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).
These are the obvious places the schools are making a ton of money - where does it go?
This is exactly the reason why I don't donate to my alma mater, neither should most people. Less "alma mater" and more "greedy mater who funnels taxpayer money into a growing bureaucracy".
I decided not to donate to my college when I saw them moving an entire historical house up a hill. They're a major research university with a $3 billion dollar endowment, a Pac-12 football team, and the largest employer in Washington State after its own government. I'm pretty sure my $100/month has more utility to more people at a food bank, than it would at that school.
> 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.
When I was in college, undergrads would have to purchase a meal plan, which could take a few forms. You could have a designated number of meals, and buy things from the cafeteria that qualified as a meal (one entree, one side, one drink), or you could have balance of food dollars which could only be spent on campus. There were also plans that involved a mix of those two types of currencies, but the better plan was to get the food dollars (which were called Declining, for whatever reason), and use that to buy food, because that gave you more flexibility. You could spend Declining at the cafeterias, at the corner store, at the Starbucks on campus, it was literally cash that you could only spend on the campus and only on food.
At the end of the academic year, though, your balance gets zeroed out, no matter how much you have left in Declining. So every year starting in April or so, people would start buying stuff in bulk from the corner store or from the Starbucks just to get something out of the money that was going to evaporate. My senior year, my girlfriend spent like two hundred dollars on coffee beans and gave them to people as presents, because what else was she going to do? I myself spent like sixty bucks on fifteen pounds of sour patch kids.
No reason to not buy that four dollar coffee every day when the money's already spent and you're not getting it back.
I don't think he is missing it, it's kind of the point of what is saying: the price is disconnected of the cost, it's a function of the money available to the customers who are, also, a captive market.
In standard economic teaching, Is not this what happens when there is a cartel acting?
Toward the end you said because you paid off your loans in 2 years instead of 10 that they didn't charge enough. I understand that seems to be how they think, but it's just not right. That's the problem.
It reminds me of when I realized that banks have an interest in balancing income from issuing more loans with default rates. Someone responded who was close enough to banking to say that they were aiming for about a 7 percent default rate as optimal. In other words, lower lending standards until you're at that rate for optimal profit. These forces are obviously financially good for the institution, but bad for the public. We need to find a way to fix that and the only thing I can think of is educating people on how they are getting screwed so they can make their own judgements on when to participate in such games.
" 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.
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.
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.
Regulation inevitably squeezes it into government one way or another. The only long-term beneficiaries are the government itself which constantly requires more funding through any means possible, and those involved in regulatory capture - typically banks and large corporations.
It is important to note that relaxation of regulation is important as well, since the direction of that easement usually favors banks and big business[1] - it's a matter of perspective. Always ask what the true purpose of a political action or movement is and follow the money; more often than not there's an ulterior motive.
"All politicians should serve two terms: one in office and one in jail."
~My Grandfather
That´s not actually the case for the United States, if you look at government spending carefully, it´s actually shrinking as a percentage of the total money supply. People who like to claim that it´s growing, invariably fail to factor inflation and/or money supply growth into their charts.
The actual answer appears to be that it´s being squeezed into the financial sector by several positive feedback loops operating around lending, and in particular securitized lending - but that´s not the sort of answer that helps to pander to populist sentiment, and securitized lending is a trillion dollar industry - so you won´t see it discussed very much.
> I imagine the justification is "but everybody does it".
A member of one of the administration teams at ASU (a dean or someone of similar position) told my sister, "everyone carries debt," as if to justify that 40k a year at an honors college is a valuable investment compared to virtually any alternative.
The comment was so asinine and destructive, I can only gather as a blanket statement that the members of administration there are either incompetent to help direct students, or are explicitly volatile for one's growth in the context of broader society, and are out to protect the institution's interests. It may be sensible to assume a bit of both.
I went to a public university and on top of tuition there was some student registration fee of around $750/quarter that went to clubs and paying for the gym. It’s such a ridiculous expense to add to poor students taking our debt. College campusss have really become like luxury resorts. If they wanted to trim some fat, they definitely could.
Makes me wonder if all the facilities and staff and extras and what not may be why college tuition in the US is so much more expensive than in many other places, like in Europe. Cause it seems like US colleges are trying to be mini towns offering everything and the kitchen sink, whereas the average UK uni is built in such a way you'll have to leave the campus to get access to those things. Over here it feels like the universities are part of the town, whereas over in the states they may as well be the town.
Since the current expectation is leisure, access to top technology, low class size from highly educated scholars, medical care, lodging, and administrative help... it costs $60k to house a prisoner per year, why do you think college costs should be much lower?
I'm not defending it, but there isn't Trader Joe's or Aldi of college yet (slightly better than average generic product with low/no frills).
If you want the answer: college loans are very lucrative, so they are pushed on the consumers heavily, just like home loans were 10-15 years ago. The people that profit from that benefit from irresponsible behavior and a broken system.
FWIW: many community colleges in my area are beginning to offer BA/BS degrees. I've seen data that shows students who get their two-year degree are often able to get into better 4-year schools than they would have had they applied straight from high school. Certainly given the cost, community colleges make a great deal of economic sense, though are perhaps held back by reputation.
Universities give preference to community college students for a number of reasons that have nothing to do with the quality of the education they have received.
They tend to be older and more focused on their education; to have already demonstrated that they can complete 2 years of basic coursework without dropping out; and have mostly completed their general education classes, meaning they are much less of a drain on the institution. None of these reasons demonstrate 'better-than-average' quality of community college education, just the quality of the kind of students that pursue it successfully, and where they are in life when they apply somewhere else.
The very strategy of doing your first couple of years (ie - the general stuff you can teach yourself from the text book) before going somewhere else to your final degree belies the argument that the education is 'better than average'.
Is that 60k a year just housing and food or guards and administration too? I'd hope there were more guards and security measures in place for prisoners than for college kids.
Yes, but that's probably offset by professors, researches, et al. (as well as better accommodations, food, entertainment). It's not apples to apples, but it felt roughly comparable.
The fundamental problem is that education was priced traditionally priced using a cost + plus or a %cost basis what you can pay. Today education is getting priced using value pricing, if in theory you can get a job which pays X you can pay sum of multiple of X.
The second problem is that even if this was a reasonable system, people estimate the risk associated with getting the job paying X very poorly, colleges exploit this, even if only few people get a job paying X everyone pays the same costly multiple of X.
That is surprising to me.
In my country the cost of english degree is totally different than a chemical engineering degree.
