I gained a lot of respect for you reading this essay. This is the kind of honesty and reason we need in our discourse. Sincere criticism of your own side is all too rare these days.
Overall, a disappointing article. It does not address at all the main criticism of post-1970s capitalism from the Right which is that the costs of the goods most important to human wellbeing, principally housing, have been consistently rising for five decades *as a proportion of average income*, whereas those goods that have got cheaper are principally those that do not promote, or actively undermine human flourishing. If a person is economically struggling, one can simply choose to consume fewer computer games, processed foods, Netflix etc. and not only will he probably be no less happy, there is a good chance he will be happier. Conversely, you can't just not have shelter.
Now, it's an unresolved question how much of this is a product of Baumol effects, how much of perverse incentives from government subsidies, how much a result of result of Cantillon effects, but in any case it's bad and needs to be fixed for civilization to flourish, and lectures in how everything is greater because you can buy iphones just reinforce the cycle of rightoids being taken advantage of by quack economics.
P.S. All the food in America is shit and anyone who has been to essentially anywhere in Europe knows this. Very strange to use tasty apples in America as an example of economic progress.
The "main criticism" coming from the right is screeching about the price of groceries (especially eggs), and that there aren't enough low-skilled manufacturing jobs (even though, in reality, there are more jobs than Americans want). Those are the things that Trumpists talk about, and what the tariffs are supposed to address.
There can be a discussion about housing prices. Insofar as housing prices have increased I don't think it has much to do with "capitalism," since supply is kept down artificially with regulations.
Your stipulation that "computer games, processed foods, Netflix etc." aren't relevant for happiness doesn't align with people's revealed preferences. Those are the first things most people buy when they have disposable income.
You mention "not hav[ing] shelter" as if this is some a serious possibility for normal Americans, which it isn't. Not everyone can buy his dream house, but American's aren't living in the streets unless they are mentally ill and/or on drugs.
"lectures in how everything is greater because you can buy iphones" - I offered several lines of evidence that the economic condition of the average person (including blue-collar worker) is far better than the 1970s, and that anyone can get a decent job if he's will to show up on time. If your takeaway is that I think people should shut up and by grateful for iPhones, I think you missed the point.
1) I myself said that government intervention is a plausible candidate for high prices in these sectors. I don't see any purpose in playing semantic games about 'capitalism'. We have to call the present system something.
2) Yes, they have shelter, but shelter takes up a larger proportion of their income than it is used to which means they have to work harder, and, in many cases, forgo the benefit of one partner not working. Unlike with consumer goods, people literally need a house so cannot realistically choose to make do with less to have a better work-life balance. This was precisely my point.
To expand a bit more, let's say the average price of housing went down and the average price of consumer goods went up to precisely the degree that they cancel each other out in macro models. According to your analysis, everyone is just as well off as before, but I contend that actually most people are now vastly better off. Those who want to work harder to have more consumer goods can choose to do that, and those who want to spend more time at home and have fewer consumer goods can do that. When it is housing that becomes more expensive no-one really has a choice.
3) The revealed preference of a crack addict is to smoke crack, but this doesn't mean it is conducive to his long- or even medium-term happiness. The question of how much of modern consumption is analogous to crack is an empirical one and cannot be avoided with handwaving about revealed preference. Most available data suggest people are getting less happy.
4) I said the article was disappointing overall, not that it was totally wrong. It is important - more important than was recognized until yesterday - to correct the gross errors and ignorance of the Right, but the way to to do this is to (a) engage with the legitimate sources of frustration and resentment and (b) promote those like Oren Cass who are economically literate. Overall, I think the impression that most people will get reading this article is that things are basically fine and they should quit bitching because consumer goods are cheaper.
Your critique is that the author's article didn't address a key point of the modern right's criticism of capitalism - housing costs. Since the point of this article was to point out that tariffs are a folly that will make an already rich nation poorer, please enlighten us as to how tariffs are going to solve the crucial housing shortage.
Increased housing costs in the U.S. are a fault of a LACK of capitalism. Housing development, landlordship, and labor are all heavily, instusively regulated. Largely for bad reasons we should've known better than to meddle ourselves in.
The tariffs are not the whole story; the administration is using them as leverage for renegotiating terms. It's a gambit. Trump's top economic advisor has even written about what their goals are.
Sorry, Trumps actions are not those of one that has a plan. He has no impulse control, his attention span is nonexistent, and he’s surrounded by people who will tell him that a turd is a ho-ho. He has no plans, only vague concepts of plans (as he would say).
Housing costs in hollowed out towns (where factories used to exist) are still cheap. There just aren't many jobs. People move to where the jobs are and increase the costs of housing.
Your bio states you are a "25-year silicon valley guy". I consider my point proven from your own experience.
When I was growing up I remember getting our first air conditioner. This was a big deal. Today it wouldn't be a big deal.
But its also the case that someone on my fathers salary could not afford the home I grew up in!
Consumer goods are discretionary. One can decide whether or not to buy them. Housing, (most) education, (most) healthcare, and personal safety are not negotiable. They are necessities. You can decide to save some money by not buying an air conditioner. You can't decide that its OK to live in the ghetto.
An air conditioner not being a big deal in many places anymore is a good thing. It's the single biggest factor that's turned the American Southeast from a backwater to an economic powerhouse. Even Mississippi now has almost the same per-capita GDP as the U.K. and Israel. Just two-percent lower.
America still is not performing optimally. We have an appalling amount of crime and disorder, and a truly fucked up education system that has turned out entire generations of racial and sexual communists who are frighteningly inept at literacy and mathematics even relative to their I.Q. groups. But we became and remain number one in the world because of our strong support for capitalism and entrepreneurship, and our single greatest sin of these last sixty years has been attacking these freedoms in the name of thumbing the scales for a better outcome for underperforming groups, paying no regard for the rising tide lifting the boats of our poor higher than the vessels of even the middle class sits in most of the world. The world average per capita GDP is only about fifteen-percent higher than what a single person on SSI and foodstamps brings in per year in the U.S. That's how much our abundance agenda lifted us above the rest.
And do you really think disaffected, underachieving, ennuitic losers are solely a modern phenomenon? Are you by chance totally unfamiliar with A Confederacy of Dunces? Or for that matter Don Quixote? We hadn't even discovered Australia when that last book was written!
High house prices as a proportion of income happen because real incomes have risen.
This statement does not disagree with your argument, but it is worth nothing.
This is because a large component of house prices isn't the house, or even the actual land, though that is how it is costed, but who and what the land and house are next to and nearby.
In a ghetto crime-ridden area, the house and land might be basically free. In an area with a lot of well to do or fashionable white people, it will be expensive.
What this ultimately means is that the market for homes is zero sum. It can be made cheaper, but only by improving the population, and it has been made more expensive by the population becoming worse.
And zero sum means that, as people can compete more (because they have higher incomes and so have satisfied consumer needs etc), they will compete more, even to the point of spending a higher percentage of their income.
> ...here aren't enough low-skilled manufacturing jobs (even though, in reality, there are more jobs than Americans want)
Jobs in which part of the country? Are you trying to claim there's no issue with the decaying husks of rustbelt factories, or that middle-aged midwesterners should move to NYC to work at McDonalds?
So the solution is obviously to onshore low skilled manufacturing jobs (e.g. textiles) from countries like Bangladesh where the median income is about $300/month? How does that help the rust belt? Why would these low skilled manufacturing jobs pay more than the service job at McDonald's?
This is exactly the sort of thing I've complained about elsewhere in this thread.
Where's the erudition in this riposte? Of course your interlocutor isn't advocating for sweatshops for the middle aged.
But many are the middle aged worker who used to work in delta tools back when they were a USA based operation. Now that's gone — this is the sought after restoration.
Okay, so let's onshore that delta tools job back to the U.S now. Why would it pay more than the Taiwanese operation? The only way that happens is if the cost of the product goes way up. Is that good for Delta? BTW, the company still employs people in the U.S in lucrative jobs. It's just that they aren't manufacturing--they are service - sales, marketing, business development, etc. Hiking prices and losing competitive advantage just means those service jobs go away. But replacing those with manufacturing jobs is preferable?
No-one is arguing that tarriffs in particular or increasing wages for low-skilled workers in general isn't going to raise the cost of consumer goods. The argument is that average GDP-per-capita is not the only thing that matters here. Having an independent livelihood, owning your own home, and not being dependent on unreliable foreign actors for vital commodities are goods in themselves.
Whether Trump's policies will actually accomplish this is a different question.
I am personally ambivalent on tariffs, though I am somewhat persuaded of the case for broad spectrum industrial capacity (re-invigorated by tariffs promoting onshoring) to catalyze technological development, the cause in which I am overwhelmingly the most invested.
So my dog is not really in this particular fight.
Rather, my point is the dismissive attitude to arguments for tariffs is neither persuasive nor gentlemanly. To that end, I do appreciate your earnest engagement, and will do my best to articulate the contrary position as I understand it.
