Stagnating Middle-Class?

by Don Boudreaux on July 25, 2011

in Creative destruction, Myths and Fallacies, Standard of Living, The Economy, The Hollow Middle, Video, Wal-Mart, Work

Here’s a PowerPoint presentation that I gave as part of a lecture at Cato University.  [UPDATED: December 2012.  The 1975 Sears-catalog comparisons start at slide #17.]  It’s an updated version of these two posts – here and here – on shopping today in a Sears catalog from Fall/Winter 1975.

In this presentation, I calculate how many hours each non-supervisory worker earning the average nominal hourly wage of such workers had to work in 1975 to buy a variety of ordinary goods, and how many hours each non-supervisory worker earning the average nominal hourly wage of such workers must work in 2011 to buy similar (or, really, in almost every case far superior) or comparable goods.

The dollar figure beside each photo from the 1975 Sears catalog is the 1975 price(s) of that product(s) adjusted, using the CPI, into 2011 dollars.  (The photos of the various pages of the 1975 Sears catalog, BTW, were taken with the camera in my iPhone.  Just FYI.)

Before starting this PowerPoint presentation, I showed this recent clip from Robert Reich – one of many, many instances of people insisting that ordinary Americans are no better off today (at least materially) than they were since just before the age of alleged laissez faire descended upon us circa 1980.

This presentation, of course, does not prove that middle-class Americans are today better off than were middle-class Americans of the 1970s.  Other factors must be controlled for and considered and factored in.  But this presentation, I fancy, does strongly suggest that the oft-heard claim of middle-class stagnation should bear a much heavier burden of proof than it seems to bear in popular discussions.

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{ 241 comments }

notalawyer July 25, 2011 at 6:28 pm

This is a very insightful presentation about how free markets & technological innovation have made “things” less expensive & more available to everyone. But, its seriously flawed because it only looks at the cost of possessions, doesn’t address inequality within our society or compare it to how other societies have fared over the same time frame. The whole point of this inquiry is to determine if our system is creating the best possible outcomes for the average citizen. This test focuses so thoroughly on the cost of purchasing objects it doesn’t look into whether getting a college education or obtaining medical care are easier. Even if objects are cheaper it doesn’t make our system as good as it could be if the outcomes so vastly benefit a disproportionately small number of people. It also doesn’t address whether other policies elsewhere have demonstrated better outcomes over the same period.

BZ July 25, 2011 at 6:46 pm

Funny you should mention college and medical care, neither of which is an end in itself, but desired because they can (in different ways) let us enjoy more of the things in that catalog (and the things outside it).

nydivide July 25, 2011 at 7:01 pm

Education, health care, and housing have all become more expensive in real terms due to direct government interference. That is the Powerpoint presentation one needs to construct.

notalawyer July 25, 2011 at 11:02 pm

nydivide, if education, health care, and housing are all more expensive because of government interference why do countries with more government engagement in these spheres spend less per capita on education, health care, and housing, yet all provide free or cheap higher education, universal healthcare and lower homelessness?

Sam Grove July 25, 2011 at 11:57 pm

They are also going broke, or broke.

Damien July 26, 2011 at 8:05 am

Sam Grove, this doesn’t answer notalawyer’s question.

Kirby July 26, 2011 at 10:34 am

Because they are willing to go into massive crushing debt to get these things. Sorry, the Dems already sent us into debt by allowing things like Medicare and Teacher’s unions to become behemoths.

nydivide July 26, 2011 at 10:40 am

Yes, countries such as Canada with a population of 30 million people. A fine comparison considering the U.S. population is well over 300 million and far more diverse (I am referring to cultural diversity and NOT racial or ethnic diversity. The higher the population; the larger the disparities in values. Some value education. Others value material possessions such as televisions and stereos. Some may value big fancy wheels on their trucks… and guess what: that is THEIR CHOICE).

Are people risking their lives getting into these socialist countries such as they are risking their lives to get into the U.S.? No, because despite the government’s interference (direct interference such as Dept of Ed., HUD, Fannie, Freddie, Dept of HHS, MedicAID, etc) and continual debasement of our currency: the U.S. is still a better alternative with more opportunity. Imagine how much better quality of life would be if the free market had not been deteriorating for the past few generations. The New Deal was a Raw Deal. MediCARE and social security are mere Ponzi/Madoff schemes.

Perhaps one of our more “progressive” states such as Vermont should enact truly socialist policies regarding education, health care, and housing – not going to happen – Bernie Sanders and co. will never practice what the preach. They wish for everything to be done on a federal level; and (unfortunately for us) that is the direction in which we are headed. If someone lives in a state in which the gov’t wishes to take over their housing, education, and health care system; they have the opportunity to MOVE. They have a CHOICE (49 other choices to be exact). Why must everything be done on the federal level? Why are all the “progressives” against CHOICE? If it is done on the federal level there is NO CHOICE, no freedom to move to a place where a system may better fit their needs and values. Europe has been heading towards a more centralized government and it is obviously not working. The Euro is a failed experiment and the centralization of government policies should be seen for what truly are: the road to serfdom.

Chucklehead July 26, 2011 at 11:41 am

If it is so wonderful there, why don’t you move? People from those countries still move here because entrenched institutions don’t allow for competition. Try opening a business in Europe. There is a controlling guild for every industry, even antique or flower shops. Their students still come here for their higher education, their elite still come here for their surgeries, and their nations still rely on the US for national defense.
Where does it say that government is to address inequality in our nation? Where can you show that equality of outcomes increases the lot of the average person?
The fact that you have not moved there is evidence enough that these Utopias you seek can not exist.

Sam Grove July 26, 2011 at 2:10 pm

Damien- but it counters his point.
His point: they are doing so well
My point: they are creating a fiscal disaster. Look good now, look bad later.

Seth July 26, 2011 at 2:40 pm

Good question. Here are some answers for your consideration.

First, they ration more effectively. For example, their governments sometimes says no. They also ration with wait times. And the quality of health care (chances of infection, effectiveness of treatments etc.) itself acts as a rationing mechanism as individuals try their best to avoid it by living healthier lifestyles, using DIY health care and seeking it from other countries.

We don’t ration very well. Nobody wants to say no. We don’t want individuals to have to say no. We don’t want insurance companies to say no. We don’t want government to say no.

They use older, less expensive treatments.

They don’t spend much on innovation as they can just adopt innovations made in the U.S.

Do they award malpractice claims? Not sure about that one.

We choose to spend more because we are wealthier and are willing to pay for things like short wait-times, nicer hospital accommodations (like private rooms).

A while back there was a piece that showed the U.S. government spending on health care is already on par with other countries. So it’s not just government spending itself that causes the $ costs to be lower. It has to be other factors. The above listed factors might explain some of the variation.

yet another Dave July 26, 2011 at 3:41 pm

In addition to the other fine points already made…

…why do countries with more government engagement in these spheres spend less per capita on…

Because they’re poorer.

…yet all provide free or cheap higher education…

Extorting the costs of higher education from taxpayers does not make them disappear, but saying “free or cheap…” does ignore them.

…[yet all provide] universal healthcare…

It’s not surprising that the lower quality “universal healthcare” in such places is less expensive.

Josh S July 26, 2011 at 4:00 pm

You can spend less per capita or something by not paying for it. For example, advanced cancer treatment costs less in the UK because the government denies it to patients. This does not make the treatment cheaper; it makes it nonexistent.

Similarly, the German government simply refuses to pay for everyone to go to high school. Only a minority of students are admitted to go to gymnasium.

lamp3 July 26, 2011 at 4:41 pm

@notalawyer
If you accept looking at the United States on its own, the real spending per student in public education (gov’t provided) has gone up much more than inflation while a lot of education outcome metrics do not show positive correlation with price.

Kirby July 26, 2011 at 10:40 pm

@nydivide:
They are against choice because everybody who actually produces for society would choose against socialism.

r123 July 29, 2011 at 10:41 pm

These countries tend to have prices controls which cause shortages. The means that consumers are paying less for healthcare but getting less, waiting longer, or not getting any care at all. We can measure the cost of health care in these countries by looking at the amount of money spent on the price-controlled HC goods. But what we can’t measure is the waiting time or loss of time in the work force waiting for the price-controlled good (lets say, missing 6 months of work waiting for a surgery in the UK which would take a 1 month wait in the US).

r123 July 29, 2011 at 10:42 pm

@notalawyer**

ArrowSmith July 25, 2011 at 8:08 pm

Some people become doctors to help people, not to buy a huge house and have luxury cars. We should enable those people to get a medical education without going into debt slavery.

Kirby July 25, 2011 at 8:22 pm

You’re right, its not like the government has tried to force functioning industries to eat costs in order to help people before, and no such hypothetical situation would have any negative effects.

Automatic July 25, 2011 at 10:50 pm

The attempts by the government to expand access to college education through guaranteed and easily accessible loans is the primary driving force behind the disproportionate inflation of higher education prices.
If “We” stopped trying to make university education the standard for everyone (including for the many people to which it is of no benefit) then there might be a chance of what you suggest happening.

Kirby July 26, 2011 at 10:22 am

Collages base their prices off of this:
Government scholarship+What parents are willing to pay

Rayray July 28, 2011 at 9:15 am

How do “we” enable students to get an education without incurring debt? Are we going to control prices? If we control prices, we control wages. After we control wages, if the schools begin to close or teachers begin to leave the profession, will we then force people to teach?

What if we eliminated government from the student loan business?

notalawyer July 25, 2011 at 11:00 pm

College may be a means to afford more possessions but I doubt medical care falls in the same category.

Stone Glasgow July 25, 2011 at 11:20 pm

If you compared the cost of the available medical technologies in 1975 and compared them to the cost of those same technologies today, you will find that high-tech healthcare in 1975 is remarkably cheap today.

notalawyer July 25, 2011 at 11:29 pm

I don’t compare myself to someone in 1975. I compare the outcomes my fellow citizens receive. I want to be able to afford basics (food, shelter, medical care, and access to an education) regardless of what job I do. I also want anyone who does better than I do to do so because of some meritorious reason. Executives at banks, healthcare organizations, & schools haven’t increased the quality of our society yet they have been disproportionately rewarded by being able to reduce their tax burden, lobby to reduce regulation upon them, and then back us into a corner and bail them out when they overextend their companies. It doesn’t matter if you work harder or create more value than I do; I should still be able to get medical help, educational advancement, and afford a decent place to live. All these things should come before anyone buys a corporate jet, a mansion. They don’t deserve them. They didn’t earn them.

Stone Glasgow July 25, 2011 at 11:58 pm

Medical care is a product and service provided by real people who don’t work for free. If a new medical technology is created that costs $1 billion per treatment, should those who can afford it be prevented from purchasing it? How would you handle a tremendously expensive new medical technology? Should it be banned until it is cheap enough for everyone to use? Should wealthy people die while they wait?

The medical help that was available 50 years ago is almost literally free to the average person today. Antibiotics that were miracles in the 1960′s are $4 per bottle today. In 1915 it took the average worker 43 minutes to earn enough to purchase a tin of 24 aspirin tablets (250mg each). Today the average worker requires less than 38 seconds to earn enough to purchase the same tablets.

Stone Glasgow July 26, 2011 at 12:03 am

Banks, healthcare, and schools are the most heavily regulated and government-controlled industries in the United States. The reason the people working in those fields are unfairly compensated is precisely because government is so heavily involved in them.

If anyone were free to start a bank, and tax dollars could be used to attend any private school, and the AMA and FDA did not prevent the supply of doctors and drugs from rising, costs to the average person would be much lower, and doctors, bankers, and school administrators would be much more reasonably compensated for their labor.

Gil July 26, 2011 at 2:07 am

Are you contradicting yourself S. Glasgow. You seem to be answering what I suspected all along – medical treatments has been cheaper all along. Would you prefer to get cancer in 1961 or 2011? Isn’t there more doctors can do to treat you today versus fifty years ago? A lot of medical treatment is expensive because it’s the cutting-edge stuff. Likewise most people can’t afford a cutting-edge computer or a cutting-edge HDTV but they can purchase an affordable PC and HDTV that was once considered cutting-edge and quite expensive.

Conversely medical treatment was cheap in olden days because there wasn’t much that could be done. If you were diagnosed with cancer that had advanced beyond the immediate area you’d have simply been told to go home.

Ameet July 26, 2011 at 8:51 am

I’d argue it’s not cheap enough. But my basis is anecdote.

I had a recent knee injury where I was told to get an MRI. 30 minutes of sitting with a big, standard MRI used to get the images, and a $400 cost. My suspicion is that I am in the minority of patients, in that I paid the full cost out of pocket due to lack of insurance coverage for that expense.

My other suspicion is that if patients did not spend OPM, MRIs and other technology would have developed so that there were cheaper options. Maybe an MRI machine that is portable and small so that it can use less power and produce an image cheaper.