Even without the commercial angle , the cost of teaching English is not remotely the same as chemical engineering, you need lot more labs , more depts with different expertise , more courses to cover etc. why is it costed the same ? Unless both are heavily subsidized and cost is a just token amount it doesn't make sense.
It's an excellent point. As for housing, where does the extra wealth go? Nowhere. No one benefits when you lock up land that can't be used by anyone. Now you might argue that existing land owners benefit: but they actually don't. Because they're not moving and selling, they haven't realized any gain at all. If they sold but stay in the same area, there's no gain. And in states without the reprehensible prop 13, those in expensive housing will pay even higher property taxes.
We could literally print nearly free wealth, inflation free, if we just opened up land for development. It's a win win win.
> We could literally print nearly free wealth, inflation free, if we just opened up land for development. It's a win win win.
Doesn't neighboring real estate value decline as you put more capacity on the market? You can't print real estate wealth anymore than you can print dollars without consequence. At the end of the day, all of this "value" is trying to get dibs on the output of labor today (housing prices are usually tied to incomes, with some distorted market exceptions).
The more interesting question is: can you provide these basic necessities at such a low cost that you can drastically reduce the labor output required to enjoy them? What if you only had to work three days a week to meet your basic needs? What if healthcare inflation wasn't consuming wage increases as rapidly as it is?
True, but the total wealth increases. Money is just a proxy for the things we want. the things we want are the actual wealth. When you can buy 50" LCD screen for 200$ instead of 700$, you've got more wealth, same for land: that's Progress.
> When you can buy 50" LCD screen for 200$ instead of 700$, you've got more wealth, same for land: that's Progress.
Great example! More to the point, total wealth is useless, just as GDP is useless as a measure of citizen wellness and happiness (US GDP was 18.57 trillion USD in 2016). It's the distribution that matters and where we're utterly failing. Your example is not progress when necessities inflation (housing, food, education, and healthcare) races ahead of other consumer expenses and incomes in general, unless one is expected to watch that 50" TV in a van down by the river.
> Reuters reports that New York Federal Reserve Bank President William Dudley was heckled at a speech in Queens today when he suggested that the rising cost of food is offset by how cheap iPads are. "Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful," he said referring to Apple Inc's (AAPL.O) latest handheld tablet computer hitting stories on Friday. "You have to look at the prices of all things," he said. This prompted guffaws and widespread murmuring from the audience, with one audience member calling the comment "tone deaf." "I can't eat an iPad," another quipped.
believe me, i find it equally frustrating that all the crap we don't need is getting cheaper and cheaper with more progress. And yet, the bare essentials of life which are so important, aren't making any progress at all: shelter and medical insurance, etc.
Food has become substantially cheaper over time. I don't think that can be discounted as a bare essential.
Shelter and medical services have ballooned due to ever increasing regulation. That regulation may be necessary, but it unquestionably comes with a cost.
I disagree. Shelter is only bound by what it costs to build a new shelter. This is where regulation has had a dramatic impact over time. Nobody would ever allow you to build a pioneer log cabin as a primary dwelling these days, even though the costs would be minimal to erect such a structure. There are very strict standards that must be adhered to in order to build shelter now.
Land is also necessary on which to build said shelter, but vacant lots in rural areas can be had quite cheaply. Lots of places where an acre, which is more than plenty to build shelter on, won't fetch much of anything dollar wise. That is, where regulation allows you to actually buy a small lot in a rural area from the surrounding landowner. Regulation often makes doing that very difficult.
The problem, at least not in a huge country like the USA, isn't population. There is incredible amounts of unused space ripe for housing someone. The problem is being able to build shelters for those people without getting caught up in red tape.
Log cabins are perfectly legal as residences in many areas provided they're up to code. Drive around any ski area and see. You can even buy them in kit form.
Hardly anyone wants to live in rural areas where land is cheap because there are no good jobs or services nearby. In desirable areas, land acquisition costs are far higher than construction costs. Regulation has little to do with it, although in some areas zoning laws that limit density are a factor.
There is a pretty large chasm between a log cabin that is up to code and a pioneer home. And the cost to build reflects that.
Desirable areas are expensive because regulation has allowed some people to make vast fortunes, allowing them to spend almost limitlessly on living in those desirable area.
Tech is the prime example of that. Without regulation like that which surrounds intellectual property, software would be quite literally worthless.
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).
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?
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.
I know this might be surprising to people who grew up in certain areas where scumbag business practices are the norm but the total number of people who run their small businesses like scumbags is very low compared to those that don't. It costs society more to make everyone play to the lowest common denominator than it does to clean up after the scumbags.
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.
There was an article in the NY Times last week (posted on HN as well) lamenting the loss of hobbies / personal time. To me it was evident the reasons, even though they were not discussed in the article, and I posit they are the same reasons as yours statement about this "Get rich or die trying" mentality. People don't engage in hobbies/leisure and have adopted this mentality out of fear. If you can't make it to the richer side of society, the alternative is a bad one. We do not have a safety net to speak of in this country, and every study shows that what constitutes an average life here is one full of poor health, poor diet, dull work if it can be found, etc. You can see it in the rising suicide rates! So of course anyone with a clue is going to drop their hobbies and bust tail to try to get ahead. As wealth inequality continues its increase, you'll only see more of this desperation.
> 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?
There's a reason for the saying: "The Rich get Richer and the Poor get Children". Perversely having children is a "luxury" many people simply cannot afford.
The happiness a "bundle of joy" should bring to the family is often replaced by additional stress of having to work a "better paying" (but often soul-destroying) job to be able to afford the bigger house, school/education, extra curricular activities like sports/music/ballet and eventually college tuition.
Conrad Bastable's well-researched post could easily have concluded that having kids "too early" will bankrupt a family.
The solution/answer is affordable housing. Housing is the single biggest "expense" for all people/families. Which is why it's the problem I want to tackle personally: https://github.com/dwyl/home
The fact that merely giving birth to a child in SF is $15k is mind-boggling. The "Government" needs to fix that or risk population decline catastrophe which will have many knock-on effects!
SF should follow the model from Finland where young parents/mothers are given cash incentives and all FREE healthcare: https://www.kela.fi/web/en/families
Apologies if this unsolicited advice comes off as rude, but consider easing up on the italicizing and "quoting" of random words. It makes your writing style hard to read and waters down the effect when you do each once per paragraph.
@berberous, it's good advice and welcome feedback. Thank you.
I just tend to write the way I talk and using punctuation, speech marks and italics/bold is the only way I can think of to convey intonation/meaning. I will try harder to avoid the excessive use of emphasis, as you say it detracts from the writing/reading.
