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 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.