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PaperclipPerfector  1mo ago (text post)   28220 thread views

Culture War Roundup for the week of October 14, 2024

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When we remove hedonic adjustments, inflation is much, much higher than the official numbers. The official numbers also just don't pass the smell test.

It's trivial to change any methodology to get bigger or smaller numbers. The question is if the new number is more meaningful than the old one.

Truflation estimates 26.27% inflation since January 2020. CPI has increased 21.23%. I'll leave it to the reader to decide if CPI is an obviously wrong estimate.

https://truflation.com/marketplace/truflation-us-aggregated

Then we get to "unemployment". It's super fake. The male, prime age employment rate was nearly 95% in 1968. Today, it is just 86%. That's 9% of men age 25-54 who are not employed. But they are not counted as "unemployed" either. It's all fugazi.

Again, why is U3 fugazi just because you can get a bigger number with another methodology? Especially when you're looking at a subgroup analysis. If we look at prime age LFPR for the entire population, it was 70% in 1968 and now it's 84%.

https://fred.stlouisfed.org/series/LNS11300060

If we look at prime age LFPR for the entire population, it was 70% in 1968 and now it's 84%.

Yes, total labor force participation is up due to women entering the workforce. It now takes 2 incomes to do what a single income did before. This phenomenon led to the one good idea Elizabeth Warren ever had: "The Two Income Trap". This is not a signal of prosperity, far from it.

But men have been leaving the labor force in large numbers. Whereas only 5% of prime age males weren't employed in 1968, today it's nearly 14%. And, of course, this doesn't even reflect the rise of part-time labor.

Again, why is U3 fugazi just because you can get a bigger number with another methodology?

Because U3 only reflects short-term fluctuations in the labor market, and not the disastrous long term changes which have occurred over the last 50 years. And the media reports on U3 but not on the things that matter more.

Whereas only 5% of prime age males weren't employed in 1968, today it's nearly 14%.

For your consideration: the US army doesn't enlist anyone scoring below 10-th percentile on their IQ test. That's 10% of men that the US army considers untrainable, despite having vastly more control over a soldier's life than another employer. Based solely on that, I would expect that there should be at least 10% of men who ought to not be employed.

Where were those men in 1968? Probably institutionalized, and thus not counted in LFPR.
There has been a massive de-institutionalization in the 70s.

Bottom 10% on AFQT is not the same as bottom 10% on IQ test. This would be more like bottom 20% on IQ test. Countries with mean IQs of 85-90 still find uses for these people; otherwise unemployment rates would be much higher. In the US, a high minimum wage and other regulation creates an incentive to choose smarter workers. If you have to pay $15/hour, you're gonna want the smarter worker/.

I am skeptical that IQ tests measure what we think they measure in developing countries. Even those tests that pertain to be context-free and that don't require one to be able to read. It takes intelligence and cunning to hunt and forage, or to run a homestead farm, or to navigate life in a shanty-town. I think that an American with IQ of 70 and a Papua New Guinean with an IQ of 70 differ greatly in how well they can take care of themselves.

The US Army doesn't specify the IQ cutoff; some people estimate it at 83 (that's what I remember from McNamamara's Folly. Standard deviation of IQ is 15, mean 100, so below 83 is 11.5%.

The US Army by law restricts the employment of the next 20 percentiles (11th--31st) to be no higher than 20% of the applicant pool:

The number of persons originally enlisted or inducted to serve on active duty (other than active duty for training) in any armed force during any fiscal year whose score on the Armed Forces Qualification Test is at or above the tenth percentile and below the thirty-first percentile may not exceed 20 percent of the total number of persons originally enlisted or inducted to serve on active duty (other than active duty for training) in such armed force during such fiscal year.

The corresponding IQs would be in the 83-93 range.

5% of the population was not institutionalized in 1968. That doesn’t pass the sniff test.

I appreciate the reality check. I asked Perplexity AI for an estimate of the total number of institutionalized people in US in 1960s, including prisons, mental institutions and institutions for the mentally impaired. The peak for mental institutions was half-a-million a decade earlier (so about 0.3% of the population), the prison population was less than it is now, but as for the mentally disabled:

The search results do not provide specific numbers for institutions housing people with intellectual disabilities (then referred to as "mental retardation") in the 1960s. However, these institutions were common at the time, often housing large numbers of individuals.

I know several institutions for the mentally disabled within my area. They range from assisted living to full-on can't-go-outside-without-an-escort (for those who are mobile). They tend to be out of the way, and people who don't have family members (or family members of their close friends) tend not to think about these places.

So I am going to guess that a large portion of the bottom-10%-IQ were indeed in some form of institution that would take them out of consideration of the labor force participation metric.

I would be open to evidence that it was common for mentally challenged men to get hired and work. Maybe with a lower minimum wage, it makes sense. My friend's sister, for example, works at a doggie day-care for like half the federal minimum wage, something like 20 hours a week.

Note that there were more actually literally retarded people at the time due to a higher rate of birth defects.

