Wednesday, September 16, 2015

Cost of Living (today)

In the last week or so, I have conversed with a number of random people (strangers and acquaintances) about the cost of living today versus a generation ago.  I purposefully targeted people who were my age or older in order to confirm what I remembered with others memories.  For instance, I remember house calls by my local doctor, and found most of those I spoke with remembered them as well.  They also confirmed my assumption that they thought those doctors, while perhaps living a bit more comfortably, seemed to share a similar economic standard.  Like other professionals, lawyers, engineers, those in management occupations, these people did not earn 10, 20, 50 times the salaries of their blue collar or small business owner neighbors.  Income seemed more equitable split. 

We also touched on the cost of such items as phone, TV, movies, eating out, and other items that moved from luxuries to the definition of what a middle class family in America expected.  TV, of course, was free.  Phone bills were $10, $20 a month.  I remember going to one or two Phillies games a summer with my dad and sitting in the nosebleed section for 50 cents for kids, a couple of bucks for my dad.  If we ate something, we didn't need to spend $30 for a 3 cokes and 3 dogs.  Fast food establishments were just appearing on the scene, so when we went out to eat it was more likely to a local pizza place where we sat at a table and ate together.  Each of the people I spoke with had their own individual stories and memories, and, while I acknowledge that I was a kid and not fully aware of the cost of things, we all remember the experiences and remember that these kinds of entertainments, while sporadic, did happen.  Paid with cash.

I have mentioned many times in this blog that I believe that since 1980 the middle class has been under pressure, that our buying power has decreased, and that the cost of things considered staples of a middle class life has outstripped our ability to pay for them.  I did a bit of research today to see if I could find some facts to confirm (or deny) this belief.  If found an interesting chart with comments by the author, which is replicated below; here is the link to the entire article.


cost of living chart
Source:  David Stockman
This is a very telling chart.  First, let us look at the biggest line item with housing.  A new home today costs $270,200.  That 1975 home adjusting for inflation would cost $209,417.  This is a “real” increase of 29 percent.  A new car costs $31,252 while that 1975 car adjusting for inflation would cost $16,578.  This is a true doubling of cost here.  Public college costs are up over 150% while private college costs are up over 160%.  And you wonder why we have over $1.3 trillion in student debt outstanding.


What is interesting to me is that everyday items, coffee, milk, sugar, eggs, etc. haven't increased all that much, in some cases they are cheaper, relatively speaking.  But the big ticket items are astronomically more expensive, while wages, minimum as well as median income are lower. 

Some might argue that government intervention in the housing and education market has a hand in this increase.  Since car costs have doubled as well, one might conclude that it is simply a demand issue.  A huge increase in the number of middle class families during the post war decades, families who now believe, indeed, were told incessantly by politicians, social scientists and Madison Avenue marketing execs, that a house, a new car and a college education were the foundation of the American Dream, resulted in a surge in the demand for these items.  And, since the United States was one of the few nations in tact after WW2, we had the labor and resources to satisfy a rebuilding world while paying everyday workers a wage which enabled them to reach their goals of a new home, a new car, and a college education for their kids.  The circle was complete. 

In a previous post, I pointed out that the tax rate for the rich and for corporations was well over 50%.  Those making huge sums of money paid huge sums of taxes through the 1970's.  One might ask if it is a coincidence that the 1960's featured the creation of a widespread highway system which required new roads and bridges, plus the engineers to design them and the workers to build them.  And that our space program went from unsuccessful rocket launches in the late 1950's to a man on the moon in 1969.  Much of the money for these endeavors, and there were more, was provided by federal dollars, taxes in other words.  And everyone prospered.

But then in the 1980's tax rates were adjusted so that the rich and the corporations paid a far lower percentage.  And there is even still more pressure to lower rates for these "job creators".   Also, those poor oppressed billionaires can be seen complaining that they are under attack, class warfare it is called.  Never mind that income inequality has reached a point not seen since the 1920's (just before the great crash), or that through the Citizens United decision they can use their money to buy as many "public" servants as they wish.  Never mind that corporations can earn huge profits by selling their products to American citizens but avoid taxes by "locating" in a foreign country.  Never mind that there are millions of American workers who put in 40 hours a week yet make a salary below $12 an hour (that is $24K a year folks), and need to turn to state and federal assistance programs for health care.  In effect, the rules have been altered to benefit those with the most, while those with the least are labeled "takers". 

Individualism, capitalism, rags to riches stories.  Concepts that have been perverted to reward those at the top, while keeping out those below.  As one of those I spoke with recently said, how much is too much?  It seems, his words, that the rich of the past cared about those around them while the rich of today only care about themselves.  How much can I make, and more importantly, how much can I keep seems to be the new mantra.  Improving one's neighborhood through good medical care or jobs at the local factory or a good product or service for a good price at all the local businesses, seems to have been lost in the rush for wealth.  And, as I have said before, how one makes that fortune, does not matter, even when it is on the backs of others, or when it is via paying low wages, providing little or no benefits, or being able to skirt environmental laws. 

Is there no grading of big corporations in terms of what percentage of their employees make poverty wages?  What percentage require government assistance for basic needs?  What percentage need to return to work immediately after delivering a child because they lack sick time, vacation time, or paid paternity time?  What percentage live in communities more than 1000 miles away from the corporate headquarters? 

And then we have my foster care child.  She lives in Vietnam.  Those in her community are excited because a new school was recently built so the children are no longer worried about getting wet during the rainy season or having no lights when the electricity flickers off.  They are working hard to educate everyone about the hazards of open defecation and are building low cost toilets to provide alternatives.  Their plans to educate parents on better nutrition are reducing the instances of poor health and infant mortality. 

They, like billions of people on our planet are still trying to gain access to clean water, proper sanitation, basic health care and education.  Their daily cost of living includes the possibility of dying. 

There is a solution, of course, and it is not unlike that which we need to embrace in America.  It is not about how much money you are worth.  It is not about how many companies you run or own.  It is about how many lives you improve, and whether the world is better after you are gone.  And, even more importantly, it is about the simple fact that we are all in this together.  Imagine that heaven or hell is an all or nothing proposition.  That we all spend eternity in bliss or no one does.  That judgment day will be about mankind and how we as a species performed, how we treated each other and how we treated our planet. 



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