How Government Spending Fuels Inflation

When debt grows so much that people don’t believe the Treasury will pay it, they sell their bonds and buy other things, sending prices through the roof.

By Tunku Varadarajan. Interview with John Cochrane. Excerpts:

"Starting in March 2020, “the Treasury issued $3 trillion of new debt, which the Fed quickly bought in return for $3 trillion of new reserves.” The Treasury then sent checks to people and businesses, later borrowing another $2 trillion and sending more checks. Overall federal debt rose nearly 30%. “Is it at all a surprise,” Mr. Cochrane asks, “that a year later inflation breaks out?”

He likens this $5 trillion in checks to a “classic parable” of Milton Friedman (1912-2006), the great monetarist at the University of Chicago, where Mr. Cochrane was a professor for 30 years before moving to Stanford in 2015. “Let us suppose now that one day a helicopter flies over this community and drops an additional $1,000 in bills from the sky, which is, of course, hastily collected by members of the community,” Friedman wrote in “The Optimum Quantity of Money” (1969). If they spent the money, inflation would result.

The Covid checks, Mr. Cochrane says, were “an immense fiscal helicopter drop. People are spending the money, driving prices up.”

Why didn’t the Fed see that this massive stimulus would cause inflation? Mr. Cochrane sees a “big blind spot” in the institution and its “large circle of policy commentators.” The Fed’s “modeling and understanding of ‘supply’ constraints is very simplistic,” he says. It focuses only on unemployment “as a measure of slack in the economy. There is no group of analysts at the Fed measuring how many containers can get through the ports.” More deeply, he says, “the Fed and its larger intellectual circle don’t think about supply at all. All variation in the economy is more or less demand.”

This “intellectual failing” showed up first in the recession that followed Covid. “The economy didn’t need demand-side stimulus,” Mr. Cochrane says. “It’s not 1933 again and again. A pandemic is, to the economy, like a huge snowstorm. Sending people money won’t get them out to closed bars, restaurants, airlines and businesses.”

The government did have to act “as a sort of insurer, making sure there wasn’t a wave of bankruptcy and helping people really hurt by the recession.” But it should have been obvious that supply constraints would lead to inflation after the recession ended. “The Fed being surprised by supply shocks is as excusable as the Army losing a battle because its leaders are surprised the enemy might attack,” Mr. Cochrane says.

He notes that even Lawrence Summers, who served as Bill Clinton’s Treasury secretary and Barack Obama’s director of the National Economic Council, foresaw inflation as early as February 2021 (in a column in the Washington Post). “Summers, who’d argued for big deficits and loose monetary policy to combat low inflation and ‘secular stagnation’ for a decade, saw inflation coming, and saw its source in the massive fiscal stimulus of the Covid recession. So why didn’t the Fed?”"

"The new theory holds that when the overall amount of government debt is more than people expect the government to repay, we see inflation. The price of everything goes up, and the value of the dollar declines.

How does this work? “The U.S. government has $20 trillion of debt outstanding,” Mr. Cochrane says. “That means, over the long run, people must expect taxes to exceed spending by $20 trillion to repay the debt.” But if they think the government will be able to pay back only $10 trillion in today’s money, “people will try to get rid of their government debt fast, before it is worth less. They try to sell it in order to buy other things,” driving up the price of everything else. “That keeps going until all prices have doubled—until the $20 trillion promise is only worth $10 trillion at today’s prices.”"

"'Mr. Cochrane believes that “we overstate the Fed’s power” to respond: “The Fed likes to say it has ‘the tools’ to contain inflation, but never dares to say just what those tools are.” In recent historical experience, “its tool is to replay 1980,” the year when inflation peaked at 14.8%. That means “20% interest rates, a bruising recession that hurts the disadvantaged, with the medicine applied for as long as it takes."

"In any case, Mr. Cochrane says, raising rates is a “crude tool to fight inflation, especially when the source is fiscal policy.” He likens the situation to a car going too fast. “Fiscal policy is the accelerator; monetary policy controls the oil. OK, if fiscal policy has floored it, you can slow the car down by draining oil, but that’s not a terribly good way to drive.” Fiscal policy sends checks, stoking inflation; monetary policy raises interest rates to discourage borrowing or encourage savers to hold the extra Treasury debt. To change the analogy slightly, the driver is accelerating and braking at the same time.

To overcome inflation, fiscal constraints on monetary policy will need to play a large role, Mr. Cochrane says: “The Fed is merely a copilot.” He notes that in 1980, the ratio of debt to gross domestic product was 25%. Today it is 100% and rising: “Fiscal constraints on monetary policy are four times larger today.” So for a rise in interest rates to lower inflation, “fiscal policy must tighten as well. Without that fiscal cooperation, monetary policy cannot lower inflation.”

An additional complication is that any increase in interest rates raises interest costs of servicing the debt. “The government must pay those higher interest costs by raising tax revenues and cutting spending, or by credibly promising to do so in the future.” At 100% debt to GDP, he says, “5% higher interest rates mean an additional deficit of 5% of GDP, or $1 trillion, for every year that high interest rates continue.” This consideration is especially relevant if fiscal policy is at the root of the inflation."

"When people fundamentally distrust the government to repay debt, interest-rate policies and quantitative easing have limited power. So “the bottom line” is to ensure that people have faith in the government as debtor, and that comes “from solid growth, and transparent, responsible, durable institutions.” There’s no way out without “regulatory reform, tax reform, entitlement reform, as well as clear-eyed monetary policy that works on the narrow things it actually understands.”"

The intermittence of some electricity sources is making it harder for them to balance supply and demand, and could result in more shortages: America’s Power Grid Is Increasingly Unreliable

See America’s Power Grid Is Increasingly Unreliable: Behind a rising number of outages are new stresses on the system caused by aging power lines, a changing climate and a power-plant fleet rapidly going green by Katherine Blunt of The WSJ. Excerpts:

 "A decade ago, coal, nuclear and gas-fired power plants—which can produce power around the clock or fire up when needed—supplied the bulk of the nation’s electricity. Since then, renewable energy sources, including wind and solar farms whose output depends on weather and time of day, have become some of the most substantial sources of power in the U.S., second only to natural gas.

Grid operators around the country have recently raised concerns that the intermittence of some electricity sources is making it harder for them to balance supply and demand, and could result in more shortages. When demand threatens to exceed supply, as it has during severe hot and cold spells in Texas and California in recent years, grid operators may call on utilities to initiate rolling blackouts, or brief intentional outages over a region to spread the pain among everyone and prevent the wider grid from a total failure.

