Asymmetrical Information

"One of the (to me) more compelling arguments in favour of new welfare programmes is that we are so rich, as a society, that we can afford to waste relatively large sums on government incompetence and deadweight loss in order to produce even small improvements in the lives of the truly unfortunate."

Honestly, I am quite happy not getting all the government I pay for.

I googled "Jane Galt" and "stupid bitch." It was no where near as fun as you led me to believe it was going to be. I couldn't even find the terms in the same article.

If you are going to measure how "better off" people from different nations or even different eras, I think that you almost certainly have to compare what percentage of their incomes they are spending on things like the essentials - housing, food, clothing and what percentage of their income they are spening on leisure - games, vacations, entertainment, etc.

I think that you can make a very plausiable assertion that people that spend more on essentials are worse off than the people that spend more on leisure. Any idea where one could find this data?

The idea that things are worse "now" than they were "then" is one that cuts across policial lines.

And historical ones; I seem to remember a story about a lovely young couple having their honeymoon cut short by listening to a talking serpent, or some such.

"Anyway it's good that I feel this way, because as you'll see if you google the words "Jane Galt" and "stupid bitch", there are a lot of people who enjoy Galt-bashing."

Having too much time on my hands, I actually checked this, and not one of those insults was aimed at you. So I guess there's nothing left for you to do, but to face the truth, however hard that may be, and accept that everybody loves you, despite your weird google searches.

Over what 30 year period in American history were thing not better. The question should be,is the improvement as much as is could be. Compare the improvement in income, standard of living, etc for the average American between 1945 and 1975 to the difference between 1975 and 2005. In the 1950'and 60's not only was the economy growing rapidly but the growth was shared by all income groups. Since the mid 70's we got somewhat lower growth rates and it was not shared by all groups. The percent of GDP that went to the bottom 90% income group fell from about 42% to near 30% using IRS data. I think this is an important enough change in how our economy works the the discussion of why this happened should not be trivialized by how much we value ipods or whatever, and charges of class warfare.
Look at the graph of the ratios at
www.visualizingeconomics.com

"It's a factual question; either Americans are living longer, more comfortable lives, or they are not."

If the facts don't fit, find additional criteria. To counter longer living, add 'quality of life', job uncertainty and various future unknowns (climate change, population aging, etc.). Comfort can be dismissed as being suburban or plebian. The anti-Walmart sentiments are evidence of this.

Joan,

Yes, we should compare how things are with how things should be (or would be had we had better policies). However, I don't think it's fair to compare the growth of the 50's and 60's with what we are currently experiencing. In the 1950's the US had a de facto monopoly on virtually all industries. Throughout Europe and Asia, all the factories had been bombed out of existence. The US had just about the only manufacturing base that was left intact. Both industry and labor benefited from the situation. Today, the world is much more competitive and labor is much more mobile (that is, it easier to substitute US labor with labor in Asia without significant changes in delivery or quality).

So, while it's important to compare how we did with how well we should have done, it's going to be hard to agree on how well we should have done.

Is it a matter of latent Marxism, or a symptom of the seemingly universal Four Yorkshiremen Syndrome? (actually, come to think of it, were the Four Yorkshiremen optimists or pessimists? They would complain that things were better back in the day, while explicitly acknowledge the considerable improvements in quality of life...)

"I googled "Jane Galt" and "stupid bitch." It was no where near as fun as you led me to believe it was going to be. I couldn't even find the terms in the same article." Ditto.

Though, I did see :"Anyway, it’s the McArdle Principle: for every argument that can be supported with facts and citations, ‘Jane Galt’ will have met someone who says the exact opposite.

Posted by nick s · June 19th, 2006 at 11:29 pm

from one who, seemingly, knows your work well..

And, now that you're back on this stupid topic, How can you continue to avoid the Trillions we are now in the hole v. 30 years ago??

I checked Google too, just cursorily, and with one exception, the first 10 or so of the links that came up referred to our gracious host, in decidedly unflattering terms. I didn't bother checking beyond that. I figure it proves Jane's point. To those who found different, p'raps try it again?

