Do you have a dumb question that you're kind of embarrassed to ask in the main thread? Is there something you're just not sure about?
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Notes -
There’s an idea, rarely expressed explicitly, that seems to underpin some of our commenters’ idea of the world- and considerably more popular among DR twitterati- wherein recent economic growth in the west is not representative of an increase in the quality and quantity of stuff, it’s reflecting accounting tricks and rising real estate prices. Seemingly a right wing corollary to the socialist/socdem idea that western economies are like South Africa where everything goes to the top 1/5/10%.
I’m not really looking for a steelman, so much as a when do these people think ‘real’ GDP started to decline. Hourly compensation became uncoupled from productivity in the 70’s but we’re much richer now than we were then.
One imo true part is inflation stats. Basically, we used to use a simple bucket-of-goods based approach, which would compare the same goods in the past to the same goods in the future and calculate inflation based on that. This was deemed not good enough, on the understandable logic that we will want different goods in the future, so over time this fixed bucket will reflect consumer realities less and less.
So we now use a different approach, the CPI, which has a flexible bucket based on the actual goods we buy instead. Sounds good? Well, the problem is twofold. First, it means we aren't comparing like-for-like anymore, so any historic inflation comparison is kind of nonsensical. Second, and imo even worse, it naturally biases inflation estimates downward. For example, back under Corona bell pepper prices shot up 300% or so at my local super market for a while, and we pretty much instantly stopped buying them. Which means that over this time frame, looking at the CPI, the rather extreme inflation of bell pepper would have minimal to no impact on the inflation stats calculated solely on our household, despite being one of my favorite vegetables that I like to eat near-daily if I can. This can easily be generalized to most consumers - if there is a good that was consumed a lot in the past but not anymore, a solid % of that will be an increase in price, and vice-versa any good that was rarely consumed in the past but is now consumed a lot, chances are it got cheaper.
See here for a graph
So if we fully buy into this framing, some time in the 80's official eco stats substantially uncoupled from the real economy. Obviously that doesn't prove that we actually got poorer, though.
Ok so when did standard of living decline.
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