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Why Isn’t Everything Worse?

Started by Will Wilkinson · 11 months ago

James Pethokoukis of US News has a plausible conjecture:

Here’s puzzled economist and blogger Brad DeLong:
I still do not understand why the real side of the economy is doing so well in relative terms. The worst financial distress since the Great Depression ought to trigger the worst downturn in demand, production, and employment since the Great [...] ... Continue reading »

16 comments

  • muirgeo

    11 months ago

    Well everyone else has an opinion on the issue as well.

    http://www.market-harmonics.com/images/tech/sen...
    reply
  • UserGoogol

    11 months ago

    Paul Krugman has a blog post from a couple months ago with some less-than-rigorous charts that suggest there is a relationship between consumer confidence and the employment to population ratio. Which I suppose suggests that falling consumer confidence is connected with the actual status of the economy (instead of people just being mopey) although it might also suggest that stagnant wages might not be the biggest factor in consumer confidence, and that unemployment might be a more dominant factor.
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  • GU

    11 months ago

    "Well everyone else has an opinion on the issue as well."

    Most people's opinions aren't worth much though. Many are not intelligent enough to think through the logical implications of their political beliefs, let alone understand complicated economic theory. Even fewer actually care about forming a comprehensive political philosophy to guide their policy analysis. And out of that small group, only some of them would change their mind given empirical data that contradicts their beliefs.

    I'm not insinuating anyone who reads this blog is "one of those people," my point is only that the vast majority of people are ignorant and unthinking when it comes to their beliefs about politics and the economy. If you don't believe me, please read "The Myth of the Rational Voter" by Bryan Caplan before you regale me with tales of the "wisdom of crowds."
    reply
  • muirgeo

    11 months ago

    Hey look the whiners are living a year and a half more then in 1980... so yeah what are they complaining about?

    http://www.epi.org/content.cfm/webfeatures_snap...
    reply
  • GilM

    11 months ago

    Yes, what?

    Or, what are you complaining about?

    Is there an obvious policy change implied by a correlation between success at accumulating wealth and life expectancy?

    It would be great if everybody's life expectancy grew faster, but I don't know why you should expect or even want everybody's to grow equally.

    I'm sure more state intervention could reduce the gains of the wealthy, but I'm skeptical that it will improve the gains of the poor.

    Would it be better if the gains were lower but more equal?
    reply
  • GU

    11 months ago

    Re: life expectancy

    I predict a huge uprising, and the end of U.S. civilization as we know it if those numbers ever reach the masses. Who would possibly be willing to suffer the indignity of living--on average--a few less years than those evil "most well off"?

    Clearly, all that worrying about where they fall in the nation's income distribution takes years off the "least well off's" lives, while the plutocrats live it up, exploiting their way to an extra 4.5 years of life. Give me a break.
    reply
  • jumbolachi

    11 months ago

    For me, the important question is: Have living standards improved much since 2000, since we elected our president?

    I doubt it.
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  • Will Wilkinson

    11 months ago

    Average total compensation rose something like 18 percent from 2001 -2005. I'm sure that's slowing down right about now. But yeah, living standards have improved considerably for most people since 2000.
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  • GilM

    11 months ago

    And that increase doesn't even account for improvements in quality and variety of products and services.

    I think it's really common to be biased towards anxiety about the economy and obliviousness to improvements. And, frequent elections create lots of opportunities for candidates to exploit this, and amplify the false impression.
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  • jumbolachi

    11 months ago

    Check out this chart - median weekly real earnings in the second quarter of 2000 were $320, which is exactly the same figure as the second quarter of this year. Eight years have passed and the average person's living standards have not changed much.

    And the quality and variety of products and services have not changed much in 8 years. Sure we have things like ipods and better computers now, but most of the things people buy (food, furniture, gasoline, housing, appliances) haven't changed significantly since 2000.

    To say, as Will does, "living standards have improved considerably for most people since 2000," is just wrong.
    reply
  • GilM

    11 months ago

    No, it's just right.

    Not only are there many new and better products and technologies, but they are cheap enough for many to own (as well as former luxuries). And, medicine has improved a lot too. Lots of former death-sentence conditions are now treatable and often curable.

    I wouldn't want to go back to 2000. And, I REALLY wouldn't want to go back to the 1970s (which I'm still hearing offered a similar living standard to the middle class compared with today).

    The level of employment has been very high recently, and people have been enjoying considerably more and better leisure than ever before.

    I realize that it's not always easy to see, and perspective can be difficult to maintain. But, I think it's worth the effort.
    reply
  • jumbolachi

    11 months ago

    Just realized the link in my previous post is faulty. If you would like to see the the data to which I referred, go here, put a check next to the 4th item down (entitle: "Constant (1982) Median wkly earnings, Emp FT, Wage & sal wrkrs - LEU0252881600 ), and click the "retrieve data" button.
    reply
  • muirgeo

    11 months ago

    "Average total compensation rose something like 18 percent from 2001 -2005"

    Come on now we all know that average income numbers are tainted by the exreme growth at the top.
    Median incomes have stagnated for lower income brackets. During Clintons years we saw greater growth all around and a better economy overall.

    That's all I'm saying the evidence suggest good regulatory policy beats hands off policies. I think the evidence is overwhelming that a lot of the income inequality especially recently is not related to issues of productivity but of gaming the system and the end result is a weaker economy overall.

    http://upload.wikimedia.org/wikipedia/en/0/02/C...
    reply
  • GilM

    11 months ago

    Income is not the same as compensation.

    Health Insurance costs have sky-rocketed, for example, so your compensation can increase without your income increasing.

    And, what is this "good regulatory policy" you speak of?
    reply
  • muirgeo

    11 months ago

    I'm a physician and my patient's are not getting more insurance coverage they are getting less with huge deductibles and Co-pays. The balance of their benefits package is putting their true income or purchasing power or compensation even more negative not more positive as you claim.
    reply
  • GilM

    11 months ago

    Are you claiming that their employers are paying less for the health insurance benefits they offer each employee than they did in the past?

    If so, I don't think that's typical.
    reply

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