The Fake Economic Boom

[brianeyci]

So Master of Asses, nobody faces the choice of starving or working a second job? What a dickass. You should ask RedImperator some time about the kids he teaches. I think he posted explaining to Mike why kids go out and take minimum wage jobs to help the family and fail school -- there just isn't enough money to go around. Mike rides high too but the difference between you and him is he acknowledges the difference in income. You don't seem to, as if it didn't exist, or worse yet as if they deserved it. No doubt you'll point to the fact nobody starves in America, semantic whoring starving to die of starvation, as if you need distended stomachs and skeletal frames to be brought up with inadequate nutrition.

Since you don't seem to know what an more equitable distribution means, how about an example. A + B + C = E. You could have two guys making 1 and C making 2 for a total of 3. Or you could have two guys making .1 and C making 10 for a total of 10.2. The economy sure is doing better in the latter case, but more people are being fucked over.

[CmdrWilkens]

So MoO here is the problem, as I see it, which is that the Median Household income is basically unchanged, inflation adjusted, despite the long periods of "growth" we have supposedly been subject to.

So despite enourmous growth the median household income in say 1995 was 35,887 (inflation adjustments I got were to '97 dollars) while the median in 1973 was 35,745. In that time period women have come to make up a significantly larger share of the workforce and two earner families are much more common. The point is: with more wage earners per household the median houehold income is remarkably flat. So despite additional investment of time in the form of more second earners the median isn't shifting. That's fucked up.

[Darth Wong]

The point is: with more wage earners per household the median houehold income is remarkably flat. So despite additional investment of time in the form of more second earners the median isn't shifting. That's fucked up.

It's exactly what Ronald Reagan wanted. He was never anything more than "help the rich get richer" president, and the entire vaunted conservative movement that he spawned has accomplished that and pretty much nothing else.

Those people who are working their asses off have helped generate tremendous wealth over the last 30 years.The problem is that they haven't seen a dime of that wealth.

[Broomstick]

Yeah, and we're too exhausted from working our asses off that we don't have any energy to do anything about the fucked situation.

[Master of Ossus]

"Dilemma"? As if dilemma between "rich" and "equal"? Equality does not equal poverty. A good distribution does not make everyone "much worse off" and is not equal to everyone being worse off - in fact, if it makes it better for 80-90% of the population, whilst making the rich "worse off" than they were before, what's the reason not to do it? Fluffy bunnies from Rockefeller house?

How's your claim that there's a "dilemma" between equality+worse condition and inequality+better conditions, doing with two "ands" there, eh? It doesn't fair well against practically existing low-GINI countries either - they can demonstrate good growth tempoes, high living standards AND equality at the same time.

The problem is simple: those countries are not the US. There is no reason to believe that we can import their economies wholesale and achieve the same results. And, as I said, this is a value judgment; it's not necessarily practical. If you gave me an alternative that would maintain good growth rates and improve equality, I would probably support it. I see none of those alternatives, though.

[Master of Ossus]

Exactly where are you getting this information from? From just about every report on American mobility I have read, America has some of the worst upward mobility, and is more comparable to Brazil than it is to France.

The Bureau of Labor Statistics and the Bureau of Economic Analysis have both done work in the field. I think that Sawyer's is still the seminal paper, but I don't know if there are more modern ones. I suppose it could have changed.

The overall volatility of household income increased significantly between 1990-91 and 1997-98 and again in 2003-04...

The middle class is experiencing more insecurity of income, while the top decile is experiencing less. From 1997-98 to 2003-04, the increase in downward short-term mobility was driven by the experiences of middle-class households (those earning between $34,510 and $89,300 in 2004 dollars). Households in the top quintile saw no increase in downward short-term mobility, and households in the top decile ($122,880 and up) saw a reduction in the frequency of large negative income shocks.

Volatility actually increases mobility above the poverty line, though. I don't see this as being inconsistent with the study that I cited earlier, although, again, i suppose it could have changed.

For the middle class, an increase in income volatility has led to an increase in the frequency of large negative income shocks, which may be expected to translate to an increase in financial distress.