I completely agree. To me, 9 formatting changes in a single sentence, e.g. in the second sentence of that GitHub repo readme, is incredibly excessive. While the comment you replied to isn't nearly as extreme, it still has a similar issue of too many formatting changes per paragraph.
> The fact that merely giving birth to a child in SF is $15k is mind-boggling. The "Government" needs to fix that or risk population decline catastrophe which will have many knock-on effects!
The fertility and associated problems of local population can be completely ignored by the government of country like US - country with low population density, predictable steady population growth, and always a large group of people around the world willing to immigrate into the country. If not you, it's going to be someone else.
But if I understand it correctly, for some unfathomable reason American health insurance policies usually have a deductible on them - so even if you are insured, you could still be paying few thousand dollars out of your pocket, no? That's insane.
There are lots of problems with the American health system, but the concept of a deductible for insurance isn't one of them. Insurance without deductible is really a pre-payment plan for "normal" expenses (along with its administrative overhead) wedded to a true insurance plan.
Half (or more of) the battle in these public policy discussions is coming to an agreement on terms.
Lots of insurance plans in other industries have deductibles in other countries, and the US certainly isn't unique in this respect. For example, deductibles are the norm in health insurance plans in Switzerland, which has a system not all that different from that in the US.
In Switzerland the deductible is annual, not per visit. Once you hit that cap, everything is free (except voluntary cosmetic stuff).
Thus, insurance actually acts like insurance, like car insurance or fire insurance, there to catch you in a bad situation, not to give you discounts on your day-to-day expenses.
In Switzerland there is a deductible for adults but everything connected to pregnancy and child-birth is deductible-free. Also, kids below 18 yrs old have mandatory insurance that is has no deductible, thus treatments for them are free.
I've seen people paying 30% of hospital bills with "full coverage" insurance. The insurance doesn't actually insure you, they just give discounts for a monthly subscriber fee. It is really really stupid.
Yes, but compared to Switzerland there is no annual cap. If you have 3 medical incidents in the same year you pay the deductible on each. This means the insurance doesn't actually protect you from financial ruin if enough bad stuff happens to you, thus defeating the point of the insurance all together.
It's much easier to have an intelligent and reasonable conversation about something if you avoid the editorializing and hyperbole by calling everything you may disagree with "unfathomable" and "insane."
That's an average. The problem is the huge variance. Also just because you have heath insurance doesn't necessarily mean your insurance will pick up the tab.
Because of the affordable care act, no (thankfully, as pregnancy was a pre-existing condition) but your insurance may not cover a doctor or hospital which could (even accidentally) add up to thousands of dollars. Ask who people are when they walk into your room, and whether their treatment is covered depending on your insurance.
Not sure why this got downvoted - pre-existing conditions are covered by law but that doesn’t mean the procedure at that hospital is covered at the same level as an in-network shop.
I’ve been charged out of network at an in-network hospital because the physician didn’t identify themselves or their network. If they’re not your primary doc it might be worth asking for someone who is covered to save you hundreds or thousands of dollars.
People save up for having a kid the way they save up for anything else expensive. Also most hospitals are 'kind' enough to allow you to set up a payment plan so you can pay it off over a few years.
No, normal case is your or your husband's insurance pays for it
Deductibles can vary wildly depending on someone's insurance plan. However, there are a myriad of financing options, charities, etc if for some reason you can't afford that.
I would estimate the vast majority of people in the US need to budget at least $5k for a baby, if everything goes right. It would be better to have $10k cash though depending on prenatal visits, c section possibility, and multitude of other costs that can arise.
Does healthcare insurance pay for that in the US ? In the EU, this is considered a personal life-choice procedure and very rarely handled by insurances - like cosmetic surgery. (being the EU though, you can get it for free using public healthcare)
There may be a confusion here, I'm referring at Private Healthcare and not Public Healthcare run by a private company.
Spain sometimes subcontract public healthcare to private hospital. However from a patient point of view, you are still treated as a public healthcare patient (i.e. you pay through your tax and the government has a specific financial agreement with the company running the hospital).
Otherwise I'm confused by France model. What's the business model of a Private Hospital is they receive no money neither from the Government nor insurances nor their patient ?
The French system is hybrid. There's public and private health insurance, and public and private hospitals.
For everyday care the public health insurance reimburses 70% and the private health insurance the remainder.
For more serious procedures (such as a baby delivery) the public health insurance reimburses 100% of the fees. The prices are fixed by law, the practitioner can charge more (if it's a private hospital) but then the private health insurance will have to pay the difference.
The public health insurance is paid through taxes (I think something like 5 to 10% of the salary?) and the private health insurance is between 50 to 100e depending on your family and coverage (glasses, teeth, etc.)
Sure, but if you for some reason don't want to give birth at an NHS hospital then your health insurance probably won't cover the costs of a private hospital.
The UK and Spain have a private health sector with Clinics, GP, ... To access those you either need to pay cash or have a private health insurance.
Both the UK and Spain have also a public health sector, with Clinics, GP, ... that is accessible for free.
In the UK and Spain, very few private health insurances covers Birth or Emergency Care: for those you are supposed to go to the public service or pay cash in a private clinic.
Other countries like Belgium have health insurances that give you the kind of extra comfort you mention. But they cost something like 5 EUR a month vs the 100 EUR in Spain and the UK.
On average yes but if there are complications or the hospital does some billing shenanigans it may cost you much more and there is almost no way to protect yourself from that other than just having a lot of money.
Our medical costs are so out of control it's not funny. Many years ago (i.e. last century) you'd go to the doctor and either they'd treat you on the spot or possibly prescribe something for most common ailments. And if that didn't work, you'd go back and then they'd run some tests and/or send you to a specialist. Today you go to your doctor, who most likely refers you to a specialist, who orders tests from a lab (of course each step racks up costs)... then maybe you get your prescription. Didn't work? Rinse and repeat with a more specialized specialist. Part of it is CYA to protect from liability, part of it is just the health care industry growing out of control.
Maybe the problem is insurance networks. This incentivizes doctors and hospitals to play by the rules of high-revenue / high-payout insurance providers, whose revenues are high because of those rules.
Not really, since people would switch to other health insurance providers who have lower premiums. The problem was not forcing everyone into the same insurance market.
Letting all the healthy white collar office people stick with their employer chosen health insurance means the leftovers are the poor and unhealthy which many insurance companies can’t handle the losses from since there is no health population to balance it out, so you have places that have no health insurance competition.
