism is slipping among younger Americans when presented as a word. For example, they'll point to studies where a question like, "Do you believe capitalism has led to more harm or good for society?" gets answered as it having been more harmful by people under 40 years of age. And then point out that this flips if one doesn't use the term capitalism but instead asks about choice, opportunities for self-determination, degree of government control of industry, etc. I think that part of the article is more of an undercurrent to their broader point than meant to be a point of focus.

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Food assistance? (I was offended by the falseness or seriously misleading quality of the passing comment in the article) Is it saying we are doing great (all I have to do is work a quarter of a year and be doing ok) So medicaid or medicare expansion has no social value?

Is the upshot of the article that we should all support Trump to prevent the socialist elimination of free enterprise and wealth?

My read on the article is that Democrats and Republicans act in ways that are expanding the deficit, using negative messaging to push agendas that aren't evident in the economy overall, but that we do have serious issues facing us if we don't start paying attention to how government spends money.

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 Post subject: Re: 2019 - A Look Back at a Strange Economic Year
PostPosted: Tue Dec 31, 2019 7:30 pm 
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I'm not sure how happy the working poor should be that they get to die young instead of really young, but it is true that standard of living has risen a great deal in recent decades and continues to do so. Relative gaps matter to people because they compare against what is realistically possible, not how good they have it compared to a subsistence farmer in the bronze age.

The article also handwaves away poverty as just being an artifact of relative definition, as if the contemporary poor are better called "less rich." That's quite misleading as there is still lots of poverty, not just in the sense of being on the bottom end of the distribution, but in the sense of struggling to furnish a basic standard of living. People, lots of people, still suffer from hunger in the US. The article also oddly ignores relative wealth gaps as a subject, implying staggering (and growing) wealth gaps we are seeing is an "immutable fact of life." This I found most frustrating, because concern about this is one of the principle drivers of the belly-aching she is implicitly condemning and is far from an immutable fact of life.

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According to research from the Massachusetts Institute of Technology, in order to get the standard of living that ordinary Americans enjoyed in 1975, today we would only have to work 23 weeks out of the year.


I see this kind of argument crop up from time to time, especially in libertarian circles, and it's quite misleading. First, think about who "we" is in that assertion. It's not everyone. It's derived from a statistical average that the discontent fall below, and in some cases, well below. More importantly, you can't go to the standard of living store and ask for "one 1975 please." These numerical averages don't map onto what kind of lifestyle you can purchase. If you, the median worker, work 11 weeks out of the year, you don't get a home built in 1955. You don't get a home at all.


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 Post subject: Re: 2019 - A Look Back at a Strange Economic Year
PostPosted: Tue Dec 31, 2019 8:02 pm 
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ajax18 wrote:
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Yet, few people realize and appreciate how very much more we have now.


That's an interesting thought. Do we have more stuff because we buy more cheap stuff from China than people did in the 1950s?

On the other hand did people not earn significantly better wages (adjusted for inflation) with a high school degree or less in the 1950s versus what that level of education qualifies them to earn today?


Material goods are cheaper because we are just way more efficient at producing them. Our planning and technology just gets better and better each year. This would be true without China. Cheap Chinese labor is a drop in the bucket compared against technological improvement.

What happens is we figure out more efficient ways to make something - say food or clothes - and this results in some combination of fewer people needing to make cheaper items. The resulting gains in productivity and/or savings then are freed up to go to other things - say HDTV's. So people go from being able to afford just some nice clothes to being able to have clothes and an HDTV. We think of this as an increase in their standard of living.

This isn't the entire story though. There are direct services that just can't get much more efficient. Think of taking care of a child. But the cost of taking care of a child keeps going up. Why? There's an economic theory that says it is because in order to have people who are willing to work to take care of children, you have to pay them something resembling a competitive salary so they, too, can buy clothes and HDTV's. Otherwise, they'll just get a job making HDTV's. They're not going to work for child-rearing wages earned in the 1870's even if they're taking care of approximately the same number of children for approximately the same amount of time. Since their profession isn't getting any more efficient at taking care of children (one would hope), the result is it just keeps getting more and more expensive in relative terms to pay someone to take care of children.

You, Ajax, can only see so many patients a day. You might become increasingly better at taking care of people's eyes, and your office might come up with some innovative ways to maximize the number of patients seen in a day, but at the end of the day, you're just not getting faster at taking care of more eyeballs as microchip manufacturers are at churning out speedy processors.

This is the technical term for this phenomenon:

https://en.wikipedia.org/wiki/Baumol's_cost_disease

This ends up pricing people with their, in some ways, historically high standard of livings out of some basic services - like being able to routinely see a doctor so they don't die.


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 Post subject: Re: 2019 - A Look Back at a Strange Economic Year
PostPosted: Tue Dec 31, 2019 9:31 pm 
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You, Ajax, can only see so many patients a day. You might become increasingly better at taking care of people's eyes, and your office might come up with some innovative ways to maximize the number of patients seen in a day,


Does the article really account for the fact that it costs a lot more time and money to qualify for a job now than it once did. For the old fogies retiring now, optometry school was a three year program and I don't think it even required an undergraduate degree to get into optometry school. They probably didn't pay more than $10k in tuition for that 3 year program.

The price of an eye exam isn't much more now than what the old fogies charged in 1970s. I still make a similar wage to what they did in the golden age but I don't see one patient per hour the way they did. Better equipment helps but that costs more money as well. I couldn't imagine having to do retinoscopy 35 times a day.

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 Post subject: Re: 2019 - A Look Back at a Strange Economic Year
PostPosted: Wed Jan 01, 2020 1:26 am 
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Location: Koloburbia
aussieguy55 wrote:
Trump has announced more tariffs on Chinese goods. I thought they were coming to an agreement.

Trump lies about everything. It seems strange to say this, but wait till you have a positive statement from Beijing.

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