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Comment by AceJohnny2 | Hacker News Reader

I don't know if it's funny or sad. Remember how economists predicted that productivity increase would lead to everyone being richer and having to work fewer hours?

Yeah...

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It will happen, just don't expect "the invisible hand of the market" to do it. The mechanism for bringing about these benefits will be political in nature.

I don't know if you missed it, but everyone(for the most part) are far better off than 10, 20, 30 etc years ago. I'd say in spite of the politics.

Not according to the growing wealth gap in the U.S.

If you considered the entire globe, then yes, there are growing middle classes in certain Asian and Latin American countries.

Wealth gap is meaningless to me. I care about quality of life, which has dramatically increased.

Quality of life has increased because of technological advancements.

To say that we shouldn't care about the growing wealth gap because the world has smart phones is disingenuous.

I care little for how much X has compared to Y. I do not see any use for the comparison, other than for media headlines. I'd say that singling out smartphones is disingenuous. The advancement of every industry has caused the lives of almost everyone to increase dramatically, the advancement has also created a lot of wealth, which is also the byproduct of an increase in industry. I've yet to see anyone explain empirically why it's bad that x has more wealth than y. I'm open to being swayed by data.

This is demonstrably false, and speaks of the "tyranny of averages". Yes, worldwide, huge reductions of poverty, largely in Asia, have let to increases. For the average middle class worker in the US, however, things have barely budged in decades. When you take into account growing inequality, and the fact that limited resources (like housing near city centers) will always go to the wealthiest, it's easy to argue the average middle class worker is substantially worse off.

See http://www.pewresearch.org/fact-tank/2014/10/09/for-most-wor... , and this quote: "In fact, in real terms the average wage peaked more than 40 years ago: The $4.03-an-hour rate recorded in January 1973 has the same purchasing power as $22.41 would today."

>This is demonstrably false

No, it isn't "demonstrably false". It's true by almost every metric.

>For the average middle class worker in the US, however"

Well, if the US middle class were somehow more important than workers elsewhere around the world, this would matter. They aren't, so it doesn't.

If real waves dropped, you should be able to name a good or service (besides obsolete ones like land lines) which we consume less of today than in the past. In fact, most goods/services should satisfy this.

So please, name them.

Lard?

Hourly wages have dropped. Household wages have risen, mostly due to women entering the work force.

Real household income has moved around, but no clear trend: https://research.stlouisfed.org/fred2/series/MEHOINUSA672N

Real hourly compensation has risen: https://research.stlouisfed.org/fred2/series/COMPRNFB

Anyone pushing wage numbers is playing a game of hide the salami, and ignoring the trend towards a larger portion of income being given in forms other than money.

Yeah, but "forms other than money" mostly means healthcare, which has skyrocketed - despite the fact that other developed nations with longer live expectancies have much lower healthcare costs.

More importantly, though, the Fed graph you show is an average (the real hourly compensation one). With growing inequality, using the average hides the fact the improvement for the median worker is much lower.

Yeah, but "forms other than money" mostly means healthcare, which has skyrocketed - despite the fact that other developed nations with longer live expectancies have much lower healthcare costs.

If you feel consumers are overconsuming medicine and driving up the price, there are lots of great ways to fix that. The most effective is high deductibles (currently illegal).

I know you are aware that life expectancy is minimally related to health care consumption, so why do you bring it up?

If you have data showing that median real compensation per hour is lower, show it.

And again, since household income has not moved much (according to figures I cited), you still need to provide an explanation for why we don't seem to consume less. (Hint: the basket of goods in CPI changes and $1 of chained-CPI adjusted wages today buys more than $1 of chained CPI adjusted wages 30 years ago. I.e., CPI != inflation in the long run.)

> "it's easy to argue the average middle class worker is substantially worse off"

it's also easy to argue that the typical metrics used in this comparison are misleading.

A "typical middle class worker" in the early 1970s lived in a house that was built in the 1950s or earlier, around 1200 square feet, 1 bathroom, 2-3 bedrooms, without air conditioning or a washer/dryer, and had one vehicle available to the household [0]. Nowadays, we consider that "the projects", undesirable housing for poor people, while the "middle class" live in considerably larger dwellings with more amenities.

The reason I mention this is that real wage / purchasing power comparisons almost universally use "average housing costs" as a significant part of the metric, and "average housing costs" are in no way measuring the same thing. ( It so happens that I live in my childhood home, which my parents purchased in 1975 for $32,500 -- about 3.1 times the national median household income. I purchased it from them in 2012 for $135,000, a mere 2.7 times the median income.)

