I have heard some economic debaters claim that the living standard of the majority of the population in many western countries (also before the present crisis) are lower than it used to be in earlier times. Is this true?
Could you be more specific?
To paraphrase Marc Faber: We're all doomed, but that doesn't mean that we can't make money in the process. Rabbi Lapin: "Let's make bricks!" Stephan Kinsella: "Say you and I both want to make a German chocolate cake."
If by earlier times you mean 2 years ago, then there might be something to it, but it still wouldn't be very significant on a long time frame. I'm guessing they're talking about a generation ago, or even longer. That is clearly false if you just look around. More specifically, look at consumption including goods that were not available in the past, not just income.
According to the Grandfather Economic Report, the average American's standard of living has not budged for the last 35 years when adjusted for taxes and inflation. Actually the upper teir has seen their living standard go up sharply during that time, but the rest have suffered - particularly the lower class. What has gone up during that time is our ability to take on an enormous amount of debt. That gives a false impression of accumulted wealth.
http://mwhodges.home.att.net/family_a.htm#saving
asusenior: According to the Grandfather Economic Report, the average American's standard of living has not budged for the last 35 years when adjusted for taxes and inflation. Actually the upper teir has seen their living standard go up sharply during that time, but the rest have suffered - particularly the lower class. What has gone up during that time is our ability to take on an enormous amount of debt. That gives a false impression of accumulted wealth. http://mwhodges.home.att.net/family_a.htm#saving
Standard of living is more than taxes and inflation. It is impossible to measure "standard of living". Standard of living includes technological advances. Automotive, camera, computer, and machine technologies are much more advanced today than they were 30 years ago, let alone all the advances in inventory control and cost control we have learned.
At most, I think only 5% of the adult population would need to stop cooperating to have real change.
I could tell right away that is flawed because it starts out talking about household income instead of per capita.
No, it is a complete falsehood. You can't claim that living standards are falling when the people, even the poor, are buying more TV sets, more cars, more computers, etc. People who are living worse lives cannot afford more of such products. The problem with these so-called political experts who claim that living standards have been falling is that they have not looked at the impact of technological advancement - they only look at price inflation vs. wage increases. Obviously, real wages can fall while living standards rise due simply to the expansion of products that improve life.
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asusenior:According to the Grandfather Economic Report, the average American's standard of living has not budged for the last 35 years when adjusted for taxes and inflation. Actually the upper teir has seen their living standard go up sharply during that time, but the rest have suffered - particularly the lower class. What has gone up during that time is our ability to take on an enormous amount of debt. That gives a false impression of accumulted wealth.
That's absolutely wrong, they're measuring gdp per capita in real terms, or so they think. The standard of living is much higher now for everyone relative to the 70s.
"If we wish to preserve a free society, it is essential that we recognize that the desirability of a particular object is not sufficient justification for the use of coercion."
Well, I herd the other day that the standard of living has fallen since the 70's. Is this true?
Today both husband and wife have to work to keep up with the mortgage and other costs of living. In the 70's the mother stayed home and took care of the kids.
As for all the new material things that have been developed since the 70's, sure we got more today. But can we afford it? Most people are broke, whereas in the 70's they weren't.
Also compare the wealth and standard of living in the 70's compared to the 40's and then 2010 to 70's. Yes we have advanced a lot since the 70's, mostly in the area of cell phones, internet and automobiles, but we probably saw as much advancement between the 40's to 70's also.
IMO, I believe the internet and cell phones have revolutionalized the world. The internet being perhaps one of the greates inventions comparable to the automobile, airplane, telephone and electricity. I can't compare the specific technologies that were developed between the 40's to 70's. I wasn't around before the 70's.
bearing01: As for all the new material things that have been developed since the 70's, sure we got more today. But can we afford it? Most people are broke, whereas in the 70's they weren't.
What makes you think most people are broke? Because someone on the news lost their house?
I'll dig up the link later but it was a bit different.
It simply said that, given the nature of the present depression, living standards are bound to slowly decrease in the long run. Why?
Because welfare states, facing shrinking revenues and ever increasing expenditures, will either cut "services" they supply or increase taxation, bringing about less disposable income. Because consumption has increased too rapidly in recent years, funded by criminal economic politics. Because enterprises have come to rely too much on cheap credit instead of good old style capital accumulation, not to mention downright handouts from governments. Last but not least people have become much less self-reliant than they once were: they've come to expect the government to help them out continously, no bar that, they've come to believe to be owed by the government big time.
The Roman Empire faced exactly the same problem: people didn't wake up in Rome one morning to find the Goths runsacking the place and paupers starving in the streets. It was a very long and slow slide which lasted more than two centuries and European standards of living only started to recover after a thousand year.
Kakugo:The Roman Empire faced exactly the same problem: people didn't wake up in Rome one morning to find the Goths runsacking the place and paupers starving in the streets. It was a very long and slow slide which lasted more than two centuries and European standards of living only started to recover after a thousand year.
The fall of the Roman Empire was a good thing for Western Europe in the long run, despite initial social upheaval. It led to decentralization of power, elimination of slavery (and later serfdom), more sound monetary policy, vigorous trade and more incentives to find labor and cost saving methods of production that led to the industrial revolution. As for the standards of living, you can find prosperous societies even during the Dark Ages. If only the federal government went the way of the Roman Empire...
If I hear not allowed much oftener; said Sam, I'm going to get angry.
J.R.R.Tolkien, The Lord of the Rings
>>What makes you think most people are broke? Because someone on the news lost their house?
Because the savings rate is near zero and most people have tens of thousands of dollars of credit card debt. There is too much debt right now. People used debt and/or home equity as their bank machine to finance their standard of living. Because they thought they had appreciating asset prices they did not feel it necessary to save. Just cash out the equity, taking on bigger loans, to finance their life. All because their asset prices were rising during a bubble. When you have debt and no savings you are broke.
bearing01: >>What makes you think most people are broke? Because someone on the news lost their house? Because the savings rate is near zero and most people have tens of thousands of dollars of credit card debt. There is too much debt right now. People used debt and/or home equity as their bank machine to finance their standard of living. Because they thought they had appreciating asset prices they did not feel it necessary to save. Just cash out the equity, taking on bigger loans, to finance their life. All because their asset prices were rising during a bubble. When you have debt and no savings you are broke.
Not necessarily, because that doesn't account for peoples' net worth (assets). The savings rate is measuring a flow.
Savings are not just in dollars. Investments like stocks and bonds or gold/silver are also savings. Those things don't really buy themselves (except for compounding or dividens). You have to forego consumption in order to buy them. That's saving.
Edit: When stocks or bonds yield an investment return/dividen/coupon, that is income. You can consume it or reinvest/save it. Reinvestment is not consuming. It's saving.