Gen Z have 86% less purchasing power compared to baby boomers in their twenties(consumeraffairs.com)
consumeraffairs.com
Gen Z have 86% less purchasing power compared to baby boomers in their twenties
https://www.consumeraffairs.com/finance/comparing-the-costs-of-generations.html
309 comments
Something to remember - the median family in the '70's had one income. A median family today has two. So the margins (single income households) are in more dire straits today than they were in the past.
Measuring in households and not individuals hides a large number of changes in how people are paid. It also doesn't account for things like pensions, which were common in the '70's and earlier.
Measuring in households and not individuals hides a large number of changes in how people are paid. It also doesn't account for things like pensions, which were common in the '70's and earlier.
There are also more single person households now[0], and the average household size has decreased by about 15%.[1]
[0] https://www.statista.com/statistics/242189/disitribution-of-...
[1] https://www.statista.com/statistics/183657/average-size-of-a...
[0] https://www.statista.com/statistics/242189/disitribution-of-...
[1] https://www.statista.com/statistics/183657/average-size-of-a...
There are also more two-person households, so perhaps part of the change is young people not living with their parents for so long? Or perhaps it is old people living alone. I don’t think I have very good priors about this. I think the kind of people I know are not going to be a great cross section of US society (and I suspect this is true for basically anyone too).
It's actually the opposite, we are at an all time high for young people living with their parents, for longer.
Approximately 50 percent of young adults 18 - 29 live with their family now[0].
Initially that was thought to be a transient externality of the pandemic but it seems to be sticking[1] thanks to the outfall of the bull market crashing.
[0]https://www.pewresearch.org/fact-tank/2020/09/04/a-majority-...
[1]https://www.pewresearch.org/fact-tank/2022/07/20/young-adult...
Approximately 50 percent of young adults 18 - 29 live with their family now[0].
Initially that was thought to be a transient externality of the pandemic but it seems to be sticking[1] thanks to the outfall of the bull market crashing.
[0]https://www.pewresearch.org/fact-tank/2020/09/04/a-majority-...
[1]https://www.pewresearch.org/fact-tank/2022/07/20/young-adult...
Which entirely disqualifies the proposed explanation of the original comment, which considered household income. thus bundling the parents and children's income together.
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The consumer price index (CPI) is untrustworthy. It incorporates adjustments into things like technology that don't actually reflect utility. For example, if you look at the section on "Computers, peripherals, and smart home assistants" you'll note a nearly 300-fold decrease in the consumer price of computers from 1997 to 2022. How the heck does that work? Computers today are cheaper than in 1997 but surely not 300 times cheaper.
It turns out that they use a "quality adjustment" that takes into account the relative performance of a modern computer compared to previous years. The bulk of the 300-fold decrease in price is due to the fact that modern computers are many times faster than those made in the 1990's. But there's a problem with that: a consumer doesn't get hundreds of times more utility out of a computer. You can't have a hundred people in your house sit there and work on the same computer and achieve the productivity scaling which would warrant this adjustment.
In reality, you're paying for one computer an amount which is nominally within an order of magnitude of what you would have paid in 1997. So this adjustment has the effect of drastically skewing the CPI statistic in this sector. Furthermore, computers have only grown in importance. What was a luxury in 1997 has become a necessity today. Families often have multiple computers. Parents may work from home and use their personal computer for paying bills, applying for jobs, doing taxes, budgeting, or applying for government services, while children may use their computers for doing schoolwork, research, playing games. Everyone uses their computers and devices for communications. However, none of these tasks (besides playing games) has markedly improved or been made more efficient by the technological advances in the computers themselves.
It turns out that they use a "quality adjustment" that takes into account the relative performance of a modern computer compared to previous years. The bulk of the 300-fold decrease in price is due to the fact that modern computers are many times faster than those made in the 1990's. But there's a problem with that: a consumer doesn't get hundreds of times more utility out of a computer. You can't have a hundred people in your house sit there and work on the same computer and achieve the productivity scaling which would warrant this adjustment.
In reality, you're paying for one computer an amount which is nominally within an order of magnitude of what you would have paid in 1997. So this adjustment has the effect of drastically skewing the CPI statistic in this sector. Furthermore, computers have only grown in importance. What was a luxury in 1997 has become a necessity today. Families often have multiple computers. Parents may work from home and use their personal computer for paying bills, applying for jobs, doing taxes, budgeting, or applying for government services, while children may use their computers for doing schoolwork, research, playing games. Everyone uses their computers and devices for communications. However, none of these tasks (besides playing games) has markedly improved or been made more efficient by the technological advances in the computers themselves.
In practice, the way the poor live is to always look for a used, refurbished, or pre-owned option.
So while if you buy new you can't get very much computer, if you buy a bunch of junkers, you can get enough to get by. But they have to be in a sweet spot of "old enough" to have depressed price and "new enough" to not be useless for current applications. This was actually a problem during the 2010's long reign of Intel, because they didn't add a lot of generational performance improvement, so old systems retained their price for longer. Since other architectures have caught up on leading performance, pricing has finally started discounting these older CPUs again.
Still, it's not a 300-fold difference and the bottommost price brackets tend to need a DIY approach. But it's definitely more feasible than 1997.
So while if you buy new you can't get very much computer, if you buy a bunch of junkers, you can get enough to get by. But they have to be in a sweet spot of "old enough" to have depressed price and "new enough" to not be useless for current applications. This was actually a problem during the 2010's long reign of Intel, because they didn't add a lot of generational performance improvement, so old systems retained their price for longer. Since other architectures have caught up on leading performance, pricing has finally started discounting these older CPUs again.
Still, it's not a 300-fold difference and the bottommost price brackets tend to need a DIY approach. But it's definitely more feasible than 1997.
Your numbers don't take into the age bands (you include older, wealthier families).
However, the comparing CPI to inflation adjusted incomes (as the article does) doesn't work either. Clearer explanation of the error I think the article made (and that I think you're pointing out):
For the sake of argument, say CPI is always proportional to income (which it would be if purchasing power was constant). To make arithmetic easy, say the CPI and median nominal income were both 1 in 1970, and are now both 8.
The inflation adjusted income in 1970 would be 8. (If we assume CPI moves with inflation, we multiply the 1970 median income by the ratio of 2022 CPI / 1970 CPI.)
So, by the author's calculations, a median family would have had 8 units of purchasing power in 1970, but only 1 unit of purchasing power in 2022, even though, by construction, CPI and nominal income went up in lockstep, and real purchasing power should be the same.
However, the comparing CPI to inflation adjusted incomes (as the article does) doesn't work either. Clearer explanation of the error I think the article made (and that I think you're pointing out):
For the sake of argument, say CPI is always proportional to income (which it would be if purchasing power was constant). To make arithmetic easy, say the CPI and median nominal income were both 1 in 1970, and are now both 8.
The inflation adjusted income in 1970 would be 8. (If we assume CPI moves with inflation, we multiply the 1970 median income by the ratio of 2022 CPI / 1970 CPI.)
So, by the author's calculations, a median family would have had 8 units of purchasing power in 1970, but only 1 unit of purchasing power in 2022, even though, by construction, CPI and nominal income went up in lockstep, and real purchasing power should be the same.
The original article was not based on incomes in any age ranges either. If they had wanted to do a more rigorous analysis, they would have compared say, 18-34 year olds in 1970 and today.
Anyway, the point is the first half of the article is fundamentally mistaken, There are ways to do more interesting analyses, but this one was mostly incoherent.
Anyway, the point is the first half of the article is fundamentally mistaken, There are ways to do more interesting analyses, but this one was mostly incoherent.
This one's a whopper. The annual salary in the first graph is adjusted for inflation, while the CPI is not adjusted for inflation. Rather the CPI is how inflation is calculated.
Wildly misleading.
Wildly misleading.
I've lost quite a bit of respect for some of the HN community here - this should be obviously wrong, we obviously aren't buying 86% less today than we were in the past.
The title's premise is so outlandish it deserves at least a little bit of critical thought... But because it confirms some previous biases (even if at a completely different and more extreme scale), more than I expected are acting as if this is true.
The title's premise is so outlandish it deserves at least a little bit of critical thought... But because it confirms some previous biases (even if at a completely different and more extreme scale), more than I expected are acting as if this is true.
Why should hackers have any idea about economics? Not everyone can be a subject matter expert on everything, and it's easy to be swayed on topics like this where emotions run high (rightly so) and anecdotal evidence is everywhere.
As for the actual number being outlandish, I don't think most people have a sense of what "86% less purchasing power" even means. People see "<surprisingly big number> + less purchasing power" and that gets the eyeballs. "Hackers" are just as susceptible to this as any other non-experts.
Plus, plenty of people here do know what they're talking about, enough to call out the obvious problems in the article and charts.
As for the actual number being outlandish, I don't think most people have a sense of what "86% less purchasing power" even means. People see "<surprisingly big number> + less purchasing power" and that gets the eyeballs. "Hackers" are just as susceptible to this as any other non-experts.
Plus, plenty of people here do know what they're talking about, enough to call out the obvious problems in the article and charts.
There have been methodology changes between 1970 and today.
Okay but two wrongs don't make a right. If there were actually methodology changes that caused CPI to be not representative of purchasing power then accounting for CPI twice doesn't really fix anything, it just adds more noise into the result. To do it properly you need to explain what the methodology changes were, estimate their impact on the "real" CPI, and use your revised CPI to account for inflation. The author hasn't done that, so it's far more likely she has no idea what she's doing.
I don’t know if you’re thinking of it but there’s this site called shadowstats which claims to calculate CPI/inflation with the old method and shows totally wild inflation numbers but the way it actually works is that the guy who runs the site takes regular CPI and adds in adjustments to his liking to get inflation numbers that he thinks look right.
My understanding is that you get pretty similar numbers with either methodology.
See more here for example: https://fullstackeconomics.com/no-the-real-inflation-rate-is...
My understanding is that you get pretty similar numbers with either methodology.
See more here for example: https://fullstackeconomics.com/no-the-real-inflation-rate-is...
That doesn't make any difference; any methodological differences are just swamped by the erroneous double application of the price deflator in the comparison.
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One of the items this article doesn't cover is healthcare spending, which has increased between 2 and 8 times since 1980 (depending on whether you're looking at individual spending or share of GDP). Here's a decent collection of charts: https://www.healthsystemtracker.org/chart-collection/u-s-spe...
It has been shocking to me to see how cheap and effective healthcare can be in other countries, from an emergency visit to the hospital (in the US: I got a $50k bill for one emergency surgery) to an eye test and new pair of glasses (US costs running $500-$1000, although startups have chipped away at this). In the US, healthcare is effectively a collection of cartels -- an enormous parasite that will be nearly impossible to rip off our soft underbelly.
It has been shocking to me to see how cheap and effective healthcare can be in other countries, from an emergency visit to the hospital (in the US: I got a $50k bill for one emergency surgery) to an eye test and new pair of glasses (US costs running $500-$1000, although startups have chipped away at this). In the US, healthcare is effectively a collection of cartels -- an enormous parasite that will be nearly impossible to rip off our soft underbelly.
I've heard this so often yet we left the UK for no other reason than the healthcare. My wife was pregnant and the experience from 0-7 months was so terrible, we flew to the US to have the child.
Post-operative outcomes and survival rates in the US are far better than in the UK and many European countries. Statistics about better birth outcomes or higher longevity is best attributed to healthier lifestyles in Europe/UK and to lower stress (shorter work weeks, etc).
While healthcare in the US can be very expensive, we paid 8k GBP for our NHS immigration surcharge and an additional 5k GBP in NHS-specific taxes (for 2 people, 1 year). A 1k/m health plan in the US (for two of us at the time) gave us 10x better health care.
Yet Americans and Brits alike sing the praises of the NHS vs US healthcare. I chalk it up to shoddy journalism and folklore.
Post-operative outcomes and survival rates in the US are far better than in the UK and many European countries. Statistics about better birth outcomes or higher longevity is best attributed to healthier lifestyles in Europe/UK and to lower stress (shorter work weeks, etc).
While healthcare in the US can be very expensive, we paid 8k GBP for our NHS immigration surcharge and an additional 5k GBP in NHS-specific taxes (for 2 people, 1 year). A 1k/m health plan in the US (for two of us at the time) gave us 10x better health care.
Yet Americans and Brits alike sing the praises of the NHS vs US healthcare. I chalk it up to shoddy journalism and folklore.
I don't think anyone disputes that us healthcare is better if you have the money.
So then healthcare in the US isn't "worse", it's only worse on average. Why would the people with money ever want to change the status quo?
Because in most democracies the median is what you optimize for, not the extremes, since poor and rich alike only get 1 vote each.
Additionally there are knock-on effects where lack ofgood average healthcare tends to reduce ecconomic efficiency as sick people are bad at working.
Additionally there are knock-on effects where lack ofgood average healthcare tends to reduce ecconomic efficiency as sick people are bad at working.
then you can understand why those of us with better healthcare and money don't want to take a downgrade to a "universal" system that is better for ppl with no money but worse for others. most middle class ppl in America have decent healthcare as a job benefit so most of us don't want to change. this is why "if you like your doctor you can keep them" was an essential talking point for passing obamacare.
Do you actually like having your health insurance tied to your employment?
To me it would be a huge worry if I lost a job and needed healthcare.
To me it would be a huge worry if I lost a job and needed healthcare.
no. but i would rather good healthcare tied to employment then mediocre healthcare that's not. it doesn't seem like other countries have been able to achieve good healthcare not tied to employment so i think it's better to focus on liberalizing the market.
btw it was the ridiculous wage and price controls that led to employers adding healthcare as a benefit... so doesnt seem like more government gonna fix it.
btw it was the ridiculous wage and price controls that led to employers adding healthcare as a benefit... so doesnt seem like more government gonna fix it.
I have both in the UK. There's the NHS when I need it, but I also have private medical insurance to top it up. I don't worry if I lose my job, I just won't have the shiniest hospitals with flowers in reception, and I'll have longer waiting times.
The quality of the medical care itself (once you get it - there are long waiting lists in the NHS now due to Covid) is really about the same.
The quality of the medical care itself (once you get it - there are long waiting lists in the NHS now due to Covid) is really about the same.
We looked at Bupa. Is that what you have to supplement? We're earnestly interested in coming back to the UK. But our fear is having more children. It didn't seem like private made a difference in that case.
I had an inexplicable leg I couldn't walk on. I paid for all my x-rays and MRIs after waiting for the NHS for 6 months. If some 500 GBP supplement fixes these problems, that'd be great. As I understand, private health care in the UK is more for bedside manner and responsive GP phone calls than for anything substantial. But I'm selfishly interested in being wrong.
I had an inexplicable leg I couldn't walk on. I paid for all my x-rays and MRIs after waiting for the NHS for 6 months. If some 500 GBP supplement fixes these problems, that'd be great. As I understand, private health care in the UK is more for bedside manner and responsive GP phone calls than for anything substantial. But I'm selfishly interested in being wrong.
According to GP it’s the same price as the UK.
IHS is £624/yr, and what do you mean by NHS-specific tax?
