Wednesday, March 04, 2009

The Miracle of the Market

With some help from the Student Entrepreneur Society at the University of Michigan-Flint (especially Jennifer Moore), and an old 1950 Sears catalog purchased from Ebay, we were able to compare the costs of 16 typical household items in 1950 to the costs of those same items today, measured in the cost of our time to purchase those household items. Using the average hourly manufacturing wage of $1.30 in 1950 and $18.01 today, the hours of work to purchase those 16 household items in both 1950 and 2009 are displayed above (click to enlarge). In all cases, we tried to match the size and quality of the items as closely as possible in both years.

Bottom Line: In 1950, it would have taken almost 8 months of full-time work at the average manufacturing wage to earn the $1,650 needed to purchase the 16 items above at the retail prices in 1950 (or 31.7 weeks, 158.4 days, or 1,267 hours). Today, it would take only 1.6 months of work at the current average hourly wage of $18.01 to earn the $4,580 necessary to purchase those same items at today's retail prices (or 6.4 weeks, 31.8 days or 254.5 hours).

To what do we owe this significant 80% reduction in the time cost of household goods over time? It's all part of the miracle of the market economy.

66 Comments:

At 3/04/2009 11:40 AM, Anonymous Anonymous said...

So let me get this right, Perry.

I can spend less hours at work to buy an ottoman but spend more hours at work to get health care and an education.

So my choices are an ottoman, a surgery, a degree at Flint.

I'll take the surgery and degree behind doors 2 and 3, if you don't mind.

That's laissez-faire capitalism, right?

Does quoting Forbes meet with your approval, OBH? Is juandos still putting on his faux nylons to fly to the oxycontin Limbaugh sky?

 
At 3/04/2009 11:55 AM, Anonymous Anonymous said...

Anon @ 11:40 a.m.: Based on your comments, the most expensive household "good" is ignorance.

 
At 3/04/2009 11:57 AM, Anonymous Anonymous said...

It is interesting that the one consumer good which has not dropped precipitously in price as measured in that chart is the mattress. Are the mattresses of today that much better than the ones of 50 years ago or is there some sort of mattress union or mattress cartel which unreasonably inflates the prices of mattresses?

 
At 3/04/2009 12:00 PM, Blogger lineup32 said...

Did it take two income's back in 1950 to make the house payment? My daughter recently purchased a used baby bed built 10 years ago in Montreal the same bed today is built in China for a fraction of the price, she opted for the used based on quality.

 
At 3/04/2009 12:01 PM, Anonymous Anonymous said...

The difference is all the items, with the exception of a mattress, are made in China.

 
At 3/04/2009 12:07 PM, Blogger Kevin Murphy said...

So what's the difference between furniture,healthcare, and education? My answer would be market disorting government involvement. There is no assistance, no programs, tax credits, etc. to buy furniture, unlike healthcare or education.
So productivity improvements in furniture manufacturing are made and passed along to the consumer - that's why the price is lower. In healthcare and education, there is no incentive to improve productivity or pass any improvements along to customers in the form of lower prices.

Take a look at the one common operation not covered by any healthcare plan or government program - Lasik. The price has plummeted while the quality has improved.

 
At 3/04/2009 12:14 PM, Blogger misterjosh said...

Anon 11:40:
It can be argued that Health Care and Higher education are more expensive BECAUSE they are not free market systems. Health care costs a lot because people don't pay for it. A lot of people pay their companies (with labor), who pay insurance companies, who pay medical providers. Doesn't sound particularly efficient to me, though I personally benefit from it.

I would also guess that if you wanted care identical to 1950s level care, you could get it for much cheaper in real dollars than you could in 1950. Keep in mind that means no Viagra, no MRIs, no CT scans, etc. I'm not sure I'd be OK with that.

With regard to education, easy access to government loans means that there is little incentive for institutions to cut costs - they raise prices, people get subsidized loans to pay for them. Again, my $14K in college loans is a testament to my benefit from this system.

 
At 3/04/2009 12:15 PM, Anonymous Anonymous said...

Wow, anon 11:55. Your intelligence quotient is overwhelming. You must be a Flint graduate.

In healthcare and education, there is no incentive to improve productivity or pass any improvements along to customers in the form of lower prices.

Why not?

 
At 3/04/2009 12:32 PM, Anonymous Anonymous said...

Anon 12:15: The problem with health care is that people with insurance never ask "how much" when visiting the doctor. There is no competition.

The example regarding Lasik is a good one -- it's a voluntary procedure, with plenty of customers shopping price and in some cases, even heading to Canada to have the procedure done.

We could start by eliminating dental insurance in this country, then sit back and watch competition drive dental costs down. I have no dental insurance and just paid $1400 for a two-hour root canal to a dentist making in excess of $700,000 per year, net. Is that a fair market at work?