Households whose adult members all worked more than 40 hours per week for two years in a row were more upwardly mobile in 1990-91 and 1997-98 than households who worked fewer hours. Yet this was not true in 2003-04, suggesting that people who work long hours on a consistent basis no longer appear to be able to generate much upward mobility for their families.

Okay, well that suggests that there has been such a change. If that's true then I'll happily retract my statement.
later.

[Master of Ossus]

You said "no one" is worse of than in the 1970's. I disagreed, saying that I am worse off. My reasons are that I lived in a larger home in a more prosperous neighborhood, with full medical coverage throughout the 1970's. I am now renting a small apartment, in a run-down neighborhood with many of my neighbors unemployed, currently with no job myself, and no health insurance. How am I "clearly wrong"?

And I agreed with you. By "everyone" I meant "a reasonably typical person in the United States."

Maybe you should generalize less. Sweeping, all inclusive terms like "all" and "no one" often mark the idealogical zealot.

Look, I already admitted to mispeaking. If you can't accept that, then we'll just have to agree to disagree.

Define "normal citizen"

One whose purchases are comparable to that of the median consumer in society.

How can you make a flip statement such as that when the quality of the social safety nets in the two countries are so different? Consider just the fact that in France the poor have health coverage on par with just about everyone else as a matter of course - in the US the poor have substandard care at best.

I'm not saying that they're similar in all respects, merely that Americans are generally more economically mobile. Although, based on what Kwas was showing me, I admit that that might not be true, anymore.

Please provide PROOF that "present trends continue" - that's the problem right now, it is EXTREMELY unlikely the trends of the past few years will continue.

Okay, there is obviously no way of proving a future outcome. Nonetheless, according to the last studies I read on the matter, this was true over the 2, 5, 9, and ten year periods prior to the study.

There have, indisputably, been periods in history with prolonged economic downtowns, yes, in the US as well. Please review the history of The Great Depression, roughly 1929 through the end of the 1930's. Yes, a few remained or became rich - that in no way removes the real suffering of millions, or in any way made it OK that so many were destitute.

Yes, thank you. Never could have guessed.

The problem is when a few make MUCH more money and most make the same OR LESS - which is what the CURRENT situation has been the past few years. If you hadn't noticed, there are several states (Illinois, in particular around here, made a big stink about it) where "real wages", as you defined them, slipped down for the vast majority of the population. It's all very well to talk about 20 years down the road but I have bills I have to pay NOW - and my wages weren't going as far as they used to even before I lost my job. It would be STUPID for people not to notice stable or even retreating "real wages" for even a one-year period. How much food, housing, fuel, etc. cost today matters today - I can't tell my landlord I'll pay him February's rent twenty years from now when my investments pay off - and affects everything from what is bought to how much is available for putting into long term investments.

Okay, nothing I've intentionally said here has indicated that the distribution of income and such across the entire country is the same, but when presented with a national summary table like the one Stas Bush has, of course it's going to lose the effects of economic change on units smaller than the country.

I think YOU are having trouble understanding how many people are doing this because they perceive they have no choice. You seem to be looking at the number of women in married households are working and assuming they are ALL doing it be choice. They are not. You have made no effort to break out women doing it by choice from women who are working from necessity.

There is a difference, though, between legitimately having no choice and colloquially having no choice. Economists study choices in scarcity, with choices being rigorously defined to mean the selection of a course of action out of many that are possible.

Let me put it another way - minimum wage is not a living wage in this country. If two spouses are both earning minimum wage they both HAVE TO work to make ends meet, even if they're living in a trailer park.

It's true that the minimum wage isn't a living wage, but very few adults have careers working for the minimum wage--it's essentially been made irrelevant because of inflation (although it cycles when Congress increases it).

