The Magic and Miracle of the Marketplace: Christmas 1964 vs. 2010 - There's No Comparison
1964 Sears Christmas Catalog
To put that in perspective, the pictures below illustrate what $5,300 in today's dollars would buy in the 2010 marketplace:
Bottom Line: For a consumer or household spending $750 in 1964, all they would have been able to afford was a console color TV from the Sears Christmas catalog. A consumer or household spending that same amount of inflation-adjusted dollars today ($5,300) would be able to furnish their entire kitchen with 8 brand-new appliances (refrigerator, freezer, dishwasher, range, washer, dryer, microwave and blender) and buy 9 state-of-the-art electronic items (laptop, GPS, camera, home theater, plasma HDTV, iPod Touch, Blu-ray player, 300-CD changer and a Tivo recorder). And of course, even a billionaire in 1964 wouldn't have been able to purchase many of the items that even a teenager can afford today, e.g. laptop, GPS, digital camera.
As much as we might complain about high unemployment, high taxes, a huge deficit, we have a lot to be thankful for, and we've made a lot of economic progress since the 1960s as the example above illustrates, thanks to the "magic of the marketplace."
34 Comments:
We have made massive leaps and bounds, so lets hope it continues :)
in 1964 a large family headed by one factory worker could afford the entertainment center & all the items in your first block below without credit...
Mark, In the past, you've shown the number of work hours required to purchase the bundles. Do you have these data handy? Thanks.
The stuff made in the 60's was quality & would last 30+ years. The stuff made today is junk.
Magic of scientific and technological advancement is more like it.
The Magic and Miracle of the electronic marketplace has a great deal to do with captialising on the magic of The Transitor.
Merry Christmas to all of those who use products that rely on transistors.
In the private sector, products just get better and cheaper all the time.
In the central command-public military industrial complex, products just become radically more expensive all the time.
Time to sunset our military and start fresh.
This is why the Libs' "WORKERS MAKE LESS NOW THAN *EVER*" rants make no sense. So... even if your salary were flat (which is disproved, i.e., lower-paid workers keep flooding our shores so it *looks* like workers' wages are stagnant/declining) you can buy. more. stuff.
While *I* don't nec. equate buying more stuff w/wealth, isn't that the very measure of a consumer-based society?
(Sorry if making little sense today, the Xmas "cheer" is hitting my nervous system... mmm.. rum balls...)
Then ..... An employed American worker designed and built the T.V.
Now...... An unemployed American worker must decide to buy junk electronics or feed his family.
Then........An employed American worker bought the T.V. for a home he owned.
Now .........An un-employed American can't afford to pay the rent on his apartment and must move back to his parents home. But he does have a HD televison, DVD player and video game console to keep him entertained while he sits at home all day.
Merry fffin Christmas !!!!!
What would be fascinating is what those dollars could get you in terms of college semester hours or health care today. Probably a lot less - thanks to greater government intervention in both areas over the past 45 years.
I wonder how many people would actually buy a microwave that works well and lasts 30 years for $5,300 instead of one that works well and lasts 10 years for $100?
Don, you say: "Now......An unemployed American worker must decide to buy junk electronics or feed his family."
Which would you choose?
But he does have a HD televison, DVD player and video game console to keep him entertained while he sits at home all day.
Ah, so you do agree that the poor are much better off these days. And Merry Christmas to you, too, sir!
Using hourly compensation rate data Mark referenced in an earlier blog post (http://www.economagic.com/em-cgi/data.exe/fedstl/ahetpi), I calculated the number of hours a worker would have to labor to earn enough income to purchase the console TV in 1964 as compared to the bundle of appliances and electronic gadgets in 2010. The results are 288 hours in 1964 as compared to 276 hours in 2010.
Ahem.
Check out this. http://www.tigerdirect.com/applications/SearchTools/item-details.asp?EdpNo=6322126&CatId=5472
Just because there is cheap crap now available doesn't mean that quality and leading tech cost any less now than before.
