Tuesday, February 14, 2023

Comparing Yourself to Others - Particularly to Your Parents and Ancestors

Mom and Dad had it so easy!  Why can't I have the lifestyle they have?

One complaint you see online (and mostly that is what online social media is, these days, just people complaining..... oh, wait) is that previous generations had it "so easy" as Dad would drive off to the Office in his 5,000 lb Cadillac burning 25 cent gasoline, work for a couple of hours, take a three-martini lunch, chase his secretary around the desk and then be home by five o'clock.  Hey, that's how they showed life on "Mad Men" - and that's a documentary of life in the 1960's!   The television never lies - right?

Meanwhile, Mom could stay at home and have all the modern appliances - as well as her Black or Hispanic maid - do all the heavy lifting around the house.   She could sit on the couch, eat bon-bons, do recreational prescription drugs (washed down with Chardonnay) and watch soap operas all day long - when she wasn't banging the mailman, that is.  People had it so easy back then! 

A Pepsi cost a nickel, and a new car cost $1500.  You could buy a new house for $10,000!  Life was so sweet back then!  Not like today.  And yes, the people who say these things flunked math class and don't understand how compound interest works, much less the future value of money.

But beyond that, they fail to understand scarcity and population increase.  Population increase is one single reason why our expectations today are less than in previous generations - and why previous generations had fewer expectations than generations before.  In my lifetime, the population of the United States has nearly doubled.   Read that again - doubled.  So how does this affect the scarcity of land, the price of houses, the amount of traffic on the roads - down to the price of sugar?  Given how many more people live on the planet today, it is actually amazing that our standard of living hasn't dropped in half.

Actually, the opposite is true - while there is still a lot of privation and suffering in the world (and by that, I don't mean not having all the cable channels) the incidence of malnutrition, starvation, and disease is far less than 50-100 years ago.  We've actually improved the standard of living across the planet - at least for those on the bottom rung of the ladder.  Of course, life still sucks in a large portion of the world.  Just not in our portion.

But yea, it is a mathematical certainty that housing will cost more as the population doubles - land is a finite resource.  And sadly, we've plowed under one farm after another to build more houses for people.  And often, our land use planning makes things worse, rather than better.  To slow down development, for example, some jurisdictions dictated that a house could occupy no less than five acres of land.  The theory was, given the cost of land, it would make it too expensive to build, or at the very least, reduce density.

My parents lived in such an area in Maryland.  The result was, old farms were cut up into five-acre tracts and houses plopped in the middle of each one.   This meant that thousands of acres of farmland would never be farmed ever again.  It also meant that people had to drive further and further to get to their homes or work or shopping, as the population density was so low.  It was a pretty stupid way of zoning - but a popular one, nevertheless.

But regardless of the laws of man, the laws of nature cannot be vetoed.  More people, finite resources, and you have a formula for escalating property values, over time. So yea, I can't afford to live in the house my parents owned - even though I made as much - if not more - money than my Dad did, adjusting for inflation.  And I don't have four kids to raise and put through college, either!

So what changed?  Well comparing our lives today with those in the past is comparing apples to oranges.  I noted before that life in the 1950's and 1960's might have seemed idyllic through the rose-colored lenses of nostalgia, but the reality was something different.  Today we spend a lot more money on depreciating junk - electronics, cars, disposable furniture, restaurant meals, and subscription services.  And maybe we do this because we realize we can't afford Mom and Dad's house, so we squander on toys and bling instead.

Or maybe values were different back then.   Our parents, having lived through the depression, put more value on things like an education, owning property, and investments. They saw through the two-dimensional consumer culture.  My parents had an expensive house on a lake.  My Mom drove a Vega - the cheapest car you could buy at the time.  My parents didn't buy a color television until 1976 - until then, when we needed a new TV (every decade or so) my Dad would look at all the ads in the Sunday paper and buy the cheapest black-and-white set there was - usually $99 at Sears.

