Systematically Impoverished: how weak politicians and Wall Street have bankrupted the Middle class

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Here and there, homes are burned by arsonists. Yet just a few years back, Howard Smith felt like a rich man. A year-old African-American engineer with a gray-flecked beard, butter-brown corduroys and red sneakers, he sits with two neighbors on a porch on Richmond Avenue and talks of his miniature real estate empire: He owned a home on this block, another in nearby Whitehaven and another farther out. His job paid well; a pleasant retirement beckoned. Then he was laid off. He has sent out 60 applications, obtained a dozen interviews and received no calls back. A bank foreclosed on his biggest house.

In her 50s, she, too, was laid off, from her supervisory job of 15 years, and she moved in with her elderly mother. Smith nods. For the greater part of the last century, racial discrimination crippled black efforts to buy homes and accumulate wealth. During the post-World War II boom years, banks and real estate agents steered blacks to segregated neighborhoods, where home appreciation lagged far behind that of white neighborhoods.

Blacks only recently began to close the home ownership gap with whites, and thus accumulate wealth — progress that now is being erased. In practical terms, this means black families have less money to pay for college tuition, invest in businesses or sustain them through hard times.

The African-American renaissance in Memphis was halting. Residential housing patterns remain deeply segregated. While big employers — FedEx and AutoZone — have headquarters here, wage growth is not robust. African-American employment is often serial rather than continuous, and many people lack retirement and health plans. But the recession presents a crisis of a different magnitude. Mayor Wharton walks across his office to a picture window and stares at a shimmering Mississippi River.

He describes a recent drive through ailing neighborhoods. View all New York Times newsletters. Banking on Nothing. As the subprime market heated up, she said, the bank pressure to move more loans — for autos, for furniture, for houses — edged into mania. She described tricks of the trade, several of dubious legality. She said supervisors had told employees to white out incomes on loan applications and substitute higher numbers.

When a homeowner deposited the check, it became a high-interest loan, with a rate of 20 to 29 percent. Then bank agents tried to talk the customer into refinancing, using the house as collateral. Several state and city regulators have placed Wells Fargo Bank in their cross hairs, and their lawsuits include similar accusations. In Illinois , the state attorney general has accused the bank of marketing high-cost loans to blacks and Latinos while selling lower-cost loans to white borrowers. John P. Relman, the Washington , D. A federal judge in Baltimore dismissed that lawsuit, saying it had made overly broad claims about the damage done by Wells Fargo.

City lawyers have refiled papers. Betts, director of the Center for Community Building and Neighborhood Action at the University of Memphis , which has closely examined bank lending records. Former employees say Wells Fargo loan officers marketed the most expensive loans to black applicants, even when they should have qualified for prime loans. This practice is known as reverse redlining. Webb A. Brewer, a Memphis lawyer, recalls poring through piles of loan papers and coming across name after name of blacks with subprime mortgages.

Wells Fargo officials say they rejected the worst subprime products, and they portray their former employees as disgruntled rogues who subverted bank policies. Blackwell, the bank executive. Clinton's opponent in the presidential election, Donald Trump, has repeatedly and falsely claimed that Clinton has advocated "abolishing" the Second Amendment. PolitiFact found "no evidence that Clinton has ever advocated for repealing or abolishing the Second Amendment," [] and FactCheck.

The Middle Class and Working Poor's Lifelong Losing Game -- In 10 Slides | HuffPost

Clinton supports the Brady Handgun Violence Prevention Act of the "Brady Bill" , which mandates federal background checks on firearm purchasers and imposes a five-day waiting period on purchases. Clinton opposes what she calls the "Charleston loophole," which allows gun sales to go through without a background after the three-day waiting period for the government to perform a background check runs out.

Clinton disagrees with the Supreme Court's decision in District of Columbia v. Heller , in which a divided Court struck down, by vote, a handgun ban in Washington D. Clinton suggested on one occasion in that Australia 's gun buyback program was "worth looking at" and "worth looking into," although such a program is not part of her gun policy proposals. Although the Australian program was compulsory, Clinton referenced it alongside voluntary gun buyback programs conducted in U.

