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Re: Decline of the U.S. Middle Class?
Old 08-25-2004, 05:18 PM   #61
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Re: Decline of the U.S. Middle Class?

ACK! Sorry Cut-Throat. Major boo-boo there on my part, and corrected in post. (See why I shouldn't post in political discussions?) Actually, I have this problem with my computer, when I try to spell C-h-u-c-k---L-y-n it comes out as "Cut Throat" .

Glad I had a thought on the drive home, or that misquote would be sitting there for a while....

My thought on standards of living: One thing I keep forgetting to factor in is that our idea of a minimal standard of living has greatly increased in the past few decades. Back in the 50's didn't families have one car, one TV and one radio if they were lucky? These days there's frequently at least one car per person over 16, more than 1 TV per person plus a slew of relatively short-lived electronic gadgets like radio/CD/cassetes (including boomboxes & personal sets), VCRs, DVD players, cable/satellite TV, cell phones, game system (PS2, Xbox) and increasingly the ever-obsoleting PC. Not to mention the vendors of each of these items has refined the nickel-and-dime upgrades like Caller ID, Call Waiting, picture-in-picture, undercoating, rustproofing, extended warranty, oh-don't-you-want-to-pay-a-little-more-for-so-much-more-features and consumables/media for consumer devices. The expected home size per person has grown, too, as an earlier poster noted.

Will all the modern consumable expenses I intuit that they severely affect our expenditures while not making us feel like our quality of life is better when reflecting upon our parents' lives.

I don't guess I have a specific point here, just an observation that I think this is a significant factor that is often overlooked.
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Re: Decline of the U.S. Middle Class?
Old 08-25-2004, 06:38 PM   #62
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Re: Decline of the U.S. Middle Class?

Cut-Throat

Oblay emay!

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Re: Decline of the U.S. Middle Class?
Old 08-25-2004, 06:40 PM   #63
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Re: Decline of the U.S. Middle Class?

Quote:

My thought on standards of living: One thing I keep forgetting to factor in is that our idea of a minimal standard of living has greatly increased in the past few decades. Back in the 50's didn't families have one car, one TV and one radio if they were lucky?
The cost of high-tech goods has come down a LOT since then. To put it into perspective, a TV set in the 1950s cost between $200 and $1000, but the average annual income was about $3000.... which means that a TV cost between 15-33% of the gross household income. No wonder homes only had one TV set. I was curious, and adjusted for inflation, that $3000 income (1955) is worth about $20000 now. From the numbers I could gather (regional), the current average pay ranges between $20k and $40k depending on where in the country you live.... so it doesn't look like people are THAT much better off..... personally, I think people make LESS now (in terms of buying power) than they did back in the 1950s, and that the dual-income family masks this underlying fact.
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Re: Decline of the U.S. Middle Class?
Old 08-26-2004, 10:41 AM   #64
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Re: Decline of the U.S. Middle Class?

Which is somewhat offset by people owning WAY more electronics crap than they used to. Most families in the 60's/70's owned perhaps one tv, a radio, and maybe a record player. They owned one car, and often it was an old clunker.

Todays families have usually more than one computer, tvs, vcr's, tivo's, satellite receivers, cable modems, a couple of stereos, clock radios, cell phones, fax machines, etc, etc. Its also almost expected that you have at least two newer cars, and of course cars for the teenagers when they get their license. So the stuff is cheaper, but we have more of it and multiples.

Hence the decline. Expectations have gone way up and exceeded the middle classes ability to pay for it without going into debt.

As far as the rest of this stuff, its said there are two kinds of people: those that just want to live their own life and are happy with that as long as someone elses behavior doesnt infringe on their freedom, and those that either want to tell other people what to do and/or how to do it, or who feel that everyone elses behavior should meet their standards.

With all due respect to people I like that fall into the latter category, my wan opinion is that the world would be a better place if some of that energy were directed a little more positively.

Perhaps all this energy spent keeping people who want to get married but dont meet some peoples "appropriate criteria" would be better spent working to drop the divorce rate below 50% or improving the quality of marriage so more younger people look at it as something they might want to do.

It seems to me that something so 'treasured' should be desirable to be in and to stay in. Then later on you can worry about 'miscreants' who want to 'pollute' the 'sanctity' of the thing a lot of people dont want to do or keep doing long term. :P
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Re: Decline of the U.S. Middle Class?
Old 08-26-2004, 02:50 PM   #65
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Re: Decline of the U.S. Middle Class?

