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Home Publications Blogs Beat the Press Do People Really Get Paid to Own Television Sets These Days?

Do People Really Get Paid to Own Television Sets These Days?

Thursday, 01 May 2014 04:47

That's a cheap shot, but an editor at the NYT was clearly asleep at the wheel when they allowed a graph into the paper showing that the relative price of televisions had fallen by somewhere around 110 percent since 2005. (Actually the base year doesn't look right either, since these look like much longer trends in prices.) The graph appears alongside a mostly good article about how the living standards of the low-income families have not kept pace with the rest of the population.

The article is at least imprecise when it tells readers:

"The same global economic trends that have helped drive down the price of most goods also have limited the well-paying industrial jobs once available to a huge swath of working Americans. And the cost of many services crucial to escaping poverty — including education, health care and child care — has soared."

The factors that have destroyed well-paying industrial jobs were conscious policy, not abstract global trends. The United States has trade policies that were explicitly designed to put our manufacturing workers in direct competition with low-paid workers in places like Mexico, China, and Vietnam. This had the predictable effect of driving down their wages.

We could have put in place a trade policy that made it as easy as possible for smart kids in the developing world to train to U.S. standards and work as doctors, lawyers, dentists and other highly paid professionals in the United States.This would have driven down the pay of these professionals and made items like health care much cheaper in the United States. This was a policy decision, not a global economic trend.

This decision was aggravated by the high dollar policy pursued by the Clinton administration. That led to the soaring trade deficit at the end of the 1990s and into the last decade. This deficit has cost the country millions of relatively high-paying manufacturing jobs.

There is also a policy to run a high unemployment budget. Congress has decided to run budgets that leave millions of people out of work rather than spending enough money to bring the economy close to full employment. As Jared Bernstein and I show in our book, lower rates of unemployment would hugely benefit lower paid workers, not only by increasing their likelihood of finding a job, but also increasing their hours and wages.

In short, the low income of the poor is largely a result of deliberate policy decisions that have made them poorer, not global economic trends.



I may have missed this the first time, but the chart indicates it is showing percentage point changes relative to a 23 percent overall increase in prices over the period from 2005-2013. This means that an item showing a 10 percentage point drop on this chart would have seen its price increase by 20.7 percent, 2.3 percentage points less than the 23 percent overall price rise. If this is correct, then a 110 percentage point decline in television prices would mean that their prices had fallen by 2.3 percent since 2005.

This may not be the most useful way to convey information. Imagine if the rate of inflation over this period had been near zero, as was the case in Japan. It would have been more standard just to show the percentage change in real prices for each item.


Comments (9)Add Comment
Paul Ryan misses the point . . .
written by jhaskell, May 01, 2014 6:24
Poverty is the end result, not the cause, of a person's economic plight. As a result, this tendency to blame anti-poverty programs for not alleviating poverty is rather ridiculous. It's akin to blaming your insurance company for your house burning down. Insurance, like anti-poverty programs, are there as stop gap measures to treat the result of the problem, not address/prevent the problem. Thus, the only way Ryan would be correct in saying that anti-poverty programs have done little to curtail poverty is to show that these programs are the cause of people's economic plight. He can't.
Value Neutral Economics of Poverty
written by Last Mover, May 01, 2014 6:57

Price indexes are so value neutral aren't they. They are what they are. Stop your whining America. You have a cell phone and internet connection right there in your hand.

Now get out there and take some online college courses while riding the bus to your 3 part time jobs with no benefits so you can qualify for a McJob and afford to eat what you make.
written by John, May 01, 2014 7:10
Low cost goods and services has not been good economic policy. Low cost stuff has meant higher societal costs such as higher pollution levels, higher unemployment, etc. Just because something is cheaper does not mean it is better.
written by Larry Signor, May 01, 2014 7:11
The factors that have destroyed well-paying industrial jobs were conscious policy, not abstract global trends.

This fact cannot be stressed enough. We did not get where we are, economically, by accident.
Frontline has been good
written by Dave, May 01, 2014 7:22
It is hard to imagine how Ryan became so duped by his party loonies. Must be ambition.

The money leaders of that party are out of touch with reality. They haven't left their homes in decades. They're like eccentric old men, Howard Hughesis, but they think they understand the world. They don't.

But they also have loony economists willing to tell them anything they want to hear, like CM at Chicago. His economics are so bad he probably thinks people breathe too much air because the excess oxygen in the atmosphere creates an incentive to live. Therefore, we need to replace it all with CO2 to reduce the incentive to live. It's just economics, people!

Poor people are caught by an oppressive system. They are oppressed by the wealthiest people in the the nation. Those wealthy people better have really good private security, because most of the population are going to be coming for them with pitchforks and sniper rifles very soon.
written by John, May 01, 2014 7:56
Another way to look at the graph is the stuff on the bottom (red) are imported (because everything is imported) products, the top are services which cannot be imported.
written by Bosco, May 01, 2014 8:51
I think you need to take back your complaint about the chart. It is not comparing prices today to some point in the past for each of those items. It is comparing the change in price relative to the change in all prices from 2005 to 2014. The chart says the change in price for all items was 23% (I get 22.2% comparing the March 2014 CPI with the March 2005 CPI). So if TVs are down around 110% relative to the 23% increase for all prices, that means TVs are down around 87% in 2014 compared to 2005. And in fact the March 2014 CPI for TVs was down about 85% from the March 2005 CPI.
Low cost goods
written by Patrick, May 02, 2014 12:47
How does increased societal wealth make bad economic policy. Lower prices for goods and services result in more people being able to afford such items. Henry Ford's Model T is a great example. He brought down the price of an automobile dramatically, and in doing so, allowed the common man to afford one. This meant that society was wealthier than it was before Mr. Ford.

Trade, between individuals, makes both parties better off. I would not buy something if it didn't benefit me, nor would you sell something if it didn't make you better off. Protectionist policies are great for the select few who own the factories that are benefactors of such policies. These policies increase inequality, and make society worse off as a whole.

From the late 1800s until the start of the Great War in 1914, was a period of honest money through the gold standard, open borders, relative peace in the world, liberal trade between different people of the world. This period brought the greatest increase in prosperity mankind has ever seen, the birth of the middle class, and has not been matched since.

Freedom and peace is the solution to today's malaise in the world.
Don't be a wanker
written by Thornton hall , May 02, 2014 1:46
The Lowrey article was at the very top of the NyT mobile app when I saw it. It is a straight forward takedown of GOP talking points on poverty. It is a fantastic example of how a post-cult-of-objectivity press might do a better job of telling the truth instead of false balance. So what do you do? Whine. For crying out loud, there's liberal and then there's being a wanker.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.