Personally I think it would have been more clever to cry out "Jane you ignorant slut!" like some latter day Dan Akroyd.

But that's just me.

After re-reading I just wanted to clarify that I do NOT think our host is in any way deserving of either i.s. or s.b. In generally I find her posts to be thought provoking, even when I don't agree.

Sure, we're wealthy enough that our current level of welfare payments doesn't harm us too much. But I'd caution you against any complacency here, as every "small improvement" in the generosity of those benefits works directly against "the number of needy shrink[ing]".

Or does your use of the phrase "truly unfortunate" mean you only want to be generous to the "deserving poor" and will let the rest suffer in their self-inflicted misery? This is a real question, not a rhetorical flourish: anybody who remembers what sort of lavish unemployment benefits were granted by countries like Germany in the 70's will be quite aware it's possible to eat up any amount of our GDP on those who would rather loaf than work, given half a chance.

I think Marxism appealed to different people for different reasons.

In his book, Witness (1952), Whittaker Chambers, a former communist, wrote that he was awed by Communism's apparent "power to change the world."

I remember reading another book, "The God That Failed," (1950), which contained articles written by ex-communists such as Arthur Koestler, Stephen Spender, and Richard Wright. In his essay, Wright, a black author, identified with Marxism's struggle on behalf of workers, which he likened to the struggle of blacks who were being repressed by racism. Wright was also attracted by the fact that the Communists in the USSR were offering "peace" and "bread."

Another author, Paul Hollander, has argued that Western democratic, free market societies somehow alienates a significant number of people (many of whom are financially well-off), who then seek alternative philosophies to explain their world.

What helps keeps Marxism afloat today, in my opinion, is that Marxists are able to easily disavow any and all failed Marxist regimes by insisting they somehow ignored Marx's ideas. Back in college, one Marxist prof. wrote in the school newspaper that the Soviet Union represented a "betrayal" of Marx's ideas. Other Marxists are quick to distance themselves from China, Cuba, Cambodia, etc. (even though they may have previously cheered them on).

So what "historical forces" will move the Yankees to their 27th World Series title? None.

If my beloved Yankees want to win, they must score more runs than the other team in each game, make the plays, and have strong pitching or else this season will go into the "ash heap of history."

(Not to mention the facts: Alicublog's commenters are full of supposed "facts" that simply aren't true, like the fellow who said people are obviously worse off because it's so much harder for the average family to purchase a car and a home than it was in 1973, which is strange because given that both home and car ownership rates are at record highs, either he's wrong or households have gotten a lot better at overcoming difficulties in the last 30 years.) Anyway it's good that I feel this way, because as you'll see if you google the words "Jane Galt" and "stupid bitch", there are a lot of people who enjoy Galt-bashing.

Jane you are not a stupid bitch. Alicublog's commenters are stupid because they can not properly frame their arguement. Jane, you have missed one important point that the lunatic fringe keeps harping on:

In 1973, your average mortgage payment (or rent payment) equaled one week's take home pay. That was with historic highs in interest rates. Today (33 years later), your average mortgage payment equals two week's take home pay (sometimes even more.) And that is with historic lows in interest rates.

The lunatic fringe says it was better in 1973 (than it is today) because mom was home and daddy's check paid for everything. In fact, in 1973 daddy could afford to pay for everything while working menial labour. That doesn't happen anymore. Today, mom and dad both work. One person's full-time job brings in the money to pay for the mortgage payment and to pay all the property taxes, sewer, gas, water, and what-have-you. The other person's check pays for the food, the electric, the cable, the internet, the cell phones, the two retirement funds, the two car payments, and the gasoline to put in those cars which are owned at "record highs."

Of course we have more home ownership and car ownership (by percentage) than at anytime in history. That is because young people today refuse to settle and live in squalor the way they were willing to in 1973. In those days, it was more important that mom stayed home with the kids even if it meant the family had to get by on one used car and a 45 year old, drafty, house with one bathroom.

