Friday, April 11, 2008

The past, they say, is another country. Elizabeth Warren visited 1978. Life is better there.

If you don't have time to sit through the whole hour (and shaving off the five minute intro doesn't help), here's a summary:

  • The typical family then (couples with two kids) was saving for retirement. The typical family now has no net savings, and is deeply in hock.
  • Most families had only one income, but they only needed one. Two-income families these days need both incomes just to make the mortgage payment; if either is unemployed for long, they lose the house, so they're doubly at risk.
  • The portion of income devoted to fixed and inelastic expenses like transportation and shelter was roughly 50%; it's now more like 75%. There are more cheap trinkets to buy with what's left, so long as you have it --- but losing 35% of income, once a major inconvenience, has become a calamity.
  • Public education and a high school degree used to be enough for a kid to attain a middle class lifestyle. Now preschool and college are effectively required --- and expensive.
  • Health insurance is less common, less available, and just covers less.
  • And so on. And so on. And so on.

Many people are old enough to remember that life --- if not from having lived it themselves, then from having lived in the homes of their parents. I guess they're too busy scraping by to complain much about what they have now. And so, panglossian economists get to tell us that since this was all the result of choices made by free people in a free market, it necessarily follows that the cheap trinkets we've gained are a more than adequate compensation for the ease we have lost.

via Mark Thoma

4 Comments:

Blogger CupOJoe said...

In 1968 or so, my dad was making about $6.50 an hour, working for the city of New York in a low-skill job, repairing potholes and the like. On that one salary, he supported our family, a family of five.

He was able to do so because prices were much much lower than they are now: rent was, I believe, only $80 a month. A loaf of bread was a quarter, same with a dozen eggs. Gas was 30 cents a gallon. I'm not going to say we lived luxuriously, but we never went hungry, and my dad even managed to save enough money to buy a house and move us to Florida. When my mother got cancer, likely because of my dad's union pension, she got the care she needed without bankrupting us.

There are still a lot of people making $6.50 an hour, or only marginally higher, yet the cost of all these things is five to ten times higher than in 1968.

And I promise, it's going to get a lot worse before it gets better.

But it will get better. Maybe not in my lifetime, but eventually. Because what they're doing just can't last. Either we'll finally rise up and send the bastards to jail or the rest of the world will say "enough" and put us down.

I only hope I live long enough to see it.

8:48 PM  
Blogger charles said...

That's pretty much what Warren was talking about --- but you've got to be careful (and she is) of comparing prices then and now. As you point out, a current dollar is just worth less --- so your Dad's $6.50 was worth a lot more than a latter-day 7-11 clerk's.

However, that doesn't mean that inflation, per se, is the problem --- it wouldn't matter so much if prices had all gone up, but wages had gone up more. It's changes in relative wages and prices that matter; for more, see Warren's talk...

8:26 PM  
Anonymous Brian said...

Nope. Don't believe things will get better. There's peak oil, massive government and personal debt. Our economy has been sold off by our traitorous elites. Climate change.

How will it get better?

8:11 PM  
Anonymous lynx said...

i'm with cupOjoe on this one... not even americans are complacent enough to take this crap lying down forever. i hope.

8:57 PM  

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