Again, that’s speculation.

But then I also think about education, and the recent articles on Khan Academy, and language software. And that’s another area where costs should be significantly cheaper today, or starting to, but does the government have an incentive to innovate and incorporate these technologies that can make lots of school administrators from the NEA less necessary for education, and hence reduce the budget they can demand from states? I think I answered myself there.

Economiser July 26, 2011 at 10:14 am

Ameet:

You’re exactly right. Look at medical procedures that are typically not covered by insurance; for example, LASIK surgery. The quality has improved while the price has come down dramatically. It’s amazing what price incentives can do even in the sacrosanct field of “health care.”

Kirby July 26, 2011 at 10:33 am

Not a lawyer, you’re being stupid.

A.) Don’t judge yourself compared to other citizens.
B.) You WANT to be able to afford basics. If so, work harder and get a better job, don’t make people who do work harder give you handouts.
C.) Executives at banks DO work harder and are smarter than you, and they are not paid on the basis on what value they give ‘society’ AKA you.
D.) Healthcare organizations are organizations. Again, just because they don’t give you handouts doesn’t mean they don’t deserve their pay.
E.) School systems don’t increase the quality of our society? Well they are run by the government, which is the primary handout-giver. So you really wouldn’t like the school system to be shut down, bad as it is.
F.) People are only able to reduce their tax burden because the tax code is one of the most complicated things in existence, aside from supercomputers and the human brain.
G.) The only of those three examples lobbying the government is the corrupt teacher’s union lobbying their employer to steal more money from the taxpayer. The banks only went down because of the fed and too little capital reserve.
H.) They overextend because they know we will bail them out.
I.) If you want free handouts of healthcare, welfare, houses, and education, go to North Korea.
J.) Oh my god. You are honestly retarded. Is this self parody? YOU want free handouts, and then you say that the people who actually work hard didn’t earn their keep: They should give you their paycheck before they buy anything for themselves.

Chucklehead July 26, 2011 at 3:18 pm

I should still be able to get medical help, educational advancement, and afford a decent place to live. All these things should come before anyone buys a corporate jet, a mansion. They don’t deserve them. They didn’t earn them.
And what have you done to deserve medical help, educational advancement, and a decent place to live? If society values your usefulness, you will be rewarded with remuneration for your efforts. You will be able to afford all those things. People who own corporate jets go them because society rewarded them with cash because what they created was wanted by society. They got rich from mutual exchange, not force.

Economic Freedom July 25, 2011 at 8:03 pm

But, its seriously flawed because it only looks at the cost of possessions,

Possessions? You mean food and clothing? In your humble opinion, those are simply “possessions”, rather than “absolute necessities”?

Talk about taking things for granted!

doesn’t address inequality within our society or compare it to how other societies have fared over the same time frame.

Why are you kvetching about inequality? Since the entire economic pie has gotten bigger, it means that everyone — even those on the low end — are getting more than they were in 1975. Why is it morally necessary for you to have a system in which all groups do better at the same rate relative to one another? Why can’t they simply all do better than they were doing previously? (Which is what, in fact, has happened.)

As for “other societies”, try to be more specific. Here are a few “other societies” for comparison:

(1) Soviet Union (collapsed)
(2) Maoist China (failed)
(3) North Korea (still failing)
(4) Cuba (still failing)
(5) Venezuela (starting to fail)
(6) Brazil (succeeding thanks to pro-market reforms)
(7) Portugal, Ireland, Italy, Greece, Spain (bankrupt)

Anything else you want to know?

notalawyer July 25, 2011 at 11:15 pm

You’re right that the presentation highlights lower food prices & that’s to be commended. But merely looking at the cost of something in a grocery and sears catalog doesn’t reflect whether people are better off. College tuition and medical care has risen drastically.

I care about inequality because citizens want a system that is “fair” & they don’t demand it be uniform. I would roughly define that a system that sees no one go without the necessities & advancement be tied to merit. People don’t begrudge a successful hard working innovative person. But when they see corporate bonuses go to CEO’s at the helm of failing businesses, their children go into the army, to get the funds to pay exorbitant college tuition in the future, and die in fruitless wars, and go bankrupt and kicked out of their home because of recklessness by those same people, the regular populace doesn’t view society as a meritocracy.

If you want to compare us to other countries, pick those similarly situated. The Soviet Union is probably a good example of our system beating theirs. However, looking at the UK, Germany, or Japan despite their own challenges, still manage to offer good healthcare and education.

Economic Freedom July 26, 2011 at 12:18 am

But merely looking at the cost of something in a grocery and sears catalog doesn’t reflect whether people are better off. College tuition and medical care has risen drastically.

If claiming that lower prices for necessities like food and clothing don’t reflect whether people are better off, then, by your same logic, claiming that higher prices for other necessities like education and medical care, don’t reflect whether people are worse off.

Additionally, as others have pointed out, education and medical care are two areas with notoriously high levels of government intrusion. If people are doing better in areas with little or no government hampering (food, clothing, electronics) and worse in areas with lots of government hampering (education, medicine, insurance), wouldn’t you agree that this says something about free markets vs. hampered markets, and the superiority of the former in creating better outcomes for people? Or can it all be explained away as an unfortunate coincidence?

I care about inequality because citizens want a system that is “fair” & they don’t demand it be uniform. I would roughly define that a system that sees no one go without the necessities & advancement be tied to merit.

Who decides what is fair and meritorious? You? Or the individuals involved in specific transactions amongst themselves?

People don’t begrudge a successful hard working innovative person.

Sure they do. It’s called “envy”; ever hear of it? And besides, there are no universally agreed upon criteria for “hard working” and “innovative.”

But when they see corporate bonuses go to CEO’s at the helm of failing businesses, their children go into the army, to get the funds to pay exorbitant college tuition in the future, and die in fruitless wars, and go bankrupt and kicked out of their home because of recklessness by those same people, the regular populace doesn’t view society as a meritocracy.

Yawn. I’d respond, but since you threw in everything but the kitchen sink, it would take too long. Choose 2 peeves from the above smorgasbord and I’ll answer.

If you want to compare us to other countries, pick those similarly situated. The Soviet Union is probably a good example of our system beating theirs. However, looking at the UK,

Ah, yes, jolly old England, where one has to wait weeks and weeks and weeks to see a specialist, and where U.S.-designed, cutting-edge pharmaceuticals are simply unavailable because some “cost-effectiveness” panel deems it to be too expensive (so you can flash as many pound notes as you wish, but the nanny NHS won’t let you have access to the drugs). Ah, yes, jolly old England, whose nationalized healthcare system destroyed its own dental industry so that toothache sufferers often end up pulling their own teeth because there’s a shortage of dentists (can’t make a good living in the field any longer, so very few enter it). Yep. Wonderful system.

Oh, did I say a “cost-effectiveness” panel? Sorry. I meant a death panel.

The UK system — not to mention the Canadian — is one of the most screwed-up healthcare boondoggles in the world. Somehow I’m not surprised you’re in favor of it. As long as it promotes itself as “free”, I guess you believe it is “the best of all possible outcomes.”

Germany, or Japan despite their own challenges, still manage to offer good healthcare and education.

I hear that often — mainly from German and Japanese bureaucrats. The U.S., despite its challenges, also manages to offer good healthcare and education; that’s why so many from around the world attend U.S. universities for their graduate and post-graduate education, and why many come here for procedures and therapies that have been made legally unavailable in their own countries.

It’s been pointed out in several studies that, e.g., if you are diagnosed with prostate cancer or breast cancer, you have a much lower chance of surviving either one in the Canadian system than in the U.S. one. Are you really the kind of person who is so cheap that you’d say “I don’t care. The important thing is not that I survive the cancer; the important thing is that I be treated for free at the state’s expense”?

tdp July 26, 2011 at 10:39 am

Regarding the ONLY three statistics used by single-payer proponents:

1)Try calculating life expectancy without excluding traffic accidents, homicides, and other premature deaths that aren’t included in UK figures and are way lower in every other developed country. Also, take into account obesity and Americans’ pitiful exercise habits, as well as our high rates of drug use, none of which reflect on the quality of health care available.

2)Try calculating the US infant mortality rate using criteria like France’s or Switzerland’s or Belgium’s, where infants are only “live births” if they are at least 30 cm long, born after 26 weeks, and “viable”. Alternately, consider using OUR criterion of “if it breathes, it’s a live birth” for all those countries, most of whom have a much higher death rate for preemies and babies with birth defects.

3) PJ O’Rourke noted that Obama claimed 46 million Americans had no health insurance. 18 million earned $50,000 a year or more, with 10 million of those 18 million earning $75,000 a year or more. 10 million weren’t US citizens and/or weren’t here legally. 14 million qualified for existing programs like Medicaid but weren’t signed up. That’s 42 million of that 46 million right there. Existing regulations drive up insurance so much that of the 22 million who are here legally and don’t qualify for Medicaid, most can currently buy insurance but don’t because its not worth the cost to them and would buy it if regulations were removed and prices fell. Those in the gap between Medicaid coverage and being able to buy insurance would be able to afford insurance with market-based reforms, and that leaves a very small number of people who truly cannot afford insurance. An assistance program for them would come in at WELL below the $1 trillion Obamacare is supposed to cost (and it will easily cost 5-10 times that much).

As for those test scores, read Fareed Zakaria on the American educational system. He says it better and more succinctly than I can.

Chucklehead July 26, 2011 at 3:22 pm

The cost of college has gone up, but the cost of education has gone down. Just look at Itunes University. Free. Just look at Econtalk or Mises University podcasts. Free. Wikipedia. Free..

GP Hanner July 26, 2011 at 8:35 pm

Re: Your debate with notalawyer

If you spend all of your time arguing with
people who are nuts, you’ll be exhausted
and the nuts will still be nuts.
–Scott Adams

Dan J July 28, 2011 at 5:29 pm

@tdp

Yes!
Yes!
And, Yes!
It is interesting to see that few, if any, ever refer back to the WHO report on medical systems. It has long been debunked as political garbage and full of inequities. Obviously, it was designed to assist in the ‘single-payer’ agenda.

Shidoshi July 26, 2011 at 5:16 pm

I think I will have a college tuition sandwich for lunch today. Then if I get a little chilly at home tonight, I’ll put on a medical care blanket. If I feel like vegging out, I’ll turn on the college tuition and watch it for a couple hours. It’s a good thing I can write this email on my medical care’s keyboard.

Dan J July 26, 2011 at 8:56 pm

Define ‘fair’…. It is a value term……. I have 2 apples and you have none…. it is not fair…… never mind how I acquired them… simply, I have two while you have none is ‘deemed’ not ‘fair’.

Many People use the word ‘fair’ to describe themselves not having what another has.

Fare is a toll for access or a ‘fair’ is an event that takes place for entertainment.

Kirby July 26, 2011 at 10:48 pm

There are three types of fair:
Everybody gets what they need
Everybody gets the same thing
Everybody gets what they deserve

One of these is Soviet Communism, and failed

One of these is Maoist Communism, and failed

One of these is capitalism, and works.

So tell me, what is fair?

Josh S July 26, 2011 at 4:06 pm

Basically, notalawyer computes his wealth like this:

(The goods and services I have) – (the envy and hatred I feel because someone has even more than I do).

Since notalawyer is so hateful and envious, he computes his wealth as being no better than someone from 1975. Since most of the rest of us don’t hate and envy, we are quite prosperous.

Stone Glasgow July 25, 2011 at 10:36 pm

The point is not to see if our system is generating the “best possible outcomes.” The purpose of this presentation is to show that the middle class is materially much better off today than in the recent past. The point is to show that the video produced by Robert Reich is laughably incorrect.

Don Boudreaux July 25, 2011 at 10:41 pm

Yep. Thanks!

Stone Glasgow July 26, 2011 at 5:07 pm

I created a comparison of a 1978 Honda Civic and its modern version here:

http://stoneglasgow.blogspot.com/2011/07/middle-class-stagnation-case-study.html

The modern version is more powerful, safer, has automatic everything, burns less fuel and pollutes much less, and takes the average worker about 106 hours less to purchase.

Polly July 28, 2011 at 4:50 pm

Very nice comparison but the only important thing is: it’s NOT a corporate jet. And that’s what notalawyer covets but can’t have because life in the U.S. is unfair.

Stone Glasgow August 2, 2011 at 7:10 pm

Yep. In 100 years half the world have a private jet and will still be complaining about their “stagnation”, and demanding that everyone have “equal access” to private jets. They’ll demonize the “ultra rich” for being able to afford space-travel.

notalawyer July 25, 2011 at 11:16 pm

The point of all societal organization is to generate the best possible outcomes. If there is a system that creates better outcomes we ought to use it.

Economic Freedom July 25, 2011 at 11:29 pm

The point of all societal organization is to generate the best possible outcomes.

