An example is not bad simply because it's unrealistic. I'm sure you've heard plenty of examples which allow you to understand the main point without being perfectly representative.
The point of this example in particular was to illustrate how wages work alongside inflation. As long as you understand the point--that inflation is relative--the specific numbers don't matter.
so yeah, the example illustrates the idea, but it also underlines how the idea contradicts reality.
If instead OP had said "if wages go up 500%, and prices go up 1,000%, everyone is worse off and got a 500% pay cut", then the main point being made would remain exactly the same. Again, this is because the exact numbers were never relevant, and the example was for explanation purposes.
Now apart from the fact that we are now 6 comments deep in the most pedantic thread I have ever had the displeasure of participating in (this is my fault too, to be fair), you also might be interested to know that cost of living/inflation has not outpaced wages for a "long time" as you so claim.
Here's a graph from the last 30 years, for example, showing earnings keeping up with inflation.
https://fred.stlouisfed.org/graph/?g=iuyN
Or maybe you'd just like to look at more recently, in which case, looking at just the past year, wages have still kept up.
https://usafacts.org/answers/are-wages-keeping-up-with-infla...
Or if your a low wage earner, those wages have especially kept up, outpacing inflation and even high wage earners by significant margin in recent years.
https://www.epi.org/publication/strong-wage-growth-for-low-w...
This is not to say that there is no affordability problem, but no matter what way you put it, your specific claim, that wages have not been outpaced by inflation "for a long time", is demonstrably false.
i'm sorry but that's just bird-brained
>> They should lift incomes, not suppress prices
> I think this misses the psychology of inflation.
> If wages go up 20%, and prices go up 15%, everyone is better off and got a 5% raise, right?
> Go poll people that experienced that and they won't tell you they're celebrating being 5% richer, they'll tell you they're outraged about the 15% inflation.
> Psychologically they'll believe they earned that 20% raise through hard work. Putting in extra hours to get that promotion. But then the inflation robbed them of their 20% raise, and turned it into a measly 5% raise. They'll be outraged.
how you get from what they said to what you said they said, i have no idea.
as for how real wages have changed overtime, you should be aware that it isn't a straight-forward measurment, and that it is an area of active political contestation.
you can see here: https://www.epi.org/blog/growth-or-not-in-real-wages/
there are ways you can slice it to make things look one way or another. for example, 1979-2017 had almost universal real wage loss for the "some college" demographic.
My issue with your criticism specifically was that you called out the example. It's like if someone had issue with Hitler, but their criticisms only focused on Hitler's choice of clothing.
"Boo Hitler! Not because of his ideology though, but because the collars he wore were too tight!" This is ridiculous because even if your criticism is valid, you are just criticizing the wrong thing.
> That's not how the economy works.
> yeah but it's not a great example, because actually wages aren't going up.
> my point is that's a bad example because we couldn't say that that's true given that the cost od living has been out-pacing wage inflation for a long time.
To take this even further, and make it so even a bird-brain like myself can't possibly misunderstand, let's look at my previous example with the Nazis. Does my analogy stop working if I switch "Hiter" with "Stalin", or him with "bin Laden"?
"Boo Stalin! Not because of the Great Purge, but because of his funny mustache!"
See how the point being made remains exactly the same, regardless of whom you use to illustrate it? Please, please, please try to understand this.
And as this has now become a stress test for how thoroughly I want to humiliate myself through meaningless argument, let me also briefly address your argument on the data.
> as for how real wages have changed overtime, you should be aware that it isn't a straight-forward measurment, and that it is an area of active political contestation.
> there are ways you can slice it to make things look one way or another.
But this is not the claim you made. Your claim was much stronger, and much less defensible. You said that wages outpacing cost of living/inflation is unrealistic, and critically, that inflation had outpaced wages for "a long time."
This is just false. Inflation generally outpacing wages for "a long time" is just not a conclusion you can make based on the data. We can have more nuanced conversation about this, but here specifically I think you're trying to take your broad, conclusive, and incorrect claim, and equivocate it into a smaller, more defensible, but different claim.