Comment by rayiner | Hacker News Reader

Comment by rayiner | Hacker News Reader

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Income inequality comparisons are full of problems like this. Reflecting your intuition, I’d imagine most people would conceive of increasing income inequality to mean increasing gaps between people in the same station in life across two time periods.

But demographics have changed dramatically since 1970. For example, immigrants make up almost 3x as large a fraction of the population (from 5% to almost 15%) than in 1970. Obviously, if you add a large number of (typically) economically disadvantaged people to the population, income inequality is going to go up, even if there is no change in incomes for everyone else: https://www.migrationpolicy.org/sites/default/files/source_i....

Likewise, peoples’ incomes increase with age. The population overall has grayed significantly. Again, even if wealth inequality wasn’t increasing for people of any given age, changing the age distribution of the population will affect income inequality.

Finally, a larger fraction of the population now comprises historically disadvantaged minorities. While the income gap between races in the US is a huge problem, it’s a different problem than “income inequality” genetically, deserving more targeted solutions. (And even that income gap is hard to analyze, because the ages of people of different races in the US differ quite dramatically). The median age of non-Hispanic whites is 42. The median age of Hispanic people is 28. The median age of African Americans is 33: https://www.pewresearch.org/fact-tank/2016/07/07/biggest-sha...).

Income inequality probably is going up. But I’ve never seen a study that actually holds demographic changes constant so the result reflects peoples’ perception of what income inequality means.

I also suspect that some of these "oversights" aren't mistakes at all, but rather intentional obfuscation of facts.

Take note of how often you hear/read something like "incomes haven't risen in 30 years, but prices have gone up over 50% over that period". [Almost?] Inevitably, the income will be real income [inflation adjusted] and the prices nominal prices.

Do you have a source for such a comparison, everything I have seen is all real prices. I know rent and college had gone up about 50% in real prices and some things like food and high end electronics have gone down. Honestly, your comment seems like intentional obfuscation of facts.

Housing costs are only going up because people are buying/renting bigger houses (despite the fact that mean houshold size has decreased by almost a full person in 50 years).

On a per square foot basis, you don't really see an increase.

http://www.aei.org/publication/new-us-homes-today-are-1000-s...

How does this explain the price increases in older, urban housing stock? I’ve been renting 500-600 sq. ft. one bedroom apartments for the past seven years. My rent has gone up from $1900 a month to now $2790 month. This is all within the same zip code.

There are definitely some outliers, particularly in urban centers (primarily due to overly restrictive zoning codes). I was speaking about averages.

You also make a good point, in many places zoning would prohibit construction of identical replacements of much of the housing that is located there.

One of the commenters on the article you linked makes a good point:

"new single family homes are a very small part of the real estate market.

most of the big price moves have been in urban areas where single family dwellings uncommon and new homes extremely rare."

Pay attention over the coming 3 months to articles and headlines on inflation and wages on social and mainstream media. I think you'll find that well over half of them omit stating key assumptions/sources, and appear to be authored so as to lead the audience to the wrong (or at least an exaggerated) conclusion.

To be fair, pretty much all articles about literally any subject on social and main stream media fail to state key assumptions/sources - don't see why you'd think this topic is special in that regard. If we're going to debate anything in a sensible manner, we need to use actual publications by experts as the basis for those discussions.

I’m not worried nor do I believe that economists are confused.

I worry that the public / workers / voters / policy makers are being misled/confused/misdirected.

You sound like a conspiracy theorist if you have no sources, the first couple google searches are not doing this[0],[1].

The public is being misled, by whenever someone complains about stagnant wages the response is "you have smartphones now", but we can't afford houses or healthcare how is this okay? So your argument seems to be that all economists are in on this together to do what?

And your thankful your favorite youtube news personality has cracked the case (without publishing any research and has an opportunity to make money from getting views). Good thing he /she is looking out for you.

The bottom line is you sound incredibly foolish to me if you can't supply any sources of people trying to do this trick. Even if you do find one or two examples, there are plenty of sound statistics that say people have it harder now finicailly then 50 years ago.

[0] https://www.investopedia.com/ask/answers/101314/what-does-cu...

[1] https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us...

It’s not conspiracy theory, but rather the fact that data analysis is hard when you’re trying to account for confounding factors, and the media has incentives to report figures that make things seem more significant than they are.

Even things that are true are often reported in a way that obscures causal factors. For example, wages are stagnating, but total compensation (wages plus benefits) is not. Now, from an employee’s perspective, they might not care that their total compensation is growing because health insurance premiums are increasing but paychecks are staying the same size. But the employer has the exact opposite perspective: the employee is costing more money whether that money is going to to paychecks or benefits. Failure to articulate that distinction moreover leads you to the wrong conclusions. When you’re told about wage stagnation but growing corporate profits, you’re supposed to think employees are getting a smaller piece of the pie. That’s not true: https://www.nber.org/digest/oct08/w13953.html

> Total employee compensation was 66 percent of national income in 1970 and 64 percent in 2006. This measure of the labor compensation share has been remarkably stable since the 1970s. It rose from an average of 62 percent in the 1960s to 66 percent in the 1970s and 1980s, and then declined to 65 percent in the 1990s where it has remained from 2000 until the end of 2007.