Even then, the people that make the most money in healthcare are the providers (doctors) and by a significant multiple, so increasing their supply would be necessary to bringing costs down.
> ...unless of course we needed a C-section, in which case it’ll be a casual $30,000.
In India, we got c-section done in a luxurious hospital in a suite ward for slightly over $1K. About 80% of that was covered by insurance. Even if it wasn't that kind of money is a typical middle class family in India can easily afford. Note that I'm talking about top of the line hospital so the median cost for a c-section is somewhere around $500.
I guess what I'm trying to say is that I'm really blown away by that kind of cost difference. In a developed country shouldn't health be more affordable? No wonder medical tourism is on the rise in India.
In the UK, nurses are also hardly paid living wages [1]. Particularly in high cost of living areas like London. About USD15/HR for an experienced band 5 nurse.
If it's not the birth itself, it doesn't stop there. No protected time off, expensive, subpar childcare options, long work hours if you want to advance your career. One way or another, you are punished for having kids.
Unless you're really rich. It's now more of a status symbol amongst the rich. "Oh you have 5 kids? Two nannies, a cook too. That's the life!".
It doesn't bankrupt us, but it does cost money. Not really the childbirth itself... that is a one time cost, and it varies greatly with 15K being the high end. But food, housing, education, clothing, and everything else you provide kids, not the least of which is health care.... it all adds up. To about a quarter of a million over time, if you believe the analysts.
So with 3 kids, I'm likely $750K down on my wealth. As a tech worker, that is not bankrupt. But if I were living closer to poverty? Then the problem is less about my personal wealth and more about where I choose to cut corners when raising the kids.
It's patchwork. They can't turn you away in an emergency, and Medicaid covers expenses for the poor. An uninsured family member recently had their unexpectedly complicated delivery written off entirely under the hospital's charity guidelines.
But I recall reading a vivid passage about ten years ago, talking about the difference between rich and poor maternity wards: the wailing.
Anesthesia is an elective expense in childbirth, not always covered by Medicaid.
My wife and I had a child in Canada with about as extreme a complication as you can get (transferred to Level 3 ICU for the sake of mother and baby). We calculated that it would have cost at least $200k in the US in direct costs, let alone things we couldn't quite get a price for (medication, the hourly rate of the over 20 medical professionals in the room during delivery, etc.). Would have ruined us for sure if out of pocket.
That is correct. To corroborate: my health insurance contract states I must pay $13,600 towards my medical expenses (this is AFTER premiums) per year, before they will begin paying on my behalf.
Health insurance will cover much of it, but more importantly Northern California is overpriced for medical procedures. Boston is $5,000 less and has equally good hospitals. And St. Louis is down at $6,000 and has really good hospitals as well.
I had a friend who got an appendectomy at Stanford that was paid for by Google (she was on business travel, works in the London office) and the price was obscene, far above what should ever be charged, literally 10x what other hospitals charge. That place is crazy.
It’s not overpriced if there is no monopoly. No one is stopping other providers from moving to Northern California and stealing business by offering lower prices. If people want to live in a place with great weather, outdoors, food, and career opportunities, then they have to compete for it because lots of other people do too, and hence they have to compete to purchase things like homes and service from healthcare providers.
Nothing is stopping them, other than people not shopping medical procedures based on price, partly due to a complete lack of price transparency.
Maybe you could move in and set up a maternity ward and advertise it as “only $10,000!” And then people will ask what the competition charges and you won’t be able to answer. They won’t be able to answer.
I would hope it’s common knowledge nowadays, at least amongst the educated, that you should call your insurance or check their website for in network providers. I can call mine and find out how much certain procedures or codes cost, and if it’s not an exact amount, they can usually give a pretty good estimate.
Also, I would expect any service to cost 50% more in the Bay Area.
Human childbirth is an amazingly complicated process with a LOT that can, and frequently does go 'wrong'. In CA, the first-birth c-section rates range from 15% to 60%, hospital depending [0]. That's 1/6th to 3/5ths of all CA first births, let alone the obvious fact that you cannot plan a birthday. Your pregnancy can go from 'low' risk to 'life-threatening' in seconds; there is no planning for this and no hospital will tell you the bills for it.
I know all of those things can happen, but for people with health insurance, the out of pocket max will kick in at that point. But if you are healthy and want to get a lower bound on how much you'll need to pay you can request that information.
Maybe, it depends on the insurance provider; I've had ones that won't quote anything to me, not even a flu shot. Still, a lower bound is of little solace when talking about healthcare, especially your unborn child. It's the upper bound that is the issue.
Hospital stays are a whole different thing from more routine procedures. A lot of the costs are directly billed by the doctor and bypass the hospital, and hospitals don’t know what their own costs will be.
If you have insurance that covers this, it’s simple. You don’t even need to call anyone. You’ll pay your deductible.
If you want to compete on price, you’ll either need to charge substantially less than people’s dedictibles in order to make a noticeable difference, aim your price competition at insurance companies (who pay vastly lower prices already), or target the not-exactly-lucrative uninsured population.
> A number of factors spurred states to require CONs in the health care industry. Chief among these was the concern that the construction of excess hospital capacity would cause competitors in an over-saturated field to cover the costs of a diluted patient pool by over-charging, or by convincing patients to accept hospitalization unnecessarily.
That is an incredible misunderstanding of supply-and-demand. Just, wow.
Most insurance plans that allow access to providers in a broad network without a referral (these are often dubbed "PPO" or "high deductible" plans) have an annual out of pocket maximum that the insured will be required to pay before the insurance covers all remaining expenses. E.g., the maximum for "family" coverage on my plan is $5400.
It's commonly said that having a baby will result in costs that exceed your out of pocket max, so you can think of the out of pocket max as the real cost to a family on one of these for the medical services from prenatal care through the birth. Caveat: Your accumulation towards this maximum will typically reset to 0 at the beginning of the calendar year, so try to finish your pregnancy before 12/31.
Even with a good health care package, a friend paid $10 thousand dollars (his maximum deductible) for the first year of one of his children, due to infant allergies.
That is not what most people consider a 'good' health care package. That would be considered a 'high deductible' plan.
When people talk about 'good' health care plans in the US they tend to think of traditional low deductible PPO. Those tend to have family deductibles in the $500-1k range.
Though the employee premium differences might add up to more than 10K in the face of a 'good' health care plan so its largely not relevant to the argument about health care costs in a nation vs nation way (though you'd want to include tax burden for health insurance in that case).