Whether things are better or worse today than in 1973, is a matter of priorities.

The left wing of the 19th, and the first half of the 20th, century had no Hayek to explain that the problem of aggregating information about supply and demand is insurmountable without prices, i.e. private property.

They had also apparently never seen a parent try to distribute slices of cake in a manner acceptable to all children involved.

Once you've seen what a fiasco *that* can be, you can't take the idea of central planning seriously. :)

There are only two metrics on which I might convincingly even try to argue that they are not: income volatility, and women working, which has drastically reduced their leisure opportunities. The data on the former is too tenative, I think, to fully assess yet, and as for the latter . . . well, I enjoy working a lot more than playing bridge with my neighbours. On the other hand, perhaps most women don't, since they have to go to boring jobs like "payroll supervisor" instead of exciting jobs like "international economics journalist". But women working has been accompanied by an enormous increase in autonomy, which inclines me very strongly to put it in the plus column.

When you are a 22 year old woman this is in the plus column.

When you are a 45 year old woman who still remembers that her mom never worked, that she got to watch the Soaps, smoke cigarettes, and drink coffee for 50 years and YOU have just spent the last 20+ years of your life in an office, you might start longing for 1973.

The stain of Marxism is still very much with us. Many of its ideas are accepted as givens by people who have no knowledge as to the origins of such notions, let alone the premises upon which such conclusions were based. The very worst thing about Marxism is how it legitimized the idea that social evolution was susceptible of being understood in a manner consistent with the advances in the hard sciences (such as physics or chemistry) which were happening in his time. In my opinion the term social science is an oxymoron. Its constantly subject to a social equivalent of the Heisenberg Principle. If you do come up with something, for example, that really does explain the dynamics of a modern economy, people will use that knowledge to devise strategies which will "game" the system, and the changes in their behavior will ultimately undermine and invalidate the premises upon which the original model was based. It won't work anymore. I don't think human behavior, economic or otherwise, can be reduced to a set of simple algebraic equations. In mathematical terms its a complex system, and anyone who thinks they have the knowledge or wisdom to do anything more than to make slight nudges to such a system is a fool.

And that is the essential ugly legacy that late 19th century thought, which Marxism popularized, even if he didn't quite invent it, left us: the very idea that we could effect predictable social change by using law to tinker with one or more variables in the simplistic equations that some confuse with reality.

Paul - average homes are fifty percent larger by square footage and people are assuming loans with less equity - both of which contribute to higher mortgage payments. Also, I think I've read (though don't have time to find proper citation) that up until two years ago, national housing affordability was inline with historic averages, so those larger mortgage payments you cite are mostly a matter of personal choice rather than economic policies gone awry.

In 1973, your average mortgage payment (or rent payment) equaled one week's take home pay. That was with historic highs in interest rates. Today (33 years later), your average mortgage payment equals two week's take home pay (sometimes even more.) And that is with historic lows in interest rates.

But with at least twice as much square footage per person in those homes, however.

As far as the whole women working thing-- do you really believe that housewives add nothing of value to a household? Their labor is obviously worth something, and when women work, then *obviously* a marriage is going to have to spend more or give up leisure in order to maintain the same standard of living.

The percent of GDP that went to the bottom 90% income group fell from about 42% to near 30% using IRS data. I think this is an important enough change in how our economy works the the discussion of why this happened should not be trivialized by how much we value ipods or whatever, and charges of class warfare.

OK. Points for discussion:

1) The immigration rate exploded. I favor immigration, but realize that lots of people came to the US from much poorer countries. That's going to increase inequality inside the US, even if the immigrants are better off than they were. Indeed, most of the statistics also show that if you ignore immigrants, inequality among US residents has decreased; similarly, the decline in medical insurance is entirely caused by immigrants. I stress that I favor immigration, and think that the immigrants are better off for coming here. But certainly it skews the statistics.

