
The Bermuda Triangle of Wealth - hedgew
https://www.conradbastable.com/essays/the-bermuda-triangle-of-wealth
======
phkahler
He misses what I consider a major issue. The price of college education is
going up much faster than the cost of providing it. If you look at tuition vs
what a professor is paid, one goes up much faster than the other. If you look
at housing costs things don't add up either - renting an apartment seems to be
a source of revenue for the schools. These are the obvious places the schools
are making a ton of money - where does it go?

And then there are the absurdities. Where I went to school they now have all
sorts of fancy places to eat on campus. I can't imagine students paying $4 a
couple times a day for a Starbucks coffee when they're paying with borrowed
money. This is just grossly irresponsible. I imagine the justification is "but
everybody does it". The problem is nobody is teaching the general public
anything about managing their money or evaluating costs of anything.

Sure, if you get a good job you can pay off your loan in X years, but that has
nothing to do with the fact that you drastically overpaid for what you got
(services provided).

~~~
maxxxxx
" The price of college education is going up much faster than the cost of
providing it. If you look at tuition vs what a professor is paid, one goes up
much faster than the other. "

That's the most important question. Same applies to health care. Where does
the money actually go and how has that changed over the last 50 years?
Everybody immediately complains about their favorite scapegoat but there is no
comprehensive accounting.

~~~
diogenescynic
Steve Ballmer was talking about how healthcare costs have gone up like 400%
over a 30 year period but expected lifespans only increased by .6 years. We’re
pahing exponentially more for relatively insignificant gains.

~~~
maxxxxx
But where does the money go?

~~~
bunderbunder
Here's one study on the subject:

[https://www.air.org/system/files/downloads/report/Delta-
Cost...](https://www.air.org/system/files/downloads/report/Delta-Cost-Trends-
in-College%20Spending-January-2016.pdf)

The table on page 11 summarizes the story. The big consistent increases in
spending are on student services and academic support.

The growth in spending on student services covers a lot of things. One big
chunk is explained by the trend toward organizing and professionalizing things
that were historically handled in a sort of ad-hoc manner by a student's
academic advisor, sometimes by the Greek system, or by nothing at all: Career
counseling and networking, academic advising, mental health services, stuff
like that. Another big chunk is non-academic, non-instructional activities
like student clubs and athletics. I believe advertising costs also tend to get
lumped in under the "student services" budget item.

Academic support is stuff that's related, but maybe not quite so directly
student facing: Dean's offices, instructional material development, the IT
department, stuff like that.

------
kartan
I very interesting article. This kind of numbers should be on the news all the
time (like global warming) so people focus more on them instead of what is the
last Twitt from the president.

> "Get rich or die trying"

I have always seen this as USA's major flaws. You are not supposed to have a
good life but to risk everything for riches. This was working when the rest of
the world was under-developed. USA citizens had so much more than the rest. As
the world catches up and surpases USA its problems are getting bigger and
bigger. If ever the dollar stops being the defacto world currency I can't even
imagine what will happen.

How many TV shows I have seen that people laugh at the janitor looking down to
him? There is no pride in a job well done, there is no self-fulfilment on
doing what is correct. Money and fame are the only thing that matter. You even
have religious groups that see economic wealth as a sign of God blessing!

Other countries have different and even bigger problems, but meanwhile the
american dream is about economic aboundance and not about having a good life
you are doom to a rat race.