There's no real correlation between the "goodness" of an insurance plan and its deductible. In the end all that really matters is the quality of care you receive and how much you have to pay for it.
Many employers offer high deductible plans but also contribute into the employee's HSA which can be used to pay deductibles. In theory that incentivizes the employee to shop around and get the best possible deal on care.
Agreed but in this anecdote what do you think would happen in that case? I’d guess the person would complain about the deductible even though in real terms it might be cheaper than premiums on a low deductible plan.
It's worth noting, the birth rate here in CA has been reducing for the last 30 years and recently has reached a 100 year low. It's currently lower than it was during the great depression.
Having a child is really expensive if you don't have health insurance. You can negotiate that cost in advance, but I don't know if people really do that very often.
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".
Actually in Italy you don't pay a dime, unless you want to. The level of care you get varies by region, but is generally pretty good, especially for regular, mass events like birth.
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.
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.
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.
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.
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.
It is not an exception, it's almost the same at least in Slovakia, Poland, Hungary and Austria. It is not true that you'd be always covered - you'd be covered only if you're registered in the system and entitled to be a part of it (by the virtue of being a resident); if you have your residence outside the EU, you're entitled to nothing; if you have your place of residence in other EU country, you're entitled only to treatment of immediately life threating issues - you still need travel insurance to travel to other EU countries if you want e.g. dentist covered, also you can't injure yourself doing sports and such, that would not be covered at all by the basic insurance.
It's true that you'd be covered even if you never paid but you have to be entitled to be a part of the system - and thus you're insured. Also the money for treatment will be later demanded from you, on top of insurance payments and interest (personal experience); of course there are options for the socially less able (the government pays insurance for them, that's why it might seem free) but as a software engineer, no it's not true.
If you read my comment properly you'd know that I'm talking about uninsured people.
EU citizens are able to move to another EU country are eligible for the same benefits as locals as long as they are working and paying taxes there and for X time after that (I can't remember the exact number).
In the Nordic countries that's extended quite a bit for citizens of other Nordic countries (even if the other country isn't in the EU), and I wouldn't be surprised if there are other groups of countries in the EU with their own similar agreements.
None of the above says anything about the level of welfare the individual EU countries have, however. If an EU member has a below-average welfare system then you might end up with nothing simply because you don't meet the requirements for receiving benefits.
Incorrect. For example in The Netherlands it is mandatory to be insured. If you refuse to pay insurance, not only will you have to pay 100% of healthcare costs, you'll also be fined.
Yes, except that if you are not in a position to pay(make below X/year, are disabled, homeless etc etc) you don't pay anything. You have to have insurance, but depending on the circumstances you might not have to pay for it.
In Portugal we have fees even in the public system, supposedly to reduce frivolous use. That said, they are usually under 10€, and large swaths of the population - including pregnant people - are exempt, so yeah, having a baby is free.
I think it would have helped if you specified Czech rather than "Europe", because it's a big place and it looks like many of the smaller countries have this kind of non-public system. The rules appear to be complicated: https://www.kancelarzp.cz/en/links-info-en/health-insurance-...
It sounds like there's a hole for people to fall in: if you're a Czech national, but not resident nor employed in Czech Republic, but in the country anyway, and you don't have private insurance, then you have a problem.
(It looks like if you're a resident proper in another EU country with resident-based healthcare, such as the UK, then that would work for EHIC purposes if you visited Czech Republic.)
There are rules that are EU-wide - because they're set by an EU regulation. If you're a resident in any EU country, you get the blue card. That makes you entitled to whatever (this is depending on the country and not set by the regulation) in your country of residence and basic care of life threatening issues in the rest of EU, Czech Republic included; however if you injure yourself doing e.g. sports in other EU country, that's not covered! That's why travel insurance still exists, otherwise it'd be pointless.
My comment was talking about uninsured people, so mostly non-EU residents and people that didn't pay and weren't entitled for coverage by their government - the way it works is that your governments pays the insurance for you if you can't, but will not if you can; there is an exception - Germany, where everyone is covered through taxes.
I'm no expert on the gritty details of the German system (who would have thought health care could be that complicated, right?) but as German resident I have some insights. Everybody who knows better, please correct me.
In Germany everybody who is employed in way that pays social insurance is also health insured, you cannot opt out of it. In that system, in addition to taxes, social security and unemployment insurance, you pay a certain percentage of your gross salary to get health insurance. This percentage varies by your choosen provider. Your employer is paying the same amount (more or less, not sure if the employer amount is fixed). You can opt out of the public system above a certain salary and pick private insurance, prices vary greatly.
Unemployed people are insured by the state, I guess using taxes or social security or unemployement budgets, I have no idea. You have to be registered as unemployed to be covered. If you do not register you have the choice of being insured with a family member (public health care) or voluntarily (private or via the public system). You are obliged to be insured oine way or the other.
Exceptions are soldiers (some kind of in-service system with cost reimbursement, don't ask for the details), public servants (something similar in a lot of cases, again, please don't insist on details), certain professions (doctors, pharmacists, artists,lawyers) with their own insurance solutions. You are screwed as a afreelancer, your only solution is a private insurance that can get quite expensiver.
TL/Dr: You are always insured one way or the other. It is not paid for by taxes.
Yes I got that part wrong. Sorry I misunderstood the text I read on the topic, you're right. My original comment was talking about people that are not insured (and not obliged to e.g. due to not being residents). My point is that healthcare always costs something, and the sum is very similar to the cost in the US once you get them to give you a discount for uninsured people - but of course there is better social security for entitled people (most of residents) in the EU.
Last time I checked, the US was among the most expensive countries regarding health care. But I don't have a source at the moment.
And sure, health care ia costing money, nobody is argueing that. What Europe figured out is that a solidaric system, one where people with less individual costs are covering for those with higher costs, are the optimal solution from a national perspective. It still pizzles me how that can actually be a issue in any developed democracy.
And again, all legal residents are eligible for health care in EU countries. A good thing if you ask me.
> Last time I checked, the US was among the most expensive countries regarding health care. But I don't have a source at the moment.
Yes, but that's comparing listed prices and not adjusted for purchasing parity. They will substantially reduce the price if you're not insured and ask them.
> And again, all legal residents are eligible for health care in EU countries. A good thing if you ask me.
I tend to agree, but that's not my point. I'm just saying that a clinic will bill you (indirectly) roughly the same as they'd in the US after you get it adjusted, but of course it's fully covered for most people here.