2) Education. People get more education for longer. In an earlier era, I might have gone to work right out of high school or college. Instead, I had four years of college and five years of grad school earning poverty level wages in exchange for a high salary now. That increases my person "income inequality" throughout my lifetime... my younger self was poorer while my older self richer than it would have been. In the aggregate, since different people are different ages, more education means more poor students at any one time and more richer advanced degree holders, increasing inequality.

3) Marriage. Those are *household* statistics you're quoting. Consider the explosion in the divorce rate, especially among the lower class. A divorce creates TWO households with lower income than the one household they used to be. If the upper middle and upper class continue to tend to be married, but the lower class becomes extremely unlikely to marry, the household statistics will show much more inequality.

Of course, there are other effects, like increasing returns to education, and women working that affect it too.

Paul: you saved yourself at the end, but I do have to highlight that interest rates and the total share of avg mortgage payment to avg salary doesn't matter. In fact, what one should see is that any change in either number has absolutely no effect on the other. The value of a house will fluctuate with interest rates, usually to produce an essentially stable mortgage payment. What proportion of their incomes people are willing to devote to a house isn't connected to interest rates, but rather as to what else they need to spend money on.

Why do people want to devote more money to housing? More demand for houses (we have been seeing a rather dramatic decrease in household size, as people move out earlier and stay single longer). Lower costs for other goods (food costs have shrunk, as has energy). Different tradeoffs (less willingness to commute, so buying back hours through more expensive housing, cutting commuting costs through higher capital costs). Accoutrements of housing becoming more important (living in a small wealthy school district bcomes very important, higher housing costs get you out of busing and guarantee you a good school without discipline problems and with a massive budget).

The fact that the things that the Left decries are specifically caused by their previously demanded policies has no effect and is something which they will never recognize nor admit. Vast numbers still think that welfare reform was evil, no matter the numbers. People were thrown off of welfare, and that's cruel! Unfortunately, these people never are treated how they wish their opponents were, nor how they claimed to be. If that were to happen, there would be many fewer of them!

Paul - average homes are fifty percent larger by square footage and people are assuming loans with less equity - both of which contribute to higher mortgage payments.

No, I think that is pure hooey. Square footage has absolutely nothing to do with it.

My dad bought a brand new split level ranch with one bathroom and 3 bedrooms in 1977. It had a large, unfinished, walk-out basement. There was 1100 sqaure feet of finished living space and about 700 square feet unfinished. He paid $33,500 for it.

That same house today, in that same neighborhood, would have run me about $380,000. That is almost a 12 fold increase in cost after 29 years. Incomes have not gone up 12 fold since 1977. Why is it that expensive?

Simple. People are willing to send wives out into the workforce today to bring home paychecks. They weren't willing to do that (as much) in 1977. My mom didn't work then. In fact, I don't remember hardly any moms on our street that worked outside the home.

Go back to that same street today and go to each of those now 30 year old homes, and I'm betting every wife must work outside the home or they can't make the payments.

As far as the whole women working thing-- do you really believe that housewives add nothing of value to a household?

I never said that. All I'm saying is those who long for 1973 believe that the ability for a family to afford to have a fulltime *housewife* is a major step up in lifestyle and affluence that we do not typically have today.

Their labor is obviously worth something, and when women work, then *obviously* a marriage is going to have to spend more or give up leisure in order to maintain the same standard of living.

I don't dispute that. My wife and I both work full time in offices. We pay to have the house cleaned once every two weels. We pay for landscaping every two weeks. We pay to have the pool cleaned weekly. And We pay for child care for our daughter. If my wife stayed home, all of that could be done by her. We would save all that money we currently spend.

She prefers to work. Some women prefer to stay home. Those that want to stay home want to be a housewife in 1973. The angry left's point is that a *housewife* can accomplish all those tasks that I listed for a mere 1 hour's worth of labour daily, giving her 7 hours per day to play with her kids, drink coffee, and watch Soaps. Thus, our society has collectively lost overall earning power from 33 years ago since it takes a household 80+ hours of weekly labour to accomplish what was done with 44 hours of weekly labour. That is a net loss.