This theoretical scenario is easily countered by empirical observations. A Lie Nielsen no. 62 Low Angle Jack plane can usually be had for around $300, and it will work out of the box. The only overseas no. 62 that is even close to functional without after market machining (aka sand paper, float glass, and much patience) is by Wood River, typically for around $250.
The LN is undeniably more expensive: $50, or 20%. That gap can increase if you get the WR on sale (LN never goes on sale). Regardless, whether or not this constitutes "a lot more money" is in the eye of the beholder.
As to the jobs: I can assure you, they have sales and marketing. And you will not find anyone who speaks ill of working for LN. They're an institution in Maine. They also have God-tier customer service.
So here's a domestic manufacturing company that pays much more than a corresponding offshore operation, while producing a way better product for only a 20% higher retail price, and also providing well paid service jobs for white collar brains in addition to the state of the art factory work for blue collar brains.
Also, LN was founded before NAFTA and MFN status for China, so the idea that tariffs would knock it out (not the argument you're making but I've seen it made) is tough to take seriously.
The argument for zero tariffs is presented as though it were a law of physics. Examples like this make me doubt that. Maybe it's undergraduate Newtonian kinematics with the assumption of frictionless surfaces.
Yes, the price of everything will go up and also the wages. Maybe all the same things will exist for consumption but people will have more satisfying jobs and the industrial base will be located in the USA. None of it's going to happen from middle-aged people who suddenly go back to the industrial life.
It will take 20 years to industrialize America again, and I doubt tariffs would make any difference. Everything is about supply and demand and prices are completely elastic, so we can just pay less for something else. With 8 trillion dollars of federal spending sloshing around there's plenty of money to pay the tariffs.
The problem of shelter is #1. It's a desperate struggle to stay off the streets for most people, and buying a house is nearly impossible for the vast majority. We are living with relatives and cramming up in small houses, doing whatever to stay under the roof.
Nobody's choosing Netflix over houses, and "decent jobs" do not exist without free housing. In modest areas the cost is at least $2,000 per month: somebody has to bring home $15 an hour just for the housing more or less.
We need to make $30 an hour net pay according to this formula, and it's not that simple for most people. It's true that higher skills bring higher pay, but the kind of housing where lower class workers used to abide in past generations is very expensive or it has vanished.
The real problem is that most land is locked up in a vast monopoly of obsolete records instead of being up for sale where anybody could afford something. The cure generally is to get land because a free spot can always be developed with shelter and off-grid methods.
I don't think it's true at all that Americans without a college degree are economically better off now; and certainly not when it comes to highly sought after things like owning a home - something which was commonplace and within the reach of most people a few decades ago.
Houses are more expensive because they became more valuable!!
Urbanization - and all the convenience that modern cities had to offer - has driven up the price of land dramatically inside their zone of influence.
You can get a cheap house at any time at 1970s-price if you would just forgo a city life and go live like your grandfather did: In a more remote area, without access to modern urban luxuries.
People's perception that they have gotten poorer is almost entirely a function of their inflated expectations, not an absolute degradation of their material wellbeing.
(Same story for healthcare. If you are willing to enjoy 1970s healthcare standards, your healthcare will be very cheap I can guarantee you that.)
I have no idea how to enjoy 1970s healthcare standards, There are some hospitals and urgent care clinics in the area- that's the choice. Some doctors office and so forth and everybody seems to be present in the year 2025.
My grandfather lived in a city and easily worked owning that home. They did not live in some remote place which today is equally expensive by any standard. The housing is relatively cheaper but the wages are lower and prices can often be higher for other things. Housing is not affordable anywhere.
The closest thing to cheap housing now is open land, which reflects the truth that supply is very constrained in general.
The cities of yore are nowhere comparable to the cities of now. Nobody's grandfather was located within commuting distance of three sushi bars, two Whole Foods, a WeWork, and four craft breweries.
Increase in urbanization > Cities became very attractive places to live in > Everybody wants to live in the cities > City land prices skyrocket because of demand overflow
> I have no idea how to enjoy 1970s healthcare standards
The cheapest plan on the market with the worst coverage is a good approximation of what healthcare was like half a century ago.
Everybody's grandfather was located within commuting distance of the equivalent culture for that time. There were plenty of breweries and grocery stores, ethnic foods everywhere and local markets. This was true in a city like Philadelphia for example.
Taking Philadelphia further, it's not especially attractive to live at all but somehow got really expensive anyway. People have always preferred to live in the nearby suburbs. Today even the shittiest town in PA is full of expensive housing.
All the medical plans in the world wouldn't change anything for the given area since everything is equally accessible anyway. It's all the same hospitals, all the same clinics, and all the same doctors etc.
There were not plenty of breweries. That only happened because Jimmy Carter deregulated home brewing in 1978. Craft breweries started taking off in the late eighties.
Nor were there plenty of ethnic foods except for like Polish food in Chicago and Chinatowns in New York and San Francisco. The Indian and Mexican food came later.
> Everybody's grandfather was located within commuting distance of the equivalent culture for that time.
But the 1950s' city equivalent wasn't nearly as good.
> Today even the shittiest town in PA is full of expensive housing.
Travel distance to the importance places is VIP.
> It's all the same hospitals, all the same clinics, and all the same doctors etc.
Different insurance plans, I mean. Medical science has advanced a very long way over the past 50 years. If you're willing to forgo all the most advanced, expensive treatment plans developed over the past half-century, you'll only need to pay a low insurance price.
Yet those gains of productivity have been drawn into rent and property values. This is the core problem, every time we advance most of it is taken through capitalism. It shows up with super high housing prices.
This is why it's become so much easier to live low grid or off-grid, the technology and access to commerce and everything else allows a high standard of living for the homeless. People are living in cars with super high-tech computers struggling to get by.
Even those gains to efficiency will only drive up the price of land as more people gather in the desired location. The core problem is "economic rent", something observed now for many centuries going back to Europe.
Well, houses ALSO became more expensive in cities and suburbs where people want to live because of NIMBY. If you add that in as a portion, I strongly agree with you about the rest.
Yeah, Nathan fixating on consumer goods seems like a conspicuous oversight, given that inflation in housing, education and healthcare markets has been outpacing general economic growth for decades at this point. Take that into account and you get the Elephant Curve.
Also, arguing that income inequality hasn't gone up when taxes and benefits are included (and ignoring wealth inequality) ignores the psychological aspects of, e.g, preferring to own your own home and have an independent livelihood. Which could, among other things, be relevant to family formation. Also the problem that a large portion of welfare spending is essentially sustained by money-printing, which drives inflation, which is mostly a stealth tax on the poor.
Housing has definitely been screwed up, but the cost of services like healthcare are because of the Baumol effect. Healthcare was still expensive for the average person in the fifties, just not as expensive compared to the cost of goods.
In cities it's the result of anti growth policies that resulted in low housing construction while the influx of immigrants both domestic and foreign into cities vastly outpaced the rate of home construction. NYC was basically 10x new residents to housing construction in the 90s and it never caught up. The tech and finance industries concentrated those jobs in a handful of cities, the first tier cities like New York and San Francisco filled up then it moved to Chicago, LA, then to Austin and Miami, then to Raleigh and Denver. Now it is nationwide as people fled those cities for cheaper locales during the work from home boom during the pandemic.
Everywhere is anti-growth from zoning restrictions to local tax policy. All the land getting hoarded up in obsolete titles and all the vacant properties etc. It's very difficult to get anything done in about 90% of it's already frozen.
If interest rates go up then housing price should go down, and it's all subject to monetary policy. People on the internet like to use the word "claim" as though it required persuasion LOL. I will choose to believe my own eyes and my own life. I don't think you know what the word claim actually means.
I think it's principally inflation being directed into the housing sector, but before we can talk about the 'why' we need to at least acknowledge the 'what'.
There are going to be people who lose out from these arrangements, yes, but if the long-term upshot is that more dry-wall manufacturers are established within the US and provide higher wages or more stable employment for low-end workers, the benefits to them may outweigh the costs.
More generally, everything you can do to squeeze GDP in the short-term is damaging society in the long term. Ceasing to have children is fantastic for the economy, for example, until you run out people.
This is a fair point but rather simplistic. The better answer is that forcing dry wall to be manufactured here is not an optimal allocation of resources and every dollar spent on more expensive dry wall is a dollar spent less on technology, pharmaceuticals, research, STEM, robotics, etc.
Subsidizing jobs for these workers, similar to communism, is not going to create optimal growth. Now, I believe some would accept suboptimal growth if it were optimal for them. Sure. But lets be clear — we aren’t going to win the technology race with China by creating the worlds most expensive drywall and textiles.
I think it was Sam Hyde who said "China uses slave labour. How are we supposed to compete with slave labour?"
Allowing humans to run any portion of the economy is, in the long run, going to be 'economically sub-optimal' and/or 'not how you win the technology race'. Thanks, but no thanks.
It’s hard to pinpoint any one cause for what you speak of. Probably many causes. The root of all this is likely central banking, fiat currency, money printing and being the world reserve currency. Fix the monetary system first and a lot of these problems will be easier to deal with.