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...and those that either want to tell other people what to do and/or how to do it, or who feel that everyone elses behavior should meet their standards.
Sounds like the US' foreign policy
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Re: Decline of the U.S. Middle Class?
Old 08-26-2004, 05:28 PM   #66
 
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Re: Decline of the U.S. Middle Class?

I don't much care what other people do, or how they do it, as long as they stay out of my way and do not
negatively impact my life.

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Re: Decline of the U.S. Middle Class?
Old 08-26-2004, 10:35 PM   #67
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Re: Decline of the U.S. Middle Class?

If there's one thing I can't tolerate it's intolerance.
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Re: Decline of the U.S. Middle Class?
Old 08-27-2004, 07:16 AM   #68
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Re: Decline of the U.S. Middle Class?


Morning in Which America?
http://www.amconmag.com/2004_08_30/buchanan.html

“With the perception growing that the economy has turned a corner and is headed due north again, Democrats seem to be losing that issue as well. But there is a worm in the apple of prosperity, and the New York Times has spotted it.

“Hourly Pay in U.S. Not Keeping Pace with Price Rises,” ran the headline over July 18’s lead story: “Drop in Spending Power May Gain Prominence as a Campaign Issue.” (The subhead to that might have read, “At Least We Hope So.”)

The story, however, frames the decisive issue of 2004. Will news of rising profits and new jobs eclipse the dark side of this recovery? For scores of millions of U.S. workers, things are getting worse.

“The amount of money workers receive in their paychecks is failing to keep up with inflation,” said the Times.

“On Friday, the Bureau of Labor Statistics reported that hourly earnings of production workers—non-management workers ranging from nurses to teachers to hamburger flippers to assembly line workers—fell 1.1 percent in June, after accounting for inflation. The June drop, the steepest since the depths of recession in 1991, came after a 0.8 percent fall in real hourly earnings in May.”

What appears to have returned is a phenomenon Americans first came to experience between 1972 and 1994. In those two decades, despite the seven fat years of the Reagan era where U.S. workers were making impressive strides, real wages fell 19 percent.

Now the cancer has recurred. “In June, production workers took home $525.84 a week, on average. After accounting for inflation, this is about $8 less than they were pocketing last January and is the lowest level of weekly pay since October 1991.”

Continued:
http://www.amconmag.com/2004_08_30/buchanan.html
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Re: Decline of the U.S. Middle Class?
Old 08-27-2004, 07:17 AM   #69
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Re: Decline of the U.S. Middle Class?

http://money.cnn.com/2004/08/26/news...ex.htm?cnn=yes

The percentage of the U.S. population living in poverty rose to 12.5 percent from 12.1 percent in 2002, the Census Bureau said in its annual poverty report, seen by some as the most important score card on the nation's economy and Bush's first term in office. The ranks of the poor rose to 35.9 million, a boost of 1.3 million.
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Re: Decline of the U.S. Middle Class?
Old 08-27-2004, 07:20 AM   #70
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Re: Decline of the U.S. Middle Class?

The median household income, adjusted for inflation, was unchanged at $43,318, down $1,535 from its peak in 2000.

http://cbs.marketwatch.com/news/stor...7D&siteid=mktw
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Re: Decline of the U.S. Middle Class?
Old 08-27-2004, 08:46 AM   #71
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Re: Decline of the U.S. Middle Class?

I have heard a lot of grumbling about use of the CPI as an inflation indicator, especially when the "core CPI" is used since many people believe that it doesn't accuratly capture the market realities (like this guy: http://www.financialsense.com/Expert...2004/0525.html)

I tend to believe that the government reported inflation numbers aren't correct in that they are a bit low.... low inflation numbers are good for politicians because the allow them to say things like "real wages remained the same".... they are also good for the budget since inflation indexed securities (I-Bonds), and social security COLAs won't increase as much. Do I think that they are outright lying? no, but I do think that they massaged the numbers a bit (look at the price for unleaded gas in the CPI numbers) for their own self-interest..... in light of this, it is my belief that real income actually went down a bit, especially when you factor in the increasing cost of health insurance.
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Re: Decline of the U.S. Middle Class?
Old 08-27-2004, 01:33 PM   #72
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Re: Decline of the U.S. Middle Class?

Quote:
Do I think that they are outright lying?
I recognize data manipulation when I see it.

They're lying. Outright.

Inflation in many areas is far higher than I've seen reported by PPI or CPI. I've kept my spending level by changing service providers; cheaper supermarkets, lower cost long distance providers, etc. In some cases substituting lower cost, lower quality products.