> The taxman. I’d like 30% please. 40% if you got a bonus this year. Good job.
> > Medical conditions! Your income means you have to pay out of pocket

The fact that your taxes are disconnected from a public health care system is
scary. I am very proud of paying taxes that helps people to survive cancer, to
get an education or to live with a disability. Your problem is not that you
have to pay taxes but that the taxes are not used to give you back services as
it was designed to be done (and that rich people does not pay their fair
share, and that is something that it is also true in Europe).

~~~
nobody271
I thought I would roll my own side gig once. The plan was to find broken cars
on Craigslist and fix them for a profit. We're talking things like needs an
engine or a transmission. I could do maybe ten a year. I'd be keeping a car
out of the junk yard (which I imagine is good for GDP in a very small way) and
making a very modest profit of $10,000/yr if I was lucky.

Well it turns out that is HIGHLY regulated. You need a dealers license which
means you need a building to act as the place of business (can't be your
residence), the business has to have $75,000 in assets or you have to get
bonded. You have to pay insurance. You need signage. You, of course, have to
pay taxes on everything. Basically by the time everyone takes their little
piece there's nothing left for you.

I think this happens in any industry. It gets regulated to the point of a
normal person not being able to participate. You dont own a bakery, you work
for the bakery. You don't own a corner store, you work at Walmart.

What I see is a lot of closed doors yet we still act like they're open. They
aren't real options anymore. So what are the real options?

~~~
lotsofpulp
I think it would be in society's interest to know the credibility of someone
repairing and selling 2 tons of metal that will go out on the road and pose
considerable risk to others' and the driver's lives on the road. See the limo
crash that just killed 18 in New York state.

There might be situations where corrupt government is inhibiting competition
for the gain of particular parties, but some things do make sense, such as
being bonded when the risk of the work you are performing could be result in
large costs.

~~~
nobody271
The bond, I think, is mainly for if someone sues you. For a $1000-$2000 car
$75,000 is overkill. They could make a class for people who aren't dealers
where you only need to buy a bond for the car you are selling or something
like that.

~~~
lotsofpulp
An vehicle with improperly installed brakes or other unsafe mechanisms can
easily cost far more damage than the value of the car.

------
jstanley
> Google tells me that the most common reason for hospitalization in the US is
> childbirth. Thankfully, here in San Francisco, that would only set me back
> $15,000

Surely this is not true?

Does having kids just bankrupt ordinary people in the US or what?

I'm not asking about exceptional cases, like what is the normal way of dealing
with having to pay $15,000 just to have a baby climb out of your body, when
I'm assuming most people don't have that much money?

~~~
TomMarius
It costs around the same in Europe if you don't have insurance. I'm pretty
sure it's the same in the USA - this is the rate that would be charged to your
insurance company. Rates are way lower for uninsured people if you ask them
and tell them that you're not insured (I got a bill lowered 10 times when I
broke my hand); and of course most people have some kind of insurance.

To the people downvoting: please read properly. If you move your place of
residence outside your country, you're no longer insured, and that's what I'm
talking about - I specifically said "if you don't have insurance".

~~~
gambiting
That's absolutely not true. If it is, name an EU country where that is the
case. If you are a citizen of an EU country, you are entitled to use the
healthcare system in that country(and any other EU state), purely by virtue of
being a citizen.

The only case that would _maybe_ trigger a payment would be if you were a
visitor to EU and had a baby - but most likely no hospital would bill you as
hospitals are just not equipped for billing, they don't have the staff or the
equipment to do such weird things as issue bills for treatment to people. I
know at least several non-EU people who had treatment in EU and no one ever
asked them for any insurance info to bill them, unless it's something major
and very very expensive there's just no point, it would most likely cost the
hospital more to figure out how much and how to bill you in the first place.

~~~
TomMarius
That is absolutely not true. I am a citizen of the Czech Republic and if I
stop being insured, e.g. because of changing my place of permanent residence,
I'm not entitled to _anything_.

