The increasing volatility of future economic prosperity in most places, as well as concentration of burgeoning businesses into a few select cities is not factored into the CPI, and is probably not able to be factored.
The difference in probabilities of future life outcomes for living in certain prosperous neighborhoods and cities and the compound effect of children growing up in those is very material nowadays. This especially effects how much more housing and land costs in certain cities, and how much people are willing to gamble on it by leveraging more to "buy in" to those probabilities of future success.
Not only are they included they account for almost a third of CPI. Thing is it is measuring nationwide housing costs which may not be moving in sync with Bay Area rents
> For instance, if everyone stores several years worth of food and water at home
1. That wouldn't allow us to pause all economic activity. Not even close. Not even remotely close. Notice that 0% of the economic damage caused by coronavirus could have been prevented by stockpiling food and water.
2. Lots of economic activity is not possible to pause. Think about e.g., large construction projects or any manufacturing process. There's an enormous amount of economic activity that just can't easily be paused, at varying timescales. At the short timescale, for example, you can't simply stop pouring a foundation and come back to it later. On a longer timescale, you simply can't restart an oil well at $0 cost. These facts aren't due to bad planning. They're due to the fundamental laws of physics. And for any given type of disaster scenario, even the most resilient and localized supply chains might be disrupted. In fact, it's not really clear that localized or even redundant supply chains/processes would make you more resilient in any given scenario. There are likely fundamental tradeoffs and, even if not, individuals and small firms simply can't plan for every possible apocalypse.
3. That level of food/water stockpiling would be enormously expensive. Stockpiling would become a nontrivial drag on GDP, not only through unproductive resource allocation but also due to new frictions (e.g., moving 2 states over now becomes a five figure investment).
4. Like it or not, most folks simply don't have the means to stockpile at that scale. A waitress working 80 hours a week will never be able to afford the space and continuous investment necessary to maintain a multi-year food and water stockpile. Heck, even the largest firms with the best margins have to take on some existential risk in order to operate. At some point, the choice is between extreme resilience and having a given sector of the economy.
5. I can't find the problem you're trying to solve with multi-year food/water stockpiling. I'm having trouble figuring out what scenario would only last a few years, and would result in substantial destruction/disruption of the agricultural sector, but would not result in either a) also damage stockpiled food/water or b) trigger extinctions/mass-deaths that aren't possible to prevent through stockpiling. Literally no massive natural disaster or attack I can think of fits that bill. Not blight. Not super volcanoes. Not pandemics. Not nuclear war. Not bioterror. In none of those scenarios would stockpiling likely be particularly helpful at a multi-year timescale. Maybe in some of those scenarios stockpiling buys you a full growing season, if all of the other stars perfectly align.
> If you're a cruise line or a convention service, there's no market
Cruise lines are in a rough place. Same as airlines.
Lots of convention and vacation related businesses might face a more interesting dynamic. I briefly worked for one in college. Their fixed costs were probably less than $500/year and they kept low six figures in the bank (very high variable costs, mostly enterprise clients, and a fairly old-school owner).
Lots of small travel-related business can “survive” basically in perpetuity. But they will probably face a lot of new friction when events held at the convention center start running again. They can burn capital to stay alive and feed the owner in the mean time, but as that capital burns away, so does the business's feasibility (because of cash flow issues). Bankruptcy and business closure rates are going to vastly under-estimate the number of small business that de facto die out.
> due to an ability to constantly grow markets with cheap oil energy and new markets. But more importantly the US had a lot of power and regulatory oversight to keep it from happening. All of that is no longer the case
Growth: emerging markets have decades of gangbusters growth ahead of them. More people will exit extreme poverty than ever before in the coming decades. China will transition from middle income to rich in our lifetimes, introducing hundreds of millions of new rich country consumers.
Federal power and responsiveness: The fed expanded its balance sheet in a rather incredible and history-making way. The CARES act is one of the largest subsidies ever.
Cheap oil energy: POTUS is currently begging SA and Russia to increase the price of oil. Meanwhile, alternative energy sources get cheaper every year.
$15/hr at mine, although if I include freelancing prior to that it's probably closer to $8. It's kind of nice. My floor is so incredibly low that the "scary times" don't look so scary.
CS was a contrarian career bet in the few years after dotcom; you didn't do it if you were listening to the wise old men and wanted a good paying job. Realizing that opportunity -- or, more commonly, doing what you wanted to and not worrying about the $, paid off incredibly well for those who took advantage from between 2004ish and today. I don't think fortunes will change for our cohort; there's still a huge dearth of principal engineers in pretty much every subarea of software engineering.
