Take 1900 to 2008, minus the few years of deflation near the Great Depression [and a few others] and of course wartime is odd so cut that out too.
Any single year there has been inflation, from one year to the next.
From 1900 to 2008 there has been radical *deflation*, for instance in the Sears catalog. You’d rather spend 10K in the modern catalog than in the old catalog.
If you are spending a million dollars (in either 1900 or 2008), there is very radical deflation. If you are spending $5, you might prefer the Sears catalog of 1900, at least get a few good white shirts.
I don’t think it all quite adds up.
True enough. And yet I would rather have the university education I had for almost free than the one my son is getting for a lot more money.
It’s not clear what an average of apples and oranges means.
I guess I’m confused. From wikipedia:
“Beginning in 1908, Sears issued its first specialty catalog for houses, Book of Modern Homes and Building Plans, featuring 22 styles ranging in price from US$650–$2,500 ($12,200-$47,100 in 2003 dollars). Sears bought a lumber mill and arranged for production of kits from which homes could be assembled to be made in Southern Illinois. The first mail-order was filled in 1909.”
Or, given evidence that people prefer lower absolute and higher relative incomes to the opposite, you’d rather you’d rather want the million now than later — but if happiness research is to be believed, humans would rather be in the top .001% of the income distribution without indoor plumbing than to be in the top 10% with high-speed Internet access.
I’d rather be the kind of person who’d rather be absolutely than relatively rich, but I’m not sure it’s the case.
I highly recommend looking through the contents of Wishbook, a Flickr user. There are some great examples in the catalogs listed from the Seventies, through the 80s.
1982 Wishbook. A brand new video camera outfit for a total of $2189. In 2006 dollars, that’s about $4600. You can get all the same features now in a sub-$200 Canon digital still camera.
Perhaps the way to resolve this paradox is to evaluate prices in hours of labour (using various quintile wage rates), rather than dollars. this won’t fix the wider avaialbility problem, but it shoudl give a purer indication of prices as they would appear to different segments of society.
Life expectancy at birth in the US in 1900 was 47 years, compared with 77 today. Given the state of medicine in 1900, how many hours of your salary do you reckon it have taken to obtain health care that would extend your life by 30 years?
But why does it take 2 incomes and a pocket full of credit cards to live a middle class life, nowadays?
I know we get some nicer stuff: cable, computers, better groceries, bigger houses. But it generally takes 2 people to achieve this. Is it twice as good? Do the kiddos benefit from being with day care providers more (of the waking hours) than with parents?
One other thought.
Sure, we live better today. But there are also items that are considered essential to modern living that couldn’t be had in past decades, no matter what the price. Cars, computers, college educations, etc.
Sure, my computer is faster today than ten years ago (in theory anyway, I don’t think it is in fact, but Vista’s another story) but I couldn’t run the programs that I need to run today on the old computer, if for no other reason than the constant waves of compatibility issues crashing against my shore of technological resistance.
This “innovation” adds to the overall cost of living of the average person, another potential input for “real” inflation.
I agree that this is conflating things. If certificates of deposit have negative returns when adjusted for inflation, will new goods still compensate? I have less purchasing power in general, but if I can buy a better iPod or computer I’m OK?
That might depend on who I am.
I do think hours labor, in the quintiles, to earn basic things like rent, food, clothing is the way to go.
Healthcare inflation … double digit growth in costs without double digit growth in life expectancy?
But why does it take 2 incomes and a pocket full of credit cards to live a middle class life, nowadays? I know we get some nicer stuff: cable, computers, better groceries, bigger houses. But it generally takes 2 people to achieve this. Is it twice as good?
Maybe because you’ve internalized the definition of ‘middle class’ life as meaning “what you can buy with 2 incomes and a pocket full of credit cards”? Seriously — what you’re asking is, “Why do I have to work the way everybody else does to buy the things that everybody else has”?
But if your ideal is the life of the 1950s with a 800 square foot Levittown tract house and a stay-at-home housewife, that option is still available. And as an extra bonus, you can keep the MP3s and DVDs and other electronic items that are so cheap it doesn’t make any sense to do without.
But I also think you’re operating under a false assumption if you think that families are working much harder now that in the past. As it happens, I’ve been re-reading Witold Rybczynski’s Home, (which is a brilliant little book), and one of the things that’s clear there but that you’re not taking into account is that a hundred years ago, being a ‘non-working’ homemaker was truly an arduous full-time job (unless you had a maid — in which case it was an arduous, full-time job for her). No washing machine or clothes dryer, no dishwasher, no vacuum cleaner (you hauled the rugs out to beat them), no refrigerator or freezer (frequent shopping), a furnace and stove that needed to be stoked by hand, clothing that was likely homemade (and pressed with 10 pound flatirons that you heated on that hand-stoked stove). Oh, and probably no indoor plumbing (which really doesn’t sound that bad until you think — no indoor plumbing in January).
Allan Meltzer recommended this as the best illustration of the phenomenon:
http://www.dallasfed.org/fed/annual/1999p/ar97.pdf
“If you are spending a million dollars (in either 1900 or 2008), there is very radical deflation.”
I think TC has missed the boat here. I think a million is much to be preferred to a million now.
You’d miss the improvements that better technology has given us, but there would be plenty to make up for it. One obvious point, at least to me, would be the much higher relative status you’d have in 1908 – and don’t all of these happiness studies tell us that is what is really important to people?
Give me $1,000,000 in 1908 and to hell with the Sears catalog. I’ll retire to Lake Como and spend my time reading and traveling. I’ll miss the cinema and music of the past 100 years but with most of the other arts – literature, fine art, classical music, theatre, gardening – most of the good stuff will be available. I’m not convinced that people with $1,000,000 in 1900 ate all that badly, either.
(If I am allowed to retain my 2008 consciousness, I will be especially gratified by my superiority in ethics to those loutish folk that lived in the past – what a fine master to my servants I will be).
@BurgerFlipper: Did women enter the workforce because they felt that a middle-class lifestyle couldn’t be supported without their non-home labor? Or did they enter the workforce for other reasons (e.g., feminist empowerment)? Basically, are middle class families dual-income because middle-class things require two incomes to purchase, or is it the other way around? Say you and I are both burger flippers. If you and I are bidding on a middle-class house for our wives and kiddos, and my wife is a homemaker and your wife is an electrical engineer, who buys the house?
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