[Master of Ossus]

So Master of Asses, nobody faces the choice of starving or working a second job? What a dickass. You should ask RedImperator some time about the kids he teaches. I think he posted explaining to Mike why kids go out and take minimum wage jobs to help the family and fail school -- there just isn't enough money to go around. Mike rides high too but the difference between you and him is he acknowledges the difference in income. You don't seem to, as if it didn't exist, or worse yet as if they deserved it. No doubt you'll point to the fact nobody starves in America, semantic whoring starving to die of starvation, as if you need distended stomachs and skeletal frames to be brought up with inadequate nutrition.

Since you don't seem to know what an more equitable distribution means, how about an example. A + B + C = E. You could have two guys making 1 and C making 2 for a total of 3. Or you could have two guys making .1 and C making 10 for a total of 10.2. The economy sure is doing better in the latter case, but more people are being fucked over.

How much money do you think my dad made while I was growing up? Hmmm? If I don't have sympathy for the poor, it's not because I don't have experience with them. I don't know if I could ever have been called "working class," but not that far from it.

[Master of Ossus]

So MoO here is the problem, as I see it, which is that the Median Household income is basically unchanged, inflation adjusted, despite the long periods of "growth" we have supposedly been subject to.

NO! Real household income HAS gone up. Real WAGES have remained the same, but many, many more women are working now than worked prior to the 1970's and 1980's.

So despite enourmous growth the median household income in say 1995 was 35,887 (inflation adjustments I got were to '97 dollars) while the median in 1973 was 35,745. In that time period women have come to make up a significantly larger share of the workforce and two earner families are much more common. The point is: with more wage earners per household the median houehold income is remarkably flat. So despite additional investment of time in the form of more second earners the median isn't shifting. That's fucked up.

Do you have evidence for this assertion? I think Stas Bush's table, and my analysis of it, show pretty conclusively that this chain of thought is erroneous. It is based (in the table, at least--that might not be true of everything) on a misunderstanding as to what the real wage means.

[Master of Ossus]

The massive middle-class outpouring of money into the stock market over the last 20 years has generated a long upward climb. That isn't "long term" enough for you, especially when many leading economists are of an age where they're looking at cashing out those investments in the near term? We're not talking about daily fluctuations here; convincing the general public to pour money into equities en masse has generated a long-term trend.

Mike, investors largely don't WANT other people to invest in the stock market, because that dilutes their returns. Suppose that there is a stock that returns a dividend of one dollar per year. Is that stock more attractive if it costs $1, or $1000? This is the basis for many of Warren Buffet's famous expressions, such as his apocryphal statement on learning that a company he had bought a controlling interest in was watching its stock price collapse. His response was: "Great! Buy more!" It's also the basis for why he hates it when the market goes up--it means he doesn't have as many opportunities to snatch up stocks that are underpriced.

In general, there are two types of people buying stocks: investors and speculators. Speculators buy a stock in the hopes that its price will go up. Virtually all economists who do buy stock, though, are investors and are largely indifferent to the price of stocks--they look for the rate of return that the stock provides. They have no incentive to pull more people into the stock market and largely don't like speculators because they spike prices and lead to instability. Moreover, while SOME economists are at an age where they are preparing to cash out (and put that money into what, exactly?), what are the rest of them doing? Just sitting on their hands trying to get people to buy into the stock market, anyway? Sorry, but the statement that economists somehow report economic news in a largely self-serving way makes little sense, and it does reek of tinfoil hats to suggest that there's some gigantic conspiracy going on. Economists, if anything, have FEWER incentives than most people with equal funds in the stock market to bring in other investors because they're much less likely to be speculators and more likely to be investors.

[Surlethe]

Let me see if I understand. In the chain-weighting inflation calculation, the value of the consumer basket is assumed constant and the fluctuation in price is inflation. So this entirely disallows the possibility of the real price of basic goods rising because those real prices are by definition constant. Is that right?

EDIT: How does that square with the assertion on Stas' table that the fixed prices were adjusted for inflation to 2004 dollars?

[Master of Ossus]

Let me see if I understand. In the chain-weighting inflation calculation, the value of the consumer basket is assumed constant and the fluctuation in price is inflation. So this entirely disallows the possibility of the real price of basic goods rising because those real prices are by definition constant. Is that right?

