He misses what I consider a major issue. The price of college education is going up much faster than the cost of providing it. If you look at tuition vs what a professor is paid, one goes up much faster than the other. If you look at housing costs things don't add up either - renting an apartment seems to be a source of revenue for the schools. These are the obvious places the schools are making a ton of money - where does it go?
And then there are the absurdities. Where I went to school they now have all sorts of fancy places to eat on campus. I can't imagine students paying $4 a couple times a day for a Starbucks coffee when they're paying with borrowed money. This is just grossly irresponsible. I imagine the justification is "but everybody does it". The problem is nobody is teaching the general public anything about managing their money or evaluating costs of anything.
Sure, if you get a good job you can pay off your loan in X years, but that has nothing to do with the fact that you drastically overpaid for what you got (services provided).
These are the obvious places the schools are making a ton of money - where does it go?
This is exactly the reason why I don't donate to my alma mater, neither should most people. Less "alma mater" and more "greedy mater who funnels taxpayer money into a growing bureaucracy".
I decided not to donate to my college when I saw them moving an entire historical house up a hill. They're a major research university with a $3 billion dollar endowment, a Pac-12 football team, and the largest employer in Washington State after its own government. I'm pretty sure my $100/month has more utility to more people at a food bank, than it would at that school.
> I can't imagine students paying $4 a couple times a day for a Starbucks coffee when they're paying with borrowed money. This is just grossly irresponsible.
When I was in college, undergrads would have to purchase a meal plan, which could take a few forms. You could have a designated number of meals, and buy things from the cafeteria that qualified as a meal (one entree, one side, one drink), or you could have balance of food dollars which could only be spent on campus. There were also plans that involved a mix of those two types of currencies, but the better plan was to get the food dollars (which were called Declining, for whatever reason), and use that to buy food, because that gave you more flexibility. You could spend Declining at the cafeterias, at the corner store, at the Starbucks on campus, it was literally cash that you could only spend on the campus and only on food.
At the end of the academic year, though, your balance gets zeroed out, no matter how much you have left in Declining. So every year starting in April or so, people would start buying stuff in bulk from the corner store or from the Starbucks just to get something out of the money that was going to evaporate. My senior year, my girlfriend spent like two hundred dollars on coffee beans and gave them to people as presents, because what else was she going to do? I myself spent like sixty bucks on fifteen pounds of sour patch kids.
No reason to not buy that four dollar coffee every day when the money's already spent and you're not getting it back.
I don't think he is missing it, it's kind of the point of what is saying: the price is disconnected of the cost, it's a function of the money available to the customers who are, also, a captive market.
In standard economic teaching, Is not this what happens when there is a cartel acting?
" The price of college education is going up much faster than the cost of providing it. If you look at tuition vs what a professor is paid, one goes up much faster than the other. "
That's the most important question. Same applies to health care. Where does the money actually go and how has that changed over the last 50 years? Everybody immediately complains about their favorite scapegoat but there is no comprehensive accounting.
Steve Ballmer was talking about how healthcare costs have gone up like 400% over a 30 year period but expected lifespans only increased by .6 years. We’re pahing exponentially more for relatively insignificant gains.
Regulation inevitably squeezes it into government one way or another. The only long-term beneficiaries are the government itself which constantly requires more funding through any means possible, and those involved in regulatory capture - typically banks and large corporations.
It is important to note that relaxation of regulation is important as well, since the direction of that easement usually favors banks and big business[1] - it's a matter of perspective. Always ask what the true purpose of a political action or movement is and follow the money; more often than not there's an ulterior motive.
"All politicians should serve two terms: one in office and one in jail."
~My Grandfather
> I imagine the justification is "but everybody does it".
A member of one of the administration teams at ASU (a dean or someone of similar position) told my sister, "everyone carries debt," as if to justify that 40k a year at an honors college is a valuable investment compared to virtually any alternative.
The comment was so asinine and destructive, I can only gather as a blanket statement that the members of administration there are either incompetent to help direct students, or are explicitly volatile for one's growth in the context of broader society, and are out to protect the institution's interests. It may be sensible to assume a bit of both.
I went to a public university and on top of tuition there was some student registration fee of around $750/quarter that went to clubs and paying for the gym. It’s such a ridiculous expense to add to poor students taking our debt. College campusss have really become like luxury resorts. If they wanted to trim some fat, they definitely could.
Makes me wonder if all the facilities and staff and extras and what not may be why college tuition in the US is so much more expensive than in many other places, like in Europe. Cause it seems like US colleges are trying to be mini towns offering everything and the kitchen sink, whereas the average UK uni is built in such a way you'll have to leave the campus to get access to those things. Over here it feels like the universities are part of the town, whereas over in the states they may as well be the town.
Since the current expectation is leisure, access to top technology, low class size from highly educated scholars, medical care, lodging, and administrative help... it costs $60k to house a prisoner per year, why do you think college costs should be much lower?
I'm not defending it, but there isn't Trader Joe's or Aldi of college yet (slightly better than average generic product with low/no frills).
If you want the answer: college loans are very lucrative, so they are pushed on the consumers heavily, just like home loans were 10-15 years ago. The people that profit from that benefit from irresponsible behavior and a broken system.
Is that 60k a year just housing and food or guards and administration too? I'd hope there were more guards and security measures in place for prisoners than for college kids.
The fundamental problem is that education was priced traditionally priced using a cost + plus or a %cost basis what you can pay. Today education is getting priced using value pricing, if in theory you can get a job which pays X you can pay sum of multiple of X.
The second problem is that even if this was a reasonable system, people estimate the risk associated with getting the job paying X very poorly, colleges exploit this, even if only few people get a job paying X everyone pays the same costly multiple of X.
It's an excellent point. As for housing, where does the extra wealth go? Nowhere. No one benefits when you lock up land that can't be used by anyone. Now you might argue that existing land owners benefit: but they actually don't. Because they're not moving and selling, they haven't realized any gain at all. If they sold but stay in the same area, there's no gain. And in states without the reprehensible prop 13, those in expensive housing will pay even higher property taxes.
We could literally print nearly free wealth, inflation free, if we just opened up land for development. It's a win win win.
> We could literally print nearly free wealth, inflation free, if we just opened up land for development. It's a win win win.