The points you bring are certainly interesting, it seems to point to the fact that we are distributing healthcare very inefficiently and I would use this as an argument for government-run healthcare.

Here is the conspiracy theory presented with no examples: >Inevitably, the income will be real income [inflation adjusted] and the prices nominal prices.

This is what I take issue with and I don't think that a comparison between real nominal prices happens in order to trick people. This seems like something high school student wouldn't get away with.

I'll give you one source: Read the headline on this NYT article "Why Wages Are Finally Rising, 10 Years After the Recession"

https://www.nytimes.com/2019/05/02/business/economy/wage-gro...

Then look at the article: nominal wages rose every year (as indicated in the chart), but the breathless headline suggests the opposite to the average American. Do you believe that the omission of the word "real" in the headline was purely accidental or intended to drive outrage clicks?

That's not what you said before at all, they don't do an inconsistent comparison of real and nominal, which what I thought the problem to be >>" Inevitably, the income will be real income [inflation adjusted] and the prices nominal prices."

They don't specify which in the title, but they do in the article. The biggest thing is there is no comparison between nominal and real prices. Acting like the nominal cost of things is not keeping up with real wages.

If you don't want to get tricked maybe read the whole article instead of just the title. It is a somewhat complex topic and takes some thought to put into it if you want to know what is going on.

I've seen the exact behavior I described; this was the fastest misleading headline I could find in a quick search.

I'll reply on thread next time I see one, which is likely to not happen in the next 24 hours. Hopefully, you'll take an open minded read to see where social and mainstream media accounts are biased for outrage and clicks over information content and will notice these on your own as well.

I always try to keep an open mind, I will admit if this happens regularly by mainstream media, but comparing real and nominal prices seems like a pretty difficult thing to get past people. This is a complex topic and it can sometimes be tricky to kept track of how much was a dozen eggs, how much was a college degree, how many people had college degrees, how much is healthcare, how much would we spend on healthcare if the government was in charge, and thousands of other factors. Newspapers and website are driven by viewership so there will not likely specific language in a headline, or even in the article sometimes.

You can't win elections if you actually start talking about most contributing factors. In that case, very soon you'll be discussing immigration as your most important point and start sounding like Trump. Woops!

I sympathise with this view, but I'm not sure it's that simple. If you're Chinese or Bangladeshi or from anywhere else that's a poster child of globalisation, you can still compete with the US labour force from your own country. If you're allowed to immigrate, you get access to infrastructure, cultural knowledge, a somewhat functional legal system, and other force multipliers which might allow you to compete with more efficiency... but you'd still be competing even if you were back home.

Consider an individual John from Texas with a total population of N.

Initially John's chances of getting a job: 1/N

Now, with the arrival of new immigrant, John's chances: 1/(N+1) i.e. he's worse off.

Sure it turned out better for the new immigrant and he can earn way more than his original country and thus this is better for humanity and the globe but it is of little relief to John who is worse off now.

My assumptions in this:

- John is a low skilled worker who will not be easily able to switch to another line of work like a software developer

- John does not have significant savings to fall back on.

Another fun fact:

- The will to let the low skilled immigrant in, in today's environment does not stem necessarily from a position of goodwill, rather it is a calculated position to keep the numbers of a voting bloc which consistently votes for a given party, constant. This can be easily explained by seeing where the opposition to limiting immigration comes from.

So keeping in mind the above 2 points, it becomes readily apparent that what politics has gotten good at is winning elections and not betterment of people. One of the parties has discovered that one of the easiest "hacks" or "optimizations" is to keep importing poor people and that way you will have a steady stream of voters, otherwise you might actually have to start improving the stock of existing population.

This is somewhat analogous to how simply being good at a written test for a position does not necessarily mean you're a good fit for that position but you've simply optimized for the selection process.

All of this to say that as far as a hypothetical John is concerned, it is of no merit to him that the world is a bit more efficient because a person from Bangladesh is able to work with a little more efficiency, indeed whatever small gains from that are outright eclipse by an increased competition in the local pool of jobs and resources.

Except that the N+1 economy is now bigger with +1 demand for johns labor; thus it is actually increasing. Further, there is a +1 supply for production and export making the economy more competitive and productive overall.

Economists used to believe that many things were zero sum, (ie if England allows French cheese imports it will be at the expense of British cheese producers. Yet often allowing imports and increased trade leaves both France and England richer as consumers in both places value the additional selection and the competition lowers prices or foreign items can charge a premium for their novelty). Immigration is similar; it’s not zero sum.

Blaming this on a cynical political motive to create a voting block is contrary to the history of commerce and global trade and also contrary to your own analysis. It seems to me that the party most opposed to immigration is also the party that had been driving inequality by 1. Promoting globalization while also decimating the social safety net that would ease the transition, 2. Shifting to regressive taxation on sales while drastically lowering taxes on capital and its accumulation i.e. inheritance taxes. 3. Destroying any bargaining power for workers and employees and resisting minimum wage increases. I could go on and on.

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