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Why do we measure inflation in dollars, instead of in hours of labor?

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Villiage Idiot
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Is there a published metric for units of production purchased by a specific unit of labor? I mean is that like a "thing"?

I brought this up in a earlier thread, and the idea was pretty much poo pooed, but the purchasing power of the median labor hour seems to be a much better metric than inflation for measuring our economic health. Is there a name for this? If not, can I claim the concept as my very own and get an award or something?

Anyone got a suggestion on what I should name this concept? Maybe PPPMWH (Purchasing Power Per Median Work Hour). Or 3PH for short? How about 3CPO, no, that conjures up images of a gold tin man.
 

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The Big Mac Index, kind of does what you are asking.
 

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Is there a published metric for units of production purchased by a specific unit of labor? I mean is that like a "thing"?

I brought this up in a earlier thread, and the idea was pretty much poo pooed, but the purchasing power of the median labor hour seems to be a much better metric than inflation for measuring our economic health. Is there a name for this? If not, can I claim the concept as my very own and get an award or something?

Anyone got a suggestion on what I should name this concept? Maybe PPPMWH (Purchasing Power Per Median Work Hour). Or 3PH for short? How about 3CPO, no, that conjures up images of a gold tin man.

How would you define median labour hour? An accountant has more purchasing power per hour worked than a barista at Starbucks because he makes more money. Inflation measures how expensive a basket of goods is over time compared to a base year and pretty much how the price for basic necessities and basic luxuries have increased. Also, NASA already has dibs on 3CPO.
 

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How would you define median labour hour? An accountant has more purchasing power per hour worked than a barista at Starbucks because he makes more money. Inflation measures how expensive a basket of goods is over time compared to a base year and pretty much how the price for basic necessities and basic luxuries have increased.

If the median wage was $17.36, then that would be the median labor hour. The point where half the people make more, and half make less.

The issue with inflation is that it doesn't take into account inflation or deflation of our wages. So like if we have 1% inflation, but we have 2% hourly wage growth, then a wage earners purchasing power hasn't declined by 1%, it's actually increased by 1%.

A friend of mine constantly harps on how inflation is theft, and how the dollar has lost 97% of it's purchasing power since 1913, yet he never seems to notice that the average American is paid about 50 times more than we were paid back then. Thus, having an official wage vs cost of stuff metric seems like it would have value in economic discussions.
 

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Is there a published metric for units of production purchased by a specific unit of labor? I mean is that like a "thing"?

sounds like the labor credit, or voucher system. I can tell you more about it if you like ;)

Let us take, first of all, the words "proceeds of labor" in the sense of the product of labor; then the
co-operative proceeds of labor are the total social product.
From this must now be deducted: First, cover for replacement of the means of production used up.
Second, additional portion for expansion of production. Third, reserve or insurance funds to provide
against accidents, dislocations caused by natural calamities, etc.

These deductions from the "undiminished" proceeds of labor are an economic necessity, and their
magnitude is to be determined according to available means and forces, and partly by computation of
probabilities, but they are in no way calculable by equity.

There remains the other part of the total product, intended to serve as means of consumption.

Before this is divided among the individuals, there has to be deducted again, from it: First, the general
costs of administration not belonging to production. This part will, from the outset, be very considerably
restricted in comparison with present-day society, and it diminishes in proportion as the new society
develops. Second, that which is intended for the common satisfaction of needs, such as schools, health
services, etc. From the outset, this part grows considerably in comparison with present-day society, and it
grows in proportion as the new society develops. Third, funds for those unable to work, etc., in short, for
what is included under so-called official poor relief today.

Only now do we come to the "distribution" which the program, under Lassallean influence, alone has in
view in its narrow fashion -- namely, to that part of the means of consumption which is divided among
the individual producers of the co-operative society.

The "undiminished" proceeds of labor have already unnoticeably become converted into the
"diminished" proceeds, although what the producer is deprived of in his capacity as a private individual
benefits him directly or indirectly in his capacity as a member of society.

Just as the phrase of the "undiminished" proceeds of labor has disappeared, so now does the phrase of the
"proceeds of labor" disappear altogether.

Within the co-operative society based on common ownership of the means of production, the producers
do not exchange their products; just as little does the labor employed on the products appear here as the
value of these products, as a material quality possessed by them, since now, in contrast to capitalist
society, individual labor no longer exists in an indirect fashion but directly as a component part of total
labor. The phrase "proceeds of labor", objectionable also today on account of its ambiguity, thus loses all
meaning.