I higjly doubt the last part, but I don't have any numbers. Just as some added cintaxt, the actual ciats are also quite different between European countries. And treatment is not the only cost driver, the way the system is set-up also has a big impact. One of the reasons why Germany is also constantly among the most expensive countries.
But the costs are different across the US as well. Of course it costs a lot in San Francisco, just like it would cost a lot in a major EU city - and it costs less in a rural area.
It's free in The Netherlands. Well, not technically free but it's covered by the universal healthcare so it won't cost you a dime. (FYI the basic healthcare plans all cover the same regardless of insurance company. It covers nearly everything that you could go bankrupt on. There are extra packages that cover additional care like physical therapy or dentist costs. A basic plan is around EUR 90,- per month with a deductible of EUR 385,- per annum, but there's no deductible for MD visits and, yes, childbirth/neonatal care).
Virtually all of Europe has either publicly sponsored and regulated universal health care or publicly provided universal healthcare.[1]
So if an EU citizen moves to another EU country, there's no problem.
An average hospital in The Netherlands (#1 in quality in Europe [2], but #6 in costs) charges the uninsured between €607 (natural birth) and €4450 (c-section).
No. Prenatal care, childbirth and postnatal care are entirely free in Portugal and in most European countries I know of. In Portugal it's both free and either best or second best in world ranking.
In Europe there are countries where you can not be a part of the public system in some cases, such as changing your permanent residence outside the country.
Well, ok, I see what you're getting at - but unless you moved to outside of EU, you are still fully covered by the country where your new permanent residence is. If you moved out of Czech Republic to Spain for example, just get an EHIC card from Spain and you can get treatment wherever you go in EU, including Czech Republic.
Yes, but I was talking about the case when you're not insured. Btw the treatment you're entitled to in other EU countries (outside the issuer country of your insurance card) is limited (but of course childbirth is covered) and you need travel insurance (it's cheap in EU, around 2 euro per day), especially if you're doing sports as any injury done during sports is not covered at all outside your country.
In Denmark it costs 0, also since we're raising the next generation of payers into the tax system we get paid money quarterly (about $700 [guesstimate] for the first couple years decreasing over time, our 9 year old gets a governmental stipend of $200 per quarter [another guesstimate])
I guess what I'm trying to say as someone who lived a lot of years in the U.S - why the hell they gotta screw you so hard there?
on edit: of course I should also specify that Denmark is pretty capitalistic, so you pay for your kindergarten once you enroll the kids in there and that will cost more per month then you are getting in stipend.
You (or one of your countrymen) pay for it with taxes, that isn't the same as it costing $0.
Now, it likely a) does cost a lot less in Denmark than in the States in real terms and b) paying for it with taxes might absolutely make the most operational sense. But it isn't free.
So how much did it cost you to have a baby in Denmark, just so the conversation is clarified?
Also as an aside there are lots of babies born in the US that are paid for via taxes and cost $0 out of pocket for the family. Medicaid, the VA, Tri-care etc. I don't have the numbers in front of me but I'd bet that there were more American babies that were tax paid for than Danish ones in a given year.
Look, I’m not some anti single payer guy. In fact given the option I’d bet on it being the best of the options.
But it’s just untrue that you paid $0 to have a kid. You don’t know how much you paid & that’s ok. But it’s a valid criticism of single payer.
Further it is also true that the US system has deep flaws but it’s fundamentally untrue that the many Americans get the full boat costs of a birth. So comparing your $0 cost & a $15k outlier is largely a futile excercise.
The article says that people in the U.S are not having children because of prohibitive costs, 15000 dollar bill from a hospital was mentioned somewhere. Various Europeans said they paid 0 in their country, somebody said that even in Europe you pay and the cost is approximately the same (the implication being that you pay a bill, not a tax) which is quite the lie and prompted me to join the people saying hey, we pay 0 (implying not getting a big bill all of a sudden that you might not be able to afford at that particular moment)
I'm pretty sure every other person reading my initial comment understood huh, the government pays for it and he pays his taxes. But you seemed to need to make a gotcha argument about it which again, given how human conversation is structured and the literal impossibility of defining everything down to constituent atoms in every communication it is generally assumed that people in good faith take some things as given which is why in response to your taxes comment I was sarcastic because who among us is so lightheaded that they don't understand taxes exist and are used to pay for things the government provides us?
I don't think the people who upvoted the comment thought I had made a brilliant refutation of your point about taxes, I think they just thought what is this guy with taxes on about - because that's not what the point under discussion is and you would have to be rather obtuse to think it was. That's ok, I certainly have my own issues that I am thickheaded about, but really people do know taxes pay for the births in European hospitals.
As to whether it is fundamentally untrue that many Americans get the full boat costs of a birth, I don't know. I do know the article seemed to think they were getting enough of a boat that they were sinking. Hence all of us Europeans saying, he we're doing swell with the kids and all started up. I don't think that's such a futile exercise.
You can't call people names on this site and claim to be "appropriately civil". And his point isn't a gotcha argument. The Dutch system might be better, and it's probably cheaper overall given what a terrible deal health care is in the US, but it isn't free, and there's a significant economic tradeoff to it. I don't know why it takes you four paragraphs to try to wiggle out of that observation; it took the other commenter just a few tens of words to make his point.
As far as that goes referring to Danish people as Dutch could also be considered less than civil.
Maybe it takes me a lot of words because I am an especially prolix person, sorry, I hadn't realized how damaging verbosity was to your feelings. I do realize however brevity is the soul of wit so let me cut it down:
Everybody knows that taxes pay for hospital costs in Europe.
The context of the conversation was being charged money at the birth of a baby, which people in Europe are not. To say that I paid 0 at the birth of my children was not an untruth but the exact truth. That I have paid taxes in the past and will pay them in the future does not change that.
Given that I was accused of lying, I think I maintained the appropriate level of civility.
Given your hectoring tone here, your insults to my nationality, complaints about my wordcount, and accusations of wiggling I worry I've been too civil.
Please be more civil. And notice that you've contradicted yourself; you said upthread "you pay 0", and now are clarifying the mechanism you use to pay a nonzero amount of dollars for it.
> 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.)
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.
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.
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.
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.
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.
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.
Thanks for summarizing this here. This is spot on. And of course I'm being a bit hyperbolic -- like I said, the median American still gets to build wealth. Just not as much as their parents. Or their parents' parents.
The only "expectation" I took as a granted was that a given person not-so-far-from-the-median can build Wealth in America. If you're willing to set THAT one lower, then perhaps there is no problem now or on the horizon...
