Friar Bijou wrote:
gbaji wrote:
Jophiel wrote:
Medieval serfs lived better lives than cavemen in terms of housing and amenities. Absolutely meaningless but true.
If someone's actually seriously making an argument about the state of the economy by using the decline in purchasing power of a sharp pointy stick in the medieval age versus the stone age, then it's not meaningless at all. I'm just following the argument here.
Well, then...try making the start point of your purchasing power/poverty comparisons 1970 instead of 1900.
Sorry. I used that as a starting point because that was the claim being debunked in the article I linked to about the fallacy of pointing to declining purchasing power as a problem (the Ron Paul argument). To be fair, you did say "since the 50s".
Here's the thing though. It does not matter. When you talk about the purchasing power of a dollar, you're talking about what a single dollar buys. Obviously, over time, inflation will reduce the value of a single dollar. But that's tells us nothing about our economic condition unless the total supply of dollars is unchanged. If I have 10 times as many dollars, but each can only purchase what used to cost 10 cents, the purchasing power of a dollar is 1/10th what it was. But I'm not affected at all.
Just saying that the purchasing power has "nosedived" doesn't tell us anything. You'd need to say that the average person is less able to purchase things today than he used to (I mentioned using purchasing power per hour of labor for this). The problem is that this is a much more difficult number to determine, since you have to decide which "things" to use as your metric. For example, we could use houses (in fact, someone did). But, as I pointed out, when adjusted for inflation, housing prices are only up about 20% over the last century. They're up even less over the last half a century. I think they might even be *down* relative to 1950s, since that was a boom time. I'd have to dig up the link again.
But even looking at the relative cost increase (let's just pretend it's like 10% increase in adjusted price for a house compared to the 1950s to split the difference), this doesn't tell us the whole picture. Is a house purchased today the same as a house purchased in the 1950s? Probably not. The average American house has doubled in size since the 1950s. There are more bathrooms. Bigger and more bedrooms. Bigger kitchens. More appliances. More plumbing and wiring to go with that. Phone and cable outlets. Probably better insulation. Probably more heat and cool efficiency. More likely to have heating (and more efficient heating). And I'm not even sure if AC existed then. So for 10% more of your average earnings, you're getting a far far better house.
I would assume rentals have followed the same pattern as well. The point being that you can't just look at the dollars spent, or even the dollars relative to some inflation adjusted standard. You also have to look at what you are buying. We could make the same calculations with cars. But is a car today the same as a car from the 1950s? Not even close. Even the old staple, food, has changed. Some (myself included) might argue for the worst, but the reality is that if you can avoid processed foods (and lets not forget that the foil wrapped food craze started in the 50s), I would argue that there are a lot more choices with regard to fresh and healthy foods today than you could get in your average market back in the 50s. Blame it on GMOs if you want. Dunno. And I don't think adjusted food prices are much higher (or higher at all) compared to 1950s prices. Lots fewer people die of salmonella and ecoli today than did back then though. So there is that.
I get what you're saying, I just don't agree that the facts support it. Aside from just comparing prices directly while ignoring inflation effects, can you actually make an argument that the average working class person was better off in the 1950s than today? I don't think you can. Not without ignoring a whole slew of things that directly affect quality of life. And no, I'm not just talking about 50 inch flat screen TVs. I'm talking about quality and variety of food, clothing, housing, transportation, leisure, etc. Heck. Even health care, as messed up as it is, is still far far "better" than it was back then. That's a whole topic by itself, but my point is (again) that you can't just compare the costs straight across. You have to look at what you are getting in return.
Edited, Mar 23rd 2016 6:46pm by gbaji