Natasha Sarin of The Budget Lab at Yale joins us to discuss what "affordability" is, why neither Biden nor Trump delivered it, and what policies could produce it. We also take on "white people tacos."
Relatedly, some level of al la carte pricing is obviously a boon to consumers because they get to avoid paying for stuff they don't want. People who complain about having to pay to check bags, for example, I think are clearly wring. But I also think that "junk fees" are bad to the extent they make actual prices consumers will pay less clear. How to square this?
I think the difference is whether or not it’s mandatory. “Resort fees” aren’t something you choose whether you want or not. So at that point, the rate isn’t “really” $200/night; it’s $260 or whatever.
I’m surprised Ben wasn’t more familiar with black olives in tacos because I grew up in Idaho and black olives were 100% part of our white people taco night. There was also a mountain west taco chain called Taco John’s that I’m pretty sure used to feature black olives in their nachos or potato ole’s at the very least.
Come on guys... The "affordablity issue" is about reaching a tipping point related to the share of your income spent on necessities OVER GENERATIONS. The worst part is that you get locked in - especially if you are a home owner. Rates of people moving around has dropped significantly over time which hurts the dynamism of the economy and that lack of dynamism has been around for a couple decades. It's also very frustrating that China very easily does all of the things that we find it impossible to do. Biden and Trump are complete losers and they're in charge... It just feel likes the decline is everywhere. It's like when private equity raids a company... Profitability goes up (like economic metrics), but it feels like shit going to a job that gets worse and worse every day until the plant is closed for consolidation.
Sorry, here at Central Air you’re going to need to provide numbers if you need to vaguely whine like this. People living in the US today have the highest living standards ever, the idea that necessities in the aggregate eat up a higher share of income than they did for our parents is wrong, if you hold fixed what’s considered necessary.
Yeah, according to the (intentionally chosen pre-Trump) BLS publication "100 Years of US Consumer Spending," the following is the average expenditures on food over time:
1901 - 42.5%
1918 - 38%
1934 - 33.6%
1950 - 29.7%
1960 - 24.3% (noted as the first time that it was not the highest percentage of household expenditures)
1972 - 19.3% (noted as the first time that housing dramatically outstrips it)
1984 - 15%
1996 - 13.8%
2002 - 13.1%
The number for 2024 was about 10% (depending on source).
And, sure, some of that reduction in percentage has been eaten by things that are now considered necessities that were not in various previous historical periods. But, that means we have more things. Which in this conversation about economics is the definition of being richer. A person with food and a cell phone is richer than a person who just has food.
Now, housing has been a problem for a variety of reasons, and AI effects are a cause for concern. There has also arguably been something of a reduction in some facets of economic stability.
But the notion that Americans are not economically better off now than they were in 1950 or 1970 or 1990 is wild.
Are you a million years old? Who cares about 1950 or 1970 - life was so different then that comparison to now is absurd. Compare 1985 to now... The picture looks very different doesn't it? It's almost like the cost of food story is getting materially worse. This is while cars, houses, healthcare, childcare, etc are all getting more expensive and third spaces are less plentiful. We are clearly on a downward trajectory now. Forgive my concern for the future outweighs my thankfulness for the present. I have kids so I tend to give the future more weight than the past.
Yes, my parents, me, and my kids and the conditions present near the time of biologically normal family formation (mid-twenties). For me, that goes back to 1980.
I am fully correct that things are materially worse now than in 1985. There is endless data proving this if you are willing to look.
Just Google “Affordability for a 20 year old in 1985 vs 2025”. Some would argue that Google is one of the great riches since 1985, but I disagree… despite having all the information at our fingertips, people are as ill-informed as ever.
To add even more... In 1985, the median wage could by 5 lbs of beef, now it can buy 3 lbs. The story on chicken is better though (gotta love heartless factory farms) before you could only get 8 lbs now you can get 10. Moral of the story is things are worse. If you think chicken is a replacement good for beef, you are not an American and should immediately self deport.
