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Comparing Today to the 1960

  1. May 6, 2012 #1
    I wish to compare today's income to the 1960s. I wan't to do this both because we currently have a thread going on with regards the effects of income inequality:

    and because of an article I read a while back that I found particularly offensive.
    Why Economics Can't Explain Our Cultural Divide
    Even during upturns, blue-collar Americans are marrying and working less, writes Charles Murray

    I also found a quote from the above offensive article in the income inequality thread.

    I wish to begin by consider an article I posted in the above thread. Ironically, I got a response saying that income inequality is something we don't need to prove. This is roughly true but aside for the top 1%, top .1% etc. the picture isn't as clear. More importantly there are some question about how the general living standards compare and it is argued in the above thread by "Rus" that absolute well-being is more important then relative. If we need more evidence about that doubt exists as to the general well-being of america have a look at:


    So let us begin.

    Well, the government gathers inflation statistics, if we doubt these these statistics we can look for historical evidences of prices and judge for our self if the results our reasonable. Here is a table comparing the budget for an average houshold between now and the 1960s

    Code (Text):
       Yearly Expenses per Average Household
    Category              1960     1960Today     2008
    Food                 $1,681     $11,681     $11,058
    General Household    $2,491     $17,314     $24,305
    Transportation       $  759     $  5,277    $  9,601
    Health Insurance     $  107     $     741   $13,968
    Federal Taxes        $1,884     $13,096     $21,138
    State & Local Taxes  $  767     $ 5,331     $12,637  
    Total Expenses       $7,689     $53,440     $92,707

    The CPI was used to compare 1960 prices to today but I believe the actually prices may have been independently gathered. We should compare these numbers to the average weights used by the CPI for each type of good:

    The CPI does not include tax. Perhaps this is the first thing we should look at. Does the above table accurately reflect the relative tax burden differences between today and the 1960s?
  2. jcsd
  3. May 6, 2012 #2
  4. May 7, 2012 #3


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  5. May 7, 2012 #4


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    In the 60's, a young man (like me) growing up in Seattle could expect:
    - to get a job at Boeing or Fisher Mills
    - buy a home on a street with sidewalks
    - marry a stay-at-home wife
    - raise two kids
    - own a muscle car
    - afford a cabin in the mountains or beach

    Now that is no longer true - not even remotely.

    Respectfully submitted,
  6. May 9, 2012 #5


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    From my position I view today's income inequality and wealth inequality both as real; there's no need to prove the inequalities exist, and the USA has the highest of all the democratic countries. Now, the causes of these can be debated and are being argued in that "other thread".

    But there is a more basic dilemma: Do these inequalities need fixing? Some say no, the massive unequal distribution of income and wealth are a natural result of our capitalist system and nothing needs be done. Furthermore, we should "stop whining like those OWS folks and lazy males mooching off their parents." Others, like myself, claim that this lopsided distribution of income and wealth, along with other results are abberations and dangerous to our very survival as a nation. So, let digest some statistics regarding this dilemma from Wikipedia:

    "However, as of 2012 several surveys of voters attitudes toward growing income inequality found the issue ranked less important than other economic issues such as growth and equality of opportunity, and relatively low in affecting voters "personally". [205][206] In 1998 a Gallup poll found 52% of Americans agreeing that the gap between rich and the poor was a problem that needed to be fixed, while 45% regarded it as "an acceptable part of the economic system". In 2011, those numbers are reversed: Only 45% see the gap as in need of fixing, while 52% do not. However, there was a large difference between Democrats and Republicans, with 71% of Democrats calling for a fix.[204] In contrast, a national survey by the Pew Research Center for the People & the Press,[207] found that respondents' sense of unfairness about taxes centered on the perception that wealthy Americans were not paying their fair share of taxes; 57% say this is what bothers them most about the tax system, an increase of 6% over a poll taken in March 2003.[208] A more recent poll found about two-thirds of Americans now believe there are "strong conflicts" between rich and poor in the United States.[209][210]

    Note: I also found the article by Charles Murray offensive. Many folks there at The American Enterprise Institute, where he hails from, often called "neoconservative", but the institute itself always waves the "We are not neocons" flag.
  7. May 9, 2012 #6


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    I wish pollsters put more effort into measuring people's understanding of reality against their perceptions.
  8. May 10, 2012 #7
    WWII put the United States in a very excellent economic position because we had 85% of the worlds surviving production infrastructure. Everyone else was bombed out. The previous master of the world economic system, England, fell from dominance in a pile of bomb rubble as her colonies all found new freedom.