Clinton made gun licensing and registration a part of her Senate campaign. Clinton was taught to shoot and hunt by her father. On hunting and shooting , Clinton said in "It's part of culture. It's part of a way of life. People enjoy hunting and shooting because it's an important part of who they are. In , the Brady Campaign to Prevent Gun Violence endorses Clinton for president, saying that she "has been a national leader on gun violence prevention for decades" and "has the experience, record, and demonstrated commitment to help reach the Brady Campaign's goal of cutting gun deaths in half by Clinton "vigorously opposed" and voted against the Military Commissions Act of , which changed the law to explicitly forbid the invocation of the Geneva Conventions when executing the writ of habeas corpus or in other civil actions.

Clinton called the act "deeply troubling" and said: "Our Nation must not indefinitely detain anyone without safeguards to ensure we are holding the right person. This is one of the bedrock principles enshrined in our Constitution; it is the way our Founders believed we could be secure against those who would abuse government power. I believe we do not have to abandon our constitutional principles or our values as Americans in the name of fighting terrorism. Clinton was a co-sponsor of the Habeas Corpus Restoration Act in Clinton believes that income inequality is a barrier to equal opportunity.

Some are calling it a throwback to the Gilded Age of the robber barons. Clinton has said that investments in the space program has "prompted a long period of American leadership in science and technology, and spurred a generation of innovators. Clinton strongly supports net neutrality. The bill aims to protect internet consumers and small businesses from Internet service providers charging large companies different amounts for Internet access than smaller customers.

Clinton has stated that the Internet must continue to use an "open and non-discriminatory framework" so that it may be used as a forum where "views are discussed and debated in an open forum without fear of censorship or reprisal". It is the embodiment of the fundamental democratic principles upon which our nation has thrived for hundreds of years. Clinton has been critical of the lack of broadband competition, stating that the monopolies "[use] their power to raise prices, limit choices for consumers, lower wages for workers, and hold back competition from startups and small businesses.

In June , Clinton released a comprehensive technology plan. Clinton has "pledged to continue the Obama Administration's efforts to rein in frivolous lawsuits by patent trolls , supporting laws that would curb forum shopping. She has called for faster review of patent applications, and investment in the U. Patent and Trademark Office to make it act faster and ensure that only valid patents are issued. In June , Clinton called for sweeping changes in national voter access laws, including automatically registering American citizens to vote at age 18 and mandating 20 days of early voting in all states.

Clinton has criticized laws passed by Republican-controlled state legislatures that do not permit student IDs at polling places, place limits on early voting, and eliminate same-day voter registration. What part of democracy are they afraid of? As First Lady, she referred to the Lewinsky scandal as being part of a politically motivated " vast right-wing conspiracy " against President Bill Clinton. On February 1, , Clinton voted against the George W. Bush's nomination of William H. Pryor Jr. Clinton also stated that supporting the Defense of Marriage Act was a strategic decision to help derail a constitutional amendment that would have banned same-sex marriage and that it was not fair that the gay partner of Gerry Studds was not receiving his benefits.

On March 18, , Clinton came out in favor of same-sex marriage. During her presidential campaign, Clinton has stressing the important of anti-discrimination laws covering sexual orientation and gender identity, stating that "you can get married on Saturday and get fired on Monday because we still permit discrimination in employment and in public accommodations.

And they used the bathroom issue. And yet, you could go to another city in Texas, like San Antonio, and you would know that that was totally without merit, that there was no basis for it. I think this is a reminder that if you stand for equal rights, if you stand against discrimination, you don't just do it once and you're done," and "You've got to keep fighting for it, you've got to keep standing up for it, you've got to keep moving forward.

Clinton's comments drew heavy criticism from LGBT groups and the media, who said that the Reagans had ignored the issue , causing Clinton to apologize and retract her statement. During both her and campaigns for the presidency, Clinton has met with Native American leaders and held events on Indian reservations. During her run, Clinton released a position statement on Native American issues emphasizing the need to both provide vital services and support tribal sovereignty. At an April candidates' forum on faith and compassion, Clinton said that "the incredible demands that God places on us, and that the prophets ask of us, and that Christ called us to respond to on behalf of the poor are unavoidable.

