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Now we need to look at some other factors. Inflation is underestimated, it doesn't properly show the increase in prices of health care, child care, education and housing. I think if inflation was calculated correctly US GDP would be about the same as Germany. This reduces the increase from 120% to 90%.
Another factor is that women started working full time. This lead to an increase GDP, but not higher salary per working adult. Hours worked increased by approximately 20% so this reduces the increase to 60%. Another factor are increased taxes on employers, compensation requirements on employers combined with higher inequality. This is hard to calculate, but it might be another 40%.
Combining this we have only seen a 20% increase in standard of living per working adult since 1970. And that is why you are not able to work fewer hours.
Now we need to look at some other factors. Inflation is underestimated, it doesn't properly show the increase in prices of health care, child care, education and housing. I think if inflation was calculated correctly US GDP would be about the same as Germany. This reduces the increase from 120% to 90%.
Another factor is that women started working full time. This lead to an increase GDP, but not higher salary per working adult. Hours worked increased by approximately 20% so this reduces the increase to 60%. Another factor are increased taxes on employers, compensation requirements on employers combined with higher inequality. This is hard to calculate, but it might be another 40%.
Combining this we have only seen a 20% increase in standard of living per working adult since 1970. And that is why you are not able to work fewer hours.
If you think US inflation vs. GDP metrics are wrong devise some data gathering and mathematical analysis fixing the problem and become a millionaire overnight.
The fact is all of that stuff is/has been well accounted for/considered over time.
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My argument has been for years that our standard of living hasn't improved as much as we'd like for a few key reasons:
1). Over the last many years in The US we've not only tolerated we've financially encouraged a very large and growing dependency class.
2). Overall tax burdens are much higher now than they were in the recent past. The economic drag and deadweight losses from that fact are apparent everywhere. Total social welfare spending used to be ~4 or 5% of GDP now much higher - per The OECD SOCX Index 30% in 2015 trailing only Fance.
3). Pro-rata fewer people are working now than in say 1990 about 5.5% fewer.
*Interestingly beginning around 1963 the labor force participation rate grew by ~9pts. by around 2000. That was mostly women going to work and nearly only to pay increased tax burden.
t doesn't properly show the increase in prices of health care, child care, education and housing.
In what way? For example, what is the inflation rate for child care according to govt versus what the actual rate is, and how did you arrive at an independent number that is accurate?
I mean you could be right (hell if I know the real numbers) but usually when someone in here is saying the rate of inflation is higher than govt says they are talking about their personal rate of inflation in a micro-universe that consists of them, a couple grocery stores, and maybe if we're lucky enough to have a wider survey it includes family or a couple friends who agree with them.
In what way? For example, what is the inflation rate for child care according to govt versus what the actual rate is, and how did you arrive at an independent number that is accurate?
I mean you could be right (hell if I know the real numbers) but usually when someone in here is saying the rate of inflation is higher than govt says they are talking about their personal rate of inflation in a micro-universe that consists of them, a couple grocery stores, and maybe if we're lucky enough to have a wider survey it includes family or a couple friends who agree with them.
Inflation is calculated by having a basket of goods and services. If the basket of goods no not represent what people people actually spend money on, then inflation will be lower than it should be. Also, when there is technological progress, such as stronger computers then it will reduce inflation. The problem is, if you were to buy a computer that cost 50% of what you spent 10 years ago, then you would get a much more worse user experience. The net result is that you will have to spend just as much today as 10 years ago.
How they calculare inflation is secret, and we do know that the government has huge incentives to keep inflation low. Benefits tied to inflation increase slower, they can keep interest rates lower and they can estimate GDP to be higher than reality. It is not a surprise that they use the secrecy for their own benefit.
Its not based on my personal experience, it is based on what I have read.
If you think US inflation vs. GDP metrics are wrong devise some data gathering and mathematical analysis fixing the problem and become a millionaire overnight.
The people who decide how to calculate the inflation rate know what they are doing. If they underststate the inflation rate it is on purpose. An obvious example of a country doing this was Argentina under Kirchner. A western country won`t do something that obvious, but they can modify it slightly.
They are not going to pay anyone to fix the inflation rate, if they wanted to fix it, they would do it themselves.
Inflation is calculated by having a basket of goods and services. If the basket of goods no not represent what people people actually spend money on, then inflation will be lower than it should be. Also, when there is technological progress, such as stronger computers then it will reduce inflation. The problem is, if you were to buy a computer that cost 50% of what you spent 10 years ago, then you would get a much more worse user experience. The net result is that you will have to spend just as much today as 10 years ago.
How they calculare inflation is secret, and we do know that the government has huge incentives to keep inflation low. Benefits tied to inflation increase slower, they can keep interest rates lower and they can estimate GDP to be higher than reality. It is not a surprise that they use the secrecy for their own benefit.
Its not based on my personal experience, it is based on what I have read.
If The CPI was manipulated downward........any advantage would be short lived there are just too many private and semi-private inflation metrics out there for CPI to be rigged downward for long C2ER leaps to mind. From C2ER data both COGI and COLI indexes of inflation are easily derived. Again there is simply no fraud going on.
The people who decide how to calculate the inflation rate know what they are doing. If they underststate the inflation rate it is on purpose. An obvious example of a country doing this was Argentina under Kirchner. A western country won`t do something that obvious, but they can modify it slightly.
They are not going to pay anyone to fix the inflation rate, if they wanted to fix it, they would do it themselves.
The Fed is deeply worried that the inflation rate remains negligible... another sign that the Big Wall O' Metrics is no longer accurately reflecting what's going in the nuclear reactor of economics.
The Fed is deeply worried that the inflation rate remains negligible... another sign that the Big Wall O' Metrics is no longer accurately reflecting what's going in the nuclear reactor of economics.
CPI is calculated by The US Bureau of Labor Statistics and reviewed by thousands - literally thousands of academics on an ongoing basis.
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