Companies around the country are rapidly adding large-scale batteries to store more intermittent power so it can be discharged during peak periods after the sun falls and wind dies. But because such storage technology is somewhat new, and was, until recently, relatively expensive, it remains a small fraction of the electricity market, and grid operators agree much more will be needed to keep the system stable as more conventional power plants retire.

The problem could soon threaten New York City. The New York Independent System Operator, or NYISO, which oversees the state’s power grid, last month warned of possible supply shortages in the coming years as several gas-fired power plants close or operate less frequently in light of stricter state air quality rules. New York, which has set a goal to eliminate emissions from its electricity supplies by 2040 and no longer has any coal-fired power plants, also recently shut down a nuclear plant some 30 miles north of Manhattan after critics for years called it a safety hazard."

"The North American Electric Reliability Corp., a nonprofit overseen by the Federal Energy Regulatory Commission that develops standards for utilities and power producers, warned in a report last month that the Midwest and West also face risks of supply shortages in the coming years as more conventional power plants retire.

Within the footprint of the Midcontinent Independent System Operator, or MISO, which oversees a large regional grid spanning from Louisiana to Manitoba, Canada, coal- and gas-fired power plants supplying more than 13 gigawatts of power are expected to close by 2024 as a result of economic pressures, as well as efforts by some utilities to shift more quickly to renewables to address climate change. Meanwhile, only 8 gigawatts of replacement supplies are under development in the area."

"One of the biggest challenges facing grid operators and utility companies is the need for better technology that can store large amounts of electricity and discharge it over days, to account for longer weather events that affect wind and solar output. Most large-scale batteries currently use lithium-ion technology, and can discharge for about four hours at most."

The Inefficiency of Government Benefits Ends Up Helping The Already Well-Off

By Bryce Covert in The NY Times. Excerpt: 

"The excitement around policymaking is almost always in the moments after ink dries on a bill creating something new. But if a benefit fails to reach the people it’s designed for, it may as well not exist at all. Making government benefits more accessible and efficient doesn’t usually get the spotlight. But it’s often the difference between a family getting what it needs to survive and falling into hardship and destitution. It’s the glue of our democracy.

President Biden appears to have taken note of this. Late last year, he issued an executive order meant to improve the “customer experience and service delivery” of the entire federal government. He put forward some ideas, including moving Social Security benefit claims and passport renewals online, reducing paperwork for student loan forgiveness and certifying low-income people for all the assistance they qualify for at once, rather than making them seek out benefits program by program. More important, he shifted the focus of government toward whether or not the customers — that’s us — are having a good experience getting what we deserve.

It’s a direction all lawmakers, from the federal level down to counties and cities, should follow.

One of the biggest barriers to government benefits is all of the red tape to untangle, particularly for programs that serve low-income people. They were the ones wrangling with the I.R.S.’s nonfiler portal while others got their payments automatically. Benefits delivered through the tax code, which flow so easily that many people don’t think of them as government benefits at all, mostly help the already well-off. Programs for the poor, on the other hand, tend to be bloated with barriers like income tests, work requirements and in-person interviews. It’s not just about applying once, either; many require people to continually recertify, going through the process over and over again."

For a Clean-Energy Future, We Need Deregulation

Environmental protections from decades past are blocking the infrastructure urgently needed to combat climate change

By Ted Nordhaus. Excerpts:

"Though the Biden administration and Democrats currently propose to spend close to a trillion dollars on low-carbon infrastructure and technology, there is little reason to believe the U.S. is capable of building any of it in a timely or cost-effective way."

"President Biden’s landmark executive order on environmental justice, for example, has directed every federal agency to screen all new infrastructure and clean-energy spending for disparate racial impact while carving out 40% of all spending for marginalized communities. Congress, meanwhile, has produced complicated formulas to guide its proposed new clean-energy investments in order to encourage the use of union labor and to achieve various other wage and occupational outcomes.

Greater equity and inclusion and more high-wage jobs are laudable goals, but these new policies are sure to make the already slow, costly business of building new infrastructure and energy projects even slower and more costly. And make no mistake, such projects are already shockingly difficult to build. Merely completing an environmental-impact statement for infrastructure projects now takes almost five years on average."

"since its founding in 1975, the Nuclear Regulatory Commission has never licensed a new commercial nuclear reactor design that was subsequently built. The two most recent developers to try, Westinghouse and Nuscale, have been at it for well over a decade and have yet to generate a single electron."

"Today’s thicket of environmental regulation at the federal and state levels thwarts permitting, siting, construction and operation of virtually every class of new infrastructure and technology. There are simply too many veto points and opportunities for obstruction, at too many procedural and jurisdictional levels, to conceivably embark on a rapid mission to remake the nation’s energy economy."

A Mistaken Case for Splitting Amazon in Two

Who determines whether pricing is ‘predatory’?

Letter to The WSJ.

"Mr. Lonsdale argues that Amazon’s cloud-computing division, Amazon Web Services, is cross-subsidizing Amazon’s other services. But he makes inferences about cross-subsidies for a multiproduct firm with fixed and common costs on the basis of one atypical year’s financial data. As has been widely reported in the financial press, Amazon’s e-commerce business ran into headwinds last year due to rising labor costs, labor shortages and supply-chain constraints.

Modern antitrust law has set a high hurdle for predatory-pricing cases, because consumers benefit from lower prices. A more activist and populist predatory-pricing policy runs the risk of evolving into a form of price regulation, whereby enforcers implicitly establish a price floor, but without a sound basis for doing so. We should be wary of a policy that makes successful firms liable for lowering prices or improving quality—normally considered pro-competitive activities.

Thomas Lenard

Technology Policy Institute

Washington"

Hijacking Philanthropy to ‘Reimagine Capitalism’

The Hewlett Foundation proves again that Joseph Schumpeter was right

WSJ editorial.

"The 20th-century economist Joseph Schumpeter famously wrote that capitalism sows its own destruction by creating a knowledge class who despise its success. Behold the Hewlett Foundation and Omidyar Network’s $40 million gift to the paupers at Harvard and MIT to “reimagine capitalism.”

Bill Hewlett and David Packard founded Hewlett-Packard in a one-car garage in Palo Alto and made it one of the world’s storied companies. Its capitalist success created wealth for shareholders and stakeholders alike, and Hewlett established his foundation to share even more of it. But his philanthropic legacy has become one more sad example of how the wealth of capitalist donors is hijacked by future generations of knowledge-class progressives. 