Yes the true point that the working class is vastly better off now than 50 years ago should probably come with an asterisk, and the asterisk is housing (setting aside that quality and size of housing was much lower then).
But these tariffs are not even ostensibly about housing, and of course they will only raise housing costs. And you never hear MAGA marxists arguing for housing reforms.
You can buy a lovely brand new 2000sq ft house outside of Atlanta for 200k from Smith Douglass or one of the other home builders. House prices are a story of regulation
I was waiting for your take on the madness that Trump unleashed in the past few days and I was not disappointed. Great piece.
I might add that something similar can be said about MAGA's approach to Ukraine and European security in general. Abandoning weaker allies and extorting mineral resources from a poor country at war might earn the US a few billion dollar in the short term, but they will lose 10 times more in the medium-long term.
The first effects are already starting to show. Just two examples that come to my mind:
1) Switzerland and Austria (two neutral countries not particularly enthusiastic in supporting Ukraine) plan to replace their combat aircrafts in the coming years. Until recently, the US-made F-35 were a natural choice. But after seeing the Trump administration threatening the Ukrainian government, both are considering switching to European-made Rafale or Eurofighters. They do not trust the US anymore, and they are literally asking themselves "what if the Americans have some kind of killing switch that could disable them to force us to obey whatever they might want us to do?". That would be tens of billions of arms sales cancelled. Whch would be only the first of hundreds of billions over the years.
2) In Italy the Meloni government, which has always been super-friendly with Trump, was in talks with Starlink for a huge contract that would task Musk's company with improving the Italian communications using Starlink's satellites. But, again, after Musk's reportedly threatened to disable Starlink in Ukraine (and publicly insulted on X a Polish politician who pointed out that the Polish government pays for Ukraine's Starlink access), the thing stalled and is likely dead. They simply do not trust a US company anymore, especially not one owned by someone associated with Trump. They are now in talks with French Eutelsat.
Many more such cases will likely follow in the coming years. The trust has been breached, and I'm not sure it can be restored.
Also, if the US abandons Europe, Europe might be forced to take a more friendly approach with China, which would be a political and security disaster for America. China is already making some timid steps to test the waters in this direction.
Agreed. Trump/Vance making friendly overtures to Meloni, Orban et al and pointing out liberal hypocrisy on the topic of free speech is very much welcome, but pissing off potential allies for the sake of short-term point-scoring is myopic.
Wonderful piece but I'm still hoping you might be wrong about the tariffs - though I suspect you're not. You are certainly right about Trump's abandonment of old allies being a stupid own goal, when anti-wokism is viewed as an international movement. In January the conservative world looked to Trump to lead the way and show us how to dismantle the power of progressive liberal elites (despite knowing Trump is a narcissistic fool). Now we view him as just one more enemy among many, though by no means the worst. He's the All-Against-All representative. He could have spearheaded a global shift to the right but instead chose to go down a very narrowly understood and short-sighted 'America First' rabbit hole. So unnecessary.
Absolutely correct about getting people to show up. At the factory I work at, 90% of the time people get fired it’s because they’re lazy or they stop coming to work
Agreed. These tariff policies are one of the most ridiculous acts of self-sabotage in American political history. If they are not rolled back very soon, they will likely cause a recession, drive prices up, and no one will care about anything else Trump did.
The Democrats now have a clear path to victory in 2026 and 2028.
Housing, Medical Care, and Education. As long as the prices of those things continue to skyrocket, none of what you're saying matters. No one cares how much work it takes them to buy a can opener when they can't afford rent. Not that Trump's tariffs are going to help, they really aren't.
Housing, healthcare, and education are three of the most heavily regulated, leased capitalistic industries in the entire United States, which itself turned heavily away from capitalism with the rise of the civil rights movement.
We need to have much less government intrusion and mandate in all three of these industries.
Fair enough (though in a democratic system, is NIMBYism really the fault of the government?) but that doesn't change the fact that the people have very good and rational reasons to like they live in a country that's poorer than it used to be. Cofnas acts like people are crazy to feel that way, when it is very much what many are actually experiencing.
Yes, in a democratic system, NIMBYism is the fault of the elected politicians who make NIMBY decisions on the rules/regulations we have to live under.
Of course you are correct that some of this is caused by the demands of their NIMBY voters, so if you want to put some of the blame on those, voters, I would surely agree.
It's not that they only vote for NIMBY politicians. It's that they show up to meetings, organize politically, scream at people, and do endless litigation. NIMBYism is the only cause that activates these people. Yes, I do blame them, I don't think evil is too strong a word for it.
That there is plenty of blame for each, I surely agree.
The NIMBYs are supremely selfish, and the ones who claim to be progressives in all other aspects of their politics perhaps could be accused of evil, but while I’m pretty sure I disagree with them every bit as much as you do, I reserve the term evil for worse offenses.
Way less than half of the bottom 60% pay for college education.
And the very poor, the very old and *most* people with a full-time job (or spouse with one) have most of the cost of their healthcare paid by someone else.
So blaming medical costs and education costs for the (false in the first place) claim that the average person is worse off is… misguided, at the very best.
Housing is higher cost for some people in the most desirable places to live and work. Some of that is because we are richer, and a big part of it is because of NIMBY policies in blue cities and states.
No, basically everyone pays for it through their property taxes or indirectly through rent they pay that is used to pay property taxes.
"And the very poor, the very old and *most* people with a full-time job (or spouse with one) have most of the cost of their healthcare paid by someone else." Which is compensation to the employee that otherwise might be paid as wages or retained as profits that might lead to further investment in the future. This accounts for some of the reason wages haven't risen very fast in the last few decades.
"Housing is higher cost for some people in the most desirable places to live and work. Some of that is because we are richer, and a big part of it is because of NIMBY policies in blue cities and states" Housing costs have gone up pretty much everywhere, not just in the most desirable cities. More than 90 percent of Americans live in counties where median rents and house prices grew faster than median incomes from 2000 to 2020.
You are of course correct that taxpayers pay for K-12 education. But your (implicit and explicit) claim that the rising cost of these was making the average person not just less well off than they could otherwise be, but less well off in absolute terms (“nothing else matters”) is what I was addressing.
Same re: healthcare. You are correct that people would be EVEN better off if healthcare cost less. And I agree it could/should. But again that wasn’t the implicit nor explicit claim; I was addressing your “nothing else matters” claim.
And re: your last point on housing. If I take you at your word that housing prices and median rents went up faster than median incomes from 2000 to 2020, what that leaves out is that homeowners were mostly BETTER OFF because of this! Because between 60% and 70% of Americans own the home they live in. Home prices went up for many reasons, but one big structural one was that interest rates went way down over that timeframe.
If a PART of your point is that there is a decent minority of people who are renters rather than homeowners in big cities and desirable surrounding suburbs, point taken. Some of these have high incomes and chose to rent instead of buy. But sure perhaps 25% of people were made notably worse off because of the cost of increased rents. Again I cite NIMBYism as the biggest culprit here in the places people most want to live. [You don’t cite by how much median rents went up everywhere; if it’s only a little in most of America, it was offset by the lower real cost of many other things.]
But your claim was that “none of what you’re saying matters” when these 3 other costs are going up, and are effectively claiming/implying that the average person is worse off than they were 20 and 50 years ago, and this simply isn’t true. Even if it IS true that for something like 25% of people their real cost of housing has gone up, it doesn’t meant that anything like 25% of Americans are worse off now than they were 20 or 50 years ago, let alone 50%+ being worse off.
So my point stands: the overwhelming number of people are way better off than 20 or 50 years ago (and that’s not even counting that immigrants to this country are way better off than in the countries they came from, even though they pull down the average per capita income numbers, and so apples-apples comparisons only of those born in the U.S. look even better still), that despite education and healthcare expenses rising, those haven’t caused American’s real standard of living to go down. And that despite high housing costs - still unrefuted by you a major factor of which is NIMBY regulations - perhaps causing some percentage of Americans to be worse off, that percentage cannot possibly be very high.
I agree with you the NIMBY regulations are a culprit, when did I say otherwise? I'd make NIMBYism a hanging offense if I could.
I don't understand how you can possibly say that rising property taxes to deal with rising education costs don't make people objectively worse off, homeowners included. It also seems true that rising costs in this area pay for less than it used to, given educational outcomes (although whether this is the fault of the system is debatable).
As for your claim that rising home prices make homeowners better off; a lot of that wealth just leads to aforementioned high property taxes. It can only be accessed when someone wishes to sell it, often to buy a new home at the inflated price. Rising housing prices don't do much to raise actual living standards, just paper wealth. I own a condo, if I sell it, I'll have to secure housing at the same inflated prices. All that happens for me when it's worth more is that my taxes are higher on it. Also, you're completely disregarding what these high housing costs have done to young people starting out, I don't see how you can claim people are so much better off when household formation has been repressed as much as it has. When times are actually good, household formation goes up. This matters more than old people getting rich on paper. Your stats are pulled right out of thin air, housing costs have caused misery for many.
