Commies and other wacko leftists often like to claim that real wages are falling in the United States, and that this fall is due to "free markets." Theoretically, of course, this claim is bunk (if firms are profit-maximizing, then they will continually seek to expand production through greater investment, which will in turn increase real wages). Here is the empirical data to whack such pinko Marxist claims on the head with:
The above shows total real compensation per hour. In other words, it's compensation (wages + benefits) that workers receive per hour, not just wages.
This one could be a good one to throw at unions such as the UAW. Real compensation for the manufacturing sector has increased by 25% since the mid 90s.
Although the price of eggs doesn't tell us much by itself, it does indicate that productivity increases have made life-necessities like food much more affordable to the average person.
Few people will argue that Americans ate more per capita in 1929 than today. This graph shows that the food has become progressively cheaper to the American worker as a result of capitalism.
Further proof that the necessities of life have become cheaper in the United States as a result of productivity increases and capitalism.
The above is fun to throw at people who post the now infamous "falling real wages" graph.
Though not very useful by itself, this data is a pertinent reminder of how new technology has not only vastly increased living standards in a way that's immeasurable, but also how new technology has become increasingly affordable over the decades.
If Americans are becoming poorer, then why are they better able to afford day-to-day products?
This puts the "falling real wages" argument in perspective.
All of these graphs have been culled from Dr. Perry's blog at http://mjperry.blogspot.com.
Political Atheists Blog
Commies and other wacko leftists...
More like your run-of-the-mill Economics illiterates.
Old Mexican: Commies and other wacko leftists... More like your run-of-the-mill Economics illiterates.
That's basically a tautology.
So this means that capitalism is out-competing inflation.
wilderness: So this means that capitalism is out-competing inflation government.
So this means that capitalism is out-competing inflation government.
Fix'd
awesome thread. Bookmarked :)
This was worthy of a Facebook repost.
i dont know about pinkos claiming such. unless you use the pinko to have various meanings.
a mises video claimed that living standards were falling and savers were harmed by the current money system.
maybe they were lying?
would living standards be greater with a different type of money...wages and compensation in gold and silver??? i havent been able to find that yet.
though often in my experience, compensation in benefit form seemed to decline in quality.
cret:a mises video claimed that living standards were falling and savers were harmed by the current money system.
OP: Couldn't a statist simply counter that those improvements in the standard of living occurred under a mixed economy, and so one should praise the mixed economy, not necessarily freedom? For example, there are farm subsidies, housing subsidies, etc. While we may understand that these gains are made despite government interference, people who are more ignorant of economics may see it as the opposite.
Here's what you do: first ask them whether or not we're a (mostly) free economy. If they say yes, show them the above post. If they say no ask them if they think things could be better, if they say no show them the graph demonstrating an increased standard of living. If they say no, we're not a free economy and that things could be better hand them a copy of Man, Economy and State.
Cal:For example, there are farm subsidies
Cal:While we may understand that these gains are made despite government interference, people who are more ignorant of economics may see it as the opposite.
You can see that prices fall their fastest up until 1940. Even if they think government can bring prosperity, they have to at least admit that the free market does too.
Thanks for the compliments. (:
cret:i dont know about pinkos claiming such. unless you use the pinko to have various meanings.
Trust me, they do. If you don't believe me, come to Detroit and we'll confront some of the Trotskyites (yes, that was purposeful) around here.
I remember watching that Mises video on youtube. Real wages have fallen and savers are harmed by the current monetary system. But if you look at things like real compensation and how many hours one must work to purchase basic necessities of life as well as household appliances, you'll find that living standards on the whole have risen. The reason for this is that the monetary system itself is just one factor in the whole economy. Our markets here in America are stronger than the inflationary forces the Fed creates.
Cal:OP: Couldn't a statist simply counter that those improvements in the standard of living occurred under a mixed economy, and so one should praise the mixed economy, not necessarily freedom? For example, there are farm subsidies, housing subsidies, etc. While we may understand that these gains are made despite government interference, people who are more ignorant of economics may see it as the opposite.
If a statist makes such a claim, then ask him/her how he/she thinks housing subsidies have lowered the price of household appliances relative to real wages.
Basically, you're saying that the statist claims:1. Government subsidizes x, y, and z.2. ???3. Goods a-z become more affordable.
Ultimately, like almost every argument made regarding economics, you have to fall back on theory. And theoretically speaking, there's no way that the statist could show that food subsidies (which mostly restrict food supply and subsidize only a small percentage of food crops) could consistently increase the affordability of food over the decades. On the other hand, there is a clear theoretical reason why capitalism can achieve increased affordability of goods and services: each business is profit motivated, so it invests in new capital equipment and technology in order to increase productivity (and thereby increase profits), which increases the amount of goods and services produced per capita, which makes said goods and services more affordable per person.
Great analysis. Thank you. Very illuminating.
At most, I think only 5% of the adult population would need to stop cooperating to have real change.
LvMIenthusiast: wilderness: So this means that capitalism is out-competing inflation government. Fix'd
nice
You know that says a lot! I mean a lot! That's packed full of information. No lie.