What we have to deal with here is a communist society, not as it has developed on its own foundations,
but, on the contrary, just as it emerges from capitalist society; which is thus in every respect,
economically, morally, and intellectually, still stamped with the birthmarks of the old society from whose
womb it emerges. Accordingly, the individual producer receives back from society -- after the deductions
have been made -- exactly what he gives to it. What he has given to it is his individual quantum of labor.
For example, the social working day consists of the sum of the individual hours of work; the individual
labor time of the individual producer is the part of the social working day contributed by him, his share in
it. He receives a certificate from society that he has furnished such-and-such an amount of labor (after
deducting his labor for the common funds); and with this certificate, he draws from the social stock of
means of consumption as much as the same amount of labor cost. The same amount of labor which he
has given to society in one form, he receives back in another.

Here, obviously, the same principle prevails as that which regulates the exchange of commodities, as far
as this is exchange of equal values. Content and form are changed, because under the altered
circumstances no one can give anything except his labor, and because, on the other hand, nothing can
pass to the ownership of individuals, except individual means of consumption.

https://www.marxists.org/archive/marx/works/download/Marx_Critque_of_the_Gotha_Programme.pdf
 

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dimensionallava

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Geesh, I didn't understand a word of that. It almost made me feel like the typical Trump fan does when reading the newspaper (reading every word of an article but not having the IQ to comprehend it)

yeah 19th century german can be hard to read :lol:, but Daniel DeLeon was an american and he wrote alot about labor vouchers, hes a bit easier too translate into modern english. Basically a labor voucher system is money without the negative aspects of capital, so it would work like money but you cant invest it or earn money off of it. This is how we will transition from capitalist society into a system where we have abolished money, Deleonists call this transitional period the Co-operative Commonwealth, DeLeonists are pretty much gone in America but they are still pretty active in Canada

"Co-operative Commonwealth" is a technical term; it is another name for the Socialist or Industrial Republic. He who says "Co-operative Commonwealth" means, must mean, a social system that its advocates maintain flows from a previous, the present, the Capitalist regimen ; a social system that its advocates maintain is made compulsory upon society by the impossible conditions which the Capitalist regimen brings to a head; finally, a social system which its advocates maintain that, seeing it is at once the offspring of Capitalism and the redress of Capitalist ills, saves and partakes of the gifts that Capitalism has contributed to the race's progress, and lops off the ills with which Capitalism itself cancels its own gifts. The issue of wages, or the worker's income, throws up one of the leading ills of Capitalism.

The Co-operative Commonwealth revolutionizes the status of the worker. From being the merchandise he now is, he is transformed into a human. The transformation is effected by his pulling himself out and away from the stalls in the market where today he stands beside cattle, bales of hay and crates of crockery, and taking his place as a citizen in full enjoyment of the highest civic status of the race.

The means for the transformation is the collective ownership of all the necessaries for production, and their operation for use, instead of their private ownership by the Capitalist, and their operation for sale and profits.

The worker's collective ownership of that which, being stripped of under Capitalism, turns him into a wage-slave and chattel, determines his new status. The revolutionized status, in turn, determines his income.

Whereas, under Capitalism, the very question whether the worker shall at all have an income depends upon the judgment, the will or the whim of the Capitalist, whether the wheels of production shall move, or shall lie idle, -- in the Co-operative Commonwealth, where the worker himself owns the necessaries for production, no such precariousness of income can hang over his head.

Whereas, under Capitalism, a stoppage of production comes about when the capitalist fears that continued production may congest the market, thereby forcing profits down, and never comes about because there is no need of his useful articles, -- in the Co-operative Commonwealth, use and not sale and profits being the sole purpose of production, no such stoppage of production, hence, of income, is conceivable.

Whereas, under Capitalism, improved methods of production have an eye solely to an increase of profits, and therefore are equivalent to throwing workers out of work, -- in the Co-operative Commonwealth, use and not sale and profits, popular wellbeing and not individual richness, being the sole object in view, improved methods of production, instead of throwing workers out of work, will throw out hours of work, and keep steady, if they do not increase, the flow of income.