“For more than 40 years, neoliberalism has dominated economic and political debates, both in the U.S. and globally, with its free-market fundamentalism and growth-at-all-costs approach to economic and social policy,” the press release says. It “offers no solutions for the biggest challenges of our time, such as the climate crisis, systemic racism, and rampant wealth inequality—and in many ways, it has made those problems even worse.”

Actually, capitalism offers solutions to all of those challenges. The largest reductions in carbon emissions have come from natural gas, thanks to the market innovation of shale fracking. Competitive labor markets have helped minorities rise despite residual racism because bigotry is too expensive. The wealth created by free markets and innovation, along with global trade, has lifted billions out of poverty. Extreme global poverty has plunged to less than 10% from 45% in 1980 while world GDP has more than tripled.

We now have fast broadband and smartphones that connect with others anywhere, anytime; 24-hour home delivery of almost anything we want; breakthrough medical treatments and vaccines; genetically engineered crops that have increased farm yields and global nutrition; cheap energy thanks to an oil and gas shale boom; and a rising standard of living for most of the world. Socialism didn’t build that.

Yet as Schumpeter predicted, people in the comfortable West, including many tech entrepreneurs, now take this prosperity for granted. “Neoliberalism’s anti-government, free-market fundamentalism is simply not suited for today’s economy and society,” says Larry Kramer, president of the Hewlett Foundation.

By “reimagining capitalism,” as the press release advertises, what these foundations really mean is putting politicians and the administrative state in charge of redistributing more of its proceeds. Yet if they had been paying attention in recent years, they might have noticed that “free-market fundamentalism” could have spared the U.S. from some terrible mistakes.

For example, when government pays people not to work, many don’t work. When government increases taxes and regulation, output declines. And when government floods the economy with money, inflation breaks out. Is 7.5% inflation helping “wealth inequality”?

The Hewlett and Omidyar grants will fund left-wing academics at the Harvard Kennedy School, Howard University, Johns Hopkins, MIT and the Santa Fe Institute to “rethink and replace neoliberalism.” As if these institutions need more money to indoctrinate young people in socialism. Endowments at Harvard ($53.2 billion), MIT ($27.4 billion) and Johns Hopkins ($9.3 billion), by the way, are swelling—thanks to investment in capitalist markets.

The Hewlett Foundation’s hard left turn is a warning to today’s successful capitalists to be wary of creating foundations or other vehicles that outlive them. Sooner or later, most of them are taken over by people who steer them for their own political purposes no matter the founder’s intent. Be careful not to finance the destruction of the system that made business success and wealth creation possible."

The Federal Government's Pandemic Jobs Program Was a Resounding Failure

Most of the $800 billion Paycheck Protection Program went to business owners, not preserving jobs, according to a new study. 

By Peter Suderman of Reason.

"In September 2020, as the pandemic dragged into its sixth month, Republicans on Congress' Select Subcommittee on the Coronavirus Crisis released a report on the rollout of the Paycheck Protection Program (PPP).

The program was among the most expensive of the pandemic relief measures passed in 2020, eventually growing to some $800 billion, making it among the most expensive government programs of 2020—nearly equivalent to the size of the American Recovery and Relief Act (ARRA), the 2009 stimulus package passed under President Barack Obama. Even apart from the rest of the pandemic relief spending, it was, all on its own, a massive economic rescue program.  

The GOP report described the PPP as "a forgivable loan program designed to provide a direct incentive for small businesses to keep their workers on the payroll." In other words, it was intended to save the jobs of ordinary workers, and the report—essentially an extended brag sheet—insisted that it had done precisely that, crediting then-President Donald Trump for its accomplishments. "The program's focus on getting money to workers quickly saved millions of jobs and kept the economy from collapse," the report concluded. One section is titled "President Trump's Swift Action Provided Relief." 

Democrats on the subcommittee argued that the program, which had passed with bipartisan support, needed more oversight, but credited it with helping "millions of small businesses and non-profit organizations stay afloat during the coronavirus crisis." Then-Treasury Secretary Steve Mnuchin repeatedly defended the program to the media and Congress. The GOP report title introduces the PPP as a "Resounding Success." 

A more accurate description would have been "Expensive Failure."

A recent study of the program's effects from the National Bureau of Economic Research (NBER) finds that the majority of the funds spent by the program went to business owners and shareholders rather than to workers themselves. Ultimately, "only 23 to 34 percent of the program's funds went directly to workers who would have otherwise lost their jobs." The jobs it did keep in place were preserved at very high cost—somewhere between $170,000 and $257,000 a year, far more than the typical earnings of affected workers, which are closer to $58,000 per year. 

While the PPP was able to save some jobs, albeit, at a very high cost, the overall result of the program was precisely the opposite of what was intended. The purpose of the program was to preserve the jobs of wage workers, not to funnel money to business owners. As David Autor, a Massachusetts Institute of Technology economist and the lead researcher behind the paper, told The New York Times recently, "it turns out [the money] didn't primarily go to workers who would have lost jobs. It went to business owners and their shareholders and their creditors." The program, he added, was "highly regressive." 

The authors suggest several reasons for the program's unintended results. It was designed in haste at the beginning of the pandemic when many—including lawmakers and policymakers—believed that it would be a relatively short affair, and the economy would fully bounce back by summer. Initially, the PPP promised loan refundability to businesses that kept workers on their payrolls for eight weeks, essentially converting those loans into grants. But, as the pandemic dragged on and the program was topped up with additional funds, the requirements slipped, and the PPP eventually turned into something more like an all-purpose federally funded slush fund for small business owners. 

The PPP was poorly designed and produced poor results accordingly. While it's useful to analyze and learn from the flaws of a program like this, I'm not sure that the proper response is to just try to design better programs in the future.

There were a variety of reasons for the poor design of the program, but in the end, it all boils down to a single, unsolvable problem: No one, especially lawmakers in Congress, truly understood how the pandemic would unfold in real-time and what its effect on the economy would be. So the PPP, along with the rest of the COVID-era relief programs, was cobbled together in a slapdash manner based on partisan agendas, poor projections, incomplete information, and wishful thinking.

That's simply not the recipe for well-designed relief programs, which is why the Obama-era stimulus package suffered from many of the same sort of flaws and failures. Rapidly constructed massive emergency relief programs are always going to be subject to these sorts of pressures and likely to result in these sorts of failures.