All my claims were in opposition to your assertion that “the only things that matter” are rising education, healthcare and housing costs.
And I assumed you were agreeing with the people in these comments claiming that because of these things, the average person is worse off - has an actually lower standard of living - than the average person decades ago.
Neither of the above is true.
Stipulate that, and we probably agree on most of this. All three are problems that government policy makes worse. And said government policy means collectively we are worse off than we would be with better policy.
Excellent article and I don't disagree with anything you say. I would however like to expand the scope by wondering are there problems that conservatives are correct to worry about. I think you would agree on being worried about anti-White DEI stuff. What about family formation, housing costs in places with good jobs, lack of good non-blue collar jobs in places with affordable housing, obesity and other health issues, aging population and end of life issues, lack of local/religious community + online socio-political outrage.
If I knew someone who complained about 7 issues that are fake I would wonder if maybe his life would be better if he focused on the 3 issues that are real and he does not complain about rather than just telling him to stop whining about the 7 fake issues.
Yes, but when conservatives get hysterical about the price of eggs, that means they aren't focusing on real problems like the ones you listed. It's even worse when they attempt to solve the fake problem with a "solution" like tariffs that will backfire and discredit the whole movement.
I agree but I think my main point remains: that we should help conservatives focus on and fix the problems they actually do have as much as we tell them they are focusing on the wrong issues and have horrible solutions.
Biden literally passed a bill called the "Inflation Reduction Act" that spent a bunch of money we didn't have and created more inflation. Best and the brightest on that one.
I literally spent my weak going over how the CBO score of the IRA in my sector is bogus, the press releases claiming savings for the government are outright lies, and cost is increasing around 300%!
You're going on about squashing pandemics! Remember when we shut our society down and spent trillions on an up-jumped flu! How do you think that debt go financed...
Lots of good stuff. But you lost me with the economy was pretty good in 2022. It wasn’t. Employment was vastly poorer than reported and we were in a low grade recession.
We have been kept out of a more significant recession by covering it up with massive govt spending. I appreciate govt spending isn’t specifically germane to your tariff argument. But I would suggest you realize the recent economy argument you make is wrong.
In context I mean in light of covid. Covid derailed the economy, but the US took the shock relatively well. If we combined covid with Trumponomics (tariffs and chaos) it would have been far worse.
Covid certainly impacted it. And the silliness of Biden’s first months in office with another Covid stimulus and an attack on cheap abundant energy introduced more inflation into the system.
But Biden stopped the post Covid recovery cold, did even more long term damage to the stock market, and with the flood of immigration began hammering back at any real wage gains the lower and lower middle classes had made during Trump’s first term.
Biden’s administration overstated the employment picture, tweaked GDP with massive govt spending and ignited inflation we are still dealing with. With the exception of the mortgage backed security crisis the last four years were as bad of an economy the US faced since Carters presidency.
That’s why and how the tariff card came to be played.
Well, the argument that the average person in the top 40% of the income distribution was better off at least a bit than they were in 2019 is probably accurate.
But I agree with you that the average working person in the bottom 60% was not.
> insofar as there is wealth inequality, this doesn’t say much about how the economy is distributing resources
According to FRED (Federal Reserve Economic Data), using share of wealth of the top 0.1% data series, in 1990 the average top-0.1% household had 95 times the average wealth of the bottom 99.9% of households; in 2024 that multiple was 160. (I'd post a picture, but comments don't take them, so I'll share this to notes and add it there.)
That's probably the joint effect of financialization, offshoring, and outsourcing, basically '90s phenomena, so it's hard to extrapolate what the data would look like in the 70s; but the increase in wealth inequality since the 90s is indisputable.
(The equivalent numbers for the top-1% are from 30x (1990) to 44x (2024).)
Great article, though I think many Democrats understand that woke is still broadly annoying and are trying to pivot to the center/kitchen table issues (Chris Murphy's postliberal-sounding threads on X, Gavin Newsom interviewing Charlie Kirk, Fetterman as of late ect). A Dem POTUS candidate in '28 will be more Manchin than AOC.
I could be wrong but I think Gavin Newsom might be a Republican's idea of a strong Democratic candidate rather than someone who will actually appeal to the Democratic base. In any case, it will be easier for the Dems to rebrand with a less obnoxious version of wokism than it will be for the Republicans to recover from Trump.
This is a good take, and I largely agree with you regarding Newsom (article is also very good, by the way). The only point with which I disagree is that the MAGA debacle is likely to usher in a low IQ, leftist mirror image of Trump a la AOC. It seems more plausible to me that the stage is being set for a non-brain dead, managerialist/technocratic “moderate” Democrat - just not Gavin Newsom, or any other extreme leftist who has now miraculously seen the error of his or her previously woke ways.
Josh Shapiro would be the obvious alternative candidate: a reasonably strong track record, not personally loathsome (and actually quite nice, by all accounts), clearly reasonably intelligent, and moderate positioning relative to the lunatic wing of the party. Obviously doesn’t carry any of the pro-Hamas, borderline antifa/terrorist baggage, either. Popular with union guys and PMC Ivy League lawyers and other coastal elites alike.
In the most recent Democratic primaries the candidates that generated the most enthusiasm were Bernie Sanders and Elizabeth Warren. They lost at least in part because the DNC put its thumb on the scale for establishment figures (Clinton and then Biden). In the last 4-8 years the Democratic voter base has become much more radical due to generational turnover and the rise of gen z. So I think a populist has a better chance of winning in 2028 than 2016 or 2020. It doesn't have to be AOC, but there are plenty of Democrats who would crawl over broken glass to vote for her--not many for Newsom or Shapiro.
On the other hand, if the Trump administration goes up in flames, some Republicans might defect to the Dems and have a moderating influence on the party. It's also possible that people will miss the old system so much that they'll be genuinely passionate about voting for a technocrat like Shapiro.
As you also noted in your reply, there is a clear tension between a) the Democratic candidate best positioned to gin up enthusiasm among the base and b) the candidate best positioned to win a convincing mandate in a country where at least 52% of the population absolutely loathes anything associated with wokery or economic leftism.
Your second paragraph concisely sums up the reasoning behind my base case projection for what is likely to happen.
Housing affordability is absurd now though. There’s lots of ‘inequality’ not captured in your stats. And while the wealthy pay the most income tax, they are taxed low on capital gains and are capped on social security taxes. So effective tax rates for millionaires *can* and do work out lower than the middle class. Of course, trump isn’t changing that.
Housing prices are crazy pretty much in all major cities around the World. I don't know exactly what is fueling it, but it is not a US thing. University education would be a more relevant example (crazy expensive in America, cheap or even free in many countries), but as far as I know the Trump administration is not addressing this (nor did Biden, for the matter).
Yes. Trump is in fact making income inequality worse, thanks to his tax breaks and medicare cuts.
I don't think his tarriff policies are necessarily irrational though. I mean, sure, threatening to annex Canada was kinda retarded, but he did have to crack the whip to induce certain LatAm countries to take their migrants back, and I think the overall plan is to return to something like the Bretton Woods era of trade relations.
I gained a lot of respect for you reading this essay. This is the kind of honesty and reason we need in our discourse. Sincere criticism of your own side is all too rare these days.
Overall, a disappointing article. It does not address at all the main criticism of post-1970s capitalism from the Right which is that the costs of the goods most important to human wellbeing, principally housing, have been consistently rising for five decades *as a proportion of average income*, whereas those goods that have got cheaper are principally those that do not promote, or actively undermine human flourishing. If a person is economically struggling, one can simply choose to consume fewer computer games, processed foods, Netflix etc. and not only will he probably be no less happy, there is a good chance he will be happier. Conversely, you can't just not have shelter.
Now, it's an unresolved question how much of this is a product of Baumol effects, how much of perverse incentives from government subsidies, how much a result of result of Cantillon effects, but in any case it's bad and needs to be fixed for civilization to flourish, and lectures in how everything is greater because you can buy iphones just reinforce the cycle of rightoids being taken advantage of by quack economics.
P.S. All the food in America is shit and anyone who has been to essentially anywhere in Europe knows this. Very strange to use tasty apples in America as an example of economic progress.
The "main criticism" coming from the right is screeching about the price of groceries (especially eggs), and that there aren't enough low-skilled manufacturing jobs (even though, in reality, there are more jobs than Americans want). Those are the things that Trumpists talk about, and what the tariffs are supposed to address.
There can be a discussion about housing prices. Insofar as housing prices have increased I don't think it has much to do with "capitalism," since supply is kept down artificially with regulations.
Your stipulation that "computer games, processed foods, Netflix etc." aren't relevant for happiness doesn't align with people's revealed preferences. Those are the first things most people buy when they have disposable income.
You mention "not hav[ing] shelter" as if this is some a serious possibility for normal Americans, which it isn't. Not everyone can buy his dream house, but American's aren't living in the streets unless they are mentally ill and/or on drugs.
