When someone tells you that real wages have stagnated, or declined, or failed to keep up with inflation, what does that mean? I thought it meant that a worker in year X could purchase more with his take-home pay than a similarly employed worker presently. I've become convinced though that inflation might not mean what we think it means.
They tell me for instance that 50 cents spent in 1980 would get you the same amount of goods and services as a dollar spent in 2000. Okay, so an iPhone costs $400 today, which means that our mid-80's counterparts were shelling out about $200 right? Small price to pay for being able to listen to Air Supply albums on your phone! Now let's go back to the chart and figure out what the Greatest Generation was paying for their MRIs in 1950...
I heard John Edwards talking about how many of us Americans have been "left behind" by economic growth in the last few decades. I think I might be one of those Americans, but I can't seem to find any data on what a developer of rich internet applications earned in 1980. Can anybody help me out?
Okay, so the CPI isn't measuring exactly what we seem to think it's measuring, is it? I think it was Locke that said something about paupers in London living better lives than the kings of savages. Maybe he was on to something. The Crown Jewels of London couldn't buy a transistor in 1900, and there was never a Roman Emperor who could muster the wealth to purchase a single coach-class plane ticket from Rome to Gaul.
Yes, this is a "rising tide floats all boats" argument. It's a "smaller piece of a bigger pie" argument. It's a "apology for economic inequality" argument. But is it a bad argument?