In , Clinton said that if elected president, she would appoint a "cabinet-level poverty czar" focused on "ending poverty as we know it. According to Clinton, there is "systemic racism in our criminal justice system. Clinton addressed the African Methodist Episcopal Church in Philadelphia in July , following the killings of two black men by police officers and the subsequent killings of five police officers by a black man in Dallas. According to CNN, she argued that "it was important to acknowledge the 'implicit bias' in society and some police departments and, in particular, called on white Americans to empathize with African-Americans".

Clinton cosponsored the Stem Cell Research Enhancement Act of , which called for federal funding of stem cell research based on stem cell lines derived from discarded human embryos. The bill was vetoed by President Bush. She also voted for the bill with the same name that passed in Congress. Clinton has spoken in favor of overhauling governance of the Department of Veterans Affairs VA and reforming veterans' health care. There have been a number of surveys of veterans, and overall, veterans who do get treated are satisfied with their treatment Nobody would believe that from the coverage that you see and the constant berating of the VA that comes from the Republicans, in part, in pursuit of this ideological agenda that they have.

Clinton urged an inquiry into the "Hot Coffee" mod of the video game Grand Theft Auto: San Andreas , which unlocked hidden sexually graphic images. Five months later, Clinton introduced the legislation anyway. In , Clinton said that she "absolutely" considers herself a feminist. Clinton has promoted equal pay for equal work and proposes action to close the gender pay gap. She supports the Paycheck Fairness Act. In , Clinton supported an Oregon state Equal Rights Amendment , which provides legal protection against discrimination based on sex.

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Clinton has called for the U. Clinton said in that if elected president, she will fill half of her Cabinet with women, a move that would be historic in the United States. Clinton has been critical of Congress's handling of the Zika outbreak in Florida. From Wikipedia, the free encyclopedia. This article may be too long to read and navigate comfortably. The readable prose size is kilobytes. Please consider splitting content into sub-articles, condensing it, or adding subheadings.

January Presidential campaigns. See also: Dakota Access Pipeline protests. See also: Nuclear power in the United States. See also: North Korea—United States relations. See also: Iran—United States relations. Further information: Cuban Thaw. Further information: Haiti—United States relations. Further information: Honduras—United States relations. Further information: Brazil—United States relations. Further information: Venezuela—United States relations. See also: Net neutrality in the United States. CBS News. Retrieved August 30, It Takes a Village. Simon and Schuster. The New York Times.

Retrieved July 19, Retrieved May 11, On The Issues. Retrieved May 20, February 18, Hillary Clinton Is Liberal". Retrieved July 12, The Huffington Post. American Conservative Union. Archived from the original on May 15, Retrieved July 9, Retrieved July 29, Retrieved August 13, Financial Times. Retrieved August 22, The Wall Street Journal.

Retrieved November 1, Retrieved August 14, August 12, Retrieved December 14, Hillary for America. Archived from the original on July 25, Retrieved July 30, The Washington Post. Bloomberg Politics. The Atlantic. Retrieved June 5, April 9, Retrieved May 17, Retrieved July 16, Retrieved May 18, Retrieved May 31, Associated Press. Retrieved December 25, Retrieved September 19, Public Radio International. Retrieved May 7, Retrieved August 3, Archived from the original on August 8, Retrieved December 7, Retrieved December 8, November 15, Retrieved June 2, Oct 26, , pm.

Retrieved October 28, Auxier, Leonard E. Burman, James R. Retrieved August 12, Retrieved June 4, Archived from the original on October 11, Retrieved October 11, Retrieved January 12, Rand Corporation. Retrieved September 23, September 23, March 15, Retrieved July 21, October 29, September 21, August 29, Archived from the original on August 30, The Washington Times.

October 4, June 15, October 7, Retrieved January 23, Retrieved April 19, The Hill. February 29, Retrieved June 13, Retrieved May 22, Fox News Channel. September 17, Archived from the original on November 2, Retrieved September 18, September 18, Eugene Emery Jr. January 18, Archived from the original on September 13, Retrieved September 13, Archived from the original on June 4, November 12, Retrieved February 28, Retrieved August 23, Archived from the original on August 24, Retrieved September 17, Retrieved July 2, South Bend Tribune.