I disagree with their point, but I acknowledge their point. That is MY point.

Paul: you saved yourself at the end, but I do have to highlight that interest rates and the total share of avg mortgage payment to avg salary doesn't matter.

When you live check to check (like the angry left assumes that everyone does) then it most certainly does matter.

The value of a house will fluctuate with interest rates, usually to produce an essentially stable mortgage payment.

Partially. The real value of the house fluctuates more so with the economy and the number of bread winning jobs in the area more than it does with interest rates. Go to Rome New York, Schenectidy, Poughkeepsie, Syracuse, or any upstate New York city and you will see homes that people still owe more on them than they can sell them for, mostly because General Electric (and all their jobs) up and left, eviserating the local economy. They haven't recovered their high water mark value yet. They are all still worth much less today than what they were worth in 1988.

If things are truly better now than they were in 1973 (and I have no reason to question Jane's figures), my question is: Why is that? Why are we better off when in a number of ways we feel like we must be worse off?

Two (of many possible) explanations come to my mind. One, between 1973 and now we had an absolute explosion of productivity due to personal computers and the internet - an explosion that is unlikely to be matched by future computing improvements. There's only one time you can invent the internet and pick all the low-hanging productivity fruit from that.

Second, we've had the luxury of being the world's reserve currency for the last half-century. Pretty nice when you can print all the money you want, and other countries are willing to take it. I don't know that that is going to last much longer either.

So I guess my point is that if we are in fact doing better now than in 1973, it's not because we've had a good set of responsible fiscal and social policies. It's because we've been incredibly lucky and have been living off the fruit of inventions and currency realities that we can't count on in the future.

"Those that want to stay home want to be a housewife in 1973. The angry left's point is that a *housewife* can accomplish all those tasks that I listed for a mere 1 hour's worth of labour daily"

First, I don't think that even today anyone could accomplish all of those tasks for a mere 1 hour's worth of work a day (unless your daughter is older than 12 and can be expected to help substantially). And you said that they wanted to be 1973 housewives. Do you remember/have you heard what cooking and cleaning and shopping were like in 1973? I think you're way, way off in your estimates, even if the child was at school all day.

Paul - average homes are fifty percent larger by square footage and people are assuming loans with less equity - both of which contribute to higher mortgage payments.

No, I think that is pure hooey. Square footage has absolutely nothing to do with it.

Yes, Paul, you're right, pure hooey (http://www.census.gov/const/C25Ann/sftotalmedavgsqft.pdf). New homes completed are only 46% larger than homes built in 1973. And 90% (sorry Paul, how precise do I need to be here? - it's actually 91%) have air conditioning compared to 49%. And 96% have 2 or more bathrooms compared to 60%. And 92% have parking facilities compared with 74%. So, how could I possibly have been led to believe that people are choosing nicer homes?

The angry left's point is that a *housewife* can accomplish all those tasks that I listed for a mere 1 hour's worth of labour daily, giving her 7 hours per day to play with her kids, drink coffee, and watch Soaps.

Well, that is pure hooey. According to this paper (http://faculty.chicagogsb.edu/erik.hurst/research/aguiar_hurst_leisure_nber_submit_final.pdf), "[t]he main empirical finding in this paper is that leisure time—measured in a variety of ways—has increased significantly in the United States between 1965 and 2003." and "the subsequent increase in leisure was greatest among less-educated adults. . .Given that the least-educated households experienced the largest gains in leisure, this growing “inequality” in leisure is the mirror image of the well-documented trends in income and expenditure inequality." Said another way, if the least-educated put some of their increased leisure time into either obtaining more education or working as much as the more-educated, income inequality probably wouldn't have expanded to the extent it has.

People are willing to send wives out into the workforce today to bring home paychecks. They weren't willing to do that (as much) in 1977. My mom didn't work then. In fact, I don't remember hardly any moms on our street that worked outside the home.

