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Ask HN: What is really wrong with the US economy, really?

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Re: Ask HN: What is really wrong with the US economy, really?

#31

My question is, what is the problem, really Take a look at Matt Yglesias's The Rent Is Too Damn High ( http://www.amazon.com/dp/B0078XGJXO); many "fun" municipalities like Seattle have restricted development to the point that housing is extremely expensive. If you move from Seattle to, say, Houston or Dallas, you'll probably see your effective rent shrink by 35 – 50%. Secondly: see Tyler Cowen's books The Great Stagn…

I agree, the issues are quite complex. I cited a fed paper in my reply below -- thanks for taking the discussion up a notch.

Something I'd like to understand better is why capital (and not labor) is capturing a higher share of firms' overall income than in past years. As I noted in my reply, the decline of savings means this is a double-whammy for people, as they get hit on the front end with lower upfront cash payments, and on the back as well, when they don't share in any upside of corporate profits, due to no share ownership.

Re: Ask HN: What is really wrong with the US economy, really?

#32
post #19

If you don't mind my asking, how far would you say that $110,000 has gotten you in Seattle?

I'd say effectively nowhere. My lifestyle is literally identical to what it was 15 years ago when I was just starting out. It honestly feels like the goalposts keep moving. I am doing better than my parents, who were poor. I am doing worse than my grandparents, who had 8th grade educations.

> It honestly feels like the goalposts keep moving

That's a really great quote and I'm happy to see the honesty. This gets to the heart of the matter.

You're stuck playing "keep up with the Jones'", which by very definition you can not win.

You need to define your own goalposts, then they won't move, and you can actually get there.

What makes you happy? How do you want to spend your limited time on this earth? What do you want to contribute to the world?

Make those things your "goalposts", not money, and you'll be much, much happier and better off.

Re: Ask HN: What is really wrong with the US economy, really?

#33
The post-war expansion was terribly inefficient. And a lot of what was defined as an increase in quality of life two generations ago (pave everything!) turns out to look like a decrease in quality of life to our generation (suburban sprawl).

If you analyze the ongoing costs of maintaining our urban environment, vs paving everything in the first place, you see that it's easy to pave more than you can afford to maintain. That's us, and it's not just pavement, it's a whole lot of things.

I like this blog / podcast for talking about how we can avoid making decisions like the ones that got us here: http://www.strongtowns.org/

Re: Ask HN: What is really wrong with the US economy, really?

#34

What'd your great grandparents do for entertainment? Probably the radio, some TV, read some books, play cards. Speaking of TV, how'd they get it? Most likely over the air. Phone? Yeah, they had a land line, but they weren't dropping $100+ for a cell phone. Internet? Of course not. House? Probably about 1200 square feet or so, and they likely had more than 3 kids to occupy it. The rest of the world? A recovering war-t…

I think if you list cell phones and the internet before you list housing, your sense of scale is completely off.

Even if somebody's spending $200/mo on telephone and internet connectivity, that still pales in comparison to the cost of rent in pretty much any part of the country. A fairly small studio apartment in the area where I live is approaching $2000/mo, minimum - to pay less than that I'd probably have to move 30+ miles away, which then increases my commuting costs dramatically and might force me to drive instead of take public transit. (And no, I'm not living in some posh downtown area with high demand, I'm living next to the low-income workers and big families, in an apartment complex built in the 70s or 80s.)

Then let's look at health and dental costs, which combined together probably are double/triple what you pay combined for reasonable cell phone/internet service. (Personally, I pay $30/mo for cell phone voice and data. Internet is expensive because yay, monopolies - very little choice there.) Going without phone/internet connectivity in this modern society is utterly ridiculous as a working professional; you simply can't get away with it unless you decide you're gonna cut yourself off from the world and live in a cabin somewhere.

To answer your specific question, let's say he spends $200/mo on internet+cell phone. If he cuts those out entirely, that's $2400/yr, or barely a month's rent in many localities.

Don't be ridiculous. Stop focusing on tiny things when the real problems are right in front of you: Housing costs, health costs, transit costs...