Archived from the original on July 2, Moyer April 13, Pew Research Center. November 4, Retrieved April 20, USA Today. Retrieved October 27, October 24, Media Matters for America. October 26, Don't let anybody tell you that raising the minimum wage will kill jobs. They always say that. My husband gave working families a raise in the s. I voted to raise the minimum wage and guess what? Millions of jobs were created or paid better and more families were more secure. That's what we want to see here, and that's what we want to see across the country. And don't let anybody tell you, that, you know, it's corporations and businesses that create jobs.

You know, that old theory, trickle-down economics. That has been tried. That has failed. That has failed rather spectacularly. One of the things my husband says, when people say, what did you bring to Washington? He says, well I brought arithmetic. And part of it was he demonstrated why trickle down should be consigned to the trash bin of history.

More tax cuts for the top and for companies that ship jobs over seas while taxpayers and voters are stuck paying the freight just doesn't add up. Now that kind of thinking might win you an award for outsourcing excellence, but Massachusetts can do better than that. Martha understands it. She knows you have to create jobs from everyone working together and taking the advantages of this great state and putting them to work. October 27, NBC News.

Retrieved June 29, Retrieved December 5, Retrieved August 1, Campaign Council on Foreign Relations. Retrieved August 4, August 8, Random House. ABC News. Archived from the original on May 29, Retrieved April 2, Archived from the original on August 17, Aides, Biographers Say No". Boston Globe. March 21, Archived from the original on July 24, Archived from the original on April 1, Retrieved August 8, Archived from the original on July 28, It's very complicated".

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International Business Times. Retrieved October 14, American Media Institute. Helderman; Anu Narayanswamy May 3, Archived from the original on June 29, June 23, Retrieved May 23, April 12, Retrieved March 31, Cornell Chronicle. Cornell University. March 10, May 3, Archived from the original on May 22, Retrieved June 9, Mother Jones. Retrieved April 17, Los Angeles Times.

Retrieved October 25, Democracy Now! Amy Goodman. Retrieved October 29, League of Conservation Voters. Yours, in fact , Politfact May 14, Archived from the original on September 26, Retrieved October 6, December 14, July 13, Retrieved June 30, The Jamaica Observer. April 7, Archived from the original on December 14, Daily News.

New York. May 24, Archived from the original on October 15, Retrieved May 25, June 26, Retrieved October 24, July 10, Political Punch. Retrieved November 2, Retrieved October 31, November 14, Retrieved January 24, November 16, Archived from the original on November 16, Retrieved November 17, Clinton's Immigration Voting Record".

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Retrieved April 4, Retrieved May 19, Retrieved May 6, The Weekly Standard. Retrieved July 26, Challenges China on Disputed Islands". Brookings Institution. June 11, Retrieved September 10, October 20, Clinton Urges U. Sanctions Against Iran". Retrieved June 12, January 19, Archived from the original on June 8, Foreign Affairs. September 27, Retrieved September 29, December 5, Archived from the original on February 7, Retrieved December 6, April 22, In meetings with the Chinese President and Premier in Beijing, Hillary emphasized that the issue was critical for the US and managed to get their support for a UN Security Council resolution in June imposing tougher sanctions on Iran.

Retrieved September 24, There is a need for a more physics-based analysis. The modern car is not necessarily better even with the cup holders. For instance,the final word on the Prius is still pending. The embedded energy in the battery may turn out to make the Prius a net drain on the economy. It will depend on the recycling potential,still unknown.

The life cycle physics of tract mansions is similarly suspect. Shadowstats may be too extreme but some average between shadowstats and the CPI seem reasonable. The economy as a whole,like any engine has a net loss, decreasing resources and inflating dollars at some rate higher than three percent. It is not the only one. It is the one in the news right now. For me, much more important than the trends in inequality or the absolute amount is whether a person can get ahead or not.

