Thursday, September 9, 2010

Cost of Living in a Fascist America

The dissonance between the news one receives from Democratic and Republican sources, that is from the Wall Street/government based media, reminds me of the stories I used to hear about communist eastern Europe when I was a youngster.  Everyone knew that government statistics were nonsense and that the broadcasts from the state-dominated media were propaganda.  So it is today in "Progressive" America.

One of the chief areas where government has manipulated information is with respect to prices. The Poughkeepsie Journal featured an article on September 6 describing how costs in Dutchess County have increased more than wages partially because the wages in New York City have declined and there is a sizable commuter element.  One point that the article omits is that the Bureau of Labor Statistics excluded house prices from cost of living calculations in the early 1980s. Thus, inflation has been understated for nearly three decades.  In response to declines in house prices over the past two years, the federal government has intervened aggressively to prop them up. This has had the effect of exacerbating the cost of living increases to a far greater degree than is revealed in government numbers.  When talking about house prices, the fascist media treats their inflation as essential to economic well being.

Recent graduates face earnings profiles that start at maybe 4 times what they were in the 1970s but house prices have gone up much more than that.   If you start work earning $40,000 but houses cost $200,000, then you are put in the position of becoming a debtor to banks at heretofore unknown levels.
I worked as a doorman at a posh New York City apartment building on 54th Street between Fifth and Sixth Avenues during the summer of 1974.  The apartments were selling for $55,000 or so, while doormen were making ten or $11,000.  In other words, given the calculus of the today's housing market, I as a college-aged doorman could have afforded an apartment in the exclusive building where I worked.   Looking at it another way, the apartments in that building now probably sell for $1.5 million, a twenty-fold increase.  But doormen's wages have increased four fold.  Yet, the enormous escalation in the cost of housing due to government policies is omitted from consumer price increase calcluations (the Federal Reserve Bank and the banking system are the only reason for these price increases, not some other exogenous explosion in housing demand).

The belief that price increases are due to forces other than government policy is superstitious.  Yet, that kind of superstition is provided in the American media and from universities.  Rather than discuss price increases in terms of government decisions to allocate wealth to banking and real estate interests, the Poughkeepsie Journal considers cost of living increases to be an unfortunate but uncontrollable and spontaneous phenomenon.

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