“Best possible outcome” by whose standard? Yours?

I_am_a_lead_pencil July 26, 2011 at 9:10 am

Don argues against a specific Robert Reich assertion A.
You argue: What about overall problem B
Glasgow answers: That isn’t the point Don is addressing.
You argue: What about overall problem B – shouldn’t we be talking about problem B?

He wasn’t – at least not in the presentation he was posting about. He also wasn’t talking about countless other tangential issues – which he could have if he preferred a less focused presentation.

Ike July 26, 2011 at 10:23 am

The system that creates the best outcomes overall is emergent order.

Period. End of discussion.

The system that creates the most EQUITABLE outcomes is a different story, one encapsulated best by the Bard of Canada, Mr. Neil Peart:

There is unrest in the forest, there is trouble with the trees, for the Maples want more sunlight and the Oaks ignore their pleas.

The trouble with the Maples (and they’re quite convinced the’re right,) they say the Oaks are just too lofty and they grab up all the light.

But the Oaks can’t help their feelings if they like the way they’re made; and they wonder why the Maples can’t be happy in their shade.

There is trouble in the forest, and the creatures all have fled, as the Maples scream “Oppression!”, and the Oaks just shake their heads.

So the maples formed a union and demanded equal rights. “These Oaks are just too greedy; we will make them give us light!”

Now there’s no more Oak oppression, for they passed a noble law, and the trees are all kept equal by hatchet, axe, and saw.

It seems to me that NotALawyer would be happier if we all were equally miserable.

muirgeo July 26, 2011 at 11:56 am

Ike July 26, 2011 at 10:23 am
The system that creates the best outcomes overall is emergent order.

Period. End of discussion.

LOL….maybe you could provide a reference?

Subhi Andrews July 26, 2011 at 1:13 pm
Economic Freedom July 26, 2011 at 10:42 pm

@ Ike – The system that creates the best outcomes overall is emergent order.

I would phrase it a bit differently. Order emerges in the market as a consequence of individuals seeking to generate the best possible outcomes for themselves.

Kirby July 26, 2011 at 10:37 am

The best possible outcome is surprisingly close to libertarianism. What you want is communism, and it provides the best outcome for the stupid and lazy, of which you seem to group yourself.f

Chucklehead July 26, 2011 at 2:36 pm

“If there is a system that creates better outcomes we ought to use it.” There is such a system, it is called the free market enterprise. We ought to try that one again. It hasn’t been used since the progressive era.
“Societal organization ” that uses force has many names. But they all come down to some form, even temporarily, of slavery. Is this your idea of best possible outcome?

Against the grain July 25, 2011 at 11:42 pm

My wife was impressed, but did ask me about gasoline. On that count we do have fuel that has gone from $2.00 per gallon $2011 in 1975 to $3.87 roughly in 2011. But when assessed based on average fuel econmy that went from 14(2008) mpg to 23mpg (2008). The price of energy to go one mile has only increased by 18%.

But on a much more important note the fatality rate per mile driven has dropped by 65% (1980 to 2010) and still going down fast with the advent more automated driving features. I doubt these saved lives are accounted for in the CPI.

Sam Grove July 25, 2011 at 11:59 pm

Did you adjust for inflation?

Kirby July 26, 2011 at 11:03 pm

I believe $2011 means 2011 dollars, but I’m not sure

muirgeo July 26, 2011 at 9:34 am

But Don left out housing cost, child care cost, transportation cost, taxes, health care, retirement cost and college cost….. why would Don leave those things out? Oh yeah.. because he was speaking to his superiors at the Cato Institute of Rent Seekers and can not be allowed to upset his masters.

Elizabeth Warren does a proper assessment of the problem… well before the current crash I might add. In other words she predicted this crash well before Don had the current opportunity to continue to deny it.

http://www.youtube.com/watch?v=akVL7QY0S8A

dean July 26, 2011 at 3:06 am

But cheaper products mean that they are more widely available, this able to be purchased by a wider range of people. Things which were luxuries in 1975 are now easliy afforded by a wide range of people. The same thing will happen to goods and services which today are purchased by the wealthy. In forty years they will be able to be purchased by people who today would not dream of buying them.

And the “best possible” outcome is hugely subjective, and will never exist outside of (dis)utopian fantasies.

Subhi Andrews July 25, 2011 at 6:42 pm

So inflation is overstated?

Stone Glasgow July 25, 2011 at 10:30 pm

What does this have to do with inflation?

Imagine that money doesn’t exist. Imagine workers are paid in washing machines, televisions, and clothing and you see that today the average worker is paid much more handsomely than in the past. It takes much less time to acquire the same goods.

Subhi Andrews July 25, 2011 at 11:00 pm

All the prices shown in the PPT, I assume, are inflation adjusted. The PPT also shows that the real wages are lower than it was in 1975. However products, those that Don has chosen, seem to have much lower real price. I would think the CPI used to adjust the nominal wages and prices are also influenced by the price of these same products. That was the reason for my questions. As Don says, this doesn’t prove one way or the other! I am just asking what is the cause of such discrepancy in real prices & wages.

Stone Glasgow July 26, 2011 at 12:24 am

Interesting.

One can still perform these calculations without using inflation estimates. For example, a tin of 24 (250mg) Aspirin cost 15 cents in 1910. The average worker earned 26 cents per hour, so it took about 35 minutes to earn 6 grams (one tin) of the drug.

Today it takes about 35 seconds to earn 6 grams ($1.00 per bottle of 100) of the same drug, so the real labor-price of aspirin is about 60 times lower than it was in 1910 for the average worker.

Don Boudreaux July 25, 2011 at 11:07 pm

Yes. I believe that inflation has indeed been overstated, largely because of the great difficulty of measuring – and, hence, adjusting for – improvements in quality.

notalawyer July 25, 2011 at 11:18 pm

This is an extremely good point. These studies all take items over time as equal when they are clearly not. Computers, cars, nearly every single item is vastly superior to its historical predecessors.

ArrowSmith July 26, 2011 at 5:01 am

Especially computers. It seems every 5 years they make a revolutionary leap.

Economic Freedom July 26, 2011 at 10:46 pm

Especially computers

Yes, but since improved computers are now part of today’s cars, shouldn’t we consider that as an improvement in cars themselves?

Dan J July 26, 2011 at 10:54 pm

Hhhmmmmm. Vastly improved with so many upgrades and additions then before, which one would assume should cost more. A computer with 1GB of space was more expensive than a computer today with 500GB of memory.

Tim July 26, 2011 at 12:12 am

But then criticism of the Federal Reserve on the grounds that is has failed to maintain price stability are, thereby, also overstated.

vikingvista July 26, 2011 at 2:04 am

Price increases are overstated, thanks to innovation. Inflation of the base money supply–as the most important facilitator of a growing state–is grossly under-appreciated.

Josh S July 26, 2011 at 4:18 pm

I don’t think that’s right, Don. Rather, improvements in quality and productivity mute the pernicious effects of inflation, making it look less severe. That is, the same economic state projected forward to today’s dollar would be priced quite a bit higher, since the last 30 years of productivity gains and discoveries would not have brought prices down.

Craig S July 25, 2011 at 6:46 pm

“This test focuses so thoroughly on the cost of purchasing objects it doesn’t look into whether getting a college education or obtaining medical care are easier”

Isn’t college enrollment way up compared to 40 years ago? That may be anecdotely but doesn’t strike me as an indicator that its harder to get a college education today. Also how is obtaining medical care more difficult? Certainly basic medical care is vastly improved. It wouldn’t surprise me if both a college education and medical care are more relativiely more expensive today, but then again, both are institutions (if that’s the right word) were prices are largely controled by the government, especially education.

notalawyer July 25, 2011 at 11:19 pm

I was referring to the price of both education and health care. However, other countries that have more engagement in these areas have lower prices to the consumer.

Chucklehead July 26, 2011 at 12:33 pm

I will lower your price of health care. Pay me a $1000.00 a month (tax) and I will lower your healthcare cost by $500.00 a month by paying part of your premium for you. There, don’t you feel better?

Gil July 26, 2011 at 2:20 am

Aren’t you contradicting yourself? Is medical care cheaper or more expensive? Treating a sore that not healing properly nowadays is much more affordable – plop on some anti-septic cream nowadays versus having a chunk of skin (or even a digit or limb) lopped off and the new would doesn’t become infected in kind. Similarly, the different types of cancers are curable per se but treatments are getting better.

Gary July 25, 2011 at 8:13 pm

Easy, everyone. Reich is merely accusing the middle class of not being “vibrant” enough. ; )

tdp July 25, 2011 at 8:33 pm

According to Cato’s Johan Norberg, 60% of Americans in the bottom 20% of income earners in 1975 were in the top 40% by 1991, with half of those 60% being in the top 20%. The average poor person in the US spends approximately two months below the poverty line, and only about 4-5% of Americans are poor for more than two years.

(From the first two chapters in “In Defence of Global Capitalism”, available for free on his website).

Tim July 25, 2011 at 8:39 pm

Isn’t the typical argument though that middle class income has stagnated relative to upper class income?

tdp July 25, 2011 at 9:30 pm

From 1999 to 2005 the real wages earned by the top 1% actually dropped, and people at the top have much greater fluctuations in income since so much of it is in stocks, investments, corporate profits, etc.

Ken July 25, 2011 at 11:11 pm

No. Krug and his shill muir, to name just two, argue that since 1970, median income has remained essentially the same.

Regards,
Ken

Don Boudreaux July 25, 2011 at 11:18 pm

Nope. Their argument is that the great bulk (perhaps even all) of whatever economic growth that has occurred over the past 30 to 35 years has been captured by the super-rich. Ordinary (“working”) Americans have languished ever since at their 1970s’ standard of living.

brotio July 25, 2011 at 11:37 pm

Oh, come on, Don!

The poor in America don’t own cell phones, Playstations, or LCD TVs. After all, if such items were affordable to average Americans, then we’d see them at Wal-Mart and K-Mart. Everyone knows that such items are only available at Neiman-Marcus.

Don Boudreaux July 25, 2011 at 11:42 pm

:-)

Jim July 26, 2011 at 1:47 pm

One way to argue would be that we have solved the war on poverty in this country. The poor pretty much purchase the same products as the middle class and the rich. In fact, a $100 watch is almost indistinguishable from a $10,000 watch, certainly no one would argue the more expensive one is ‘worth’ it other than as a signaling device.

The irony is that the government is not going bankrupt because of redistribution. It is going bankrupt because it so determinedly ignores and circumvents the market in its delivery systems with Ponzi schemes and institutional control; if all they did was subsidize the poor to purchase say, health care or education on the open market, those costs could well be less than a third of their present cost if other product price curves are any indication.

Shidoshi July 26, 2011 at 6:00 pm

“One way to argue would be that we have solved the war on poverty in this country.”

Huh? What does the miniscule differences in quality of your example (watches) have to do with poverty? There are hundreds of thousands (conservative estimate) of people who would never be able to afford a $100 dollar watch. I see your point, but that is an outrageous overstatement.

Tim July 26, 2011 at 12:19 am

This seems like semantics. You admit that, according to them, the rich have gotten considerably richer. So, how then is the argument not that the middle class has stagnated relative to the rich? If, as you then seem to suggest, the claim made by some regarding stagnation at ’70s-era levels is bogus….why not deal with the other question concerning relative differences? I mean again Don, you’ve left the other side with the perfect comeback…”it’s the relative differences which matter.” More and more I am struggling to understand why you do this.

Stone Glasgow July 26, 2011 at 12:36 am

Examining relative differences is a mistake that is made only by those who do not understand the source of wealth. Don understands that in most cases, it is impossible to become wealthy without helping other people.

People who are hell-bent on examining how poor they are compared to the “ultra-rich,” behave as if wealth falls from the sky, and that if some people have more of it they must be cheating, or taking more than their “fair share,” of the wealth raining down on society.

If you understand that wealth is created, not taken, it becomes pointless or counterproductive to look at relative wealth differences between individuals. If your neighbor invents a miracle drug that doubles human lifespans and has no side-effects, and sells it to everyone on earth for one dollar, earning $6.8 billion in the process, should something be done? Is there a problem, or did he help everyone on earth and become wealthy because of it? Do you imagine that other wealthy people have done no such similar thing for the world?

Economiser July 26, 2011 at 10:18 am

> Don understands that in most cases, it is impossible to become wealthy without helping other people.

This is the great miracle of capitalism. One becomes wealthy by lifting up others. It’s a virtuous cycle.

Don Boudreaux July 26, 2011 at 1:53 pm

I don’t care about income distribution – either as a policy matter or as a matter of personal interest. (Whenever in my life I have envied other people’s higher income I feel deeply ashamed of myself, and I struggle – largely successfully – to rid myself of such childish sentiments.)