That's not a cause for policy nihilism. Instead, it's a reason for policy makers to act with greater caution and humility, especially in the face of a novel emergency. Rather than throwing money at poorly constructed mega-programs like the PPP and ARRA, smaller, more targeted programs—like Operation Warp Speed, which was probably the biggest success of the pandemic but cost just a few billion dollars—are much more likely to result in something that resembles a resounding success."

How global warming can be good for us

By Matt Ridley.

"Global warming is real. It is also – so far – mostly beneficial. This startling fact is kept from the public by a determined effort on the part of alarmists and their media allies who are determined to use the language of crisis and emergency. The goal of Net Zero emissions in the UK by 2050 is controversial enough as a policy because of the pain it is causing. But what if that pain is all to prevent something that is not doing net harm?

The biggest benefit of emissions is global greening, the increase year after year of green vegetation on the land surface of the planet. Forests grow more thickly, grasslands more richly and scrub more rapidly. This has been measured using satellites and on-the-ground recording of plant-growth rates. It is happening in all habitats, from tundra to rainforest. In the four decades since 1982, as Bjorn Lomborg points out, NASA data show that global greening has added 618,000 square kilometres of extra green leaves each year, equivalent to three Great Britains. You read that right: every year there’s more greenery on the planet to the extent of three Britains. I bet Greta Thunberg did not tell you that.

The cause of this greening? Although tree planting, natural reforestation, slightly longer growing seasons and a bit more rain all contribute, the big cause is something else. All studies agree that by far the largest contributor to global greening – responsible for roughly half the effect – is the extra carbon dioxide in the air. In 40 years, the proportion of the atmosphere that is CO2 has gone from 0.034 per cent to 0.041 per cent. That may seem a small change but, with more ‘food’ in the air, plants don’t need to lose as much water through their pores (‘stomata’) to acquire a given amount of carbon. So dry areas, like the Sahel region of Africa, are seeing some of the biggest improvements in greenery. Since this is one of the poorest places on the planet, it is good news that there is more food for people, goats and wildlife.

But because good news is no news, green pressure groups and environmental correspondents in the media prefer to ignore global greening. Astonishingly, it merited no mentions on the BBC’s recent Green Planet series, despite the name. Or, if it is mentioned, the media point to studies suggesting greening may soon cease. These studies are based on questionable models, not data (because data show the effect continuing at the same pace). On the very few occasions when the BBC has mentioned global greening it is always accompanied by a health warning in case any viewer might glimpse a silver lining to climate change – for example, ‘extra foliage helps slow climate change, but researchers warn this will be offset by rising temperatures’.

Another bit of good news is on deaths. We’re against them, right? A recent study shows that rising temperatures have resulted in half a million fewer deaths in Britain over the past two decades. That is because cold weather kills about ’20 times as many people as hot weather’, according to the study, which analyses ‘over 74million deaths in 384 locations across 13 countries’. This is especially true in a temperate place like Britain, where summer days are rarely hot enough to kill. So global warming and the unrelated phenomenon of urban warming relative to rural areas, caused by the retention of heat by buildings plus energy use, are both preventing premature deaths on a huge scale.

Surely this will change in the future? Probably not. Britain would have to get much, much hotter for summer mortality to start exceeding winter deaths. Not even Greece manages that. And the statistics show that – as greenhouse-gas theory predicts – on the whole more warming is happening in cold places, in cold seasons and at cold times of day. So winter nighttime temperatures in the global north are rising much faster than summer daytime temperatures in the tropics.

Summer temperatures in the US are changing at half the rate of winter temperatures and daytimes are warming 20 per cent slower than nighttimes. A similar pattern is seen in most countries. Tropical nations are mostly experiencing very slow, almost undetectable daytime warming (outside cities), while Arctic nations are seeing quite rapid change, especially in winter and at night. Alarmists love to talk about polar amplification of average climate change, but they usually omit its inevitable flip side: that tropical temperatures (where most poor people live) are changing more slowly than the average.

But are we not told to expect more volatile weather as a result of climate change? It is certainly assumed that we should. Yet there’s no evidence to suggest weather volatility is increasing and no good theory to suggest it will. The decreasing temperature differential between the tropics and the Arctic may actually diminish the volatility of weather a little.

Indeed, as the Intergovernmental Panel on Climate Change (IPCC) repeatedly confirms, there is no clear pattern of storms growing in either frequency or ferocity, droughts are decreasing slightly and floods are getting worse only where land-use changes (like deforestation or building houses on flood plains) create a problem. Globally, deaths from droughts, floods and storms are down by about 98 per cent over the past 100 years – not because weather is less dangerous but because shelter, transport and communication (which are mostly the products of the fossil-fuel economy) have dramatically improved people’s ability to survive such natural disasters.

The geological record shows greater climatic volatility in cold periods of the Earth’s history than in hot periods. At the peak of recent ice ages, the temperature fluctuated dramatically between years and decades, while decade-long mega-droughts ravaged Africa, drying up Lake Victoria at least twice. Those mega droughts happened 17,000 years ago and 15,000 years ago respectively, when the world was much colder than today and cooler oceans meant failed monsoons. One theory about the invention of farming argues that it was impossible until the climate settled down in the post-glacial warmth of around 10,000 years ago: ‘Recent data from ice- and ocean-core climate proxies show that the last glacial climates were extremely hostile to agriculture – dry, low in atmospheric CO2, and extremely variable on quite short time scales.’ It then became calmer as it became significantly warmer than today between 9,000 and 6,000 years ago, when human civilisation emerged.

The effect of today’s warming (and greening) on farming is, on average, positive: crops can be grown farther north and for longer seasons and rainfall is slightly heavier in dry regions. We are feeding over seven billion people today much more easily than we fed three billion in the 1960s, and from a similar acreage of farmland. Global cereal production is on course to break its record this year, for the sixth time in 10 years.

Nature, too, will do generally better in a warming world. There are more species in warmer climates, so more new birds and insects are arriving to breed in southern England than are disappearing from northern Scotland. Warmer means wetter, too: 9,000 years ago, when the climate was warmer than today, the Sahara was green. Alarmists like to imply that concern about climate change goes hand in hand with concern about nature generally. But this is belied by the evidence. Climate policies often harm wildlife: biofuels compete for land with agriculture, eroding the benefits of improved agricultural productivity and increasing pressure on wild land; wind farms kill birds and bats; and the reckless planting of alien sitka spruce trees turns diverse moorland into dark monoculture.

