then how come the US economy boomed after 2009 in spite of unprecedented stimulus and other programs. Not saying that the programs caused the expansion, but it did not seem to hurt it either. Everyone who said that the printing would cause inflation, a repeat crisis, recession, or other problems, were wrong.
Doesn't something feel wrong about the post 2008 "boom"? Theoretically the economy is doing great but you have constant social upheaval, a generation where many are still living with their parents, and the need for constant central bank stimulus in the form of cheap credit.
I sometimes wonder if we've managed to mask the real state of the economy by pumping the metrics to make it look like it's fine.
Add to that the collapse in wage growth and the conspicuous difference in the rate of improvement in Asia vs in America.
The World Bank says [0] the US GDP per capita has more than doubled since 1996. In real terms. Computers have been a big boost, but it seems a tough sell that the US population has actually seen a real doubling in that time. That is saying a dude with a house in 1996 is a dude with 2 houses now. Is that arguably true? Where is the stuff?
In the hands of increasingly few people, namely tech billionaires. Amazon for example is worth more than all but 18 of the entire world's sovereign nations' respective GDP.
The economy has grown tremendously, in measurable terms, but that growth has almost exclusively gone to the 0.1%
And also much of the 'stuff' is here, or converted to services. 25 yrs ago, approx no one had 55"+ tvs, internet connection was a minority, and media eas collections of CDs/Videotapes. Now 'net connections are near-universal, and it is all streaming. Cell phones were just beginning & expensive, now everyone has a powerful computer in their pocket. We don't have two houses, but the ones we have are worth twice as much. Cars are much better developed than 2 decades ago, snd we'll soon have ubiquitous electric cars...
All of it needs to be more evenly spread. Just look at the charts of portions of funds going to labor vs capital.
It's worth mentioning that houses are not only worth far more, they are also physically much larger while household sizes have gotten smaller. In 1850 households had on average nearly 6 people; in 1890 five, in the 1930s four, in the seventies three - and today, the average household in America has two and a half people. Meanwhile house sizes have almost tripled since the 50s: new single-family homes were an average of 983 square feet in 1950 (about 280 sqft per person); today they are around 2,600 square feet (around 1050 sqft per person.)
That is to say - not only are the houses almost three times larger, but the average American has nearly -four- times more personal space today vs in the 1950s.
Only 3.4% of jobs in America require very heavy strength according to the Bureau of Labor Statistics. With the US employment rate at 56.8%, that's 1.9% of the population that has to do a very strenuous job.
Compared to even very recent generations, we live in palaces, we drive in luxury, we work cushy jobs, and we have endless entertainment.
>All of it needs to be more evenly spread.
Absolutely. Among the world, of course, but even within America the inequality is still huge. The fact that we live with this inequality while having the resources to fix it is a stain on our collective conscience.
Do you have a source on the housing statistics (people per house, house size, square foot per person)? I'm curious how this trend holds up internationally; maybe a US source would help.
We have problems, but I intuitively agree with this narrative of progress and want to see good data to back it up.
I do wish there were more choice - the ability to buy 1950s-70s grade housing, medical care, etc., for a lower price - but that seems to be becoming rarer.
From there it's just simple division to see the square foot per person.
> the ability to buy 1950s-70s grade housing, medical care, etc., for a lower price
If you want 50s style housing (aka dated interior and 280 sqft per person) - there are plenty of options. Go on Zillow and limit your price to $75k and you'll see plenty of homes available. 600sqft homes aren't the average, but they certainly still exist. You may think "aha, but you can't find a home in NYC!" - but keep in mind, only 16% of the world lived in urban areas in 1900 (and only 29% in 1950!) If you want an old car, those are cheap too. Old phones, TVs, radios, etc etc are all basically free. Dated medical care is the one thing you obviously can't get.