There should be a separate group that is non-government that measures, determines and reports inflation across various geographic and demographic segments.

The danger to ER's is purchasing "inflation protected securities" in bulk and removing inflationary influences from their long term financial calculations.
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Re: Decline of the U.S. Middle Class?
Old 08-27-2004, 01:58 PM   #73
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Re: Decline of the U.S. Middle Class?

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The danger to ER's is purchasing "inflation protected securities" in bulk and removing inflationary influences from their long term financial calculations.
Danger is a relative thing. If the market believed that inflation was much higher than the CPI, that would be reflected in nominal interest rates. It's not, so there is clearly less danger in TIPS than any other security I'm aware of.

An excellent rant on the CPI is here:

http://www.zealllc.com/commentary/damnlies.htm

Among other things, this guy goes into alternative measures of inflation (such as the size of the money supply, which is the fundamental measure when you have a fiat currency as we do). I actually take some solace in the fact that the CPI tracks M1 so well....
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Re: Decline of the U.S. Middle Class?
Old 08-27-2004, 02:16 PM   #74
 
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Re: Decline of the U.S. Middle Class?

Quote:
The median household income, adjusted for inflation, was unchanged at $43,318, down $1,535 from its peak in 2000.
Yes, this indicator tends to rise and fall. This change is not out of the ordinary.


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Re: Decline of the U.S. Middle Class?
Old 08-27-2004, 02:19 PM   #75
 
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Re: Decline of the U.S. Middle Class?

Quote:
http://money.cnn.com/2004/08/26/news...ex.htm?cnn=yes

The percentage of the U.S. population living in poverty rose to 12.5 percent from 12.1 percent in 2002, the Census Bureau said in its annual poverty report, seen by some as the most important score card on the nation's economy and Bush's first term in office. The ranks of the poor rose to 35.9 million, a boost of 1.3 million.
Again, this is not unusual.

http://www.census.gov/hhes/poverty/p...pov03fig03.pdf


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Re: Decline of the U.S. Middle Class?
Old 08-27-2004, 02:31 PM   #76
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Re: Decline of the U.S. Middle Class?

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Danger is a relative thing. * If the market believed that inflation was much higher than the CPI, that would be reflected in nominal interest rates. * It's not, so there is clearly less danger in TIPS than any other security I'm aware of.
I cant say I disagree. However, that wasnt my point. My point is that I dont believe you can buy tips or ibonds and forget about inflation. I dont think they're fully indexed.

Tips at ~5-5.5% pre-inflation returns, untaxed federally, arent bad for government bonds...no doubt. But I keep seeing people say "I just bought a bunch of tips and now i'm immune to inflation and I can live off the real return for 20 years!".

Good luck. Check in with someone thats been living off of social security for a while and ask them if their checks today buy them the same level of goods and services that they did 10 years ago. According to my dad, he's lost at least 25-30% of his buying power.
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Re: Decline of the U.S. Middle Class?
Old 08-27-2004, 02:40 PM   #77
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Re: Decline of the U.S. Middle Class?

Fascinating read on the link Wab.

It brought up one of my favorites, the 'quality' readjustment done that says that things are better today, so their "quality value" is higher than the price reductions.

Currently, the quality adjustment for computers says that while they've dropped in price 8-10%, because they're faster they're really creating a 25% discounted valuation to inflation calculations.

Ignoring the fact that credible studies exist that show that faster computers and communications networks may in fact net a negative overall productivity benefit.

Along with plenty that show no benefit to the average user at all vs models of a few years ago.

Not to mention the ones that demonstrate clear productivity benefits.

In other words, the government has no business incorporating quality benefits when there is no clear cut, undisputed quality advantage.

The really interesting part was reading the timeline related material about the economy, the stock market and the upcoming elections and feeling like the document was a current one, not a four year old one!
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th, every time you say "credible study"...
Old 08-28-2004, 10:12 PM   #78
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th, every time you say "credible study"...

... a little alarm bell goes off in my head.

Now that you've taught us how to manipulate the data, how can we trust anyone else's studies?
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Re: Decline of the U.S. Middle Class?
Old 08-29-2004, 10:49 AM   #79
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Re: Decline of the U.S. Middle Class?

Ha Ha Ha.

Well, some are simply minor misrepresentations. Some require removing the brain from the brain-pan, immersing it in a mysterious liquid that removes all ability to think independently, replacing it, then consuming the results.