~~~
gambiting
Then Czech Republic must be an exception in the EU - pretty much every other
country that I lived in worked on the simple principle of "you are a
citizen/resident = you are entitled to care". Even if you didn't make any
payments ever(due to lack of a job, or being homeless or disabled for example)
you would still be 100% covered.

~~~
expertentipp
Not the case for Poland either. If one is not employed and not registered as
unemployed (authorities are doing all they can to keep the official
unemployment statistics low), one has to proactively subscribe to "voluntary
health insurance". In case one doesn't - _pronto!_ one has no healthcare
insurance. Of course, the constitution guarantees the healthcare, free-
universal-healthcare blah blah - good luck suing everyone or anyone while
being in such life situation.

Slightly different, but also extreme, case - Germany. There, one _always_ is
insured, only for the months one doesn't pay a debt is accumulating (you
thought healthcare can incur debt only in US?). It's quite difficult to get
out of German healthcare insurance actually, even while being EU citizen and
moving out of Germany.

In fact, for a EU citizen who takes advantage of free movement of workers and
relocates often between EU countries, one can fall pretty badly on its face
healthcare insurance-wise.

~~~
hef19898
Really? As long as you are properly employed in any EU country you should also
be covered in that country. There are some issues regarding cross-border,
meaning a German is working in Spain and needs medical attention in Germany
that would be invoiced to the Spanish insurance.

In Germany free-lancers face issue, they need to get their insurance
somewhere. But thay have to get, there is no such thing as uninsured German
resident.

------
80386
> The sticker price of college pre-loan or pre-financial-aid is about the same
> as the median net worth of married couples in America. Just enough to hit
> the reset button on those savings.

I know someone who works in a warehouse. She's done that for a while, she's
good at her job, and management wants to promote her but can't -- because she
doesn't have a degree. They told her as much: if she gets a degree, they'll
promote her, but without one they can't, because HR says managers need
degrees.

I have a degree, but it isn't a degree _from a good college in a useful field_
, which it seems you need nowadays to get a job better than warehouse manager.
I didn't know this, and neither did my parents; they just figured that you
need the piece of paper, and that's it. But people with a higher-class
background did know that.

And for those people... well, class mobility isn't in their interests, now is
it?

(It's worth remembering that colleges themselves switched from academic
performance to "holistic admissions"... to ensure that they remained a
preserve for the hereditary upper class.)

------
afpx
Here’s a controversial perspective. Maybe most people’s expectations are too
lofty, and their abilities much lower than the think they are.

In 2000, less than 25% of the working popultion had a bachelors degree. Today,
every young person I talk to expects to finish a Phd, JD, and MBA. And, now
everyone wants to live in the trendiest (highest-cost areas). There are plenty
of places in the US where a house can be purcahsed for under $100k.

Unless you came from wealth, or you’re definitely in the top 1% of your peers,
maybe set your expectations a bit lower. Or, at least be patient as you work
your way up. Build wealth the old fashion way (like we did 25 years ago) - get
a menial job (i.e. “in the mail room”), genuinely try to help your bosses (not
compete with them), slowly build your reputation and circle of influence, take
night classes at the community college, live below your means, save, etc.

~~~
annabellish
What the linked article is trying to explain is that the opposite is true. It
isn't that everyone wants to live in the trendiest areas, it's that they
_have_ to in order to find a job that has any hope of paying off their debts
fast enough for them to save up enough so that when the next huge expense
comes through they can afford it... likely taking on more debt even so.

It isn't that everyone wants a degree - certainly not, given the price - but
if you don't have one then you don't even have a chance of making enough
savings to afford housing, healthcare, education for your children, et cetera.

People _can't_ "set their expectations a bit lower". Your options are to have
no expectations, and accept that you're not going to be able to provide for
your children, or to join the same rat race as everybody else and get locked
into this cycle of wildly increasing prices. There isn't a middle ground for
people to aim at any more.

~~~
Raidion
I disagree. I think it would be interesting to do that same article, but
replace the MIT tuition with that of a decent in state school, and replace the
housing prices with those of a medium/large midwest city like Omaha,
Cleveland, or Pittsburg.

Salaries don't scale like rent does. In Cleveland, you can get a 1 bedroom for
around 900 dollars, in SF, that's 3.5k+. That means to maintain the same
purchasing power and keeping monthly rent at 1/40th of salary, you'd need to
earn 36k in CLE, but 140k in SF. 140k isn't out of reach in the Bay Area at
all, but usually requires a college degree, while 36k in CLE is in reach of
those without a college degree, and numbers twice that high are in reach of
those with a STEM degree.