Socialism and Labor Time Vouchers
https://www.marxists.org/reference/archive/bellamy-ed/works/1891/gronlund-coop.htm
Daniel De Leon - RationalWiki
 

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Great thread.
sounds like the labor credit, or voucher system. I can tell you more about it if you like ;)
https://www.marxists.org/archive/marx/works/download/Marx_Critque_of_the_Gotha_Programme.pdf
Simply changing the model of currency to fit the labor model would be easier--the Ithica Hour was intended to work this way.


How would you define median labour hour?
The BLS apparently already has metrics on this.

May 2015 National Occupational Employment and Wage Estimates
 
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Great thread.

Simply changing the model of currency to fit the labor model would be easier--the Ithica Hour was intended to work this way.


The BLS apparently already has metrics on this.

May 2015 National Occupational Employment and Wage Estimates

The largest problems with the Ithaca hour system is that the only purpose they serve is to prevent capital from leaving a specific region, I had to check too see if that program was still active because its technically an alternative currency which is considered form of treason, Im surprised its still around
 

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The largest problems with the Ithaca hour system is that the only purpose they serve is to prevent capital from leaving a specific region, I had to check too see if that program was still active because its technically an alternative currency which is considered form of treason, Im surprised its still around
Treason? Not in any era I've lived in. There are several complementary currencies operating here and there. The nearest one to me is Davis Dollars.
 

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Is there a published metric for units of production purchased by a specific unit of labor? I mean is that like a "thing"?

I brought this up in a earlier thread, and the idea was pretty much poo pooed, but the purchasing power of the median labor hour seems to be a much better metric than inflation for measuring our economic health. Is there a name for this? If not, can I claim the concept as my very own and get an award or something?

Anyone got a suggestion on what I should name this concept? Maybe PPPMWH (Purchasing Power Per Median Work Hour). Or 3PH for short? How about 3CPO, no, that conjures up images of a gold tin man.

I found a metric called Employment Cost Index, which might be a substitute for hourly wage compensation. Here's what I did:

PPPMWH index 1.jpg

Data is the quotient of CPIAUCSL (annual average, index 1982-1984 = 100) and Employment Cost Index (Service Occupations, December Indices, Index Dec 2005 = 100); quotient is re-indexed at 1980 = 1.00.

Consumer Price Index (CPI)
http://www.bls.gov/ncs/ect/sp/ecconst.pdf



If this methodology is sound enough for a rough look, then it looks like the libertarians were generally right--inflation was stronger than wage growth from 1980 to 1984 (not surprising), but held generally level between 1984 to 1996, and then started plummeting again in 1996 (Clinton. Go figure).
 
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Treason? Not in any era I've lived in. There are several complementary currencies operating here and there. The nearest one to me is Davis Dollars.

there are some special exceptions like they have to be solely used for local purposes and cannot be seen as competition for the american dollar, Yanis Varoufakis leader of the libertarian marxist Syriza party in greece, faced charges of high treason for trying to setup an alternative currency in case greece left the eurozone last year, when he was finance minister

Varoufakis: 'If I?m Convicted of High Treason, it would be Interesting' | GreekReporter.com
 

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there are some special exceptions like they have to be solely used for local purposes and cannot be seen as competition for the american dollar, Yanis Varoufakis leader of the libertarian marxist Syriza party in greece, faced charges of high treason for trying to setup an alternative currency in case greece left the eurozone last year, when he was finance minister

Varoufakis: 'If I?m Convicted of High Treason, it would be Interesting' | GreekReporter.com
I wasn't aware we were talking about Greek law.
 

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I wasn't aware we were talking about Greek law.

its considered the law in america too and pretty much every other country, you can certainly work to change the US dollar, but you cant just start printing your own money, even just making coins of any kind is illegal. It counts as an act of terrorism, as well.
 

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its considered the law in america too and pretty much every other country, you can certainly work to change the US dollar, but you cant just start printing your own money, even just making coins of any kind is illegal. It counts as an act of terrorism, as well.
This has no basis in reality. Alternative currencies are not illegal in the United States.
 

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last time someone tried it they were raided by the FBI it was called "the liberty dollar", and there have been other cases of people trying to bring back the confederate dollar who were arrested, as well

https://en.wikipedia.org/wiki/Liberty_dollar_(private_currency)
Last time someone tried it, it was the Ithica Dollar, the Davis Dollars, the Berkley Share, the ****ing bitcoin for crying out loud. Alternative currencies are not illegal in the United States.
 