Also to add... The number of relocations per year per capita has been cut in HALF since 1995. I think this is very bad and adds to malaise. How are we moving less while also becoming more lonely.
I'm mid 40s and my blue collar parents first house was a much smaller fraction of their income than my first house on my college educated salary (living in places with similar COL). Sure it's just an anecdote, but the same story is true for my children. Their rents while in college are much higher than my rent while in college as a fraction of my income at the time. In 1985, the ratio of median housing cost to median income was 3.6x now it's over 5x. What data do you have that it's the best time ever? Maybe you're unable to see the problem because you are on the favorable leg of the K or maybe you don't know many people in their 20's. IDK...
I think it would be a mistake to abandon the idea that some inflation would be better than a deep recession. I agree that that philosophy has some problems, which were revealed int he post-Covd inflation. But I think the solution needs to be found elsehwere than accpeting higher than ideal levels of unemployment.
The glacially slow recovery post-2008/9 recession also created a lot of discontent.
I think people are focused on their economic problems whatever those may be, and the only real way past all that is good policy, of which we have been sorely lacking for a long time.
The late 70s/early80s are (correctly) remembered as a time of high inflation, but that was also a time of major supply side problems in the economy. And while history seems to credit Ronald Reagan for soliving those things, the reality is a little more complex. Deregulation begain in earnest under the Carter Administration and Paul Volcker, the Fed CHair widely credited as having "broken the back of inflation" was a Carter appointee. Democrats also held the House and sometimes the Senate during the Reagan Admin, so they were part of the legislative efforts to address these problems.
My point to all of this is that we need now what we had then: enough civic virtue in our elected leaders to work together on solving our problems. Like the late 70s/early 80s, we have plenty of supply side problems in the economy, and we could improve the public perception problems by solving some of them. But unlike then we don't have a bipartisan political consensus on solving them. Each side would rather just blame the other, though the problem is worse with Republicans.
We should definitely be willing to accept a few tenths of a percent to goose employment. But double-digit inflation turns out not just to be politically costly, but socially and politically corrosive, and we should not underweight those risks.
Completely agree, and the first step is admitting we have a problem. Some people (Josh) would have you believe that Americans are richer than they have ever been and that things are great. Who cares if government is dysfunctional when things are so great and we are all so rich!
Read his comment to my post... He said that we have never been richer and that necessities are not a larger share of people's incomes now than in the 1980s. He also tends to frequently say "why do people incorrectly feel like things are so bad". Yes we are richer than ever because we all have smart phones, our cars have electric windows, and our houses are more square feet. The problem is, this "luxury" is largely forced on us. It's not like we can opt out of those luxuries to reduce costs.
I moderate a homebuying subreddit , and I can tell you the reason why most people hated the 50 year mortgage is that its extraordinarily easy to punch in numbers into an online calculator and see that the monthly savings was *incredibly small* for the tradeoff of 20 years. People may be undereducated in finance but they intuitively understood it was a ripoff.
Re: long-tail recovery, it’s also worth pointing out that most people aren’t equipped to evaluate things like long-term economic plans, which plays into the whole dynamic you all hit about deflated expectations. If you don’t really grok how all these macroeconomic dynamics shake out, then it’s just one more promise - like “inflation will go down” or “now that I got my raise, my standard of living will be higher” - that you don’t actually believe will ever happen.
Hi! I write about Missouri state politics for the St. Louis Post-Dispatch. I really enjoy your show. I have two questions. First, I'm curious whether you all think this bill in the Missouri General Assembly is YIMBY. Democrats in the Missouri General Assembly appear unified in their opposition. The bill gives the state more control over local building codes. The bill would limit environmental regulations cities can enforce on home builders*. The bill sponsor, a Kansas City Republican, hopes it will increase affordability.