This means you're going to have more disposable income, not having to deal
with 5%+ rent increases every year, pay less in the higher tax brackets, and
be able to buy a house without paying nearly as much interest. All just
because you stop trying to be the top 1% and live in some place that isn't NYC
or SF, but is still in the top 50 largest cities in the US.

~~~
annabellish
It's possible that if you did that you might be okay _today_, if your kids are
also gonna go to a "decent" school instead of a better school, if you're also
gonna get a "decent" house, et cetera, and you happen to live in the right
place to enable all of this. The trend lines are strongly suggesting that
everywhere is going down similar paths, though. There's no indication there's
anywhere specific they're going to -stop-.

The problem here is the trends, not today, because those big expenses are in
the future and we need to worry about what they'll be then, not what they are
today. The trends are happening just about everywhere, just to different
degrees.

~~~
lotsofpulp
Yes, with the wealth (and power) gap increasing, if you want your descendants
to have a chance to move up class-wise, you have to try and be in school
districts where they will make friends who are high achieving (usually from
high achieving parents), so then they can get into high achieving colleges
where they can create a network of high achieving people to rely on in their
future careers and lives, and maybe even marry one of those. It all compounds,
and the faster it compounds, the faster the gap widens and the harder it is to
catch up. Until something causes the reset button (revolution) to be hit.

~~~
Raidion
But that's the thing, by definition, you can't always move up, and in a lot of
cases, it's harmful trying to move up when you're really not ready to spend
the effort it takes to give there.

It's statistically unlikely that you and your offspring going to perform at
world leading levels of being in the 1%. It's the equivalent of buying the
best carpentry tools in the industry and then complaining that they're too
expensive for your hobby use. If you're going to pay for Harvard/MIT, you're
going to get a lot out of them, but the ROI for going to a such expensive
school and living in a highly competitive area only works if you can take full
advantage by really maximizing connections and getting high grades. If you
can't, which is ok, you're just wasting time and money where spending 60% to
go to a decent state school and living in a place that isn't next to FAANG
office is going to get you 95% of the return in purchasing power.

Sooner people realize you don't have to be the best, richest, smartest, etc to
be happy is when people will stop mortgaging their future to try to achieve
something they don't actually want.

------
NTDF9
The biggest trick that the FED has pulled is that it convinced the world that
inflation is at 2% yoy. What a disgraceful joke!

Had they been real about the inflation, the interest rates on savings would've
been higher. Sure, it would crash the stock market but the stock market only
benefits the rich disproportionately. Not teachers, admins, nurses etc.

Oh btw, has anyone noticed that 20% of the 20 trillion dollar US GDP is
healthcare? That's 4 trillions spent on healthcare every year!!

~~~
realusername
> The biggest trick that the FED has pulled is that it convinced the world
> that inflation is at 2% yoy. What a disgraceful joke!

I don't believe it either, or they are counting the wrong things.

------
adventured
> But unlike the prophecies of talking cartoon bears, all this money didn’t
> drive inflation through the roof and crash the stock market. It doesn’t seem
> to have really gone…anywhere.

It sure did drive inflation. It went into asset prices, which have been
massively inflated by low interest rates.