EDIT: How does that square with the assertion on Stas' table that the fixed prices were adjusted for inflation to 2004 dollars?

Inflation already takes into account price changes in "fixed" categories, weighted for how much a typical consumer spends on them in their market basket. It's very misleading to adjust wages for inflation (which takes into account the change in prices on things like housing, cars, etc.) and then subtract the "fixed" costs from whatever household income looks like. This ignores the fact that the real wage has already been adjusted for that change, and even THAT ignores the differences in quality that have occurred over time--which in the cases of housing and cars are undoubtedly positive. I didn't catch that they were adjusting the housing to form "real" dollars, but it doesn't change the fundamental point. The fact that real income has remained stable, while spending on things like housing has increased, means that the real costs of OTHER things in the consumer's market basket have decreased.

When you think about it, it's not at all surprising that the costs of different classes of goods and services would fluctuate AGAINST EACH OTHER over time, nor is there any reason to suspect that peoples' spending across various categories of living is constant. There's no reason why my house should always be equal in value to 1000 pizzas, for instance. If my mortgage payments go up, or even my REAL mortgage payments, that is not enough information to state whether or not I am worse off than before--you also have to know about the prices and the REAL prices of other goods that I typically consume.

[aerius]

Sorry, but the statement that economists somehow report economic news in a largely self-serving way makes little sense, and it does reek of tinfoil hats to suggest that there's some gigantic conspiracy going on.

So why haven't I heard a peep about non-borrowed bank reserves going negative or how the bonds industry is in deep shit, or Sallie Mae taking yet another credit rating hit? Why isn't any of this on the CNN Business page, the Business News Network, or any other major source of economic & financial news? Why do I have to dig through The Automatic Earth blog or the Market Ticker page to find this information?

[Darth Wong]

The massive middle-class outpouring of money into the stock market over the last 20 years has generated a long upward climb. That isn't "long term" enough for you, especially when many leading economists are of an age where they're looking at cashing out those investments in the near term? We're not talking about daily fluctuations here; convincing the general public to pour money into equities en masse has generated a long-term trend.

Mike, investors largely don't WANT other people to invest in the stock market, because that dilutes their returns. Suppose that there is a stock that returns a dividend of one dollar per year. Is that stock more attractive if it costs $1, or $1000?

$1000, if you plan on selling it.

This is the basis for many of Warren Buffet's famous expressions, such as his apocryphal statement on learning that a company he had bought a controlling interest in was watching its stock price collapse. His response was: "Great! Buy more!" It's also the basis for why he hates it when the market goes up--it means he doesn't have as many opportunities to snatch up stocks that are underpriced.

Puh-lease, how naive do you think I am? People in the finance industry make their money when people make transactions, not when they buy and hold. Investors like Warren Buffett look for unglamourous companies that the speculators don't pay attention to, but the finance industry as a whole loves speculators.

They have no incentive to pull more people into the stock market and largely don't like speculators because they spike prices and lead to instability.

Tell me, where were their shrill complaints during the last ten years of purely speculative growth in the real-estate market, and in the financial "assets" that accompanied that growth? Most of them were trying to cash in. And now, they're all joining the chorus of saying how stupid everyone was, as if they were an exception.

Moreover, while SOME economists are at an age where they are preparing to cash out (and put that money into what, exactly?), what are the rest of them doing? Just sitting on their hands trying to get people to buy into the stock market, anyway? Sorry, but the statement that economists somehow report economic news in a largely self-serving way makes little sense, and it does reek of tinfoil hats to suggest that there's some gigantic conspiracy going on.

Bullshit. Do you even know what makes the difference between a conspiracy theory and a simple argument about a class of people? Nobody needs to work together in a hidden conspiracy for this to happen; they all simply need to perceive that it is in their self-interest to get a lot of stupid people investing a lot of money without knowing what they're doing, so they can reap the upside. Do you expect people to believe your implication that the money lost by these idiot speculators vanishes into a black hole somewhere? It ends up in the hands of more savvy operators.