Or is the average person stuck with little hope of making economic progress? I think that work is poorly done and ignores a lot of important factors to make a political point. And yes, I have my own biases. When I interview someone like Meyer, I try to ask him tough questions knowing that I am sympathetic. This is important to look at. He may not do it well. Thanks for interviewing another of my former economics professors from my undergraduate days at Northwestern I took his Labor Economics class — continues to make me appreciate the quality of the program more and more.

Enjoyed the dicussion very much. As best I recall, it rose to prominence at Cal-Berekley a few decades ago, when they were trying to increase the percentage of female graduate students at the university. Each department was strongly encouraged to increase their percentages of female graduate students, and the end results was something like what you describe in the poverty demographics: Despite each department increasing their invidivual percentages, the overall percentage of female graduate students at Cal-Berekley actually decreased.

We like to think that the US is highly socially mobile, much more than other countries, but the opposite seems to be true. This myth could also play into the hands of people who want low taxes. In these regards I feel pretty sure that power is increasingly concentrated in the hands of the very rich. I would be surprised if it did not increase between and Email the webmaster econlib. A valid email address is required to post comments on EconLog and EconTalk.

Are there studies showing, for example, how age and therefore time-spent saving, increased specialization, skill attaintment, debt repayment, etc impact inequality studies? Drawing on recently published papers, Burkhauser shows that changes in the standard of living of the middle class and other parts of Deaton wonders if economists should re-think the widely-held view that redistribution from rich nations to poor nations makes Greg Gilman Oct 3 at am.

Russ Roberts Oct 3 at am. Aaron Oct 3 at am. Thanks for your time. Bruce Meyer Oct 3 at pm. I want to emphasize two things. Filip Oct 3 at pm. Russ Roberts Oct 3 at pm. Aaron, I messed up my earlier comment in editing it. William B Oct 3 at pm. Great interview but this was more a lesson on confirmation bias than anything else. Bullets points; — health care is excluded?

Pietro Poggi-Corradini Oct 3 at pm. Mark Allen Oct 3 at pm. Chris Meisenzahl Oct 4 at am. Listening to this podcast now and enjoying it as usual. Russ Roberts Oct 4 at am. Also very happy to discover that this paradox has a name. Aaron Oct 4 at pm. Seth Oct 4 at pm. Frank Howland Oct 4 at pm. B Oct 4 at pm. Two points on that issue: At times, Russ Roberts would reference as a starting point.

Russ Roberts Oct 4 at pm. Russ Roberts Oct 5 at am. David Oct 5 at pm. B Oct 5 at pm. It makes me suspect that the data is just plain wrong. Russ Roberts Oct 5 at pm. Cowboy Prof Oct 5 at pm. Aaron Oct 5 at pm. Russ Roberts Oct 6 at am. B, There are three important trends going on in the education market. David Oct 6 at pm. B Oct 6 at pm. Michael Oct 6 at pm. I love the podcast, thanks Russ. Rohit Oct 7 at am. B Oct 7 at pm. DarrylC Oct 7 at pm.

Russ — It would be great to hear you chat a bit with Saez. Alan McCrindle Oct 7 at pm. Jim Kelley Oct 8 at am. Russ Roberts Oct 8 at pm. Trent Whitney Oct 11 at am. Russ, Thanks for interviewing another of my former economics professors from my undergraduate days at Northwestern I took his Labor Economics class — continues to make me appreciate the quality of the program more and more.

B Oct 11 at pm. Yoav Freund Oct 15 at pm. Ess Oct 16 at am. Tom Oct 16 at pm. Luke Avedon Oct 23 at am. Fantastic show! Am I missing something obvious? Comments are closed. Enter your email address to subscribe to our monthly newsletter:. Journal of Economic Perspectives, Winter Includes link to papers by Mark Bils mentioned in the podcast. Concise Encyclopedia of Economics. Poverty in America , by Isabel V. Web Pages: Mark Bils's Home page. Links to papers and more. Podcasts and Blogs: Cowen on the Great Stagnation.

EconTalk podcast. Bernstein on Inequality. Time Podcast Episode Highlights. More EconTalk Episodes. Particularly alarming is the claim that these changes have occurred at a time--until recently--of great growth in national income: very healthy grown in the United States in per capita income between the early s and the mids. Yet the claim is made that the rising tide did not lift all boats. Rather, it only lifted the big, rich yachts. The dinghies of the poor and the middle class did not share in that tide of improvement, share in that wellbeing.