The enrollment surge also hasn't yet effected CS PhDs, because undergrad enrollment wasn't matched by a corresponding growth in phd enrollment. That might change in the next 5 years.
But the entry level positions seem extraordinarily competitive at the moment; I've never had this many qualified applicants (and that goes for before covid19 as well). The only saving grace is that more and more non-programming positions require some programming skills, and those folks seem to have a hard time recruiting/hiring.
I think it's true. Around 2010 is when CS got hot again.
A few years ago, we interviewed some new graduates. I couldn't believe how smart they were. They seemed a lot smarter than I was when I graduated. Heck, they seemed smarter than me right now. There are definitely a ton of highly qualified, recent grads these days.
I think the main thing we ( as in our generation of late 30's to 40's) have to worry about these days is ageism. We might become obsolete quick if businesses think the new, smart, cheaper kids can replace us aging ones.
1. 30k/year is REALLY high for tuition. Most state flagships -- which are some of the best universities in the entire world -- aren't that expensive. UIUC, definitely one of the best CS departments in the world, has tuition that's about half that per year [1]. And that's a top-tier state flagship research university; a bit of an overkill for any but the most ambitious (phd or md or jd or elite co.)-bound students. The regional campuses, which do an excellent job at preparing you for typical entry level industry gigs in most fields, have tuition closer to $10k/year [2]. If you want a "normal" life -- decent salary in exchange for a 40 hour work week, in a relatively normal stress environment, and without attending a top-tier graduate program -- don't go to a top-tier state flagship.
2. Most private universities do have sticker prices in that range, but a) why go non-elite private (e.g., mid-low tier liberal arts colleges) since they're usually not even as good as comparable public schools, and b) almost no one actually pays the sticker price at private universities. The average discount factor at private universities is around 50% [3].
3. It's definitely possible to make >$10K each year while doing university full time. Even very conservative estimates -- state minimum wage and only working summers/weekends with no overtime -- put the number north of $8K [4].
4. Living at home is often an option (not always, but the percentage of people who can't live at home and also don't qualify for need-based aid has to be pretty small).
5. Four years is an upper bound, not a requirement! College-ready students can and should transfer credits from high school AP, IB, or college credit courses; one of those three options is available in the vast majority of US high schools. Students who are not college-ready should start off at community college, which, again, brings the price down substantially.
So, for example, if you:
* go to your local branch campus of a state university like SIU-E or UMSL,
* live at home,
* work a minimum wage job for 40 hours over the summer and on the most weekends during the school year [4], and
* come in with sophomore standing OR do you first year at community college
then you can graduate with a very modest amount of debt (less than a used car, or possibly none at all). Cutting any one of those assumptions still keeps you well below $100K and possibly much lower than even $30K.
Plus, some of those assumptions are conservative. E.g., for most of that time you should be able to make substantially more than minimum wage by taking internships, tutoring ($20/hr+ is typically a "low" rate), etc. Scholarships and fellowships are typically available as well.
College is far too expensive in the USA, but you really have to be a huge outlier to graduate from undergrad with $100K in debt. And it's still possible in many parts of the country to graduate with "used car" worth of debt or even no debt at all.
Part of our "college affordability" problem is real, but part of the problem is a "buying luxury goods with a credit card" problem. Attending one of the best universities in the world and living in their dorms and staying for four full years and not working full time over the summers + weekends during the school year... that's the most expensive option possible. There are plenty of much less expensive options for most college students in the US.
> 1. 30k/year is REALLY high for tuition. Most state flagships -- which are some of the best universities in the entire world -- aren't that expensive.
So what? Prestigious schools are notoriously egalitarian toward the students. If you get accepted to Cal Tech, you are guaranteed to be subsidized. Nobody "can't afford" to go to Cal Tech, but there are people who don't test well enough.
> 2. Most private universities do have sticker prices in that range, but a) why go non-elite private
Because most people aren't even average collegiate level intelligence.
> 3. It's definitely possible to make >$10K each year while doing university full time.
Not sure what this is supposed to say, but surviving is hard out there. Especially around any school (public or private). Most people in massive debt, try to work it off.
This whole post seems a little holier than thou. Least of which is the perspective that people could (or would) attend "best universities", which is more than a little presumptuous. This debt hole is so common it appears in US media from TV (eg Grey's Anatomy, Devs, etc) to the newest films.
So, people are choosing to go to expensive universities that don't subsidize their tuition. It's a choice, and there are much cheaper options for most of the country.
