Thursday, July 30, 2015

Say it isn't so, Matt

When Hillary Clinton is seen through by a leftish journo like Matt Yglesias, it might be time to buy Bernie Sanders futures.

Yglesias (or his headline writer) describes that as; Hillary Clinton's favorite chart is pretty misleading. Because;
One problem with that chart, as deployed by the Clinton campaign, is that economic productivity simply has nothing to do with "working hard." 
It has more to do with working smart. Or, having more capital (equipment, machinery, computers, etc.) available to the workforce.
But the bigger problem is that both lines are indexed to inflation — using different inflation indexes.
When Yglesias eliminates that deception, he gets a much different story;

A story that doesn't make the Obama Administration look very good. The same Obama Administration in which Hillary Clinton served as Sec'y of State. However, Yglesias could have gone even further by pondering his conclusion;
Real wages really have risen much too slowly over the past 40 years. But while Clinton's version of the chart makes it look like rising productivity isn't part of the solution, looking at the divergent price indexes clarifies that it is crucial. For real wages to rise, we need the things middle-class families spend the bulk of their income on to get cheaper. That means more productivity in the big housing, health, and education sectors — not more pessimism about the potential of productivity.
The three sectors (our bold, above) are all heavily regulated/subsidized by governments at all levels. Maybe that is the problem.

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