I'm sure hand tailored clothing costed more back in the day than cheap factory imports from Bangladesh of today, but if you look at how much a hand tailored shirt costs now, I'm sure it would be comparable.
Ah yes, the wonders of Chinese slave labor
The choice of color television in 1964 for this example is quite conspicuous. Quoting liberally from Wikipedia:
"...the relatively small amount of network color programming, combined with the high cost of color television sets, meant that as late as 1964 only 3.1 percent of television households in the U.S. had a color set. [...]the number of color television sets sold in the U.S. did not exceed black and white sales until 1972..."
Color sets did not become affordable until the early 1970s. They were still an elite, luxury item in 1964. As such, this example doesn't illustrate the "magic of the marketplace" so much as the fact that, as more units of an item are produced, the unit cost goes down; hardly a revelation. There's also the advancement of technology to consider, and granted, that may be largely due to market forces, but there are better ways to show that.
For example, pop-up toasters had already been in production for home use for about 40 years at the time, and are still in production today. The 1964 Sears Christmas Catalog shows their top-of-the-line, 4-slice toaster selling for $23.95. Using the same BLS inflation calculator cited above, that would be $169.04 in today's dollars. The current retail price of a Sears/Kenmore 4-slice toaster is $59.99, meaning you could buy roughly three of them, or three times as much in consumer goods, today for the same amount in inflation-adjusted dollars. That's still impressive, and does illustrate the author's point, but it's a more realistic example than the one used in the article.
Steven,
You are not exactly comparing apples to apples. While choosing the year 1964 may create an extreme example for televisions, home entertainment has evolved and improved since then in ways not even imaginable in that year. You have chosen an example at the opposite end of the scale, that hasn't basically changed at all since 1964. Toasters still just make toast.
As you are no doubt aware, most new innovations start out as elite luxury items, including the electric toaster.
The U.S. leads the world in basic necessities, e.g. housing, food, and clothing. So, it seems, America's poor are better off than other country's poor (in absolute rather than relative terms):
U.S. Living Standards Still Tops
December 30, 2008
"In housing, the average U.S. family enjoys nearly twice as much living space as the Germans, French or Brits. Even the 20% of Americans with the lowest incomes tend to have larger residences than is typical for households in Western Europe.
In food affordability, the U.S. shines: Just 5.7% of household spending is dedicated to food. Most European and Canadian households devote between 9% and 14% to feeding their families. For Japanese consumers, food takes nearly 15% of household spending."
And here's what someone from India said about clothing sold in the U.S.:
"You can get good branded clothes in US for relatively less price, depending on sale or time of season….I took out few friends, who came from India few weeks ago, to shopping malls and outlet malls to buy clothes and shoes…they were surprised by the price of clothes and shoes in America….they said US prices were relatively cheap for the good brands they were buying."
Peaktrader, you are assuming that the size of a house correlates with high living standards, and that choosing to eat cheap unhealthy food is a mark of wealth. The only thing you are demonstrating is that you are a typical American.
Not only is the author not comparing apples to apples, he is failing to account for externalities such as cheap chinese slave labor, amount of electricity required, etc. Living in a big house full of cheap junk is NOT A SIGN OF PROGRESS.
A blog about, I think, it's logical to assume when someone lives in a big house with a big yard instead of a tiny row house, drives an SUV instead of a subcompact, can buy healthy food at much lower prices, and can purchase brand clothing cheaper than in a Third World country, that person has a higher standard of living.
Americans are not only most productive, they produce valuable new products and trade those goods. Living in newer, bigger, and better houses and being able to afford more goods are signs of "progress."
Why not talk about the comparitive cost of a owning a home.
Talking about electronic items and technology which did not exist in 1964 is rather pointless.
I know most of my older peers own their home, which they easily purchased in the 60's.
The percentage of persons young persons today who can afford a home today has dropped drastically.
Don Culo: "the percentage of persons young persons today who can afford a home today has dropped drastically."
Do you have evidence to support this assertion?