No, if you want to party like it's nineteen (forty) nine, go ahead. Live without a car (the majority of households had no car in the 40s) - you can get around by bike if you're lucky, and if you're in a car-centric area you can ride along with your coworkers, family and friends, or hitchhike, as people did. Your small housing will be very inexpensive. Your old-fashioned diet will consist of staples like flour, potatoes, milk, bread etc that have gotten extremely cheap relative to your income. Costs that would have been a solid chunk of your budget in the 40s (new clothing, for example) have gotten so cheap as to be almost unrecognizable.
I say this all as someone who did live a life of consuming very little for several years. If you do want to live in a smaller space, not have a car, and simply consume less (water/electricity/money/resources) it is certainly possible, even in our modern world. Give it a shot! You'll be surprised.
That is really interesting to me, as the local market seems to have totally exploded in price recently. A few of my friends are paying prices that would have seemed ridiculous in January 2020 when we were looking at houses. Maybe it's mostly housing in the middle of the price spectrum that's inflating.
That teardown analysis site is very interesting indeed!
My main takeaway is that it is actually a reasonable and healthy market, keeping the value of building roughly proportion to the value of the land/location.
Those things became cheaper to produce because of technological advancement, largely developed by people who did not benefit from this rise in production. They do not represent wealth in any meaningful sense. Wealth is economic power, and 55" TVs dont help you start a buisness or pay a downpayment for a mortgage. Internet connection may once have served as some measure of economic power, but its no coincidence that those with the power currently are doing everything they can to restrict the rights of normal people to create using it.
Imo, its really about things that give you more agency over your own life and the world. Cars are good, they represent a great increase in our ability to travel and make decisions for ourselves.
> We don't have two houses, but the ones we have are worth twice as much.
This is largely a wealth transfer to the elderly. Among under 40s, home ownership has fallen consistently since the 1990s, with only a brief increase in 2001-2005.
That's too limited a definition. For instance, living in a beautiful, well-designed city full of beautiful art is a form of wealth, but none of that is economic power. And what good is money ultimately, anyway, if not to buy goods and services that you want?
Those cell phones have voice navigation that will get you unlost practically anywhere on the planet. That would have been sci-fi fifty years ago. Give one to your kid and you don't have to worry about them being lost or not being able to get help.
Those cell phones (+ internet) will let you buy almost anything on the planet and have it shipped to your door usually within days, all without you leaving the house. Two hundred years ago you could not have done that even with servants, and since servants are unaffordable these days, it saves us the time spent driving around looking for the item. (I bought a wok ring last week; I could have driven an hour in traffic, or I just bought another item I needed and had it shipped "for free", and saved myself at least an hour.)
When I started programming, writing Windows programs took ages because if the Petzold book didn't have an example and/or the MS documentation was somewhat vague on some points, you just had to try it out. I spent days writing a screensaver for personal use, because I forgot I needed to zero out the struct, and it crashed NT, and it took me five or ten minutes to reboot, reload VS, and try again. Now I have a decent chance of finding things like that on StackOverflow, or at least posting it and coming back the next to find comments by complete strangers informing me of my silly error. (Being a young programmer without SO was a double-whammy...)
And in China and Africa people absolutely do use their cell phones to run their businesses. Even in the West we wanted more instant access: the movie "Sabrina" shows the wealthy executive making a business deal in the car with a portable phone, which was completely fantasy in 1954.
Cell phones and internet absolutely have made us wealthier. Even the 55" TV is a form of wealth: you can practically have your own private theater now, and thanks to the Internet, you can watch any one of the thousands of movies you want, instead of only the 12 most recent ones on offer at the cinema.
> [Falling homeownership amoung young implies wealth transfer to elderly]
Insufficient data to make that conclusion. It might be true, but you haven't examined any confounding variables. A counterexample: my parents own a house but I do not. It's not because I am not as wealthy as my parents (age-adjusted), it is because I am optimizing for flexibility and also because rent has been cheaper for me than owning. How many young people do not own a home because they want to live in an cool/hip/fun/whatever expensive location, while their parents are fine somewhere cheaper? How many people want to be digital nomads?