Overall, I probably pay more towards the NHS than I would for healthcare in the US, because I'm a comparatively high earner, and that's the nature of progressive taxation. The NHS seems fairly good value for money, however, although I think that may be due to how much we underpay nurses and doctors.
I'm sorry you had a bad experience. Many people do, and the service's deficiencies are widely publicised domestically. Even at its best, the service has always been a bit rough around the edges - not like the beautiful hospitals with friendly service that you often get by going private.
However, what people like so much about the NHS here is the universality and lack of barriers to access. If you're sick, you just walk in and get treatment - doesn't matter who you are, no charges, no paperwork, no insurance or anything else. Unfortunately, even accessing care is becoming more difficult in recent years. Increasingly people I know are relying on private insurance or self funding to get treatment in a reasonable timeframe.
Overall, I probably pay more towards the NHS than I would for healthcare in the US, because I'm a comparatively high earner, and that's the nature of progressive taxation. The NHS seems fairly good value for money, however, although I think that may be due to how much we underpay nurses and doctors.
I'm sorry you had a bad experience. Many people do, and the service's deficiencies are widely publicised domestically. Even at its best, the service has always been a bit rough around the edges - not like the beautiful hospitals with friendly service that you often get by going private.
However, what people like so much about the NHS here is the universality and lack of barriers to access. If you're sick, you just walk in and get treatment - doesn't matter who you are, no charges, no paperwork, no insurance or anything else. Unfortunately, even accessing care is becoming more difficult in recent years. Increasingly people I know are relying on private insurance or self funding to get treatment in a reasonable timeframe.
You're very lucky! Where can I find a plan that costs $1k/mo in the US for 2 people and I assume you got kids as well.
Is it paid fully by you or does your employer contribute to it? If your employer contributes, how much would it cost you if you leave the job?
I assume the $1k/mo is only premiums. How much do you pay for deductibles and copays?
Does your insurance cover 100% of your medical bills when you meet your deductibles? Or are you still on the hook for 20% of it?
What happens if one day you lose everything, and you can no longer pay the monthly premiums?
Is it paid fully by you or does your employer contribute to it? If your employer contributes, how much would it cost you if you leave the job?
I assume the $1k/mo is only premiums. How much do you pay for deductibles and copays?
Does your insurance cover 100% of your medical bills when you meet your deductibles? Or are you still on the hook for 20% of it?
What happens if one day you lose everything, and you can no longer pay the monthly premiums?
Really it's $1.2k for two of us. $600 a piece. CO. I pull $80k out of a C-Corp and my wife is unemployed so there's a small tax refund. Deductible is $500 for me, $0 for my wife. Our kid has changed that equation.
To answer your last question, if we can no longer pay monthly premiums, then Medicaid exists. The difficulties likely mirror the difficulties with the NHS.
You bring up great points but having experienced both, I'd still go with US healthcare 10 times of 10. It really is *that bad* -- maybe NHS was great back in the day but when we got back stateside US care felt like an oasis in the desert.
To answer your last question, if we can no longer pay monthly premiums, then Medicaid exists. The difficulties likely mirror the difficulties with the NHS.
You bring up great points but having experienced both, I'd still go with US healthcare 10 times of 10. It really is *that bad* -- maybe NHS was great back in the day but when we got back stateside US care felt like an oasis in the desert.
Healthcare in the US is hilarious. I got a bill when Border Patrol forcefully took me to the hospital to "search" me, despite not consenting to the search and them having no warrant or court order at the time care was rendered.
That's right, you can be billed in the US if you never consented to have care, refused to even go to the hospital, no psych hold was in place, never had any emergency at all, and some healthcare workers touched you against your will without a court order nor being under arrest. I complaint to the state nursing board and they said this is all good and dandy.
Name one other country where you can bill care to someone who refused it while being psychologically stable and being alert and oriented to deny consent, and no court authorized the treatment.
That's right, you can be billed in the US if you never consented to have care, refused to even go to the hospital, no psych hold was in place, never had any emergency at all, and some healthcare workers touched you against your will without a court order nor being under arrest. I complaint to the state nursing board and they said this is all good and dandy.
Name one other country where you can bill care to someone who refused it while being psychologically stable and being alert and oriented to deny consent, and no court authorized the treatment.
> In the US, healthcare is effectively a collection of cartels
Not just in the US. For example there's a huge glasses cartel in France with specialists that are protected by the government and make pairs of glasses cost 500~1000 USD with very little reimbursement, while in Japan private companies (that actually compete against each other's) let you have glasses for 60~70 USD all included. You are literally better off flying to Japan from France to shop for eyewear.
Not just in the US. For example there's a huge glasses cartel in France with specialists that are protected by the government and make pairs of glasses cost 500~1000 USD with very little reimbursement, while in Japan private companies (that actually compete against each other's) let you have glasses for 60~70 USD all included. You are literally better off flying to Japan from France to shop for eyewear.
Things have improved significantly over the past few decades. Once you have a prescription, you can independently buy your glasses from a discount seller or on the Internet. Most opticians also offer very decent pairs that are fully covered by social security, or that cost €1. The pain point these days is getting that prescription renewed.
I don't know how much things have changed, but in 2008 I bought my first pair of glasses in France, and had to leave the store to get some cash because they had a 10 euro minimum. I lost my prescription sunglasses a few months ago and got a replacement for $700 _after_ insurance. The frame was $150, so not outrageous.
I recently bought a pair of prescription sunglasses and I had to pay almost 35 000 yen, about 250 USD or EUR at the current exchange rate, the same I paid for the previous ones in Spain 5 years ago. I would love to know where I can get them for a quarter the price!
Might be tricky if you don’t speak Japanese though. Do they have multilingual optometrists that cater to tourists? I suppose Tokyo is big enough you can probably find one of anything.
French people are rich enough to be proficient English speakers, as are people in Tokyo. Seems like it'll probably work out.
I spent about a week in Japan, split between Tokyo and Nagasaki, and had no problem, having not even tried to learn any Japanese, except that I couldn't get the right train stop because I couldn't even recognize the characters, much less read them.
I spent about a week in Japan, split between Tokyo and Nagasaki, and had no problem, having not even tried to learn any Japanese, except that I couldn't get the right train stop because I couldn't even recognize the characters, much less read them.
Apparently Japan has fewer bilingual citizens than even the USA.
> than even the USA.
The US has a lot of immigrants, so I wouldn't count it as a country with a low percentage of bilinguals.
The US has a lot of immigrants, so I wouldn't count it as a country with a low percentage of bilinguals.
Citizens?
Yes. As of 2020 nearly half of immigrants in the USA are citizens according to Pew Research[0]
0- https://www.pewresearch.org/fact-tank/2020/08/20/key-finding...
0- https://www.pewresearch.org/fact-tank/2020/08/20/key-finding...
So about 6% of Americans are immigrants
The ability to speak English is a function of wealth? Sorry, what?
I'm not sure how much it would cost to hire a translator for an hour or two, but you'd probably still come out ahead.
Is the eye chart in kanji? That’d be tough to translate.
I was thinking more that optometry appointments usually include medical testing (the "air puff" test for glaucoma etc.) and may turn up issues that you need to be informed of. A machine translator or a friend who speaks both languages conversationally may not be sufficient to translate complex medical terminology.
I'm not sure what you'd do about the eye chart. I don't know about optometry but I would imagine you can't just print off a poster of an English-language eye chart and use that, I always figured they'd be calibrated for a certain size, resolution, and the distance from the vision test machine taken into account.
As you suggest, given the number of western tourists to Japan I'm sure there'd be some subset of optometrists who are set up for English-language patients.
I'm not sure what you'd do about the eye chart. I don't know about optometry but I would imagine you can't just print off a poster of an English-language eye chart and use that, I always figured they'd be calibrated for a certain size, resolution, and the distance from the vision test machine taken into account.
As you suggest, given the number of western tourists to Japan I'm sure there'd be some subset of optometrists who are set up for English-language patients.
I paid $97 in the US for my last optometrist visit to get a prescription at Costco, and about $50 for (ehem) "transition" lens glasses from zenni.com.
according to the stats it is true that in France glasses and lenses are expensive, but not that expensive as you claim.
It's between 50 and 250 euros, depending on the brand.
For a pair of Prada or Louis Vuitton sunglasses you can easily spend 350-500 euros, but luxury brands are expensive by definition.
Anyway you pay for glasses and lenses once and then you're good for years.
It's between 50 and 250 euros, depending on the brand.
For a pair of Prada or Louis Vuitton sunglasses you can easily spend 350-500 euros, but luxury brands are expensive by definition.
Anyway you pay for glasses and lenses once and then you're good for years.
I took a sabbatical month between jobs, living in a (somewhat cushy) emergency fund, and while we were traveling my partner got sick with something and had to be rushed to a hospital. I called an ambulance at 7AM, and by noon she was back in bed, medicated and feeling much better. We didn’t spend a single dime, not even on the medication, and it’s crazy to me to think that if we were in the US that experience would’ve basically bankrupt us for no reason other than bad timing.
It’s in these moments that the fact that I’ve paid an absurd amount in taxes over the years just… disappears.
It’s in these moments that the fact that I’ve paid an absurd amount in taxes over the years just… disappears.
I always see the healthcare cost to consumer compared to other countries, but that isn't the true cost to society if the govt is subsidizing the rest. AFAIK the US healthcare is still truly more costly. Monopolies or something, idk.
The US government spends more on healthcare per capita than any other OECD nation. We are just being robbed.
Americans also consume a lot more healthcare. And doctors and nurses earn 2x more than in other countries. An NHS nurse makes something like $33k a year. In the US it's going to be $60-70k before overtime.
I'd be curious to see what portion of US health care goes to salaries of licensed health care workers, and how the relates to labor costs of various middle men and administrators, as well as regulatory compliance people.
Administration costs have gone something like 4x since 1980. The specific share they take is probably dependent on the niche, but like universities, a huge portion of cost is siphoned away to paper pushing.
When you go to the doctor ask them if they think they are making more or less than your deductible for the visit.
The only time I've seen a doctor since I've been responsible for health insurance was when the police took me there in handcuffs against my will and without a court order or any legal basis. Obviously on that occasion I refused to provide insurance. I've never been to the doctor voluntarily as an independent adult or paid a deductible for my healthcare. Can you explain how the deductible relates and is useful for figuring doctor's pay?
When you see a doctor when you have insurance you have to pay an out of pocket fee. Because economics teaches us that patients needs skin in the game otherwise people will abuse 'free healthcare'. This makes total sense if you're an economist. Because well if you are an economist you are an extremely stupid person.
Now if you're an accountant you'd take 20 patients a day X 250 working days a year X $50 and get $250,000. Which is close or more than a doctors take home.
Now if you're an accountant you'd take 20 patients a day X 250 working days a year X $50 and get $250,000. Which is close or more than a doctors take home.
That still mixes a lot of factors in, including how often people need care and what kind of care is provided. Better to compare the same procedure/drug/etc in the US vs elsewhere. I think in the US it's usually more costly that way, especially when it comes to drugs.
> healthcare per capita than any other OECD nation.
You also need to mention that the US is not like any other OECD nation. It also happens to he the nation with the largest innovation in Healthcare, and not just by a little. By Far.
You also need to mention that the US is not like any other OECD nation. It also happens to he the nation with the largest innovation in Healthcare, and not just by a little. By Far.
Yep! Innovative billing practices, and innovative marketing!
Actual R&D is a distant second. https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p...
Actual R&D is a distant second. https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p...
there's no discernible innovation in healthcare, at least if you go by any actual metric that would indicate that. Life expectancy in Cuba is higher than in the US, infant mortality in the US is higher than in any peer country, drug death rates are higher than in most if not all comparable nations, and so on.
The pharmaceutical industry might produce innovations concerning some rare diseases or whatever, but there's no discernible reason why that is, or should be paid for by the public healthcare sector.
The pharmaceutical industry might produce innovations concerning some rare diseases or whatever, but there's no discernible reason why that is, or should be paid for by the public healthcare sector.
> infant mortality
You have to be careful with statistics like that. I did some research on that a few years ago. Different countries define infant mortality differently. Other countries would classify many failed pregnancies as a miscarriage that the US classifies as infant mortality, for example. This is because the US is very aggressive at trying to save premature babies.
You have to be careful with statistics like that. I did some research on that a few years ago. Different countries define infant mortality differently. Other countries would classify many failed pregnancies as a miscarriage that the US classifies as infant mortality, for example. This is because the US is very aggressive at trying to save premature babies.
Is your theory that medical research and innovation is why it's so outrageously expensive to get stitches to close a wound?
The expense comes from the cost of poor people getting free emergency room treatment getting passed on to the paying customers.
No, it doesn't.
https://link.springer.com/article/10.1007/s11606-020-06147-9
> The overall mean for charity care as percent of total expenses was 2.62% for for-profit hospitals compared with 2.95% for nonprofit hospitals...
https://link.springer.com/article/10.1007/s11606-020-06147-9
> The overall mean for charity care as percent of total expenses was 2.62% for for-profit hospitals compared with 2.95% for nonprofit hospitals...
That's total expenses, not emergency room expenses.
Yes, and much of that small, single-digit percentage of charity hospital expenses will be that sort of care. It's a rounding error on their books. Stitches are costly whether you're in the ER or in the ICU after surgery. Forcing poor folks to rely on the ER for treatment is silly, and needlessly expensive, but it's hardly the primary driver of healthcare cost rises.
Which is heavily paid for by taxpayer-funded research, so Americans are paying for it on both sides.
Heavily is something of a stretch: the NIH is a fairly small part ($40B) of the federal budget ($1,600B discretionary + another $4,000 mandatory spending).
It's about 0.5% of the total budget, which works out to about a dollar a week for the average taxpayer. On top of that R&D spending has a huge multiplier: a lot of that money supports small, high-tech businesses, which in turn hire people...etc
It's about 0.5% of the total budget, which works out to about a dollar a week for the average taxpayer. On top of that R&D spending has a huge multiplier: a lot of that money supports small, high-tech businesses, which in turn hire people...etc
I never claimed it was a huge part of the federal budget, only that NIH and NSF provide a large fraction of basic science research. It’s always tricky tracing that to actual treatments but the drug companies tend to fund development of promising candidates from taxpayer-funded basic research more than doing that basic science themselves, and a lot of their R&D goes to tweaking existing drugs which might make them more effective/convenient but definitely protects the company’s margin against generics.
The US federal government also spends more per capita on healthcare than almost every other nation.
Median after tax income per capita in the U.S. is really high as well, almost at the top.
Less so after you correct for all of the things which we have to pay for out of pocket: health insurance, copays, drugs, etc. but also things like education, childcare, retirement, transportation, and often housing. I’ve known a number of people from Europe or Asia and all of them commented on how they thought they’d be making more here based on the raw income numbers, and how much more stressful it was here because you had to do more work yourself to get the same or lesser quality.
A lot of those things are based on life circumstances. If you have a large family in a major metropolitan area making the median income then yeah you might be worse off.
If you are a tech worker in a small city or town then it can be quite lucrative. You have a lot of control over these variables, especially when younger.