Here's some Census Bureau data on home ownership in the U.S.:
1960 - 62.1%
1970 - 64.2%
1980 - 65.6%
1990 - 63.9%
2000 - 67.4%
2009 - 67.4%
Homeownership rates 1960 to 2005
Homeownership rates in the 21st century
Homeownership rates for householders under 35 is currently about 40 percent, the same as it was in 1990. According to the Census Bureau, homeownership rates for this age group in earlier decades are unavailable.
a blog about: "The stuff made in the 60's was quality & would last 30+ years. The stuff made today is junk."
I purchased some of that stuff in the 1960's. It was far less reliable than what we can buy today.
Were you alive back then?
Steven,
We cannot compare products from the 1960s with exacty the same products from the 21st century. Products with 1960s features are not being produced today. So no comparisons across 50 years are going to be apples to apples comparisons. The best we can do is compare the 1960s products which are most like those produced in the 21st century. For television sets, that would be the 1960s color television consoles.
Jet, you are absolutely right about electronic devices bought today. Not only do you get more features (some never even thought of like connectivity or communication capabilities) in a smaller package, but they require far less energy to operate and are far more reliable than ever.
I recall the huge console color TV my parents had, all 19" of it, breaking down constantly. And it radiated heat like a 2000 watt space heater. Moving it took the strength of 2 burly men.
Certainly, Americans have benefited well from innovation in all things entertainment.
Jet,
> The best we can do is compare the
> 1960s products which are most
> like those produced in the 21st
> century. For television sets,
> that would be the 1960s color
> television consoles.
No, that would be black & white television sets. A fair comparison to a color console in 1964 would be something like a 52-inch HD plasma, though even that isn't really fair because a far greater percentage of stations today broadcast HD than broadcast color in 1964.
Ron H.,
> You are not exactly comparing
> apples to apples... Toasters
> still just make toast.
That's precisely why it IS an apples-to-apples (or toast-to-toast) comparison.
> ...most new innovations start
> out as elite luxury items,
> including the electric toaster.
Toasters were a luxury item in 1925, not the year with which we're comparing. That's why I chose it as an appropriate middle ground item. If I had truly wanted to choose "an example at the opposite end of the scale," I would have picked something that's gotten MORE expensive over time, like hand-crafted hardwood furniture.
The article's example is specifically extreme in the attempt to make a point. I'm trying to point out that this was not necessary, because any number of household items could have been used to make the same point, albeit less dramatically.
Steven,
I do not think you either understand the meaning of the term "apples to apples comparison" or understand my argument. I'm confident that others who read my comment do, and they were my intended audience all along.
Jet, no, I was not alive in the 60's - good call! I'll have to take your word on it that the stuff made then was inferior to what is made now. From what I can tell, most of the stuff my grandparents own is 30-60 years old, sometimes older, which is why I said stuff made then was built to last.
"rjs said...
in 1964 a large family headed by one factory worker could afford the entertainment center & all the items in your first block below without credit"
Not likely, and I am a factory worker. I came in as a "changing of the guard" as the first new hire in 25 years at this plant. The stories the old timers told fall in to line with the point of this post. And much like you they were mostly Democrats (communists), and did not understand economics.
if you attached a solid oak frame that was not put together with nail guns around a flat screen it would cost the same price..TV's were fine pieces of furniture back then so the comparison is weak
Mike, I think you're wrong. Furthermore, most of those TV cabinets were veneer, not solid oak. In any case, it doesn't cost much to frame a flat screen. Certainly not thousands.
In 1964, a color TV was a luxury item; it might be best to compare that TV to HDTVs - not today, but a few years ago, when first introduced.
As for the "today's products are cheap junk" theory, you must not have watched TVs in the 60s. My parents bought one of those console TVs. The sound was lo-fi, the picture was fuzzy and would flip when sync was lost, and the color rendition was nasty. It also generated lots of heat. There have been many qualitative improvements in TV and other electronics since the 60s.
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