If you actually compare the goods a median-wage worker can purchase today to the goods a median-wage worker could purchase in the 1970s, there are definitely some things we have a harder time affording (like routine health care), but with the majority of material goods, you can get much bigger/better/faster/higher quality stuff for the same portion of the budget [1]. A modern middle class income gets you much better than 40-years-ago middle class living conditions.

[0] dig through the reports at http://www.census.gov/programs-surveys/ahs/data.All.html for details

[1] http://nonprofitupdate.info/2011/07/27/i-can%E2%80%99t-think...

But all that better stuff Americans can buy is largely due to bigger household incomes from women entering the workforce. Back in the fifties/sixties, a single working class income could support a family of 4-5, comfortably. That's laughable today.

A single working class income can easily support a family of 4-5 in the sort of housing a family from the 50s/60s would have lived in, with the number of vehicles a family from the 50s/60s drove, etc.

This seems to be the case as long as consumption continues to scale. I think you can come close to approximating a circa 1950's standard of living on very little income.

I'm not really sure if that's the case- I'd have to do a lot more research to know if my instincts are anywhere near accurate here, but I suspect that while most people these days have access to more luxury goods than people in the 50's, it's mostly because the cost of luxury goods relative to essential goods has decreased drastically. I think that food and housing are far less affordable for people these days.

Yeah, I'm sure they aren't directly comparable. I'm just trying to describe my general feeling of "life as we know it" will somehow always manage to make itself more and more expensive, no matter how many productivity gains we experience. I'm skeptical of how a basic income can address this - wouldn't living off of the BI be equivalent to the frowned-upon practice of living off of welfare? I need to research this area more.

It's hard to judge stuff from today's world, where all the system is geared towards growth and consumption. But it wasn't always like this. there we're periods in history or different cultures when people desired different things, so there's no reason for it not to happen again.

As for real human needs , like healthcare - it seems to be that with technology ,at some point in time, they will be fully solved, so no need for further growth.

This page (http://www.fiftiesweb.com/pop/prices-1955.htm) suggests that the average income in 1955 was $4,137, and

a house cost $22,000 (ie, 5.3x an annual income)

a loaf of bread cost $0.18 (ie, 0.004% of annual income)

Today, a median household income is $51,939 and

a median house costs $188,900 (ie, 3.63x an annual income)

a loaf of bread costs $2.26 (ie, 0.004% of annual income)

Current median income and house prices from Google, loaf of bread cost from http://www.numbeo.com/cost-of-living/country_result.jsp?coun....

All dollars nominal.

How about comparing median individual income, rather than median household income? That median household income in 1955 likely reflected a single individual income, whereas the median income today likely reflects two.

Perhaps it would be worth considering that in 1955 household income was generally earned by fewer household members than it is today. Probably close to 1/2. Would it be safe to assume, then, that's approximately how much less the average household bread winner earns in today's world?

EDIT: Here's a fancy chart I just found, thought it might be useful to make the point:

http://www.bls.gov/opub/ted/2000/feb/wk3/art03.htm

Also I'm not sure if it's a typo, but your comparison between "average income" in 1955 and "median household income" today seems to hurt, not help your point.

1. You have to be careful how you define "luxury". The average house in 1950 was less than half the size of today's average house (even though the average household was larger), and not air-conditioned.

2. Since 1950, food prices seem to have grown at the overall rate of inflation, so food is cheaper relative to the median income. (https://research.stlouisfed.org/fred2/series/CPIUFDSL/)

3. Healthcare is usually considered essential, and its cost has increased as a fraction of median income, but I would bet 1950's medicine would be dirt cheap today if it weren't illegal to practice it: no MRIs, no patented medicines, no chemotherapy, etc. What we get in exchange for the higher cost is a decade of life expectancy.

4. Here is an interesting article I found on this topic: http://www.theatlantic.com/business/archive/2012/04/how-amer...

> What we get in exchange for the higher cost is a decade of life expectancy.

It's not quite clear that the extra decade of life expectancy comes from the more expensive medicine.

(I agree with the rest of your arguments for what it's worth.)

You seem to be implying there was some sort of scientific consensus instead of populist smoke-blowing.

That's actually unevitable. Everyone is richer today (in a sense) than 100 years ago, and the quality of life and work has increased for hundreds of millions of people. Imagine all the people who do not have to work the fields due to machinery. Now we just need to further these advances and soon enough we'll have a world where most of the menial work will be automated. At that point there will be a revolution and the rich will be forced to pay a hefty 70% income tax to provide for the 70% of the population not a work.

Well it probably would happen if economists were managers and owners.

This totally happened too, as long your definition of "everyone" is "the minority of people that are already rich and in power". :(

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