The proposal would also require cities to issue building permits in 30 days. Failure to respond would automatically approve the permit. It also would reduce the number of staircases required in six-story buildings from two to one.
My second question is one of those "explain it to me like I'm 5" things. In this episode you guys talked about how deflation is bad. Then you talked about how we need to build more homes so housing prices go down. Trump has made comments recently about how current homeowners would lose equity if housing prices go down and that's bad so he doesn't want to do that. Do we only want housing prices to go down a certain amount? And what do you all make of Trump saying the quiet part out loud, that he doesn't want housing to get cheaper because home equity shrinks?
*Here are details about what it would do with regard to codes from a story I wrote about the bill: Cities adopt versions of the International Residential Code, a set of construction rules developed by the International Code Council. Municipalities also can adopt the Council’s International Energy Conservation Code, which lays out energy efficiency standards. The bill would prevent cities from adopting energy and sustainability-related requirements from any version of the codes beyond the 2009 edition.
One of the dynamics that I think Democrats haven't come to grips with is that they used to be the party of, we are going to give you everything you need by raising taxes on rich people. Now, Trump's GOP, as opposed to Romney's GOP of makers not takers, promises that cutting taxes on rich people and deregulation will give you everything you want. And on a political level, Dems don't understand that they are competing against a party that promises government intervention in free markets but that rival still cloaks itself as the party of belt-tightening budget hawks.
I haven't listened yet, but there's a decent sized chain in Texas and Oklahoma called Taco Casa that puts black olives in some of their burritos, as well as taco salads, tostadas, and something they call a chilada (like a burrito/enchilada).
Listening to today's show, I got to wondering whether Josh, Megan, and Ben have takes on "enshittification."
Relatedly, some level of al la carte pricing is obviously a boon to consumers because they get to avoid paying for stuff they don't want. People who complain about having to pay to check bags, for example, I think are clearly wring. But I also think that "junk fees" are bad to the extent they make actual prices consumers will pay less clear. How to square this?
I think the difference is whether or not it’s mandatory. “Resort fees” aren’t something you choose whether you want or not. So at that point, the rate isn’t “really” $200/night; it’s $260 or whatever.
I’m surprised Ben wasn’t more familiar with black olives in tacos because I grew up in Idaho and black olives were 100% part of our white people taco night. There was also a mountain west taco chain called Taco John’s that I’m pretty sure used to feature black olives in their nachos or potato ole’s at the very least.
LIES
I remember getting black olives on nachos at a "mexican" restuarant in New England back in the 1990s.
Come on guys... The "affordablity issue" is about reaching a tipping point related to the share of your income spent on necessities OVER GENERATIONS. The worst part is that you get locked in - especially if you are a home owner. Rates of people moving around has dropped significantly over time which hurts the dynamism of the economy and that lack of dynamism has been around for a couple decades. It's also very frustrating that China very easily does all of the things that we find it impossible to do. Biden and Trump are complete losers and they're in charge... It just feel likes the decline is everywhere. It's like when private equity raids a company... Profitability goes up (like economic metrics), but it feels like shit going to a job that gets worse and worse every day until the plant is closed for consolidation.
Sorry, here at Central Air you’re going to need to provide numbers if you need to vaguely whine like this. People living in the US today have the highest living standards ever, the idea that necessities in the aggregate eat up a higher share of income than they did for our parents is wrong, if you hold fixed what’s considered necessary.
Yeah, according to the (intentionally chosen pre-Trump) BLS publication "100 Years of US Consumer Spending," the following is the average expenditures on food over time:
1901 - 42.5%
1918 - 38%
1934 - 33.6%
1950 - 29.7%
1960 - 24.3% (noted as the first time that it was not the highest percentage of household expenditures)
1972 - 19.3% (noted as the first time that housing dramatically outstrips it)
1984 - 15%
1996 - 13.8%
2002 - 13.1%
The number for 2024 was about 10% (depending on source).