But even if I did care about income distribution, the question I address in the presentation remains a legitimate one. That question is not “what happened to the consumption possibilities of the American middle-class relative to those of the ‘the rich’ from the 1970s until now?” Rather, that question is “what happened to the consumption possibilities of the American middle-class from the 1970s until now?”

I was, put differently, directly addressing the veracity of Reich’s claim that “adjusting for inflation, most people’s wages have barely increased.” His clear implication is that most people’s economic conditions since the 1970s haven’t improved very much.

muirgeo July 26, 2011 at 6:31 pm

And……… again……. please clarify…. Do you concur?

PJ July 25, 2011 at 8:58 pm

Really, really, cool analysis. This is going to get lots of attention I think.

So, what are the things that are substantially more expensive in terms of an hours worth of work? Are all of these items just cheaper relative to the rest of the basket, or is inflation seriously overstated?

Stone Glasgow July 25, 2011 at 10:27 pm

This has little to do with inflation; one can ignore the prices and look only at the amount of labor required to get each item. In all cases the amount of work required to acquire wealth has been dramatically reduced.

PJ July 26, 2011 at 1:11 am

Yes, thats how I read it. But in slide one, we see that the CPI adjusted wage has fallen since 1975!

So either inflation, as measured by the CPI, is way overstated, or there are many other items not included in this analysis that are much more expensive (in terms of hours).

Henri Hein July 26, 2011 at 1:33 am

I’m convinced that inflation is dramatically overstated. As we get richer — and we are getting richer — we spend more on the same stuff. In other words, we buy higher quality items. We buy cars with climate control, ABS and GPS, a lot of produce is organic, we spend more on name-brand clothes and sunglasses, etc.

I sympathise with the poor folks trying to calculate the CPI from year to year (and I don’t normally sympathise with government employees), but sorting all this out is an impossible excercise.

Dan J July 26, 2011 at 1:42 am

Amazing! At ten yrs old, in 1985, we had no air conditioning, no cable tv, no computer, no microwave, a Christmas paid for by grandparents as living on low income. Yet, today, many Americans declared as ‘poor’ have all of that stuff and more. Many of the what I would classify as ‘poor’ have been many illegal aliens living in ghettos. Yet, many still have colored tv, video games and such.

Pom-Pom July 27, 2011 at 12:02 am

“So, what are the things that are substantially more expensive in terms of an hours worth of work? ”

Government services.

MWG July 25, 2011 at 10:21 pm

“In Defence of Global Capitalism”

An excellent read for anyone who wants to understand the basics of international trade. I wonder if muirgeo has read it…

gregworrel July 25, 2011 at 10:43 pm

It doesn’t matter if Muirgeo has read it. I saw a slogan on a t-shirt the other day that sums it up perfectly:

“I can explain it to you but I can’t understand it for you.”

brotio July 25, 2011 at 11:38 pm

*like*

Don Boudreaux July 25, 2011 at 10:57 pm

I agree. Johan’s book truly is one of the most compelling and finest pieces of scholarship ever penned on the topic of international trade.

jorod July 25, 2011 at 10:21 pm

A lot of debt, no working capital and declining revenues had something to do with it as well.

Ken July 25, 2011 at 11:22 pm

What are you talking about? What does “A lot of debt” have to do with declining real prices of eggs? And what “declining revenues” are you talking about? How does declining revenues account for a it taking 154 hours of labor to buy a hulking 32 inch analog TV in the 70′s that probably takes three or four people to move, but in today’s markets you can buy a 32 inch digital flat screen that a tiny woman can move and hang on a wall easily?

Regards,
Ken

Ken July 25, 2011 at 11:24 pm

Edit: but in today’s markets you can buy a 32 inch digital flat screen that a tiny woman can move and hang on a wall easily for only 12.6 hours of labor?

Gil July 26, 2011 at 2:25 am

Then again how expensive are flat-panels TVs that can outperform a CRT for colour and contrast? Display purists say quality CRT TVs win over Plasmas and LCDs every time. It’s like comparing CFL and LEDs light to incandescents . . .

Ken July 26, 2011 at 2:24 pm

Gil,

So consumers are just dumbasses? They’re too stupid to recognize that a 300-400 pound analog TV is superior to a 32″ TV that can be hung on a wall leaving more floor space for anything other than a TV? I grew up with an analog TV and now I own two digital TVs. Hands down the digital TVs are better, except at giving their owner hernias.

CRT TVs only do better in the crazed imagination of “purists” the same way vinyl records do better than a CD with a sample rate of 44kHz. They don’t. It’s pure fantasy, a foolish nostalgia for past technologies.

And you completely ignore the ignore the main point. Real prices of TVs have dropped by 90% since the ’70s.

Regards,
Ken

HaywoodU July 26, 2011 at 2:54 pm

And he forgets that most TV’s can now connect to the internet giving the purchaser even more bang for the buck.

yet another Dave July 26, 2011 at 7:40 pm

My TV experience is the same as yours but I disagree with your LP vs. CD claim.

CD playback do have some advantages (especially cost), but high quality vinyl LP playback has wider bandwidth, higher resolution and superior low level linearity compared with 16 bit / 44.1 kHz CD audio. These factors are enough to explain why some people prefer the sound of LPs over CDs, and refute the foolish nostalgia description.

The turntables most people owned were VERY far from high quality LP playback capability, so it’s understandable that most people have no idea what LPs are capable of.

Dan J July 26, 2011 at 8:12 pm

All of this disagreement in the marketplace over which type of TV units are superior leads me to call out for the govt to legislate which units should be produced. For they, and they alone know best and can reduce our bickering and wastes, leading to vast improvement in our lives and less wastes of tv units being produced.
Where is Obama to save us and write an executive order to make this decision for us.
Maybe do the same for cars……. use govt to mandate or subsidize the vehicles that the all-knowing govt knows is best for us and ensure the consumers, who are dumb, start making the better choices, according to the super brilliant, all knowing, genius, proficient govt officials.

Ken July 26, 2011 at 10:42 pm

YADave,

“These factors are enough to explain why some people prefer the sound of LPs over CDs, and refute the foolish nostalgia description.”

A sample rate above 44kHz is far beyond the human ear’s capability to detect, so what your saying doesn’t really refute anything.

“The turntables most people owned were VERY far from high quality LP playback capability, so it’s understandable that most people have no idea what LPs are capable of.”

Playing a CD through a high audio system results in the same level of playback as a high end LP system. As stated above 44kHz is well above human ear detection and the information is stored digitally, it can be manipulated to mimic the distortions that are typical on LPs. It turns out that LPs distorted music in way that is pleasing to the human ear and there is plenty of software out there that can process CD information to distort it the same way an LP recording does.

Also, very few people care about the high end that you’re talking about outside the highfalutin snobs in ANY field. While I can appreciate a Van Gogh, I won’t for $100M; I have nice reprints for less than $100 and they are still remarkably pleasing. For the same reason, I may appreciate a high end LP system, but not for tens of thousands of dollars it costs. I can get an excellent performance digital system for less than $1000 and have the additional capability of storing off the music information in a safe place in case my CDs or digital playback device gets corrupted.

But the wonderful thing about all of this is that you can buy whatever you high end LP system and feel smug about it, while I can buy my mid range digital system and think you’re a music snob. This is yet another wonderful thing about the advancement in quality that Don is referring to and what Gil is trying to dismiss.

Dan J,

Nice!

Regards,
Ken

Gil July 26, 2011 at 11:42 pm

Well CRT TV production ceased in 2005 and you obviously haven’t seen one in a long time if you think they weigh “300-400 pounds”. So there’s no really a choice is there? However, because I still have access to a good quality CRT TV only the most expensive Plasma and LCD TVs have much the same colour and contrast. Cheap TVs have bland colours and jarring motion quality. Personally, if money was no object I would love to buy a Samsung SMART TV – they have frigging awesome picture quality. However I would also like to find a 2nd hand Sony Trinitron CRT HDTV if any quality ones still exist (they probably don’t).

Ken July 27, 2011 at 12:05 am

Gil,

“you obviously haven’t seen one in a long time if you think they weigh ’300-400 pounds’”

The comparisons are to the 1970′s and today, dickhead, or has your pathetic brain in this short amount of time all ready forgotten that? TVs in the 70′s routinely weighed hundreds of pounds. Today they do not.

“Personally, if money was no object I would love to buy a Samsung SMART TV”

“[I]f money was no object” forms the basis of ALL bad policy. Economics is, as is consumption, about trade offs. Ignoring those means you simply live in fairy tale land. We buy the things we want in the price range we can afford. If you want a higher price range, work harder.

Clearly, you don’t want to address the topic at hand: the claim that wages have stagnated completely ignores improvements (mostly vast improvements) in the things we buy. Obviously this is true, as my clear example comparing 1970′s TV’s with today’s TV’s. But somehow you get side tracked into talking about Samsung SMART TV, a TV that you can get for less than $1000 (the 32″ model sells for $899 and really? You can’t afford that?).

Regards,
Ken

Pom-Pom July 27, 2011 at 12:10 am

“The turntables most people owned were VERY far from high quality LP playback capability, so it’s understandable that most people have no idea what LPs are capable of.”

Yeah, and most people don’t have 24 bit oversampled digital CD’s and playback equipment either.

That is, most people don’t have the best of either. Most people are satisfied with lossy-compression mp3 players, which is lower quality than CD’s.

yet another Dave July 27, 2011 at 1:26 pm

Ken,
This (and the paragraph before it):

But the wonderful thing about all of this is that you can buy whatever you high end LP system and feel smug about it, while I can buy my mid range digital system and think you’re a music snob. This is yet another wonderful thing about the advancement in quality that Don is referring to and what Gil is trying to dismiss.

…are right on (with one exception: I’m not an audio or music snob and don’t feel smug about anything). I would only add that it’s not just quality, but variety of choices as well that have improved.

I have long been fascinated with the physics of LP recording and playback so I’ve studied the subject. The challenges involved are extremely difficult and the ingenuity of various designers has produced some truly impressive products, including the numerous high quality turntables, tonearms and cartridges available today.

-{OT content warning below this point}-
This:

Playing a CD through a high audio system results in the same level of playback as a high end LP system. As stated above 44kHz is well above human ear detection…

…not so much.
I agree that “44kHz is well above human ear detection” but 44kHz is NOT the bandwidth of CD audio. The 44.1kHz sample rate can capture steady-state signals up to 22kHz (which is also above most people’s hearing range), but music is anything but steady-state. The CD sample rate gives good phase integrity only to ~4kHz (which is well within almost everybody’s hearing) so high frequency content is distorted. LP bandwidth with good phase accuracy extends well beyond 20kHz.

The low resolution resulting from the 16 bit word size and data encoding method causes quantizing distortion that increases for lower level portions of recordings, so the quiet parts are more distorted than the loud parts. With LP playback it is reversed – loud passages are more distorted than quiet ones. I’ve read research indicating the ear is more forgiving of distortions at high levels that at low levels.

The combination of these elements limits the musically useful dynamic capabilities of CD to less than the LP. You may not notice or care about any of this, but some do and they’re not engaging in pure fantasy or foolish nostalgia. They’re doing what we all do – choosing the option they find best among what’s available based on the their priorities.

-{return to topic indicator}-
The fact that some people hear and care about such differences brings us back to the topic at hand – like so many other products, the number and quality of audio playback options available today are vastly more / better than what the 70s had to offer.

Ken July 27, 2011 at 7:26 pm

YADave,

“don’t feel smug about anything”

This is either a lie or you don’t really know yourself. Look at the tone of your comments on this site. Smug is a pretty good description of the tone of many of them.

As for the technical part of your comment: All right, I’ll change my statement to “Playing a CD through a high [end digital] audio system results in [a] level of playback that [most don't care about or can detect in a] high end LP system.”

“The low resolution resulting from the 16 bit word size and data encoding method causes quantizing distortion that increases for lower level portions of recordings, so the quiet parts are more distorted than the loud parts.”

I wish I knew more about this from a non-theoretical standpoint. I know a fair amount about discretization and quantization. I wrote my thesis in a related topic (it was on radars, though, not audio), but it’s all equations. I remember reading or hearing that many CD’s these days are made more to play loud rather than for sound quality.

Regards,
Ken

brotio July 27, 2011 at 8:49 pm

I very well may be a music snob. More likely, I’m an audio snob. I want the best reproduction I can afford, and enjoy hearing the differences every time I can upgrade.

The first time I heard The Wall on a high-quality turntable – when I could finally ditch the Pioneer and its POS tonearm and cartridge, I was amazed at what I hadn’t heard before. Mind you, I wasn’t moving from the -$100 Pioneer to a $1500 Micro Seiki, I was only stepping up to a $350 Thorens, but it sure seemed like a Micro Seiki by comparison.

