Inflation mystery. An Aha! moment for me.

[kandrathe]

In the future, there will be a surplus of experienced workers, not a surplus of rookies. There is no glut of young people. The population is, overall, aging.

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Our local population is still growing slightly until 2020.

The retirement of the boomers will be painful, but the baby boom is not *that* large. It changes the composition of the work force somewhat, but the big burden is retired workers living until 80, not an absence of experienced workers.

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Here is what our boom looks like here.

You can calculate inflation however you like - higher by some measures than others. (Heaven help you if you're from the school that insists gold is the only stable measure of value!)

I would reference a basket of stable commodities, not just gold (which can be influenced by fad). Were I to invest in commodities to offset inflation, it would not be in gold.

I would tell you that runaway costs for health care have to do with a cripplingly inefficient system,

It is. The question I have is whether the increasing amounts of government control (nearing 50% of all health care spending) have streamlined it, or have complicated it. Also, I fear their "one size fits all" approach fails in an economy as diverse as the USA. See also the article below on price in-elasticity. If a heart transplant costs $100 or $1M I would still attempt to save my own life. There is no objective place where some one determines they will not pay for health.

... and that increasing college tuition is about the withdrawal of subsidies for higher education, forcing up "retail" prices for college without dramatically changing the underlying costs. It's just a question of who pays the bills and how.

Perhaps it is the chicken and the egg, but I see it as the opposite. Prices are chasing subsidies.



Subsidy-Absorbing Institutions of Higher Education

"The government often decides that it would like to subsidize a particular good or service in an attempt to make it more affordable for consumers. It generally does so with good intentions. However, such subsidies are frequently captured by the providers and fail to result in lower prices for the consumer. In such instances, the providers simply increase their prices by the amount, or some portion of, the subsidy. They maintain their margins and increase their revenues, all thanks to the generosity of the public purse (or perhaps politician’s failure to understand basic economics). This problem is especially prevalent for subsidized goods and services that economists consider to be relatively inelastic. The term inelastic simply refers to a good whose demand is relatively unresponsive to a change in price. Health care, food and education are often thought to fit the bill of an inelastic good – consumer’s generally continue to pay for them even when prices rise."

Other services are divided into sophisticated services, like law and banking, that track the skill premium on educated workers, and low-end services, which pretty much just track wages, and therefore will only increase along with an increase in the standard of living.

However the method used, it is clear that the BLS use of the CPI-U is couched in inaccuracy, and describes hardly anyone's experience with inflation.

Wages should be equal to the marginal product of labour, right? Otherwise, someone is leaving money on the table by either hiring too many workers, or not enough of them...

Generally, yes. Collective bargaining strengthens labors position. My slim point here is that law supports the corporate ownership of the intellectual work done by their employees. It is the inventions, designs, plans, and etc. that enable corporations to be unique and competitive. In a nutshell, we treat too much of our work like its a widget on an assembly line, and remunerate employees with an hourly wage.