Meanwhile, real environmental issues are ignored or neglected because of the obsession with climate. With the help of local volunteers I have been fighting to protect the red squirrel in Northumberland for years. The government does literally nothing to help us, while it pours money into grants for studying the most far-fetched and minuscule possible climate-change impacts. Invasive alien species are the main cause of species extinction worldwide (like grey squirrels driving the red to the margins), whereas climate change has yet to be shown to have caused a single species to die out altogether anywhere.

Of course, climate change does and will bring problems as well as benefits. Rapid sea-level rise could be catastrophic. But whereas the sea level shot up between 10,000 and 8,000 years ago, rising by about 60 metres in two millennia, or roughly three metres per century, today the change is nine times slower: three millimetres a year, or a foot per century, and with not much sign of acceleration. Countries like the Netherlands and Vietnam show that it is possible to gain land from the sea even in a world where sea levels are rising. The land area of the planet is actually increasing, not shrinking, thanks to siltation and reclamation.

In January 2020, the UK’s chief scientific adviser organised for some slides to be shown to Boris Johnson to convert him to climate alarmism. Thanks to a freedom of information request, we now know that these slides showed the likely acceleration in sea-level rise under a scenario known as RCP 8.5. This is shocking because RCP 8.5 has long been discredited as a highly implausible future. It was created by piling unrealistic assumptions on to each other in models: coal use increasing tenfold by 2100, population growth accelerating to 12 billion people, innovation drying up and an implausibly high sensitivity of temperature to carbon dioxide. No serious scientist thinks RCP 8.5 represents a likely outcome from ‘business as usual’. Yet those who want to grab media attention by making alarming predictions use it all the time.

Environmentalists don’t get donations or invitations to appear on the telly if they say moderate things. To stand up and pronounce that ‘climate change is real and needs to be tackled, but it’s not happening very fast and other environmental issues are more urgent’ would be about as popular as an MP in Oliver Cromwell’s parliament declaring, ‘The evidence for God is looking a bit weak, and I’m not so very sure that fornication really is a sin’. And I speak as someone who has made several speeches on climate in parliament.

No wonder we don’t hear about the good news on climate change."

Government Bans on GMOs Are Making Global Hunger Worse—and Do Serious Harm to the Planet

Those who want to improve standards of living and care for the environment should be appalled by GMO restrictions around the world.

By Jeffrey Miron & Sarah Eckhardt.

"The global controversy over genetically modified organisms is a classic bootleggers and Baptists story. Activists who mistakenly believe that GMOs are dangerous to consume have teamed up with pesticide and insecticide sellers to restrict the world’s poor from life-saving technologies.

This is a tragedy.

GMOs increase crop yields, improve the nutritional value of crops, and decrease greenhouse gas emissions. Those who want to improve standards of living and care for the environment should be appalled by GMO restrictions around the world.

Although the ‘Baptists’ are skeptical about GMO safety, an overwhelming consensus of scientists agree that GMOs are safe to eat. They do not damage organ health, cause genetic mutations in humans or animals, affect pregnancies, or transfer genes to those who consume them.

The ‘bootlegger’ allies—the pesticide and insecticide industries – are threatened by high-yielding and disease resistant crops that don’t require their products.

Unlike conventional plant or animal breeding, which combines all the genes from two sources, GMOs are created by tweaking an organism’s genetic code. This allows for more precise alterations, such as insertion of a disease-resistant gene or one that produces more vitamin C. Targeted alterations allow researchers to improve on conventional breeding practices and create organisms that are optimized for specific agriculture conditions.

This makes them well-suited to increase food security and lift farmers out of poverty. Farmers in poor countries lack access to the seed selection, farm equipment, fertilizers, pesticides, and irrigation technologies that are widespread in wealthy countries. Without these products, their crops are more susceptible to weeds and pests and yield substantially less than crops in the developed world. When pesticides are available, farmers often apply them by hand, which contributes to pesticide poisoning.

The benefits of GMOs are well-known to farmers in these conditions. In Kenya, dairy farmers are petitioning their government to lift the ban on GMOs because the rising prices of non-GMO livestock feeds have put many out of business. Since plant improvements are more targeted, GMOs are higher yielding, require fewer synthetic pesticides and fertilizers, and are more disease resistant than conventional crops.

For example, genetically modified bacillus thuringiensis (Bt) cotton increased Indian cotton yields between 50 and 70 percent between 1975 and 2009 and decreased insecticide poisoning by 2.4 million cases a year. Because farmers lost fewer crops to disease and pests, their profits rose by as much as 50 percent. For farmers who cannot afford tractors and fertilizer, these cost-reducing GMO seeds are an effective way to raise food production.

Yet only four African countries allow GMO crops, and much of southeast Asia restricts GMO access. The Information Technology & Innovation Foundation estimates that GMO restrictions could cost low and middle income nations up to $1.5 trillion in foregone income through 2050. In the Philippines, Bt eggplants were banned by the Supreme Court, even though several studies conducted in the country found numerous health and income benefits.

Beyond all these benefits, GMOs lower carbon emissions per unit produced. Adoption of genetically modified technology decreased greenhouse gas emissions by an equivalent of removing 15.27 million cars from the road in 2018 and saved the world approximately 16.1 million hectares in farmland. This is approximately 14 percent of the United States’ arable land.

Yet the European Union is moving away from GMOs and aims to have 25 percent of European farms producing organics by 2030.

The GMO debate continues to be controlled by non-scientific groups to the detriment of global hunger and efforts to lower emissions. Governments, particularly those of impoverished nations, should lift their bans and allow full access to GMOs."

How’s the American Dream doing? Not bad at all!

By James Pethokoukis of AEI.

"Writing in The Nation, Maria Bustillos advises caution when hearing some politician or billionaire musing about the “American Dream.” This from her piece, “How the ‘American Dream’ Became Un-American: When plutocrats defend it, and democrats bewail its passing, it’s time to recall the original meaning of the phrase”:

Powerful political language is invariably corrupted and exploited by many actors, and that’s why it’s crucial to trace out this history of meanings. Whenever the phrase “the American Dream” is invoked, we should take care to consider whether it means the dream of a better life for a lucky few, or a better life for everyone.

