Core CPI, etc.

Want to announce again our First-time Homebuyers' Seminar (not just for first-time homebuyers) coming up November 9. Best 2 hours of financial/real-estate advice you'll get, or your money back. Oh, right. It's free. But you have to RSVP, and last I checked, spots were not exactly going begging. I think we still have some seats...

A couple of weeks ago, a study was released that essentially said that over the last 30 years, the average American worker's pay improved by only 4% after adjusting for inflation. Now, first off, I don't know why that's an indictment of the capitalist system, such as it is in America, unless you want to go back and say that most folks were in the poorhouse 30 years ago. They weren't. But secondly, and far more importantly, this number is completely laughable, so divorced from reality as to be irrelevant to anything.

Let's just cut right to the chase, shall we? Here's the question: if I could, would I take a 5% pay cut to go back to 1976? How about a 10% raise? 20%?

And of course the answer is under no conceivable circumstances. Let's say that in inflation-adjusted dollars, the average American had $200 a month of disposable income in 1976. What could he buy with it? Um...books. Records (vinyl ones). Stereo equipment. Sporting goods (although not very high-quality goods). He can forget about leasing a car, since that wasn't invented yet. He can't fly, even domestically, anywhere. Too expensive. No CDs, since they don't exist. Can't open a brokerage account; that takes more money than that. No VCRs (for those that remember those) - in 1976, a VCR was over $1000. By the early 1980's, he could go to Erol's and rent a VCR along with his tape, if he wanted. $25 a crack (of course, he can buy a perfectly good VCR now at any pawnshop for $10 - or $2.76 in 1976 dollars). DVD? No, don't make me laugh. Music selection is also dramatically reduced by local-store availability. Nobody could download every song ever sung by any artist for 99 cents, because iTunes wasn't around. No Walkman, no computers, no Internet.

According to my wife and I, who were very interested in this project, something like 90% of the things we do every day were impossible, right down to getting a glass of water out of the fridge door. To say that I am 5% better off now than my father was in 1976 is certifiable. Even the lowliest backwater in the US has more wealth in terms of magical gadgets and freedom to acquire more of them than the richest man on earth did even fifteen years ago. We eat better. We live longer. We have more leisure time - FAR more leisure time, which itself is easier to consume in tiny bits here and there (YouTube at work? Anyone? That strike you as possible in the world of Dirty Harry?).

So when we start talking about economics here, and we do that from time to time, and we start waxing rhapsodic about how good things are, just remember - we're right.

Tomorrow, though, we'll consider the flip side of this coin - so we have all this stuff. Are we happier?