Doesn't neighboring real estate value decline as you put more capacity on the market? You can't print real estate wealth anymore than you can print dollars without consequence. At the end of the day, all of this "value" is trying to get dibs on the output of labor today (housing prices are usually tied to incomes, with some distorted market exceptions).
The more interesting question is: can you provide these basic necessities at such a low cost that you can drastically reduce the labor output required to enjoy them? What if you only had to work three days a week to meet your basic needs? What if healthcare inflation wasn't consuming wage increases as rapidly as it is?
I very interesting article. This kind of numbers should be on the news all the time (like global warming) so people focus more on them instead of what is the last Twitt from the president.
> "Get rich or die trying"
I have always seen this as USA's major flaws. You are not supposed to have a good life but to risk everything for riches. This was working when the rest of the world was under-developed. USA citizens had so much more than the rest. As the world catches up and surpases USA its problems are getting bigger and bigger. If ever the dollar stops being the defacto world currency I can't even imagine what will happen.
How many TV shows I have seen that people laugh at the janitor looking down to him? There is no pride in a job well done, there is no self-fulfilment on doing what is correct. Money and fame are the only thing that matter. You even have religious groups that see economic wealth as a sign of God blessing!
Other countries have different and even bigger problems, but meanwhile the american dream is about economic aboundance and not about having a good life you are doom to a rat race.
> The taxman. I’d like 30% please. 40% if you got a bonus this year. Good job.
> Medical conditions! Your income means you have to pay out of pocket
The fact that your taxes are disconnected from a public health care system is scary. I am very proud of paying taxes that helps people to survive cancer, to get an education or to live with a disability. Your problem is not that you have to pay taxes but that the taxes are not used to give you back services as it was designed to be done (and that rich people does not pay their fair share, and that is something that it is also true in Europe).
I thought I would roll my own side gig once. The plan was to find broken cars on Craigslist and fix them for a profit. We're talking things like needs an engine or a transmission. I could do maybe ten a year. I'd be keeping a car out of the junk yard (which I imagine is good for GDP in a very small way) and making a very modest profit of $10,000/yr if I was lucky.
Well it turns out that is HIGHLY regulated. You need a dealers license which means you need a building to act as the place of business (can't be your residence), the business has to have $75,000 in assets or you have to get bonded. You have to pay insurance. You need signage. You, of course, have to pay taxes on everything. Basically by the time everyone takes their little piece there's nothing left for you.
I think this happens in any industry. It gets regulated to the point of a normal person not being able to participate. You dont own a bakery, you work for the bakery. You don't own a corner store, you work at Walmart.
What I see is a lot of closed doors yet we still act like they're open. They aren't real options anymore. So what are the real options?
I think it would be in society's interest to know the credibility of someone repairing and selling 2 tons of metal that will go out on the road and pose considerable risk to others' and the driver's lives on the road. See the limo crash that just killed 18 in New York state.
There might be situations where corrupt government is inhibiting competition for the gain of particular parties, but some things do make sense, such as being bonded when the risk of the work you are performing could be result in large costs.
There was an article in the NY Times last week (posted on HN as well) lamenting the loss of hobbies / personal time. To me it was evident the reasons, even though they were not discussed in the article, and I posit they are the same reasons as yours statement about this "Get rich or die trying" mentality. People don't engage in hobbies/leisure and have adopted this mentality out of fear. If you can't make it to the richer side of society, the alternative is a bad one. We do not have a safety net to speak of in this country, and every study shows that what constitutes an average life here is one full of poor health, poor diet, dull work if it can be found, etc. You can see it in the rising suicide rates! So of course anyone with a clue is going to drop their hobbies and bust tail to try to get ahead. As wealth inequality continues its increase, you'll only see more of this desperation.
> Google tells me that the most common reason for hospitalization in the US is childbirth. Thankfully, here in San Francisco, that would only set me back $15,000
Surely this is not true?
Does having kids just bankrupt ordinary people in the US or what?
I'm not asking about exceptional cases, like what is the normal way of dealing with having to pay $15,000 just to have a baby climb out of your body, when I'm assuming most people don't have that much money?
There's a reason for the saying: "The Rich get Richer and the Poor get Children". Perversely having children is a "luxury" many people simply cannot afford.
The happiness a "bundle of joy" should bring to the family is often replaced by additional stress of having to work a "better paying" (but often soul-destroying) job to be able to afford the bigger house, school/education, extra curricular activities like sports/music/ballet and eventually college tuition.
Conrad Bastable's well-researched post could easily have concluded that having kids "too early" will bankrupt a family.
The solution/answer is affordable housing. Housing is the single biggest "expense" for all people/families. Which is why it's the problem I want to tackle personally: https://github.com/dwyl/home
The fact that merely giving birth to a child in SF is $15k is mind-boggling. The "Government" needs to fix that or risk population decline catastrophe which will have many knock-on effects!
SF should follow the model from Finland where young parents/mothers are given cash incentives and all FREE healthcare: https://www.kela.fi/web/en/families
Apologies if this unsolicited advice comes off as rude, but consider easing up on the italicizing and "quoting" of random words. It makes your writing style hard to read and waters down the effect when you do each once per paragraph.
> The fact that merely giving birth to a child in SF is $15k is mind-boggling. The "Government" needs to fix that or risk population decline catastrophe which will have many knock-on effects!
The fertility and associated problems of local population can be completely ignored by the government of country like US - country with low population density, predictable steady population growth, and always a large group of people around the world willing to immigrate into the country. If not you, it's going to be someone else.
But if I understand it correctly, for some unfathomable reason American health insurance policies usually have a deductible on them - so even if you are insured, you could still be paying few thousand dollars out of your pocket, no? That's insane.
That's an average. The problem is the huge variance. Also just because you have heath insurance doesn't necessarily mean your insurance will pick up the tab.
Does healthcare insurance pay for that in the US ? In the EU, this is considered a personal life-choice procedure and very rarely handled by insurances - like cosmetic surgery. (being the EU though, you can get it for free using public healthcare)
On average yes but if there are complications or the hospital does some billing shenanigans it may cost you much more and there is almost no way to protect yourself from that other than just having a lot of money.