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Is there a published metric for units of production purchased by a specific unit of labor? I mean is that like a "thing"?

I brought this up in a earlier thread, and the idea was pretty much poo pooed, but the purchasing power of the median labor hour seems to be a much better metric than inflation for measuring our economic health. Is there a name for this? If not, can I claim the concept as my very own and get an award or something?

Anyone got a suggestion on what I should name this concept? Maybe PPPMWH (Purchasing Power Per Median Work Hour). Or 3PH for short? How about 3CPO, no, that conjures up images of a gold tin man.

It sounds like you're asking for what's called Real Average Hourly Earnings and "Yes, it's a thing". The BLS even produces reports on it

Real Earnings
 

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Last time someone tried it, it was the Ithica Dollar, the Davis Dollars, the Berkley Share, the ****ing bitcoin for crying out loud. Alternative currencies are not illegal in the United States.

I never said alternative currency was illegal, I said it has to be local, and bitcoin faces massive legal issues in every single country, specifically for this very reason, The USA classifies it as a commodity, not a currency, and many others have banned it, some then brought it back with strict regulations, some only ban bitcoin atms, some ban them being stored in banks, in countries like bangladesh and ecuador its completely illegal and its use can carry jailtime

https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country
 

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Is there a published metric for units of production purchased by a specific unit of labor? I mean is that like a "thing"?

I brought this up in a earlier thread, and the idea was pretty much poo pooed, but the purchasing power of the median labor hour seems to be a much better metric than inflation for measuring our economic health. Is there a name for this? If not, can I claim the concept as my very own and get an award or something?

Anyone got a suggestion on what I should name this concept? Maybe PPPMWH (Purchasing Power Per Median Work Hour). Or 3PH for short? How about 3CPO, no, that conjures up images of a gold tin man.
I need to correct my first graph. I realized I was using the current-dollar tables, not the constant-dollar tables, essentially counting inflation twice (if I understand correctly). The changes are striking:

PPPMWH index revised.jpg (note the footnotes are wrong, this isn't ECEC, this is constant-dollar ECI)

This shows that, at least, that employment costs rose faster than inflation in near-constant proportion.

I also found this:
ECT Handbook of Methods said:
The ECEC series measures the average cost to employers for wages and salaries [...] per employee hour worked.
and realized ECEC would probably be closer to what you intended than ECI.

ECEC is a more recent data series, so I couldn't go back to 1980, but these are the results:

PPPMWH index revised 2.png

It's remarkably flat, actually. The best explanation I have for that is that wages are often indexed to inflation anyway. It would be more interesting, undoubtedly, to see data back to the 70's.



So... which method is most appropriate?
 
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I brought this up in a earlier thread, and the idea was pretty much poo pooed, but the purchasing power of the median labor hour seems to be a much better metric than inflation for measuring our economic health.
No singular measure is sufficient to assess the economic health of a nation. Inflation is commonly short term for price inflation but could actually refer to a number of different measures, one of which is wage inflation as it happens. Clearly to assess the internal health of an economy you’d need to consider prices and income, and the in the inevitably varied ranges and extremes rather than singular national averages.

The kind of measure you’re thinking of has difficulties because it’s based on multiple hugely varying measures (wages, prices, employment, non-wage income etc.) so even if you could establish a way of boiling all that down to a standard measure, you wouldn’t be able to read anything at all in to it changing without further details. There’s no benefit in making those calculations when you’d need to look at the individual measures that would be combined in to it anyway.
 

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Then again, maybe the measure shouldn't be a ratio at all, because the way you're looking at it may be more appropriate to call it the difference between inflation and wage growth.

pppmwh wage growth minus inflation.png
 

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Gosh, let's just stop doing economics then. :roll:
Where did that come from?!? I only suggested that there’s no benefit in trying to combine a number of separate measures in to a single output in this specific example. High wages and high prices would have different consequences and would require different responses to low wages and low prices but a combination measure of a “working hour value” wouldn’t show that difference. Economists and policy makers would need to monitor wages and prices as separate values to reach legitimate conclusions. Obviously some ratio’s, averages and combinations are necessary but that can be taken too far – it’s about the balance between simplicity and usefulness.
 
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