I commented elsewhere that it doesn't seem to me that "Economic Surplus" / "Building Wealth" is an axiom of any system. So perhaps that expectation should in fact be lowered. But that's certainly not something my peers or I are willing to do. Thus the race.
> 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.
Where does this idea come from?
According to the OECD, only 48% of American adults have a post-secondary education. I find it hard to believe that 52% of Americans truly cannot afford housing, healthcare, education for children, etc. I might even bet that the 52% have an easier time (especially with shelter), as there seems to be a correlation between the desire to live in an expensive city and having post-secondary attainment.
Additionally, wages are stagnant. The rapid rise in post-secondary attainment mentioned by the parent has done nothing to increase incomes among the workforce. The article points out that incomes have been on the decline for those without a post-secondary education. But misses the obvious: As colleges select for the most successful people, the most successful people without a degree who brought up the average in previous years now belong to the college group.
People can't set their expectations lower, but they can set them higher by not falling prey to misleading interpretations of the data surrounding college. The data is abundantly clear that there has been no advantage in the significant rise in post-secondary attainment. If anything, people are worse off now because of it.
The median age in the US is 38. Half of the population is older than that, since 27% of the population is under 18 that means nearly 70% of the adult population is over 38, about 45% is over 50, and about a quarter is over 60. Those older folks had the benefit of higher wage jobs in their early careers, and were able to build their careers, job experience histories, and income levels much faster than later generations. Additionally, because of the much lower costs of housing they were able to build their wealth at a much faster rate.
Someone who is 60 years old or older today (which again makes up fully 1/4 of the adults in the US) would have seen average (nominal) wages of about 12k/yr and would have been able to jump into a mortgage only a few years after entering the job market, on a home price of just 60-100k. With a 30 year mortgage they would today be living with a fully paid off house worth easily half a million dollars, and would have had one to two decades of being able to plow their former mortgage payments into investments. Those people have no problem paying for housing, healthcare, children, etc.
It's folks who were born after 1980 who face lower wage jobs with higher requirements, higher costs of education, higher housing costs, higher medical costs, etc. And face an uphill battle in terms of building their careers, increasing their income, and building their wealth.
As to your point about college educations, it is much more difficult to obtain a high paying job without college. And study after study show that college educations result in higher incomes. You might claim that colleges select for the most successful people, which skews the results, but that doesn't change the fact that most desirable and well paying jobs still list college educations as requirements.
As a millennial, I bought my home for $120k. I'm not sure if your figures are real or nominal, but even if they are real, at worst we're talking $20k more. That's not life ending. Food is way less expensive now. I will easily save $20k on food during the lifespan of my home when compared to what they had to spend, not to mention that interest costs are much cheaper today.
The housing issue is vastly overblown, except in certain major centres. But if you have a job that compensates for the higher cost of housing, what's the problem? You cannot expect to have more money than someone outside of the city. The economy and its quest for equilibrium would never allow that over the long term, although there may be short term opportunities now and again. Economically speaking, your higher paying job must, on average, come with higher expenses so that you don't make more money than people with low-income jobs in low-cost areas.
If you don't have one of those jobs that makes up for the cost of housing, why are you there? There are houses everywhere.
> it is much more difficult to obtain a high paying job without college.
A common misconception that it matters, but a higher paying job doesn't mean anything. The goal is to maximize income less expenses. If a job is higher paying, but you have higher living costs due to the job being in a high cost city, and needing a high cost college degree, then you're not necessarily further ahead.
If you are further ahead than you would be without, what's the issue? You're literally further ahead. The costs are a non-issue. The costs are recouped and then some.
> And study after study show that college educations result in higher incomes.
Not quite. Study after study shows that successful people are successful in college and in the workplace. This is not the same as college resulting in higher income. Handing a college degree to someone who has a crippling mental disability is not going to benefit from it in the workplace. They are going to struggle no matter what, just as successful people will succeed no matter what.
If we took it to the logical extreme and assumed everyone had a post-secondary education, the jobs wouldn't change. Someone would still be flipping burgers at McDonalds, someone would be driving trucks around the country, someone would be writing software, and so on. And they're not going to magically pay more just because you have a degree. Why would they? When have you ever offered the burger flipper at McDonalds more money because they happened to have a degree? College degrees have no bearing on the job market.
I see how it is easy to mix them up, but the data is abundantly clear that it is the latter and not the former. After all, incomes are stagnant and have been for 50-some-odd years. If incomes were increasing with post-secondary attainment, they couldn't also be stagnant.
Those seem to be two very extreme options. I’m certain that there are hundreds of other options available. I mean I can think of more than a dozen just off the top of my head.
In this case, the author appears to have a degree from MIT and a background in finance and engineering. Out of curiousity, I did a job search (outside the trendy areas), and there are plenty of high-paying jobs available to them. A person would just have to live in a boring area or take on a boring job, or live a boring lifestyle. I guess I’m not understanding why seemingly few people seem to accept trade offs these days.
> Unless you came from wealth, or you’re definitely in the top 1% of your peers, maybe set your expectations a bit lower.
Why should any of us set our expectations lower? Because you say so? Why is the best piece of the cake reserved to some 1% folks largely with inherited wealth? Why should 1 billion Chinese set their expectations lower? Because they happen to not be born in Silicon Valley and their father doesn't run a law firm in Manhattan?
This is called wealth inequality to the max and it will crash our societies sooner or later. Pseudo-meritocracies will eventually break their necks over this and the developing crisis of democracy is one step into that direction. 2008 proved that the system is utterly broken and since then we put on a few bandaids at best.
> There are plenty of places in the US where a house can be purchased for under $100k.
Sure, those places just don't have the jobs people strive after, for example to escape automation in the 21st century.
I’m just providing an alternative perspective. It’s certainly not a mandate. If you know that you’re exceptional, then by all means go be exceptional. But, the vast majority of people aren’t exceptional. And, the truly exceptional are probably out there working their ass off right now, not reading HN.
High expectations = high chances for disappointment. I was exceptional in high school. One day a teacher bluntly told my “gifted” class, “You guys aren’t special. You may feel special right now. But, there are millions of people better than you. Be ready for disappointment.” That advice hurt, and I hated that teacher. But, the truth is that even after being lucky and working hard for 20+ years, the best I got was to be an exceptional person’s captain. And, only through helping that person was I able to retire early. YMMV.
I'm sort of with you with housing and education but where I'm in violent disagreement is health. Some are born with a terrible hand and there's little that they can do, on their own, to resolve those issues. It's unacceptable to lose everything for health treatments. People have options with school and housing. People can put forth effort to improve their situation. With health, you can't just get up and move somewhere else to be healthy.
