@salimfurth @MichaelRStrain @stanveuger @oren_cass The basic issue is this: if I had $5 and bought one coffee, and you gave me $5 and I bought another coffee, the price of coffee hasn’t doubled. And if someone else wishes you’d given them $5 and can’t afford a second cup, they’re not worse off than they were.
@salimfurth @MichaelRStrain @stanveuger @oren_cass Now if the price of coffee actually goes up because I have an extra $5 to spend, then the person who just wants one cup IS worse off because his one cup is now $5.10 or whatever. Price indices will capture that. Oren’s method can’t distinguish.
@salimfurth @MichaelRStrain @stanveuger @oren_cass If I spend my $10 on a platinum latte or something, and the $5 cuppa joe goes away entirely, then the person who wants the $5 cuppa joe is even more worse off (probably—she can still spend her $5 on SOMETHING). Oren seems to think such situations are ubiquitous.
@salimfurth @MichaelRStrain @stanveuger @oren_cass But why would the $5 cuppa joe go away if there is still demand for it? Oren’s argument really only makes sense in the context of housing, but (1) the problem is regulation and more importantly (2) he has no idea whether this is a big or small problem in practice