Re: Ask HN: What is really wrong with the US economy, really?

#35
post #19

Earlier quoted context omitted.

I'd say effectively nowhere. My lifestyle is literally identical to what it was 15 years ago when I was just starting out. It honestly feels like the goalposts keep moving. I am doing better than my parents, who were poor. I am doing worse than my grandparents, who had 8th grade educations.

How is that? Again, I don't really mean to press you too far with the questions, I'm just a young guy who hears $110,000 and thinks "gee, that's a lot of money".

Hey, I'm an old(er) guy and I think 110K is a lot of money.

Re: Ask HN: What is really wrong with the US economy, really?

#36
The problem is the rich are getting richer, and the middle class is shrinking. Actual inflation-adjusted pay for most people hasn't risen in 30 years, while for the top of the top it's skyrocketed. Meanwhile, everything is more expensive, and unemployment is high thanks to the apparent political impossibility of introducing stimulus spending in a time of lowered demand and zero interest rate (cutting interest rates is the usually the easiest way to stimulate the economy, but you can't do that when you're at zero already). The money moved into finance, distorted everything thanks to deregulation, and screwed up the country, and the world to a certain extent. Europe in the meantime is addicted to debilitating austerity measures; the populations haven't exploded yet only because most of them have excellent social safety nets.

Things really were better in the 60's and 70's from the point of view of how everyone was doing, what they could afford and with how much effort spent to afford it.

Also, if you're a tech guy living in a tech area, cost of living is probably higher than average. And the US has expensive health care, thanks to, until recently, stubbornly refused all attempts to socialize it.

Re: Ask HN: What is really wrong with the US economy, really?

#37

I'm not sure if I agree that your grandparents were under less pressure in their jobs. Overall, I think life is far easier today than it was 50 years ago, at least for most workers. It sounds like you're doing better than 99% of people. Six figure income, no huge expenses. I think the question isn't 'what's the problem with the economy' - really the question should be 'what's the problem with our expectations?' I thi…

He made it clear he's not complaining about his situation and is asking about others', in general - or more precisely, 'My situation is fairly okay, but why isn't it great on my income? Why do other people have it so much worse when it seems like they should be okay?'

Re: Ask HN: What is really wrong with the US economy, really?

#38
post #23

Where is all your money going? Living in a studio apartment making $110k, you should be able to save thousands of dollars a month. Sounds like a budgeting problem.

Seattle, mid-to-late thirties = near-constantly increasing rents and increasing health expenses.

If he's actually in proper Seattle and not the surrounding area, the nearest affordable housing might be dozens of miles away from where he works, increasing his transit costs considerably.

Health insurance keeps getting more expensive, and if his plan isn't great he might be shelling out thousands of dollars a year to hit his deductibles, especially if he's not in great health.

'Sounds like a budgeting problem' is missing the point, which is that the set of unavoidable expenses - things you have to pay - keeps getting bigger and bigger, but incomes for a big chunk of the US don't grow quite as fast as that.

Re: Ask HN: What is really wrong with the US economy, really?

#39

I'm not sure if I agree that your grandparents were under less pressure in their jobs. Overall, I think life is far easier today than it was 50 years ago, at least for most workers. It sounds like you're doing better than 99% of people. Six figure income, no huge expenses. I think the question isn't 'what's the problem with the economy' - really the question should be 'what's the problem with our expectations?' I thi…

Well, I can't really know my grandparents' state of mind. But my grandfather drove trucks locally, and my grandmother worked in a supermarket. Try to imagine affording a single family house and two cars with jobs like that today. They always seemed like they enjoyed their jobs. My grandfather kept working long after retirement age. I never heard them complain about their jobs or give any indication they didn't like them.

If 99% of people are worse off than I am, that seems like an extremely serious problem to me. Hence my question.

Re: Ask HN: What is really wrong with the US economy, really?

#40
post #30

[deleted]

He's not asking for pity or for you to explain why he feels pressured; he was asking about whether things are this way for everyone, and why things are this way. Your post completely ignores this and takes the opportunity to condescend to him.
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