"lectures in how everything is greater because you can buy iphones" - I offered several lines of evidence that the economic condition of the average person (including blue-collar worker) is far better than the 1970s, and that anyone can get a decent job if he's will to show up on time. If your takeaway is that I think people should shut up and by grateful for iPhones, I think you missed the point.
1) I myself said that government intervention is a plausible candidate for high prices in these sectors. I don't see any purpose in playing semantic games about 'capitalism'. We have to call the present system something.
2) Yes, they have shelter, but shelter takes up a larger proportion of their income than it is used to which means they have to work harder, and, in many cases, forgo the benefit of one partner not working. Unlike with consumer goods, people literally need a house so cannot realistically choose to make do with less to have a better work-life balance. This was precisely my point.
To expand a bit more, let's say the average price of housing went down and the average price of consumer goods went up to precisely the degree that they cancel each other out in macro models. According to your analysis, everyone is just as well off as before, but I contend that actually most people are now vastly better off. Those who want to work harder to have more consumer goods can choose to do that, and those who want to spend more time at home and have fewer consumer goods can do that. When it is housing that becomes more expensive no-one really has a choice.
3) The revealed preference of a crack addict is to smoke crack, but this doesn't mean it is conducive to his long- or even medium-term happiness. The question of how much of modern consumption is analogous to crack is an empirical one and cannot be avoided with handwaving about revealed preference. Most available data suggest people are getting less happy.
4) I said the article was disappointing overall, not that it was totally wrong. It is important - more important than was recognized until yesterday - to correct the gross errors and ignorance of the Right, but the way to to do this is to (a) engage with the legitimate sources of frustration and resentment and (b) promote those like Oren Cass who are economically literate. Overall, I think the impression that most people will get reading this article is that things are basically fine and they should quit bitching because consumer goods are cheaper.
Your critique is that the author's article didn't address a key point of the modern right's criticism of capitalism - housing costs. Since the point of this article was to point out that tariffs are a folly that will make an already rich nation poorer, please enlighten us as to how tariffs are going to solve the crucial housing shortage.
Increased housing costs in the U.S. are a fault of a LACK of capitalism. Housing development, landlordship, and labor are all heavily, instusively regulated. Largely for bad reasons we should've known better than to meddle ourselves in.
Yes I completely agree. And tariffs are yet another form of "central planning" that won't work.
The tariffs are not the whole story; the administration is using them as leverage for renegotiating terms. It's a gambit. Trump's top economic advisor has even written about what their goals are.
Sorry, Trumps actions are not those of one that has a plan. He has no impulse control, his attention span is nonexistent, and he’s surrounded by people who will tell him that a turd is a ho-ho. He has no plans, only vague concepts of plans (as he would say).
The Treasury Secretary literally wrote about their aims.
This is an interesting overview if you're curious about getting an idea of what their aims are:
https://youtu.be/1ts5wJ6OfzA?feature=shared
Housing costs in hollowed out towns (where factories used to exist) are still cheap. There just aren't many jobs. People move to where the jobs are and increase the costs of housing.
Your bio states you are a "25-year silicon valley guy". I consider my point proven from your own experience.
I think your point about consumer goods is key.
When I was growing up I remember getting our first air conditioner. This was a big deal. Today it wouldn't be a big deal.
But its also the case that someone on my fathers salary could not afford the home I grew up in!
Consumer goods are discretionary. One can decide whether or not to buy them. Housing, (most) education, (most) healthcare, and personal safety are not negotiable. They are necessities. You can decide to save some money by not buying an air conditioner. You can't decide that its OK to live in the ghetto.
An air conditioner not being a big deal in many places anymore is a good thing. It's the single biggest factor that's turned the American Southeast from a backwater to an economic powerhouse. Even Mississippi now has almost the same per-capita GDP as the U.K. and Israel. Just two-percent lower.
America still is not performing optimally. We have an appalling amount of crime and disorder, and a truly fucked up education system that has turned out entire generations of racial and sexual communists who are frighteningly inept at literacy and mathematics even relative to their I.Q. groups. But we became and remain number one in the world because of our strong support for capitalism and entrepreneurship, and our single greatest sin of these last sixty years has been attacking these freedoms in the name of thumbing the scales for a better outcome for underperforming groups, paying no regard for the rising tide lifting the boats of our poor higher than the vessels of even the middle class sits in most of the world. The world average per capita GDP is only about fifteen-percent higher than what a single person on SSI and foodstamps brings in per year in the U.S. That's how much our abundance agenda lifted us above the rest.
And do you really think disaffected, underachieving, ennuitic losers are solely a modern phenomenon? Are you by chance totally unfamiliar with A Confederacy of Dunces? Or for that matter Don Quixote? We hadn't even discovered Australia when that last book was written!
High house prices as a proportion of income happen because real incomes have risen.
This statement does not disagree with your argument, but it is worth nothing.
This is because a large component of house prices isn't the house, or even the actual land, though that is how it is costed, but who and what the land and house are next to and nearby.
In a ghetto crime-ridden area, the house and land might be basically free. In an area with a lot of well to do or fashionable white people, it will be expensive.
What this ultimately means is that the market for homes is zero sum. It can be made cheaper, but only by improving the population, and it has been made more expensive by the population becoming worse.
And zero sum means that, as people can compete more (because they have higher incomes and so have satisfied consumer needs etc), they will compete more, even to the point of spending a higher percentage of their income.
> ...here aren't enough low-skilled manufacturing jobs (even though, in reality, there are more jobs than Americans want)
Jobs in which part of the country? Are you trying to claim there's no issue with the decaying husks of rustbelt factories, or that middle-aged midwesterners should move to NYC to work at McDonalds?
So the solution is obviously to onshore low skilled manufacturing jobs (e.g. textiles) from countries like Bangladesh where the median income is about $300/month? How does that help the rust belt? Why would these low skilled manufacturing jobs pay more than the service job at McDonald's?
The difference is that most Americans haven't dealt with manufacturing jobs, so they see them through nostalgia glasses.
And also, manufacturing produces something tangible, which laypeople are able to visualize.
You want middle aged workers to work in textile factories ? Really ?
This is exactly the sort of thing I've complained about elsewhere in this thread.
Where's the erudition in this riposte? Of course your interlocutor isn't advocating for sweatshops for the middle aged.
But many are the middle aged worker who used to work in delta tools back when they were a USA based operation. Now that's gone — this is the sought after restoration.
Okay, so let's onshore that delta tools job back to the U.S now. Why would it pay more than the Taiwanese operation? The only way that happens is if the cost of the product goes way up. Is that good for Delta? BTW, the company still employs people in the U.S in lucrative jobs. It's just that they aren't manufacturing--they are service - sales, marketing, business development, etc. Hiking prices and losing competitive advantage just means those service jobs go away. But replacing those with manufacturing jobs is preferable?
No-one is arguing that tarriffs in particular or increasing wages for low-skilled workers in general isn't going to raise the cost of consumer goods. The argument is that average GDP-per-capita is not the only thing that matters here. Having an independent livelihood, owning your own home, and not being dependent on unreliable foreign actors for vital commodities are goods in themselves.
Whether Trump's policies will actually accomplish this is a different question.
I am personally ambivalent on tariffs, though I am somewhat persuaded of the case for broad spectrum industrial capacity (re-invigorated by tariffs promoting onshoring) to catalyze technological development, the cause in which I am overwhelmingly the most invested.
So my dog is not really in this particular fight.
Rather, my point is the dismissive attitude to arguments for tariffs is neither persuasive nor gentlemanly. To that end, I do appreciate your earnest engagement, and will do my best to articulate the contrary position as I understand it.
This theoretical scenario is easily countered by empirical observations. A Lie Nielsen no. 62 Low Angle Jack plane can usually be had for around $300, and it will work out of the box. The only overseas no. 62 that is even close to functional without after market machining (aka sand paper, float glass, and much patience) is by Wood River, typically for around $250.
The LN is undeniably more expensive: $50, or 20%. That gap can increase if you get the WR on sale (LN never goes on sale). Regardless, whether or not this constitutes "a lot more money" is in the eye of the beholder.
As to the jobs: I can assure you, they have sales and marketing. And you will not find anyone who speaks ill of working for LN. They're an institution in Maine. They also have God-tier customer service.
So here's a domestic manufacturing company that pays much more than a corresponding offshore operation, while producing a way better product for only a 20% higher retail price, and also providing well paid service jobs for white collar brains in addition to the state of the art factory work for blue collar brains.
Also, LN was founded before NAFTA and MFN status for China, so the idea that tariffs would knock it out (not the argument you're making but I've seen it made) is tough to take seriously.
The argument for zero tariffs is presented as though it were a law of physics. Examples like this make me doubt that. Maybe it's undergraduate Newtonian kinematics with the assumption of frictionless surfaces.
Yes, the price of everything will go up and also the wages. Maybe all the same things will exist for consumption but people will have more satisfying jobs and the industrial base will be located in the USA. None of it's going to happen from middle-aged people who suddenly go back to the industrial life.