The top marginal federal income tax rate in 1977 was 60%. This created a huge disinventive to have second-income households. My wife works now, but if the top marginal tax rate went back to 60%, she'd stay at home.

Go to Rome New York, Schenectidy, Poughkeepsie, Syracuse, or any upstate New York city and you will see homes that people still owe more on them than they can sell them for, mostly because General Electric (and all their jobs) up and left

Perhaps if NY wasn't ranked last in business-friendly states, it wouldn't have led the country in net domestic outward migration from 1995-2000 and the upstate economy wouldn't have been so bad for so long.

They are all still worth much less today than what they were worth in 1988
Citation please. I don't believe it.

quick question here for the benefit of the uneducated (namely, me.) What 3 books would you all recommend to educate oneself on historical Communism/Marxism? Both from the perspective of the right and the left. thanks.

But though the economic system of Marx has been largely discredited, many of his ideas are still with us: of historical progress, of class as a defining category, of class struggle as an agent of history.

Just a nitpick - although I agree with the latter, the idea of historical progress should not be attributed to Marx. It should instead be attributed to Saint Augustine, who's book City of God, which attempted to explain the fall of Rome and show that Christianity did not cause its downfall, first set forth the idea of history as a linear concept. This is a natural position for someone in the Judeo-Christian tradition. Genesis happened only once, Christ died only once for our sins. This represented a break with the thinking of classical scholars who viewed history as cyclical.

Interestingly enough, Augustine viewed history as a conflict between the City of God (Christians) and the City of Man (seculars). Thus he anticipated Marx by more than a 1000 years!

My dad bought a brand new split level ranch with one bathroom and 3 bedrooms in 1977. It had a large, unfinished, walk-out basement. There was 1100 sqaure feet of finished living space and about 700 square feet unfinished. He paid $33,500 for it.

That same house today, in that same neighborhood, would have run me about $380,000. That is almost a 12 fold increase in cost after 29 years. Incomes have not gone up 12 fold since 1977. Why is it that expensive?

Probably because either due to government regulations or to simple lack of space, the value of the land has gone sky-high. I own (among other properties) a 4 bedroom house, built in 1905 for a lumberyard superintendent who was the second-richest man in town. (It's got 2x4's that actually are 2x4, and hardwood planks...) It's in a crime-free neighborhood, although I can't recommend the local school system, and some of the neighbors made me think of Jeff Foxworthy's joke about rednecks whose family trees don't branch. So does the guy I'm renting it to. I bought in in 1991 for $28,000, and if it was fixed up nicely it still wouldn't sell for $80,000. The difference is that there are thousands of unused acres within a few miles, so all you're going to get for a house is the cost of building a new one (probably with non-union labor), minus discounts for age and condition.

MarkJ: If things are truly better now than they were in 1973..., my question is: Why is that? Why are we better off when in a number of ways we feel like we must be worse off?

Why we are better off: economic growth and technological progress. Why we don't feel better off? The human tendency to idealize the past and to never be satisfied with what they have (every time you get a raise, you are only temporarily happier).

Why do people keep using the new homes data?

Housing is an extremely long lived asset and using the new homes data is confusing what is happening on the margin to what is happening to the average.

Even now when we are building something like 2 million new homes a year the housing stock is only expanding by something like 0.5% annually.

The median home in the us was 32 years old in 2005. That means half of the homes were built before 1973. Using the new homes data is an extremely biased indicator.

The median size of the US home in 2005 was only
1,758 sq feet--- not the over 3,000 for new homes cited above. Moreover, when you look at the median data your find that square footage is growing at less then 0.5% annually. In 25 years this generate something closer to a 12% increase, not the nearly 50% increase cited for new homes.

Second, yes home ownership is at a record level. But the bulk of the gain occured before 1980.
From 1900 to 1940 home ownership bounced around 45%-- from a high of 46.5% in 1900 to a low of 43.6% in 1940.