 
At 3/04/2009 12:37 PM, Anonymous EJ said...

Anon,

"I can spend less hours at work to buy an ottoman but spend more hours at work to get health care and an education"

Beyond the fact that both these areas you state are sectors heavily distroted by government intervention and are not even close to a "free market," healthcare now is vastly superior to that of 1950. You get a lot more healthcare value now. Where you would die of x ailment in 195, you now get saved. Education too has improved in mnay ways. Classrooms are filled with computers and up to date text books for example, more valuable then in 1950.

 
At 3/04/2009 12:41 PM, Anonymous Anonymous said...

Reason.tv did a great video explaining this very thing. If you haven't seen it, it's worth a look.

Here's the Link

 
At 3/04/2009 1:40 PM, Anonymous Anonymous said...

I can spend less hours at work to buy an ottoman but spend more hours at work to get health care and an education.


Health care and education are expensive because of government imposed cost shifting.

The cost of private health care reflects government mandates for things like "alternative care" (acupuncture), specific procedures (sex-change operations) and indigent care (illegal aliens). Perhaps the most egregious example of cost shifting is the Medicare and Medicaid payment schedules. The following excerpt is from the New York Post:

... the feds reimburse hospitals and doctors at below-market rates for Medicare and Medicaid patients. So those of us with private health plans have to pay more to fill the gap - and that hidden tax is about 10 percent. In California, for example, private payers paid an extra $45 billion to compensate for unpaid Medicare costs in 2004.

Obama's budget also takes aim at prescription-drug costs by forcing manufacturers to give Medicaid a bigger discount, probably 20 percent, on brand-name drug purchases (it already gets a 15 percent break). That might help curb Medi caid's expenses, but it will raise drug prices for everyone else, who will have to make up the difference.

Most states require that residents purchase insurance from a company domiciled in their state. This limits choice and competition, driving up costs. Why shouldn't a resident of New York be able to purchase insurance from a company in Kansas that meets his needs. Further, the Democrats have steadfastly refused to allow small businesses to pool their bids, or to let private individuals to pay for insurance with pre-tax income the way those who receive employer provided care do.

Education costs have also been shifted. Increasing government subsidies have meant that students are not paying the actual costs for their education, destroying pricing pressure. This has allowed colleges and universities to increase expenses without consequence resulting in ever increasing tuition rates. Responding to pressure from the AMA and ABA, the government imposes arbitrary certification requirements for medical and law schools. The list could go on and on.

 
At 3/04/2009 1:54 PM, Anonymous Anonymous said...

The cost of private health care reflects government mandates for things like "alternative care" (acupuncture), specific procedures (sex-change operations) and indigent care (illegal aliens)

Excuse me, the private cost of health care reflects nothing of the sort. Give me laissez-faire capitalism in health care, right now. I want my health care to be priced the same as my ottoman. I want it to go down to 1950's levels.

By the time you tweddle dees and tweedle dums figure it out, i'll be dead.

 
At 3/04/2009 2:12 PM, Blogger R.Heil said...

So if things are so much cheaper now:

Why are there more two-income families?

Why, despite more two-income families, is our savings rate lower and our debt higher?

 
At 3/04/2009 2:34 PM, Blogger Walt G. said...

R. Heil,

People have more stuff available and they want it. They want it NOW. You noticed that big-screen TVs and such were not on the list?

I grew up in a one-income house. We had one car, one small home (no place up North), one black-and-white TV, and one bedroom for three kids. I think that would be rather unusual today. Don't you?

 
At 3/04/2009 2:46 PM, Anonymous Machiavelli999 said...

Why don't you do the same comparison from about 1970 til now. You will see practically no gains.

 
At 3/04/2009 2:47 PM, Anonymous Anonymous said...

"So if things are so much cheaper now:

Why are there more two-income families?

Why, despite more two-income families, is our savings rate lower and our debt higher?"

Because we choose to consume more. Isn't that fairly obvious?

 
At 3/04/2009 2:48 PM, Anonymous Anonymous said...

Give me laissez-faire capitalism in health care, right now. I want my health care to be priced the same as my ottoman. I want it to go down to 1950's levels.


I guess that it's just too much for a twit, like you, to figure out. So here's a post from Dr. Perry to get you started:

Affordable Health Plans Available From $37/Mo.

According to the Census Bureau, there are 47 million Americans without health insurance (link, link). NPR had a segment today about getting insurance quotes through a website called eHealthInsurance.com.

For a 36-year old male living in my area, there were 119 quotes through eHealthInsurance with monthly premiums ranging from a low of $37 per month ($10,000 deductible, co-insurance of 20%) to a high of $232 per month ($0 deductible, 0% coinsurance), and there were 62 different plans with premiums of $100 per month of less. For a 36-year old female, the premiums are slightly higher, ranging from $47 to $307 per month.