It will take 20 years to industrialize America again, and I doubt tariffs would make any difference. Everything is about supply and demand and prices are completely elastic, so we can just pay less for something else. With 8 trillion dollars of federal spending sloshing around there's plenty of money to pay the tariffs.
The problem of shelter is #1. It's a desperate struggle to stay off the streets for most people, and buying a house is nearly impossible for the vast majority. We are living with relatives and cramming up in small houses, doing whatever to stay under the roof.
Nobody's choosing Netflix over houses, and "decent jobs" do not exist without free housing. In modest areas the cost is at least $2,000 per month: somebody has to bring home $15 an hour just for the housing more or less.
We need to make $30 an hour net pay according to this formula, and it's not that simple for most people. It's true that higher skills bring higher pay, but the kind of housing where lower class workers used to abide in past generations is very expensive or it has vanished.
The real problem is that most land is locked up in a vast monopoly of obsolete records instead of being up for sale where anybody could afford something. The cure generally is to get land because a free spot can always be developed with shelter and off-grid methods.
I don't think it's true at all that Americans without a college degree are economically better off now; and certainly not when it comes to highly sought after things like owning a home - something which was commonplace and within the reach of most people a few decades ago.
Isn’t it the Dems job to get better messaging then? They did lose to him, twice.
Houses are more expensive because they became more valuable!!
Urbanization - and all the convenience that modern cities had to offer - has driven up the price of land dramatically inside their zone of influence.
You can get a cheap house at any time at 1970s-price if you would just forgo a city life and go live like your grandfather did: In a more remote area, without access to modern urban luxuries.
People's perception that they have gotten poorer is almost entirely a function of their inflated expectations, not an absolute degradation of their material wellbeing.
(Same story for healthcare. If you are willing to enjoy 1970s healthcare standards, your healthcare will be very cheap I can guarantee you that.)
I have no idea how to enjoy 1970s healthcare standards, There are some hospitals and urgent care clinics in the area- that's the choice. Some doctors office and so forth and everybody seems to be present in the year 2025.
My grandfather lived in a city and easily worked owning that home. They did not live in some remote place which today is equally expensive by any standard. The housing is relatively cheaper but the wages are lower and prices can often be higher for other things. Housing is not affordable anywhere.
The closest thing to cheap housing now is open land, which reflects the truth that supply is very constrained in general.
The cities of yore are nowhere comparable to the cities of now. Nobody's grandfather was located within commuting distance of three sushi bars, two Whole Foods, a WeWork, and four craft breweries.
Increase in urbanization > Cities became very attractive places to live in > Everybody wants to live in the cities > City land prices skyrocket because of demand overflow
> I have no idea how to enjoy 1970s healthcare standards
The cheapest plan on the market with the worst coverage is a good approximation of what healthcare was like half a century ago.
Everybody's grandfather was located within commuting distance of the equivalent culture for that time. There were plenty of breweries and grocery stores, ethnic foods everywhere and local markets. This was true in a city like Philadelphia for example.
Taking Philadelphia further, it's not especially attractive to live at all but somehow got really expensive anyway. People have always preferred to live in the nearby suburbs. Today even the shittiest town in PA is full of expensive housing.
All the medical plans in the world wouldn't change anything for the given area since everything is equally accessible anyway. It's all the same hospitals, all the same clinics, and all the same doctors etc.
There were not plenty of breweries. That only happened because Jimmy Carter deregulated home brewing in 1978. Craft breweries started taking off in the late eighties.
Nor were there plenty of ethnic foods except for like Polish food in Chicago and Chinatowns in New York and San Francisco. The Indian and Mexican food came later.
> Everybody's grandfather was located within commuting distance of the equivalent culture for that time.
But the 1950s' city equivalent wasn't nearly as good.
> Today even the shittiest town in PA is full of expensive housing.
Travel distance to the importance places is VIP.
> It's all the same hospitals, all the same clinics, and all the same doctors etc.
Different insurance plans, I mean. Medical science has advanced a very long way over the past 50 years. If you're willing to forgo all the most advanced, expensive treatment plans developed over the past half-century, you'll only need to pay a low insurance price.
> But the 1950s' city equivalent wasn't nearly as good.
You are either dishonest or retarded.
Funny my computer is both cheaper and better than the one available during the 1970s.
Yet those gains of productivity have been drawn into rent and property values. This is the core problem, every time we advance most of it is taken through capitalism. It shows up with super high housing prices.
This is why it's become so much easier to live low grid or off-grid, the technology and access to commerce and everything else allows a high standard of living for the homeless. People are living in cars with super high-tech computers struggling to get by.
Because NIMBYists won't let us build, at least not in the blue areas people like that want to live in.
Even those gains to efficiency will only drive up the price of land as more people gather in the desired location. The core problem is "economic rent", something observed now for many centuries going back to Europe.
In short, landlordism.
I bet that sounded a lot more cleverer in your head.
The fundamental problem is supply and demand. Landlordism has nothing to do with it.
What in the world does that have to do with Spinoza’s claims about housing?
No serious person would deny that computers have gotten better and cheaper, and at rates that exceed just about everything else.
Well, houses ALSO became more expensive in cities and suburbs where people want to live because of NIMBY. If you add that in as a portion, I strongly agree with you about the rest.
Yes, NIMBY policies severely exacerbated the problem. Urbanization vastly increased demand while NIMBYism perpetually stagnated supply. The great housing double whammy.
Yeah, Nathan fixating on consumer goods seems like a conspicuous oversight, given that inflation in housing, education and healthcare markets has been outpacing general economic growth for decades at this point. Take that into account and you get the Elephant Curve.
Also, arguing that income inequality hasn't gone up when taxes and benefits are included (and ignoring wealth inequality) ignores the psychological aspects of, e.g, preferring to own your own home and have an independent livelihood. Which could, among other things, be relevant to family formation. Also the problem that a large portion of welfare spending is essentially sustained by money-printing, which drives inflation, which is mostly a stealth tax on the poor.
Housing has definitely been screwed up, but the cost of services like healthcare are because of the Baumol effect. Healthcare was still expensive for the average person in the fifties, just not as expensive compared to the cost of goods.
https://www.wikiwand.com/en/articles/Baumol_effect
Nonsense -- we all remember pre-ACA prices.
Housing becoming much more expensive in large cities is a result of government regulation and doesn't have anything to do with trade.
In cities it's the result of anti growth policies that resulted in low housing construction while the influx of immigrants both domestic and foreign into cities vastly outpaced the rate of home construction. NYC was basically 10x new residents to housing construction in the 90s and it never caught up. The tech and finance industries concentrated those jobs in a handful of cities, the first tier cities like New York and San Francisco filled up then it moved to Chicago, LA, then to Austin and Miami, then to Raleigh and Denver. Now it is nationwide as people fled those cities for cheaper locales during the work from home boom during the pandemic.
I agree with you until your “nationwide” claim.
You got evidence of that part causing housing price increases?
It's happening so there's the evidence, right in front of our nose
Housing got more expensive nationwide only after Biden’s inflation caused interest rates to rise from generational lows.
Yes it’s true that during the pandemic people fled big blue cities with terrible lockdown policies
We don’t have anti growth policies nationwide. So no, that is not evidence for your claim.
Everywhere is anti-growth from zoning restrictions to local tax policy. All the land getting hoarded up in obsolete titles and all the vacant properties etc. It's very difficult to get anything done in about 90% of it's already frozen.
If interest rates go up then housing price should go down, and it's all subject to monetary policy. People on the internet like to use the word "claim" as though it required persuasion LOL. I will choose to believe my own eyes and my own life. I don't think you know what the word claim actually means.
I think it's principally inflation being directed into the housing sector, but before we can talk about the 'why' we need to at least acknowledge the 'what'.
Well it will get even more expensive. Imports for dry wall from Mexico are much more expensive now. Fixtures and appliances from china are too.
Housing will also suffer from this stupidity.
There are going to be people who lose out from these arrangements, yes, but if the long-term upshot is that more dry-wall manufacturers are established within the US and provide higher wages or more stable employment for low-end workers, the benefits to them may outweigh the costs.
More generally, everything you can do to squeeze GDP in the short-term is damaging society in the long term. Ceasing to have children is fantastic for the economy, for example, until you run out people.
This is a fair point but rather simplistic. The better answer is that forcing dry wall to be manufactured here is not an optimal allocation of resources and every dollar spent on more expensive dry wall is a dollar spent less on technology, pharmaceuticals, research, STEM, robotics, etc.
Subsidizing jobs for these workers, similar to communism, is not going to create optimal growth. Now, I believe some would accept suboptimal growth if it were optimal for them. Sure. But lets be clear — we aren’t going to win the technology race with China by creating the worlds most expensive drywall and textiles.
I think it was Sam Hyde who said "China uses slave labour. How are we supposed to compete with slave labour?"
Allowing humans to run any portion of the economy is, in the long run, going to be 'economically sub-optimal' and/or 'not how you win the technology race'. Thanks, but no thanks.
It’s hard to pinpoint any one cause for what you speak of. Probably many causes. The root of all this is likely central banking, fiat currency, money printing and being the world reserve currency. Fix the monetary system first and a lot of these problems will be easier to deal with.
