What Color is the Sky on Your Planet?

[kevin_standlee]

Over on another community -- some of you reading this may still be following that discussion, too -- I had reason to question the economic assumptions of someone claiming that we're in a "bad economy." I asked how long we've been in a "bad economy." The reply, cut-and-pasted here exactly so I can't be accused of misquoting, was:

i think our economy has been in a primarily steady decline since the 50's with the occasional boost.

This is someone a few years younger than me. I was born in 1965 and grew up in different parts of northern California. I am not from a wealthy family, nor have I won a lottery. I'm pretty middle class, I reckon. For the record, I do not think that the US economy has been in a sustained 50-plus year decline.

It makes me think that the dot-com boom did even more harm than we thought at the time: it convinced some people that the running with a high fever is the "normal" state, and than anything else is a depression.

Comments

[howeird]

Depends on what he means by decline. If he's talking about what a dollar can buy, I'd have to say he's right. But if he's talking about things like jobs and GNP and the usual leading economic indicators, he's way off base.

[(Anonymous)]

As Howeird notes, it is all a question of what measures you use. Inflation is certainly one, although the fact that the purchasing power of the dollar has declined steadily over the past 50 years does not mean that Americans have got poorer; they have generally got richer.

There are, of course, many other measures you could use. It seems fairly likely, for example, that over the past 50 years more and more of the nation's wealth has fallen into the hands of (gasp!) women. There are some who will see that as a Bad Thing.

An environmental campaigner might note that the US economy has seen a period of sustained growth, and that in consequence every year Americans need more and more of an unfair share of the world's natural resources in order to sustain their lifestyle. That's certainly "bad" by many people's definitions.

Then again there is the question of the increasing gap between the rich and the poor. Even though poor Americans are getting richer, the very rich are getting richer much faster, which many people view as bad. This one, however, is probably a relatively recent trend, and not something that has been sustained over the last 50 years.

Also, of course, it depends what you are comparing. Is the US economy "bad" in comparison to Sweden? To Argentina? To Cambodia? To Zimbabwe? Or simply to an ideal standard of affluence that your correspondent believes The Government has a duty to provide?

- Cheryl

[kalimac.livejournal.com]

Um, no, he's pretty much right. The real income (adjusted for inflation) of everyone except for a handful of plutocrats has been dropping for at least thirty years. This may be disguised by the fact that most individuals coming of age in that time rise more quickly within the falling stream than the rate at which it goes down, and by the increasing cornucopia of things you can buy with your less money.

[kevin-standlee.livejournal.com]

Could you cite your source for this real-income-is-dropping assertion? There's so much information out there (much of it contradictory) that I can't figure out where you're getting it.

But my first reaction to your comment is that "does it matter if 'real income' drops if I can still buy more things with the less income?"

For example, let us suppose that fifty years ago I could earn 20% more in real terms than I can today. (Of course, in 1957, my job, or jobs like it, didn't even exist, but that's a side issue.) But today with that "less money" I can buy a car, a color TV, a personal computer, a mobile phone and an iPod. In 1957 most of those didn't exist, and I might not have been able to afford a car.

The presence of some super-wealthy people in the population does not by itself mean that everyone else is worse off today than they were half a century ago. I expect that most Americans would say that they are better off now than they were in 1957, assuming they were old enough to make the comparison.

[howeird]

Interesting point about new inventions, but I'd have to disagree with your general point. In 1950, you could certainly have afforded a house and a car on an engineer's salary. I'll use my father as an example - with a master's degree in physics, what would now be considered an MSEE, he had no trouble supporting a wife and 4 children, buying a 4BR house in the NYC suburbs, and buying a new car for cash every 5 years. I doubt if a single-wage MSEE could afford to do that today.

[kalimac.livejournal.com]

I can't cite a particular source, no. This is a statistic I've seen many times over the years in various places, and which I've never seen challenged. That doesn't prove it, of course, but even if I found an article in an economics journal that wouldn't prove it. And I refuse to play the "get me a peer-reviewed citation" game on basic well-known facts: I played that once with Dafydd ab Hugh re global warming, and that was enough to teach me never to do it again.

I certainly am not pointing merely to the increasing gap in income between the plutocrats and everyone else. It's not that the plutocrats are rising fast and everyone else slowly. It's that real wages for everyone else stagnated around 1970 and have been dropping slowly ever since. Any statistics saying they're still going up: check to see if that includes everybody, or if it excludes the plutocrats. All that increased GDP we're making? It's not going into the workers' hands, not any more.

Yes, it matters if you have less income with which to buy the more things, because you could buy even more if you had more income. As Howeird pointed out, in 1957 a man with a job at your level (mutatis mutandis) would not only have had a car, he certainly would have had a nice house in the nearby suburbs if he wanted it. Today buying the house is basically impossible here, and not very easy anywhere else. That's a huge quality of life issue.

Of course people who were around in 1957 have a better life today. I addressed that "rising motion within a generally falling stream" issue in my original reply. In 1957 I was a tiny child: I can't pretend my quality of life hasn't improved.

Sure we can buy more things with our less money, but we could buy even more if we had more money instead. Besides, bling has been on a steady rise for two centuries. The increase in bling 1957-2007 is impressive, yes, but I'd put the increase of 1907-1957 (radio! television! commercial air flight! reliable films and automobiles!) up against it, and even that of 1857-1907 is remarkable. For one quality of life issue, by 1907 you were more likely to get your illness cured by going to a doctor than by staying the heck away. In 1857 this was still not true, and hygiene issues were only part of it.

[daveon.livejournal.com]

I've heard that data point too, but I've not seen it broken down. There was a flame war on rassf a year or so back with David Friedman who was claiming incomes were going up, and somebody else who was pointing out that while household incomes were up, it depended on how you measured them.

There are lot more two income households now than there were 30 years ago, and it's less and less likely you'll find people who can make ends meet well on a single salary.

You could also say that some of the economic development and "growth" we see is illusionary caused by a credit boom fueled by low interest rates and rising house prices.

Somebody was dissing Sweden and Norway a year or so ago in the NYT for having older cars and older things in their houses than Americans. However, the average household debt in Sweden and Norway is something like 5% of an average US household.

Debt isn't sustainable long term and I'm glad I've got to the point where the only debt I have that isn't voluntary[1] is on my mortgage.

[1] - we are currently running a couple of credit cards with thousand dollar-ish balances for a few months to establish a good credit rating in the US.

[daveon.livejournal.com]

There is a factor around when you entered the job market and where. I graduated in 1991 and found the next 7-8 years to be pretty heavy going with poor economic conditions being the norm until the boom.

There were some personal circumstances which helped things downwards in the late 90s and then the end of the boom was bad when we had to relocate back from California.

Times are pretty good now though.

I think it's trickier looking forward and making comparisons to people older than I am - then I do worry more. Saving enough to retire at the age my father did (55) seems impossible, at least to save enough and have as much money as he did and certainly looking at my mother who has half his pension plus her own state pension - she has pretty significant disposable income and short of working to my late 60s I can't see myself managing that.

[bovil.livejournal.com]

I finally saw that exchange...

I think the bit about Pantheacon having a kick-ass staff is incomplete. Much like BayCon, they have a kick-ass staff that's overworked, to the point that many staffers are working 10-16 hour days and don't have the time to enjoy the convention. It's the nature of a convention where the staff is an expense.

[purpleranger.livejournal.com]

Purple. The color of the sky on my planet is purple.