Our medical costs are so out of control it's not funny. Many years ago (i.e. last century) you'd go to the doctor and either they'd treat you on the spot or possibly prescribe something for most common ailments. And if that didn't work, you'd go back and then they'd run some tests and/or send you to a specialist. Today you go to your doctor, who most likely refers you to a specialist, who orders tests from a lab (of course each step racks up costs)... then maybe you get your prescription. Didn't work? Rinse and repeat with a more specialized specialist. Part of it is CYA to protect from liability, part of it is just the health care industry growing out of control.
Maybe the problem is insurance networks. This incentivizes doctors and hospitals to play by the rules of high-revenue / high-payout insurance providers, whose revenues are high because of those rules.
> ...unless of course we needed a C-section, in which case it’ll be a casual $30,000.
In India, we got c-section done in a luxurious hospital in a suite ward for slightly over $1K. About 80% of that was covered by insurance. Even if it wasn't that kind of money is a typical middle class family in India can easily afford. Note that I'm talking about top of the line hospital so the median cost for a c-section is somewhere around $500.
I guess what I'm trying to say is that I'm really blown away by that kind of cost difference. In a developed country shouldn't health be more affordable? No wonder medical tourism is on the rise in India.
If it's not the birth itself, it doesn't stop there. No protected time off, expensive, subpar childcare options, long work hours if you want to advance your career. One way or another, you are punished for having kids.
Unless you're really rich. It's now more of a status symbol amongst the rich. "Oh you have 5 kids? Two nannies, a cook too. That's the life!".
It doesn't bankrupt us, but it does cost money. Not really the childbirth itself... that is a one time cost, and it varies greatly with 15K being the high end. But food, housing, education, clothing, and everything else you provide kids, not the least of which is health care.... it all adds up. To about a quarter of a million over time, if you believe the analysts.
So with 3 kids, I'm likely $750K down on my wealth. As a tech worker, that is not bankrupt. But if I were living closer to poverty? Then the problem is less about my personal wealth and more about where I choose to cut corners when raising the kids.
It's patchwork. They can't turn you away in an emergency, and Medicaid covers expenses for the poor. An uninsured family member recently had their unexpectedly complicated delivery written off entirely under the hospital's charity guidelines.
But I recall reading a vivid passage about ten years ago, talking about the difference between rich and poor maternity wards: the wailing.
Anesthesia is an elective expense in childbirth, not always covered by Medicaid.
My wife and I had a child in Canada with about as extreme a complication as you can get (transferred to Level 3 ICU for the sake of mother and baby). We calculated that it would have cost at least $200k in the US in direct costs, let alone things we couldn't quite get a price for (medication, the hourly rate of the over 20 medical professionals in the room during delivery, etc.). Would have ruined us for sure if out of pocket.
That is correct. To corroborate: my health insurance contract states I must pay $13,600 towards my medical expenses (this is AFTER premiums) per year, before they will begin paying on my behalf.
Health insurance will cover much of it, but more importantly Northern California is overpriced for medical procedures. Boston is $5,000 less and has equally good hospitals. And St. Louis is down at $6,000 and has really good hospitals as well.
I had a friend who got an appendectomy at Stanford that was paid for by Google (she was on business travel, works in the London office) and the price was obscene, far above what should ever be charged, literally 10x what other hospitals charge. That place is crazy.
It’s not overpriced if there is no monopoly. No one is stopping other providers from moving to Northern California and stealing business by offering lower prices. If people want to live in a place with great weather, outdoors, food, and career opportunities, then they have to compete for it because lots of other people do too, and hence they have to compete to purchase things like homes and service from healthcare providers.
Most insurance plans that allow access to providers in a broad network without a referral (these are often dubbed "PPO" or "high deductible" plans) have an annual out of pocket maximum that the insured will be required to pay before the insurance covers all remaining expenses. E.g., the maximum for "family" coverage on my plan is $5400.
It's commonly said that having a baby will result in costs that exceed your out of pocket max, so you can think of the out of pocket max as the real cost to a family on one of these for the medical services from prenatal care through the birth. Caveat: Your accumulation towards this maximum will typically reset to 0 at the beginning of the calendar year, so try to finish your pregnancy before 12/31.
Even with a good health care package, a friend paid $10 thousand dollars (his maximum deductible) for the first year of one of his children, due to infant allergies.
That is not what most people consider a 'good' health care package. That would be considered a 'high deductible' plan.
When people talk about 'good' health care plans in the US they tend to think of traditional low deductible PPO. Those tend to have family deductibles in the $500-1k range.
Though the employee premium differences might add up to more than 10K in the face of a 'good' health care plan so its largely not relevant to the argument about health care costs in a nation vs nation way (though you'd want to include tax burden for health insurance in that case).
It's worth noting, the birth rate here in CA has been reducing for the last 30 years and recently has reached a 100 year low. It's currently lower than it was during the great depression.
Having a child is really expensive if you don't have health insurance. You can negotiate that cost in advance, but I don't know if people really do that very often.
It costs around the same in Europe if you don't have insurance. I'm pretty sure it's the same in the USA - this is the rate that would be charged to your insurance company. Rates are way lower for uninsured people if you ask them and tell them that you're not insured (I got a bill lowered 10 times when I broke my hand); and of course most people have some kind of insurance.
To the people downvoting: please read properly. If you move your place of residence outside your country, you're no longer insured, and that's what I'm talking about - I specifically said "if you don't have insurance".
Actually in Italy you don't pay a dime, unless you want to. The level of care you get varies by region, but is generally pretty good, especially for regular, mass events like birth.
That's absolutely not true. If it is, name an EU country where that is the case. If you are a citizen of an EU country, you are entitled to use the healthcare system in that country(and any other EU state), purely by virtue of being a citizen.
The only case that would maybe trigger a payment would be if you were a visitor to EU and had a baby - but most likely no hospital would bill you as hospitals are just not equipped for billing, they don't have the staff or the equipment to do such weird things as issue bills for treatment to people. I know at least several non-EU people who had treatment in EU and no one ever asked them for any insurance info to bill them, unless it's something major and very very expensive there's just no point, it would most likely cost the hospital more to figure out how much and how to bill you in the first place.
I think it would have helped if you specified Czech rather than "Europe", because it's a big place and it looks like many of the smaller countries have this kind of non-public system. The rules appear to be complicated: https://www.kancelarzp.cz/en/links-info-en/health-insurance-...