My guess is that it was pretty common for actually literally retarded people living mostly with relatives to do some unskilled grunt work(eg field hand, heavy laborer- there was still a lot of unmechanized agriculture and ditch digging going on). McNamara’s morons had to come from somewhere, and I’m guessing looking into it might give us a better idea- it seems unlikely the military was recruiting from long term care homes. But we really don’t know.

And the media reports on U3 but not on the things that matter more.

@sarker has addressed most of the rest, but just to highlight this point - this is a criticism of the media not of the statistics. FRED or the Treasury or any other statistical body/publisher have very limited control over how the media reports on their statistics, so it's hardly their fault if you think some other measure of unemployment than U3 ought to be more widely reported on.

reflects short-term fluctuations in the labor market

This is more a criticism of news-as-events than anything specific to statistics. I don't wholly disagree with that broader point - news media does often privilege 'current events' over longer-term analysis - but reporting on unemployment is usually carried out with reference to current transitory conditions, which certainly has a legitimate place and for which U3 is the appropriate tool. In other words, that U3 reporting reflects short term fluctuations is by design.

Yes, the total labor force participation is up due to women entering the workforce. It now takes 2 incomes to do what a single income did before. This phenomenon led to the one good idea Elizabeth Warren ever had: "The Two Income Trap". This is not a signal of prosperity, far from it.

The two income trap isn't that women enter the workforce, it's that people live paycheck to paycheck on two incomes rather than one, meaning that there's less slack in the household.

Things are obviously generally not twice as expensive in real terms as they were in the 1960s, though housing is a notable exception. However, the price of housing clearly is being driven by factors other than people having more income.

But men have been leaving the labor force in large numbers. Whereas only 5% of prime age males weren't employed in 1968, today it's nearly 14%. And, of course, this doesn't even reflect the rise of part-time labor.

Okay, but women have been entering the labor force in larger numbers.

By the way, you are equivocating between "employed" and "participating in the labor force". There are not the same concept.

Because U3 only reflects short-term fluctuations in the labor market, and not the disastrous long term changes which have occurred over the last 50 years. And the media reports on U3 but not on the things that matter more.

You've yet to show that it's disastrous, unless all you care about is minmaxing prime age male LFPR.

Yes, I think minmaxing prime age male labor participation rate is a good thing.

We don't need more hikikomori and drug addicts who don't work. (I will acknowledge that part of the change is due to people who are studying past the age of 25. But this is also bad).

There is nothing good about the number of men not working going from 5% to 14%.

Conversely, I think we'd be much better off with lower female labor participation. Many women who would prefer to stay home with children feel that they need to work, either for money or for social acceptability reasons.

We don't need more hikikomori and drug addicts who don't work. (I will acknowledge that part of the change is due to people who are studying past the age of 25. But this is also bad).

I somewhat disagree. Getting these people out of the labor force may mean better service for customers and productivity for employers. People who have low inclination to work are probably worse employees.

I'm not sure how coherent this is. If your objections are primarily socio-cultural - i.e. women would be happier in the home (I disagree but whatever, fine) - then why even bother talking about economics? If your objections are economic then these two goals obviously work at cross-purposes; if the problem is the increasing ratio of the non-economically productive to the productive, women leaving the workforce obviously makes this problem worse.

There is nothing good about the number of men not working going from 5% to 14%.

Conversely, I think we'd be much better off with lower female labor participation. Many women who would prefer to stay home with children feel that they need to work, either for money or for social acceptability reasons.

You've got a just so story for why women staying home is good and men staying home is bad, but it's easy to make up the alternate story as well. It might go something like:

We don't need more women staying home and profligately spending the man's paycheck (recall that women spend most of the household's discretionary income). Let them work to understand the value of a dollar. Conversely, many men who would prefer to stay home to raise children feel that they need to work, either for money or social respectability reasons.

I don't expect you'll be convinced by my argument, but you should recognize that yours is also only convincing to those already convinced.

I have the seeds of an effortpost about women’s socially conservative preferences conflicting with the situation on the ground. But so far, it’s just the seeds.

There are good reasons(although he doesn’t articulate them) to care a lot about prime age male LFPR. Generally fewer to care about female LFPR.

I can imagine a society in which women go to work and keep the place running, and men don’t. My knowledge of men and women points to this being a very bad society.

In contrast if you cut female LFPR to 0, well, strict Islamic countries exist. Saudi Arabia managed to be stable and functional and have a low crime rate. In practice I don’t know of many people that want to go that far- the female LFPR in America 1950 was still well into the double digits, but this was a stable functional society with modern infrastructure.

Gender roles are real. You cannot ask for men to do women’s jobs, or women to do men’s jobs, and expect that they will do them as well as if done by the sex to which they are naturally suited. And at society-wide scales, even small differences add up.

Okay, but we're not trading off 100% male LFPR vs 0%. The question is about 95% vs 86%. The fact that women don't want to work construction or whatever doesn't tell us which one of those two is better.

Generally fewer to care about female LFPR.

Fewer, except for respecting the freedom of an individual to choose whether they wish to work or not. Perhaps you can argue that women are driven into the workforce despite not wanting to do so, but you must admit that the opposite was happening in the sixties.

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