Economists, if anything, have FEWER incentives than most people with equal funds in the stock market to bring in other investors because they're much less likely to be speculators and more likely to be investors.

Then why weren't economists sounding the alarm about the real-estate market before the bubble began to pop? The fact is that if you have heavy holdings in the market, and that market is largely speculative, you have absolutely NO incentive to blow the whistle because you will lose a shitload of equity if regular people wake up to reality. Your hand-waving doesn't change that fact.

Yes, smart investors don't like speculators. But they have to deal with them regardless, and they're not going to pop the speculative bubble when they would pay for its collapse just like everyone else.

[Broomstick]

And I agreed with you. By "everyone" I meant "a reasonably typical person in the United States."

Then I suggest that in the future you use the long form, as it is more accurate and does not leave you open to attack in the rather rough and tumble debate style on this board.

Define "normal citizen"

One whose purchases are comparable to that of the median consumer in society.

Not good enough. Give me some guidelines. I don't know who this "median consumer" is - for darn sure I don't make typical choices. Give me more information

I'm not saying that they're similar in all respects, merely that Americans are generally more economically mobile. Although, based on what Kwas was showing me, I admit that that might not be true, anymore.

Let me just say that I have gained more respect for you for considering the evidence of the other side in such a civilized manner.

I think YOU are having trouble understanding how many people are doing this because they perceive they have no choice. You seem to be looking at the number of women in married households are working and assuming they are ALL doing it be choice. They are not. You have made no effort to break out women doing it by choice from women who are working from necessity.

There is a difference, though, between legitimately having no choice and colloquially having no choice. Economists study choices in scarcity, with choices being rigorously defined to mean the selection of a course of action out of many that are possible.

WHO is making the decision between "must" and "don't have to"? Who should? "Experts" who are wealthy and don't have to make hard decisions of that nature, or the parents who have to deal with low wages day to day?

Let me put it another way - minimum wage is not a living wage in this country. If two spouses are both earning minimum wage they both HAVE TO work to make ends meet, even if they're living in a trailer park.

It's true that the minimum wage isn't a living wage, but very few adults have careers working for the minimum wage--it's essentially been made irrelevant because of inflation (although it cycles when Congress increases it).

Our current administration has fought tooth and nail to prevent a rise in minimum wage, even a COLA adjustment. It has NOT kept pace with inflation.

And it's not just a matter of a career you twit - when you lose a job, as I have, you might well take on a minimum wage job just to bring something in. Again, it's one thing to say "over a lifetime this averages out" - in reality I have to have a place to live and food to eat TODAY. When someone loses a job they might take a minimum wage job just to bring something in, but it represents a steady depletion of resources which makes it that much more difficult to climb out of the hole again. Why the FUCK is it OK for someone to bust their ass fulltime and NOT earn enough to obtain even the most basic shelter, food and clothing? That is FUCKED UP.

[The Dark]

So MoO here is the problem, as I see it, which is that the Median Household income is basically unchanged, inflation adjusted, despite the long periods of "growth" we have supposedly been subject to.

NO! Real household income HAS gone up. Real WAGES have remained the same, but many, many more women are working now than worked prior to the 1970's and 1980's.

Gross real household income has increased, but net real household income after fixed expenses has declined (from 19560 to 18140 in 2004 dollars), due to increased costs involved with the second worker.

[K. A. Pital]

The problem is simple: those countries are not the US. There is no reason to believe that we can import their economies wholesale and achieve the same results.

Of course not. However, the US endlessly harps about how all other economies should simply copycat it's structure and achieve a super-duper market blah blah blah. And simply ignoring even to look at the measures taken in other countries with positive effects is only one consequence of the United States' extremely self-centered politics.

[The Dark]

It's true that the minimum wage isn't a living wage, but very few adults have careers working for the minimum wage--it's essentially been made irrelevant because of inflation (although it cycles when Congress increases it).

MoO, if the minimum wage had been indexed to inflation in 1968, it would be over $14/hour today. It's ridiculously low at a real wage level.