Bottom Line: At a monthly cost comparable to a typical monthly cable TV plan, and maybe even about the same cost as a monthly cell phone plan, isn't it true that an individual can easily purchase relatively affordable health insurance in the private market? I wonder how many of the 47 million have cable TV and cell phones, and voluntarily chose not to buy health insurance, even though they obviously can afford it?

Or, since you have trouble reading, here's a VIDEO that will explain it all for you.

Of course, it would be even cheaper if the socialist scum in this country would stop interfering with the market. Even so, capitalism provides.

 
At 3/04/2009 2:51 PM, Anonymous Anonymous said...

Why don't you do the same comparison from about 1970 til now. You will see practically no gains.

Wrong. Watch the video.

 
At 3/04/2009 2:54 PM, Anonymous Machiavelli999 said...

The cost of private health care reflects government mandates for things like "alternative care" (acupuncture), specific procedures (sex-change operations) and indigent care (illegal aliens)

One of the easiest ways to disprove these claims is to just to compare our health care system with one of the "socialist" systems. I think its very telling that health care is one of the top political issues in our country, while in Germany and France, where health care really is socialized, health care is a non-issue.

The Germans and French take great health care for granted like we do our McDonald's hamburgers. Some of the other things you do not see in a truly socialized health care system are runaway costs or 20% of the population without coverage. Yes, yes, I am sure you can point out some anecdotal story of some Frenchman having to wait forever to get a hip replacement. Well, for everyone of those, I can find you 10 much more horrid stories that result from our health care system.

But things, like facts, evidence, results don't matter in the world of free market absolutists. Ideology triumphs above facts with you guys always.

 
At 3/04/2009 2:57 PM, Anonymous Anonymous said...

Machiavelli,
Apparently you are wrong. The average family of 4 spends 33 percent less on clothing, 23 percent less on food, 51 percent less on major appliances than in the early 1970s.

It's not surprising. We are talking about goods that can be produced overseas.

http://www.rasmusen.org/x/2006/03/16/changes-in-us-consumption-goods-since-1970-two-earner-families/

We are spending more on housing (larger houses, etc), health care, etc.

 
At 3/04/2009 3:02 PM, Anonymous Anonymous said...

But things, like facts, evidence, results don't matter in the world of free market absolutists. Ideology triumphs above facts with you guys always.

We've suffered through scores of your ignorant posts and never seen you present anything resembling a "fact". It's always just leftist drivel.

 
At 3/04/2009 3:05 PM, Blogger David said...

All of the items you listed are made in factories, and all of them (with the possible exception of the mattress) are transportable readily enough to be subject to import.

There is a whole class of good and services that do not share these attributes--houses, for example, are not made in factories (though components of them are) and are certainly not imported. Ditto for education, healthcare, restaurant dining, etc.

Precisely because of the tremedous improvement in the productivity of the manufacturing sector, manufactured goods will represent an ever-decreasing portion of the average family budget and hence, further productivity improvements in this sector will have less effect than previously.

 
At 3/04/2009 3:12 PM, Blogger R.Heil said...

"Why, despite more two-income families, is our savings rate lower and our debt higher?"

Anon: Because we choose to consume more. Isn't that fairly obvious?

Walt G: People have more stuff available and they want it. They want it NOW.


Well, no, I don' think that it's obvious. I think the statement "we choose to consume more" is too generalized and theoretical to be useful.

But overall, yes, we have a much higher level of consumption. That is clear. This has been possible in part by higher productivity, but also through externalizing and exporting the costs of our high level of consumption.

 
At 3/04/2009 3:14 PM, Anonymous Anonymous said...

From your article, "It's all part of the miracle of the market economy."

The Chicago school of economic principles have now been proven to be horribly incorrect and the world is now suffering because of it.

It is not "the miracle of the market economy". It is a curse that will adversely affect the young people of this planet and is destroying the baby boomers hopes of retirement. You can have a market based economy, however it must be responsibly managed. Corporate America can no longer be allowed to run amok destroying peoples lives with impunity, controls must be put into place to force corporate America to act responsibly. Enormous profits can still be made however Wall Street as well as American banks must be held accountable. Furthermore those who have placed the world's economy as peril should be held accountable and prosecuted to the full extent of the law.

 
At 3/04/2009 3:14 PM, Anonymous Machiavelli999 said...

@Anon,

I think its a pretty much universally recognized FACT that a health care is a top political issue in this country. I am not sure what I have to explain to you about that.

While in other European countries, it is a non-issue. Oh, and by the way another thing I forgot to add from the last post. Illegal immigration is just as much of a problem in France and Germany as it is in America. But again, there are no runaway health care costs in either country.

 
At 3/04/2009 3:15 PM, Anonymous Anonymous said...

One of the easiest ways to disprove these claims is to just to compare our health care system with one of the "socialist" systems.

