Economic Decline measured by Big Macs per hour

On the basis of big mac per hour rate, living standards in the US fell 9% between 2007 and 2011, two and half percent a year. This agrees pretty well with cars and meat (two percent fewer cars and two percent less meat per person per year.)

Big Macs per hours 2007-2011

Big Macs per hours 2007-2011

Big mac prices from 2007 to 2011 rose 16%, which is suspiciously high since supposedly none of the components went up sixteen percent in the period according to the US official cpi, casting doubt on the official cpi.

Sixteen percent inflation accompanied by a six to nine percent fall in the standard of living is incompatible with Keynesian accounts of the crisis, and indicates a supply side account – that business is being terrorized by regulators.

Big macs are in themselves a broadly based inflation measure, because they are a little bit of everything, bread, meat, manufactured good, and service industry, and are a widely traded good. There is a lot of data suggesting the the big mac index is in fact a pretty good measure of inflation, and the cpi not necessarily a very good indicator of inflation. Professor Orely Ashenfelter complains that a lot of cpi prices are not actually measured, but are “imputed” (“Imputed” means that some anonymous government official under pressure to make the numbers come out right makes a guess about how many apples make an orange.)

It is not hyperinflation but it is substantially higher than official inflation.

The Big mac per hour rate indicates a broad based economic decline across the entire developed world (Western Europe falling at two percent a year, South Africa and Japan collapsing at seven to eight percent a year, see table six below and figure fifteen above.

Interestingly, the big mac per hour rate us that the problem set in long before 2007, it just got a lot worse after 2007. Living standards were disturbingly stagnant for a long time, then started to decline, and now are declining with disturbing speed.

I have long argued that in most economic, technological, and scientific fields, the US peaked in 1972, and has been in decline ever since, though of course progress in the very important field of the ultra small continues rapidly, with the US continuing to lead the world.

There is a lot of ruin in a nation. Looks like we are getting near our total. The overall picture is not “Obama fouled up”, or even “Bush fouled up and Obama continued to make it worse”, but rather “Western civilization is in decline, condition potentially terminal”.

The problem is simple: The moochers have a majority, and we cannot continue with them on the voting rolls. So either the franchise has to be restricted, or democracy ended altogether. The more drastic cure is likely to be the more politically feasible.

Mencius Moldbug suggests a bankruptcy proceeding, in which various financial claims upon the government are turned into shares, and the government reorganized as limited liability corporation, a form of organization that is well known to work effectively. This, however, is only feasible in an environment where people expect contracts to be honored, and debts to be paid, which is not the environment you get when a nation state defaults on its promises.  The environment may well more closely resemble anarcho-piratism.

The success of the corporate form of organization rests in substantial part on moral, legal, and social restraints against redistributing wealth from one class of shareholder to another.  In a breakup, legality is nonexistent, social constraints destroyed by bitterness and rage.  The success of the restoration settlement of 1660 was because the deal, and the official religion that they agreed to impose upon themselves, prohibited redistribution.  If everything is up for grabs, conflict will continue till there is nothing left.  To actually end the conflict, rather than merely create the sort of “stability” that Diocletian gave the Roman Empire in the west, it will be necessary to create an environment where redistributionists get the same treatment as white supremacists do today, or Puritans got in Restoration England.

The collapse of South Africa and, surprisingly, Japan is proceeding at about the same rate as the growth of China. Russia also shows extraordinary growth, so extraordinary as to suggest measurement error caused by bounceback from ruble crisis of 1998. In Russia, in the years shortly after 1998, big macs may not necessarily have been a broadly based good, due to difficulties in performing international transactions with a collapsed currency.  Professor Orely Ashenfelter notes that for big mac based statistics to be meaningful, the economy has to be sufficiently advanced and functional to support reasonable levels of production and consumption of big macs.

2 Responses to “Economic Decline measured by Big Macs per hour”

  1. jim says:

    Restoring federalism would require returning to the constitution, which would also require civil war, and would not fundamentally solve the problem, though it would help a great deal.

    Transferring power to the bureaucracies does not help. The bureaucracies are incapable of governing. The basic concept of government is Hobbes Leviathan, that many wills are submitted to a single will – which useful for many purposes, especially making war. But a bureaucracy is not a single will, so as in the financial crisis, you get tragedy of the commons. Everyone helps himself. You can fix the tragedy of the commons by enclosure, breaking up the commons, or by lordship and serfdom, submitting all the commoners to the will of the lord. Congress abandoning its power to bureaucracies is neither solution. In the financial crisis, enclosure would be de-regulating the banks so that the banks were free to pursue profitability rather than bureaucrats pursuing political correctness, and lordship and serfdom would be regulating them by someone with enough authority that he could have blown off political correctness when PC and affirmative action bankers started to make large numbers of million dollar loans to no-hablo-English unemployed wetbacks, someone who could be personally and individually blamed for the crisis if the financial system blew up, and had sufficient power to make it not blow up: Der Führerprinzip.

    That the enclosure solution (de-regulating the banks) would have worked is proven by the fact that the worst behaved banks, Countrywide and Washington Mutual, lost the most money, therefore their bad behavior was not motivated by desire for profits, but for political influence and the prestige of being lefter than thou. In the US, nearly all the money that was pissed away was pissed away by Fanny, Freddy, the HUD, Washington Mutual, and Countrywide bank, all of who put political correctness and the CRA far above profits. In the Bay Area in 2009, more than 99% of mortgages in foreclosure were mortgages to non asian minorities, mostly Mexicans, mostly illegals, mostly really really huge mortgages. Delegating power to the bureaucrats makes decisions more left wing political, not less left wing political. The bureaucracy and the professoriat is where the various leftist conspiracies send their most fanatical members to be rewarded for their fanaticism.

    The basic progressive strategy is to identify some real or imaginary problem, some noble or allegedly noble cause, proclaim that more power for the state is the solution, then obtain more power for the state, and then divide up that power between each of the innumerable conspiracies that compose the progressive movement, and then each conspiracy divides up its share of that power between its leading members. Hobbes Leviathan develops cancer, Parkinson’s disease, and multiple personality disorder. If Leviathan could have fixed the problem (or furthered the noble cause) by acting as a single individual with a single will, it cannot do so when the power is divided into thousands of small bite sized chunks.

    The short summary of the great financial crisis is that various left wing conspiracies gave us Basel and Basel II, and then proceeded to reward their loyal conspirators by granting them regulatory power, thus granting power over financial decisions to a faceless horde of left wing political extremists who had no interest in profitability, and no responsibility for losses.

  2. jim says:

    It is far from clear that a true return to Federalism would result in civil war. Even if we are talking secession (a great idea IMO), I don’t think the general will could currently stomach a fratricidal brawl

    They are not going to consult the general will. They would attempt to do a Ruby Ridge/Waco in the state capitol building, and all the mainstream media would totally support the feds once it started. Suppose, for example, that one of the states got serious about denying illegals and dead people the vote in state elections?

    What would happen? The Department of Justice and the supreme court would rule it illegal, and the feds would “enforce the law”. And if a hell of a lot of people get killed in the process, it is all due to racism.

Leave a Reply