It sounds like there's a hole for people to fall in: if you're a Czech national, but not resident nor employed in Czech Republic, but in the country anyway, and you don't have private insurance, then you have a problem.
(It looks like if you're a resident proper in another EU country with resident-based healthcare, such as the UK, then that would work for EHIC purposes if you visited Czech Republic.)
It's free in The Netherlands. Well, not technically free but it's covered by the universal healthcare so it won't cost you a dime. (FYI the basic healthcare plans all cover the same regardless of insurance company. It covers nearly everything that you could go bankrupt on. There are extra packages that cover additional care like physical therapy or dentist costs. A basic plan is around EUR 90,- per month with a deductible of EUR 385,- per annum, but there's no deductible for MD visits and, yes, childbirth/neonatal care).
Virtually all of Europe has either publicly sponsored and regulated universal health care or publicly provided universal healthcare.[1]
So if an EU citizen moves to another EU country, there's no problem.
An average hospital in The Netherlands (#1 in quality in Europe [2], but #6 in costs) charges the insurance company between €607 (natural birth) and €4450 (c-section).
No. Prenatal care, childbirth and postnatal care are entirely free in Portugal and in most European countries I know of. In Portugal it's both free and either best or second best in world ranking.
In Denmark it costs 0, also since we're raising the next generation of payers into the tax system we get paid money quarterly (about $700 [guesstimate] for the first couple years decreasing over time, our 9 year old gets a governmental stipend of $200 per quarter [another guesstimate])
I guess what I'm trying to say as someone who lived a lot of years in the U.S - why the hell they gotta screw you so hard there?
on edit: of course I should also specify that Denmark is pretty capitalistic, so you pay for your kindergarten once you enroll the kids in there and that will cost more per month then you are getting in stipend.
> The sticker price of college pre-loan or pre-financial-aid is about the same as the median net worth of married couples in America. Just enough to hit the reset button on those savings.
I know someone who works in a warehouse. She's done that for a while, she's good at her job, and management wants to promote her but can't -- because she doesn't have a degree. They told her as much: if she gets a degree, they'll promote her, but without one they can't, because HR says managers need degrees.
I have a degree, but it isn't a degree from a good college in a useful field, which it seems you need nowadays to get a job better than warehouse manager. I didn't know this, and neither did my parents; they just figured that you need the piece of paper, and that's it. But people with a higher-class background did know that.
And for those people... well, class mobility isn't in their interests, now is it?
(It's worth remembering that colleges themselves switched from academic performance to "holistic admissions"... to ensure that they remained a preserve for the hereditary upper class.)
Here’s a controversial perspective. Maybe most people’s expectations are too lofty, and their abilities much lower than the think they are.
In 2000, less than 25% of the working popultion had a bachelors degree. Today, every young person I talk to expects to finish a Phd, JD, and MBA. And, now everyone wants to live in the trendiest (highest-cost areas). There are plenty of places in the US where a house can be purcahsed for under $100k.
Unless you came from wealth, or you’re definitely in the top 1% of your peers, maybe set your expectations a bit lower. Or, at least be patient as you work your way up. Build wealth the old fashion way (like we did 25 years ago) - get a menial job (i.e. “in the mail room”), genuinely try to help your bosses (not compete with them), slowly build your reputation and circle of influence, take night classes at the community college, live below your means, save, etc.
What the linked article is trying to explain is that the opposite is true. It isn't that everyone wants to live in the trendiest areas, it's that they _have_ to in order to find a job that has any hope of paying off their debts fast enough for them to save up enough so that when the next huge expense comes through they can afford it... likely taking on more debt even so.
It isn't that everyone wants a degree - certainly not, given the price - but if you don't have one then you don't even have a chance of making enough savings to afford housing, healthcare, education for your children, et cetera.
People _can't_ "set their expectations a bit lower". Your options are to have no expectations, and accept that you're not going to be able to provide for your children, or to join the same rat race as everybody else and get locked into this cycle of wildly increasing prices. There isn't a middle ground for people to aim at any more.
I disagree. I think it would be interesting to do that same article, but replace the MIT tuition with that of a decent in state school, and replace the housing prices with those of a medium/large midwest city like Omaha, Cleveland, or Pittsburg.
Salaries don't scale like rent does. In Cleveland, you can get a 1 bedroom for around 900 dollars, in SF, that's 3.5k+. That means to maintain the same purchasing power and keeping monthly rent at 1/40th of salary, you'd need to earn 36k in CLE, but 140k in SF. 140k isn't out of reach in the Bay Area at all, but usually requires a college degree, while 36k in CLE is in reach of those without a college degree, and numbers twice that high are in reach of those with a STEM degree.
This means you're going to have more disposable income, not having to deal with 5%+ rent increases every year, pay less in the higher tax brackets, and be able to buy a house without paying nearly as much interest. All just because you stop trying to be the top 1% and live in some place that isn't NYC or SF, but is still in the top 50 largest cities in the US.
Thanks for summarizing this here. This is spot on. And of course I'm being a bit hyperbolic -- like I said, the median American still gets to build wealth. Just not as much as their parents. Or their parents' parents.
The only "expectation" I took as a granted was that a given person not-so-far-from-the-median can build Wealth in America. If you're willing to set THAT one lower, then perhaps there is no problem now or on the horizon...
I commented elsewhere that it doesn't seem to me that "Economic Surplus" / "Building Wealth" is an axiom of any system. So perhaps that expectation should in fact be lowered. But that's certainly not something my peers or I are willing to do. Thus the race.
> but if you don't have one then you don't even have a chance of making enough savings to afford housing, healthcare, education for your children, et cetera.
Where does this idea come from?
According to the OECD, only 48% of American adults have a post-secondary education. I find it hard to believe that 52% of Americans truly cannot afford housing, healthcare, education for children, etc. I might even bet that the 52% have an easier time (especially with shelter), as there seems to be a correlation between the desire to live in an expensive city and having post-secondary attainment.
Additionally, wages are stagnant. The rapid rise in post-secondary attainment mentioned by the parent has done nothing to increase incomes among the workforce. The article points out that incomes have been on the decline for those without a post-secondary education. But misses the obvious: As colleges select for the most successful people, the most successful people without a degree who brought up the average in previous years now belong to the college group.