Loudspeaker upgrades were even more fun. Moving from Kraco to Kenwood to Infinity to Green Mountain Audio was like having my ears pop from altitude changes with every upgrade. Those Infinitys are great speakers, but the increased depth of the soundstage, and increased clarity due to aligning the drivers, and a first-order crossover in the Green Mountains was another ear-opener, and I got to hear a bunch of old, favorite albums for the first time, again.

I have some albums that sound better on vinyl, and some that sound better on CD. Open reel is superior to vinyl or CD, but it was very inconvenient, and quality playback decks were more expensive than turntables (WAY more expensive than CD players).

All of that is a rather long way of saying, “If you can hear the difference, indulge as much as you can afford (or care) to”.

yet another Dave July 27, 2011 at 9:01 pm

Ken,
If I come across as smug it’s an accident – I’m truly not a smug person. I am intentionally snarky sometimes, but I wasn’t on this thread. I try to be clear and tend to be blunt when I write, and text on blog is very sterile, so that may be a factor – it can be very difficult to discern tone on a blog and I’m not that good at using the right cues to make it clear.

My LP point was intended to correct a misconception. Most (all?) people who describe LP sound like you did have absolutely no idea what the medium is capable of because they’ve only heard LPs played on crappy turntables (i.e. most turntables ever made). The ignorance is understandable, but it’s still a misconception. The fact that a majority of people care more about other factors doesn’t change that.

You remember right – lots of CDs (especially mainstream pop) are very compressed these days so the average level will be louder for a given peak level. I don’t know the whole story about why, but being louder on the radio may be a big one. It does get away from the quantizing distortion issues, but it kills all the dynamics and sounds like crap to me.

brotio July 28, 2011 at 12:45 am

YADave,

You are pretty much spot-on about why modern CDs are over-compressed. They play louder, so they stand out more on radio. This is really sad, because it is negating dynamic range – one of the few areas where CD is vastly superior to its analog competitors (including open reel). Listening to Classical music on CD for the first time was literally breathtaking because of that advantage, but some Rock producers also occasionally still take advantage of that ability of CD.

There was a time when a portion of an album run was dedicated to radio station release. It’s too bad they don’t still do that. Then, producers could produce for general release, and then squash the compressors for radio.

Joe Cushing July 25, 2011 at 11:14 pm

I heard somewhere that Maglight has never changed their price–that year after year, the price stays the same and the dollar gets worth less and less.

chris July 27, 2011 at 4:47 pm

Just bought one. Significantly lighter weight than the older model. Makes sense from an economic standpoint.

robert_o July 25, 2011 at 11:46 pm

That middle-class average incomes have stagnated is not a prima facie sign that ever individual in the middle is doing any worse.

For example, it’s entirely possible that:
- The middle class shrunk (reduced population).
- The people who left the middle class were in the top of the middle class and are now in the upper class.
- The rest (ie: bottom) of the middle class has had their income increase such that their average income is now the same as the old average income, when it included all those top earners.

In this situation, you see “stagnating” income for the group, and yet every individual in that group has had their income increase.

That is, this may just be a huge statistical artifact (and that’s ignoring benefits, general price decreases, and so on).

robert_o July 25, 2011 at 11:48 pm

|> - The middle class shrunk (reduced population).

I meant that there are now fewer people in the middle class, not that there is a reduced number of people in general.

I miss the Edit button.

John Dewey July 26, 2011 at 12:31 pm

Fewer people in the middle class than in 1975? I don’t think I can agree with that. If we used the 1975 standards to determine the 2011 middle class, I’m pretty sure the middle class would now be larger absolutely and proportionately.

I think we have to first agree on what we mean by “middle class”. Are you referring to everyone who is neither in the working class and the capitalist class? That is, using the occupational definition of classes.

Perhaps you are referring to “middle class” using income measures. That’s an entirely different grouping. In the U.S., most members of the working class of the occupational categories are members of the middle class of the income categories.

robert_o July 26, 2011 at 2:04 pm

John,

I was trying to point out that just looking at average/median income of a group of people doesn’t tell statists what they think it tells them.

John Dewey July 26, 2011 at 4:32 pm

Well, I would agree that statists will use and misuse any set of data which they can twist into appearing to bolster their position. I’m not sure I would give them credit for simply misunterpreting data. Rather, I’m more inclined to believe they are simply dishonest.

BCanuck July 26, 2011 at 12:45 am

The FYI about taking the photos with your iPhone… Imagine telling someone in 1975 that the small black thing in your hand is a portable phone that takes pictures and costs about 20 hours of the average wage or $100 in 1975! Less than a turntable, BBQ or microwave oven.

MatTrue July 26, 2011 at 1:00 am

This is my favorite class warfare chart: “(Not) spreading the wealth” http://www.washingtonpost.com/wp-srv/special/business/income-inequality/

Notice the slight of hand comparing incomes rather than people over the last 38 years. The fact that the number of people (incomes, actually) in the bottom 90% has probably grown by 50%, and average income only fell 1% in that group, is an amazing feat. How did the number of paychecks increase by 50%, but it only cost the entire group 1% of their income–an income that buys a higher standard of living and more years of life of the previous generation?

The class warriors never ask themselves how wealth is created and how all of society benefits.

Dan J July 26, 2011 at 1:34 am

It would seem 2006 was quite the pain with blog solicitors-blogcitors.

muirgeo July 26, 2011 at 1:39 am

Elizabeth Warren agrees with Don….except for the rest of the data….College,child care, homes, cars, taxes, and health care…….

http://www.youtube.com/watch?v=akVL7QY0S8A

Start at 15:00 or 23:00 minutes

gregworrel July 26, 2011 at 7:07 am

“College, child care, homes, cars, taxes, and health care…”

What a great opportunity, Muirgeo, for a “We have met the enemy and he is us” moment. All of the items you mention suffer from intrusive government regulation, subsidization, and distortion of normal market function. Of course, taxes are government itself.

It is the liberal mindset driving government policy that is driving up the costs of these items and beating down the middle class. It is you, Muirgeo, along with your clueless liberal cohorts, creating the very problems you decry.

muirgeo July 26, 2011 at 8:30 am

The question at hand Greg is simple. Who was right? Is Don right or was Elizabeth Warren right regarding the “beating down of the middle class”. It appears you do agree with Ms. Warren… so that’s good. The middle class is stagnating and the professor could only question it by giving insufficient data to his fledglings. And now you are trying to change the subject and doing a poor job of it as well.

Now all these cost are NOT a result of liberal policies since Reagan the republicans have had more control and policy has been decidedly pushed in their direction over that of what us liberals would prefer.

Before Reagan college in many states was basically free, car expenses and child care were less costly because both parents didn’t have to work and drive to get by, taxes were cut on the wealthy pushing them more onto the middle class via state and local taxes, health care and housing were indeed subsidized to favor the wealthy ( no limit on mortgage deduction and for profit health care was allowed, government subsidized health care plans were allowed just the way the insurance industry wants it).

If liberal progressive policies were in place total taxes would be far more progressive, incentives for offshoring would be gone, trade would be more equal, college would be nearly free to those who qualified, child care would be subsidized, we’d have at least a public option or a single payer health care and the mortgage deduction would have an upper limit.

So liberal policies are not in place and you are full of shit to claim they are just as if I would be if I claimed libertarian policies were in effect. Because back when liberal policies were more dominant a single working man, like my father , could raise a family of 5 with one car, own a home and send his kids to college and retire comfortably with a good pension. Republicans destroyed all that in favor of piling more wealth onto the wealthy, stagnating wages and getting us the resulting economy you see before you.

So there was no opportunity here for a teaching moment for you… just another opportunity for you to ignore the facts, rewrite history and blather on about your own ideological blindness.

Here is a simply fact Greg… until middle class wages increase and demand increases we will not see much improvement in our economy. Pushing policy in the libertarian direction will make things worse.

gregworrel July 26, 2011 at 10:10 am

I am not agreeing with Elizabeth Warren. Don has made it obvious to anyone with a brain that costs for most consumer goods have gone down dramatically. The few exceptions that you mention (which I don’t know for a fact are exceptions, but I am accepting the list at face value) are all items in which the government has played a major role.

I don’t see how I am changing the subject. I am merely responding to your post. You say the effects are not the result of liberal policies. Really what you are saying is the policies were not liberal enough. Government has grown in cost and regulations, including under Reagan. The Republicans are merely the lying alter ego of the liberal mindset. They sometimes talk about cutting spending and reducing regulations but they essentially never do.

What you fail to see is that areas of the market left relatively free have driven down consumer prices, making us all richer. The government (both democrats and republicans) has driven up the cost of everything it touches, making us all poorer.

So your solution, in the face of overwhelming evidence to the contrary, is to make government even more intrusive and controlling. Your solution is just to have someone else pay for all these things, as if such a solution is without consequences. Sure, the government can say health care is free for all. To quote Heinlein: “There ain’t no such thing as a free lunch.”

Also, I went to college before Reagan and it was not free. Don’s presentation makes it clear that your rosy scenario of life in the good old days is pure bunk. People choose to have both parents work so they can take advantage of the tremendous array of consumer goods available. When I hear of the struggling middle class, I think, right, struggling to decide between black granite countertops or beige with flecks, should we get the new car this year or struggle with the old one that needs repairs now and again for another year. Heaven forbid that anyone be forced to cut back to basic cable or limit their cell phone minutes.

Emil July 26, 2011 at 10:30 am

“Before Reagan college in many states was basically free”

No, it wasn’t free, it was paid for by someone else, it’s not the same thing

“If liberal progressive policies were in place total taxes would be far more progressive, incentives for offshoring would be gone, trade would be more equal, college would be nearly free to those who qualified, child care would be subsidized, we’d have at least a public option or a single payer health care and the mortgage deduction would have an upper limit.”

And everyone would have a pony

“Because back when liberal policies were more dominant a single working man, like my father , could raise a family of 5 with one car, own a home and send his kids to college and retire comfortably with a good pension. ”

1) I thought it was a good thing that women worked and were not constrained to raise 5 kids at home?
2) they didn’t have any aircondition, ate poorer food, had no TV, no computer, no Internet access, no washing mashine, no dish washer, no holiday travels, poorer life expectancy, etc, etc

brotio July 26, 2011 at 6:44 pm

*LIKE!*

Dan J July 26, 2011 at 3:02 pm

Drivel!! As usual.

Dan J July 26, 2011 at 6:50 pm

Can somebody get this guy a collegiate textbook on economics?

Sam Grove July 27, 2011 at 3:55 pm

If liberal progressive policies were in place total taxes would be far more progressive, incentives for offshoring would be gone, trade would be more equal, college would be nearly free to those who qualified, child care would be subsidized, we’d have at least a public option or a single payer health care and the mortgage deduction would have an upper limit.

Evidence of totally superficial comprehension of economics, that is, evidence of extreme cluelessness.

Slocum July 26, 2011 at 7:32 am

Cars? Seriously. No. You get so unbelievably much more for your money now. I posted this comparison on a ‘Marginal Revolution’ thread about ‘stagnation’ a while back — here’s what $14,500 in 2011 dollars would have bought you in the mid 1970s:

http://www.amcpacer.com/images/print/sundowner1.jpg

And here’s what a bit more money would buy you in a compact car today:

http://www.hyundaiusa.com/elantra/

The ‘advanced’ features (included at no extra charge!) for the Pacer are hilarious. Custom vinyl interior with basket-weave upholstery! Rear wiper! Styled steel wheels! (Oh, be still my beating heart). The more you look, the funnier it gets. The 1975 Pacer had a zero-to-60 time of…wait for it (and you really do have to wait for it)…14.5 seconds:

http://www.zeroto60times.com/AMC-0-60-mph-Times.html

Compared to the Pacer, the Elantra is like a car from another universe: traction control? stability control? front and side airbags? satellite radio? (not to mention 0-60 in 8.5 seconds and 40MPG).

Gil July 26, 2011 at 2:29 am

Aw shucks, it’s a wonder Don didn’t simply argue against “classes” and simply state that there are people who simply make more money than others. After all, what is the annual income to differentiate between “upper working-class” and “lower middle-class”. Likewise what is the “middle” that makes the middle-class “middle”? Those who are referred to as “middle-class” in the U.S. would be affluent in other parts of the world. And so on . . .

ArrowSmith July 26, 2011 at 5:04 am

I just don’t buy the notion that people in 2011 are “richer” because they can have an iPhone. People live worse, unhealthier and more complicated lives not then in 1975. We need to return to simpler times.

Martin Brock July 26, 2011 at 8:34 am

Who’s stopping you? You can easily return to a 1975 lifestyle and pile up lots of savings in the process.

I like the net, and apparently so do you. You couldn’t drag me, kicking and screaming, back to 1975.

Mark Anthem July 26, 2011 at 8:48 am

Hats off to the kids using technology for finding sanctuary from a world full of creepy buzzards bereft of of even a picoliter of testosterone or individual dignity and mutual sovereignity.