And, sure, some of that reduction in percentage has been eaten by things that are now considered necessities that were not in various previous historical periods. But, that means we have more things. Which in this conversation about economics is the definition of being richer. A person with food and a cell phone is richer than a person who just has food.
Now, housing has been a problem for a variety of reasons, and AI effects are a cause for concern. There has also arguably been something of a reduction in some facets of economic stability.
But the notion that Americans are not economically better off now than they were in 1950 or 1970 or 1990 is wild.
Are you a million years old? Who cares about 1950 or 1970 - life was so different then that comparison to now is absurd. Compare 1985 to now... The picture looks very different doesn't it? It's almost like the cost of food story is getting materially worse. This is while cars, houses, healthcare, childcare, etc are all getting more expensive and third spaces are less plentiful. We are clearly on a downward trajectory now. Forgive my concern for the future outweighs my thankfulness for the present. I have kids so I tend to give the future more weight than the past.
Didn't you start this thread by talking about economic effects "over generations"?
And for the record, I am in fact ancient. Verging on decrepit. (By which I mean that I'm exactly the same age as Josh.)
Yes, my parents, me, and my kids and the conditions present near the time of biologically normal family formation (mid-twenties). For me, that goes back to 1980.
I am fully correct that things are materially worse now than in 1985. There is endless data proving this if you are willing to look.
Just Google “Affordability for a 20 year old in 1985 vs 2025”. Some would argue that Google is one of the great riches since 1985, but I disagree… despite having all the information at our fingertips, people are as ill-informed as ever.
To add even more... In 1985, the median wage could by 5 lbs of beef, now it can buy 3 lbs. The story on chicken is better though (gotta love heartless factory farms) before you could only get 8 lbs now you can get 10. Moral of the story is things are worse. If you think chicken is a replacement good for beef, you are not an American and should immediately self deport.
Also to add... The number of relocations per year per capita has been cut in HALF since 1995. I think this is very bad and adds to malaise. How are we moving less while also becoming more lonely.
I'm mid 40s and my blue collar parents first house was a much smaller fraction of their income than my first house on my college educated salary (living in places with similar COL). Sure it's just an anecdote, but the same story is true for my children. Their rents while in college are much higher than my rent while in college as a fraction of my income at the time. In 1985, the ratio of median housing cost to median income was 3.6x now it's over 5x. What data do you have that it's the best time ever? Maybe you're unable to see the problem because you are on the favorable leg of the K or maybe you don't know many people in their 20's. IDK...
I think it would be a mistake to abandon the idea that some inflation would be better than a deep recession. I agree that that philosophy has some problems, which were revealed int he post-Covd inflation. But I think the solution needs to be found elsehwere than accpeting higher than ideal levels of unemployment.
The glacially slow recovery post-2008/9 recession also created a lot of discontent.
I think people are focused on their economic problems whatever those may be, and the only real way past all that is good policy, of which we have been sorely lacking for a long time.
The late 70s/early80s are (correctly) remembered as a time of high inflation, but that was also a time of major supply side problems in the economy. And while history seems to credit Ronald Reagan for soliving those things, the reality is a little more complex. Deregulation begain in earnest under the Carter Administration and Paul Volcker, the Fed CHair widely credited as having "broken the back of inflation" was a Carter appointee. Democrats also held the House and sometimes the Senate during the Reagan Admin, so they were part of the legislative efforts to address these problems.
My point to all of this is that we need now what we had then: enough civic virtue in our elected leaders to work together on solving our problems. Like the late 70s/early 80s, we have plenty of supply side problems in the economy, and we could improve the public perception problems by solving some of them. But unlike then we don't have a bipartisan political consensus on solving them. Each side would rather just blame the other, though the problem is worse with Republicans.
We should definitely be willing to accept a few tenths of a percent to goose employment. But double-digit inflation turns out not just to be politically costly, but socially and politically corrosive, and we should not underweight those risks.