If you are a tech worker in a small city or town then it can be quite lucrative. You have a lot of control over these variables, especially when younger.
>Less so after you correct for all of the things which we have to pay for out of pocket: health insurance, copays, drugs, etc. but also things like education, childcare, retirement, transportation, and often housing.
You end up paying for those things in other countries where you're provided them but not directly charged for it. The difference is in the USA for most of those if you don't pay you simply don't get the service, while in other countries you get the service but the tax-man may come and put you in jail if you don't pay for them. It's an individual choice but I prefer getting to pick (at least a little bit) how to spend that money personally rather than the government entirely deciding for me, although I can see how someone coming from a place where government does all that would find it uncomfortable.
You end up paying for those things in other countries where you're provided them but not directly charged for it. The difference is in the USA for most of those if you don't pay you simply don't get the service, while in other countries you get the service but the tax-man may come and put you in jail if you don't pay for them. It's an individual choice but I prefer getting to pick (at least a little bit) how to spend that money personally rather than the government entirely deciding for me, although I can see how someone coming from a place where government does all that would find it uncomfortable.
But that’s the point: you’re already paying more in taxes for healthcare than anyone else in the world, and then you’re paying again to an insurance company. You’re literally paying twice.
So I buy health insurance and save money however I choose for later expenses. I don't see how it's easier or less stressful to bring the government into that loop, unless I don't care at all.
It’s all the stuff you left out: for example, you’re spending on average 2-3 times more so you’re probably not actually saving more.
Finding providers will require you to spend a lot of time finding doctors, dentists, specialists, etc. who you like, accept your insurance, and are accepting patients. Often the intersection of those things requires substantial travel to areas without transit so how that whatever medical needs you develop don’t preclude driving.
If you did have any real medical needs - even common life events like an uncomplicated natural pregnancy – you’ll need to have tens to hundreds of thousands of dollars saved to avoid needing to negotiate a payment plan. That’s even more pricey if you need medication or care for an ongoing basis.
Because the doctors are for-profit, you’re going to be steered towards unnecessary services and you’ll need to review every bill to make sure only things you approved are listed - hospitals are notorious for having some random out-of-network specialist pop in for 30 seconds to add $15k to your bill.
Because your insurance company is for-profit, be prepared to need to escalate or threaten to sue to have necessary treatment authorized. Your doctor’s medical expertise is secondary to Fred in claims processing, hope whatever you have doesn’t get worse in the meantime!
Also because your doctor and insurance company are for-profit, expect either of them to stop doing business with the other any time it’s more profitable. There’s no guarantee that anyone in-network will be available in your area and you’ll likely need to haggle to get permission to go out of network.
None of that is great to deal with while your family is caring for someone with whatever issues need testing and it’s made even more fun by the knowledge that almost nobody in what you’d consider a peer country has to deal with anything like that much hassle.
Finding providers will require you to spend a lot of time finding doctors, dentists, specialists, etc. who you like, accept your insurance, and are accepting patients. Often the intersection of those things requires substantial travel to areas without transit so how that whatever medical needs you develop don’t preclude driving.
If you did have any real medical needs - even common life events like an uncomplicated natural pregnancy – you’ll need to have tens to hundreds of thousands of dollars saved to avoid needing to negotiate a payment plan. That’s even more pricey if you need medication or care for an ongoing basis.
Because the doctors are for-profit, you’re going to be steered towards unnecessary services and you’ll need to review every bill to make sure only things you approved are listed - hospitals are notorious for having some random out-of-network specialist pop in for 30 seconds to add $15k to your bill.
Because your insurance company is for-profit, be prepared to need to escalate or threaten to sue to have necessary treatment authorized. Your doctor’s medical expertise is secondary to Fred in claims processing, hope whatever you have doesn’t get worse in the meantime!
Also because your doctor and insurance company are for-profit, expect either of them to stop doing business with the other any time it’s more profitable. There’s no guarantee that anyone in-network will be available in your area and you’ll likely need to haggle to get permission to go out of network.
None of that is great to deal with while your family is caring for someone with whatever issues need testing and it’s made even more fun by the knowledge that almost nobody in what you’d consider a peer country has to deal with anything like that much hassle.
> It’s all the stuff you left out: for example, you’re spending on average 2-3 times more so you’re probably not actually saving more.
What I spend on health insurance is far less than the difference in pay I'd get working in a peer country as a SWE, even if ignoring the difference in taxes. I'm not saving up tens of thousands of dollars for common life events; it's covered.
And the opportunities are better here. My family members and friends from Iran and Lebanon tell each other, France or Germany is better if you want to sit on an entry-level job (which some do), US is better if you're ambitious. There's a real brain drain.
What I spend on health insurance is far less than the difference in pay I'd get working in a peer country as a SWE, even if ignoring the difference in taxes. I'm not saving up tens of thousands of dollars for common life events; it's covered.
And the opportunities are better here. My family members and friends from Iran and Lebanon tell each other, France or Germany is better if you want to sit on an entry-level job (which some do), US is better if you're ambitious. There's a real brain drain.
[deleted]
It actually just is, if we're talking about purchasing power of an individual, which is pretty much the only thing the average person cares about
It matters when you're talking about policy. Subsidizing healtchare doesn't fix the problem of anticompetitive behavior among the suppliers, or pushing unnecessary treatment/drugs.
Not saying that healthcare spending isn't an issue, but it doesn't seem like a major contributor to the problem of gen Z being poor. They're not exactly at the age where most of them are racking up huge healthcare bills from chronic illnesses.
Their salaries are suppressed by the cost of insurance premiums, typically paid by their employer.
This is all true, but I am guessing the article skipped it because rising healthcare costs likely impact Gen Z much less than the population overall.
Obamacare has allowed children to stay on their parent's insurance for much longer. All of Gen Z is still young enough to qualify for that, so as a generation they haven't felt the full cost of seeking insurance independently. Plus the overturning of the personal mandate means young people are once again free to simply not get insurance which is often a bad decision overall, but can end up saving a healthy young adult some money.
There is still something very wrong with the healthcare system in the US, it just isn't a problem that has hit Gen Z particularly hard yet.
Obamacare has allowed children to stay on their parent's insurance for much longer. All of Gen Z is still young enough to qualify for that, so as a generation they haven't felt the full cost of seeking insurance independently. Plus the overturning of the personal mandate means young people are once again free to simply not get insurance which is often a bad decision overall, but can end up saving a healthy young adult some money.
There is still something very wrong with the healthcare system in the US, it just isn't a problem that has hit Gen Z particularly hard yet.
> There is still something very wrong with the healthcare system in the US
Government interference with the free market.
Government interference with the free market.
Is there a country you would point to as a good model for free market healthcare? Because healthcare seems like a market prone to be abused by market forces because the demand for it is often inelastic.
For example, the free market price for insulin is basically infinite because type 1 diabetics need a constant supply of it or else they die. Judging by the price of insulin in the US compared to our peer nations, it seems like the US's problem is too free of a market rather than it being too restricted.
For example, the free market price for insulin is basically infinite because type 1 diabetics need a constant supply of it or else they die. Judging by the price of insulin in the US compared to our peer nations, it seems like the US's problem is too free of a market rather than it being too restricted.
>For example, the free market price for insulin is basically infinite because type 1 diabetics need a constant supply of it or else they die.
I've been to places in the Philippines where all available water is either on private property or being sold by private vendors. The price of water did not go to infinity, in fact you could buy a 1L bottle for something like 10 pesos, which is like $0.20. I'm not so sure a free market for necessities results in infinite price. If the price were truly near-infinite the entire economy of workers and capital would flock to it in seek of infinite profits and competition would become fierce.
I've been to places in the Philippines where all available water is either on private property or being sold by private vendors. The price of water did not go to infinity, in fact you could buy a 1L bottle for something like 10 pesos, which is like $0.20. I'm not so sure a free market for necessities results in infinite price. If the price were truly near-infinite the entire economy of workers and capital would flock to it in seek of infinite profits and competition would become fierce.
>I've been to places in the Philippines where all available water is either on private property or being sold by private vendors. The price of water did not go to infinity, in fact you could buy a 1L bottle for something like 10 pesos, which is like $0.20.
The "basically" there was meant to show that I was being somewhat facetious. There are of course other factors at play. First the supplier wants to maximize profit and not price. The highest price doesn't necessarily yield the highest profit if it prices some people out of the market. Also a small group can't maintain a monopoly over a necessity required by a large group without facing a literal revolt. However when the group being taken advantage of is small, resistance becomes much more difficult to achieve. It is a lot easier to oppress the 0.5% of the population that is a type 1 diabetic than the 100% of the population that needs water.
>If the price were truly near-infinite the entire economy of workers and capital would flock to it in seek of infinite profits and competition would become fierce.
This would depend on some basic Economics 101 assumptions being true such as a commodity product in an industry with low barrier to entry and no economies of scale. Those assumptions rarely hold in the real world, especially in healthcare.
The "basically" there was meant to show that I was being somewhat facetious. There are of course other factors at play. First the supplier wants to maximize profit and not price. The highest price doesn't necessarily yield the highest profit if it prices some people out of the market. Also a small group can't maintain a monopoly over a necessity required by a large group without facing a literal revolt. However when the group being taken advantage of is small, resistance becomes much more difficult to achieve. It is a lot easier to oppress the 0.5% of the population that is a type 1 diabetic than the 100% of the population that needs water.
>If the price were truly near-infinite the entire economy of workers and capital would flock to it in seek of infinite profits and competition would become fierce.
This would depend on some basic Economics 101 assumptions being true such as a commodity product in an industry with low barrier to entry and no economies of scale. Those assumptions rarely hold in the real world, especially in healthcare.
In insulin sales the biggest barriers are regulatory. I thought you were talking about the free market, not the regulated market.
That leads to the same question I asked in the other comment chain. If you think the costs of the US healthcare are caused by the market being too regulated, doesn't that imply that you think cheaper markets are freer markets? Would you say that almost all of our peer nations take a more free market approach to healthcare than the US?
> If you think the costs of the US healthcare are caused by the market being too regulated
Yes
>doesn't that imply that you think cheaper markets are freer markets?
No. Example: You could imprison slaves and pick cotton, that doesn't mean the cheaper cotton is result of a free market, because it is predicated on force rather than voluntary exchange.
>Would you say that almost all of our peer nations take a more free market approach to healthcare than the US?
An interesting question. Possibly yes, possibly no, but forcing the tax for it under the gun of the tax man is a big strike against it being a free market, in any nation that taxes universally for it. I would have to contrast that against the gun of the regulator in the US effectively forcing the provider and consumer to follow their onerous constraints. One could make the argument that an otherwise unregulated but universal healthcare system might be considered a freer market, but I don't know enough about these other nations to say which ones that may be.
Yes
>doesn't that imply that you think cheaper markets are freer markets?
No. Example: You could imprison slaves and pick cotton, that doesn't mean the cheaper cotton is result of a free market, because it is predicated on force rather than voluntary exchange.
>Would you say that almost all of our peer nations take a more free market approach to healthcare than the US?
An interesting question. Possibly yes, possibly no, but forcing the tax for it under the gun of the tax man is a big strike against it being a free market, in any nation that taxes universally for it. I would have to contrast that against the gun of the regulator in the US effectively forcing the provider and consumer to follow their onerous constraints. One could make the argument that an otherwise unregulated but universal healthcare system might be considered a freer market, but I don't know enough about these other nations to say which ones that may be.
> You could imprison slaves and pick cotton, that doesn't mean the cheaper cotton is result of a free market, because it is predicated on force rather than voluntary exchange.
Isn't regulation against slavery inherently a restriction of a free market? There is obviously violent coercion baked into it, but from an economic perspective, it is basically an elimination of minimum wage which is an artificial limitation on the market.
> Possibly yes, possibly no, but forcing the tax for it under the gun of the tax man is a big strike against it being a free market, in any nation that taxes universally for it. I would have to contrast that against the gun of the regulator in the US effectively forcing the provider and consumer to follow their onerous constraints. One could make the argument that an otherwise unregulated but universal healthcare system might be considered a freer market, but I don't know enough about these other nations to say which ones that may be.
But whether the funding comes from public or private sources is not what most defines a free market. That comes from competition between buyers and sellers. I view US healthcare as more free market because buyers aren't nearly as limited. Many other countries restrict the market by centralizing purchasing through the government. This distortion of the free market gives the buyers more power which can result in lower negotiated prices. It isn't that healthcare markets in other countries are less regulated that makes them cheaper. It is that they are regulated in specific ways to make sure they are cheaper.
Isn't regulation against slavery inherently a restriction of a free market? There is obviously violent coercion baked into it, but from an economic perspective, it is basically an elimination of minimum wage which is an artificial limitation on the market.
> Possibly yes, possibly no, but forcing the tax for it under the gun of the tax man is a big strike against it being a free market, in any nation that taxes universally for it. I would have to contrast that against the gun of the regulator in the US effectively forcing the provider and consumer to follow their onerous constraints. One could make the argument that an otherwise unregulated but universal healthcare system might be considered a freer market, but I don't know enough about these other nations to say which ones that may be.
But whether the funding comes from public or private sources is not what most defines a free market. That comes from competition between buyers and sellers. I view US healthcare as more free market because buyers aren't nearly as limited. Many other countries restrict the market by centralizing purchasing through the government. This distortion of the free market gives the buyers more power which can result in lower negotiated prices. It isn't that healthcare markets in other countries are less regulated that makes them cheaper. It is that they are regulated in specific ways to make sure they are cheaper.
>Isn't regulation against slavery inherently a restriction of a free market? There is obviously violent coercion baked into it, but from an economic perspective, it is basically an elimination of minimum wage which is an artificial limitation on the market.
What? Slavery = free market? Are you serious? Free market has voluntary exchange. I'd like you to apologize for deliberately debating in bad faith, otherwise we can just stop here.
>it [slavery] is basically an elimination of minimum wage which is an artificial limitation on the market.
Someone as intelligent as you doesn't need to be explained this, but I will feed the troll for a moment and make it obvious:
Free market:
What? Slavery = free market? Are you serious? Free market has voluntary exchange. I'd like you to apologize for deliberately debating in bad faith, otherwise we can just stop here.
>it [slavery] is basically an elimination of minimum wage which is an artificial limitation on the market.
Someone as intelligent as you doesn't need to be explained this, but I will feed the troll for a moment and make it obvious:
Free market:
A: OK bob, we're setting your wage to zero. Make sure to hit production today.
B: Nah fuck off, EvilCo down the street will pay me 20 Wulans an hour, but my daughter might volunteer for free to work with the CapitalistFuckwad Engineering division on a charity project to help with her college application.
A: OK bob, we're setting your wage to zero. Make sure to hit production today. We'll be changing the code to the cage for your children today, so if you don't hit production we'll be auctioning them off without telling you the code.
B: Yes sire, can I tickle your balls as well in exchange for you allowing to see my wife for 5 minutes in the conjugal visit cage?
