Economics has met the enemy, and it is economics

[Hauldren Collider]

Let me guess: HC has first claimed that I was a ******, and then that arguing with me would be pointless, given that I am a ******.

There's a number of problems with this guessing game.

1. It's passive aggressive and makes you look like a *****
2. If you are right it means nothing, since clicking that "view post" button is so easy
3. If you are wrong you look like a dumbass
4. It's passive aggressive and makes you look like a *****

[Fake Boris]

I don't understand the point you're trying to get accross. Are you saying Kuciwalker's level of tolerance for philosophical analysis varies? What does this mean?

Example: the fact that today's products are better than those of 50 years ago is an argument against eroding buying power, but the fact that products in 50 years from now are going to be better is not an argument against the fact that there is more to money than deferred consumption.

This is not the best example, but I'm tired and wish to head back home. Think of it the following way: empirical evidence has to be related to a certain value that we set rationally; but we can't set any value without empirical evidence. Whenever empirical evidence contradicts a certain value, it's easy to "re-rationalize it" until it doesn't, and people do this according to certain biases.

In this case, Kuci was willing to reflect on a qualitative value of consumer goods, but wished to restrict the value of insurance to an amount of damage it protected against.

[DaShi]

Let me guess: HC has first claimed that I was a ******, and then that arguing with me would be pointless, given that I am a ******.

True, HC is among the last ones who should be lecturing anyone on economics. But you are missing some fundamental attributes of economic theory and its models. Primarily, that they are empirically derived. From there, there are a vast array of criticisms you can make, but they still predict what they were designed for.

[Kidlicious]

Kuciwalker is an idiot but he's not an economist. Can you explain how your theory explains how models failed to predict the 2008 crisis and Japanese deflation.

[Kuciwalker]

Example: the fact that today's products are better than those of 50 years ago is an argument against eroding buying power, but the fact that products in 50 years from now are going to be better is not an argument against the fact that there is more to money than deferred consumption.

You completely misunderstand the argument and its context.

I was offering a technical critique of a specific method for comparing real prices across time. You could construct an alternate measure - call it CPI* - not subject to my critique, that I would accept as an appropriate method.

Moreover, my argument for the unsuitability of CPI was not from first principles; claims such as "it doesn't correctly account for the changing quality of goods" were explanations from the observed fact that CPI was unsuitable. We know CPI is unsuitable because it tells us that the real median household income has stagnated even though that is obviously false.

We know the real median household income hasn't stagnated because if you look at the actual goods purchasable by the median household income in 1970, and compare that to the actual goods purchasable by the median household income in 2010, almost anyone would choose the latter.

I don't even know where you get the idea that this relates to the other issue.

This is not the best example, but I'm tired and wish to head back home. Think of it the following way: empirical evidence has to be related to a certain value that we set rationally; but we can't set any value without empirical evidence. Whenever empirical evidence contradicts a certain value, it's easy to "re-rationalize it" until it doesn't, and people do this according to certain biases.

This is gibberish.

In this case, Kuci was willing to reflect on a qualitative value of consumer goods, but wished to restrict the value of insurance to an amount of damage it protected against.

I was implicitly ignoring the administrative overhead, etc. of the insurance company, because 1) we were talking about self-insurance, which shouldn't really have any overhead and 2) it didn't seem important to the key idea.

[Elok]

Your trolls are funny, but you should show that you understand what you're talking about to make them even better.

On the contrary, that'd make them really boring. There is no way to demonstrate knowledge of philosophy that is not boring. Doubly so for the history of philosophy.

[C0ckney]

We know the real median household income hasn't stagnated because if you look at the actual goods purchasable by the median household income in 1970, and compare that to the actual goods purchasable by the median household income in 2010, almost anyone would choose the latter.

although i see what you're saying, i think you have to be careful with certain goods. takes televisions for example. now it's fairly obvious that a television from 2010 is superior in many ways to one from one made in 1970. you can receive more channels, have a better quality of picture etc. however, the real question in my opinion, is what you use a television for? to watch moving pictures on a screen and hopefully be entertained by them. in that respect a television from 1970 is the same as one from 2010 and i would argue that people are about as enterained today with their television as they were in 1970.

clearly you're arguement is on much firmer ground with things like mobile telephones and personal computers, but i just don't think you can apply it to all goods.

[Kuciwalker]

C0ckney: as I said, the "CPI doesn't sufficiently account for increased quality of goods" isn't an argument, but an explanation for why CPI is "wrong".

We already know that CPI is wrong just from the simple thought experiment: if you could choose between earning the median 1970 income but only being able to spend it on the stuff available in the 1970s (at 1970 prices), versus earning the median 2010 income and getting to spend it on 2010 goods at 2010 prices, I'm pretty sure you would choose the latter. But CPI says you should be indifferent between those options.

[DaShi]

Why are you using a false dichotomy to make your argument?

[Kuciwalker]

You don't understand what a false dichotomy is.

False dichotomy:

1. P xor Q
2. ~P
3. Therefore Q

where step 1 is actually false, and it's really P xor Q xor R xor S ...

I am explicitly constructing a dichotomy for the thought experiment ("what if?"), not asserting that dichotomy actually applies to C0ckney. Quite obviously, he can't choose to actually purchase 1970s goods at 1970s prices...

[DaShi]

Then what's the one I'm thinking of? Where you only give two options when there are clearly more than two?

[Aeson]

I would choose the 70's and put it all in Apple stock

[Kuciwalker]

Then what's the one I'm thinking of? Where you only give two options when there are clearly more than two?

You have the right name; I'm just not doing that.

If you want it line by line, here's the proof:

1. CPI correctly accounts for the change of the real value of a dollar between 1970 and 2010 (assume for sake of contradiction)
2. Therefore, the median wage in 1970 has the same real value as the median wage in 2010 (not going to look up the numbers but this is the common claim)
3. Therefore, the median wage in 1970 could purchase goods equal in value to the goods purchasable by the median wage in 2010 (defintion of "real")
4. Therefore most people, if given the choice between one or the other, ought to be indifferent. (definition of "equal value")
5. The vast majority of people would not be indifferent if given that choice. (observably true)
6. Contradiction between (4) and (5), therefore the premise (1) is false.

[giblets]

Then what's the one I'm thinking of? Where you only give two options when there are clearly more than two?

You think the median standard of living was higher in the 70's?

[DaShi]

No, I'm saying that point 2 of Kuci's argument is wrong in concept. The price of, say, a banana could be $1 in 1970 and then $20 dollars in 2010. However, median wage in 1970 could be $1, but only $10 in 2010. You can argue all you want about new products, but it is irrelevant to a CPI argument.