Implode-o-Meter News - We Are Drowning in "Cost Disease"

``Libertarian-minded people keep talking about how there's too much red tape and the economy is being throttled. And less libertarian-minded people keep interpreting it as not caring about the poor, or not understanding that government has an important role in a civilized society, or as a "dog whistle" for racism, or whatever. I don't know why more people don't just come out and say "LOOK, REALLY OUR MAIN PROBLEM IS THAT ALL THE MOST IMPORTANT THINGS COST TEN TIMES AS MUCH AS THEY USED TO FOR NO REASON, PLUS THEY SEEM TO BE GOING DOWN IN QUALITY, AND NOBODY KNOWS WHY, AND WE'RE MOSTLY JUST DESPERATELY FLAILING AROUND LOOKING FOR SOLUTIONS HERE." State that clearly, and a lot of political debates take on a different light.''

This is a provocative article with lots of great data and points made -- it really wraps up a lot of the observations we've been making around here for over a decade now about the economic (and resulting political effects of) stresses that we are seeing in the modern world, and especially the U.S.

The best crack we have at an answer to where this "cost disease" is coming from is that cost disease actually is just inflation -- it's just that our inflation is unusually-poorly distributed compared with other countries and past eras. But basically, we would suggest that if one just looks at the monetary base, one will find that "cost disease" corresponds well to the increase in monetary base (i.e., something like a 10x increase since the 1970s). Variations are probably due to differing "deflationary" effects of technology, export-substitution, and quality declines. So in other words, a lot of confusion over what this "cost disease" is, versus inflation, comes from confusing inflation of the money in circulation in the economy with "an (arbitrary) basket index of goods and services".

Relevant:

We Are Drowning in "Cost Disease"