Finally a decent answer to the "stagnating wages" conundrum. I've been waiting for someone to address this one for a long time.
Marxists pwned, yet again. Good job!
How does this fit in with Hoppe saying in the Democracy TGTFailed that the U.S. has been degenerating economically ever since WW1 with only one upspike in the 1950's? I don't have my book as somebody is borrowing it but I can't remember what word he used exactly to described the economic degeneration. Whether the word was wealth or standard of living or something else. Anybody remember that part in the book or could it explain what he was getting at in light of the OP here?
anybody? ^^^^^
It's possible Hoppe was just plain wrong. Many people fall into the trap of saying "oh, well in the good ole days..." when the "good ole days" really were everyone worked at relatively low-paid and labor-intensive manufacturing jobs the way many people in the third world work today.
"It has been well said that, while we used to suffer from social evils, we now suffer from the remedies for them."
F.A. Hayek, The Constitution of Liberty
Actually, Benjamin, if you actually look at the graphs I posted (in other words, if you don't just spout out your left-wing talking points and actually look at the facts), then you'll discover that housing and food costs have fallen. In contrast, medical care and education are heavily regulated and subsidized by government. The result is low supply and high demand. Such amazing interventionist failures should not be surprising.
That said, I agree that it totally sucks that sometimes you don't want health insurance or pensions or other benefits but get them anyway. For that, you can thank unions and government for structuring tax incentives and labor regulations in such a way that it becomes more profitable for businesses to provide you with health insurance or pensions instead of just giving you the money via higher wages.
is an older and more injury -sickness prone population growing faster then medical technology that can reduce health care costs?
well...there is the usda, and lables on textiles, consumer product safty commission, etc. i dont know the effects of those bureaus though.
How do they come up with falling wages?
A very encouraging post, my only question is exactly how are real wages calculated and is that figure 100% accurate?
... just as the State has no money of its own, so it has no power of its own - Albert Jay Nock
My mistake, I wrote wages but I mean prices in general, as in how can you exactly compare the price of 1905 apples with 1990 apples. Can we be certain that this measurement is accurate?
Directly contradicted by the facts:
Does "income" include benefits in the study you posted?
Not bad charts at all. But I have a source that contradicts our rising standards of living:
http://www.waronthemiddleclass.com/GovernmentDebtReport.htm
Yeah, because only an Economics Illiterate would fail to include the average number of wage earners and average household size in a chart illustrating median income per house hold member. Because it's not like having the number of wager earners going up steadily over the time period covered in the chart would skew that data. Oh, wait, of course the median income per household member would go up steadily during a time period where the median household goes from being a one income family to being a two income family. Add to that the decreasing size of the average family (lowering the number of household member to divide that income by) and of course the chart will appear to show a steady increase, in spite of stagnate or slowly declining real wage.
There is a similar problem with the wages+compensation charts, failing to include what percentage of that "compensation" is actually going to things like health insurance paints a misleading picture. According to the "compensation" model I have received over $100,000 in healthcare coverage in the last decade, Wow, so my two physicals have cost over $50,000 each. I'd rather have the cash, because "compensation" doesn't let me afford a home in decent school district.
<blockquote>Add to that the decreasing size of the average family (lowering the number of household member to divide that income by) and of course the chart will appear to show a steady increase, in spite of stagnate or slowly declining real wage. </blockquote>
The chart above shows median appliance ownership, not real wages. What it shows is that the purchasing power of people's wages have actually increased for those products that are not heavily regulated by the State.
<blockquote>According to the "compensation" model I have received over $100,000 in healthcare coverage in the last decade, Wow, so my two physicals have cost over $50,000 each. I'd rather have the cash, because "compensation" doesn't let me afford a home in decent school district.</blockquote>
It means you did not have to spend that money yourself, that's all. If you prefer the cash, change the way you work - become a contractor. Well, except that now everybody will be made at bayonet point to buy health care insurance but that's what happens when one loves the State more than oneself.
To add on to what Old Mexican said, if you have a problem with non-monetary compensation, take it up with the government and unions which subsidize and mandate such non-monetary compensation like health insurance.
"for more than 20 years the living standards of middle class americans have steadily declined, incomes have remained flat or fallen and the opportunities and security we once took for granted have began to fade. for most families on income no longer pays the bills, it requires two or more incomes to afford a home, pay medical and child expenses, and put children through school. unless present trends change young workers are unlikely to live as well as their parents. good jobs with a future are harder and harder to come by, education doesnt count for what it once did, taxes continue to rise while social security is going bankrupt, private pensions are NO LONGER relaible, economic volatility and uncertainty are on teh rise,
politicians espouse nyumerous theories about teh cause the cause of these economic woes, seldom however do these officlas look below the surface, the roots of our economic ill can be traced t ocentral banking and our present monetary system"
is this message drastically differnt than teh alleged pinkos and mysterious real wage declines??? does teh above message use govt data different than the pinkos???
Don't quote me on this, but on LRC I think either Peter Schiff or Gary North had written an article outlining how the standard of living had increased in spite of further government regulation. Basically, a free market is hard to put down all at once and while some parts of it still thrive then the standard of living could still increase, just not to quite the same degree it would in a complete free market system.