Re: Fraud in the CPI


"Rumpelstiltskin" <PleaseDoNotReplyByEmail@xxxxxxxxxxx> wrote in message
news:38g4l3p69j9vmkeieajrhdiakiqv047u1d@xxxxxxxxxx
On Sat, 1 Dec 2007 21:28:06 -0600, "John Galt"
<whoisjohngalt@xxxxxxxxxxxxxx> wrote:


"Rumpelstiltskin" <PleaseDoNotReplyByEmail@xxxxxxxxxxx> wrote in message


<snip>


But the question at present, is it not, is whether the official
CPI genuinely preserves the buying power that it used to.
Substituting hamburger or steak would not be an example
of "preserving the buying power that it used to."

No,


It isn't? Sorry, I must have missed the whole point of the
thread, and don't see what it would be instead.


but let';s not pretend that the chicken/steak example invalidates the
entire notion of subsitution. It in and of itself might not be the best
type, but I think you'll agree that the basket of goods ought not contain
"One button-down cotton oxford shirt made by Hart, Shaffner, and Marx" but
"One button-down cotton oxford shirt."


It doesn't invalidate it in principle, but the field is wide
open to invalidation in practice.

Sure. Economics is not as hard a science as people would want it to be.
There are LOTS of assumptions being made all the time.


Substituting the cost
of hamburger for the cost of beef sure sounds like
invalidation in practice. If there are more examples
like that, something fishy is going on. Even that alone
looks fishy.

Doesn't sound fishy to me. Sounds like a guy in an ivory tower (the
government economist) having a difference of opinion with a guy on the
street (you).




If the former, a good deal of cost increase appears in the CPI over the
years; but, I can buy that same quality of shirt for the same price I did
25
years ago -- because of subsitution.


Sure, but that's not hamburger versus steak.
Unequal substitution doesn't need to be universal
to result in inequality - it just has to be significant
and trending one way or the other. The contention
being made, I thought, was that it is significant and
it does trend to the disadvantage of SS recipients,
and wherever else it might matter.

A rigid, no-subs policy obviously results in a higher CPI, which is
obviously good for SS receipients. However, it doesn't accurately model the
inflation in the economy.

JG


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