A: Great, our labor prices and price to consumers are so much lower now than back when we were called CapitalistFuckwad enterprises and the dopes working for us could actually walk away when we tried paying them zero. Bob's daughter's charity work was great so I can't wait to use the cattle prod to entice her to work on the real meat and potatoes.>What? Slavery = free market? Are you serious? Free market has voluntary exchange. I'd like you to apologize for deliberately debating in bad faith, otherwise we can just stop here.
Do you think healthcare is always a voluntary exchange? Because a type 1 diabetic has exactly the same choice in whether to participate in the insulin market as a slave does in the labor market. Either they participate or they die. Once you say slavery can't be considered part of a free market, isn't that an admission that lifesaving healthcare also can't be part of a free market?
Do you think healthcare is always a voluntary exchange? Because a type 1 diabetic has exactly the same choice in whether to participate in the insulin market as a slave does in the labor market. Either they participate or they die. Once you say slavery can't be considered part of a free market, isn't that an admission that lifesaving healthcare also can't be part of a free market?
The US before 1968.
Insulin is heavily regulated by the FDA, making competition very difficult.
Insulin is heavily regulated by the FDA, making competition very difficult.
So would you say that other countries in which insulin is cheaper have a healthcare industry that is a freer market than the US?
Other countries are not controlled by FDA regulations.
Sure, but they have their own FDA equivalent with their own regulations. Why are the regulations in the US more harmful than the regulations elsewhere?
Regulatory barriers to competition:
https://www.t1international.com/blog/2019/01/20/why-insulin-...
https://www.wbur.org/hereandnow/2021/12/10/insulin-drug-pric...
https://www.t1international.com/blog/2019/01/20/why-insulin-...
https://www.wbur.org/hereandnow/2021/12/10/insulin-drug-pric...
Many of those issues are not specific to the US. So are you arguing for doing away with drug patents or something? That is rarely an argument I see from someone praising free markets.
Warning about above poster: they believe slavery is free-market.
Of course people active in free-market discussion know that patents as government imposed forced monopoly against people that never entered a contract with the "patent-holder" are staunchly opposed by many free market thinkers, including individuals such as Murray Rothbard. Again in SLG's bad-faith quest to make free-markets about slavery and monopolies, he uses his exceptional intelligence in attempts to trick the naive reader into a false view about free markets.
> countries in which insulin is cheaper have a healthcare industry that is a freer market than the US?
Here we see the fallacious slight of hand, where OP attempts to deceive audience by using PRICE OF A SINGLE GOOD to measure whether THE ENTIRE MARKET OF HEALTHCARE is "freer."
Of course people active in free-market discussion know that patents as government imposed forced monopoly against people that never entered a contract with the "patent-holder" are staunchly opposed by many free market thinkers, including individuals such as Murray Rothbard. Again in SLG's bad-faith quest to make free-markets about slavery and monopolies, he uses his exceptional intelligence in attempts to trick the naive reader into a false view about free markets.
> countries in which insulin is cheaper have a healthcare industry that is a freer market than the US?
Here we see the fallacious slight of hand, where OP attempts to deceive audience by using PRICE OF A SINGLE GOOD to measure whether THE ENTIRE MARKET OF HEALTHCARE is "freer."
>Again in SLG's bad-faith quest to make free-markets about slavery and monopolies,
Yeah, I'm the one acting in bad faith...
My comment about patents was because in the US political sphere "free market" and is often code for "pro-business" so I was checking which meaning WalterBright was using.
Yeah, I'm the one acting in bad faith...
My comment about patents was because in the US political sphere "free market" and is often code for "pro-business" so I was checking which meaning WalterBright was using.
I'm not so sure that is a sensible inference to draw. Government "interference" in healthcare in many countries where citizens both have greater access and report more satisfaction with the healthcare service they receive.
Also, free markets really don't have much to say for people who don't have the money to trade in that market, and in the healthcare space, denying treatment to people just because they can't afford treatment can cause some massive negative externalities. Just imagine how bad it would be if there was a massive pandemic and only the rich could afford vaccines; there would be so many unvaccinated hosts for that virus that new variants would keep emerging and significantly harm the quality of life for everyone.
Also, market efficiencies are largely a product of the ability of the consumer to compare the price and quality of different services. When the government is the consumer, it A) can afford to allocate this task to a few experts (rather than demand the entire population learn how to evaluate the cost and efficacy of medical treatments), B) can use its monopsony power to negotiate prices, and C) can use its treatment and outcome data to identify opportunities to do preventative maintenance rather than the more expensive (in both life and money) emergency care.
I'm more sympathetic to free markets than most, but healthcare is arguably the sector where free markets would produce the worst outcomes.
Also, free markets really don't have much to say for people who don't have the money to trade in that market, and in the healthcare space, denying treatment to people just because they can't afford treatment can cause some massive negative externalities. Just imagine how bad it would be if there was a massive pandemic and only the rich could afford vaccines; there would be so many unvaccinated hosts for that virus that new variants would keep emerging and significantly harm the quality of life for everyone.
Also, market efficiencies are largely a product of the ability of the consumer to compare the price and quality of different services. When the government is the consumer, it A) can afford to allocate this task to a few experts (rather than demand the entire population learn how to evaluate the cost and efficacy of medical treatments), B) can use its monopsony power to negotiate prices, and C) can use its treatment and outcome data to identify opportunities to do preventative maintenance rather than the more expensive (in both life and money) emergency care.
I'm more sympathetic to free markets than most, but healthcare is arguably the sector where free markets would produce the worst outcomes.
The US had a free market in health care in 1968, and there's simply no evidence to support your suspicions.
First off, the US healthcare market wasn't a free market in 1968. State licensing boards regulated the supply of doctors and as Milton Friedman argued in his book "Free to Choose", powerful interest groups used the US court system to impose massive costs on unlicensed healthcare practitioners; "The AMA has engaged in extensive litigation charging chiropractors and osteopathic physicians with the unlicensed practice of medicine, in an attempt to restrict them to as narrow an area as possible." [0]. So no, even before Medicare and Medicaid, there wasn't a free market for healthcare in the US.
Still, in that time, there was much less government involvement in healthcare and the stats show significant improvement after the implementation of the SSA of 1965 Act. Infant mortality fell from over 2.5% in the early 1960s to just over half a percent now [1], with the decrease accelerating in the late 1960's before tapering in the 1980's. Life expectancy also jolted upward in the late 1960's [1].
Healthcare has increased in cost significantly since the time before Medicare and Medicaid, when the treatment for a heart attack was to lay in a hospital bed and wait to die, whereas now, we have much better treatments that can add decades on to people's lives. [2]
And regarding the pandemic hypothesis, there's so much evidence to support my claims. If vaccine shots hadn't been made free to individuals, uptake would have been far slower and life would be far worse as the death rate would be much higher than the (still horrifying) ~500 people per day.
[0] https://en.m.wikipedia.org/wiki/American_Medical_Association...
[1] https://datacommons.org/place/country/USA?category=Health#In...
[2] https://www.politifact.com/article/2012/jan/20/was-early-196...
Still, in that time, there was much less government involvement in healthcare and the stats show significant improvement after the implementation of the SSA of 1965 Act. Infant mortality fell from over 2.5% in the early 1960s to just over half a percent now [1], with the decrease accelerating in the late 1960's before tapering in the 1980's. Life expectancy also jolted upward in the late 1960's [1].
Healthcare has increased in cost significantly since the time before Medicare and Medicaid, when the treatment for a heart attack was to lay in a hospital bed and wait to die, whereas now, we have much better treatments that can add decades on to people's lives. [2]
And regarding the pandemic hypothesis, there's so much evidence to support my claims. If vaccine shots hadn't been made free to individuals, uptake would have been far slower and life would be far worse as the death rate would be much higher than the (still horrifying) ~500 people per day.
[0] https://en.m.wikipedia.org/wiki/American_Medical_Association...
[1] https://datacommons.org/place/country/USA?category=Health#In...
[2] https://www.politifact.com/article/2012/jan/20/was-early-196...
> First off, the US healthcare market wasn't a free market in 1968
Yes, there was still some government interference that made it less of a free market. The beauty of the free market, however, is the closer it is to a free market the better it works. It's pointless to nitpick over just where the line is.
Healthcare outcomes in the US improved throughout the 20th century. There wasn't a magical change in the 1960s. The major government interference started in 1968, and your reference shows things improving throughout the 1960s.
> If vaccine shots hadn't been made free to individuals, uptake would have been far slower
An assumption without evidence. People don't appreciate things they get for free. In fact, the free vaccines seems to have engendered suspicion of the vaccine and lots of resistance to it. I've often suspected that charging for it would have increased vaccination rates.
Besides, in a free market, nothing whatsoever impedes any charity from giving out free stuff.
That said, I'd argue that vaccination against highly infectious diseases is a special case that suggests government involvement as a public good.
Yes, there was still some government interference that made it less of a free market. The beauty of the free market, however, is the closer it is to a free market the better it works. It's pointless to nitpick over just where the line is.
Healthcare outcomes in the US improved throughout the 20th century. There wasn't a magical change in the 1960s. The major government interference started in 1968, and your reference shows things improving throughout the 1960s.
> If vaccine shots hadn't been made free to individuals, uptake would have been far slower
An assumption without evidence. People don't appreciate things they get for free. In fact, the free vaccines seems to have engendered suspicion of the vaccine and lots of resistance to it. I've often suspected that charging for it would have increased vaccination rates.
Besides, in a free market, nothing whatsoever impedes any charity from giving out free stuff.
That said, I'd argue that vaccination against highly infectious diseases is a special case that suggests government involvement as a public good.
I would take straight up communism health care or ancap pay-or-die unregulated over our current bastardized system that combines the worst aspects of both.
Really? I remember a thread on reddit about the HBO series Chernobyl. A lot of posters who lived through it commented. One I recall said that root canals were free in the USSR, but you didn't get any anesthetic. Another commented that the hospital stay was free, but you had to bribe the nurses to take care of you.
Having had a root canal myself, it's "no thanks" to free communist health care.
Having had a root canal myself, it's "no thanks" to free communist health care.
I’d rather suffer through it and live, than die because I couldn’t afford it.
A root canal is an attempt to save what's left of the tooth. The alternative is an extraction.
Order of preference [not an exhaustive list]
1) Unregulated ancap pay-or-die (or charity)
2) USSR style salute Lenin on the way into the doctor's office
3) Our system
1) Unregulated ancap pay-or-die (or charity)
2) USSR style salute Lenin on the way into the doctor's office
3) Our system
Honestly, glasses there sound like they're only double what they are here which as far as comparing US healthcare costs normally go is practically reasonable. Usually I'm hearing about the same thing costing 10x or more.
You might find this video interesting from a UK perspective, I suspect with a mix of overlap and difference to the USA:
https://m.youtube.com/watch?v=ZuXzvjBYW8A
David Willets draws comparison of "boomers" to other generations, and includes what is paid into healthcare vs. what is consumed in a lifetime.
https://m.youtube.com/watch?v=ZuXzvjBYW8A
David Willets draws comparison of "boomers" to other generations, and includes what is paid into healthcare vs. what is consumed in a lifetime.
Healthcare costs increased in step with inflation until 1968, when the rate increased dramatically and never slowed down.
What happened in 1968? LBJ's Great Society massive efforts at free medical care started.
The same thing happened with college tuition. Government attempts to reduce its costs resulted in greatly expanded costliness.
The most expensive things in the world are government provided "free" stuff.
What happened in 1968? LBJ's Great Society massive efforts at free medical care started.
The same thing happened with college tuition. Government attempts to reduce its costs resulted in greatly expanded costliness.
The most expensive things in the world are government provided "free" stuff.
The US has less government provided care than any other industrial country and by far the highest costs in the world
The US cost far less before the government got involved in it.
You are mixing up care and spending
How does this rhyme with the fact that many countries have well functioning, tax financed healthcare systems?
Just because it's "free" doesn't mean you aren't paying plenty for it.
Healthcare efficiency costs in the US are huge.
https://www.bloomberg.com/graphics/infographics/most-efficie...
We certainly pay for healthcare in the UK through taxation. It's pretty efficient. Hospitals aren't nice and shiny and medical people get paid a lot less though. I'll take that trade off myself anyday.
https://www.bloomberg.com/graphics/infographics/most-efficie...
We certainly pay for healthcare in the UK through taxation. It's pretty efficient. Hospitals aren't nice and shiny and medical people get paid a lot less though. I'll take that trade off myself anyday.
Public+private spending on healthcare in the US is 2-3x that of public+private spending on healthcare in the rest of the OECD.
See the chart at https://data.oecd.org/healthres/health-spending.htm; we pay more in taxes than any other OECD nation does total for healthcare, and then pile individual spending on top of that.
See the chart at https://data.oecd.org/healthres/health-spending.htm; we pay more in taxes than any other OECD nation does total for healthcare, and then pile individual spending on top of that.
The US government does a lot to increase health care costs. For one example, the government empowers the AMA to strictly limit the number of seats in medical schools, the purpose being to limit the supply of doctors to keep their fees high.
You're skipping off to a different argument.
You asserted "Just because it's 'free' doesn't mean you aren't paying plenty for it", but the places where it's "free" are paying less. You're highlighting issues specific to the American system in an apparent attempt to argue against European-style systems, which is... odd.
You asserted "Just because it's 'free' doesn't mean you aren't paying plenty for it", but the places where it's "free" are paying less. You're highlighting issues specific to the American system in an apparent attempt to argue against European-style systems, which is... odd.
The US does not have a free market in health care.
Again, an entirely different argument, but what country does that you'd like to emulate? We've tried the "no regulation" thing in our past; it's where the term "snake oil salesman" comes from.
"Free market healthcare" is just the right's version of "communism would work if it weren't for human nature".
"Free market healthcare" is just the right's version of "communism would work if it weren't for human nature".
Again, the US before 1968.
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4193636/
> Of the members of the general population who reported they had “pains in the heart,” 25 percent did not see a physician (Andersen and Anderson, 1967).
Sounds awesome.
The article makes a pretty good case for your 1968 date being an attribution error - that years before it, the rise of things like transplants, ICUs, demographic changes, etc. were already messing up costs.
> Of the members of the general population who reported they had “pains in the heart,” 25 percent did not see a physician (Andersen and Anderson, 1967).
Sounds awesome.
The article makes a pretty good case for your 1968 date being an attribution error - that years before it, the rise of things like transplants, ICUs, demographic changes, etc. were already messing up costs.
I've seen charts of medical costs over time, there's a knee in the curve in 1968.
and we hear a lot of stories of ppl from other "free healthcare" OECD countries having to come here for decent care. i'd rather a system where i can get better by paying more than a system where i'm at the mercy of some bureaucrat or waiting list.
if you want to reduce costs:
1. stop giving the AMA a monopoly. ban state and local regulations on how much healthcare can be built and where.
2. require posting prices and give it teeth.
3. make it easier to import cheap generics from other countries.
4. enable nurse practitioners to do more stuff.
