Saturday, May 7, 2016

Rockefeller problems

Just thinking about my previous entry on whether things are getting better or worse for the American middle class on an absolute scale ...

One of the themes the "things are worse" crowd brings up as evidence of the absolute decline of the middle class is the shift to dual income households. A comfortable family lifestyle with a single breadwinner was typical in the 50s. The Atlantic suggests that a comfortable middle class lifestyle today requires an income of over $130,000 - definitely not typical. That's not even typical for two income households.  So in that important sense, things have gotten worse.

Technological progress hides this decline. Without the increased productivity and technological progress, there wouldn't be any argument; a situation where one person was able to provide well for a family of four that changes to where two people are even less able to provide for that family is a disaster. But if workers are providing more goods and services than ever before, then one worker should be able to provide more for a family.

Intuitively, as material abundance grows, there is less need to work and greater financial security. In other words, if we had Star Trek levels of abundance, barely anyone needs to work whereas in times of extreme scarcity everyone is always working. Before the Industrial Age, for example, most people - children included - were working most of the day on farms.*

And yet here we are with increasing productivity but also having to work more just to maintain our living standard. It's something analogous to stagflation (what an ugly word) although it is more than an analogy since both problems share many of the same causes. Maybe I've written about them before but I'm sure I'll write about them again.

* That's one thing that history books don't really cover. There might be a small section on how peasants lived but the majority of the rest: battles, cities, kings, queens, inventors, philosophers, etc., represent only a tiny portion of the human experience. There's only so much to be written (but much more to be said) about toiling in fields and simple family life I guess. And in truth, the typical first worlder's life has more in common with city life and royalty than subsistence farm living.

Someone out there wondered whether it would be preferable to be a Rockefeller during their heyday or a regular American today.  Professor Don Bordreaux and the modern camp point to the amazing technologies and conveniences that are within the reach of typical Americans that even Rockefeller simply had no access to: advanced medicine, supermarkets, cheap air travel, better cars, instantaneous communication, access to incomprehensibly greater information and entertainment than ever before, etc. The Rockefeller camp, like Peter Schiff, point out that Rockefeller lived in a modern enough era that travel, entertainment, and access to information, were plentiful enough. Having Netflix is nice but not having to worry about financial security is even nicer.

If you are materialistic, Bordreaux is absolutely right. Materialistic has a negative connotation, but I mean a strong as opposed to a more indifferent preference for goods and services that are more varied, higher quality, and cheaper. It's this type of materialistic thinking that we have to thank for the standard of living we enjoy today. If you are more worried about status and stability, Schiff is right. Perhaps related: Bordreaux hates Trump while Schiff is more sympathetic (though not particularly supportive).

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