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The Consumption Gap Between the Rich and the Rest of Us

Posted By Don Boudreaux On January 21, 2014 @ 11:56 am In Growth,Standard of Living | Comments Disabled

I mentioned in this earlier post [1] that I have a genuinely small nit to pick with Scott Sumner’s superb post [2], at EconLog, on income inequality.  Here’s the passage from Scott’s post that I will challenge:

FWIW, in my view the consumption gap between the middle class and rich has widened over my lifetime….

FWIW, in my view the consumption gap between the middle class and rich has narrowed over my lifetime.  (I think that Scott and I are largely contemporaries.  I was born in 1958; I believe that Scott is just a year or two older than me – so we’re talking here about the same span of time.)

Here’s a list – admittedly only off the top of my head – of ways that the consumption gap between the rich and the middle class has shrunk since, say, 1965.  I will use Howard Hughes (1905-1976) as my hypothetical super-rich person in 1965.

- In 1965, Howard Hughes could afford to have a package or letter delivered across the continent or ocean overnight.  No middle-class American in 1965 could afford such a service.  Today such speedy delivery options – both to send and to receive – are quite within the reach of ordinary Americans.

- In 1965, Howard Hughes could afford to pay someone to unlock his car doors for him, and to open and close his car’s heavy trunk lid.  Not so for any middle-income American back then.  But today, keyless entry and, on many models, automatic opening and closing doors and trunk lids are the norm for automobiles driven by middle-class Americans.

- In 1965, Howard Hughes could afford to talk on the phone for hours to someone hundreds or thousands of miles away.  Not true for ordinary Americans.  Today, even the poorest American pays no long-distance charges even when making a transcontinental telephone call.

- In 1965, Howard Hughes could afford to equip his house with a large screen, a state-of-the-art projector, an impressive sound system, and a film library filled with thousands of movies, documentaries, and television shows, so that he had a virtual movie theater in his home.  No ordinary American back then could do so.  Today, nearly every ordinary American can buy a large-screen hi-def television, a surround-sound speaker system, and a Netflix subscription so that, as a result, today’s ordinary American has an in-home theater experience very much like that which only the Howard Hugheses of 1965 could enjoy.

- In 1965, Howard Hughes could afford to staff his kitchen with chefs from Thailand, Korea, Japan, Vietnam, Ethiopia, Afghanistan, Morocco, Lebanon, India – and from the bayous of Louisiana.  No (or only the rare) ordinary American in 1965 had the daily option of choosing to dine on Thai or Korean or Vietnamese or Ethiopian or Afghan or Moroccan or Lebanese or Indian or Cajun cuisine.  Perhaps a New Yorker in 1965 could have scoured that city and found one or two each of these restaurants.  Today, of course, such restaurants are common even in communities much, much smaller than New York and Los Angeles.

- In 1965, Howard Hughes could easily afford to equip each member of his family with an automobile of his or her own.  In 1965, ordinary Americans still had “the family car.”  Unlike in 1965 for ordinary Americans, today it’s not unusual for a middle-class American household to have one car each for every person in that household who is at least 17 years old.

- In 1965, Howard Hughes could easily afford to vacation in a foreign country.  I don’t know the statistics on the matter, but my strong sense is that relatively few middle-class Americans in 1965 could afford to take foreign vacations – at least far fewer than the percentage of middle-class Americans who today actually do take foreign vacations.

- In 1965, Howard Hughes could (of course!) afford to fly to whatever distant locations he visited.  Air travel was not routine for ordinary Americans in 1965.  Air travel is emphatically routine for ordinary Americans in 2014.

- In 1965, Howard Hughes surely hired servants to wash his dinner dishes.  Few ordinary Americans in 1965 did so.  Today, automatic dishwashers are the norm in middle-income households.  Ordinary Americans in 2014, therefore, have a mechanical device to do much of the work that only the Howard Hugheses of America in 1965 could afford to avoid doing personally.

- In 1965, Howard Hughes could afford to equip his residence with an always-at-the-ready dark room so that he could take high-quality photographs and view them minutes later.  Ordinary Americans in 1965 could buy Polaroid cameras that yielded their photos within minutes, but the quality of those photos was poor.  Otherwise, ordinary Americans 49 years ago had to deliver their exposed film to a film-developer and then wait a day or two to view the results.  In hi-def contrast, ordinary Americans today can take high-quality, digital photos and view them only a split second after they are taken.  Ordinary Americans can also, if they wish, inexpensively print these photos.  And unlike even Howard Hughes in 1965, ordinary Americans in 2014 can also instantly text or e-mail those photos to friends across town or half-way around the globe.

- I suspect (although I admit that I do not know) that the percentage increase, between 1965 and 2014, in both the square-footage and the cubic-footage of the house occupied by the median-income American family was larger than the percentage increase, over the same years, in the square-footage and cubic-footage of the house occupied by the typical American billionaire.  I suspect also that the typical middle-class American house in 1965 did not – unlike the typical billionaire’s house back then – have central air-conditioning.  Today, central air-conditioning is common.

And it’s also worth mentioning that

unlike even Howard Hughes in 1965, ordinary Americans in 2014 can correct their vision by wearing soft contact lenses.

… unlike even Howard Hughes in 1965, middle-aged middle-class American men can take the likes of Viagra or Cialis in order to romp more robustly through Cupid’s grove.

… unlike even Howard Hughes in 1965, middle-class Americans can today treat their depression with drugs such as Lexapro and Paxil.

The list of medical advances, commonly available today to ordinary Americans, since 1965 is long [3].

So now a question: In what ways, over these years, has the consumption-ability of rich Americans grown by more than that of middle-class Americans?

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URLs in this post:

[1] this earlier post: http://cafehayek.com/2014/01/some-links-357.html

[2] Scott Sumner’s superb post: http://econlog.econlib.org/archives/2014/01/imagine_theres.html

[3] The list of medical advances, commonly available today to ordinary Americans, since 1965 is long: http://cafehayek.com/2013/01/is-the-quality-adjusted-cost-of-health-care-higher-today-than-in-1980.html


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