(Roughly) Daily

Mike Konczal unpacks happens when one takes the AEI graphic of items that have had high and low inflation, but extend it to all categories…

This graphic is in the news again:

Its creator is Mark Perry of the American Enterprise Institute, who last posted an update to it in July 2022. He’s been doing a version since at least 2016, and if you read enough economics blogs or content you’ve probably seen some iteration of it.

People are talking about it again after Marc Andreessen posted it under the headline “Why AI Won’t Cause Unemployment.” Andreessen describes what people generally take away from it – blue line capitalism and dynamic, red line government regulations and stagnant…

Matt Yglesias noted on twitter that he’s “come to think it’s misleading — by being very selective in which categories of labor-intensive services it chooses to chart, it’s generated a narrative that relative price shifts are just about government regulation.”

That seems correct to me; these categories are pretty loaded. Let’s see if we can do better by including every possible category… let’s download all of the current Consumer Price Index (CPI) data off the BLS download site…

Since the BLS is constantly changing categories, we have to select the items that exist in both January 2000 and February 2023 to duplicate the chart. That leaves us with 62 categories. Doing a quick glance (and seeing in Perry’s own chart) the year-by-year evolution over time doesn’t really tell us much, so we can go with a simple bar chart for overall change. Let’s chart that here in full:

There are a few key takeaways looking at it this way:

In our version of the AEI chart the number one item isn’t health care but ‘delivery services,’ which is “fees for delivery of items such as letters, documents, and packages at non-US Postal Services facilities.”Think UPS or FedEx. This is pretty far from a government monopoly, indeed it’s the private sector alternative to a government program. But it is services and it is labor intensive.

The biggest thing, to me, isn’t “regulations” but whether it’s a service or a good…

More on how and why that matters in “A Better AEI Graphic of Inflation Over the Past 20 Years.”

* Sam Ewing

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As we ruminate in the rise, we might recall that it was on this date in 2006 that Twitter co-founder Jack Dorsey sent the first tweet.

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