[CmdrWilkens]

So despite enourmous growth the median household income in say 1995 was 35,887 (inflation adjustments I got were to '97 dollars) while the median in 1973 was 35,745. In that time period women have come to make up a significantly larger share of the workforce and two earner families are much more common. The point is: with more wage earners per household the median houehold income is remarkably flat. So despite additional investment of time in the form of more second earners the median isn't shifting. That's fucked up.

Do you have evidence for this assertion? I think Stas Bush's table, and my analysis of it, show pretty conclusively that this chain of thought is erroneous. It is based (in the table, at least--that might not be true of everything) on a misunderstanding as to what the real wage means.

Census Bureau study from 1947 to 1997 which can be found here in pdf format

The specific data to which I am referring is Table C-17 "Median HOUSEHOLD Income by Race and Hispanic Origin of Householder 1967 to 1997" (emphasis mine). If you look the median income (inflation adjusted for 1997 dollars) has gone from 31,583 to 37,005 in the study period with the maximum in 1989 (37,415 adjusted)

This means despite a massive entry of minorities and women into the workforce as second earners there is about .5% average growth not even pointing to the fact that you can see multiple downtrends throughout the study period.

[K. A. Pital]

Census Bureau study from 1947 to 1997 which can be found here in pdf format

It's also rather interesting that poverty rates remain stable for the 70s-90s period and aren't cut down.

[Alan Bolte]

I came across a link to this article and thought immediately of this thread. The author was Secretary of Labor under Clinton.

It's Not Just the Business Cycle

A better stimulus package? More bailouts of Wall Street? Another Fed rate cut? None of these fixes will help much because they do not deal with the underlying problem now facing American consumers, and the underlying anxiety now gripping American voters.

The problem lies deeper than the current slowdown and transcends the business cycle.

The fact is, middle-class families have exhausted the coping mechanisms they have used for more than three decades to get by on median wages that are barely higher than they were in 1970, adjusted for inflation. Male wages today are in fact lower than they were then: the income of a young man in his 30s is now 12 per cent below that of a man his age three decades ago. Yet for years now, America’s middle class has lived beyond its pay cheque. Middle-class lifestyles have flourished even though median wages have barely budged. That is now ending. Americans are beginning to feel the consequences.

The first coping mechanism was moving more women into paid work. The percentage of American working mothers with school-age children has almost doubled since 1970 – from 38 per cent to close to 70 per cent. Some parents are now even doing 24-hour shifts, one on child duty while the other works. These families are known as Dins: double income, no sex.

But we reached the limit to how many mothers could maintain paying jobs. What to do? We turned to a second coping mechanism. When families could not paddle any harder, they started paddling longer. The typical American now works two weeks more each year than 30 years ago. Compared with any other advanced nation we are veritable workaholics, putting in 350 more hours a year than the average European, more even than the notoriously industrious Japanese.

But there is also a limit to how long we can work. As the tide of economic necessity continued to rise, we turned to the third coping mechanism. We began to borrow, big time. With housing prices rising briskly through the 1990s and even faster between 2002 and 2006, we turned our homes into piggy banks through home equity loans. Americans got nearly $250bn worth of home equity every quarter in second mortgages and refinancings. That is nearly 10 per cent of disposable income. With credit cards raining down like manna, we bought plasma tele­vision sets, new appliances, vacations.

With dollars artificially high because foreigners continued to hold them even as the nation sank deeper into debt, we summoned inexpensive goods and services from the rest of the world.

But this final coping mechanism can no longer keep us going, either. The era of easy money is over. With the bursting of the housing bubble, home equity is drying up. As Moody’s reported recently, defaults on home equity loans have surged to the highest level this decade. Car and credit card debt is next. Personal bankruptcies rose 48 per cent in first half of 2007, probably even more in the second half, which means a wave of defaults on consumer loans. Meanwhile, as foreigners begin shifting out of dollars, we will no longer have access to cheap foreign goods and services.

In short, the anxiety gripping the middle class -- and their inability to go on buying enough to keep the economy going -- is not simply a product of the current economic slowdown. The underlying problem began around 1970. Any presidential candidate seeking to address it will have to think bigger than bailing out lenders and borrowers, or stimulating the economy with tax cuts and spending increases.