My parents had the same furniture my entire life - and much of it was bought before I was born.    Today, people go to disposable furniture showroom and buy a "suite" of furniture on time - and throw it away by the time the payments finish.   The thinking was different back in the day - you bought for all-time, not for a month or a year.

Our generation has been lured by the siren song of consumerism, fueled by a steady stream of cheap products from China.  My parents had one coffee maker - a "percolator" which was considered an expensive appliance, reserved only for special occasions (e.g., company, Christmas, Easter).   They finally broke down and bought a "Mr. Coffee" in the 1970's - and had it for well over a decade.   Cell phones, computers, flat-screen television - and all the subscription services that went with them - were just unknown.

You bought something, it never became obsolete, either.   The phone on the wall of the kitchen was 30 years old (it came with the house) and if you wanted to dial (dial) "long distance" you had to wait until "after 5 when the rates go down."    Today, you can call anywhere in the USA and talk for hours at no additional charge.  Ironically, no one talks on the phone anymore, now that it is free - we text instead.

The point is not to say, "dagnabbit!  Things in the old days were better! (or worse!)" but only that they were different and comparing life for previous generations with life today is totally an apples-and-oranges situation.  You could go down this road, but what's the point?  You could spend hours pointing out how things were "better" back then - or far worse.  The nostalgic types never bother to mention how things were back then for women and minorities, for example (and they were far, far worse than today).

The reality of today is what it is and it isn't going to change much, simply because of scarcity and population demographic trends.   Levittown houses aren't going to appear magically for $10,000, and even if they did, most people today would not accept them.  Two bedrooms?  One bath?  Ick, you have to share a bathroom?  No thank you!

The point is, you can pine for a world of yesteryear - a world you may never have known - or apply your energies to making your life better in the world you live in.  There are voices today - loud voices, but a small minority - who argue that the whole system is stacked against them, so why bother trying?  But as I noted before, it only seems like the system is stacked against you, when you stack yourself against the system.

People waste their emotional energy by arguing that only by overthrowing the entire social structure can any sort of real change take place.  But it isn't just the social structure, it is the laws of nature.  Maybe this pandemic will kill off half the country and then you can have your choice of real estate at low, low prices.  I suspect if that happened, the economy would collapse and you still would not be able to afford a place to live anyway.

That is the funny thing about real estate.  There are places in America today - Gary Indiana, Detroit, West Virginia - where you can buy a "house" for less than the price of a modest car.  Problem is, there are no jobs there to support you if you wanted to live there.  And chances are, you would not want to live there even if you could support yourself.   That is the other half of the argument - people claim they can't afford a house to live in, but what they are really saying is they can't afford the house they feel entitled to, in the neighborhood they want to live in.   It is like my friend who argued we should build housing for the homeless in the resort town of Key West.  It makes no sense at all?  What's next?  Homeless shelters at Disney World?

I digress.

Predicating your success in life on a complete overthrow of the existing social structure is never a good plan. Maybe it worked for Lenin, I don't know. It wasn't necessarily an improvement for most Russians, however.  It seems that we are facing an incredible wave of stupidity in the world today.  People want to claim they are victims. Even people who decry "victimhood" claim to be victims of the victims.  Everything is somebody else's fault, and if we could just get rid of those "other" people, the world would be perfect.  But that is a stupid world-view and by the way, it has been tried many times before and not only doesn't it work, it makes things worse for everyone involved.

So no, maybe I can't live the lifestyle of my parents.  Thank God for that.  I'd rather have my hamster with its six airbags, seven speakers, panoramic sunroof, disc brakes, and heated and cooled leather seats, than the deathtrap my Mother drove.  And quite frankly, accounting for inflation, you could buy a helluva lot more car today than you could back then.  Some things are better today than in the past.

As for real estate?  It is a bubble, once again.   And this too, shall pass, I suspect in the next six months or so, as the people paying top dollar for homes, using funny-money mortgages predicated on pie-in-the-sky AirBnB rental scenarios, default on their mortgages, one by one.  Hell, even the guy who runs Twitter stopped paying his rent!

Of course, when the housing market comes tumbling down, it will create a whole new series of woes....