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Comment by ctoth | Hacker News Reader

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.

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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.

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 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.

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!"

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.

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.

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.

I'd be first in line for a new car that only has the features of cars from the 1990s.

Ford Crown Victoria was sorta that until 2010.

Yeah but the gas mileage on that was only 16 city/24 highway (mpg)...

90s cars of that size aren't any better. But even today, that MPG is common in the US because the fuel efficiency gains in engines get negated by 2/3 of people driving SUVs.

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.

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.

That's why your parent poster specified "low milage."

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.

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.

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.

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.

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.

> 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?

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.

The cars would still be fairly expensive. The upgrades on a low-end car are topical and aren't the expensive part of a car. Basic cars

A basic car only costs ~20k brand new. Some cars are as low as 12k.

Are there still cars in the USA without "smart"/connected features?

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.

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.

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.

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.

> 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...

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...

>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.

> 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.

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.

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.

First-time homebuyers can get a FHA loan, which allow a 3% downpayment.

Allow for a 3% down payment, but add in a requirement for PMI until you’ve hit a sufficient amount of equity, raising the cost of the front end of the loan.

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.

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...

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.

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.

> 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.

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.

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.

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