> And, the truly exceptional are probably out there working their ass off right now, not reading HN.
I think this is where our differences in viewpoints really emerge. I certainly do not want to contest that there are exceptional individuals who fundamentally have a vastly more profound impact on the development of the human civilisation.
However, it seems like you want to assign special conditions and resources to those who, in your view, deserve them - and to them only. Everyone else should take a step back and not demand stuff they haven't earned.
This view is fine, but I disagree that it is realistic or even possible to establish true meritocracies as long as you stand by values of liberalism. You have to take away the individuality of people itself in order to achieve a system in which its inhabitants are content with getting what they deserve. And that is because the meaning of "deserve" is then required to be centrally controlled rather than a subjective viewpoint that is different for 7.5 billion people.
So a Chinese farmer might find they "deserve" the same quality of healthcare as Jeff Bezos simply on account of being human. Others might argue that you should have to work and contribute to "earn" your cancer treatment. Both have merit.
Due to gains in efficiency and scale, it’s more winner take all than ever before. Look at the public markets, it’s halved in the number of companies even listed on it, and of those listed there’s basically a handful capturing all the gains. The bigger companies will continue to gain pricing power so unless you’re in some regulated niche like doctors, expect to not be in control of your destiny if all you plan to do is work a job.
The parent poster has a very skewed opinion. My observations are similar to yours, in fact I’m not sure of anyone outside medical professions who did graduate schools right after a bachelors.
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!!
> 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.
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.
> 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.
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.
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.
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.
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.
> 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.
I agree with you, but I don't know what the solution was. I've still got my thermostat set to "off" from summer, and am turning it on periodically. Last night it hit 14 degrees before I got home. Telling a pensioner to "use less energy" because their home is 14 degrees seems a little too far.
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?
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.
(Hey, OP here, thanks for reading I really appreciate it!)
Look, on the one hand this can get a bit too cynical, to the extent that you start looking for a "grim cabal" (quoting myself, not you) to blame. There are no lizard people etc. etc. :) So you have to phrase things carefully.
On the other hand, this quote from the article is me trying to highlight...exactly what you're saying here about optimizing human output:
"The slave works for his owner. The indentured servant for his master. The communist for everyone. The American for himself. It’s a powerful idea, a powerful motivator, and a powerful system. A grand competition, where advancement can be achieved through merit and competence — so don’t be shocked when those with merit and competence flock to compete. And they make perfect competitors."
I wanted to dodge the Culture War / Politics questions a bit. This was more about specifying the pain points than proposing My Genius Solution To The Utopia Problem #729.
But I didn't want to let it go unsaid that the American system powerfully motivates the sorts of people most-apt-to-compete to do exactly that.
> $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.
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.
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..
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
In Bay Area the situation with public schools is pretty dire, in my oppinion. Palo Alto, Cupertino and Los Gatos are ok. The rest are surviving.
Housing in districts where public schools are ok comes at a massive premium. The difference between San Jose and Los Gatos is more than 300k.
Private schools are 2-3k per month.
To afford Bay Area both parents have to work 50+ hours a week with 30+ minute commutes. As a result, the time parents spend with children is very limited. Raising a famility with even 2 children is a big challenge.
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.
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.
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.
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.
> 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.
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.)
> 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.
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.
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.
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,.
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.
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.
Wage increases require both difficulty in hiring someone at a lower price as well as a need to do the job at a higher price.
50-year low unemployment may affect the former, but that does not mean that the jobs are worth doing at a higher rate. Like with the price of anything, there is always a point where something is no longer worth buying. A job may pencil out at $10/hr, but not $11/hr, and so as soon as wage pressure pushes for $11/hr, the job potential simply disappears.
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?
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
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.
except price of computers have been steady or rising.
electronics is the one fake anchor in that list. and there are a few. when he says repeatedly that he won't contest the official number, that is an economist joke. the official number is a joke and it only matters that the number can withold by not affecting other numbers the fed have no control. if those other number respect the ramdon number, the random number holds. if not, the random number is adjusted to meet reality as needed. so the "measure measures" joke in the article. inflation index is an index alrigth, but not of what everyone thinks it is.
This is purely my unscientific, though information-based opinion... I graduated in 2000. Basically, an arms race started, as elite schools could afford to make it "free" to attend, others jacked up their tuition to become "elite" in their own way, online education was going to eat the bottom end (so to speak), and any college that wanted to stay in business had better ramp up their appeal. I think what you'll observe was beginning in about that time, there was a massive building boom, as each school tried to provide nicer dorms, facilities, etc in order to compete with other schools. Along with this was a significant boost in administrative overhead across schools, for reasons I've not quite understood - my guess is that in a drive to compete on quality, in came the middle management.
I do not know about all jurisdictions, but in my region of the world, the high school completion rate jumped by approximately 20 percentage points right around that time (from ~60% to ~80%). Assuming that holds true elsewhere, it stands to reason that with more people graduating high school, more people are likely to be accepted into higher levels of schooling. With more people attending higher level schools, the increase in demand (without an immediate increase in supply – it takes a long time to build new schools and even longer to recognize them as respected institutions), means price is going to rise.
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.
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.
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.
> Modern societies are supposed to be organised for the benefit of all in society
That's a nice sentiment to hold, but that's simply not true. All societies are formed by the elite for the benefit of the elite. If others benefit in the endeavor, it's simply an accidental side effect.
Industrialized human society is no different than the industrial animal farm. The industrial animal farm doesn't exist for the benefit of the animals. It exists for the benefit of the people who own, run or rule the farm.
> This is why the government usually sponsors education, for example.
Modern education system in the US and UK and everywhere was created to indoctrinate the students into a particular belief system of the elite, produce future factory workers and to keep child labor from competing against adult laborers. It was one part to serve as innoculation against "wrongthink", one part to produce factory workers who can read simple instructions and to remove labor supply ( child labor ) from a society which couldn't produce enough jobs for its adults. A reason for the constant increase in education demands from jobs is simply because there aren't enough jobs to go around. A solution is to keep successive generations longer and longer in school and out of the work force. But a side effect of this is that students are indebted more and more. And debt is slavery as adam smith pointed out.
> I believe the start of the problem was the rise of neo-liberalism, holding the market and competition above all else.
The problem predates neoliberalism. Neoliberalism ( and neoconservativism ) is just national industrialism writ large ( international ). It's the natural progression from national industrialization of the past 200 years.
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).