Did we hit double digit after Covid? I agree that is too much.
Completely agree, and the first step is admitting we have a problem. Some people (Josh) would have you believe that Americans are richer than they have ever been and that things are great. Who cares if government is dysfunctional when things are so great and we are all so rich!
Maybe this is just me, but I don't think Josh would have us believe anything like that.
Read his comment to my post... He said that we have never been richer and that necessities are not a larger share of people's incomes now than in the 1980s. He also tends to frequently say "why do people incorrectly feel like things are so bad". Yes we are richer than ever because we all have smart phones, our cars have electric windows, and our houses are more square feet. The problem is, this "luxury" is largely forced on us. It's not like we can opt out of those luxuries to reduce costs.
PSA: The original “white people taco night” video where the meme came from, apparently
I see no olives present, sorry @Josh Barro perhaps it is just the taco salads that are their natural habitat
https://www.tiktok.com/t/ZTh4yRPE7/
PSA: The original “white people taco night” video from 2020 where the meme came from, apparently
I see no olives present, sorry @Josh Barro, perhaps it is just the taco salads that are their natural habitat
https://www.tiktok.com/t/ZTh4yRPE7/
I moderate a homebuying subreddit , and I can tell you the reason why most people hated the 50 year mortgage is that its extraordinarily easy to punch in numbers into an online calculator and see that the monthly savings was *incredibly small* for the tradeoff of 20 years. People may be undereducated in finance but they intuitively understood it was a ripoff.
Re: long-tail recovery, it’s also worth pointing out that most people aren’t equipped to evaluate things like long-term economic plans, which plays into the whole dynamic you all hit about deflated expectations. If you don’t really grok how all these macroeconomic dynamics shake out, then it’s just one more promise - like “inflation will go down” or “now that I got my raise, my standard of living will be higher” - that you don’t actually believe will ever happen.
Hi! I write about Missouri state politics for the St. Louis Post-Dispatch. I really enjoy your show. I have two questions. First, I'm curious whether you all think this bill in the Missouri General Assembly is YIMBY. Democrats in the Missouri General Assembly appear unified in their opposition. The bill gives the state more control over local building codes. The bill would limit environmental regulations cities can enforce on home builders*. The bill sponsor, a Kansas City Republican, hopes it will increase affordability.
The proposal would also require cities to issue building permits in 30 days. Failure to respond would automatically approve the permit. It also would reduce the number of staircases required in six-story buildings from two to one.
My second question is one of those "explain it to me like I'm 5" things. In this episode you guys talked about how deflation is bad. Then you talked about how we need to build more homes so housing prices go down. Trump has made comments recently about how current homeowners would lose equity if housing prices go down and that's bad so he doesn't want to do that. Do we only want housing prices to go down a certain amount? And what do you all make of Trump saying the quiet part out loud, that he doesn't want housing to get cheaper because home equity shrinks?
*Here are details about what it would do with regard to codes from a story I wrote about the bill: Cities adopt versions of the International Residential Code, a set of construction rules developed by the International Code Council. Municipalities also can adopt the Council’s International Energy Conservation Code, which lays out energy efficiency standards. The bill would prevent cities from adopting energy and sustainability-related requirements from any version of the codes beyond the 2009 edition.
One of the dynamics that I think Democrats haven't come to grips with is that they used to be the party of, we are going to give you everything you need by raising taxes on rich people. Now, Trump's GOP, as opposed to Romney's GOP of makers not takers, promises that cutting taxes on rich people and deregulation will give you everything you want. And on a political level, Dems don't understand that they are competing against a party that promises government intervention in free markets but that rival still cloaks itself as the party of belt-tightening budget hawks.
I haven't listened yet, but there's a decent sized chain in Texas and Oklahoma called Taco Casa that puts black olives in some of their burritos, as well as taco salads, tostadas, and something they call a chilada (like a burrito/enchilada).