More dismal science
tomcondit at igc.apc.org
Thu Nov 9 01:46:58 MST 1995
Michael Boskin, Stanford University's expert in silver linings,
has added yet another feather to his cap. You all may remember
him as the fellow who said that long commutes aren't really a
problem because cellular phones let you be productive while
you're doing them.
Now Boskin has joined with some other prize economists to explain
that real wages haven't really been falling, because ...
... people just buy chicken instead of beef, so food prices don't
go up as much as it looks like they do;
... the quality of goods such as televisions, refrigerators,
etc., is improving, so you get more for your money;
... consumers are going to discount stores instead of regular
department stores, so they aren't really paying those higher
... new products like VCRs and compact disc players expand our
choices, so we're better off even if older prices rise.
With this clever combination of seeing symptoms as cures and
adding in non sequiturs, Boskin and his pal Dale Jorgenson from
Harvard have concluded that the current method of calculating the
Consumer Price Index has overstated the rise in the cost of
living by about 1.5% a year, men's wages aren't falling, women's
wages are rising much faster than it looks like they are, and we
all should put our rose-colored glasses back on.
All of this actually has consequences. Boskin & co. were hired
by the federal government to do this study, so cost-of-living
increases for social security could be reduced and tax payments
would have lower inflation adjustments. They delivered the
superior new product as ordered.
Meanwhile, personal bankruptcies in the U.S. rose to over 900,000
per month in the second quarter of 1995.
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