Frank, if you read that Don Boudreaux column closely, you see that it is a double-shuffle. It is actually a paean to advanced technology, not a demonstration of our increasing wealth. Indeed, the column admits that real income in terms of constant dollars has dropped dramatically from 1967 to today -- $46,326 in 1967 compared with $35,379 today. So what he is really saying -- indeed, crowing about -- is that "we" have almost $11,000 less to spend on a greater variety of goods. Somehow, he assumes, that should make us feel better, that we have a greater field of consumables across which to stretch a smaller wad of cash. No one wants to live with yesteryear's plumbing or dentistry, but most would like the ability to pay for the advances in those arts to keep up with the advances. Even considering, as he does, that advances in certain products and services have caused the prices to drop, it doesn't begin to make up for such a huge income drop.
Read again, Willis: "today’s real median household income ($46,326)" vs. "1967’s real median household income ($35,379)." "(These figures are expressed in 2005 dollars, by the way.)" Which is why "being 31 percent higher today than it was in 1967 is not very impressive" - because it "means that real household income grew at an average annual rate since 1967 of much less than one percent."
Boudreaux's point is that "if forced to choose between living in 1967 (or 1973) with today’s higher income and living today with 1967’s (or 1973’s) lower income, I wouldn’t hesitate for as much as a nano-second to choose living today with the lower income from the past" - because "the growth in real dollar income between 1967 (or 1973) and today underestimates the improvements to everyday life brought to us by economic growth during the past 30 or 40 years."
Oh, geez, what a goof! Well, I fall (and fell) under the median income both today and in 1967, so maybe that skewed my vision, both actual and figurative.
I thought about this after I wrote my comment and I realize that a more precise way of putting Boudreaux's point is that wealth must be calculated not just by how much money you have, but what is available to buy with it. A lot more is available to us at more reasonable prices today than was the case 30 years ago. Adjusted for inflation, though, I'm not making any more now than I was then. Alas and alack.
Frank, if you read that Don Boudreaux column closely, you see that it is a double-shuffle. It is actually a paean to advanced technology, not a demonstration of our increasing wealth. Indeed, the column admits that real income in terms of constant dollars has dropped dramatically from 1967 to today -- $46,326 in 1967 compared with $35,379 today. So what he is really saying -- indeed, crowing about -- is that "we" have almost $11,000 less to spend on a greater variety of goods. Somehow, he assumes, that should make us feel better, that we have a greater field of consumables across which to stretch a smaller wad of cash. No one wants to live with yesteryear's plumbing or dentistry, but most would like the ability to pay for the advances in those arts to keep up with the advances. Even considering, as he does, that advances in certain products and services have caused the prices to drop, it doesn't begin to make up for such a huge income drop.
ReplyDeleteRead again, Willis: "today’s real median household income ($46,326)"
ReplyDeletevs. "1967’s real median household income ($35,379)."
"(These figures are expressed in 2005 dollars, by the way.)" Which is why "being 31 percent higher today than it was in 1967 is not very impressive" - because it "means that real household income grew at an average annual rate since 1967 of much less than one percent."
Boudreaux's point is that "if forced to choose between living in 1967 (or 1973) with today’s higher income and living today with 1967’s (or 1973’s) lower income, I wouldn’t hesitate for as much as a nano-second to choose living today with the lower income from the past" - because "the growth in real dollar income between 1967 (or 1973) and today underestimates the improvements to everyday life brought to us by economic growth during the past 30 or 40 years."
Oh, geez, what a goof! Well, I fall (and fell) under the median income both today and in 1967, so maybe that skewed my vision, both actual and figurative.
ReplyDeleteI thought about this after I wrote my comment and I realize that a more precise way of putting Boudreaux's point is that wealth must be calculated not just by how much money you have, but what is available to buy with it. A lot more is available to us at more reasonable prices today than was the case 30 years ago. Adjusted for inflation, though, I'm not making any more now than I was then. Alas and alack.
ReplyDelete