First off, the chart shows GDP per capita at current prices, meaning it's not adjusted for inflation.
GDP per capita is a very rough proxy for economic well-being. Adam Neumann of WeWork 'earned' $185 million for getting fired. So in essence, he raised GDP per capita by about $0.50.
someone needs to do a blog post or write up explaining how in sane world this is rational or justified, but in a serious manner . That is unheard of anywhere else in the world where people get paid so much after they fuckk up.
> I sometimes wonder if we've managed to mask the real state of the economy by pumping the metrics to make it look like it's fine.
This concept extrapolates widely in our personal and professional lives. The internet and cell phones were probably the biggest real pieces of innovation in my lifetime (mid thirties). Everything else is just fluffed up rehashes of relics or in very early stages of something radically new. I just read an article proposing genomics as the next big thing to really change the course of medicine and humanity, and I'm inclined to agree but do not see what the timeline of the tipping point will be. Everywhere else I look I just see more stagnation, short term thinking/goals, and continuation of status quo...with touches of regression throughout.
I wouldn't be so quick to dismiss medicine; we all just witnessed mRNA paying off its research tab, so it would seem.
CRISPR is at the beginning of its journey, but monoclonal antibodies are practically miraculous to people with a lot of autoimmune conditions. I have one which almost certainly would have blinded me 30 years ago. Today I can get an (admittedly enormously expensive, we still have progress to make there) IV infusion every couple of months which has practically no side effects and effectively forces the disease into remission. This drug (Remicade) wasn't around when I was born, and I'm only 39.
Lyn Alden explored this idea in her January newsletter, titled "The Hindsight Depression"[0].
> the US and much of the rest of the world have already been in a mild depression for the past 12 years, ever since the 2008 global financial crisis. It’s just not as obvious as the 1930s depression, because higher levels of technology and anti-deflationary monetary policy disguised it in a nominal sense.
Things are kind of distorted from what would be fair. The near zero interest rates have lead to high property prices which has made owners rich and renters poor in a rather arbitrary manner.
It's like the governments are trying to control a lot of variables with only a couple of levers.
A lot of the Fed problems are related to the fact that it doesn't have direct control over the economy and the help (fiscal stimulus) that is most needed can only be done by the US government.
Many economists argue that the 2008 stimulus didn't do enough, and that where it did provide stimulus it was applied at the wrong places (towards the top rather than the bottom). That's why we're seeing this response to the current situation.
If you are going to do stimulus, the way we are doing it now is better. Even better still would be to drop money from helicopters.
There's an argument to be made that we have done too much over the past ~10 years and are risking significant inflation, but that's a separate argument and it's hard to say what else we could have done that would have been better. Inflationary blowoff is usually less painful than deflationary depression, but neither is good. Policy is often an exercise in choosing the least awful option.
I agree, ineffective policies just cause unintended consequences. If the Fed or us government had done its job we wouldn't have to print so much money in the first place.
Empty houses everywhere since 2008. Someone has those booked at "full value" as assets, but they're gonna take money to remove before any use of the site can be made; they have negative value.
I'm not sure to what extent the 2008 crisis and the stimulus programs even did result in net printing of money. Remember, every time a bank issues a new loan they're printing money and every time they reduce lending they're destroying it, and increases in the flow of money are also act much like an increase in the money supply. So when the banks stopped lending and the money flows locked up back in 2008, this was effectively a massive destruction of money that offset some of the money printing.
The Covid pandemic is different. Western economies are heavily service-based and the pandemic effectively stopped many of those services being consumed. All of the restaurant meals and vacations and so on are gone, never happened, the opportunity to create them forfeited, even some factory production time was lost - and the money that would've paid for those things remained in the customers' pockets. Yet in most countries, the employees who would've worked to supply them also earned most of what they would've got for doing so. There's an imbalance there between stuff available to consume and money paid that's fundamentally very different from 2008, which was mostly a crisis in the financial and housing sectors.