There are different ways to define the American Dream. In a 2019 survey commissioned by AEI, 94 percent of respondents reported that having a successful career was essential or important to their own view of the Dream, while 88 percent reported the same about having a better quality of life than their parents. And it is the economic aspect of the Dream that is the focus of the short and sharp (and excellent) 2020 book “The American Dream Is Not Dead: (But Populism Could Kill It)” by my AEI colleague and economist Michael Strain. And I think three of the many informative charts from that book give a great indication of the health of the Dream heading into the pandemic.

This first chart shows that over the past three decades, wages for typical workers have grown by 20 percent using the CPI and by a third using the PCE, the inflation measure preferred by the Federal Reserve.

This second chart is of absolute mobility: Are you doing better during, say, your 40s than your parents were doing during their 40s? Overall, Strain finds that around 73 percent of Americans in their 40s have higher incomes than did their parents.

Third, Strain notes that although the Congressional Budget Office found that income inequality between 1979 and 2006 increased by between 24 and 27 percent (depending on the definition of income), inequality only grew by 2 percent between 2007 and 2016. (Using income after taxes and transfers, inequality has actually decreased by 7 percent.)

Growth. Mobility. Equality. Nothing un-American about any of this. The American Dream, while it could be stronger with faster economic and productivity growth, abides."

Many businesses report that grants are not an important factor in location or expansion decisions

See Workforce and Small Business Incentives.

"Neither VJIP nor the Small Business Jobs Grant appears to be a decisive factor for many businesses to locate or expand in Virginia, according to a survey of businesses. Seventy-four percent of businesses that received a VJIP grant and 83 percent of businesses that received a Small Business Jobs Grant reported that they would have proceeded with the project in Virginia even if the grant had not been available. Some of these projects, however, would have proceeded at a smaller scale (45 percent of VJIP projects and 40 percent of Small Business Jobs Grant projects). However, businesses that received a grant from the VJIP or Small Business Jobs Grant programs between FY10 and FY17 reported in a survey that the grant was important in their decision to train workers and it resulted in workforce improvements."

Judge Cain’s Injunction Concerning Social Cost of Carbon Is Reasonable

By Devin Watkins of CEI.

"Jonathan Adler’s recent article on a preliminary injunction by Judge James D. Cain makes it sound like it’s crazy, but I’m afraid that Adler has misconstrued the opinion. Judge Cain’s opinion is based on five key holdings:

1. The Interagency Working Group (IWG) on the Social Cost of Greenhouse Gases is an agency that has been tasked with deciding how much harm CO₂ causes.
2. The so-called “interim” social cost of carbon estimates it issued are actually final agency actions.
3. The states have standing because they are directly forced to use those figures and they are currently being used to restrict leases from which states get money.
4. This final agency action was a legislative rule, and therefore it was done without following the Administrative Procedure Act’s (APA) notice and comment requirements and contrary to prior agency actions, which did go through a notice and comment process.
5. Even assuming the APA procedures had been followed, the global harms calculations that the IWG used were in conflict with the harms the statutes considered relevant.

So, the first problem with Adler’s post, as I see it, is the title is wrong. Nothing in Judge Cain’s opinion or order prohibits the agencies from accounting for domestic costs of climate change. In fact, it insists on the agencies doing so using a 3 percent and 7 percent discount rate. (The discount rate is how much less valuable a dollar is in the future than a dollar today.)

The IWG is an agency because it acts independently of the president under authority delegated by him. It does more than make recommendations to the president, who then issues executive orders based on those recommendations. The judgment of the IWG is made binding on the Environmental Protection Agency (EPA) and other agencies in their cost-benefit analysis, causing such IWG evaluations to have legal effect.

In my opinion, Cain is right, and Adler is wrong, in that that these “interim” values were in fact a final agency action for three reasons:

1. The federal government told states that if they wish to use their sovereign authority to regulate their own citizens, they must use the agency’s numbers on harm from carbon dioxide (CO₂) in state implementation plans submitted to the EPA. If states believe these “interim” SCC numbers are incorrect and submit different numbers, the EPA will issue a federal implementation plan instead. That is not a “proposed” estimate of CO₂ harm lacking legal effect; that is directly regulating states in the exercise of their sovereign authority under threat of federal preemption if they don’t go along with it. (See e.g., New Jersey v. EPA, 989 F.3d 1038, 1046 (D.C. Cir. 2021.) “EPA’s actions injure states when those actions necessitate changes to state laws and make ‘the states’ task of devising an adequate SIP’ ‘more difficult and onerous.’”)
2. The Bureau of Land Management and the Department of the Interior are currently using the “interim” SCC values to reduce how many leases are issued for oil and gas production. States earn royalty payments from the production that occurs due to these sales, so the states are directly harmed financially by the reduction of issued leases.
3. Several agencies have issued final agency rules based upon the “interim” values (the EPA’s phase down of hydrofluorocarbons).

Non-final actions do not yet have legal effect, yet these “interim” IWG values are causing direct legal effect and as such are a final agency action. The final agency action doesn’t need to directly harm the plaintiffs by itself; it just needs to cause particularized harm that is imminent, and in this case, that harm is already occurring. These harms are ongoing harms against the states, and this injunction can prevent those harms from continuing to occur. As such, the states have standing. The states could have sued over each and every action taken based on the IWG’s numbers, but they are not required to file dozens of lawsuits that all stem from the same fundamental final agency action just because further agency actions will be taken.

Adler correctly notes that the presidency is not an agency, but he incorrectly implied that Judge Cain treated the presidency as an agency. Judge Cain explicitly did not issue the injunction to President Biden at all. If you read footnote 1 of Judge Cain’s order, it says where he orders “defendants,” it is “[w]ith the exception of President Biden as he is not an agency under the Administrative Procedures Act.” Nothing that Judge Cain did restrained President Biden directly in any way. Rather, the judge’s orders were to the agencies bound by the APA under the president.

Judge Cain determined the IWG’s interim values were legislative rules (not a mere policy statements) because they dictate specific numerical values for use across all decision making affecting private parties [Catholic Health Initiatives v. Sebelius, 617 F.3d 490, 495 (D.C. Cir. 2010)], and that such values “remove agency discretion.” [Texas v. EEOC, 933 F.3d 433, 442 (5th Cir. 2019) “[I]f a statement denies the [agency] discretion in the area of its coverage[,] then the statement is binding, and creates rights or obligations.”] The other agencies could not use CO2 harms other than the specific values determined by the IWG, thus removing agency discretion which would form the basis for if leases were granted, rulemakings occurred, or federal implementation plans preempted state authority. As the Fifth Circuit held in Texas v. EEOC:

Put differently, “where agency action withdraws an entity’s previously-held discretion, that action alters the legal regime, binds the entity, and thus qualifies as final agency action.” That withdrawal of discretion distinguishes a policy statement—which leaves the agency “the discretion and the authority to change its position … in any specific case” and “does not seek to impose or elaborate or interpret a legal norm”—from a final agency action.