People can't set their expectations lower, but they can set them higher by not falling prey to misleading interpretations of the data surrounding college. The data is abundantly clear that there has been no advantage in the significant rise in post-secondary attainment. If anything, people are worse off now because of it.
Those seem to be two very extreme options. I’m certain that there are hundreds of other options available. I mean I can think of more than a dozen just off the top of my head.
In this case, the author appears to have a degree from MIT and a background in finance and engineering. Out of curiousity, I did a job search (outside the trendy areas), and there are plenty of high-paying jobs available to them. A person would just have to live in a boring area or take on a boring job, or live a boring lifestyle. I guess I’m not understanding why seemingly few people seem to accept trade offs these days.
> Unless you came from wealth, or you’re definitely in the top 1% of your peers, maybe set your expectations a bit lower.
Why should any of us set our expectations lower? Because you say so? Why is the best piece of the cake reserved to some 1% folks largely with inherited wealth? Why should 1 billion Chinese set their expectations lower? Because they happen to not be born in Silicon Valley and their father doesn't run a law firm in Manhattan?
This is called wealth inequality to the max and it will crash our societies sooner or later. Pseudo-meritocracies will eventually break their necks over this and the developing crisis of democracy is one step into that direction. 2008 proved that the system is utterly broken and since then we put on a few bandaids at best.
> There are plenty of places in the US where a house can be purchased for under $100k.
Sure, those places just don't have the jobs people strive after, for example to escape automation in the 21st century.
I’m just providing an alternative perspective. It’s certainly not a mandate. If you know that you’re exceptional, then by all means go be exceptional. But, the vast majority of people aren’t exceptional. And, the truly exceptional are probably out there working their ass off right now, not reading HN.
High expectations = high chances for disappointment. I was exceptional in high school. One day a teacher bluntly told my “gifted” class, “You guys aren’t special. You may feel special right now. But, there are millions of people better than you. Be ready for disappointment.” That advice hurt, and I hated that teacher. But, the truth is that even after being lucky and working hard for 20+ years, the best I got was to be an exceptional person’s captain. And, only through helping that person was I able to retire early. YMMV.
Due to gains in efficiency and scale, it’s more winner take all than ever before. Look at the public markets, it’s halved in the number of companies even listed on it, and of those listed there’s basically a handful capturing all the gains. The bigger companies will continue to gain pricing power so unless you’re in some regulated niche like doctors, expect to not be in control of your destiny if all you plan to do is work a job.
The parent poster has a very skewed opinion. My observations are similar to yours, in fact I’m not sure of anyone outside medical professions who did graduate schools right after a bachelors.
The biggest trick that the FED has pulled is that it convinced the world that inflation is at 2% yoy. What a disgraceful joke!
Had they been real about the inflation, the interest rates on savings would've been higher. Sure, it would crash the stock market but the stock market only benefits the rich disproportionately. Not teachers, admins, nurses etc.
Oh btw, has anyone noticed that 20% of the 20 trillion dollar US GDP is healthcare? That's 4 trillions spent on healthcare every year!!
> But unlike the prophecies of talking cartoon bears, all this money didn’t drive inflation through the roof and crash the stock market. It doesn’t seem to have really gone…anywhere.
It sure did drive inflation. It went into asset prices, which have been massively inflated by low interest rates.
Absurdly, the article is ranting about the rate at which real estate and rent are increasing, then pretending the inflation from printing all that money didn't go anywhere. From one paragraph to the next, somehow the author managed that disconnect. The Fed's zero interest rate policy, spurred the big recovery in housing prices (intentionally), and has enabled people to spend more on housing via artificially cheap mortgages than they otherwise could have, pushing prices up rapidly.
Inflation, at least in Australia where I live is measured as a “basket of goods”. I totally agree that inflation has gone higher than it seems reported, but I think that is due to categories that are not properly captured in the basket.
No elected government wants to do a review on a metric that will make them look bad unfortunately if it was corrected.
> But unlike the prophecies of talking cartoon bears, all this money didn’t drive inflation through the roof and crash the stock market. It doesn’t seem to have really gone…anywhere.
This essay is obviously backed by a lot of thought, but this specific conclusion is a bit glib. Talking of things which are exponential, 2 trillion dollars is a few magnitudes bigger than 2 million dollars. That is more than the annual GDP of most countries.
The banks havn't lost that money under the couch cushions, they will be using it to their advantage. If it is to their best advantage to have it in excess reserves, that probably means something complicated is happening that is letting them make out like bandits.
If they aren't using it to influence the wider economy, we really need to ask what exactly they are doing with it. It is an extraordinary claim that it "doesn't seem to have gone anywhere", implying that somehow it isn't doing something.
For sure, this was a bit intentionally glib. My own understanding of macroeconomics is relatively light, so I linked to two different perspectives on this event and glossed by it a bit.
The point I was trying to make (suggest? raise?) was that regardless of your views on printing $2,000,000,000,000, the crazy Cost-Disease-funded-by-debt does not appear to be a symptom of a banking system gone mad chasing risk (ala 2008). Which means it can rationally go higher still, which means it will keep going higher, past the point where all surplus wealth generated by the median Americans is consumed.
I was just trying understand what was fueling this fire, and whether it was rational or irrational exuberance.
I didn't put it in my comment because I have no evidence, but my first guess was that the cost-disease-funded-by-debt was exactly caused by those 2 trillion. My instinct is as follows:
* The reserves for fractional reserve banking are excess reserves at the Fed + other reserves.
* Fed is safer than other, so large portions of the banks reserves sit with the fed.
* New money is created by the banks as loans.
* The excess reserves allow massive lending (the multiplier was something like 20x if I recall).
* Banks now have an income stream & massive cash reserves. Actors willing to take on debt push any capitalists smaller than a bank out of capital markets.
Basically, I assume these "excess" reserves are misleadingly labeled and are actually in use relative to the fractional reserve system.
That is obviously a complicated guess with no evidence, and you look like you've put more effort into research than me, but it fails the sniff test that 2 trillion exists and is having literally no impact. I bet it is and it is just complicated enough that it is hard to pin down.
Readit News
And then there are the absurdities. Where I went to school they now have all sorts of fancy places to eat on campus. I can't imagine students paying $4 a couple times a day for a Starbucks coffee when they're paying with borrowed money. This is just grossly irresponsible. I imagine the justification is "but everybody does it". The problem is nobody is teaching the general public anything about managing their money or evaluating costs of anything.