    The 1960’s were our best and most profitable time because our competition finally reorganized well enough to put forth a massive effort to rebuild. They needed our products to rebuild, and we made lots of money selling to them. That generated a huge demand for our manufacturing output. We started to fall from dominance in the 1970’s when our completion started to go back on line with new and modern production facilities. We started to really hurt in the 1980’s because we had never before had a reason to modernize production. Our manufacturing plants were still operating for the most part like they did before WWII. The end of that decade saw the advent of computer controlled automated production equipment, which we were slow to adopt—putting us further behind our competition. More recently, we saw much of our manufacturing work go overseas and began to notice a serious decline. But we were quick to catch up and the work is now returning to our shores. The trouble is that we have become so efficient through computerized automation that we no longer need to hire such a large unskilled and semi-skilled workforce at those old artificially high post WWII wages.

    I lost my engineering job last year when the Space Shuttle shut down. But I very quickly found a much better job. The one thing that really stood out at the job fairs I went to is that the most aggressive recruitment effort was by the traditional US auto companies. They pulled out all the stops in catching our attention, and they were offering very good salaries to move to Detroit. All this while the press was full of pain and woe of all the laid off auto workers. The manufacturing jobs of the future will be the engineers who design robots and the highly skilled tech’s who operate and maintain them. The guy who could afford a nice life style by pulling the same levers and turning the same cranks for 40 years is now unemployed and will stay that way until he upgrades his skill set.

    The bottom line is that we got fat, dumb, and lazy from the lack of competition after WWII when we had 85% of the production resources. Our manufacturing companies were slow to adapt to the recovered competition, and now our work force has been even slower. Both hurt at a level proportional to their slowness to adapt to a changing world. The fact of the matter is that we are now manufacturing more than we ever did before, and we are exporting more than we ever did before. But we are letting the emerging economies produce the labor intensive produces while their wages are still low, and are specializing in such things as airplanes, jet engines, and sophisticated manufacturing equipment—all high tech stuff that requires a seriously upgraded skill set. We are still the most innovative country in the world. That is why all the others are “stealing our technology.” Those able to innovate are making good money.

    All that explains where we are and how we got here. The more important question to ask is, “What do we do now?” We will always have people who are much more able to compete than other people. That has never changed and I see no reason to expect it to change in my lifetime. But we can expect big political and social changes because we now encourage those who are not so competitive to vote.
  9. May 10, 2012 #8
    Thats a very good point I've never thought of that before.
  10. May 12, 2012 #9
    Actually there are democratic countries with higher level of inequality than the US:

    (that's not an ideological statement from my side in any direction and merely data check)

    By occasion - what did you find offensive in that article? The only thing I think could be easily challenged from that article that I can find is the idea of trying to blame traces of welfare state as responsible for all undesirable social changes.
    Last edited: May 12, 2012
  11. May 13, 2012 #10


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    "Actually there are democratic countries with higher level of inequality than the US"
    Well, after transfer payments, not so much, so long as we're talking about being developed as well as democratic. They all tend to fall down on one or the other. Argentina, maybe.

    Many are nominal democracies but are really oligarchies. But does the US itself even count as a democratic country anymore? After two stolen presidential elections, hackable blackbox voting machines everywhere, a duopoly of parties that puts pro-wrestling style fake conflict out front but whose policies agree on nearly everything, (whatever popular opinion might actually be), and an electorate more pliant to the corporate oligarchy-controlled mass media than any Goebbels could have dreamed of - I'd have to say for practical purposes, no, the US is no longer a democratic country.

    It isn't even a nation of laws anymore - we have secret laws, secret interpretations, secret prisons, unlimited executive power. In large part this is because money has become the ultimate power that can buy public opinion, buy Congress, buy the President and the other powers in the government, and even buy more money from the government.
    And that money and power is in fewer and fewer hands every year.
  12. May 13, 2012 #11
    Bigger ones: South Africa, Brazil, Philippines, Argentina. However, I was very surprised when I learned recently that the US has higher gini coefficient than the whole EU. (odd because there were also new rather poor post-communism members)

    If you claim so, then you made a mistake by wanting to compare it with democratic countries? ;)

    I read a few years ago that in Sweden tried to cure depression by sending people to Saint Petersburg for a while. They were coming back in a much better mood and were happier because started using as reference point not their country, but Russia.
    You know, maybe you would benefit from a trip (maybe as volunteer in a charity organization, you seem somewhat idealistic) to a less develop country to learn how outher countries work? I'm almost sure that you would place your opinion about your country in more optimistic way.
  13. May 13, 2012 #12


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    I have traveled quite a bit. I have been all over the US, Mexico, and most of western Europe. I have lived a few months in Costa Rica and Greece. My fourth passport is halfway to expiration. I have lived in eight or ten distinct regions of the US, depending how you count West / Central / East Texas. I have lived in travel trailers in Texas and Georgia, but also mansions in Georgia and Maryland and an elite boarding school in New England.

    A few months ago I went on a trip through Birmingham, Alabama and on into small towns in northern Alabama, then back to south-west Georgia. The economic devastation there is beyond anything I have seen abroad. I'd have to go to Fallujah or the West Bank to find something much worse, and I don't think it would cheer me up.

    This is relevant, and it cheered me up: Pearls Before Swine: Moving Abroad
    Last edited: May 13, 2012
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