I'll let the "father of Canadian Health Care" straighten you out:

Back in the 1960s, Castonguay chaired a Canadian government committee studying health reform and recommended that his home province of Quebec — then the largest and most affluent in the country — adopt government-administered health care, covering all citizens through tax levies.

The government followed his advice, leading to his modern-day moniker: "the father of Quebec medicare." Even this title seems modest; Castonguay's work triggered a domino effect across the country, until eventually his ideas were implemented from coast to coast.

Four decades later, as the chairman of a government committee reviewing Quebec health care this year, Castonguay concluded that the system is in "crisis."

"We thought we could resolve the system's problems by rationing services or injecting massive amounts of new money into it," says Castonguay. But now he prescribes a radical overhaul: "We are proposing to give a greater role to the private sector so that people can exercise freedom of choice."

Castonguay advocates contracting out services to the private sector, going so far as suggesting that public hospitals rent space during off-hours to entrepreneurial doctors. He supports co-pays for patients who want to see physicians. Castonguay, the man who championed public health insurance in Canada, now urges for the legalization of private health insurance.

Link

Ooops, another one of your "facts" just went up in flames.

 
At 3/04/2009 3:27 PM, Anonymous Machiavelli999 said...

This is just the opinion of one man, what does this prove? And in the end Castonguay never advocated full privatization of the health care system.

http://tinyurl.com/alrhsr

And all he tries to do is to suggest some reforms to cut costs. The reforms would emulate another socialized system, that of Britain.

If a police sheriff suggested some reforms to his department to cut costs, would that imply the sheriff is in favor of getting rid of the police department.

And again, it speaks volumes that health care is a top political issue only in our country. While, in others, if it is even an issue at all, it is just an issue between policy wonks trying to figure out how to streamline the system so as to reduce costs.

 
At 3/04/2009 3:44 PM, Anonymous Anonymous said...

And in the end Castonguay never advocated full privatization of the health care system.

Heh, genius, we don not have "full privatization" in this country. Approximately 50 percent of health care in the U.S. is provided by the government (state/federal).

If you spent even a little bit of time investigating, you would know that the British system is a nightmare and deeply in the red.

All socialized systems ration care aggressively. They routinely deny drugs and procedures that are common place in the U.S.

Get a clue.

 
At 3/04/2009 3:47 PM, Anonymous Anonymous said...

I guess that it's just too much for a twit, like you, to figure out. So here's a post from Dr. Perry

You are a moron. A $10K deductible. You would have to borrow that from your mama.

And any parent that would spend $10K to have their child take a finance or economics course from Perry is likewise.

Wow, this blogpost has moved a long way from an ottoman to health care. :-)

Where are the educators?

 
At 3/04/2009 3:59 PM, Anonymous Anonymous said...

You would have to borrow that from your mama.

That's rich coming from a guy who's always looking for the government to take care of him. Here's an idea, man up, take care of yourself. Get your hand out of your neighbors pocket. Socialism is a system designed for losers, like you, who just can't cut it.

 
At 3/04/2009 4:12 PM, Anonymous Anonymous said...

Socialism is a system designed for losers, like you, who just can't cut it.

So you borrowed from your mama? That's called inter-generational socialism, numbnuts!

You are in a crony capitalism socialist state. Stop borrowing from your mama.

 
At 3/04/2009 4:12 PM, Anonymous Anonymous said...

To get an accurate picture you need to show how many hours of work was required in 1950 versus 2009 to own an average home, pay average utility bills, pay for gasoline, pay for insurance, pay for an average car, and pay for medical care.

 
At 3/04/2009 4:23 PM, Anonymous Anonymous said...

To Anonymous at 2:48

Those insurance sites quote you their cheapest rate for a person with absolutely no health problems. If you have any health problems whatsoever or a history of needing some medication, your monthly rates will go up dramatically.

It's apparent you've never shopped for individual health insurance!

 
At 3/04/2009 4:24 PM, Anonymous Anonymous said...

So you borrowed from your mama? That's called inter-generational socialism, numbnuts!

You are in a crony capitalism socialist state. Stop borrowing from your mama.

Man, you are an intellectual tour de force.

Your brown shirt and black boots need pressing. Oh, and don't forget This.

 
At 3/04/2009 4:28 PM, Anonymous Anonymous said...

If you have any health problems whatsoever or a history of needing some medication, your monthly rates will go up dramatically.

What's the cost of insuring an event with a 100% probabilty?

Take your time.

 
At 3/04/2009 4:30 PM, Anonymous Anonymous said...

"DO NOT CANCEL ANY HEALTH INSURANCE COVERAGE YOU CURRENTLY HAVE OR DECLINE COBRA BENEFITS UNTIL YOU RECEIVE AN APPROVAL LETTER AND INSURANCE POLICY, (ALSO KNOWN AS AN INSURANCE CONTRACT OR CERTIFICATE), FROM THE INSURANCE COMPANY YOU SELECTED. "

It is easy for Ehealthinsurance to provide quotes.