5. enable more clinics with clear prices for stuff like this one where i can go their site and see it's $6215 for a bilteral knee arthroscopy: https://surgerycenterok.com/?procedure_category=knee#jump because very few of the healthcare $ are spent on emergency procedures where ppl don't have time to choose and information is how you make markets efficient.
if you want to reduce costs:
1. stop giving the AMA a monopoly. ban state and local regulations on how much healthcare can be built and where.
2. require posting prices and give it teeth.
3. make it easier to import cheap generics from other countries.
4. enable nurse practitioners to do more stuff.
5. enable more clinics with clear prices for stuff like this one where i can go their site and see it's $6215 for a bilteral knee arthroscopy: https://surgerycenterok.com/?procedure_category=knee#jump because very few of the healthcare $ are spent on emergency procedures where ppl don't have time to choose and information is how you make markets efficient.
> and we hear a lot of stories of ppl from other "free healthcare" OECD countries having to come here for decent care
You'll hear that in both directions, to the point where the CDC has a page for Americans seeking care abroad, typically due to exorbitant costs here. https://wwwnc.cdc.gov/travel/page/medical-tourism
> i'd rather a system where i can get better by paying more than a system where i'm at the mercy of some bureaucrat or waiting list.
There are very few countries in which this is the case; you can opt for private healthcare in Europe, Australia, etc. if you like. There's simply also a specific, reasonable level of care available to all. (The idea that the US lacks bureaucrats and waiting lists is, incidentally, funny to most folks who've tried to see a specialist on short order, or had insurance deny coverage for something.)
You'll hear that in both directions, to the point where the CDC has a page for Americans seeking care abroad, typically due to exorbitant costs here. https://wwwnc.cdc.gov/travel/page/medical-tourism
> i'd rather a system where i can get better by paying more than a system where i'm at the mercy of some bureaucrat or waiting list.
There are very few countries in which this is the case; you can opt for private healthcare in Europe, Australia, etc. if you like. There's simply also a specific, reasonable level of care available to all. (The idea that the US lacks bureaucrats and waiting lists is, incidentally, funny to most folks who've tried to see a specialist on short order, or had insurance deny coverage for something.)
yeah but notice it's not people traveling to OECD free healthcare countries. it's mostly going to cheaper developing countries with clinics a lot like the oklahoma one i linked that specialize in procedures and offer them at reasonable prices.
private care over there just isn't the same. and yeah i dealt with insurance and specialists before and it sucks but at least money makes a difference and more money makes more difference and it's not just "lol get on the list and stfu"
private care over there just isn't the same. and yeah i dealt with insurance and specialists before and it sucks but at least money makes a difference and more money makes more difference and it's not just "lol get on the list and stfu"
> yeah but notice it's not people traveling to OECD free healthcare countries
"Medical tourists from the United States commonly travel to Mexico and Canada"
Canada isn't an OECD nation?
> at least money makes a difference
"The rich get healthcare before needier poor people who've been waiting longer" seems like a negative to me, on a societal level.
"Medical tourists from the United States commonly travel to Mexico and Canada"
Canada isn't an OECD nation?
> at least money makes a difference
"The rich get healthcare before needier poor people who've been waiting longer" seems like a negative to me, on a societal level.
> tax financed
Of course people still pay. It's not provided by magic fairies.
However, it's not automatically inefficient just because it's publicly funded.
Of course people still pay. It's not provided by magic fairies.
However, it's not automatically inefficient just because it's publicly funded.
Yes, it is automatically inefficient. It's just not obvious because there are no free market health care systems left to compare it to.
It's inefficient because nobody is as careful spending other peoples' money as they are with their own money.
It's inefficient because nobody is as careful spending other peoples' money as they are with their own money.
This doesn't make sense at all to me.
They're comparing income in constant 2022 dollars with the CPI. That's saying "if we adjusted historical salaries for inflation, then assumed that the constant 2022 dollar numbers were actually nominal numbers for each point in history, then people would've been able to buy much more stuff back then". Which is true, but not very meaningful.
The whole point of the constant 2022 dollar adjustment is to back out the effect of inflation. If 2020 average salaries in 2022 dollars were $44.2K, and 1970 average salaries in 2022 dollars were $24.6K then 2020 workers have 80% higher purchasing power for whatever basket is used for the deflator.
They're comparing income in constant 2022 dollars with the CPI. That's saying "if we adjusted historical salaries for inflation, then assumed that the constant 2022 dollar numbers were actually nominal numbers for each point in history, then people would've been able to buy much more stuff back then". Which is true, but not very meaningful.
The whole point of the constant 2022 dollar adjustment is to back out the effect of inflation. If 2020 average salaries in 2022 dollars were $44.2K, and 1970 average salaries in 2022 dollars were $24.6K then 2020 workers have 80% higher purchasing power for whatever basket is used for the deflator.
They've specifically pulled out only the categories that have risen faster than inflation, and didn't include any categories that have fallen relative to inflation. So it's guaranteed to get this result.
[deleted]
Maybe they are arguing that GenZ should commute to the past? That way they can spend their 2022 dollars on good value 1970s products?
At least they can buy cheap TVs, right?
I wonder if we can finally accept that just because things like phones and TVs got better faster than purchasing power got worse, doesn't mean that it hasn't been getting worse for a while. I'd even go so far to say that technical progress in a couple areas has hidden some pretty stark declines. Or at least allowed some people to point at shiny things getting better when complaints surfaced.
I could not agree more. I won't romanticize 1950s or 1970s cheap junk products compared to 1990s cheap junk products or 2020s cheap junk products, but something definitely has changed.
Here's how I like to argue it:
TVs might be cheaper "per unit of TV", but it's also difficult to just buy a basic TV. This is also offset intensely by "shrinkflation", which applies as much to durable goods (cheapening components) as it does to food. So you end up stuck with a bunch of "extra TV" that you don't need or want, effectively providing 0 utility, while the core product is lower-quality, even further lowering utility. And meanwhile economists deny that there is a problem because when you average it all out, you do technically pay less per abstracted unit of TV.
The reason this happens is because it ultimately leads to better profit margins for manufacturers. "We make 'em like they used to!" isn't enough of a differentiating factor for most consumers, who are deliberately kept under-educated and constantly bombarded with p̶r̶o̶p̶a̶g̶a̶n̶d̶a̶ advertising and marketing. If you can sell a TV for $100, do you want to spend $10 manufacturing the TV, or do you want to spend $5 manufacturing the TV and $0.25 adding some onboard computer and software to make it "smart" (marketing!) while skimming off a huge data/ad revenue stream as essentially free money on the side?
Moreover, luxury goods are somewhat irrelevant if your basic economic needs become less affordable. Maybe TVs are cheaper "per unit", but housing, healthcare, food, and energy are not. Those are literally all of the basic human needs except one (water), recognizable as such in even the most primitive of ancient societies. And water is problematic ("expensive" in terms of consumer welfare) in much of the USA for reasons other than pure financial cost.
Edit: None of the above should be construed as advocacy or apology for chart-crimes and misleading reports based thereupon.
Here's how I like to argue it:
TVs might be cheaper "per unit of TV", but it's also difficult to just buy a basic TV. This is also offset intensely by "shrinkflation", which applies as much to durable goods (cheapening components) as it does to food. So you end up stuck with a bunch of "extra TV" that you don't need or want, effectively providing 0 utility, while the core product is lower-quality, even further lowering utility. And meanwhile economists deny that there is a problem because when you average it all out, you do technically pay less per abstracted unit of TV.
The reason this happens is because it ultimately leads to better profit margins for manufacturers. "We make 'em like they used to!" isn't enough of a differentiating factor for most consumers, who are deliberately kept under-educated and constantly bombarded with p̶r̶o̶p̶a̶g̶a̶n̶d̶a̶ advertising and marketing. If you can sell a TV for $100, do you want to spend $10 manufacturing the TV, or do you want to spend $5 manufacturing the TV and $0.25 adding some onboard computer and software to make it "smart" (marketing!) while skimming off a huge data/ad revenue stream as essentially free money on the side?
Moreover, luxury goods are somewhat irrelevant if your basic economic needs become less affordable. Maybe TVs are cheaper "per unit", but housing, healthcare, food, and energy are not. Those are literally all of the basic human needs except one (water), recognizable as such in even the most primitive of ancient societies. And water is problematic ("expensive" in terms of consumer welfare) in much of the USA for reasons other than pure financial cost.
Edit: None of the above should be construed as advocacy or apology for chart-crimes and misleading reports based thereupon.
It's conspiratorial to assume that advertising and marketing is responsible for the status quo, rather than it being reflective of the genuine preferences of consumers to have new toys. Consumer preference has rewarded lowest-common-denominator dopamine trains in basically every facet of modern life. See the gaming industry with microtransactions/lootboxes, or entertainment with the move towards short-form content.
It's not conspiratorial to assume marketing influences behavior. That's its purpose.
Size of the impact is up for debate. But consider how many large business sectors have advertisement as their primary income.
It's not for nothing.
Size of the impact is up for debate. But consider how many large business sectors have advertisement as their primary income.
It's not for nothing.
Marketing does influence behavior. However, reward loops don't need marketing, just like heroin doesn't need marketing. I've sank 100s of hours into idle games that look like a spreadsheet and have 0 marketing budget.
It’s not conspirational to assume that advertising and marketing is part of forming the status quo, by virtue of those fields literally exploiting human weaknesses to do so. If they simply reflected what consumer want, not only would they not have a reason to exist, but if they did they wouldn’t need to resort to endless amounts of FOMO to get you to buy Season 329 of their Battle Pass.
In 2022, it would be stupid to make a game that doesn't have some sort of battle pass and dopamine-drip progression system. Way fewer people would play your game and gamers would complain without them. People genuinely enjoy these systems, just like they genuinely enjoy reality TV over a documentary or TikTok over long-form Youtube videos. It's an obvious trend that won't be fixed if we misunderstand the issue and assume that people don't want these things and they're being pushed by advertising.
How do you know people want these things? Do you actually think “yay! I love that this new game has a battle pass system and lootboxes” is a common sentiment? The point is that there is no choice. Sure, companies are very likely making more money off these systems than otherwise, but to say this is because people want it doesn’t ring true to me, simply because they can’t just pivot to a similar game without them, or avoid it entirely. Games like Fortnite are so predatory on monetization that they strip you out of even choosing the base nothingburger characters available for free, instead randomizing which one you get per match to force you to buy something to even have a consistent player model you somewhat like. That kids, a demographic that’s by nature desperate to express themselves, spend piles of money on these systems is no surprise. Not to mention the fact that they’re too young to know there’s even an alternative at all.
There’s also mountains of evidence that contradict the statement that a game without a battle pass won’t succeed. One of the most profitable and respected MMOs currently is Final Fantasy XIV, a game that has nothing like it, in the genre that had micro-transactions and lootboxes before most people even heard the terms. Middle Earth Shadows of War is also a great game that was ruined by loot boxes and progression systems, where the outcry was so big that the developers completely removed them after the fact.
There’s also mountains of evidence that contradict the statement that a game without a battle pass won’t succeed. One of the most profitable and respected MMOs currently is Final Fantasy XIV, a game that has nothing like it, in the genre that had micro-transactions and lootboxes before most people even heard the terms. Middle Earth Shadows of War is also a great game that was ruined by loot boxes and progression systems, where the outcry was so big that the developers completely removed them after the fact.
Two economists walk by an exotic car dealership. One economist points at a Ferrari and says to the other, "I want one of those." The other economist says, "Obviously you don't, otherwise you'd have one already!"
What good is cheaper tech if we just use that to add more features and keep the same price?
You could get a TV for less than $50 if it had the same features and processing power as it did in 2002. Same for computers.
Imagine how cheap we could make a car that only has the features we had in the 90’s? Even if you include the mandatory passive safety upgrades.
You could get a TV for less than $50 if it had the same features and processing power as it did in 2002. Same for computers.
Imagine how cheap we could make a car that only has the features we had in the 90’s? Even if you include the mandatory passive safety upgrades.
> You could get a TV for less than $50 if it had the same features and processing power as it did in 2002. Same for computers.
Well have I ever got good news for you. Here's a random article about TV tech from 2002 that I just found on google [0] talking about the top of the line in display tech being a new 30 inch LCD TV that cost $8,000 (that would be $13,200 in today's dollars). Now twenty years later you can buy a 32 inch 720p LCD TV on Amazon for $99.
Same for computers, ever heard of a raspberry pi?
[0] https://www.nytimes.com/2002/04/18/technology/state-of-the-a...
Well have I ever got good news for you. Here's a random article about TV tech from 2002 that I just found on google [0] talking about the top of the line in display tech being a new 30 inch LCD TV that cost $8,000 (that would be $13,200 in today's dollars). Now twenty years later you can buy a 32 inch 720p LCD TV on Amazon for $99.
Same for computers, ever heard of a raspberry pi?
[0] https://www.nytimes.com/2002/04/18/technology/state-of-the-a...
> What good is cheaper tech if we just use that to add more features and keep the same price?
...having better technology, and therefore higher living standards?
...having better technology, and therefore higher living standards?
I'd be first in line for a new car that only has the features of cars from the 1990s.
Plenty of low-mileage 90s cars are on the market. If you’re being sincere, just filter by low mileage and single owner and you’ll find your dream car.
Gimme something with '20's safety and fuel economy, and '90's features otherwise. Or, even better, an electric car without the computer screen on the inside.
I remember 90's cars safety and gas mileage, and I emphatically don't want that.
I remember 90's cars safety and gas mileage, and I emphatically don't want that.
Yeah that’s the expensive stuff. The touchscreens and other tech crap is cheap
> Yeah that’s the expensive stuff.
In today's world of subscription heated seats, $9k to unlock pre-installed range extensions, and $10k FSD capability (though without the actual FSD)... I feel reasonably justified in disagreeing with you.
In today's world of subscription heated seats, $9k to unlock pre-installed range extensions, and $10k FSD capability (though without the actual FSD)... I feel reasonably justified in disagreeing with you.
[deleted]
safety has improved, but gas mileage for small cars was great. 90'2 and 00's had lots of compacts that got 40+ mpg highway.
Older cars require more ongoing maintenance and repairs.
What I want is a car with '90s features that rolled off the factory yesterday so I don't have to worry about it dying in the middle of a road trip next week.
What I want is a car with '90s features that rolled off the factory yesterday so I don't have to worry about it dying in the middle of a road trip next week.
That's why your parent poster specified "low milage."
But since they're not being made in 2022, getting parts for them in 2040 will be fraught.
pick a slightly more expensive car from that era that has an enthusiast fan-base; aftermarket parts will be available indefinitely.
no problem finding parts for my (very old) Honda or the (very much older) VW beetle that's in the family.
no problem finding parts for my (very old) Honda or the (very much older) VW beetle that's in the family.
This isn't true in any part of the country that has a winter.
True. California or Arizona (no salt on the roads, low humidity) are the unicorn places for cars without holes.
Ford Crown Victoria was sorta that until 2010.
I was going to say "and how light we could make a car", but then i actually looked up some stats, and this was news to me:
http://web.mit.edu/sloan-auto-lab/research/beforeh2/files/Ma...
