Megan McArdle has a great post about how we should treat problems, not just measurements.

Do the wealthy get to live in nicer houses and drive nicer cars than the poor? Yes, but I'm not sure how much this matters. I find the absolute quality of the housing stock and cars available to the poor much more important than the relative fanciness. Are their abodes warm and dry and safe? Are their cars reliable? As PJ O'Rourke once remarked, "The biblical injunction is to clothe the poor, not style them." You can argue that the poor do not have enough--enough safe homes, education, health care, reliable automobiles, etc. But they wouldn't have enough even if Bill Gates lost half his money.

Tyler Cowen also addresses "inequality":

The cyclically adjusted measures are an abstraction, and furthermore an abstraction based on estimating a modal quantity, namely potential output.

To give an analogy, I get uneasy when I read sentences such as "inequality caused X." "Inequality" didn't cause anything. Inequality is a statistical residue of some other actual processes. It is better to say what caused X (say "the rage and poverty of inner city residents") and, if relevant, connect this to inequality as well. Except that the cyclically adjusted deficit is an even more problematic causal concept than "inequality" because it relies on measurement of a modal, namely potential output.

The word "austerity" is a political concept and it does not belong in rigorous economics. Let's just say what happened. Note the simple causal language in my point #2.

Good stuff, and using proper terminology can help clarify thinking.

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