But from 1950 to 1980 the homeownership ratio rose from 55% to 64%. That is a 16% gain that averages out to about a 0.5% annual increase.

But from 1980 to 2000 the homeownership ratio rose from 64% to 66%, about a 3% increase or something like a 0.15% annual rate.

So yes, homeownership is at a record high but
there also was a sharp slowing of the rate of growth around 1980. So if you are looking at the growth in living standards and using this measure to show what happened you see that since 1980 the gains have been much, much more modest then it was prior to 1980.

The evidence is overwhelming that there was a sharp slowdown in the growth in the well being of the average or median american around 1980.
And using bias data, or a false strawman that
living standards did not collapse is not going to negate that statement.

To demonstrate that the sharp slowdown in growth widely observed around 1980 did not happen you have to show that something happened around that time to make the data extremely more inacurate. And despite all the talk about the inacuracy of the cpi I have seen no one really make that case.

Remember the census data on real incomes no longer uses the CPI. Rather it uses the cpi-rs, a series that takes all the changes in the cpi made after the boskin commission and runs them backwards to create a historical cpi based on the new methodologies. The cpi-rs shows that the inflation rate was about 0.5% lower each year.

Spencer, I am not claiming that there was not a shift in the relative earning power of educated/uneducated workers; obviously there was. I am only pointing out that because increasingly important sectors of our society, such as health care, are really, really badly handled by any of the inflation metrics, real income figures tend to understate SOL gains, particularly at the lower end. To dispute that, YOU have to be willing to say that in fact the average worker should be happy to go back to 1973 with a 10% boost over the then-current median wage, which I defy you to do with a straight face. Thinks like better health care, cheap long-distance telephone calls and travel, and more leisure really matter in ways that both liberals and conservatives agree they matter: it means more time connecting with loved ones, enjoying life. Not to mention that for every job we lost manfully working steel, we lost at least another tediously punching computer cards or typing letters; speaking as a former secretary, that's a massive, and unrecorded, improvement in quality-of-life.

As for homeownership . . . at some point it had to slow down. We can't just drive ever forward along these lines until everyone in America owns a home; there are people who are transient, people who are old and living in a nursing home, people who are too young to have a downpayment, etc. I think it's pretty safe to say that if you didn't buy a house by the end of the recent boom, you don't want one (or, like me, you want one in a very dense urban area like Manhattan, where there aren't enough to go around through no fault of the free market).

Truly we live in the best of all possible worlds.

Yes, Jane the cpi does badly handle healthcare.

The cpi for healthcare is esentially a measure of out of pocket expenses. consequently, it massively understates the impact of healthcare by
both underweighting it and excluding many of the areas where costs are rising the most rapidly. But on the other hand it is not quality adjusted, so I don't know if rising health care prices are inflation or not -- but neither do you.

Your argument that I have to agree that the average worker would have to go back to 1973 is just plain stupid. I can see no other way of looking at it.

As far as homeowership, yes is has to stop rising. But my point about the rate of growth is more valid then the point that living standards are rising because it is at a record level. What else do you use levels rather then growth rates to make this type of comparison for?

There has always been improvement that are not properly incorporated into the data. My family did not get a phone until 1948-- when I was in third grade. Now, which was a greater increase in living standards, my family getting a party line in 1948 or someone getting a cell phone in 1998.. By the way cell phone service was in the cpi in 1998 -- it had a weight of 0.057%

Jane:

"I think it's pretty safe to say that if you didn't buy a house by the end of the recent boom, you don't want one (or, like me, you want one in a very dense urban area like Manhattan, where there aren't enough to go around through no fault of the free market)."

Free market in NYC real estate? Uh, have you ever heard of rent control?

Abolish rent control and you people could live there like humans again. Average apt. wouldn't be a million bucks anymore.

Oh, but can't have that, can we?

Jane,
I provide regular comments on Alicublog. Not cause I learn much or find my host and fellow commenters particularly bright. More to annoy than anything else. It's that streak which usually wins the day in my decision to engage the yokels there.