What are your thoughts on these claims? They are basically wrong. And that's what 10 years of research by myself and James Sullivan at Notre Dame has shown. And if you look at consumption, it's gone up by a similar amount over that whole period--though exactly when it went up is slightly different from the income pattern. And you are going to argue that that is just a correction for a mistaken measure of inflation? Let's stick with the income side; we'll come to consumption later. Inflation is probably the most important reason, but also the picture looks much better if you look at what people are actually able to spend, which is the income that's left after taxes.

So, taxes also matter quite a bit at the median. Particularly in the s, if you account for taxes, the median has gone up much more than if you don't. And that is because of? Cuts in income taxes in and But, Bruce: The Bush tax cuts all went to the rich! We all know that. No, they were pretty evenly spread across the distribution in percentage terms. In percent. A little secret that doesn't get talked about very much. I just thought that I'd just mention that. So, what I want to start with: There are of course other measures of despair that pessimists--I'll call them the pessimists, the people that think that the rich are getting everything and the average person is getting nothing or less, 25 years.

So, if you look at hourly wages, corrected for inflation, they look pretty flat since about You hear the claim that median income is basically unchanged since Is your basic claim--I want to push you on what you said a minute ago--let's start with the correcting for inflation. What's wrong with those statements? They seem pretty powerful.

22 Statistics That Prove The Middle Class Is Being Systematically Wiped Out Of Existence In America

They are corrected for inflation, of course. They are not nominal income. So if you look at hourly wages reported by the Bureau of Labor Statistics BLS and median income reported by some folks, I assume taken from the Bureau of the Census, it looks pretty dismal. Why is your story better? Well, back in , the Boskin Commission concluded that our main rate of inflation, the CPI-U, overstates inflation by 1.

And over time, we've made some corrections to how we've measured inflation, but the Commission members, when polled more recently, concluded that still the bias was about. Now, why do we not measure inflation well? Well, it's very hard to keep track of new goods and to adjust for the improvements in the quality of goods. Take, for example, cars. The car you drive you drive, that most people drive now, is nothing the car of 20 years ago. Anti-lock breaks, power windows, power steering, power breaks. More cup-holders. Everything's better.

Everything is so much better. Braking, acceleration. Or do they not? They do, but they don't do it adequately; and it's a very hard thing to do. And the problem is even more difficult when you think about new goods. If you think about DVD players, cell phones--it took the BLS 15 years to include cell phones after they were introduced.

What do you mean? We should back up for a little bit. So, what the BLS does is it goes out regularly and it tries to measure the prices of a basket of goods where the weights on the basket are proportional to the spending that people do on these different goods. And when a new good comes along, it can't be in the basket the first day, obviously, because they haven't gone out and surveyed the price of that.

But you are saying it took 15 years from the introduction of cell phones till where they were even in the basket? And that's been historically true, that it's been very long before goods have been included. Most, historically, the vast majority of people had electric refrigerators before they were included. Used cars weren't included till, I think it was the s or s. Of course, in the beginning, very few people are buying these goods. But in recent times, the beginning doesn't last very long.

So, leaving out cell phones for 15 years, you miss a big component of something that is actually falling in price rather dramatically, when it's 15 years, I assume. Now, the other issue they struggle with, which you mentioned, is quality. Do they correct for that at all in the car example you mention?

You said they did it poorly. Did they do it for a good like an iPod? I know they do it for big items; they try to. You know, I'm actually not sure about iPods. But in general, they are reluctant to do hedonic corrections because it's a lot of work and there's certainly some judgment involved.

The preference is to accurately measure what's not quite the right thing. So, we might use the word hedonic. The idea of that is--I think it comes from work by Zvi Griliches originally--where the idea was to say, well, if it's better, some of the price is it's for the better good; to compare it to the old good, you have to take into account or somehow add a dollar figure for the improvement in quality. There are statistical techniques that help you try to do that. But as you point out earlier, it's very difficult to do. So, given all those changes; there's also been criticism of the BLS because they've often not surveyed some retailers such as Wal-Mart or super-Walmarts that were driving down prices and their baskets were not measured correctly.