Car weight declined sharply from 1976 to 1982, then started creeping up again, but cars in 2010 were only about as heavy as cars in ~1979.
http://web.mit.edu/sloan-auto-lab/research/beforeh2/files/Ma...
Car weight declined sharply from 1976 to 1982, then started creeping up again, but cars in 2010 were only about as heavy as cars in ~1979.
I don't think this takes into account that something like 50% of vehicles sold are now light trucks (pickups and SUVs) rather than passenger cars.
[deleted]
You can get a 32" Fire TV for $99 on Amazon right now...I'm not sure it makes sense to make cheaper, especially when you have used items on Craigslist that covers the gap.
TVs became cheaper because now companies have recurring revenue by selling ads.
Same with other stuff, it got "cheaper" because the sellers found alternative monetization channels, which often are more anti-consumer.
Same with other stuff, it got "cheaper" because the sellers found alternative monetization channels, which often are more anti-consumer.
TVs have been continuously better and cheaper in real terms since their invention - any cross-subsidy from smart TV ads is very much a "last five years" phenomenon I think.
FWIW smart TVs are "cheap" because of how lucrative it is to sell the data they collect. Gen Z probably has even less privacy than they do purchasing power. And while the economy will invariably bounce back - that data stays collected forever
As usual, there's a few chart crimes in here.
Chart 1 shows CPI and inflation adjusted wages on the same graph? Why? Inflation adjusted wages already take into account CPI. There's no sensible reason to plot these two on the same graph.
The caption is "wages are up 80% but that didn't keep up with living costs" - you cannot draw that inference from this graph. This graph actually shows that in fact wages grew faster than inflation.
Housing is another red herring, of course, because the average new American home is 2x bigger now than it was in the 70s - and the average American family is like 10% smaller. Broadly, 1 square foot of the 'average' American home costs exactly the same as it used to in the 1970s. [1] So yes, housing is more expensive in big cities but that's because of zoning as Mr. Andreessen will tell you. Outside big cities it's still zoning, which requires minimum setback, garages, square footage, etc.
In fact if you look by cohort, inflation-adjusted, millennials are doing roughly as well as other generations did at their age. [2]
Their flagship claim that folks have 86% less purchasing power now holds zero water. The poverty rate remains basically unchanged since the 70s. [3] You'd think there'd be a lot more people in poverty if they only had 1/10th the buying power no?!
Some things are more expensive (college, healthcare, 1 sqft of house in a big city, new houses outside of town) and yes, productivity growth far outpaced wage growth - but wage growth kept pace with inflation. That means folks are just the same off, instead of the better off they could be. [4]
[edit] If you really slice it by decile, the bottom 10% of millennials is much worse off (like 15%) - that's what it looks like when you massacre the social safety net. But millennials as a whole are just as well off as previous generations.
[1] https://fee.org/articles/new-homes-today-have-twice-the-squa...
[2] https://ofdollarsanddata.com/no-millennials-arent-poorer-tha...
[3] https://poverty.ucdavis.edu/faq/what-current-poverty-rate-un...
[4] https://www.cnbc.com/2022/07/19/heres-how-labor-dynamism-aff...
The caption is "wages are up 80% but that didn't keep up with living costs" - you cannot draw that inference from this graph. This graph actually shows that in fact wages grew faster than inflation.
Housing is another red herring, of course, because the average new American home is 2x bigger now than it was in the 70s - and the average American family is like 10% smaller. Broadly, 1 square foot of the 'average' American home costs exactly the same as it used to in the 1970s. [1] So yes, housing is more expensive in big cities but that's because of zoning as Mr. Andreessen will tell you. Outside big cities it's still zoning, which requires minimum setback, garages, square footage, etc.
In fact if you look by cohort, inflation-adjusted, millennials are doing roughly as well as other generations did at their age. [2]
Their flagship claim that folks have 86% less purchasing power now holds zero water. The poverty rate remains basically unchanged since the 70s. [3] You'd think there'd be a lot more people in poverty if they only had 1/10th the buying power no?!
Some things are more expensive (college, healthcare, 1 sqft of house in a big city, new houses outside of town) and yes, productivity growth far outpaced wage growth - but wage growth kept pace with inflation. That means folks are just the same off, instead of the better off they could be. [4]
[edit] If you really slice it by decile, the bottom 10% of millennials is much worse off (like 15%) - that's what it looks like when you massacre the social safety net. But millennials as a whole are just as well off as previous generations.
[1] https://fee.org/articles/new-homes-today-have-twice-the-squa...
[2] https://ofdollarsanddata.com/no-millennials-arent-poorer-tha...
[3] https://poverty.ucdavis.edu/faq/what-current-poverty-rate-un...
[4] https://www.cnbc.com/2022/07/19/heres-how-labor-dynamism-aff...
> Housing is another red herring, of course, because the average new American home is 2x bigger now than it was in the 70s. Roughly speaking 1 square foot of the average home costs exactly the same as it used to in the 1970s. [1] And the average family has become smaller. So yes, housing is more expensive in big cities but that's because of zoning as Mr. Andreessen will tell you.
Just because houses have gotten bigger and families have gotten smaller, doesn’t mean you can buy an average 1970s house in major cities for the same inflation adjusted price. A lot of those old homes are either gone, extremely expensive, or situated in different metro areas than younger generations live in today.
Just because houses have gotten bigger and families have gotten smaller, doesn’t mean you can buy an average 1970s house in major cities for the same inflation adjusted price. A lot of those old homes are either gone, extremely expensive, or situated in different metro areas than younger generations live in today.
I have long advocated for Japanese-style federal zoning rules which would stop local municipalities from playing these games. I agree that housing is more expensive, but of course, housing is priced into inflation numbers - and wages have kept pace. Housing is a major driver of inflation.
Part of the discrepancy here - and housing needs its own entire article - is how low interest rates factor into affordability. In the 80's, a 30-year fixed cost 18%. Last year it was 2.5%.
On a monthly basis (which is how many calculate affordability) a $166K loan at 18% APR is $2500/mth. A $635K loan at 2.5% APR is $2500/mth. These houses are equally affordable on a monthly basis. Even though one home is $200K and the other is $800K. The only delta is the down payment.
Part of the discrepancy here - and housing needs its own entire article - is how low interest rates factor into affordability. In the 80's, a 30-year fixed cost 18%. Last year it was 2.5%.
On a monthly basis (which is how many calculate affordability) a $166K loan at 18% APR is $2500/mth. A $635K loan at 2.5% APR is $2500/mth. These houses are equally affordable on a monthly basis. Even though one home is $200K and the other is $800K. The only delta is the down payment.
Isn't the down payment delta pretty significant? Having to save 160k instead of 40k for a 20% down payment significantly delays the point at which a millennial household could start accruing home equity, feel confident about starting a family, etc.
Yes, it does mean folks can generally only buy a home later than they would have before - but that's not what we're measuring. We're measuring how well off they are. Over this period, the 1970s to present, equities have way outperformed real estate. So folks rented, and saved in the equity markets instead until they could make their down payments - without diminishing their quality of life.
In a very real way, the 'starter home' became a 60/40 equity/bond portfolio plus a rental unit.
Between that and FHA as a peer comment pointed out, folks could actually be quite a bit better off today in spite of the bigger sticker - and yes, in spite of PMI (generally only 0.5% to 1%) which can be waived once you reach 20% LTV. (2.5% + 1%) is still way - way - lower than the 18% rates we saw in the 80s.
That's why I said housing deserves its own post, rather than letting it get lumped into with the chart crimes.
Owning is not always better than renting (although it can be). The biggest driver of the delta between owning and renting is actually the opportunity cost associated with not investing the down payment into the equity markets. The point at which folks buy has shifted older, yes. That isn't always a bad thing. A higher down payment is still your own capital. You get it back when you sell.
In a very real way, the 'starter home' became a 60/40 equity/bond portfolio plus a rental unit.
Between that and FHA as a peer comment pointed out, folks could actually be quite a bit better off today in spite of the bigger sticker - and yes, in spite of PMI (generally only 0.5% to 1%) which can be waived once you reach 20% LTV. (2.5% + 1%) is still way - way - lower than the 18% rates we saw in the 80s.
That's why I said housing deserves its own post, rather than letting it get lumped into with the chart crimes.
Owning is not always better than renting (although it can be). The biggest driver of the delta between owning and renting is actually the opportunity cost associated with not investing the down payment into the equity markets. The point at which folks buy has shifted older, yes. That isn't always a bad thing. A higher down payment is still your own capital. You get it back when you sell.
There are a lot of other benefits of buying with high interest rates - namely that the U.S. 30-year mortgage allows you to refinance if rates drop. So that 18% headline rate quickly became ~10% or less after refinancing a few years down the road (not to mention paying for houses with depreciating dollars because of the 70s inflation).
You don't get the same optionality if you buy with interest rates at an all time low.
Housing affordability is actually at an all-time low right now, close to 1982 levels, after the interest rate rise.
https://www.atlantafed.org/center-for-housing-and-policy/dat...
You don't get the same optionality if you buy with interest rates at an all time low.
Housing affordability is actually at an all-time low right now, close to 1982 levels, after the interest rate rise.
https://www.atlantafed.org/center-for-housing-and-policy/dat...
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My understanding is that inflation is based on the monthly payment number, not on the sticker price of the house (though I’m not all that confident in that assertion). It’s meant to reflect actual consumer spending baskets.
The down payment is probably more significant than what your comment lets on. While I haven’t experienced this, it’s not uncommon to hear young people complain that their rent is more expensive than a lease and there’s nothing to be done about it because they can’t afford the down payment.
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>As usual, there's a few chart crimes in here. Chart 1 shows CPI and inflation adjusted wages on the same graph? Why? Inflation adjusted wages already take into account CPI. There's no sensible reason to plot these two on the same graph.
That's absolutely right - it's a gibberish chart.
That's absolutely right - it's a gibberish chart.
There's literally nothing more recent than something built in the early 70s without going 1h30 outside the city that I can currently afford, and we're a two-income household with a single child. My parents could afford their - much bigger than I'll ever own - house on a single income (in the same ballpark as my current individual salary, adjusted for inflation) in their early 20s, 30min from downtown. My current freaking rent for a 1200sqft flat is higher than the mortgage they paid on the 2200ft house they bought in the mid-90s after selling the first one. The latest inflation, especially on food and transportation, has been eating in my savings/investing budget so less opportunites to make that money work for me.
I guess the numbers you're pointing at do seem to point towards that I'm supposedly faced with provided with opportunities as they were, but I can't help but feel like I'm getting shafted somewhere along the way cause I'm pretty damn far from feeling like it does.
Maybe my timing is just horrible, I don't know - I did get out of school right after 2008, and wasn't financially ready to buy a home before mid-2020... But I just cannot subjectively recognize my situation in those numbers.
I guess the numbers you're pointing at do seem to point towards that I'm supposedly faced with provided with opportunities as they were, but I can't help but feel like I'm getting shafted somewhere along the way cause I'm pretty damn far from feeling like it does.
Maybe my timing is just horrible, I don't know - I did get out of school right after 2008, and wasn't financially ready to buy a home before mid-2020... But I just cannot subjectively recognize my situation in those numbers.
> If you really slice it quintile, the bottom quintile of millenials is much worse off - that's what it looks like when you massacre the social safety net. But millenials as a whole are just as well off as previous generations.
This I think warrants more than a footnote. A return to extreme class stratification is really quite bad, not just for those individuals affected but for society overall.
This I think warrants more than a footnote. A return to extreme class stratification is really quite bad, not just for those individuals affected but for society overall.
I completely agree. That's also why I think it's important to paint a picture that's as accurate and faithful as possible.
> Housing is another red herring, of course, because the average new American home is 2x bigger now than it was in the 70s
My spouse and I ran into this when we were looking for our current home 5 years ago in Los Angeles. Even though we're older, it's just the 2 of us, so we didn't need something huge. It was really hard to find a reasonably-sized house for 2 people (plus a little room to have a guest stay over). It was really hard to find something because people who want huge houses kept buying small ones for more than asking price, then tearing them down and building a much bigger house on the same lot. The one we did eventually buy had even been enlarged sometime between the 50s when it was built and today.
My spouse and I ran into this when we were looking for our current home 5 years ago in Los Angeles. Even though we're older, it's just the 2 of us, so we didn't need something huge. It was really hard to find a reasonably-sized house for 2 people (plus a little room to have a guest stay over). It was really hard to find something because people who want huge houses kept buying small ones for more than asking price, then tearing them down and building a much bigger house on the same lot. The one we did eventually buy had even been enlarged sometime between the 50s when it was built and today.
This article is complete bullshit because it effectively corrects for inflation twice. The CPI is a measure of the nominal change in cost of a basket of goods. This should be compared, like for like, to nominal income, not inflation-adjusted income. The CPI was already used to adjust the income to which it's compared in this article!
The fact that this got upvoted to the top despite being complete bullshit just shows how desperately people want this to be true. 170+ people clearly upvoted the headline and didn't understand the article. And everyone in the comments is knee-jerk posting their own personal rants about finance with only a tangential connection to the article. What a dumpster fire of a post.
Thank you for summing this up so succinctly. I knew they comparing these two numbers was wrong, but I couldn't quite articulate it.
Some of these charts are atrocious chart crimes.
This one is particularly bad: https://i.imgur.com/hfHmvhP.png
This one is particularly bad: https://i.imgur.com/hfHmvhP.png
Jesus Christ, the person who made this chart needs to accept Tufte into their life.
It seems the annual income vs. CPI is the core chart here. Something happened in the decade of 2000-2010 to throw things out of whack. I'm not informed enough to know if that was the result of policy decisions or what, but I'd like to know how wage growth declined so dramatically during this time while prices seemed to maintain its projected linear growth.
One thing jumps out in my mind. I think of the 2000s as being the decade in which tech companies that survived the dot com bust turned into tech giants. And these companies would go on to rack up market caps that broke historical records. I remember everyone was sort of in awe of the numbers and generally had a pretty positive sentiment towards the success. However, I'm not sure I can craft a really clear narrative that connects this back to stagnant wages. But it seems related. Perhaps in the sense that large corporations like the tech giants seemed to be free to monopolize and suck up all the money without allowing it to circulate in the economy.
The tech giants may have just been a particular touch stone in a long trend of increased, unchecked corporatization of US business. Perhaps that culminated in a kind of phase transition that took place in the 2000s.
But there's another interesting detail to that chart which is that wages appear to be back on track since 2010 and have trended upward pretty sharply since then compared to the 2000s. If the slope of the wage line is to be believed (and were to continue), we'd be in pretty good shape in another decade or so. So, to play devil's advocate, perhaps it's wrong to look sideways at some of the big players in the space right now. I don't know. Not an economist.
The tech giants may have just been a particular touch stone in a long trend of increased, unchecked corporatization of US business. Perhaps that culminated in a kind of phase transition that took place in the 2000s.
But there's another interesting detail to that chart which is that wages appear to be back on track since 2010 and have trended upward pretty sharply since then compared to the 2000s. If the slope of the wage line is to be believed (and were to continue), we'd be in pretty good shape in another decade or so. So, to play devil's advocate, perhaps it's wrong to look sideways at some of the big players in the space right now. I don't know. Not an economist.