Sure, if you get a good job you can pay off your loan in X years, but that has nothing to do with the fact that you drastically overpaid for what you got (services provided).
This is exactly the reason why I don't donate to my alma mater, neither should most people. Less "alma mater" and more "greedy mater who funnels taxpayer money into a growing bureaucracy".
When I was in college, undergrads would have to purchase a meal plan, which could take a few forms. You could have a designated number of meals, and buy things from the cafeteria that qualified as a meal (one entree, one side, one drink), or you could have balance of food dollars which could only be spent on campus. There were also plans that involved a mix of those two types of currencies, but the better plan was to get the food dollars (which were called Declining, for whatever reason), and use that to buy food, because that gave you more flexibility. You could spend Declining at the cafeterias, at the corner store, at the Starbucks on campus, it was literally cash that you could only spend on the campus and only on food.
At the end of the academic year, though, your balance gets zeroed out, no matter how much you have left in Declining. So every year starting in April or so, people would start buying stuff in bulk from the corner store or from the Starbucks just to get something out of the money that was going to evaporate. My senior year, my girlfriend spent like two hundred dollars on coffee beans and gave them to people as presents, because what else was she going to do? I myself spent like sixty bucks on fifteen pounds of sour patch kids.
No reason to not buy that four dollar coffee every day when the money's already spent and you're not getting it back.
In standard economic teaching, Is not this what happens when there is a cartel acting?
Yeah, this is exactly a rephrasing of the point I was trying to get across.
That's the most important question. Same applies to health care. Where does the money actually go and how has that changed over the last 50 years? Everybody immediately complains about their favorite scapegoat but there is no comprehensive accounting.
It is important to note that relaxation of regulation is important as well, since the direction of that easement usually favors banks and big business[1] - it's a matter of perspective. Always ask what the true purpose of a political action or movement is and follow the money; more often than not there's an ulterior motive.
"All politicians should serve two terms: one in office and one in jail." ~My Grandfather
[1] https://thehill.com/blogs/congress-blog/economy-budget/28362...
A member of one of the administration teams at ASU (a dean or someone of similar position) told my sister, "everyone carries debt," as if to justify that 40k a year at an honors college is a valuable investment compared to virtually any alternative.
The comment was so asinine and destructive, I can only gather as a blanket statement that the members of administration there are either incompetent to help direct students, or are explicitly volatile for one's growth in the context of broader society, and are out to protect the institution's interests. It may be sensible to assume a bit of both.
I'm not defending it, but there isn't Trader Joe's or Aldi of college yet (slightly better than average generic product with low/no frills).
If you want the answer: college loans are very lucrative, so they are pushed on the consumers heavily, just like home loans were 10-15 years ago. The people that profit from that benefit from irresponsible behavior and a broken system.
Community college.
The second problem is that even if this was a reasonable system, people estimate the risk associated with getting the job paying X very poorly, colleges exploit this, even if only few people get a job paying X everyone pays the same costly multiple of X.
Doubtful. If that were true, you would pay differently for a English degree than a Chemical Engineering degree. And I've never seen that.
We could literally print nearly free wealth, inflation free, if we just opened up land for development. It's a win win win.
Doesn't neighboring real estate value decline as you put more capacity on the market? You can't print real estate wealth anymore than you can print dollars without consequence. At the end of the day, all of this "value" is trying to get dibs on the output of labor today (housing prices are usually tied to incomes, with some distorted market exceptions).
The more interesting question is: can you provide these basic necessities at such a low cost that you can drastically reduce the labor output required to enjoy them? What if you only had to work three days a week to meet your basic needs? What if healthcare inflation wasn't consuming wage increases as rapidly as it is?
> "Get rich or die trying"
I have always seen this as USA's major flaws. You are not supposed to have a good life but to risk everything for riches. This was working when the rest of the world was under-developed. USA citizens had so much more than the rest. As the world catches up and surpases USA its problems are getting bigger and bigger. If ever the dollar stops being the defacto world currency I can't even imagine what will happen.
How many TV shows I have seen that people laugh at the janitor looking down to him? There is no pride in a job well done, there is no self-fulfilment on doing what is correct. Money and fame are the only thing that matter. You even have religious groups that see economic wealth as a sign of God blessing!
Other countries have different and even bigger problems, but meanwhile the american dream is about economic aboundance and not about having a good life you are doom to a rat race.
> The taxman. I’d like 30% please. 40% if you got a bonus this year. Good job. > Medical conditions! Your income means you have to pay out of pocket
The fact that your taxes are disconnected from a public health care system is scary. I am very proud of paying taxes that helps people to survive cancer, to get an education or to live with a disability. Your problem is not that you have to pay taxes but that the taxes are not used to give you back services as it was designed to be done (and that rich people does not pay their fair share, and that is something that it is also true in Europe).
Well it turns out that is HIGHLY regulated. You need a dealers license which means you need a building to act as the place of business (can't be your residence), the business has to have $75,000 in assets or you have to get bonded. You have to pay insurance. You need signage. You, of course, have to pay taxes on everything. Basically by the time everyone takes their little piece there's nothing left for you.
I think this happens in any industry. It gets regulated to the point of a normal person not being able to participate. You dont own a bakery, you work for the bakery. You don't own a corner store, you work at Walmart.
What I see is a lot of closed doors yet we still act like they're open. They aren't real options anymore. So what are the real options?
There might be situations where corrupt government is inhibiting competition for the gain of particular parties, but some things do make sense, such as being bonded when the risk of the work you are performing could be result in large costs.
Dead Comment
Surely this is not true?
Does having kids just bankrupt ordinary people in the US or what?
I'm not asking about exceptional cases, like what is the normal way of dealing with having to pay $15,000 just to have a baby climb out of your body, when I'm assuming most people don't have that much money?
The happiness a "bundle of joy" should bring to the family is often replaced by additional stress of having to work a "better paying" (but often soul-destroying) job to be able to afford the bigger house, school/education, extra curricular activities like sports/music/ballet and eventually college tuition.
Conrad Bastable's well-researched post could easily have concluded that having kids "too early" will bankrupt a family.