If you're paying $30K in tuition and planning on a "normal" career path, then you're paying way too much.
> This whole post seems a little holier than thou
Well, if sound financial advice is perceived as a personal attack, then we're never going to solve this problem.
People whose parents can support them by allowing them to live at home for free during college can graduate with almost no debt by attending a cheap institution, working while going to school, and getting a head start in high school or community college. And most people whose parents cannot allow them to live at home will qualify for state and federal grants.
This country does have affordable college options for most people. The problem is that most people who go to college choose the more expensive options (state flagships and non-elite private universities) even though their local state university branch campuses are capable of providing a perfectly adequate education at a third of the price.
More importantly, the only way we'll reduce the debt burden on undergraduates is by providing more subsidy to state branch campuses. That will only work, however, if people choose to go to those state branch campuses. There's just no world where the taxpayer subsidizes a big chunk of room&board&tuition at research institutions for the majority of college students. For the top ~5% of students by merit, sure. But that model just doesn't make any sense when there are far cheaper options.
> eg Grey's Anatomy
Medical debt is an entirely separate issue. Intertwining it with the undergraduate debt issue confuses things -- the solution to med school debt will be different from the solution to undergrad debt.
But it might go away for a year or two, which is enough time to do an incredible amount of economic damage -- far more than what we save by not bailing them out.
They don't need to be indispensable. they just need to be critical enough that not bailing them out is much more expensive than bailing them out.
The solution is to prevent this scenario from ever happening in the first place, by either requiring sufficient competition, or requiring sufficient capital reserves (see: banking and reinsurance), or just nationalizing the thing.
I've used small claims 4 times now. Each time, I spent less time with the court than I did with customer service prior to the court.
Lesson learned. I ask customer service once, in plain english, on a recorded line. If they don't resolve it at that opportunity, I just go to small claims.
Only if you assume perfect liquidity and either 1) a constant or monotonically increasing stock price or else 2) a huge cash reserve such that selling stock at basement prices or taking out highly leveraged loans is never necessary.
If a company parks $1 in a treasury bond during good times, they have that $1 + approximately inflation in bad times.
If a company buys back their stock at $N and then has to sell a large amount of stock at $M for M << N (or take a leveraged loan), then the company is only getting fractions on the dollar of that original $1.
Unfortunately, the scenarios where huge companies really need cash now pretty well overlap with the scenarios where there are huge liquidity shocks and crashing equities prices. Such as a financial crisis or a pandemic.
Maybe the companies in question should save money instead of expecting the American people to bail them out in these situations. Every single financial crisis in recent memory has the same core group of companies not saving money and needing the government's help. Yet when it comes time to help individuals in need the government suddenly wants means testing and byzantine rules around who gets the help and how quickly it can come. Trickle down economics don't work. They just coat the economy in varnish.
If every business had to consider every possible risk scenario (WW3?) then nothing would function. We need a kind of 'insurance' that nobody else will provide. The government is well-positioned to do that if they do it responsibly.
These companies are generally not getting free money - they are getting loans, or in some cases the gov. is getting equity. The government could have actually made a profit were they to have held their auto-bailouts a little longer.
The reality is, Auto Companies cannot prepare for an 'apocalypse' in an adjacent, much bigger market - banking.
Credit is the right thing to do to keep that system going, again the government did loose a few billion, but it was small in the grand scheme, moreover, they should have broken even.
There are quite a few social programs provided by gov for individuals, moreover, those are 'freebies'. The gov is not taking a chunk of 'ownership of you' and they're generally not extending loans.
Banks also paid back their loans, the sneaky thing there was when the Fed allowed banks to dump mortgages on them at face value - which was a 'bailout' of banks and home-owners.
Of all the things that drive unfairness and inequality - these are not them. These are generally good bits of intervention.
Low-interest rates that drive massive home inflation is a primary driver of inequality. Lack of some kind of socialized medicine. Lack of reasonable healthcare regulations. Garbage public schools in some areas. Prison Industrial Complex. These are much more obvious areas for reform.
Of course - I'm not denying that 'stock buybacks' have a strategic impetus, of course they do.
Every financial decision does.
I'm saying that the popular notion of 'stock buybacks' as somehow a 'windfall' for investors is just not really true at all.
The notions that some individual investors are literally selling their stock, but instead of to some other party but the company itself, is not a big deal.
Stock buybacks are a rational and normal part of financial operations not some 'special win' for investors as some of the rhetoric implies.
