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Inflation Truthers

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Re: Inflation Truthers

#91

Post by defertoreptar »

jfengel wrote: post #90
defertoreptar wrote: post #87

Earlier quoted context omitted.

> and despite tax cuts for the wealthy wages haven't gone up. Real median personal income went up almost 8% from the year before the tax cuts (2017) and 2019. https://fred.stlouisfed.org/series/MEPAINUSA672N

I'm referring to the long term policy of tax cuts, starting in the 1980s. The data set you link to has real median income (after inflation) going up by about 40% since 1975, under 1% per year. That's not zero, but compared to GDP, the stock market, and other measures of overall economic health -- which have gone up by an order of magnitude or more -- the median is practically immobile. And for much of that time, it w…

Here is an image that plots the effective capital gains rate from the 1950s to recent years: https://en.m.wikipedia.org/wiki/Capital_gains_tax_in_the_Uni...

Let's analyze three periods:

1953-1985: no significant trend in effective capital gains tax

1985-1996: upward trend and higher capital gains tax

1996-2020: downward trend

Now let's compare those periods to real median family income (which tracks to 1953). https://fred.stlouisfed.org/series/MEFAINUSA672N

Annualized growth in real median income:

1953-1985: 1.8%

1985-1996: 0.8%

1996-2020: 2.0%

Real median income growth during lower capital gains tax policy was twice that of the period of higher capital gains tax policy.

Re: Inflation Truthers

#92

Post by dragonwriter »

defertoreptar wrote: post #91
jfengel wrote: post #90

Earlier quoted context omitted.

I'm referring to the long term policy of tax cuts, starting in the 1980s. The data set you link to has real median income (after inflation) going up by about 40% since 1975, under 1% per year. That's not zero, but compared to GDP, the stock market, and other measures of overall economic health -- which have gone up by an order of magnitude or more -- the median is practically immobile. And for much of that time, it w…

Here is an image that plots the effective capital gains rate from the 1950s to recent years: https://en.m.wikipedia.org/wiki/Capital_gains_tax_in_the_Uni... Let's analyze three periods: 1953-1985: no significant trend in effective capital gains tax 1985-1996: upward trend and higher capital gains tax 1996-2020: downward trend Now let's compare those periods to real median family income (which tracks to 1953). https:/…

Your choice of a thirty-two year period, and 11 year period, and a 24 year period, when the unequal periods aren't supported by some kind of consistent in-period patterns in the conjectured independent variable, plus using fuzzy subjective descriptors for the independent variable, suggest a breathtaking degree of cherry picking and desired-results-driving-methodology, here.

Re: Inflation Truthers

#93

Post by defertoreptar »

dragonwriter wrote: post #92
defertoreptar wrote: post #91

Earlier quoted context omitted.

Here is an image that plots the effective capital gains rate from the 1950s to recent years: https://en.m.wikipedia.org/wiki/Capital_gains_tax_in_the_Uni... Let's analyze three periods: 1953-1985: no significant trend in effective capital gains tax 1985-1996: upward trend and higher capital gains tax 1996-2020: downward trend Now let's compare those periods to real median family income (which tracks to 1953). https:/…

Your choice of a thirty-two year period, and 11 year period, and a 24 year period, when the unequal periods aren't supported by some kind of consistent in-period patterns in the conjectured independent variable, plus using fuzzy subjective descriptors for the independent variable, suggest a breathtaking degree of cherry picking and desired-results-driving-methodology, here.

They are unequal periods, and that's why we annualize the growth.

The periods aren't "cherry-picked." If you'd actually look at the plotted effective capital gains rate, you'd see a clear difference in tax policy in those three periods.

The "fuzzy subjective descriptors" are totally in line with the parent poster's: "long term tax policy."

Re: Inflation Truthers

#94

Post by dragonwriter »

defertoreptar wrote: post #93
dragonwriter wrote: post #92

Earlier quoted context omitted.

Your choice of a thirty-two year period, and 11 year period, and a 24 year period, when the unequal periods aren't supported by some kind of consistent in-period patterns in the conjectured independent variable, plus using fuzzy subjective descriptors for the independent variable, suggest a breathtaking degree of cherry picking and desired-results-driving-methodology, here.

They are unequal periods, and that's why we annualize the growth. The periods aren't "cherry-picked." If you'd actually look at the plotted effective capital gains rate, you'd see a clear difference in tax policy in those three periods. The "fuzzy subjective descriptors" are totally in line with the parent poster's: "long term tax policy."

> The periods aren't "cherry-picked." If you'd actually look at the plotted effective capital gains rate, you'd see a clear difference in tax policy in those three periods.

The first period includes within it a perfectly flat period longer than shortest of the periods you chose followed by a period of equal length that is more consistently increasing than the (mostly flat) period you've held up as an increasing trend, and then a period nearly as long as your shortest that is as consistently and more sharply decreasing than the one you hold up as showing a decreasing trend.

So, no, I don't see natural breakpoints in the data.