Absurdly, the article is ranting about the rate at which real estate and rent
are increasing, then pretending the inflation from printing all that money
didn't go anywhere. From one paragraph to the next, somehow the author managed
that disconnect. The Fed's zero interest rate policy, spurred the big recovery
in housing prices (intentionally), and has enabled people to spend more on
housing via artificially cheap mortgages than they otherwise could have,
pushing prices up rapidly.

~~~
apapli
Inflation, at least in Australia where I live is measured as a “basket of
goods”. I totally agree that inflation has gone higher than it seems reported,
but I think that is due to categories that are not properly captured in the
basket.

No elected government wants to do a review on a metric that will make them
look bad unfortunately if it was corrected.

------
roenxi
> But unlike the prophecies of talking cartoon bears, all this money didn’t
> drive inflation through the roof and crash the stock market. It doesn’t seem
> to have really gone…anywhere.

This essay is obviously backed by a lot of thought, but this specific
conclusion is a bit glib. Talking of things which are exponential, 2 trillion
dollars is a few magnitudes bigger than 2 million dollars. That is more than
the annual GDP of most countries.

The banks havn't lost that money under the couch cushions, they will be using
it to their advantage. If it is to their best advantage to have it in excess
reserves, that probably means something complicated is happening that is
letting them make out like bandits.

If they aren't using it to influence the wider economy, we really need to ask
what exactly they are doing with it. It is an extraordinary claim that it
"doesn't seem to have gone anywhere", implying that somehow it isn't doing
something.

~~~
cjmb
Hey, OP here. Thanks for reading.

For sure, this was a bit intentionally glib. My own understanding of
macroeconomics is relatively light, so I linked to two different perspectives
on this event and glossed by it a bit.

The point I was trying to make (suggest? raise?) was that regardless of your
views on printing $2,000,000,000,000, the crazy Cost-Disease-funded-by-debt
does not appear to be a symptom of a banking system gone mad chasing risk (ala
2008). Which means it can rationally go higher still, which means it will keep
going higher, past the point where all surplus wealth generated by the median
Americans is consumed.

I was just trying understand what was fueling this fire, and whether it was
rational or irrational exuberance.

~~~
roenxi
:D Hey OP.

I didn't put it in my comment because I have no evidence, but my first guess
was that the cost-disease-funded-by-debt was exactly caused by those 2
trillion. My instinct is as follows:

* The reserves for fractional reserve banking are excess reserves at the Fed + other reserves.

* Fed is safer than other, so large portions of the banks reserves sit with the fed.

* New money is created by the banks as loans.

* The excess reserves allow massive lending (the multiplier was something like 20x if I recall).

* Banks now have an income stream & massive cash reserves. Actors willing to take on debt push any capitalists smaller than a bank out of capital markets.

Basically, I assume these "excess" reserves are misleadingly labeled and are
actually in use relative to the fractional reserve system.

That is obviously a complicated guess with no evidence, and you look like
you've put more effort into research than me, but it fails the sniff test that
2 trillion exists and is having literally no impact. I bet it is and it is
just complicated enough that it is hard to pin down.

------
mothsonasloth
In the UK people's savings have been shrinking for the last 10 years.

Its scary how many people are living hand to mouth, and with banks offering
crappy interest rates it is no wonder people are spending rather than saving.

cue : rampant consumerism, payday loans, wage stagnation etc.

~~~
pjc50
Yes, and in this case it can't be blamed on healthcare costs and mostly not on
student loans - it's mostly housing that's the problem, and relatedly costs of
transport (because to some extent you can trade one against the other).

For pensioners the top complaint is usually energy bills, but I don't think
it's a good idea to make energy too cheap lest people use more of it.

~~~
dagw
_I don 't think it's a good idea to make energy too cheap lest people use more
of it._

Have a tiered pricing system. Make the first N kWh cheap and then gradually
increase the price.

------
vermilingua
I've been wondering recently if the economy has shaped to optimally exploit
the most readily available and easily renewable resource available: people.

There's been an explosion in computing power over the last two decades, and
computing power roughly equals the ability to optimise. Has this allowed the
economy, through sheer market forces, to reach an equilibrium where people are
maximally exploited while still being able to grow, and increase their "value
output" over time?

Has the economy managed to dodge the malthusian trap with humanity, that it
has otherwise fallen into with fossil fuels and rare metals/minerals?

~~~
nerdponx
_I 've been wondering recently if the economy has shaped to optimally exploit
the most readily available and easily renewable resource available: people._

Has not shaped of its own accord, it has been shaped. At least to some extent,
this is planned, and governments are mostly complicit.

