In the comments, some have disagreed with my proposition that BLS statistics are unbelievable because the US is becoming dirtier and shabbier. Dirtier and shabbier is rather subjective, so reasonable people can disagree.
Obviously California has become poorer, dirtier, and shabbier, but this is not necessarily indicative of the USA as a whole. Possibly California might be exceptional due the federally sponsored movement of very large numbers of Mexicans into formerly white areas by affirmative action lending, and the state government’s self destructive tax and regulate policies, as for example just a couple of days ago, the Californian government shot itself in the foot by attempting to tax Amazon.com, with the result that Amazon abruptly fled, as thousands of smaller businesses have fled over the last couple of years.
So let us look for statistics less subject to manipulation and subjective judgment than the consumer price index.
According to the government’s disputed measure of inflation, US GDP per head is increasing. If GDP per head was increasing, we would see electricity consumption per head increasing and life expectancy increasing. Both are decreasing.
The green line is gdp per head as a percentage of 2005 value – or what the BLS claims is GDP per head.
The red line is power used per head as a per head as a percentage of 2005 value.
power and gdp per head as a percentage of 2005 values
You will notice that the green line, alleged gdp per head, goes up about five percent a year more than the red line, power use per head. I find this hard to believe. Perhaps you find it easier to believe.
Total electricity production from EIA
Population assumed to be growing linearly between the 1990, 2000, and 2010 censuses.
GDP figures from the BEA
Life expectancy is not going down. It is rising rapidly. From this link:
The figures for whites are surprising, given that the white category is getting more hispanic with each passing year and given that hispanics have a 2.5 year lower life expectancy—so there is a composition effect working against the rise.
On per-capita energy use, that peaked in the US in the 1970s. It has been declining due to improved energy efficiency. You’ve noticed the lack of insulation and caulking in houses built before the 1970s, right?
You are right about California. It is a dump now. But, the South has bloomed. In the 1970s, there were people living in shacks by the side of every highway, and practically every town was a dump. Now, it’s pretty nice. Niceness tends to be pretty tightly correlated with growth. New buildings are nicer. CA is not growing any more. Buffalo is not growing any more and has not been for a while. FL is all brand new because it is growing.
GDP per head is not a great measure. Roughly all the real GDP growth since the 1970s has gone to the top 10% or so of income-earners. The majority of that to the top 1%. Since that period also saw the explosive growth of our parasitic financial sector, it’s reasonable to wonder how much of GDP growth over that period has accrued to those scumbags.
Nevertheless, the rise in life expectancy coupled with the lack of measured growth in real, median income argues for an overestimation of inflation. You are also ignoring the big declines in pollution.
The only info I was able to turn up in a brief look on your washing machine example showed that the introduction of hedonic price adjustment slightly raised measured inflation for clothes dryers.
In sum, I think living standards have been rising in the US over the last few decades, albeit very slowly for normal people. For high-income types, living standards have been exploding upward.
As you surmise, though, the hedonic models BLS uses do not consider things like how clean the clothes get, how long the appliance is likely to last, how much energy it uses, and etc. The models consider basically a checklist of features which can be read off of boxes, manuals, advertisements, and the like. This is clearly a problem given that appliances are so obviously getting crappier. For example, both appliance guys and HVAC guys I have talked to claim that the outlawing of freon has drastically reduced the life expectancy of fridges and air conditioners and also raised maintenance costs. And the fucking toilets . . .
I agree with you that inflation is likely to get bad in the US. It just is not happening yet. And when it does, the BLS won’t try to hide it because it won’t be possible to hide it.
You are right that the improvement in age adjusted mortality suggests a real increase in living standards. I am inclined to discount alleged declines in pollution as mere improvement in holiness, rather than improvement in living standards. For example replacing septic tanks with government sewers is in practice not an improvement in living standards, but because these things are valued at government imposed cost, town sewage is rated as an improvement in living standards. Town sewage is supposedly more valuable than septic because you pay more for it, but it is the city government, not the end user that decides you will pay for it. The organizations responsible for measuring the harmfulness of smog gain power and wealth in proportion to how harmful they measure it to be, just as those responsible for protecting endangered species gain power and wealth according to how finely they define species.
Houses are insulated because they are centrally heated and/or air conditioned – insulated in response to increased energy usage. If living standards rising, use of air conditioning should still be increasing. Lots of houses in the Bay Area are insulated and centrally heated but not air conditioned. Energy efficiency has been increasing but I find it hard to believe it has been increasing by enough to explain the discrepancy between GDP and energy usage. When people are richer they have more electronic gear, turn up the air conditioning, and air condition larger areas. Plus everything you buy takes electricity to make, so if you buy more stuff, that uses more electricity.
Still I cannot give hard numbers on energy efficiency that proves the data is discrepant.
I notice that the BLS estimate of food price inflation is only slightly lower than the McDonald’s estimate of food price inflation, which is support for your position – that any jiggering of cpi is within the range of what is arguably plausible.