Now go try and actually buy the insurance. I am not insurable at any price, because Ihave a chronic disease. I cant get my heart insured because my feet hurt.


Some system.

 
At 3/04/2009 4:32 PM, Anonymous Anonymous said...

Median price of home 1950 7354.
House payment 30 year note 6 percent interest: 45.00
Hours worked each month to make house note: 34.6

Median price of home 2008: 201100
House payment 30 year note 6 percent interest: 1205.00
Hours worked each month to make house note: 66.9

Annualize the hours
1950: 415 hours
2008: 802 hours

So in 1950 19.9 percent of hours worked went towards house note while 58 years later 38 percent of hours worked went towards house note.

You can do all sorts of things with statistics and paint all sorts of stories. Did cheaper consumer prices for household items make us better or worse off?

Here's something worth trying. Use google and try to find a website that gives you the true cost per square foot of building an average house.

 
At 3/04/2009 4:36 PM, Anonymous Anonymous said...

To get an accurate picture you need to show how many hours of work was required in 1950 versus 2009 to own an average home, pay average utility bills, pay for gasoline, pay for insurance, pay for an average car, and pay for medical care.

But why would we need to that. After all, if an ottoman costs less, I guess everything else must cost less. cough, cough


In any event, here's a peak at what's happened since 1990. Gasoline costs less today than medical care.

What's the deal with ottoman furniture?

 
At 3/04/2009 4:42 PM, Anonymous Anonymous said...

I'd like a little 1950's style love where the price of this is concerned.

Couldn't people use that extra 700-1400 to buy health insurance?

 
At 3/04/2009 4:43 PM, Blogger misterjosh said...

To get an accurate picture you need to show how many hours of work was required in 1950 versus 2009 to own an average home, pay average utility bills, pay for gasoline, pay for insurance, pay for an average car, and pay for medical care.

Why average? The average home of 2009 is much larger than the average home of 1950. That would be like comparing a crab apple with a Fuji apple. if people have chosen larger homes, larger vehicles, and the better medical care that is available today, I don't think we should call them poor if they can only barely pay for it.

 
At 3/04/2009 5:57 PM, Blogger Ivin said...

MP,

I wonder how different your results would be if you used median wages rather than mean wages. I suspect that there is a skewness effect present in both the 1950 number (skewed downward) and the 2008 number (skewed upward).

I tend to think that in this analysis it is the median wage that is more informative than the mean.

Just my thoughts,

Ivin

 
At 3/04/2009 6:35 PM, Blogger randian said...

Don't forget that for houses, zoning regulations, building codes, mandatory contractor licensing, and other such anti free-market things conspire to make it much more expensive than it needs to be.

Philadelphia's building code, for example, still mandates the use of cast iron in plumbing systems, precisely because it's the most expensive and (more importantly) most labor intensive way to install plumbing. Advanced plastics for plumbing systems (the kind that don't break during freeze/thaw cycles) are still unavailable in most localities because they don't meet local building codes.

 
At 3/04/2009 6:40 PM, Blogger randian said...

houses, for example, are not made in factories

They could, and most likely would, be made in factories (most houses are clones in housing tracts and thus highly amenable to factory construction) if building codes and labor rules permitted it. I doubt homebuilders would meekly accept the inefficiencies of site-built construction if they didn't have to.

 
At 3/04/2009 8:19 PM, Blogger Craig said...

"To get an accurate picture you need to show how many hours of work was required in 1950 versus 2009 to own an average home, pay average utility bills, pay for gasoline, pay for insurance, pay for an average car, and pay for medical care."

No. To deal in today's averages would skew the picture towards today's tastes for a more lavish lifestyle.

To get an accurate picture you need to show how many hours of work was required in 1950 versus 2009 to own the same-sized home, pay utility bills for the same amount of energy consumed, pay for gasoline, insurance and the cost of one average car for 1950, and pay for medical care which consisted in trips to the doctor only for broken bones, childbirth or an illness which wouldn't go away after weeks of Mom's efforts.

 
At 3/05/2009 6:20 AM, Blogger Juani said...

Very interesting data Mark. Good job both to you and to the Student Entrepreneur Society.

 
At 3/05/2009 9:34 AM, Anonymous Anonymous said...

Three words: Quality, workmanship, quality.

 
At 3/05/2009 10:02 AM, Anonymous Anonymous said...

