Wednesday, November 2, 2011

Are we wealthier today than in the past? Yes.

A family watching television back in 1958.  Note how simple and uncluttered the home is.  People were a lot poorer back then, in real terms.  Yet this photo depicts a comfortable middle-class family of the era.

On some websites and blogs about "Occupy" protesters, these young folks are chastising their older peers, saying things like, "Well, you were lucky, being born into the largest economic expansion boom in history!  When you graduated from high school, there were jobs galore!"

Well, maybe for my elders, but even then, not really true.  When I graduated from high school in 1978, we were in an economy facing 10% unemployment, 10% inflation, and 14% home mortgage interest rates.  Consider yourself lucky - you only got one out of three.

But we survived.  And in part because we made do with a lot less.  Our expectations were a lot lower back then, than today.

My Father was an upper-middle-class manager of a rust-belt factory at the time, and he had a good income.  But even then, we had one television in the home, which was typical.  We didn't buy a color television until 1975, if you can believe that!  And in part, that was because I think my parents were stressed financially with home mortgage payments, college education payments, and trying to save for retirement.  They chose to save, instead of spend.

We had two cars in the family.  One was the Mercury that the company allowed my Dad to use, the other was, well, a Vega - a $2000 car that was a piece of crap.  And remember, we were considered wealthy back then!

Of course, some of my friends whose parents made a lot less than my folks, had really nice cars - new high performance Mopars every few years - and they would give the hand-me-downs to their kids.  And of course, they lived in more modest houses, had no savings, and bought everything "on time" using credit.  They were income-rich, but wealth-poor, just as so many are today.

But even simple things were expensive back then, as most everything was made in America.  NOTHING was made in China - Richard Nixon had not even gone there yet to thaw relationships with that country.  If you owned something "made in China" you'd probably have been arrested.

So a steel-belted Coleman cooler was like $99.  A basic lawn mower was $99 (and still is today!) A simple black-and-white television, made in Japan, was over $100.  A nice RCA ColorTrak was $500, installed.  A home stereo could set you back $1000 or more, in 1975 dollars.  And computers?  When they first hit the market, they cost more than a small car!

So, not surprisingly, we didn't have a lot of crap in our lives.  Not like today, where people are crowded into homes, owning two, three, four, or five of the same thing.  I think I must own nearly a half-dozen picnic coolers of various sorts, for example.  And clothes - closets full, and I am hardly a "shopper".

And it is not that we are spendthrifts - it is just that stuff is SO CHEAP today that you can get things for nearly nothing and then throw then away.  People just give us stuff, or it is bought cheaply at a garage sale.

Today, te average middle-class American family has a number of televisions - often more than there are people in the home, plus something called "Cable TV" which we never heard of, as kids.  And these are large, flat-panel displays, not flickering CRTs.  Most houses have at least one computer, perhaps two or three.  And cars - tons of cars.

Back in the 1950's, the idea of a "two-car family" was considered an ultimate luxury.  Go on YouTube and see the ads from Ford back then - touting the insane idea that maybe the wife needs a car, too!

Today, in a typical middle-class family, every member of the family above driving age has a car - and a nice one, too!  Cars today are made better, last longer, and are safer.  And odds are, they have air conditioning, power windows, power locks, etc. - all things that were optional or even unobtainable on cars of yesteryear.

And food.  While we made do with minute steaks and Swanson TV dinners, today, people get take-out from the gourmet store, drink designer coffees, and cook in fabulous "gourmet" kitchens with stainless steel appliances and granite countertops.  And appliances - we have so many!  Microwaves, food processors, coffee makers - you name it.  Back in the day, you were considered fabulously wealthy if you had a $500 Amana "Touchmatic RadarRange" - bearing in mind that $500 would buy you a nice used Chevy back then.

We eat better, we drink better, we have better stuff, larger houses, fancier appliances.  Did I mention CENTRAL AIR CONDITIONING?  Unheard of back then - unless you were a Millionaire!

This is the one factor that people miss when they try to compare incomes today to those of years past.  You can look at numbers on a chart and say "Gee, the middle class doesn't have it so good as we did back in 1980."

But if you lived in 1980 you might be inclined to disagree.  Yea, maybe our relative income was numerically greater, when compared to the median incomes back then, or compared to the richest people back then.  But then again, comparing yourselves to others, as I have noted, is a zero-sum game.

If you take away the numbers - which are indicative of nothing - and replace them with values you'll see that people today have it a lot easier.  We work less hard, dress far more casually, and have a greater variety and selection of things to consume - at far lower prices than we did in the past.

Yea, maybe life seemed simpler and easier back then.  But that was in part due to the fact that we made do with less back then.  No cell phone plans, no cable TV bills, no second car to maintain.  No shopping in the mall (Mall?  What's a mall?) no wholesale stores, no gadgets and gimcracks.

And therein lies on key to success in this new age.  It is tempting, since everything today is "so cheap" to accumulate a lot of crap and spend, cumulatively, a lot of dough on it.  Why not?  It is cheap, right?  But if you realize that folks "back in the day" made do with so much less - and yet were still perfectly happy, if not happier, than people today - then you may have discovered a secret to success in the modern world.

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