Id. The IWG was not merely recommending that EPA or other agencies consider using such values, but the other agencies were, under executive order, required to use such values for CO2 harms.

Finally, Judge Cain evaluated the legal correctness of the IWG’s decision to consider international harms under the statutes that the IWG’s was purporting to act:

1. The Energy and Policy Conservation Act’s EPCA’s requirement that “consider the need for national energy and water Conservation” 42 U.S.C. § 6295(o)(2)(B)(i) or EPCA’s concern with “the need of the United States to conserve energy,” 49 U.S.C. § 32902(f)(b).
2. The Clean Air Act’s goal to “protect and enhance the quality of the Nation’s air resources” 42 U.S.C. 7401(b)(1).
3. The National Environmental Policy Act’s requirement that agencies to “assure for all Americans safe, healthful, productive, and esthetically and culturally pleasing surroundings,” U.S.C. § 4331(b)(2).
4. Mineral Leasing Act requirement “public welfare” of the United States and “the protection of the interests of the United States.” 30 U.S.C. § 187.

Judge Cain accepted the state’s interpretation of the statutes under which the IWG were purporting to act focused on the harms to the United States, not foreign nations. As such, including those harms in the IWG’s calculations was contrary to Congress’s intent in the statute to consider only domestic harms.

But even assuming the statutes were silent on considering international harms, which they are not, such a consideration of extraterritorial harms is a major question one that Congress, not regulators, should decide. There is, after all, a presumption against extraterritoriality. This is why Judge Cain finds EO 13990 contrary to law, because the statutes only consider domestic harms and the EO requires consideration of other harms. And, even if the statutes were silent, the President cannot unilaterally decide such a major question.

The President’s executive order is not itself a legislative rule, but it ordered the IWG to issue such a final agency rule contrary to Congress’ intent in the statutes to not consider such international harms. And the court is enjoining the government’s continued reliance upon that final rule of the IWG.

Contrary to Adler’s post, Judge Cain’s opinion does not prohibit the Biden administration from “changing course” where such actions are within the agency’s statutory authority, such as by changing which discount rates are considered. But if such changes occur to eliminate or change final agency actions taken with notice and comment (such as Circular A-4 which went through notice and comment under the OMB), the new action must at least also go through notice and comment to do so. The IWG did not go through notice and comment and so cannot be used to contradict Circular A-4. Additionally, the global harms part of the EO and the IWG’s work is contrary to statute and cannot be used by any of the defendant agencies.

Someone can reasonably disagree with Judge Cain’s statutory interpretation. But it is far from the crazy opinion that Adler makes it out to be."

Is it harder to buy a home today than in the past? No, despite what people say about Homer Simpson

By Jeremy Horpedahl.

"Is it harder to buy a home today than in the past? Many seem to think so. Lately, some people have used the example of the fictional Simpsons family to make this claim. A recent Tweet with around 100,000 likes expressed the sentiment:

The unspoken implication is that today a “single salary from a husband who didn’t go to college” couldn’t buy a typical home in the US. Or at least, it would stretch your budget so thin that you would have to give up something else or need two incomes to support that lifestyle (famously dubbed “the two-income trap” by Elizabeth Warren).

And it’s not just a Tweet that caught fire. A December 2020 article in the Atlantic claimed “The Life in The Simpsons Is No Longer Attainable” and used housing as a prime example. And while a 2016 Vox article on Homer’s many jobs doesn’t mention the cost of housing, they draw a similar conclusion and implication: “Homer Simpson has gone nowhere in the past 27 years — and the same could be said of actual middle-class Americans.”

But is this an accurate picture of the Simpsons family over time? And does that picture accurately represent a typical family in the US? Let’s investigate. And let’s start by pointing out that as measured by the availability of consumption goods, the Simpsons do see rising prosperity over time. They have flat screen TVs now, instead of consoles with rabbit ears, as the late Steve Horwitz and Stewart Dompe point out in their contribution to the edited volume Homer Economicus. But with all due respect to my friends Steve and Stewart, I don’t think many would deny that TVs, cell phones, and computers are cheaper today than in the 1990s. The familiar refrain is “but what about housing, education, and health care?”

In this post I want to take on the question of housing, partially by using the Simpsons as an example. My main result is this chart, which I will present first and then explain.

My “Homer’s Home” curve shows how much of Homer’s annual salary it would take to make the mortgage payment on the median new home sold in the US. My calculation takes into account the interest rate on a 30-year mortgage and assumes a 20% down payment (before you object, read on). It does not include insurance or taxes (let’s assume these are roughly constant over time, so would shift the level but the trend of the line).

The crucial piece of data though is Homer’s income. Where does this come from? Many analyses of this the Simpsons, including the Atlantic and Vox articles mentioned above, use a paystub we see of Homer’s in a May 1996 episode. It reveals Homer makes about $24,000 per year (if you assume he works about 50 weeks per year). Many people then make a fundamental mistake of merely adjusting that income for inflation and say that Homer makes about $42,000 in today’s dollars (for example, in the Atlantic). But this assumes what you are trying to prove, that wages have stagnated! Even using the EPI wage data, often the source of wage stagnation stories, we see that median wages have grown 26% faster than inflation since 1996. Inflation adjustments are the source of so much confusion!

Here’s what I do instead: in 1996, Homer was earning about 84.5% of the median family income for single-earner families. I simply assume that Homer is always roughly at this level: his income grows with the normal growth rate for single-earner families. Perhaps this is a problem because Homer only has a GED in the early years, so maybe he’s falling behind over time. I’ll address that below.

What does this chart show? It shows that quite clearly the Simpsons are not being squeezed by housing prices. To the contrary, housing prices are much higher (probably unaffordable at over 50%!) for the family in the late 1980s/early 1990s, but they become cheaper over time. Part of what’s doing the work here is falling interest rates, but that’s a real thing during this time period, and their income does also grow over time.