I would like to add a thought or two about houses in the 50's and now. I was around in the 50's and actually spent time building and developing in the 70's & 80's. In my part of South Louisiana "starter" homes in the 50's ranged between 1000 and 1200 square feet. (In the early 50's closer to 1000.) They had a one car carport and one bathroom and two bedrooms. They had a "central" floor furnace for heat and, of course, no A/C. The kitchen had damn few liner feet of cabinets and connections for a gas stove and an outlet for a fridge. There were no garbage disposals, dishwashers, microwave hoods, and no appliances came with a home. There was a connection for a washing machine in the little storage/utility room at the end of the carport. Dryer? If you could afford a dryer you certainly would not be buying a starter home. There were no granite counter tops or garden tubs much less walk in closets. To compare such a home with a starter home or condo today is just plain silly.

I am Macquechoux.

 
At 3/05/2009 4:40 PM, Anonymous Anonymous said...

Indeed, in 1950 the average house size was 1,000 sq. ft., and in 2005 it was 2,400 sq. ft.

So based on new home price work hours of:

1950: 415 hours
2008: 802 hours

We get:

1950: 0.42 hours/sq. ft. of home
2008: 0.33 hours/sq. ft. of home

Amazing! You will also get a much more energy-efficient home, although made of more manufactured wood product rather than thick wood beams.



http://www.moyak.com/researcher/resume/papers/housing_summary.html
http://money.cnn.com/2006/07/24/real_estate/home_stretching/index.htm

 
At 3/05/2009 4:54 PM, Blogger @sethstorm said...

The problem is that the goods from 1950 are more likely to last to this day than the junk from the Third World is to last even 1/10th the time.

 
At 3/05/2009 5:49 PM, Blogger randian said...

The problem is that the goods from 1950 are more likely to last

Have you actually used a modern car or appliance? They are so much better and more reliable than they used to be.

 
At 3/05/2009 7:34 PM, Anonymous Workerbee said...

As some have pointed out the differences in quality, from today's goods versus those made in 1950.

To match a comparable arm chair, you would most likely have coil springs, cotton and horsehair stuffing and upholstery that was far more durable than majority of today's furniture.

The two chairs after five-ten years of use, would be in quite different conditions.

To find comparable quality for the money, 1950's furniture would compare more closely to high-end furniture today. Comparing quality of materials and durability of construction methods.

But perhaps more telling would be the wage base which this comparison is made. I would like to know what percentage of the work force earned $1.30 or more an hour in 1950 versus the percentage earns $18.01 or more an hour today.

I won't compare pensions and health care, both which were still becoming the norm by 1950, and are on the decline for most workers today.

Or the tax base and levels. As most of those goods were domestically produced in 1950. With a lower unemployment rates and less crime, prisons and welfare. And the industrial tax base to support communities.

One thing I am sure of, the top percentile would not like to return to the 1950 tax schedule adjusted for inflation.

 
At 3/05/2009 7:55 PM, Blogger OBloodyHell said...

> Does quoting Forbes meet with your approval, OBH?

By all means. Quoting out of context will quite possibly be relevant, and that's generally going to be your likely out, but I'll only call you on it if I see you doing it.

The "Education" crisis is a complete bullshit one.

Most of the state universities love to use "rankings" to argue for tuition increases.

Example: If, say, Florida ranks 39th out of 50 in tuition cost, they often claim that they need to jack up tuition costs because, hey, clearly, they "aren't charging enough".

This jacks up their tuition until they're ranked 28th, at which point South Carolina (I'm making these numbers up to illustrate the process, not claiming they are true) drops from 38th to 39th. Now THEY start whining, and jack up THEIR tuition so they're ranked 30th.

Kansas, now at 39, jacks theirs up until they're 24th.

Arizona notes that they're ranked 48th, and jacks theirs up so that they're only 36th.

And so on, until tuition across the board is twice what it was 10 years ago, despite inflation being a fraction of that.

And all because the organizations that set tuition don't tie it to the cost/benefit to the state -- for example: how much extra tax revenue does it generate from in-state students who remain in the state? What is the cost of the education, given the percentage of students who remain in the state as a higher-%ile taxpayer?

No, they use a stupid and utterly unrelated-to-cost/benefits "relative ranking" justification system which is flat out guaranteed to rachet up tuitions.

As far as health care goes, one of the obvious reasons it's climing isn't because everything costs so much more, but because the healthcare industry is DOING so much more. As someone recently pointed out somewhere (I can't identify where at the moment, or I'd link to it), we're expecting health care to do a lot more than it's done before. We now EXPECT to live to be 85, 90 years old, and to be active for most of that. People used to die at 60. I will guarantee you that keeping you alive for an additional 25 years is hardly a trivial expense.

That doesn't mean you're wrong to want it, but don't whine too much about the cost.

"Oh, but expenses for 20yos are higher too!!"

Well, DUH. How do you think you get to live an extra 25 years if it's not also by having better care levels at younger ages?

Attention by human beings costs money. Attention by highly-trained human specialists in health care costs even more money. Attention by highly-trained human specialists in a field where an error costs a buttload of money in malpractice costs costs still moree money. TANSTAAFL.