------
theandrewbailey
> $180,000 on a 4-year degree in 2018 would’ve been a $160,000 downpayment on
> a house for my parents generation, plus the $20,000 four year degree.

$160k would buy the whole house! (If not, most of it!)

> Success only begins when you build enough wealth to pay for:

> Your own continuing education: $0 — $125,000

> A home for your family: $750,000 — $1,500,000 (depending on how far you are
> willing to move from a major urban center — but don’t move too far because
> the wages go down too)

> Education for your children: $180,000 — $325,000 (start at the bottom of the
> range if your kids are 18 today, move up accordingly)

> Medical expenses: $50,000 guaranteed between childbirth and insurance, more
> with pre-existing conditions or any large event

> Your own medical care as you age: $0 — $LOTS

I get the feeling that the author purposefully picked one of the worst places
to build wealth with "average" incomes (which so happens to be where he
lives). While these are bad, these prices aren't average.

I live in the rust belt and might be making some very large (read: expensive!)
life changes in the next year or two. There is no way it's going to this
expensive.

------
xivzgrev
I like where his heart is. The article is a bit hard to follow. He mixes broad
stats with his own situation and I'm often not sure if he is referring to USA
or bay area. I think with another edit, and to tighten prose up a bit, it
could be a great post.

------
arunmp
I read a passage related to this, in a book called 5000 years of trade.
Countries can be categorized as rich/scarce in capital, land or labour. Those
countries that are rich in say capital, tend to enforce protections on capital
while relaxing the policies for land and labour. So coming back to this
article, I would say that US being rich in capital has strictly enforced and
nurtured conditions on its society by which capital has decent return through
investment into student, house debt etc., while meaningly deteriorating the
conditions for labour (wages). This is the reason why it is incredibly
difficult to become rich nowadays in US through wages alone..

------
gbustomtv5
Cost of my childrens’ education will much more than $180k. Daycare is 70-80k
then private school is 300k+. Public schools are in a very sad state.

Children are a true luxury in this day and age.

~~~
frockington
Out of curiosity where are you living where the public school are so bad the
only alternative is 300k+? I live in a larger midwestern city and the public
schools are decent. Some students will go to Harvard, most go to a respected
state school, some don't go to college

~~~
megaman8
In some parts of SF, you don't even have the option of sending your kids to
Public school, because they won't let anyone else in: all seats taken. They
have a pretty massive shortage of teachers because no one can afford to live
there. At that point, your only choice is private school or move.

~~~
poulsbohemian
Whaaatttt???? I don't doubt what you are saying, but not living in SF / Bay
Area I've never heard this. Can you provide a citation / more information?

------
womitt
This happens when you give a lot of data to entities that helps others to
empty your pocket...

~~~
noelwelsh
That's not the root cause. It shouldn't be the case that you need such a
massive loan for education or housing. The government has failed if it cannot
control the cost of these basic items.

~~~
randomdata
Assuming you are, like the article, referring to the USA, the only schooling
that may necessitate a massive loan is _post-secondary_ (as in after primary
and secondary) schooling. The government has done a great job of controlling
costs of schooling up to that point. It is confusing to me why you call that
optional tertiary level of schooling a basic item? According to the OCED, only
48% of American adults have post-secondary attainment. The other 52%, a
majority, seem to be managing without, living long and fulfilling lives.

It is understandable why you call housing a basic item. The small percentage
without are often left to parish if the lack of shelter isn't quickly
corrected. That is a real problem. But is any meaningful portion of the
population actually taking out massive loans to make rent? In my experience, a
massive loan is difficult to get even when you have a security to back it
with. I am surprised that someone struggling to pay the rent each month has
any collateral to put up against the loan.

~~~
noelwelsh
Loan for housing is just lazy writing on my part. I should have made it clear
I meant the cost of housing.