The solution/answer is affordable housing. Housing is the single biggest "expense" for all people/families. Which is why it's the problem I want to tackle personally: https://github.com/dwyl/home
The fact that merely giving birth to a child in SF is $15k is mind-boggling. The "Government" needs to fix that or risk population decline catastrophe which will have many knock-on effects!
SF should follow the model from Finland where young parents/mothers are given cash incentives and all FREE healthcare: https://www.kela.fi/web/en/families
The fertility and associated problems of local population can be completely ignored by the government of country like US - country with low population density, predictable steady population growth, and always a large group of people around the world willing to immigrate into the country. If not you, it's going to be someone else.
That's an average. The problem is the huge variance. Also just because you have heath insurance doesn't necessarily mean your insurance will pick up the tab.
Do most people just decide to do it at home and take the risk?
> ...unless of course we needed a C-section, in which case it’ll be a casual $30,000.
In India, we got c-section done in a luxurious hospital in a suite ward for slightly over $1K. About 80% of that was covered by insurance. Even if it wasn't that kind of money is a typical middle class family in India can easily afford. Note that I'm talking about top of the line hospital so the median cost for a c-section is somewhere around $500.
I guess what I'm trying to say is that I'm really blown away by that kind of cost difference. In a developed country shouldn't health be more affordable? No wonder medical tourism is on the rise in India.
This cost disparity is not one of developed world vs undeveloped, it is one of an insane health care system vs a rational one.
Unless you're really rich. It's now more of a status symbol amongst the rich. "Oh you have 5 kids? Two nannies, a cook too. That's the life!".
So with 3 kids, I'm likely $750K down on my wealth. As a tech worker, that is not bankrupt. But if I were living closer to poverty? Then the problem is less about my personal wealth and more about where I choose to cut corners when raising the kids.
But I recall reading a vivid passage about ten years ago, talking about the difference between rich and poor maternity wards: the wailing.
Anesthesia is an elective expense in childbirth, not always covered by Medicaid.
I had a friend who got an appendectomy at Stanford that was paid for by Google (she was on business travel, works in the London office) and the price was obscene, far above what should ever be charged, literally 10x what other hospitals charge. That place is crazy.
It's commonly said that having a baby will result in costs that exceed your out of pocket max, so you can think of the out of pocket max as the real cost to a family on one of these for the medical services from prenatal care through the birth. Caveat: Your accumulation towards this maximum will typically reset to 0 at the beginning of the calendar year, so try to finish your pregnancy before 12/31.
When people talk about 'good' health care plans in the US they tend to think of traditional low deductible PPO. Those tend to have family deductibles in the $500-1k range.
Though the employee premium differences might add up to more than 10K in the face of a 'good' health care plan so its largely not relevant to the argument about health care costs in a nation vs nation way (though you'd want to include tax burden for health insurance in that case).
Deleted Comment
To the people downvoting: please read properly. If you move your place of residence outside your country, you're no longer insured, and that's what I'm talking about - I specifically said "if you don't have insurance".
The only case that would maybe trigger a payment would be if you were a visitor to EU and had a baby - but most likely no hospital would bill you as hospitals are just not equipped for billing, they don't have the staff or the equipment to do such weird things as issue bills for treatment to people. I know at least several non-EU people who had treatment in EU and no one ever asked them for any insurance info to bill them, unless it's something major and very very expensive there's just no point, it would most likely cost the hospital more to figure out how much and how to bill you in the first place.
It sounds like there's a hole for people to fall in: if you're a Czech national, but not resident nor employed in Czech Republic, but in the country anyway, and you don't have private insurance, then you have a problem.
(It looks like if you're a resident proper in another EU country with resident-based healthcare, such as the UK, then that would work for EHIC purposes if you visited Czech Republic.)
So if an EU citizen moves to another EU country, there's no problem.
An average hospital in The Netherlands (#1 in quality in Europe [2], but #6 in costs) charges the insurance company between €607 (natural birth) and €4450 (c-section).
[1] https://en.wikipedia.org/wiki/List_of_countries_with_univers...
[2] https://en.wikipedia.org/wiki/Healthcare_in_Europe#European_...
I guess what I'm trying to say as someone who lived a lot of years in the U.S - why the hell they gotta screw you so hard there?
on edit: of course I should also specify that Denmark is pretty capitalistic, so you pay for your kindergarten once you enroll the kids in there and that will cost more per month then you are getting in stipend.
I know someone who works in a warehouse. She's done that for a while, she's good at her job, and management wants to promote her but can't -- because she doesn't have a degree. They told her as much: if she gets a degree, they'll promote her, but without one they can't, because HR says managers need degrees.
I have a degree, but it isn't a degree from a good college in a useful field, which it seems you need nowadays to get a job better than warehouse manager. I didn't know this, and neither did my parents; they just figured that you need the piece of paper, and that's it. But people with a higher-class background did know that.
And for those people... well, class mobility isn't in their interests, now is it?
(It's worth remembering that colleges themselves switched from academic performance to "holistic admissions"... to ensure that they remained a preserve for the hereditary upper class.)
In 2000, less than 25% of the working popultion had a bachelors degree. Today, every young person I talk to expects to finish a Phd, JD, and MBA. And, now everyone wants to live in the trendiest (highest-cost areas). There are plenty of places in the US where a house can be purcahsed for under $100k.
Unless you came from wealth, or you’re definitely in the top 1% of your peers, maybe set your expectations a bit lower. Or, at least be patient as you work your way up. Build wealth the old fashion way (like we did 25 years ago) - get a menial job (i.e. “in the mail room”), genuinely try to help your bosses (not compete with them), slowly build your reputation and circle of influence, take night classes at the community college, live below your means, save, etc.
It isn't that everyone wants a degree - certainly not, given the price - but if you don't have one then you don't even have a chance of making enough savings to afford housing, healthcare, education for your children, et cetera.
People _can't_ "set their expectations a bit lower". Your options are to have no expectations, and accept that you're not going to be able to provide for your children, or to join the same rat race as everybody else and get locked into this cycle of wildly increasing prices. There isn't a middle ground for people to aim at any more.
Salaries don't scale like rent does. In Cleveland, you can get a 1 bedroom for around 900 dollars, in SF, that's 3.5k+. That means to maintain the same purchasing power and keeping monthly rent at 1/40th of salary, you'd need to earn 36k in CLE, but 140k in SF. 140k isn't out of reach in the Bay Area at all, but usually requires a college degree, while 36k in CLE is in reach of those without a college degree, and numbers twice that high are in reach of those with a STEM degree.