My memory is hazy, but iirc Alan Greenspan brought out a lot of easy money in response to the dotcom bubble bursting, which then helped inflate the housing bubble.
> I remember everyone was sort of in awe of the numbers and generally had a pretty positive sentiment towards the success. However, I'm not sure I can craft a really clear narrative that connects this back to stagnant wages. But it seems related.
The relation I can think of is the tech giants obviating away many instances of labor that were being sold.
Email, travel agents, streaming, GPS mapping apps, etc all let people do a lot more with the labor of a lot fewer.
But that is not solely the domain of tech giants or tech companies. Automation has been happening for decades, along with outsourcing to countries with cheaper labor.
Since prices (wages) stayed stagnant, one can conclude that the supply of labor increased more than the demand for labor.
Edit: another factor increasing supply of labor is women joining the workforce
The relation I can think of is the tech giants obviating away many instances of labor that were being sold.
Email, travel agents, streaming, GPS mapping apps, etc all let people do a lot more with the labor of a lot fewer.
But that is not solely the domain of tech giants or tech companies. Automation has been happening for decades, along with outsourcing to countries with cheaper labor.
Since prices (wages) stayed stagnant, one can conclude that the supply of labor increased more than the demand for labor.
Edit: another factor increasing supply of labor is women joining the workforce
> However, I'm not sure I can craft a really clear narrative that connects this back to stagnant wages. But it seems related
but the famous productivity/wage gap chart shows it started in the 70s to 80s. What makes you think it's due to the dotcom bubble?
but the famous productivity/wage gap chart shows it started in the 70s to 80s. What makes you think it's due to the dotcom bubble?
This chart is complete garbage though, it's graphing inflation adjusted income against inflation... If you want a comparison it's possible to draw a valid conclusion from you need to compare non-inflation adjusted income.
If I'm being charitable, they made a mistake in their analysis, if I'm uncharitable they didn't care about the methodology and went in looking for a way to write a provocative conclusion like "86% less purchasing power". Obviously a lot of energy was spent here drawing up the pretty infographics, probably should have spent more energy getting the basic statistics correct first?
If I'm being charitable, they made a mistake in their analysis, if I'm uncharitable they didn't care about the methodology and went in looking for a way to write a provocative conclusion like "86% less purchasing power". Obviously a lot of energy was spent here drawing up the pretty infographics, probably should have spent more energy getting the basic statistics correct first?
Midpoint of a 20 year war. Inflation, combined with the financial engineering of the 90s and the deflationary power of the internet.
My parents bought a house when I was born in NYC in the 70s for $20k, sold it for 10x more in 1990 and that buyer sold it for 10x more circa 2007.
The deflationary power of the internet powered costs for business. My employer has 1/3 the accountants they had 30 years ago, but 5x as many IT people. Specific occupations make more money, but most make less due to dropped demand. On the production side, you can pretty trivially source goods from a anywhere on the planet. Again, reducing cost.
But the hard assets go up. Housing, food, durable goods. The average white good like a fridge costs 50% more and last 50% less time.
My parents bought a house when I was born in NYC in the 70s for $20k, sold it for 10x more in 1990 and that buyer sold it for 10x more circa 2007.
The deflationary power of the internet powered costs for business. My employer has 1/3 the accountants they had 30 years ago, but 5x as many IT people. Specific occupations make more money, but most make less due to dropped demand. On the production side, you can pretty trivially source goods from a anywhere on the planet. Again, reducing cost.
But the hard assets go up. Housing, food, durable goods. The average white good like a fridge costs 50% more and last 50% less time.
Quantitative easing
I think it is a combination of 1: massive money supply expansion - that mostly benefits the already rich: asset owning classes and banks/institutions that get first dibs on cheap money, and 2: globalization/technology - reducing the value of your typical worker though outsourcing, efficiency, culture, etc. 3: The rich entrenching their power, making it more difficult for everyone else who isn't. Not so much a conspiracy, more of some kind of feedback loop we need to break.
Unsubstantiated guess: insane P/E ratios became the norm and maintaining them is harder when you’re raising salaries.
> insane P/E ratios became the norm and maintaining them is harder when you’re raising salaries
P/E is the inverse of earnings yield. It varies with rates. So 2% -> 1% equity yield means a doubling of P/E. But framed as a yield shift it looks less dramatic (and more familiar).
P/E is the inverse of earnings yield. It varies with rates. So 2% -> 1% equity yield means a doubling of P/E. But framed as a yield shift it looks less dramatic (and more familiar).
How do large P/E ratios impact salaries?
I don't think this would pass much scrutiny, but I suppose you could have a situation where a small number of people that own a large number of shares in a variety of companies could become a monopolistic unified force that could put downward wage pressures on entire industries.
Setting a trillion dollars on fire in Iraq and Afghanistan?
Of course Putin's doing it now in Ukraine and maybe China is about to do it in Taiwan so don't worry, the rest of the world is catching up to America's stupidity.
Of course Putin's doing it now in Ukraine and maybe China is about to do it in Taiwan so don't worry, the rest of the world is catching up to America's stupidity.
there was a significant recession around 2007
I would say that is a symptom, not a root cause
Not saying it's related, but 9/11 happened.
The proliferation of payment plans.
Everyone can "afford" a flagship smartphone. Only 36$ per month Everyone can afford a car only : 340$ a month.
numbers add up fast digging themselves into a hole
Everyone can "afford" a flagship smartphone. Only 36$ per month Everyone can afford a car only : 340$ a month.
numbers add up fast digging themselves into a hole
>Everyone can "afford" a flagship smartphone. Only 36$ per month Everyone can afford a car only : 340$ a month.
But auto loans were around since the 20s. What changed?
https://lendedu.com/blog/history-of-auto-lending-industry
But auto loans were around since the 20s. What changed?
https://lendedu.com/blog/history-of-auto-lending-industry
Financial responsibility, it would appear: https://www.businessinsider.com/credit-card-debt-record-2017...
It seems like everywhere is pushing financing as an alternative to payment upfront. Even small (<$50 purchases) are being offered financing through services like Klarna. It really feels like it's become an option for almost any purchase now.
Given the banks know these people can't afford it anyway they will still allow them to continue borrowing despite knowing that it is already getting expensive for average people to do so quickly.
If some are rejected directly by the banks for getting these loans, then the banks can still get them by setting up a BNPL (Buy-Now-Pay-Later) competitor / service with even higher interest rates. Either way, the banks still win.
So you will own nothing, and you will be very happy. Even if you can't afford it, the banks will be very happy to charge you interest and you will still be happy.
The scam of the century.
If some are rejected directly by the banks for getting these loans, then the banks can still get them by setting up a BNPL (Buy-Now-Pay-Later) competitor / service with even higher interest rates. Either way, the banks still win.
So you will own nothing, and you will be very happy. Even if you can't afford it, the banks will be very happy to charge you interest and you will still be happy.
The scam of the century.
That's incorrect.
If anything, banking and lending regulation have only increased since the boomer era. We made it more convenient, but we also made it harder for businesses to trap people in bad loans.
If anything, banking and lending regulation have only increased since the boomer era. We made it more convenient, but we also made it harder for businesses to trap people in bad loans.
What's with the title? The article itself does not make this claim (even if it has some outlandish presentations of information) - it claims that dollars have 86% less purchasing power, not that we have 86% less purchasing power. The article does everything it can to make you think this without actually saying it, but it doesn't say it.
It's a terrible article, but that title is somehow worse.
(Honestly, I don't think this really deserves a submission, it's just wrong..)
It's a terrible article, but that title is somehow worse.
(Honestly, I don't think this really deserves a submission, it's just wrong..)
I really feel for the younger than Gen X (which I am) groups.
My older brothers who are boomers did have it easier (than me) and I had it easier than the younger groups.
Purchasing power and a general decline in society's support along multiple axes for what most would call a 'normal' life really does make me think that some form of strife or revolution is coming.
My older brothers who are boomers did have it easier (than me) and I had it easier than the younger groups.
Purchasing power and a general decline in society's support along multiple axes for what most would call a 'normal' life really does make me think that some form of strife or revolution is coming.
You're probably an early cohort of Gen X. Late Xers, that started their professional lives in the late 90s or early 2000s already got a bad deal.
As someone who was saddled with around $150k in college loans in a major I couldn't use (flying; that career was aborted in September of 2001), yeah... Bad deal sums it up nicely.
Took me into my 40's to buy a house, and for my area I got a steal at under $200k. At which point my dad (born '38) chewed me out for not saving money and building it myself like he did for only $10k (~$100 in today's dollars for 5 acres of land and 3,000 sqft).
Took me into my 40's to buy a house, and for my area I got a steal at under $200k. At which point my dad (born '38) chewed me out for not saving money and building it myself like he did for only $10k (~$100 in today's dollars for 5 acres of land and 3,000 sqft).
It does feel inevitable because at some stage, young people aren't going to care about supporting rich older people and check out of the boomers preferred systems of politics and taxes.
Home prices are misleading because real estate has become an inflation-proof place to store wealth, like stocks but with nuanced subsidies. Even homeowners who live in the house are partially buying with the expectation to sell it for more later. Call it a bubble that never fully pops. In some less countries with higher inflation and less developed markets, this is so extreme that nobody really buys a house, only buys a piece or inherits.
Better to look at rent, which isolates the utility part.
Better to look at rent, which isolates the utility part.
Ah not to be a spoilsport but I don’t the title is accurate.
Actual quote is: “Gen Z dollars today have 86% less purchasing power than those from when baby boomers were in their twenties.”
Quite a different claim.
Actual quote is: “Gen Z dollars today have 86% less purchasing power than those from when baby boomers were in their twenties.”
Quite a different claim.
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You should compare things that didn't change between then and now.
BigMac, for example, cost 65c in 1970, and $5 today. Average income (from the first graph) was $3.68k vs $44.2k today. So you had to work x1.5 more time for a bigmac in 1970 than today.
A return flight from NY to London cost $550 in 1970, about the same today. So you had to work 10 times more for that flight in 1970 than today.
BigMac, for example, cost 65c in 1970, and $5 today. Average income (from the first graph) was $3.68k vs $44.2k today. So you had to work x1.5 more time for a bigmac in 1970 than today.
A return flight from NY to London cost $550 in 1970, about the same today. So you had to work 10 times more for that flight in 1970 than today.
Things have been bad for the young for quite some time. It all started way back in the dawn of neo-liberalism. Since then, productivity has been raising without salaries growing as much. And worse than income concentration, we've seen an absurd level of wealth concentration since the late 80s and early 90s.
Late Gen-Xers were already pretty much fucked.
Isn't it a natural consequence of capital growing faster than wage?
> a natural consequence of capital growing faster than wage?
No. It’s the result of our real estate and housing system. (Stocks and Bitcoin can go up faster than wages without spiking CoL.)
No. It’s the result of our real estate and housing system. (Stocks and Bitcoin can go up faster than wages without spiking CoL.)
It's a result of skyrocketing corporate profit margins and plunging corporate tax share leading to a massive consolidation of wealth among a very, very small number of people.
Don't discount the change in population. The US population has doubled during this period. Everyone has an opinion on how that change would have affected the economy, but it would be foolish to assume that it did nothing.
My parents are boomers and frequently talk about the 2020s being 70s dejavu. My father entered his 20s in in 1968, and the tail end of his 20s in a deep recession and purchased a modest home in 1976 at a blistering 14% on 30 year fixed. His experience in the Midwest did not match with the assertions in the article.
How much was the total price of that modest home? 14% of cheap is still cheap.
It’s pretty much the same as today when you consider inflation and interest rates. People love to believe homes were basically free back then but they weren’t. Interest rates were super high and people still paid the same percentage of their monthly income line today.
There has been sone warping to be sure in and around metro areas people want to live in. Those areas were being abandon back then. Most places in the country are really cheap.
But overall it’s about the same.
There has been sone warping to be sure in and around metro areas people want to live in. Those areas were being abandon back then. Most places in the country are really cheap.
But overall it’s about the same.
Rents really are higher though.
very true. in my area it's related to Zillow and the iBuyers swallowing property and inflating rent artificially.
I don't understand why people compare now to before (Boomer adolescence) in the United States. The USA basically had no competition when Boomers were in their 20s. All of the major powers destroyed themselves and their economy.
I'd be interested to see this analysis done per country.
I'd be interested to see this analysis done per country.
This isn't a chart of declining GDP. It's a chart of declining purchasing power.
The US economy is thriving. The profits just aren't getting to actual workers.
The US economy is thriving. The profits just aren't getting to actual workers.
Right, all we have to do to return to a post ww2 era of middle class success is destroy the rest of the worlds industry.
Agreed. Compare to previous eras. Post WW2 America was an anomaly.
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This doesnt pass the sniff test.
Well I think it’s partly true and partly not- which is dangerous because it muddies the water and makes people less likely to believe what they read in the future.
I don't know why you're downvoted - You're correct, even some basic common sense should show that we aren't buying 86% less stuff today than in the 70s.
And that conclusion is born through when you actually read the article, they completely misrepresent reality with that title. It's kind of astounding how many people are just taking it as face value.
And that conclusion is born through when you actually read the article, they completely misrepresent reality with that title. It's kind of astounding how many people are just taking it as face value.
It does for me.
Absolutely agree. This is a piece about relative poverty in disposible income against current inflation and % of post-tax income which has to go to rent/power &c against truly disposable income.
I'm not in the cohort, but I still believe the model. Look to UK power bills, and Australian rents, and rates of home ownership since the 1960s.
I'm not in the cohort, but I still believe the model. Look to UK power bills, and Australian rents, and rates of home ownership since the 1960s.
I'm an older millenial, should be earning a good wage (doctor/consultant etc..) in the UK. Correction, I am earning a good wage. My parents can't understand how so much of my money goes towards mortgage, commuting costs, bills, childcare.
Some things are a lot cheaper. A midi controller, DAC converter, HDMI splitter - these are all cheap imports from china these days. Toys for kids are cheaper, but also cheaply made. But labour is so expensive - building work, window cleaning, childcare, carpentry etc.. Lots of things grossly expensive now - houses, disneyland, centreparcs, football and sports tickets.
It's only going to get worse. Hundreds of pounds more leave my bank account this year for energy costs, nearly a thousand more may leave my bank account next year for mortgage costs. I might just sell up and go somewhere else.
Some things are a lot cheaper. A midi controller, DAC converter, HDMI splitter - these are all cheap imports from china these days. Toys for kids are cheaper, but also cheaply made. But labour is so expensive - building work, window cleaning, childcare, carpentry etc.. Lots of things grossly expensive now - houses, disneyland, centreparcs, football and sports tickets.
It's only going to get worse. Hundreds of pounds more leave my bank account this year for energy costs, nearly a thousand more may leave my bank account next year for mortgage costs. I might just sell up and go somewhere else.
I think its odd a cohort (me basically) had the golden years, between the one before which had to live through postwar rebuild and industrial conflict, and the ones we leave our somewhat blasted legacy to, refusing to die, spending the inheritance.