Yes the true point that the working class is vastly better off now than 50 years ago should probably come with an asterisk, and the asterisk is housing (setting aside that quality and size of housing was much lower then).
But these tariffs are not even ostensibly about housing, and of course they will only raise housing costs. And you never hear MAGA marxists arguing for housing reforms.
So the asterisk is for the thing that is higher quality and larger size? 🙄
And the housing problem is only material in a handful of cities.
So suggesting that any meaningful fraction are net worse off now than 50 years ago is pretty close to baseless.
[none of this is defending the tariffs. And certainly not defending leftist housing policy.]
You can buy a lovely brand new 2000sq ft house outside of Atlanta for 200k from Smith Douglass or one of the other home builders. House prices are a story of regulation
I was waiting for your take on the madness that Trump unleashed in the past few days and I was not disappointed. Great piece.
I might add that something similar can be said about MAGA's approach to Ukraine and European security in general. Abandoning weaker allies and extorting mineral resources from a poor country at war might earn the US a few billion dollar in the short term, but they will lose 10 times more in the medium-long term.
The first effects are already starting to show. Just two examples that come to my mind:
1) Switzerland and Austria (two neutral countries not particularly enthusiastic in supporting Ukraine) plan to replace their combat aircrafts in the coming years. Until recently, the US-made F-35 were a natural choice. But after seeing the Trump administration threatening the Ukrainian government, both are considering switching to European-made Rafale or Eurofighters. They do not trust the US anymore, and they are literally asking themselves "what if the Americans have some kind of killing switch that could disable them to force us to obey whatever they might want us to do?". That would be tens of billions of arms sales cancelled. Whch would be only the first of hundreds of billions over the years.
2) In Italy the Meloni government, which has always been super-friendly with Trump, was in talks with Starlink for a huge contract that would task Musk's company with improving the Italian communications using Starlink's satellites. But, again, after Musk's reportedly threatened to disable Starlink in Ukraine (and publicly insulted on X a Polish politician who pointed out that the Polish government pays for Ukraine's Starlink access), the thing stalled and is likely dead. They simply do not trust a US company anymore, especially not one owned by someone associated with Trump. They are now in talks with French Eutelsat.
Many more such cases will likely follow in the coming years. The trust has been breached, and I'm not sure it can be restored.
Also, if the US abandons Europe, Europe might be forced to take a more friendly approach with China, which would be a political and security disaster for America. China is already making some timid steps to test the waters in this direction.
Agreed. Trump/Vance making friendly overtures to Meloni, Orban et al and pointing out liberal hypocrisy on the topic of free speech is very much welcome, but pissing off potential allies for the sake of short-term point-scoring is myopic.
All that sounds like rather a positive development, God works in mysterious ways.
A great piece, though I couldn't help but chuckle at the typo "Burgher King," and the image it conjured. "Have it thy way!"
Good catch. My excuse is that I grew up vegetarian and have never been in a *Burger* King.
Impossible Whoppers!!!!
So you’ve used the drive thru every time you’ve gotten food there?
Wonderful piece but I'm still hoping you might be wrong about the tariffs - though I suspect you're not. You are certainly right about Trump's abandonment of old allies being a stupid own goal, when anti-wokism is viewed as an international movement. In January the conservative world looked to Trump to lead the way and show us how to dismantle the power of progressive liberal elites (despite knowing Trump is a narcissistic fool). Now we view him as just one more enemy among many, though by no means the worst. He's the All-Against-All representative. He could have spearheaded a global shift to the right but instead chose to go down a very narrowly understood and short-sighted 'America First' rabbit hole. So unnecessary.
Absolutely correct about getting people to show up. At the factory I work at, 90% of the time people get fired it’s because they’re lazy or they stop coming to work
Agreed. These tariff policies are one of the most ridiculous acts of self-sabotage in American political history. If they are not rolled back very soon, they will likely cause a recession, drive prices up, and no one will care about anything else Trump did.
The Democrats now have a clear path to victory in 2026 and 2028.
Terrific
Housing, Medical Care, and Education. As long as the prices of those things continue to skyrocket, none of what you're saying matters. No one cares how much work it takes them to buy a can opener when they can't afford rent. Not that Trump's tariffs are going to help, they really aren't.
Housing, healthcare, and education are three of the most heavily regulated, leased capitalistic industries in the entire United States, which itself turned heavily away from capitalism with the rise of the civil rights movement.
We need to have much less government intrusion and mandate in all three of these industries.
Fair enough (though in a democratic system, is NIMBYism really the fault of the government?) but that doesn't change the fact that the people have very good and rational reasons to like they live in a country that's poorer than it used to be. Cofnas acts like people are crazy to feel that way, when it is very much what many are actually experiencing.
Yes, in a democratic system, NIMBYism is the fault of the elected politicians who make NIMBY decisions on the rules/regulations we have to live under.
Of course you are correct that some of this is caused by the demands of their NIMBY voters, so if you want to put some of the blame on those, voters, I would surely agree.
It's not that they only vote for NIMBY politicians. It's that they show up to meetings, organize politically, scream at people, and do endless litigation. NIMBYism is the only cause that activates these people. Yes, I do blame them, I don't think evil is too strong a word for it.
That there is plenty of blame for each, I surely agree.
The NIMBYs are supremely selfish, and the ones who claim to be progressives in all other aspects of their politics perhaps could be accused of evil, but while I’m pretty sure I disagree with them every bit as much as you do, I reserve the term evil for worse offenses.
Like woke oppressor-oppressed ideology.
Only the rich pay for their K-12 education.
Way less than half of the bottom 60% pay for college education.
And the very poor, the very old and *most* people with a full-time job (or spouse with one) have most of the cost of their healthcare paid by someone else.
So blaming medical costs and education costs for the (false in the first place) claim that the average person is worse off is… misguided, at the very best.
Housing is higher cost for some people in the most desirable places to live and work. Some of that is because we are richer, and a big part of it is because of NIMBY policies in blue cities and states.
"Only the rich pay for their K-12 education."
No, basically everyone pays for it through their property taxes or indirectly through rent they pay that is used to pay property taxes.
"And the very poor, the very old and *most* people with a full-time job (or spouse with one) have most of the cost of their healthcare paid by someone else." Which is compensation to the employee that otherwise might be paid as wages or retained as profits that might lead to further investment in the future. This accounts for some of the reason wages haven't risen very fast in the last few decades.
"Housing is higher cost for some people in the most desirable places to live and work. Some of that is because we are richer, and a big part of it is because of NIMBY policies in blue cities and states" Housing costs have gone up pretty much everywhere, not just in the most desirable cities. More than 90 percent of Americans live in counties where median rents and house prices grew faster than median incomes from 2000 to 2020.
Anything else?
“Anything else?”
Yes, plenty.
You are of course correct that taxpayers pay for K-12 education. But your (implicit and explicit) claim that the rising cost of these was making the average person not just less well off than they could otherwise be, but less well off in absolute terms (“nothing else matters”) is what I was addressing.
Same re: healthcare. You are correct that people would be EVEN better off if healthcare cost less. And I agree it could/should. But again that wasn’t the implicit nor explicit claim; I was addressing your “nothing else matters” claim.
And re: your last point on housing. If I take you at your word that housing prices and median rents went up faster than median incomes from 2000 to 2020, what that leaves out is that homeowners were mostly BETTER OFF because of this! Because between 60% and 70% of Americans own the home they live in. Home prices went up for many reasons, but one big structural one was that interest rates went way down over that timeframe.
If a PART of your point is that there is a decent minority of people who are renters rather than homeowners in big cities and desirable surrounding suburbs, point taken. Some of these have high incomes and chose to rent instead of buy. But sure perhaps 25% of people were made notably worse off because of the cost of increased rents. Again I cite NIMBYism as the biggest culprit here in the places people most want to live. [You don’t cite by how much median rents went up everywhere; if it’s only a little in most of America, it was offset by the lower real cost of many other things.]
But your claim was that “none of what you’re saying matters” when these 3 other costs are going up, and are effectively claiming/implying that the average person is worse off than they were 20 and 50 years ago, and this simply isn’t true. Even if it IS true that for something like 25% of people their real cost of housing has gone up, it doesn’t meant that anything like 25% of Americans are worse off now than they were 20 or 50 years ago, let alone 50%+ being worse off.
So my point stands: the overwhelming number of people are way better off than 20 or 50 years ago (and that’s not even counting that immigrants to this country are way better off than in the countries they came from, even though they pull down the average per capita income numbers, and so apples-apples comparisons only of those born in the U.S. look even better still), that despite education and healthcare expenses rising, those haven’t caused American’s real standard of living to go down. And that despite high housing costs - still unrefuted by you a major factor of which is NIMBY regulations - perhaps causing some percentage of Americans to be worse off, that percentage cannot possibly be very high.
I agree with you the NIMBY regulations are a culprit, when did I say otherwise? I'd make NIMBYism a hanging offense if I could.