One reason so many people nowadays can expect to have all their teeth into their 70s is because they've grown up with fluoride treatments all along. Those cost money throughout your life. Worth it? I dunno, I don't need dentures, but it damnedwell sure seems like it does.

You're comparing apples and oranges, here -- the forces driving the cost of education and health care up are not generally market forces at all. You can counter some of them with market action, but there are limits to what that can do when most of the issues are outside the market itself.

 
At 3/05/2009 8:02 PM, Blogger OBloodyHell said...

And if prices weren't lowered by the price of labor in China, they'd be lowered by robotics.

Just as mechanization has revolutionized agriculture, so that 2-5% of the population can make all the food needed by the rest, so, to, is roboticization going to slowly transform manufacturing.

The future factory is going to be like the auto factory in Minority Report, where you go online, specify model, features, and color, and it is delivered to your door within 24 hours, with nary a single human's attention.

The only reason to still use people at this point is because it's better to help them bootstrap themselves to the same tech/education levels the USA, Japan, and Europe are at.

 
At 3/05/2009 8:06 PM, Blogger OBloodyHell said...

> With regard to education, easy access to government loans means that there is little incentive for institutions to cut costs

a) nice point about the "cost" of 50s-level health care. That dovetails with what I was saying earlier, too.

b) In re: the point above, the real fact is that most universities these days are research organizations first and not education factories. As a result, they optimize the officially recognized output of their research profs, not optimize the quality and efficiency of education. Education is a secondary interest only vaguely related to a university's purpose any longer.

Wal-Mart U, anyone?

 
At 3/05/2009 8:45 PM, Anonymous Workerbee said...

In regards to robots. Yes they could assemble manufactured goods, but they would not supply the demand.

Unless you can sell a car to a robot?

Either productivity gains are shared among the consumers via wages or lower prices, or demand will ultimately shrink.

Debt only postpones the adjustment.

 
At 3/05/2009 9:16 PM, Blogger OBloodyHell said...

> By the time you tweddle dees and tweedle dums figure it out, i'll be dead.

You're dead already?

 
At 3/05/2009 9:25 PM, Blogger OBloodyHell said...

> If you have any health problems whatsoever or a history of needing some medication, your monthly rates will go up dramatically.

GASP!!! You mean people who actually cost the system more money PAY MORE !?!?!

Say it ain't so!! One shouldn't have to pay more when one costs the system more!?!?


Everything should be FREE, man! It's all a great big plot by the eeevil corporate types to make us all slaves, man!! Corporate types SUCK, man!! Bummer, just bummer...

.

 
At 3/05/2009 9:44 PM, Blogger OBloodyHell said...

> Well, for everyone of those, I can find you 10 much more horrid stories that result from our health care system.

But things, like facts, evidence, results don't matter in the world of free market absolutists. Ideology triumphs above facts with you guys always.


OK, here's a USA anecdote.

WITHOUT Health insurance, I've had back problems... At the emergency room, across multiple occasions, I was given two CAT scans, an MRI, at least one EKG leading to being admitted and given a heart catheterization for an ejection fraction analysis. Turned out to not really need treatment. If I'd needed treatment, I might have had to actually ask for help from a charity.

Damn, being uninsured in the USA just flat out really, really sucks.

I mean, if I was in Canada, with their wonderful coverage, and had a diagnosed brain tumor, I'd be looking at an 18 month wait for surgery. No appeal to charity would do anything, and I couldn't spend my own money on it by mortgaging a house or selling anything or appealing to relatives for help, I'd just have to wait 18 months, and maybe die in the process.


Does the phrase, "you're a fucking imbecile" carry the right tone for you?

 
At 3/05/2009 9:47 PM, Blogger OBloodyHell said...

> Either productivity gains are shared among the consumers via wages or lower prices,

Aaaand what part of the article attached to this led you to the brilliant notion that the "lower prices" isn't happening?

 
At 3/05/2009 11:36 PM, Blogger randian said...

Most of the state universities love to use "rankings" to argue for tuition increases.

I would argue a much simpler mechanism is at play. To wit, every dollar of additional government subsidy to the student is captured by the school as a dollar of additional tuition or fee. The school knows next year's grant/aid budget will just get bigger to compensate because the government won't dare reduce net affordability.

 
At 3/06/2009 12:26 AM, Anonymous Workerbee said...

Aaaand what part of the article attached to this led you to the brilliant notion that the "lower prices" isn't happening?

3/05/2009 9:47 PM OBL


First I'm not say they haven't since 1950. I would question the wage comparisons.

Fewer "high paying" manufacturing jobs per capita today, more lower paying service jobs. And as was alluded to by an earlier poster, the real comparison would be the median wage 1950 vs. 2009

The quality of goods are not equal. There has been great advances in design and durability of goods such as autos and electronics on one hand.