I don't entirely feel good about this outcome. I am pretty sure higher taxation may be necessary, a return to the state, not the free market. But in the UK and Australia, older voters are holding this back. It's impossible absent revolution to change without waiting for my cohort and older.. to die.
I don't entirely feel good about this outcome. I am pretty sure higher taxation may be necessary, a return to the state, not the free market. But in the UK and Australia, older voters are holding this back. It's impossible absent revolution to change without waiting for my cohort and older.. to die.
People sometimes point out how cheap things like TVs or computers are now, but they're such different scales of cost. In the 90s, a decent computer might run you a few thousand $. A house now costs hundreds of thousands more than it did back then. The savings in commodities isn't making up for rising costs in housing, education, energy, etc.
How does one compare the purchasing power for a phone, which would be like a million dollars back in the day (if it was built to do a fraction of the things it can do now)?
You don't, because that's not a sensible way of looking at things.
Landlines, which were not cheap going by UK prices compared to operating a mobile today.
Don't have figures but then couldn't afford one when I grew up in the 70's.
Then colour TV's.
Much technology has got cheaper.
Now real-estate and travel costs (well apart from plan flights I'd say) have got more expensive.
But when rent and travel is a big chunk of life, and you measure things from owning a home. Well, those do skew things.
Then you also have aspects of population growth, post-war, kinda fewer people, that soon grow to hit that real-estate boom.
Also interest rates, was mentality of saving for things in 70s and shifted towards low interest rates and buy now, pay later. This also changed the landscape and again made those on the property ladder grow and push the access to that property ladder higher and higher.
But rental and travel, those really are the skew factors at play.
Need to compare quality of life really to get a bigger picture of everything, as that has increased in more aspects than people appreciate.
Heck I grew up with no central heating, single pain windows which had ice on the inside in winter and an outdoor toilet. This was in the uk in the 70s. Today, that would be called homeless. So much improved, so can't distract from that difference either.
Don't have figures but then couldn't afford one when I grew up in the 70's.
Then colour TV's.
Much technology has got cheaper.
Now real-estate and travel costs (well apart from plan flights I'd say) have got more expensive.
But when rent and travel is a big chunk of life, and you measure things from owning a home. Well, those do skew things.
Then you also have aspects of population growth, post-war, kinda fewer people, that soon grow to hit that real-estate boom.
Also interest rates, was mentality of saving for things in 70s and shifted towards low interest rates and buy now, pay later. This also changed the landscape and again made those on the property ladder grow and push the access to that property ladder higher and higher.
But rental and travel, those really are the skew factors at play.
Need to compare quality of life really to get a bigger picture of everything, as that has increased in more aspects than people appreciate.
Heck I grew up with no central heating, single pain windows which had ice on the inside in winter and an outdoor toilet. This was in the uk in the 70s. Today, that would be called homeless. So much improved, so can't distract from that difference either.
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Boomers in their twenties were mostly working. Gen Z in their twenties is finishing college, working towards a master's or even a PhD.
EDIT: No value judgments here. This is just a fact, people entered the active workforce earlier.
EDIT: No value judgments here. This is just a fact, people entered the active workforce earlier.
Makes sense, a Boomer in their twenties could buy a house and support a family of 4 with a high school education.
The joys of an industrial economy without too much automation.
and the fact that US is the only major economy isn't in ruins from ww2
an industrial economy without too much competition there’s plenty of cheap labor to be had in the world. The us was prosperous because there was the right combination of labor and capital.
They also weren't competing with a bunch of people with college degrees so except at the highest end a college degree was less of a necessity therefore they could get away without wasting 4yr on it.
My mother, a baby boomer ('48), worked as a waitress part time to pay her way through college in her 20's.
My dad worked for ma'bell, and earned somewhere around $150k in today's dollars as an high-school-educated lineman when he retired (and was then hired back on to train). And that's with a fully funded pension plan.
So, even if they were in the workforce earlier (they weren't, I (as a genX) was working part time in college at 18, my wife full time), the workforce was very different.
The times, they've changed.
My dad worked for ma'bell, and earned somewhere around $150k in today's dollars as an high-school-educated lineman when he retired (and was then hired back on to train). And that's with a fully funded pension plan.
So, even if they were in the workforce earlier (they weren't, I (as a genX) was working part time in college at 18, my wife full time), the workforce was very different.
The times, they've changed.
Sorry for nitpicking, but 48 is not a boomer. She is a Gen X.
Boomers are the folks born after WWII and before the oil crisis.
1948 is actually roughly within the OG "baby boomer" group, since it represents babies born to WWII veterans when they returned home to their wives. WWII ended in September 1945.
And while there are variations on the years per generation, here's the breakdown per Wikipedia. The baby boomer generation runs from 1946 to 1964, X from 1965 to 1980, Millenials 1981 to 1996.
https://en.wikipedia.org/wiki/Generation
As an aside, the "First Oil Crisis" was in '73, so even by your definition she's a boomer?
And while there are variations on the years per generation, here's the breakdown per Wikipedia. The baby boomer generation runs from 1946 to 1964, X from 1965 to 1980, Millenials 1981 to 1996.
https://en.wikipedia.org/wiki/Generation
As an aside, the "First Oil Crisis" was in '73, so even by your definition she's a boomer?
I misunderstood. I thought you were saying she was 48 years old, but she was born in 48.
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This is the stuff that can cause or facilitate revolutions.
Median age is too high for revolutions. Most people are tired and chugging along.
It bears repeating[1]: the mob doesn't replace the king; the court does, using the mob to do it. Nothing will get better under a revolution unless we're EXTREMELY, infinitessimally small chance lucky.
[1]https://youtu.be/rStL7niR7gs?t=878
[1]https://youtu.be/rStL7niR7gs?t=878
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or just resignations
So much this. A lot of people are just checked out. Their plan if they get laid off? Take a flight to Mexico and live a better life while the storm passes.
That is the plan for Texas frost storms.
aren't taxes lower now, though?
At the federal level nominal rates are lower. Effective rates are a lateral move or slight change depending on your bracket. Unless you're rich enough that progressive taxes (e.g. income and property) dominate your tax burden (most 20yos are not this wealthy) overall tax burden in most places is way up due to the proliferation of regressive consumer taxes and government fees that are basically taxes in the past 70yr.
The above paragraph is a broad brush statement and does not apply to all jurisdictions and situations. The prior sentence shouldn't be needed but is.
The above paragraph is a broad brush statement and does not apply to all jurisdictions and situations. The prior sentence shouldn't be needed but is.
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Other ways to say this:
Baby boomers have 86% less purchasing power than the greatest generation had in their seventies.
Gen-X have 86% less purchasing power than the silent generation had in their fifties.
On top of that, boomers use the money they have against the people who don't have the money (e.g. by buying real estate, and also by speculating with it). So the problem is compounded.
It seems obvious that the cost of living is much higher today than it was in the 1970s when a family could be supported by a single income while today given the cost of house, car, and commodities even two incomes does not compare to the buying power of a single income then.
The dollar has inflated to the point that it will soon be worthless. I wondered how the fed planned to pay its massive multi-trillion dollar debt once the dollar crashes but the Inflation Reduction Act has answered that question. Democrats are planning to extract the wealth of the American people at gunpoint held by 87k new militarized IRS agents.
The dollar has inflated to the point that it will soon be worthless. I wondered how the fed planned to pay its massive multi-trillion dollar debt once the dollar crashes but the Inflation Reduction Act has answered that question. Democrats are planning to extract the wealth of the American people at gunpoint held by 87k new militarized IRS agents.
To be fair, most (the vast majority) of people I know in gen z I know works significantly less hard than my parents did, I did, etc.
Those who do work hard are fairly well off. They work two jobs, didn’t go to college, but own their homes and have a steady income.
There’s definitely systemic issues, but work ethic is the major issue. And that’s a cultural issue.
Would you want the gen z you know building your house? I know some that I would, but not many.
Those who do work hard are fairly well off. They work two jobs, didn’t go to college, but own their homes and have a steady income.
There’s definitely systemic issues, but work ethic is the major issue. And that’s a cultural issue.
Would you want the gen z you know building your house? I know some that I would, but not many.
This might sound like an extreme take, but I want people who don’t work hard to be able to live.
I mean you can, but you won’t collect wealth.
I know gen Z as working harder, especially in school. The bar gets higher every year.
kids left highschool knowing more math in the 70's than college graduates do now
I doubt it. Kids leave elementary school today knowing more programming languages than college graduates did in 2010.
If you want actual data, compare SAT scores or something. I'm willing to bet that by any metric, school was lax back then.
If you want actual data, compare SAT scores or something. I'm willing to bet that by any metric, school was lax back then.
If anything, if that was actually true, it'd be a colossal indictment of prior generations of administrators and leaders demolishing the quality of education for those who followed. So for GP's sake, I hope they're actually wrong about math skills being weaker among the current gen.
SAT scores have a trend of being inflated over time because they are dropping.
There is no way the average college bound student from the 70’s doesn’t score higher on every standard subject than a contemporary one.
There is no way the average college bound student from the 70’s doesn’t score higher on every standard subject than a contemporary one.
I don't think so, but ok, look at college acceptance rates then. Pick some semi-top one like UCLA https://www.collegetuitioncompare.com/trends/university-of-c...
UCLA being flooded with applications doesn’t mean anything in this context
Every high-end school getting lots of applications does mean more students are seriously trying for college, and yes, the same student in 1975 would have a harder time being admitted to UCLA today even if it's just because they're flooded.
You could also look at college graduation rates. https://educationdata.org/number-of-college-graduates What trend shows that 1970s kids were better educated or harder working?
You could also look at college graduation rates. https://educationdata.org/number-of-college-graduates What trend shows that 1970s kids were better educated or harder working?
> To be fair, most (the vast majority) of people I know in gen z I know works significantly less hard than my parents did, I did, etc.
Any possibility this perceived "less-hard" working is an effect rather than a cause?
> Those who do work hard are fairly well off. They work two jobs, didn’t go to college, but own their homes and have a steady income.
Any possibility that Baby Boomers achieved this with just one job?
> There’s definitely systemic issues, but work ethic is the major issue. And that’s a cultural issue.
> Would you want the gen z you know building your house? I know some that I would, but not many.
I'd take literally any Gen Z to build me a house because I'd know how to compensate them for their work. It's largely unskilled/low-skilled labor, hence why almost anyone with some physical fitness and capability (Gen Z or otherwise) can do it.
Bear in mind: lots of Gen Z are children of Gen X and may have already witnessed the negative impact of inequality on Gen X and Millennials, which could very well be the "cause" for lower perceived participation in the workforce among Gen Z.
Either way, this is an exceptionally low-EQ take.
Any possibility this perceived "less-hard" working is an effect rather than a cause?
> Those who do work hard are fairly well off. They work two jobs, didn’t go to college, but own their homes and have a steady income.
Any possibility that Baby Boomers achieved this with just one job?
> There’s definitely systemic issues, but work ethic is the major issue. And that’s a cultural issue.
> Would you want the gen z you know building your house? I know some that I would, but not many.
I'd take literally any Gen Z to build me a house because I'd know how to compensate them for their work. It's largely unskilled/low-skilled labor, hence why almost anyone with some physical fitness and capability (Gen Z or otherwise) can do it.
Bear in mind: lots of Gen Z are children of Gen X and may have already witnessed the negative impact of inequality on Gen X and Millennials, which could very well be the "cause" for lower perceived participation in the workforce among Gen Z.
Either way, this is an exceptionally low-EQ take.
I'd attribute it more to the fact that zoomers are mostly just finishing high school or in uni right now. While boomers mostly left school early to jump directly in to a job. Give it 10 years and see if the education pays off.
It's a simplified conclusion, but the era in which a mail man could support an entire family with ease was a historical anomaly.
You can pinpoint the timeline exactly, where the above wealth stagnates or declines whilst the rest of the world is rapidly catching up, industrializing.
You can locally optimize but not even taxing the rich for 90% will fix this.
My other simplified conclusion is that everything that you need seems to be getting ever more expensive whilst everything that you do not necessarily need becomes dirt cheap.
We should probably spend some more time thinking about that. Everything becomes cheaper due to spectacular advances, but not housing, healthcare, energy, education, tax levels.
I mean, it's almost as if some invisible force blocks this progress, benefiting from artificial scarcity. Almost as if we're not supposed to have it good.
You can pinpoint the timeline exactly, where the above wealth stagnates or declines whilst the rest of the world is rapidly catching up, industrializing.
You can locally optimize but not even taxing the rich for 90% will fix this.
My other simplified conclusion is that everything that you need seems to be getting ever more expensive whilst everything that you do not necessarily need becomes dirt cheap.
We should probably spend some more time thinking about that. Everything becomes cheaper due to spectacular advances, but not housing, healthcare, energy, education, tax levels.
I mean, it's almost as if some invisible force blocks this progress, benefiting from artificial scarcity. Almost as if we're not supposed to have it good.
Well, I spent my twenties (in the 80's) in school, or working for 30K or 36K/year. You can work out what inflation does to those salaries vs. what purchasing power gets you today. Anecdotal, yeah, but it's all I got. And albums cost $4-5 in the mid-70's and I did ok on $20/week for food and stuff in school.
And there was no internet and the only computers filled rooms (but were still fun). One did social interactions F2F, which might actually have been a little more expensive.
And there was no internet and the only computers filled rooms (but were still fun). One did social interactions F2F, which might actually have been a little more expensive.
> Well, I spent my twenties (in the 80's) in school, or working for 30K or 36K/year.
Ballpark the 80's as 1985 and that works out to 82,604.83 to 99,125.80, for the curious. What most people would consider an excellent salary in their 20s, probably (software engineers in the current market excepted, perhaps).
Ballpark the 80's as 1985 and that works out to 82,604.83 to 99,125.80, for the curious. What most people would consider an excellent salary in their 20s, probably (software engineers in the current market excepted, perhaps).
There's always a golden job in the era.
Back in the 2000s in Canada, you could make 350k/y driving a truck in the oil fields with 0 education.
Software engineers are just the new golden job of this era. Even then, it's still considerably harder and has a higher bar of entry than driving a truck.
Back in the 2000s in Canada, you could make 350k/y driving a truck in the oil fields with 0 education.
Software engineers are just the new golden job of this era. Even then, it's still considerably harder and has a higher bar of entry than driving a truck.
She somehow seems to be calculating inflation adjusted wage increases to CPI changes. Rather--
Median Family income in 1970 was $9,870 [0]
Median Family income in 2021 was $79,900 [1]
CPI in 1970 was 38.8 [2]
CPI in 2021 was 271.0
Ratio of incomes = 8.1
Ratio of CPI = 6.98
So household income has increased more than inflation.
Median household income might not be the best comparison--family sizes have changed, there are more women in the workforce, etc. But "86% less purchasing power" makes no sense.
[0] https://www.census.gov/library/publications/1971/demo/p60-80... [1] https://www.huduser.gov/portal/datasets/il/il21/Medians2021.... [2] https://www.minneapolisfed.org/about-us/monetary-policy/infl...