Housing costs, the largest component of a typical household’s budget, are not squeezing this family. In fact, it’s not until the most recent decade that they get into the 30% of income territory, a typical rule-of-thumb for housing costs. I suspect the trend is the exact opposite of what most would have guessed!

Potential Objections Answered

Down payment

Is it realistic to assume they could make a 20% down payment? Maybe, maybe not, but if it’s unrealistic now then it’s unrealistic in the early 1990s. In the early 1990s, it would have taken about 1.1 years of Homer’s annual income to pay for a 20% down payment on the median new home. Today, it’s more like 1.3 years of income. That’s more, to be sure, but not ridiculously more.

It’s also true that many people are lucky enough to have their parents help with a down payment (and others, of course, aren’t so lucky). The Atlantic writer originally mentioned this as being much more necessary today, but then had to make a correction: the Simpsons actually got help from Homer’s dad too! Yes, parents help, but parents helped the Simpsons in their early years too.

High school degree

First, let’s be clear: Homer does have a college degree! Or at least he did get one in the 1993 season, before we see his 1996 paycheck. Still, it’s a common objection: a single male without a college degree used to be enough!

While I can’t slice the family income data by education status and still keep a single earner, we can use another Census data source: median personal income. I can recreate the chart using median personal income for a full-time male worker with only a high school degree.

While the downward trend isn’t quite as steep in this second chart, which now has nothing to do with the fictional Simpsons data, there is clearly no squeezing of the household budget over time. And for the past decade, we are floating right around 30% of income devoted to housing. Keep in mind this is a single person’s income with a high school degree, no tricks here! The amount spent as a percent of household income is almost exactly equal in 1996 and 2019.

You could say, of course, well this is stagnation! It hasn’t obviously improved over time! But the usual stagnation story is: yes, TVs and flatter and cheaper, but housing prices are going up, and going up so much that they offset the cheaper TVs. And remember, land is basically fixed in supply, so if anything should get more expensive over time, this is the main thing that should. And yes yes! We could be doing much more to make housing cheaper, as I have wrote about in a previous blog post. Still, I think this result is striking.

Finally, while college grads are an increasing share of the labor force, they are still only about 43% of the workforce (using the latest BLS employment situation report). That means they median US worker today doesn’t have a college degree. So the median overall income is not a bad place to start.

Geographic variation

Housing prices vary dramatically across geography in the US. Everyone knows this, even if they know nothing else about urban economics. Some areas and cities have higher prices, and importantly some areas and cities have seen greater prices increases in recent years. Using the median home price for the entire nation might not be perfect.

But where do the Simpsons live? Part of the joke about “Springfield” is that it could really be just about anywhere in the US. But all indication is that it is at least inspired by Springfield, Oregon, according to the show’s creator. What can we say about housing prices in Springfield, Oregon?

Springfield is part of the Eugene, Oregon MSA, and thankfully I could locate some data on housing prices over time in that MSA. It’s a good MSA to pick, because Eugene has seen housing prices rise faster than the US as a whole since 1996. Not a whole lot faster, certainly not like a San Francisco or New York, but fast enough where we are using an MSA that has had some aspect of a “hot housing market,” especially in recent years.

Here’s the best data I can find: in 1996, the median existing single-family home sold in Eugene sold for $116,200. The mortgage payment on that would have taken about 34.1% of Homer’s income. In 2020, the same figure is $370,400 for Eugene, a lot more than 1996, but the mortgage payment is now only about 30.6% of Homer’s income. Less than 1996! Housing prices have continued to rise in 2021, but we don’t have the comparable income data yet, and hey, 2021 is a weird year for housing. But we can reassess when we have complete data.

So even in Eugene-Springfield, Oregon, the Simpsons aren’t falling behind!

Counter objection: the Simpsons are always in financial trouble!

To all of these objections, let me add one of my own: the Simpsons are not an example of a family with no financial difficulties! Money problems are a recurring theme throughout the series, though of course these problems are usually resolved (with hilarious consequences). In fact, one 1995 episode revolves around the fact that Homer missed a mortgage payment, and he only got out of the situation by getting a loan from his hated sisters-in-law and becoming their servant. It all works out in the end for Homer, but once again, the Simpsons have money problems, even in the early 1990s. Them easily owning a home on just Homer’s salary is absolutely not what viewers should take away from the show.

Finally: Houses are bigger and better!

Using the median new home sold is making the hard case. Not everyone buys a new home. And if you do buy a new home, it is better than the new house of the early 1990s in almost every way. For single-family detached homes, here’s just a few stats:

• They are bigger: from under 2,000 square feet in the 1990s, to 2,400-2,600 square feet in recent years
• More bedrooms: the Simpsons have at least 4 bedrooms, but 39% of new detached homes did in 1996. In 2020, 57% had 4 or more bedrooms.
• More comfortable: in 1996, just 83% of new homes had air conditioning. In 2020, it was 96%.

These are just a few of the improvements. And we’re not going back to the 1950s here: these improvements are just since the 1990s! I didn’t make any adjustments for these in my charts because, well, some may accuse me of cheating. And a real objection is that you have to buy what houses are available: if houses are bigger, you have to buy a big house even if you’d prefer a smaller one. So, I didn’t size-adjust the houses. Doing so would have made recent years look even better

Conclusion: The Simpsons are Fictional, but Real Income Growth is Not

The Simpsons are a fictional family. Should we care what they represent? Maybe! A lot of people seem to think so. See the articles I referenced above. Or see this long Reddit thread on the topic. Clearly, the “single income family can’t buy a home anymore, as represented by the Simpsons” line has struck a chord. And it just feels right to so many: sure, flat screen TVs are cheap. But try buying a house to put one in!

However, using the best data I can find to accurately represent the Simpsons’ housing budget situation does not show stagnation. It shows progress, or at the very least stasis. But what about health care? Education? I’m already at almost 2,000 words here, so I’ll save those for another day. I’ve also got a post on the Simpsons tax situation in the works. So, stay tuned, but remember: housing is the biggest budget item for most households. It’s 1/3 of the CPI-U weight. It’s the go-to example of how it’s “hard to get by these days.”

No doubt it’s true in some place. But at least for the median home in the US, or the median home in Springfield, there does not appear to be a budget squeeze going on.

Finally: don’t just adjust things for inflation when you don’t need to. If you are interested in whether a particular good has got more affordable over time, just compare it to the income measure you want for each year. It’s much easier, and much more realistic."