But there is also making more out of less and cheaper materials, and more shoddier goods as a whole today.

To approach 1950's quality in materials and workmanship such as furniture and clothing you would need to spend more for upscale goods not Wall Mart mass produced.

There were more repairable goods then, versus the disposable shorter life type we have today. Vacuum cleaners for example.

A pound of coffee was 16 ozs. not 11.5. Quality has been affected over the years, and not all accruing to the consumers favor.

Our current price levels is more debt dependent than 1950. As there are limits to debt burden, this must correct in time, if it isn't already now.

 
At 3/07/2009 10:35 AM, Blogger Opinionated Rat said...

what a lame chart and thesis. all that "stuff" that is listed is made in china (except for the mattress, since the transportation costs on a bulky item like that outweigh - pun intended- any gains in cheaper manufacturing).

Lets look at the chart when we include: health care, college tuition, the cost of a 3br house, electricity, movie ticket, etc,; all the "stuff" not made in China

 
At 3/14/2009 7:14 AM, Anonymous Anonymous said...

My (perhaps) naive economic/life opinion:

Human greed, overpopulation, and the vast extent to which robotic machinery displaced human workers led individuals, such as myself, to be utterly disgusted with our own human nature.

No matter the amount of knowledge one may possess, or how many degrees he/she receives, one may still feel a sense of being worthless, as it will never be enough. More so without any degree. The competitive global marketplace (or lack thereof) puts hardworking individual contributing thinkers, entitled to a decent job as a result of the college "learning experience," ending up right back in college, sometime listening to (but not very often) professors regurgitating same ideas or facts which have already been posted on forums somewhere else on the WWW.

We, as an American society, have acquired more than we need, yet many cannot value what we already have. Increasingly so, our society tips far to each end of the pendulum, in our beliefs and values, which may result in argument of, or indifference to these qualities important to some meaningful facet of life.

On another note, I am not against those possessing large sums of money, as long as they don't enslave valuable workers, through wages not nearly reflecting what some may actually be worth. How would this affect an employee's outlook? How much do teachers make? Researchers? I assume that data can suck depending on the profession.

Innovative, productive, or "free-thinking" minds become hampered by others greed and consumption, continually being attacked by critics, or those receiving a government grant to research opinion leaders or centers of influence.

To a great extent (especially now), I believe research institutions sucker (both as a business, as well as financial $$$ loaned to those paying for membership into the program), some may actually realize they might need to break from the norm. We've become too socialist.

Research helps in many fields of study. But remember life before cell phones and GPS? How liberating was that? Now it invades the privacy of all who possess these devices.

Is the internet vast enough to learn collegiate material without ever having to pay tuition for college? Or perhaps it is now just wasting one's valuable time, being consumed by sifting through pages and pages of b.s., eventually finding a few credible sources of information. Many still do not know where to start in such a bastardized system, even in scholarly ejournals. We can't rely on Google or Wikipedia either

One more rant... Myspace was once a cool fad, Facebook too... until everyone became so distinguished in their individualism, everyone eventually became less important as an individuals. Additionally, you become pigeonholed by everything you've posted. The result? Either a fine selection of bland "individuals," or those enslaved by that which distinguished themselves in the first place. Twitterers suck for the most part too, as nobody cares what all of you have to say. Information overload of crap for the most part. Unfortunately it's a fad that society is now addicted to, like oil. Good luck being your individual self in America now. Someone's probably Twittering about you too!

What really matters today? How do my rants relate to the world economy in any capacity? One will never be able to keep any competitive edge in any market as a result, no matter how branded, copy-written, trademarked, or patented the ideas one may possess for very long.

Perhaps losing some communications technologies may be a good thing. Perhaps it may actually spark the local economy, forcing a community to retain its identity. Why should we be stuck with Walmarts anymore?

Wishful thinking I suppose. Anyone's thoughts?

 
At 3/13/2010 1:11 PM, Anonymous Mikey 2 Shoes said...

Not for nothin' there chief, but you are one hell of a bargain hunter... I added up what it cost me for the same 16 items and came up with more than twice that! I even price checked some of the crap they shovel at Walmart and I still couldn't get it that low unless I bought the mattress and not the box spring and bed frame..

 
At 1/10/2011 9:03 AM, Blogger finecyclo said...

This study looks at consumer goods which are well served by free market ideology. But the actual cost of living is driven predominantly by housing, transportation, energy and food for which no information is provided. Furthermore, most Americans are drowning in debt.

The Hayek-Friedman economic philosophy of greed is good should never replace sound socialistic community based planning for defense, health care, roads, schools & libraries, trade & industrial policy, water, sewage and real estate & resource developement.

For most people, consumer goods constitute 5-10% of their budgets. The success of the free market model in the consumer goods marketplace does not infer it provides an optimum solution for a sustainable economy.

 

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