As long as you understand the methodology, the way the data was collected, the limitations of the data and metholology, and you never, ever, ever, EVER look at the conclusions drawn and simply draw your own from the data provided...you're all set.
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Re: Decline of the U.S. Middle Class?
Old 09-09-2004, 02:24 PM   #80
 
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Re: Decline of the U.S. Middle Class?

An Elder Challenges Outsourcing's Orthodoxy
By STEVE LOHR
9/9/04 NY Times

At 89, Paul A. Samuelson, the Nobel Prize-winning economist and professor emeritus at the Massachusetts Institute of Technology, still seems to have plenty of intellectual edge and the ability to antagonize and amuse.

His dissent from the mainstream economic consensus about outsourcing and globalization will appear later this month in a distinguished journal, cloaked in clever phrases and theoretical equations, but clearly aimed at the orthodoxy within his profession: Alan Greenspan, chairman of the Federal Reserve; N. Gregory Mankiw, chairman of the White House Council of Economic Advisers; and Jagdish N. Bhagwati, a leading international economist and professor at Columbia University.

These heavyweights, among others, are perpetrators of what Mr. Samuelson terms "the popular polemical untruth."

Popular among economists, that is. That untruth, Mr. Samuelson asserts in an article for the Journal of Economic Perspectives, is the assumption that the laws of economics dictate that the American economy will benefit in the long run from all forms of international trade, including the outsourcing abroad of call-center and software programming jobs.

Sure, Mr. Samuelson writes, the mainstream economists acknowledge that some people will gain and others will suffer in the short term, but they quickly add that "the gains of the American winners are big enough to more than compensate for the losers."

That assumption, so widely shared by economists, is "only an innuendo," Mr. Samuelson writes. "For it is dead wrong about necessary surplus of winnings over losings."

Trade, in other words, may not always work to the advantage of the American economy, according to Mr. Samuelson.

In an interview last week, Mr. Samuelson said he wrote the article to "set the record straight" because "the mainstream defenses of globalization were much too simple a statement of the problem." Mr. Samuelson, who calls himself a "centrist Democrat," said his analysis did not come with a recipe of policy steps, and he emphasized that it was not meant as a justification for protectionist measures.

Up to now, he said, the gains to America have outweighed the losses from trade, but that outcome is not necessarily guaranteed in the future.

In his article, Mr. Samuelson begins by noting the unease many Americans feel about their jobs and wages these days, especially as the economies of China and India emerge on the strength of their low wages, increasingly skilled workers and rising technological prowess. "This is a hot issue now, and in the coming decade, it will not go away," he writes.

The essay is Mr. Samuelson's effort to contribute economic nuance to the policy debate over outsourcing and trade. The Journal of Economic Perspectives, a quarterly published by the American Economic Association, has a modest circulation of 21,000 but it is influential in the field.

Indeed, Mr. Bhagwati and two colleagues, Arvind Panagariya, an economics professor at Columbia, and T. N. Srinivasan, a professor of economics at Yale University, have already submitted an article to the journal that is partly a response to Mr. Samuelson. Theirs is titled "The Muddles Over Outsourcing."

The Samuelson critique carries added weight given the stature of the author. "He invented so many of the economic models that everyone uses," noted Timothy Taylor, managing editor of the Journal of Economic Perspectives.

For generations of undergraduates, starting in 1948, the study of economics has meant a Samuelson textbook, now in its 18th edition, with William Nordhaus, a Yale economist, as a co-author since the 12th edition. Because he has taught at M.I.T. for six decades, the elite ranks of the economics profession are filled with Mr. Samuelson's former students, including Mr. Bhagwati and Mr. Mankiw.

According to Mr. Samuelson, a low-wage nation that is rapidly improving its technology, like India or China, has the potential to change the terms of trade with America in fields like call-center services or computer programming in ways that reduce per-capita income in the United States. "The new labor-market-clearing real wage has been lowered by this version of dynamic fair free trade," Mr. Samuelson writes.

But doesn't purchasing cheaper call-center or programming services from abroad reduce input costs for various industries, delivering a net benefit to the economy? Not necessarily, Mr. Samuelson replied. To put things in simplified terms, he explained in the interview, "being able to purchase groceries 20 percent cheaper at Wal-Mart does not necessarily make up for the wage losses."

The global spread of lower-cost computing and Internet communications breaks down the old geographic boundaries between labor markets, he noted, and could accelerate the pressure on wages across large swaths of the service economy. "If you don't believe that changes the average wages in America, then you believe in the tooth fairy," Mr. Samuelson said.

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