(You've kind of muddied whether you are more concerned with the actual cap gains tax rate or the trend in changes to the rate, seeming to lean a little more heavily on the former, so I focussed on that in my criticism; but if you care about the rates instead of the deltas the periods you chose still make no sense, for similar reasons.)

Re: Inflation Truthers

#95

Post by defertoreptar »

dragonwriter wrote: post #94
defertoreptar wrote: post #93

Earlier quoted context omitted.

They are unequal periods, and that's why we annualize the growth. The periods aren't "cherry-picked." If you'd actually look at the plotted effective capital gains rate, you'd see a clear difference in tax policy in those three periods. The "fuzzy subjective descriptors" are totally in line with the parent poster's: "long term tax policy."

> The periods aren't "cherry-picked." If you'd actually look at the plotted effective capital gains rate, you'd see a clear difference in tax policy in those three periods. The first period includes within it a perfectly flat period longer than shortest of the periods you chose followed by a period of equal length that is more consistently increasing than the (mostly flat) period you've held up as an increasing trend…

> The first period includes within it a perfectly flat period longer than shortest of the periods you chose followed by a period of equal length that is more consistently increasing than the (mostly flat) period you've held up as an increasing trend, and then a period nearly as long as your shortest that is as consistently and more sharply decreasing than the one you hold up as showing a decreasing trend.

It sounds like you're referring to the "maximum tax rate on long term gains." As I stated, I used the "effective capital gains tax rate," which is the average rate that is being taxed (long term cap gains tax is different than short term).

Re: Inflation Truthers

#96

Post by PhaedrusV »

mrfredward wrote: post #57
PhaedrusV wrote: post #26

Earlier quoted context omitted.

Also, all those changes were wrought by government fiat, and have been accomplished almost completely by reducing the weight of the cars, not by quality improvements as the article implies.

>have been accomplished almost completely by reducing the weight of the cars This is entirely false. All the work in materials to make cars lighter has been countered by added amenities (from power seats all the way to chilled cupholders), additional safety measures (extra airbags), and (in the U.S. at least) shifting preferences toward trucks and SUVs. From the first google result on the subject, slate: "The average…

Fair enough, I was mistaken

Re: Inflation Truthers

#97

Post by PhaedrusV »

TheTrotters wrote: post #34
PhaedrusV wrote: post #25

Earlier quoted context omitted.

Yes, the author is debating a straw man. The argument that the government is understating inflation is a pretty simple one. 1) The government is heavily incentivized to understate inflation in order to limit its expenditures for social security and TIPS, both of which are indexed to inflation. Social security in particular would explode in costs if, say, the official rate had been 1% higher on average over the past 3…

>Second, and the big point that the article missed entirely, is that real gdp per capita HAS been declining, reflecting that decrease in standard of living that one would expect to see if inflation were understated. Not true. See https://fred.stlouisfed.org/series/A939RX0Q048SBEA And why resort to conspiracy theories? Look at other data sources. They are consistent with the official inflation rate. E.g. https://fred.…

Excuse me, real median per capita income. And it hasn't been declining but it has been flat.

https://commons.wikimedia.org/wiki/File:US_GDP_per_capita_vs...

Re: Inflation Truthers

#98

Post by iguy »

leereeves wrote: post #70
iguy wrote: post #41

Earlier quoted context omitted.

You can also make almost the opposite point. We used to spend a lot on basic needs like food and shelter, 3/4 of the average income on food, and more money on bread alone than on housing (IIRC, 19thC rich countries). As growth/technology made these cheaper, or if you prefer, made us so rich that they can be had for a tiny fraction of our income, we spend it on other things. Many of these are status competitions -- it…

According to [1], the average cost of education has risen significantly faster than the CPI, not only the cost of top name universities with rare connections. > [Since 2001], in-state tuition and fees at public National Universities have grown the most, increasing 212%. while > The total consumer price index inflation increased by around 50% from August 2000 to August 2020, according to the U.S. Bureau of Labor Stati…

I guess I do think people paying for education are trying to buy something other than knowledge, even when it's not the ivy league. Perhaps more like trying to buy a position in society, an entry to a respectable white-collar career.

That would be why (in this theory of mine) it hasn't been disrupted by technology. The ability to impart knowledge to lots of people, in a way which was once only possible by gathering them in a room with a teacher, has indeed become cheap. But, as you say, this has not placed pressure on college tuition, as would happen in a more normal industry, which was actually selling what it says it's selling.

Re: Inflation Truthers

#99

Post by deathlight »

ItsMonkk wrote: post #74
intotheabyss wrote: post #6

Earlier quoted context omitted.

Yeah, this article is strange. Not even a mention of the Cantillion Effect, which is what people point to when they're describing "asset inflation".

I'm saddened to see that while this post isn't down-voted, it is not the most up-voted post that it deserves to be so. I expect this to be because most people don't know what the Cantillion Effect is, so this post will attempt to show it. People think of inflation like they think of the oceans. If the ice caps melt and water melts in, the shore lines from New York to Tokyo rise slightly. If you track this rise, that'…

Thank you for this interesting well written post. Did you come up with these water analogies for inflation or did you get that from somewhere else?
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