Real cost of reproduction up a factor of 5 during the last 52 years I just got a BD card from my insurance agent listing the price of various items in 1954 vs now. A rough calculation from the few numbers provided by this insurer shows that the cost, adjusted for things like inflation, risk of unemployment and the need to have both parents working, of reproduction has risen by a factor of 5 during my lifetime. Our authorities call this “progress” and tell us to be grateful for their leadership. I call it genocide. The two big ticket necessities: car price increase: 18 times Even if we grant that the quality/cost ratio of manufactured goods has gone up so much during the last 52 years that $1,567 for a used car in 2006 is as good as a new car was in 1954, it doesn’t bring down the sum of the 2 major debt-service items much: house+car increase: 19 times So the debt-service load in a family household has gone up nearly a factor of 20 in the last 52 years. Has household income kept up? Hardly… average household income increase: 11 times So household income has gone up only about 1/2 as much as the household debt service in the last 52 years. Oh, but wait—that “household” in 1954 was one income and the income was relatively stable—the woman stayed at home and raised the kids. How can we factor not only that both parents must work in 2006 and not only are _each_ of their jobs less secure, but the _effective_ income of the household, adjusting for risk of not being able to meet debt payments for a substantial period of time? Here’s a realistic option: We can reasonably say that the odds of _both_ parents being out of work at any given point of time in 2006 is comparable to the odds of the father being out of work in 1954. Hence the _reliable_ household income—the income stream that can service debt without foreclosure—is approximately 1/2 of the household income. Certainly we can say that there will be “fat” times when both parents are working and they can save money for the lean times—but then one of the two parents is likely to be making substantially less money than the other, so we can say the savings during the times they are both working can be put toward bringing the lower-earning working parent up to par with the average of the two in terms of making a reliable payment to the mortgage lender. Hence, making appropriate adjustments we have a household income increase of approximately 6 times since 1954—and we haven’t taken into account the loss of value of having the full time housekeeper. So let’s take that into account as well. What are the real costs to a family with children of having both parents working rather than one dedicated to staying at home? Is it another factor of 2? Probably not. But we can say it could reasonably be another third. So let’s say the income increase is actually only a factor of 4 rather than 6. Since the cost of the two major debt items has gone up a factor of 22, it looks to me like the real cost of reproduction has gone up by about a factor of 5 since I was born. Our authorities—nearly to the person—call this “progress”. I call it genocide. Comments:3
Posted by onetwothree on Tue, 17 Jan 2006 14:11 | # car price increase: 18 times The prices haven’t been adjusted for inflation. But the truth is, a used car today at $1,567 is probably better than a new one from 1954. I wonder about the use of talking about “averages” on one hand, and then semi-privation on the other. People on the financial edge are not going to pay 28,000 dollars for a car. A mechanically identical car is available for 12,000 dollars—and that will run 10 times longer than a 1954 auto. 4
Posted by James Bowery on Tue, 17 Jan 2006 17:04 | # onetwothree, of course I could use your figure of $1,567 for a family car and it would hardly impact the conclusions since the car was only about 15% of the price of a house in 1954 and I already did generously and arbitrarily bring the house cost multiple down from 22 to 20 in rounding down my final ratio. Also, part of the problem is in purchasing used cars there is a risk you are going to be taking even with the lower quality standards for manufacturing in 1954. However, the way I’ve presented it makes nit picking easier. As a result I’ve changed the post to assume the best for “progress” in the car arena to contrast real estate and manufactured goods in terms of cost of reproduction. Doing so, and rounding appropriately, we see the final number indeed does not change. I guess I may as well include tax burden here too since that has gone up with bracket creep. Does anyone have the tax burden figures for the 1950s vs today for a typical household? 5
Posted by Delos on Sun, 22 Jan 2006 14:40 | # Excellent post James. It probably partially explains why we now have 1/5 of the amount of kids we did back in the 1950’s. Post a comment:
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Posted by Alex Zeka on Tue, 17 Jan 2006 09:57 | #
This is a case of Garbage In Garbage Out. The economic establishemnt presumes that economic activity is what matters, and so adovactes policies to encourage it. Result: we get more economic activity (a.ka. work), but we can afford less and less due to galloping inflation.