It’s this kind of fuzzy groupthink steamrollering that leads to Amy Winehouse dying under prohibition so effective even millionaires can’t safely obtain the goods they are peacefully seeking.

With apologies, I address this to the strawman tied together during my interpretation of your comment here.

There are no people, only individuals who are
“these children that you spit on
As they try to change their worlds
Are immune to your consultations
They’re quite aware of what they’re going through”

Dan J July 26, 2011 at 3:07 pm

Yeah, we need to go back to using lard, MSG, and treating fevers by tossing more blankets on to help the symptoms of chills.

Automatic July 27, 2011 at 11:21 pm

When I hear phrases like “return to simpler times” I find myself asking what it was that made those times simpler. The answer in most cases seems to be that there were fewer choices that needed to be made. The 70′s were simpler because there were fewer ways in which one could choose to spend his or her money (or earn a living). It is the mark of progress that things are not as simple as they once were.

Dan J July 27, 2011 at 11:47 pm

Was it simpler times when tending to fields, livestock, and upkeep of living quarters were the days dominant activities?
Leisure consisted of reading, fishing, watching the sunset, and a game of horseshoes?
Worries and sustenance work consumed more time and considerably more effort.
We forgo that for others comparative advantages to produce our sustenance and so that we may labor less intensely with fewer worries of survival.

Nevada Doctor July 26, 2011 at 8:25 am

Brilliant. If this were, Speakeasy Hayek I’d like to see some numbers on designer knockoffs, media dubs, stolen goods, whiskey, hookers, lapdances, blow, weed, one night stands with tourists, nannies, gardners, mistresses, and all the other off-catalog goods and services beyond the White Market.

Martin Brock July 26, 2011 at 8:27 am

The presentation is very interesting, but it raises a question without addressing the question. The CPI-adjusted, average hourly wage of a non-supervisory worker hardly changed between 1975 and 2011, but you cite many examples of goods that are far, far less costly when measured in hours of labor. Something’s amiss here. Have other prices, measured similarly, gone up? Does the CPI assign greater weight to these other goods? I’d like to see a detailed analysis of the CPI explaining this discrepancy.

ctbtj July 26, 2011 at 8:51 am

Fantastic. This is a concrete way to capture the abstract notion that people can be much better off, even if their slice of the pie declines slightly, when the pie itself is growing quite rapidly. The comparison of prices is compelling, but the difference in quality even more so.

John Galt July 26, 2011 at 8:53 am

Upper classes are a nation’s past; the middle class is its future.”
- Ayn Rand

Is there a slowdown in Middle Class moving to Upper Class?

I don’t think so, provided we deal with the achilles heel that is energy.

We definitely need a better dispersed redundant robust market in energy worldwide.

muirgeo July 26, 2011 at 9:38 am

Upper classes are a nation’s past; the middle class is its future.”
- Ayn Rand

The top 400 wealthiest individuals have more wealth than the bottom 60% combined.In other words 400 is > 180,000,000. The top 1% wealthiest have more wealth than the bottom 90% combined… I think she missed that call.

tdp July 26, 2011 at 10:53 am

They also pay more taxes than the bottom whatever combined.
Top 1%= 20% of income/38% of taxes (95% more than their “fair share”)
Bottom 53%= 13% of income/3% of taxes (23% of their “fair share”).

And what part of THE WORLD IS NOT ZERO SUM do you not understand? EVERYONE has benefited from economic growth. The people still suffering are suffering BECAUSE of elitist morons like you.

Do us all a favor and read this:http://www.johannorberg.net/pdfs/chapter2.pdf

pages 66, 72, 73, and 77-83 will be of particular interest, as well as page 89 and the sections at the end comparing and contrasting East Asia and Africa. You can find chapter one on his site too for even MORE confirmation that free markets are good for the poor and that neoliberalism is a far better alternative to your luddite protectionism that leads to poverty, malnutrition, illiteracy, disease, starvation, and death.

Johan Norberg has intellectually bitch-slapped the likes of you with his book. Even SOCIALISTS have given it positive reviews. Read his book. The only way it could be better was if every chapter ended with “Q.E.D. motherfuckers!”.

Ken July 27, 2011 at 12:08 am

“The only way it could be better was if every chapter ended with “Q.E.D. motherfuckers!””

Shouldn’t all arguments be ended that way?

QED motherfuckers!
Ken

Dan J July 26, 2011 at 3:12 pm

I, too, am waiting for the ‘bottom’ half to pay their ‘fair’ share. Where is their contribution. I am not near the top, but, pay a share. Yet, so many others do not, and I have to keep paying more in forms of prices or BACKDOOR taxes to accommodate the portions of America who pay nothing. This includes GE and Whirlpool.

Automatic July 27, 2011 at 11:32 pm

The top 400 wealthiest individuals have more wealth than the bottom 60% combined.In other words 400 is > 180,000,000. The top 1% wealthiest have more wealth than the bottom 90% combined…

This is a perfect example of going to that same old envy well for the left. Other than being less offensive to your sense of fairness, why would a more equitable wealth distribution be more desirable if it comes at the expense of everyone involved?

If someone decided to give each poster at CafeHayek $100 it would be more equitable than if that same person gave you and me $1000 and everyone else $500. But I doubt any of us would rationally chose the former over the latter. We would need to be acting out of the type of envy that you are trying to rouse in order to chose the $100.

nailheadtom July 26, 2011 at 8:53 am

What’s with all this fixation on the expense of the increasingly irrelevant remnant of 19th century German philosophy called a college education? The information dispensed in college is easily available now to practically everyone and isn’t that what education is, acquisition of information? Sure, it might be easier to gain instruction, especially in areas like surgery, for instance, in an institutional setting but little knowledge is now secret. The dissemination of information has exploded in the last decades. Anyone with even a smidgin of self-discipline can acquire an education that would put to shame that of the most learned in centuries past. Of course, learning something on your own might not be rewarded with a certificate suitable for wall display but that item isn’t synonymous with education either.

Economiser July 26, 2011 at 10:25 am

*Like*

When most people speak of a “college education,” they’re speaking of a certificate that confers certain advantages in the labor market. That’s the real value.

Ben July 26, 2011 at 9:09 am

In a very un-empirical fashion, what if we use the visions of various science fiction authors and their promises of rocket packs, flying cars, and space travel as the bar of society’s best possible outcome? In that respect, our lives are disappointingly only marginally better than they were in the 70′s. I suspect the future will continue to betray the promise of the best possible future until we are free from the tyranny of the bad ideas of Marxism and ‘social progressivim’ as displayed in some of the comments above.

Economiser July 26, 2011 at 10:25 am

I’m still waiting for my flying DeLorean.

Slappy McFee July 26, 2011 at 11:26 am

The flying didn’t happen until Doc went into the future and returned to 1985.

Economiser July 26, 2011 at 1:05 pm

“The Future” was 2015. They also had hoverboards, auto-sizing jackets, and home fax machines. I can’t wait!

Slappy McFee July 26, 2011 at 3:59 pm

I think I saw some documentary with the hoverboards already being made. I really wish I could remember what it was. And, I think I read in a recent Popular Mechanics that the “flying car” has been approved by the FAA. All you need is a Delorean sticker.

And wait a minute, did you just write that you can’t wait for “home fax machines”?

Economiser July 26, 2011 at 4:39 pm

Of course! Don’t you want the convenience of a personal fax machine in your very own home?

Dan J July 26, 2011 at 4:49 pm

And the cubs actually win the World Series…… More than once.

Gil July 26, 2011 at 11:37 am

I s’pose I could glue some wings onto a Hotwheels DeLorean for you.

John Dewey July 26, 2011 at 11:00 am

Ben,

When I was growing up in the 1950s and early 1960s, these were a few visions of the future presented to me:

video-phones worn on ther wrist
giant screen televisions
robot vacuums
electronic diaries
digital newspapers viewed on microcomputer monitors
giant tree harvesting machines
bullet trains

Of course, these visions were a bit more conservative than the rocket packs and flying cars. For a child in the 1950s, though, they seemed as distant as interplanetary travel. It’s difficult for me to express just how much the world has changed in my 60 years. Innovation and entrereneurship somehow flourished despite the shackles of socialism.

kyle8 July 26, 2011 at 2:25 pm

I miss the rocket packs and the moving sidewalks, but then again, I need the exercise.

brian July 26, 2011 at 11:42 am

It is human nature to compare yourself to those around you. That is why we have large consumer debt, larger homes than we can afford, luxury automobiles that we cannot afford. All because we want to keep up with our friends and neighbors. Live within your means and stop worrying about what others have. TAKE RESPONSIBILITY FOR YOUR ACTIONS.

Mortgage sales people may have been dishonest. You make the final decision whether to sign the documents. If you don’t understand them, don’t sign them. TAKE SOME RESPONSIBILITY FOR YOUR ACTIONS.

CEO’s don’t pay themselves, the board of directors approves their salary. If you believe the job is easy, start your own business and see how you do. Not as easy as it sounds.

Last I noticed, people from other countries were coming here to get away from their government. If you don’t like the United States, you are free to leave. There is no successful system that has a level playing field. If I CHOOSE to work 70 hours a week and you CHOOSE to work 40 hours a week, why should I pay more of the tax burden?

If I take the risk to start my own business and take the risk to hire employees, should I not profit from that risk? OR should I share my profits with all my employees so everyone including me makes the same amount? Because we would not want things to be unequal.

IRRESPONSIBLE!!! You live in a capitalistic society, some will be greedy, others envious. Both are wrong. Take responsibility for yourself.

WhereAreTheAccrediations? July 26, 2011 at 12:24 pm

Cato University
http://www.cato.org/cato-university/
Doesn’t list any accreditations. Do they have any?

“There are two types of accreditation, regional and national.

Regionally accredited schools are predominantly academically oriented, non-profit institutions.

Nationally accredited schools are predominantly for-profit and offer vocational, career or technical programs.

Regional accreditation is a measurement the US Department of Education (DOE) uses to ensure that schools meet rigorous and up-to-date standards of education and professionalism. All schools must be accredited, and their curriculum must pass approval with a DOE-approved accreditation board.”

Slappy McFee July 26, 2011 at 12:30 pm

You do know its not REALLY a university right?

Anymore than Beck University…..

Chucklehead July 26, 2011 at 12:41 pm

Do you think that Cato would ever want accreditation from the US Department of Education? It would go against everything they stood for. The DOE has done such a fine job ensuring that public education “meet rigorous and up-to-date standards of education and professionalism. ” More like standards of indoctrination.

John Dewey July 26, 2011 at 4:50 pm

Just to be clear, the Department of Education does not directly accredit universities and colleges. But the Secretary of Education does provide a list of private accrediting agencies which the DOE has determined to be “reliable authorities as to the quality of education or training”.

Dan J July 26, 2011 at 4:56 pm

Accreditation? Ha! Another fallacy. Remember Dr Sowell’s example of how an accreditation board works when the Bar Ass. Threatened Univ. Of Colorado Boulder Law School. It was all about politics and the threat the Univ. Was to the expensive Ivy league schools whose graduates made up the board.
They hampered the school with ridiculous goals to meet in order to retain their accreditation. It was entirely about making the school rack up huge new costs which would have to be passed on to students and making it less possible for lower income individuals to gain a law degree. Can’t have Harvard be humiliated by a school whose graduate pass the bar on the first time at a higher rate and cost less than 1/3 for the degree.

Chucklehead July 26, 2011 at 12:36 pm

You have failed to include the cost of state, local and federal governments. That cost hasn’t dropped.

Observer_Guy1 July 26, 2011 at 1:15 pm

I guess besides stagnating or declining, the middle class is shrinking.
Also, if 25% of the middle class becomes poorer over time, 50% gets richer, and the rest stay the same, you’d end up with more people better off than before. So is that a good way to run an economy or not? I really think that the it is more like 50% of middle class is becoming poorer, 25% are movin’ on up and the rest are stagnating. So, more are likely doing with less.

This is an empirical question of course, so it can surely be answered. I didn’t get the answer from your PowerPoint presentation. You also failed to discuss the cost of health care, rent, transportation, food, and clothes. Those expenses ought to come before the purchase of a flat screen TV, or beer and cigarettes.

ArrowSmith July 26, 2011 at 1:44 pm

He deliberately doesn’t want to talk about the inflation in necessities. It’s an absolute failure of his precious Hayekian model.

Ken July 26, 2011 at 10:51 pm

False.

Regards,
Ken

Stone Glasgow July 26, 2011 at 4:27 pm

The hours required for the average worker to buy 1975 healthcare, cars, housing, food and clothes has dropped a lot. For example, a Honda civic took 776 hours to earn in 1978, and in 2009 a Civic (with a lot more options and safety) took only 670 hours to earn for an average worker.