Most Americans are still not prospering in the high-technology, global economy that emerged three decades ago. Almost all the benefits of economic growth since then have gone to a small number of people at the very top.

The candidate who acknowledges this and comes up with ways not just to stimulate the economy but also to boost the wages of the bottom two-thirds of Americans –- through, say, a more progressive tax (including a larger Earned-Income Tax Credit), stronger unions and, over the longer term, better schools for children from lower-and moderate-income families and better access to higher education –- will have a good chance of winning over America’s large, and increasingly anxious, voters.

[Darth Wong]

It's nice to hear someone stand up and admit this publicly. I'm tired of the way far too many economists echo MoO's head-in-sand "everything is OK" denials. Of course, I've never had too much respect for economists to begin with; they act as if their doctrines are scientific, when a lot of them seem more like religion.

But I doubt that we'll see real improvement on this front. For one thing, most of the establishment is just like MoO: they have no sympathy whatsoever for the lower classes and while they usually won't come out and say it, their attitude toward the poor is "fuck 'em, they're just lazy." For another, America has defined itself by its opposition to socialism for so long that any solutions to this problem (virtually all of which are going to have some socialist flavour) are going to be shot down for that reason alone.

Canadians aren't really that much better than Americans in terms of the wealth held by the top percentile of society; our filthy rich demographic is just as obscenely wealthy as yours. The country is not quite awash in billionaires, but you Americans might be surprised. However, our middle class does not suffer from the extreme anxieties and uncertainties bedeviling yours, because we have taken away a few huge uncertainties by keeping university tuitions down and paying for universal health care. Much of that is due to the fact that the "big government is bad" mantra has not really caught on here the way it has down there. Also, our fiscal policies do not encourage people to take on huge debts the way yours do (probably the biggest difference is our lack of a middle-class mortgage interest tax deduction).

[Illuminatus Primus]

The problem with economists, especially those in the West, is that they treat their philosophical presumptions and political preferences like they are proved by economics itself. But I find this leap in logic to be rarely substantiated. MoO keeps harping on "growth for everyone" - which is of course just bullshit: there's been plenty of growth for 30 years; but the working wage has yet to rise in real terms. So why would those in the lower quartiles of income give a shit about additional growth when it already has not been lifting their boat in 30 years?

[Broomstick]

Hmm....

I wonder if my no-debt strategy might, in fact, have been the best strategy -- I have fewer paper assets than most, but what I have I own - my vehicles, for example, are paid off. We may not be happy taking a drastic pay cut, and it does cut into the luxuries of course, but it will not put us into debt and we will still have food, shelter, and clothing.

Ha-ha-ha! All you people who mocked me for settling for less and not keeping up with the Jones - I WIN! Neener-neener!

Just so long as I keep some money coming in, of course - don't want to get cocky.

Really, if it weren't for the health care issue I'd say I have few to no serious worries at all. Of course, the health care issue is HUGE.

[Surlethe]

Hmm....

I wonder if my no-debt strategy might, in fact, have been the best strategy -- I have fewer paper assets than most, but what I have I own - my vehicles, for example, are paid off. We may not be happy taking a drastic pay cut, and it does cut into the luxuries of course, but it will not put us into debt and we will still have food, shelter, and clothing.

You should write a book called Living Within Your Means. It might sell very well, since it appears that most people don't understand how to do that.

Seriously, though, I'm looking to copy your strategy. For the next couple of years, the only income my fiancee and I will be able to count on is scholarships; this will put us well below the poverty line. Of course, we will have no illusions about our economic state in life; and this, I think, gives us the edge over other people. The only thing I'm really seriously afraid of is some sort of social upheaval or economic upheaval that renders our savings worthless or our lives in danger.

Ha-ha-ha! All you people who mocked me for settling for less and not keeping up with the Jones - I WIN! Neener-neener!

You actually got mocked for that? I wouldn't expect people to actually say that to someone's face.