Blog Post

AEIdeas

The chart above (thanks to Olivier Ballou) is an update of a chart we produced last year about this time, and shows the percent changes since January 1997 in the prices of selected consumer goods and services, along with the increase in average hourly earnings in this version (which have increased by 81.5% over the last 21 years vs. the 55.6% increase in the CPI).

See any patterns? Tradeables (with import competition like TVs) vs. non-tradeables (like childcare), manufactured goods (with import competition like clothing and cars) vs. services (medical, hospitals, education), competitive (software) vs. protected industries (healthcare), degree of government involvement/funding/regulation?

Here are some comments from Twitter about the chart, which I posted there a few days ago and which has been re-Tweeted more than 200 times.

1. Blue lines = prices subject to free market forces. Red lines = prices subject to regulatory capture by government. Food and drink is debatable either way. Conclusion: remind me why socialism is so great again.

2. Interesting, almost all of the items above the line are protected industries while those below the line are subject to generally robust competition…

3. I’m not going to lie, this is one of the most important charts about the economy this century.

4. Imagine that, prices are cheaper with more competition and less government involvement.

5. What areas are government most intrusive? Education and healthcare or manufacturing?