For education, OP's article made a strong case for tertiary education (as the
only group seeing wage growth). Also, if you believe that inequality and lack
of social mobility are bad things then you should believe that all people
should have easy access to tertiary education.

~~~
randomdata
_> OP's article made a strong case for tertiary education (as the only group
seeing wage growth_

If wages are growing for this group, then it stands to reason that costs of
joining this group should also be also rising. Economically speaking, there
cannot be a disparity where simply having a tertiary education leaves you
better off than not having it. If there is, then people will join that group,
driving up costs and negating the disparity. The economy always finds
equilibrium given enough time.

It's a similar situation to housing. As an advocate for lost-cost rural
living, I have asked _a lot_ of people why they choose the high-cost city. The
answer is always the same: Their higher paying job justifies the higher cost
of living. And thus living costs are rising to reach equilibrium with rural
areas. There, again, cannot be a financial advantage to living in the city,
else people will move there, drive up costs and negate the disparity.

Any time wages rise for a particular group, costs have to as well. It is the
only way the balance will remain in the economy. The exception is when you
don't let all people join that group. Without access, then people cannot move
to find that balance. There is why everyone who is ultra-wealthy are so due to
exclusive property rights (land, intellectual property, etc.) that are out of
reach to everyone else.

~~~
noelwelsh
We have fundamentally different beliefs about the world. I don't believe
access to education needs to be controlled by ability to pay, for example.
(And costs of education are rising faster than wages, as demonstrated in the
article. Also, some people enjoy living in the city.)

~~~
randomdata
_> I don't believe access to education needs to be controlled by ability to
pay_

 _Education_ is accessible to everyone for free. Not to be confused with
schooling, which is presumably what you are trying to point to here. The
government already provides all of the schooling one needs to be a useful
member of society for free.

If someone wants to attend guitar school to learn how to play guitar on top of
that, I am not sure why it cannot be controlled by the ability to pay.
Learning how to play the guitar is a useful skill and all, but the time of
guitar teachers is a limited resource. There has to be some way to manage
that.

~~~
noelwelsh
Ok, I'm out of this conversation. I'm not interested in playing games.

~~~
randomdata
I am not sure which game you are referring to?

You are quite welcome to explain why everyone should have equal access to
guitar school, schooling provided beyond the schooling the government provides
to everyone. It is not clear to me why that is beneficial. What do we, as a
society, gain by allowing everyone a chance to learn how to play guitar,
irrespective of how much money they have?

I suspect the game here is that you are staring to realize that it is not
actually beneficial to provide schooling to everyone beyond the schooling we
already provide to everyone.

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sailfast
I really liked this article as it was thought provoking and motivational, with
interesting data to back it up!

That said, I don't understand why 750K-1.5M for housing was considered in the
one-time expenditure equation. Your home is an asset as well as a monthly
liability, and you don't need to have it paid off in order to build wealth,
either in prices or in savings while you pay off your mortgage.

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megaman8
Whenever people mention real wages, I get the feeling they're not really
"real". What I mean is that I don't think they're calculating inflation
correctly. Inflation doesn't seem to take into account Housing costs, which
often cost significantly more than their constituent building blocks upon
which inflation is based. Furthermore, I believe real wages should be
calculated based on your ability to afford the necessities of life: shelter,
food, water, transportation, medical rather than everything under the sun
(most of which won't raise your living standard much). I'd like to see a chart
that calculates real "real" wages for the last 50 years,.

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expertentipp
One clearly hits a salary ceiling and starting from a certain timepoint one
becomes only more vulnerable by switching the jobs. One has no means to push
back rising prices other than picking something else but sooner or later the
prices simply unify upwards.

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afpx
Does anyone know why wages aren’t increasing? Unemployment is almost at a
50-year low.

~~~
VLM
Civilians think unemployment means people don't have a job. Reality is its a
measure designed in the 30s and heavily gamed and politicized to not mean very
much.