The cost of high-tech medical care available in 1978 is much cheaper today, and Don showed clothing prices in his Powerpoint slides.

Housing costs have dropped tremendously if you look at the price per square foot. In 1978 the average new home was about 1,700 sq ft and cost $160,000 (inflation adjusted dollars). Today the average new home is 2,500 sq ft and costs $160,000 (inflation adjusted dollars).

John Dewey July 26, 2011 at 4:42 pm

“besides stagnating or declining, the middle class is shrinking.”

How do you define “middle class”?

Some classical economists defined middle class to be everyone who wasn’t part of either the worker class or the capitalist class. So that blue collar workers would be in the worker class, your local dentist would be part of the middle class, and the owner of the local Ford dealership would be the capitalist class. Such occupation distinctions are hardly meaningful today/

Do you define middle class based on income levels? If so, do you simply use some arbitrary definition? Or do you use the government’s definition of the poverty level? That’s a definition which has changed considerably over time.

If you’re going to assert that “the middle class is shrinking”, you really should provide some definition so that we can understand what you are talking about.

Ken July 26, 2011 at 10:51 pm

“the middle class is shrinking.”

As has been stated and proven with data, the middle class is shrinking because people are getting RICHER. See table 695 of the Statistical Abstract maintained by the Census Bureau and keep in mind that the incomes are inflation adjusted AND is per family, meaning that per capita people are even richer.

“Also, if 25% of the middle class becomes poorer over time,”

It doesn’t. You’ll see in the table I mentioned, that as a percentage of the population, families earning less than $75K shrank, those earning $75K-$100K stayed the same, while those earning $100K or more exploded, going from 13% of the population in 1980 to 26% in 2008.

“This is an empirical question of course, so it can surely be answered.”

It certainly is empirical and it has indeed been answered: your assumptions that the middle class are getting poorer are wrong.

“You also failed to discuss the cost of health care, rent, transportation, food, and clothes. ”

The cost of all of those things, based on the number of hours needed to work to pay them, has gone down. You may disagree with health care and rent, but the reality is that the quality of both has improved dramatically, as well as options. And as other things get cheaper, people like to live comfortably and healthy, so spend more on housing and health care, but today people are able to buy much more of both.

Regards,
Ken

John Dewey July 27, 2011 at 8:41 am

Ken: “As has been stated and proven with data, the middle class is shrinking because people are getting RICHER.”

Can you provide some source which proves the middle class is shrinking?

Ken: “See table 695 of the Statistical Abstract maintained by the Census Bureau”

This table has no heading for “middle class”. It does show that the real median income of families was higher in the past decade than in 1980. But the table provides no indication about what is “middle class”, so it does not prove your assertion.

Ken: “your assumptions that the middle class are getting poorer are wrong.”

I agree that the middle class, as defined by occupational groups, are not getting poorer. But table 695 has no information about occupational groups. I’m really not sure if that classical definition of middle class – the group composed of those who are neither capitalists nor blue collar working class – is what either you or Observer_Guy are referring to.

Ken July 27, 2011 at 10:33 am

JD,

Seriously? You can’t draw conclusions about the middle class from a table talking about median incomes?

I see why: your definition of the middle class is as non-standard as it gets. The middle class has ALWAYS been defined as those in the middle incomes, i.e., not rich or poor. Neither blue collar working class nor capitalist defines an income class.

Blue collar working class simply means the group of people holding down full time blue collar jobs. Many of those make north of $100K. Some of those really skilled or rare skills make a couple hundred thousand a year. Both of those incomes would classify you as rich in pretty much any part of the nation. The rest of the blue collar working class is in the middle class.

Capitalist is an economic ideology, like communist, socialist, and libertarian. It has nothing to do with an income class.

Regards,
Ken

John Dewey July 27, 2011 at 12:10 pm

Ken: “The middle class has ALWAYS been defined as those in the middle incomes,”

You are mistaken. Middle class was originally defined to be exactly those workers who were neither blue collar working class not capitalists.

Even today, common usage distinguishes between classes based on socioeconomic status and not merely based on income.

Here’s the Merriam-Webster definition:

” a fluid heterogeneous socioeconomic grouping composed principally of business and professional people, bureaucrats, and some farmers and skilled workers sharing common social characteristics and values”

And here’s the definition from BusinessDictionary.com:

“middle class DefinitionSocial class usually comprising of white-collar (non-manual) workers, lower-level managers, and small business owners, often constituting about one-third of the employed population of a country. The income of this class is higher than that of the working-class but lower than that of the upper-middle class (doctors, engineers, lawyers, middle-size business owners) and upper class.”

The Max Weber definition of middle class, which most sociologists follow, definitely excluded all except the most highly-skilled blue collar workers.

Ken July 27, 2011 at 1:01 pm

JD,

I can find a bunch of definitions as well:

I love how you completely leave out the ACTUAL definition given in the Merriam-Websters dictionary: a class occupying a position between the upper class and the lower class.

Here are a couple more:

Wiki: any class of people in the middle of a societal hierarchy.

American Heritage: a class of people intermediate between the classes of higher and lower social rank or standing; the social, economic, cultural class, having approximately average status, income, education, tastes, and the like.

To sum up, the middle class is defined as being not the upper or lower class. Class refers to one’s socioeconomic situation and is measured in terms of income and wealth. Thus table 695 of the Statistical Abstract is a fantastic table to use to determine what is happening to the middle class.

And, again, a capitalist is NOT a class. It is an ideologue, i.e., one who believes in capitalism. Here are some definitions, since you clearly didn’t bother to look this one up:

Wiki: an economic system in which the means of production are privately owned and operated for profit, usually in competitive markets.

Merriam-Webster: an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market.

American Heritage: an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, especially as contrasted to cooperatively or state-owned means of wealth.

Regards,
Ken

John Dewey July 27, 2011 at 2:15 pm

Ken,

This discussion is going nowhere.

I asked Observer-Guy for his definition of the term “middle class” because he asserted that:

“the middle class is shrinking”

You have asserted the same about the middle class, but have yet to provide any definition for that term other than the meaningless

“being not the upper or lower class”

Your subsequent assertion that class is:

“measured in terms of income and wealth”

indicates you may not understand the meaning of the words “status”, “education”, and ” tastes”. Those words were included in the American heritage definition you chose to include in your comment. I’m also not sure you understand the meaning of the word “socioeconomic”, which you used in your comments about the definition of middle class.

You are unable to provide a definition of the term “middle class” which might help someone understand your assertion. Would you mind explaining how you separate the incomes shown in Table 695 into lowwer, middle, and upper?

Ken July 27, 2011 at 3:10 pm

JD,

“This discussion is going nowhere.”

Primarily because you insist on using the term “middle class” as it is typically used.

“indicates you may not understand the meaning of the words “status”, “education”, and ” tastes”.”

I see. So if a person has no savings and works at coffee shop earning $8K/year, but has a PhD and superior taste in art (that PhD is in art history) you may not consider him part of the lower class? Or consider a person earning $50K/year with a net worth of $100K and has a master’s degree who likes WWE is a person of lower class? Or a person who earn $250K/year with a net worth of $1.5M, but only has a high school education, three bedroom house in Severn, MD, and doesn’t read for fun, is not in the upper class?

“You are unable to provide a definition of the term “middle class” which might help someone understand your assertion. ”

I provided three separate definitions and how to measure those definitions and provided a table in the Statistical Abstract to help understand my assertions. So, really you’re just pissy that you don’t like income to be used as the definition of classes. However, ask a random sample of people about the examples I gave above and you’ll find that almost everyone puts income as the heaviest weight in determining class.

“Would you mind explaining how you separate the incomes shown in Table 695 into lowwer, middle, and upper?”

Sure. The lower class would be in the far left column (those earning less than $15K/year) and the upper class would be in the far right column (those earning $100K/year). The middle would be those in the middle. Is this really that hard? This isn’t rocket science involving Bayesian statistics, but third grade math involving only inequalities (Lower class earnings < middle class earnings < upper class earnings).

Regards,
Ken

John Dewey July 27, 2011 at 4:01 pm

Ken,

Based on what you have told me, you would define classes as follows:

lower class – all U.S. families with incomes below $15K
middle class – all U.S. families with incomes of $15K to $99K
upper class – all U.S. families with incomes of $100K or more

I suspect that few readers of Cafe Hayek would agree with you. I do not.

Ken, the problem with making the assertion that:

“the middle class is shrinking because people are getting RICHER”

is that there is really no consensus on what the term “middle class” means. The classic occupation-based definition is more meaningful than the one you apparently use. But I’m sure you will not agree with that.

My only reason for carrying out this long argument is that perhaps someone else might think about what they are writing before they post a comment such as the one Observer_Guy made.

Ken July 27, 2011 at 4:13 pm

JD,

“I suspect that few readers of Cafe Hayek would agree with you. I do not.”

You would suspect wrong, otherwise you would have responded to my examples. This is why YOU should think before you begin to reply to my comments.

But for shits and giggles, how do YOU define the middle class. Make sure to think first and make the definition so that we can partition (divide into sets of people, so that these sets have no intersection) the US population. Otherwise, you’re just blowing smoke or being purposefully misleading just to be an ass http://xkcd.com/169/.

Regards,
Ken

yet another Dave July 27, 2011 at 5:08 pm

lower class – all U.S. families with incomes below $15K
middle class – all U.S. families with incomes of $15K to $99K
upper class – all U.S. families with incomes of $100K or more

These thresholds look downright stupid to me. A family making $16k a year is middle class!!!?!?!??!!? A family earning $110k is upper class?!?!?!?!!?!?!??

Not even close.

John Dewey July 27, 2011 at 5:55 pm

Ken: “how do YOU define the middle class”

I don’t like using the term for the very reason that there is no consensus about its definition. I would much prefer to use population quintiles when discussing incomes. Of course, quintiles are by definition 20% of any population, whether one is referring to households, families, or persons. So it would not be correct to assert that “the middle quintile is shrinking”.

The definition of class which I prefer is based on occupations and similar to the Max Weber definition:

working class – blue collar and lower skilled white collar workers

middle class – professionals, small business owners, and higher skilled white collar workers

upper class – capitalists (you seem to have trouble with that term, Think of capitalists as owners of medium to large businesses and wealthy investors)

The problem with using the Weberian definition is that we have few statistics available which distinguish small business owners from capitalists. Furthermore, the occupational definitions are little help in today’s world where households may have workers in more than one occupational group.

Ken July 27, 2011 at 5:57 pm

YADave,

A family making $16K a year can afford decent housing, food, and clothing as well as have cell phones, cars, and other luxury items, so yes making $16K per year does put a family in the middle class.

A family making $100K a year can afford luxurious housing, gourmet foods, and trendy clothes, as well as have top of the line cell phones, cars and other top of the line luxury items, so yes making $100K per year does put a family in the upper class.

Regards,
Ken

John Dewey July 27, 2011 at 6:05 pm

Yet another Dave: “These thresholds look downright stupid to me.”

I do not like Ken’s groupings either. $110K annual income may be considered wealthy in Tunica, MS, but it’s probably fairly normal in Barrington, IL.

John Dewey July 27, 2011 at 6:09 pm

My occupational based definitions of class only referred to houesholds which have working persons. The other class that is not mentioned – the perpetually unemployed of working age who depend on transfers from government or family – I refer to as the “parasite class”.

Ken July 27, 2011 at 6:10 pm

JD,

“The problem with using the Weberian definition is that we have few statistics available which distinguish small business owners from capitalists.”

The definition of capitalist is 1) a supporter of capitalism and 2) an investor of capital in business. A small business owner meets AT LEAST the definition in 2) and many, if not most, meet the definition of 1).

Please use standard definitions. Now on top of redefining “middle class” you have used “capitalist” to mean something other than the actual definition, which is one who believes in capitalism.

“Furthermore, the occupational definitions are little help in today’s world where households may have workers in more than one occupational group.”

It also doesn’t matter, since a plumber earning $80K/year and store manager making $80K/year in the same locality would be considered in the same class (in this case the middle class) by everyone except for you. Occupation doesn’t matter at all. Wealth and income do.

Regards,
Ken

John Dewey July 27, 2011 at 6:12 pm

I was only thinking about workers and forgot to include the other class of households. That would be the households with persons of working age who perpetually depend on transfers from government and/or relatives. I refer to these households as the “parasite class”.

John Dewey July 27, 2011 at 6:16 pm

Ken,

There are broad and narrow definitions for the term capitalist. I prefer to use the narrow one, which would not include the small business owners.

As for your assertion that only I use occupational-based definitions of upper, middle, and lower class, rather than income-based definitions:

you are mistaken.