I don't understand how you can possibly say that rising property taxes to deal with rising education costs don't make people objectively worse off, homeowners included. It also seems true that rising costs in this area pay for less than it used to, given educational outcomes (although whether this is the fault of the system is debatable).
As for your claim that rising home prices make homeowners better off; a lot of that wealth just leads to aforementioned high property taxes. It can only be accessed when someone wishes to sell it, often to buy a new home at the inflated price. Rising housing prices don't do much to raise actual living standards, just paper wealth. I own a condo, if I sell it, I'll have to secure housing at the same inflated prices. All that happens for me when it's worth more is that my taxes are higher on it. Also, you're completely disregarding what these high housing costs have done to young people starting out, I don't see how you can claim people are so much better off when household formation has been repressed as much as it has. When times are actually good, household formation goes up. This matters more than old people getting rich on paper. Your stats are pulled right out of thin air, housing costs have caused misery for many.
https://www.visualcapitalist.com/median-house-prices-vs-income-us/
As for Medical care rising costs for the same care or less means that you're effectively getting poorer in terms of what your dollar can buy.
All my claims were in opposition to your assertion that “the only things that matter” are rising education, healthcare and housing costs.
And I assumed you were agreeing with the people in these comments claiming that because of these things, the average person is worse off - has an actually lower standard of living - than the average person decades ago.
Neither of the above is true.
Stipulate that, and we probably agree on most of this. All three are problems that government policy makes worse. And said government policy means collectively we are worse off than we would be with better policy.
In 1985 the average wage earner had a shot of affording the average house. Now that's impossible, explain how that doesn't make them worse off?
Excellent article and I don't disagree with anything you say. I would however like to expand the scope by wondering are there problems that conservatives are correct to worry about. I think you would agree on being worried about anti-White DEI stuff. What about family formation, housing costs in places with good jobs, lack of good non-blue collar jobs in places with affordable housing, obesity and other health issues, aging population and end of life issues, lack of local/religious community + online socio-political outrage.
If I knew someone who complained about 7 issues that are fake I would wonder if maybe his life would be better if he focused on the 3 issues that are real and he does not complain about rather than just telling him to stop whining about the 7 fake issues.
Yes, but when conservatives get hysterical about the price of eggs, that means they aren't focusing on real problems like the ones you listed. It's even worse when they attempt to solve the fake problem with a "solution" like tariffs that will backfire and discredit the whole movement.
I agree but I think my main point remains: that we should help conservatives focus on and fix the problems they actually do have as much as we tell them they are focusing on the wrong issues and have horrible solutions.
Trump's 2024 mandate was "the traditional Republican party, but much tougher on immigration and softer on abortion/IVF"
https://www.nytimes.com/2024/02/01/us/politics/biden-food-prices.html
Biden literally passed a bill called the "Inflation Reduction Act" that spent a bunch of money we didn't have and created more inflation. Best and the brightest on that one.
I literally spent my weak going over how the CBO score of the IRA in my sector is bogus, the press releases claiming savings for the government are outright lies, and cost is increasing around 300%!
You're going on about squashing pandemics! Remember when we shut our society down and spent trillions on an up-jumped flu! How do you think that debt go financed...
Lots of good stuff. But you lost me with the economy was pretty good in 2022. It wasn’t. Employment was vastly poorer than reported and we were in a low grade recession.
We have been kept out of a more significant recession by covering it up with massive govt spending. I appreciate govt spending isn’t specifically germane to your tariff argument. But I would suggest you realize the recent economy argument you make is wrong.
In context I mean in light of covid. Covid derailed the economy, but the US took the shock relatively well. If we combined covid with Trumponomics (tariffs and chaos) it would have been far worse.
COVID has zero effect on the economy. The LEFT WING response to covid had a terrible effect on the economy.
Covid certainly impacted it. And the silliness of Biden’s first months in office with another Covid stimulus and an attack on cheap abundant energy introduced more inflation into the system.
But Biden stopped the post Covid recovery cold, did even more long term damage to the stock market, and with the flood of immigration began hammering back at any real wage gains the lower and lower middle classes had made during Trump’s first term.
Biden’s administration overstated the employment picture, tweaked GDP with massive govt spending and ignited inflation we are still dealing with. With the exception of the mortgage backed security crisis the last four years were as bad of an economy the US faced since Carters presidency.
That’s why and how the tariff card came to be played.
Well, the argument that the average person in the top 40% of the income distribution was better off at least a bit than they were in 2019 is probably accurate.
But I agree with you that the average working person in the bottom 60% was not.
> insofar as there is wealth inequality, this doesn’t say much about how the economy is distributing resources
According to FRED (Federal Reserve Economic Data), using share of wealth of the top 0.1% data series, in 1990 the average top-0.1% household had 95 times the average wealth of the bottom 99.9% of households; in 2024 that multiple was 160. (I'd post a picture, but comments don't take them, so I'll share this to notes and add it there.)
That's probably the joint effect of financialization, offshoring, and outsourcing, basically '90s phenomena, so it's hard to extrapolate what the data would look like in the 70s; but the increase in wealth inequality since the 90s is indisputable.
(The equivalent numbers for the top-1% are from 30x (1990) to 44x (2024).)
The promised figures:
Great article, though I think many Democrats understand that woke is still broadly annoying and are trying to pivot to the center/kitchen table issues (Chris Murphy's postliberal-sounding threads on X, Gavin Newsom interviewing Charlie Kirk, Fetterman as of late ect). A Dem POTUS candidate in '28 will be more Manchin than AOC.
I could be wrong but I think Gavin Newsom might be a Republican's idea of a strong Democratic candidate rather than someone who will actually appeal to the Democratic base. In any case, it will be easier for the Dems to rebrand with a less obnoxious version of wokism than it will be for the Republicans to recover from Trump.
This is a good take, and I largely agree with you regarding Newsom (article is also very good, by the way). The only point with which I disagree is that the MAGA debacle is likely to usher in a low IQ, leftist mirror image of Trump a la AOC. It seems more plausible to me that the stage is being set for a non-brain dead, managerialist/technocratic “moderate” Democrat - just not Gavin Newsom, or any other extreme leftist who has now miraculously seen the error of his or her previously woke ways.
Josh Shapiro would be the obvious alternative candidate: a reasonably strong track record, not personally loathsome (and actually quite nice, by all accounts), clearly reasonably intelligent, and moderate positioning relative to the lunatic wing of the party. Obviously doesn’t carry any of the pro-Hamas, borderline antifa/terrorist baggage, either. Popular with union guys and PMC Ivy League lawyers and other coastal elites alike.
In the most recent Democratic primaries the candidates that generated the most enthusiasm were Bernie Sanders and Elizabeth Warren. They lost at least in part because the DNC put its thumb on the scale for establishment figures (Clinton and then Biden). In the last 4-8 years the Democratic voter base has become much more radical due to generational turnover and the rise of gen z. So I think a populist has a better chance of winning in 2028 than 2016 or 2020. It doesn't have to be AOC, but there are plenty of Democrats who would crawl over broken glass to vote for her--not many for Newsom or Shapiro.
On the other hand, if the Trump administration goes up in flames, some Republicans might defect to the Dems and have a moderating influence on the party. It's also possible that people will miss the old system so much that they'll be genuinely passionate about voting for a technocrat like Shapiro.
I'd rather the party be hijacked by Taylor Swift than AOC. At least she's a successful capitalist.
As you also noted in your reply, there is a clear tension between a) the Democratic candidate best positioned to gin up enthusiasm among the base and b) the candidate best positioned to win a convincing mandate in a country where at least 52% of the population absolutely loathes anything associated with wokery or economic leftism.
Your second paragraph concisely sums up the reasoning behind my base case projection for what is likely to happen.
Anybody else nostalgic for the days of smoke-filled rooms?
Care to bet on that? I.e. who the Dem nominee is in ‘28 and whether their positions are close to Manchin’s or AOC’s?
Housing affordability is absurd now though. There’s lots of ‘inequality’ not captured in your stats. And while the wealthy pay the most income tax, they are taxed low on capital gains and are capped on social security taxes. So effective tax rates for millionaires *can* and do work out lower than the middle class. Of course, trump isn’t changing that.
Housing prices are crazy pretty much in all major cities around the World. I don't know exactly what is fueling it, but it is not a US thing. University education would be a more relevant example (crazy expensive in America, cheap or even free in many countries), but as far as I know the Trump administration is not addressing this (nor did Biden, for the matter).
Yes. Trump is in fact making income inequality worse, thanks to his tax breaks and medicare cuts.
I don't think his tarriff policies are necessarily irrational though. I mean, sure, threatening to annex Canada was kinda retarded, but he did have to crack the whip to induce certain LatAm countries to take their migrants back, and I think the overall plan is to return to something like the Bretton Woods era of trade relations.
https://www.youtube.com/watch?v=1ts5wJ6OfzA&ab_channel=Money%26Macro
If this is the way the “smart elites” make arguments then no wonder nobody wants to listen to you.
Great piece as always.