A somewhat more realistic measure would be something like FREDs EM ratio.
About a decade ago 62% of the population was employed, and after the great
recession we've slowly climbed back up to 60%. Flat at 58% from the great
recession until 2014, then continuous growth since. Sure theres boomers dying
off, but that means demand dying off too, in theory the ratio should be fairly
constant. FRED is an online product of the St Louis Federal Reserve; at least
semi-trustworthy, surely more trustworth than unemployment stats.

Its not so much intentional dishonest as changing the definitions of what it
means to be unemployed with all kinds of moral and ethical boundaries for
welfare services etc. On the other hand, the percentage employed is reported
honestly as a simple percentage of the population with a job. To have a job is
a honest observational result; to be in the legal and welfare state of
qualifying for unemployment benefits is a totally different kind of subjective
observation. We could have 0% unemployment simply by not providing benefits
anymore, which is kinda what we're doing.

Anyway the point is the last time the employment percentage was as low as 60%
was after the 1983 recession; the graph is surprisingly not very dramatic and
the percentage of employed americans post WWII has never been below 55% and
never above 65%. None the less, the current stat of 60% is 3% below the peak
in '07, almost 5% below the peak in '99, 3% below the peak in '90... For most
of the 80s, all of the 90s, all of the 00s, employment was higher than it is
now. Admittedly its better now than at the end of '09, but hardly at a high
number.

As such, given that about 3% of the population was very recently working and
now is not, we have a long way to go before any wage pressure.

~~~
notfromhere
unemployment stat isn't gamed, people just don't understand U1-6 unemployment
stats.

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lr4444lr
Medical care has arguably gotten better and continues to improve. Housing is
vague and controversial, because land is fixed, and people can live in formats
that have significant impact on other people, and they continue to prefer
modes that cost more for sundry reasons (not all of them good, but there is
choice). Food has gone up, but there are savings to be had if you adjust your
habits and expectations. No one need starve.

But education is the big one: no real net improvement from many decades ago
(arguably worse), and in greater supply than ever. Why has cost continued to
go up?

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ikeboy
Focusing on the parts of the inflation index that have gone up the most and
implying that's the "real" rate of inflation is misleading.

I could write an article pointing out that wages have stayed the same but the
cost of a computer has gone down by orders of magnitude - that doesn't imply
that we're richer by an order of magnitude just as this article doesn't mean
we're poorer

~~~
diogenescynic
Housing and healthcare are much more significant and frequent expenses than a
computer tho. They’re also necessities.

~~~
ikeboy
Most of his discussion is about education which isn't necessity - and he
ignores the subsidies, quoting sticker prices like most people don't get
significant discounts

Also, looking at average cost is misleading because that includes purchases by
people who gladly pay higher amounts because they can afford it. You want to
look at the cheapest "reasonable-quality" cost to determine what's
"affordable", not average.

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ghobs91
What happened around 2000 that caused the accelerated growth in tuition?

~~~
dagw
I'm guessing more people got easier access to larger student loans.

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noelwelsh
Modern societies are supposed to be organised for the benefit of all in
society (broadly speaking; obviously there are cases when different people
have desires that cannot be reconciled). This is why the government usually
sponsors education, for example. All of society benefits from an educated
population and hence all of society contributes to the cost of that education.
This seems to have been lost in the US (and, increasingly, the UK) and is, I
think, the root cause of the problems. I believe the start of the problem was
the rise of neo-liberalism, holding the market and competition above all else.

~~~
realusername
I think personally that the main problems in the developed world were
globalisation + large scale automation, it completely destroyed the power the
average worker had, and power directly means money.

Inflation is only low because better technology and bigger markets are now
available which automatically makes everything cheaper to make, but even that
isn't enough to compensate the loss of power of the middle class.

~~~
oldsklgdfth
I tend to agree with that. Globalization has acted in very interesting ways. I
wonder how it will affect the standard of living on a global scale. My guess
is that it will have a normalizing effect.

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mistermatt
Is this again millenials fault ? /s

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billyggruff
The writing of this article seems a bit 'choppy'.