Ken July 27, 2011 at 6:41 pm

JD,

“Think of capitalists as owners of medium to large businesses and wealthy investors”

When looking up the definition for capitalist I found the two I provided. I have no trouble with the definition of the word. It is you who want to use it in some manner that no one else uses. Since you have redefined this word as the Queen of Hearts would: what you mean, nothing more, nothing less. All without regard to how the word is actually defined and used. If what you are saying is true, then people would talk about the upper class and capitalists as if they were synonymous. Of course no one does this. Is everyone else wrong or just you?

JD’s defintion:

“working class – blue collar and lower skilled white collar workers

middle class – professionals, small business owners, and higher skilled white collar workers

upper class – capitalists”

Your “definition” of upper class is a non-definition (see above).

JD’s later statement:

“As for your assertion that only I use occupational-based definitions of upper, middle, and lower class, rather than income-based definitions:

you are mistaken.”

I am not mistaken. Clearly in the definition you provided for the different classes, they are broken up according to occupation. At no time in your definitions do you provide anything close to an income based-definition.

Regards,
Ken

John Dewey July 27, 2011 at 7:21 pm

Ken: ‘When looking up the definition for capitalist I found the two I provided. “

Here’s the definition from the American Heritage Dictionary of the English langueage:

“An investor of capital in business, especially one having a major financial interest in an important enterprise”

Note the term “important enterprise”. This is the narrow definition I referred to. The owners of the mom-and-pop flower shop do not meet the narrower definition, which refers to “important enterprise”.

Ken July 27, 2011 at 7:35 pm

JD,

“Here’s the definition from the American Heritage Dictionary of the English langueage:

“An investor of capital in business, especially one having a major financial interest in an important enterprise””

You mean the definition I provided that in 2) above? I did leave off the “especially” part, since it’s a qualifying statment, not a defining part. However, if you want to emphasize the qualifier “important enterprise”, fine. Please define “important enterprise”. It’s nice to know we can all count on you to determine what’s “important” and what’s not. I’m guessing thos mom and pop stores are pretty important to mom and pop and their employees. Don’t forget either that many of those “mom and pop” stores employ hundreds of people and do sales in the tens or hundreds of millions, but no, you’re right, those businesses aren’t important.

Regards,
Ken

John Dewey July 27, 2011 at 7:10 pm

Ken,

Perhaps my reply confused you. When I wrote:

“your assertion that only I use occupational-based definitions”

the words “only I” referred to the part of your statement which read:

“… by everyone except for you. Occupation doesn’t matter at all. Wealth and income do.

Again, you are mistaken. Not just me, but many people well-versed in the social sciences agree that occupation and education are as important or more important than income in defining middle class in America.

Ken July 27, 2011 at 7:41 pm

JD,

“Not just me, but many people well-versed in the social sciences”

I’m sure. That’s why, as a mathematician, when I use the phrase ” in generally” I use it carefully depending on what audience to which I am talking. If I am talking to another mathematician and I say “in general P is true”, I mean P is ALWAYS true. Wen talking to a non-mathematician, it would mean that “often not always”, like “in general, it’s hot in July”.

That’s why I mocked you with the XKCD link. I suspected you read some technical social science paper somewhere, where the words you nit-picked about were rigorously defined and used in ways not typically used (a narrow technical definition, like the one you’re insisting on), then acting smug about it. Thank you for comfirming this.

Regards,
Ken

Jim July 26, 2011 at 1:29 pm

Is there a common consensus (I hate those words) by economists about whether middle class living standards have stagnated?

What is wrong with merely asking people if they would rather live then, or now?

I am also surprised that it is not common knowledge that really the only products that have not decreased in price in the last 40 years are those controlled or delivered by government. Why is it not a no-brainer to allow the market to do what it does best in those arenas as well? Even Progressives must acknowledge between subsidizing the poor to purchase products, and controlling institutions that deliver it. One is simple. The other always fails.

ArrowSmith July 26, 2011 at 1:43 pm

It is a consensus that living standards have stagnated badly in the last 30 years since Raygun took office. Before 1981 we were a fairer, more egalitarian nation. Raygun set us all at each other’s throats. The ultimate in class warfare, trickle-UP economics!

Dan J July 26, 2011 at 6:21 pm

Egalitarianism is a fallacy created by intellectuals with little to no real-world experience beyond the college campus.

muirgeo July 26, 2011 at 10:39 pm

That’s because you are a member of the elite privileged class with a fascist neoliberal agenda that wants to exploit the poor to get richer while people starve and die from having no medical care. We should completely equalize income in this country because equality is all that matters and it is hurtful and selfish to have more money than someone else. In fact, people like me should get extra money and privileges along with everyone else who helps point America to the path of fairness as a reward, just like Nancy Pelosi and Bernie Sanders and Dennis Kucinich and Harry Reid.

Kirby July 26, 2011 at 10:50 pm

Congratulations, Comrade Vasili, you’ve been drafted into the Army of the Motherland!

Greg Webb July 26, 2011 at 10:53 pm

George, that’s just plain and simple stupidity.

muirgeo July 27, 2011 at 1:08 am

Thats not my writing….. some one is being a wise guy.

muirgeo July 27, 2011 at 1:09 am

There’s no web page or FDR avatar.

brotio July 28, 2011 at 1:28 am

Thats not my writing….. some one is being a wise guy. – Yasafi

You’re right. Grammar and spelling are correct

Economiser July 26, 2011 at 2:04 pm

I would think that any real economist would agree that middle class living standards in America have increased dramatically over the past 40 years.

Take a look at any period TV show from 1971 and compare their material standard of living to today. For a really fun experience, watch a TV episode from 1971 and count how many plot issues would be quickly and efficiently resolved if the characters all had smartphones.

kyle8 July 26, 2011 at 1:57 pm

We are so much better off than in the 1970′s it is not even close. I can go into my local grocery store and buy lobster, caviar, Kobe’ beef, and exotic fruits. And all at a middle class income. This was simply not possible in the 1970′s/

My auto is a cheap little hatchback and lasts about ten times longer than a similar car in the 1970′s. My home is much much bigger than my father’s house was and I am only a schoolteacher.

kyle8 July 26, 2011 at 2:24 pm

We are SO much better off now than we were in the 1970′s. My father had a high end manufacturing job and I am only a schoolteacher. Yet I have a much much larger house, my automobiles last about ten times longer, and I can go into my local supermarket and buy things that I could never obtain on a middle class income in the 1970′s. Fine wines, caviar, Kobe’ beef, and lobster to name a few.

Dan J July 26, 2011 at 6:44 pm

I would have to agree that the availability of items that were beyond my family or my neighbors are now available to most. higher quality devices and foods available at lowered prices. A middle class wage purchases much more today. The fact that there are more luxuries that we all engage in is irrelevant.

muirgeo July 26, 2011 at 6:15 pm

When the cost of college,child care, homes, cars, taxes, and health care are figured in we are not doing better. Then add to that both parents combined work hours have increased just to be where they are.

http://economix.blogs.nytimes.com/2011/07/20/rising-family-income-more-work-not-raises/

We have 9-10% unemployment and you guys are arguing that we are doing better? Reality just doesn’t seem to bother your opinion of it.

Emil July 27, 2011 at 1:56 am

“Then add to that both parents combined work hours have increased just to be where they are.”

1) Again, I thought women working was a good thing?

2) but they are spending significantly less time hand washing and laundering, cooking, cleaning, sowing clothes and DIY in general

brotio July 27, 2011 at 8:24 am

It’s a good thing they have the opportunity . It’s not a good thing if both parents combined have to work more total hours to get by…which is apparently what is happening.

Ken July 27, 2011 at 2:21 am

muir,

“We have 9-10% unemployment and you guys are arguing that we are doing better? Reality just doesn’t seem to bother your opinion of it.”

The reality that the policies of government intervention caused this high unemployment doesn’t change your opinion that the government should intervene even more, does it? And you claim that libertarians are divorced from reality. You are truly a leftwing zombie.

Regards,
Ken

Kirby July 27, 2011 at 11:20 am

THANK YOU!
College: Gov’t regulated to increase price astronomically
Child Care: personal choice
Homes: Gov’t regulated and crashed because of it
Cars: Cheap if you aren’t conspicuously consuming
But my favorite two are:
Taxes
Health Care

Muirego has seen the light!

muirgeo July 26, 2011 at 6:23 pm

I wear women’s underwear.

muirgeo July 26, 2011 at 6:25 pm

Stalin, Mao, Pol Pot, Chavez, Castro…. they were not so bad. If the right people, like myself, would have been advising them, they would have been successful beyond the world’s wildest dreams.
Siigghhh!!!! Twas not meant to be.

SheetWise July 26, 2011 at 10:06 pm

These people took advice? What fantasy are you living in?

Kirby July 26, 2011 at 10:53 pm

Yea, Stalin would have been real friendly towards TWO people whispering over his shoulder.

muirgeo July 27, 2011 at 1:11 am

brotio is being a child. But it makes me happy to know I piss him off to that degree.

brotio July 28, 2011 at 3:23 am

Please, Yasafi. Try to think just a little. If I was going to surreptitiously write under your monicker, I’d have asked the patrons of the Cafe if they could spell “A” for me.

Dan J July 26, 2011 at 6:32 pm

That’s just wrong. Just wrong.

muirgeo July 26, 2011 at 10:35 pm

look1ng FoR a GreAT time 2night? TrY black-whitemingle.com. Sign up tOdaY and Get a Fre3 trial offer N0W!

Kirby July 26, 2011 at 10:52 pm

Oh no, Muirgeo has short-circuited; he’s stopped spewing random garble. Fire up the defibrillator!

Ken July 27, 2011 at 2:17 am

+1

muirgeo July 27, 2011 at 8:26 am

Again, that is not my writing. That is brotio or some one using my user name.

Ray July 27, 2011 at 12:32 am

You do awesome work. Please promise not to stop.

brotio July 27, 2011 at 1:14 am

No it’s brotio who has short circuited.

Kirby July 27, 2011 at 11:22 am

You still have your picture up, Muir

brotio July 28, 2011 at 3:28 am

He’s not the brightest Church of Anthropogenic Climate Change-mandated, mercury-infused CFL in the horrible-for-landfill plastic package.

dullgeek July 27, 2011 at 8:40 am

Another problem with Reich’s video is the comment that the middle class is “fighting for scraps” of the remaining US federal budget. The assumption here seems to be that the only way to enrich the middle class is to ensure that they get more than just the scraps of the federal budget.

It’s really hard to imagine how horrible life would be for the middle class if the only mechanism that they had for their enrichment were the coffers of the federal government. That experiment has been tried in China, N. Korea and the USSR. And the wages paid by the middle class were’s tens of millions of deaths by starvation.

Whatever the sins of the quasi-capitalist system that we have, we’re doing much better off than that.

Smash Equilibrium July 27, 2011 at 4:53 pm

Robert Reich is a pretty good drawer.

sctt July 29, 2011 at 10:33 am

if america is to be a market fundamentalist, classist, warmongering society, we should at least know what the classes are.

http://www.youtube.com/watch?v=akVL7QY0S8A

Charles Peterson August 11, 2011 at 1:48 am

Well of course Chinese made and subsidized goods have helped box sold goods remain about the same hourly cost to median wage Americans. But things you can’t buy in Sears catalog include all the things that have seen drastic rises as compared to average wage: health care, college education, homes. And many new things have become necessities, imagine your kid going to high school now *without* a computer, can’t compete that way. Cars and homes have become better, but are still essential and also more expensive. The honest claim is that median wage has had stagnant growth in buying power since the 1970′s, while the super rich have had enormous income growth. It is the below median income groups which have seen the actual losses in buying power.

Dan J August 11, 2011 at 2:36 am

Even if your stAtements ring true, Below median incomes are people who are not stagnate themselves.
Health care, education, homes all rising, assumingly, have direct relationship to govt interventionism that is/has distorted the market.
Yep! The newest treatments will cost more. But, we have seen price reduction in older treatments or standard treatments, higher prices in third party payment programs as govt entities impose higher costs thru regulation. Mandating non-copayment, or simply mandating more and more coverages are not free. And as consumers are not having to make a choice on parting with money for a product or service demand goes up incurring more costs.
Govt continues to intervene in college education with subsidized tuition. Tenure adds to rising costs. And, accreditation orgs who demand politically correct cost additions or protectionist costs for their alder maters.
Housing…….. Really!! Govt interventionism caused a melt down on this one. Besides, I believe there are homes in Detroit for less than a new car. The lovely know-it-alls declare all should own a home. Thru coercion, low interest rates, GSE’s, etc.,…. We get a massive demand for new ownership and valuations go thru the roof!

Ivona Poyntz August 16, 2011 at 11:40 am

Foreign made goods do indeed allow a favorable comparison for purchasing power with mid 70s, but analysis excludes cost of medical care, pension contributions, homes as well as the fact that outsourcing jobs abroad leads to high unemployment, or part time jobs at home, so the people who actually have the money to spend are less than in 1975

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