That's all true. I'm very sympathetic to that argument. What I'm less sympathetic to is how you mechanically go about logistically correcting the actual numbers. So, you said members of the actual Commission were surveyed; and they are an illustrious group of folks immersed in some very dull and dreary stuff, to be honest. And bless them for their diligence. But surveying them and saying, well, we think it's about. There are people like Mark Bils at the U. It's quite significant, and he's tried to correct for these quality changes.


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But how do you do that in a systematic way without just saying: Well, we know that real wages have grown more than the data show? So, there are two ways. You can put together a lot of careful studies like the Bils study for particular groups of goods over particular time periods and try and extrapolate from that.

And that's basically what the Boskin Commission did in coming up with their numbers. Another way is to look at what you would have to adjust incomes by so that spending patterns over time at a given level of adjusted income stayed the same. Now that's a little bit harder to picture. You want to try that again? The idea is that: Think that if people's true incomes were at the same level over time, they would spend about the same share of their income on food, clothing, and leisure activities.

So, you look for what level you would have to adjust income by so that spending patterns stay the same over time. And several people have done that--Dora Costa, Bruce Hamilton--and they come up with biases to the CPI that aren't that different from what the Boskin Commission concluded.


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The thing I find remarkable about this--and I just have to get this in because it's so extraordinary--one of my reasons for being skeptical of the mainstream, standard view now the average person has made no progress now for the last 30 years is I look around. Now looking around is dangerous.

It can lead to very bad misperceptions. I live in the Washington, D. So, if I say: Well, the recession's not so bad; I went to the mall the other day and everybody was in there and it was packed and stuff was selling out the door. So, that's a stupid claim, to say because I looked around and things looked pretty good that this whole recession thing is exaggerated. But when I look back to , when I was alive and perceptive, meaning conscious and aware of stuff, I was 19 years old--when I look around at how much the world has changed since and I see how much the car of the average person drives has changed, the house of the average person lives in, the health care that's available to so many more people at unbelievably higher quality; the innovation, the revolution in technology, the innovation; and you tell me that the average person is not any better off?

I start to think maybe there really is something wrong with the data. And the thing that I find so remarkable is the pace of the improvement of daily life is what makes it hard to measure and gives you the impression--incorrectly--that the average person is falling behind. People say: Well, the s and s were more fair. Well, the s and s were pretty dull and pretty stagnant. And there wasn't a lot of innovation. Your car looked kind of similar at the end of those decades as it had at the beginning.

And your refrigerator was kind of similar. Now, 10 years go by and everything's better. And so I think it's incredible that because of that people are led to the false conclusion that people aren't catching up, because they are mismeasuring these things such as inflation. I want to absolutely agree with what you just said. And I think that I need to go back a bit and emphasize that you were getting at something right when you said it's hard to measure how much we overstate inflation in our official price indices.

I don't think people would universally agree that the Boskin Commission got it exactly right. There is a lot of uncertainty about what the exact bias in the CPI is. And it probably has varied over time. No doubt. But the way I can also point out that the price indices have to be overstating inflation is to look at the type of things you just mentioned.

The poverty rate now is quite a bit higher; and even two years ago it was quite a bit higher than the official poverty rate of They have a dishwasher often, they have a washing machine; they have things that even an average person didn't have in So, things have dramatically changed. And if you look at numbers for ownership of a dishwasher, a washer and dryer, those numbers have gone up similarly.

The counter to that is: you are cherry picking a few toys, a few electronics; those have gotten cheaper but a lot of important things--housing, healthcare, education--crucial things--food's gotten cheaper, undeniably, but those big items which are hugely important have gotten a lot more expensive.

So, just to point out that the poor have more goodies, that's an illusion about their improvement. Well, housing is really important. For the poor, for the middle class, for people at high incomes. And the size of housing units that people live in has gone up dramatically. The other things we mentioned--air conditioning--that's gone up. You can look at lack of problems like leaks in the roof or in plumbing, and those have almost disappeared.

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