I agree with much of your sentiments in this entry. However, in my opinion, libertarianism suffers from many of the same basic flaws as socialism. It manifests itself in different ways though. I actually must confess I have less patience for Ayn Rand and some of Milton Friedman's ideas than I do for do-good socialists. The every man is an island perspective or heroic individual is about as relativistic as you get and as uninformative as can be given its underlying numerous assumptions about the nature of man, freedom, community, and its penchant for analyzing man and his choices as though he's merely an economic good. Every discipline has this penchant for thinking they're cubby hole best explains the world "as it is". But libertarianism is wholly materialistic explanation, similar to Marxism, but without the compassion and humanity that begins to explain why we are different than mere animals.

Human beings are not only free to choose but free to refrain as well. There is a spiritual aspect to a human being that is as old as mankind himself. Beauty, love, compassion, among others, are not well explained in libertarian modes of thought. Analyzing this as merely a perspective or a choice that provides utility is meaningless. It is itself a social construct that may be useful for analysis but provides little in the way of actual choices people make each day. The fundamental flaw that socialism suffers from is the same one that libertarianism suffers from. It misunderstands man in its own ideological image. In many ways its different. But in its most important ways it is not.

        One of the things seldom mentioned in the discussion of Marxism is that Marx's supposed 'impoverishment of the masses' was not, to use modern terminology, a prediction of a decline in real wages, but a prediction of a decline in relative income and wealth.  The poor would see their real income double, then see the real income of the rich triple, and they'd explode in rage.

        Which turned out to be bad psychology.

Conservative Guy failed to mention that he gets his ass handed to him every time he shows up at Roy's place, because he's nowhere near as bright as he thinks he is. Spouting boilerplate Karl Rove and Newt Gingrich talking points may impress some, but at Alicublog, we read CG strictly for the laughs.

One of the other major Marxist fallacies, IMHO, is the current thinking pattern which requires that there be two, and only two, sides to any issue, and these must be in complete and total conflict with each other. Conflict to the death, actually. Life's deck chairs are simply not that easily arranged.

Oh yeah, another one: either you are an oppressor or you are an oppressed. Most of the mainstream media coverage of any aspect of our world ensures that the article will clearly identify which one they are talking about. And they will only quote people who fit those roles.

Bob, yes, that thesis-antithesis stuff was pure mysticism.

One more thing.

Does anyone know how Marx did his research? Did he actually visit factories in different countries and interview workers and owners? Did he do any real research especially on the subjects of nationalism, religion, and social reform, which he obviously underestimated?

Did he, a self-proclaimed "scientist," approach his subject matter objectively and gather the facts? Or did he just make assumptions to fit his thesis?

Isn't ironic (don't ya think?) that large numbers of academics who rely on Marx's ideas to one extent or another could never get papers or books published or get tenure by doing the same kind of shallow research he did?

Economics is a social science. You can get pretty far in it using deductive reasoning. If you're going to dismiss Marx's work for that methodology, you need to do the same for David Ricardo, who came up with the theory of comparative advantage.

Who's that other loony Randroid who makes pizzas out of mayonnaise and lard? Now she's funny. This silly bint here is boring.

Jane -- you got linked by Alicublog. Hence you can expect an infusion of morons who are trying too hard to be witty. None of them are smart enough to understand your point that you weren't denying that future income growth is a good thing. Instead, you were making the obvious point that if one is going to criticize the supposed lack of income growth over the past thirty years, one must take into account all of the advances that make life in 2006 better than life in the 1970s even at the same income.

Roy is probably just barely smart enough to understand this point, which is why he now backs off with the (pathetic) excuse that debating you is a waste of time.

"if you google the words "Jane Galt" and "stupid bitch"," ...

Is that like a high school clique? Hey guys lets google the words "Jane Galt" and "stupid bitch" and see if we get foaming hatred about ourselves! You guys are a riot. I can see why I didn't join the club.