This means you're going to have more disposable income, not having to deal with 5%+ rent increases every year, pay less in the higher tax brackets, and be able to buy a house without paying nearly as much interest. All just because you stop trying to be the top 1% and live in some place that isn't NYC or SF, but is still in the top 50 largest cities in the US.
Thanks for summarizing this here. This is spot on. And of course I'm being a bit hyperbolic -- like I said, the median American still gets to build wealth. Just not as much as their parents. Or their parents' parents.
The only "expectation" I took as a granted was that a given person not-so-far-from-the-median can build Wealth in America. If you're willing to set THAT one lower, then perhaps there is no problem now or on the horizon...
I commented elsewhere that it doesn't seem to me that "Economic Surplus" / "Building Wealth" is an axiom of any system. So perhaps that expectation should in fact be lowered. But that's certainly not something my peers or I are willing to do. Thus the race.
Where does this idea come from?
According to the OECD, only 48% of American adults have a post-secondary education. I find it hard to believe that 52% of Americans truly cannot afford housing, healthcare, education for children, etc. I might even bet that the 52% have an easier time (especially with shelter), as there seems to be a correlation between the desire to live in an expensive city and having post-secondary attainment.
Additionally, wages are stagnant. The rapid rise in post-secondary attainment mentioned by the parent has done nothing to increase incomes among the workforce. The article points out that incomes have been on the decline for those without a post-secondary education. But misses the obvious: As colleges select for the most successful people, the most successful people without a degree who brought up the average in previous years now belong to the college group.
People can't set their expectations lower, but they can set them higher by not falling prey to misleading interpretations of the data surrounding college. The data is abundantly clear that there has been no advantage in the significant rise in post-secondary attainment. If anything, people are worse off now because of it.
In this case, the author appears to have a degree from MIT and a background in finance and engineering. Out of curiousity, I did a job search (outside the trendy areas), and there are plenty of high-paying jobs available to them. A person would just have to live in a boring area or take on a boring job, or live a boring lifestyle. I guess I’m not understanding why seemingly few people seem to accept trade offs these days.
Why should any of us set our expectations lower? Because you say so? Why is the best piece of the cake reserved to some 1% folks largely with inherited wealth? Why should 1 billion Chinese set their expectations lower? Because they happen to not be born in Silicon Valley and their father doesn't run a law firm in Manhattan?
This is called wealth inequality to the max and it will crash our societies sooner or later. Pseudo-meritocracies will eventually break their necks over this and the developing crisis of democracy is one step into that direction. 2008 proved that the system is utterly broken and since then we put on a few bandaids at best.
> There are plenty of places in the US where a house can be purchased for under $100k.
Sure, those places just don't have the jobs people strive after, for example to escape automation in the 21st century.
High expectations = high chances for disappointment. I was exceptional in high school. One day a teacher bluntly told my “gifted” class, “You guys aren’t special. You may feel special right now. But, there are millions of people better than you. Be ready for disappointment.” That advice hurt, and I hated that teacher. But, the truth is that even after being lucky and working hard for 20+ years, the best I got was to be an exceptional person’s captain. And, only through helping that person was I able to retire early. YMMV.
Had they been real about the inflation, the interest rates on savings would've been higher. Sure, it would crash the stock market but the stock market only benefits the rich disproportionately. Not teachers, admins, nurses etc.
Oh btw, has anyone noticed that 20% of the 20 trillion dollar US GDP is healthcare? That's 4 trillions spent on healthcare every year!!
I don't believe it either, or they are counting the wrong things.
5% avg inflation
It sure did drive inflation. It went into asset prices, which have been massively inflated by low interest rates.
Absurdly, the article is ranting about the rate at which real estate and rent are increasing, then pretending the inflation from printing all that money didn't go anywhere. From one paragraph to the next, somehow the author managed that disconnect. The Fed's zero interest rate policy, spurred the big recovery in housing prices (intentionally), and has enabled people to spend more on housing via artificially cheap mortgages than they otherwise could have, pushing prices up rapidly.
No elected government wants to do a review on a metric that will make them look bad unfortunately if it was corrected.
This essay is obviously backed by a lot of thought, but this specific conclusion is a bit glib. Talking of things which are exponential, 2 trillion dollars is a few magnitudes bigger than 2 million dollars. That is more than the annual GDP of most countries.
The banks havn't lost that money under the couch cushions, they will be using it to their advantage. If it is to their best advantage to have it in excess reserves, that probably means something complicated is happening that is letting them make out like bandits.
If they aren't using it to influence the wider economy, we really need to ask what exactly they are doing with it. It is an extraordinary claim that it "doesn't seem to have gone anywhere", implying that somehow it isn't doing something.
For sure, this was a bit intentionally glib. My own understanding of macroeconomics is relatively light, so I linked to two different perspectives on this event and glossed by it a bit.
The point I was trying to make (suggest? raise?) was that regardless of your views on printing $2,000,000,000,000, the crazy Cost-Disease-funded-by-debt does not appear to be a symptom of a banking system gone mad chasing risk (ala 2008). Which means it can rationally go higher still, which means it will keep going higher, past the point where all surplus wealth generated by the median Americans is consumed.
I was just trying understand what was fueling this fire, and whether it was rational or irrational exuberance.
I didn't put it in my comment because I have no evidence, but my first guess was that the cost-disease-funded-by-debt was exactly caused by those 2 trillion. My instinct is as follows:
* The reserves for fractional reserve banking are excess reserves at the Fed + other reserves.
* Fed is safer than other, so large portions of the banks reserves sit with the fed.
* New money is created by the banks as loans.
* The excess reserves allow massive lending (the multiplier was something like 20x if I recall).
* Banks now have an income stream & massive cash reserves. Actors willing to take on debt push any capitalists smaller than a bank out of capital markets.
Basically, I assume these "excess" reserves are misleadingly labeled and are actually in use relative to the fractional reserve system.
That is obviously a complicated guess with no evidence, and you look like you've put more effort into research than me, but it fails the sniff test that 2 trillion exists and is having literally no impact. I bet it is and it is just complicated enough that it is hard to pin down.