Economics

Isn’t great to be alive today? Time to buy labor saving devices is really low, or, average people are getting richer

Mark J. Perry compares how long it takes to buy an electric kitchen oven in 1966 versus what you could buy today for the same number of hours of labor.  See his visual illustration at Living the Good Life:  The Good Old Days Are Now.

He translates the cost of an oven in 1966 into the number of hours labor needed to buy it at the average hourly wage then. He figures out the average hourly wage today and figures out what home appliances could be purchased for the same number of hours work.  The cost reductions are amazing.

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Jim Ulvog

Unintended consequences – – how much harm can doing good cause?

What in the world is Swedow?

In writing about GIK and deworming meds, I’ve learned some fancy words, like Albendazole, Mebendazole and Swedow.  I’ve also started reading discussions in places I usually don’t go.

For example, Good Intentions are not enough is a great blog written by Saundra Schimmelpfennig.  She has lots of posts about the complexities of doing foreign aid well.

While visiting that site, I read a guest post by Juanita Rilling:  Compassion on Sale. 

She has a sobering discussion of the unintended waste of sending drinking water as part of humanitarian relief. (more…)

Jim Ulvog

Isn’t it great to be alive today? Christmas 1964 shopping list edition

Mark J. Perry at Carpe Diem often uses a delightful formula that consistently makes me thrilled to be alive today.

General formula is this:  You could have bought item X in whatever year. For the same amount of inflation adjusted dollars or same hours of labor, today you could buy X, plus Y and Z, along with A, B, C, D and E.

His post yesterday, The Magic and Miracle of the Marketplace: Christmas 1964 vs. 2011 – There’s No Comparison, has cool pictures from the 1964 Sears Christmas Catalog.

One of those really cool, great big, color TV consoles that takes up an entire wall could be had for $750 back then.  Adjusted for inflation, that would cost you $5,300 in 2010.  What could you buy today for inflation adjusted $5,500 today? His shopping list:

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Jim Ulvog

Rap video on government distortions of supply and demand

Check out Supply & Demand: A Thug Story

Government interference with the pricing mechanism produces shortages which are resolved by non-price mechanisms: discrimination, waiting lines, rationing, black markets, or favoritism.  Markets messed up?  Look for government messing with price signals to find the cause.

[youtube=http://www.youtube.com/watch?v=7MY7E_VhKMM&feature=player_embedded#t=149]

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Jim Ulvog

Q: Why does it feel like the economy hasn’t recovered yet the stats say it has?

A:  Doing more with less.  In other words, increased productivity.

On one hand, the unemployment rate continues very high, which means there are lots fewer people working.  On the other hand, GDP has just passed the peak from before the recession, which means the size or value of the economy has recovered.

Check out this picture – (more…)

Jim Ulvog

Maybe no double dip recession? Initial release of Q3 GDP number is good news.

GDP numbers announced last week show 3rd quarter growth at 2.5% rate. Wow.

That is not exactly the kind of growth you would expect if the economy were starting to falter in advance of slipping into a double dip recession.  Maybe we are not going to slip into a double dip. I discussed this idea earlier.

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Jim Ulvog

I have lots of servants helping in my home and business

After reading some comments in Russell Roberts’ book, The Price of Everything, I realized that I have a lot of servants hard at work in my home.  I have a huge number of servants working in my business.

See a partial list of servants who are hard at work at my other blog, Outrun Change:  I Have Dozens of Servants in My Home and Business.

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Jim Ulvog

Is it possible we are not heading into a double dip recession?

While out for a walk yesterday morning, I noticed construction at the strip shopping center near my home. Wood frame in just about done.

New construction?  In this economy?  That isn’t supposed to be happening, right?

I looked around the strip center.  I counted 11 out of 26 small shops that are empty.  The two large spaces and one medium-sized space are filled.  That is a rather high percentage of vacant space.  Yet this piece of new construction is large enough for three small shops.

Someone is optimistic enough about the economy to put their money on the line.  Hmm.

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Jim Ulvog

Video of purchasing power in 1975 and today

Want to see a video comparing how many hours of labor needed to buy things from the 1975 Sears catalogue compared to today?

Check out this post by Cafe Hayek, Greatly Stagnating?, for a link to video prepared by Fred Dent. 

My little bitty contribution to the discussion of how much technology 90 gallons of gasoline will buy when I was in college versus now, is located here. (Hint: basic calculator then and bottom of the line laptop computer today.)

Jim Ulvog

It’s better to teach someone to someone to fish, but if you’re just going to give someone fish, at least you shouldn’t poison the village lake

The Apparent Project Blog explains the serous unintended consequence of giving help in Haiti while ignoring the economic context in their post Peanut Butter and Shelley.

Those of us in the West desperately need to understand the culture, economy, and local situation when we want to move cross-culturally. We can provide wonderful blessings but can cause harm without intending to.

I’ve discussed this in other posts: Does humanitarian aid actually help and how do we know? along with Cross-cultural partnerships.

Back to the situation in Haiti.

Some churches in the US are trying to help the hungry in Haiti by shipping huge quantities of peanut butter. Sounds like a great way to help since it is a superb source of protein – as good as pork for nourishment.

What do you think happens to the local economy if peanut butter and pork are major products? It can seriously disrupt the economy.

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Jim Ulvog

Teen’s purchasing power from working for the summer in 1952 and 2011

What could a teenager working minimum wage 60 years ago buy with his summer earnings compared to now?

Mark Perry has a calculation at his blog Carpe Diem: Young Americans: Luckiest Generation in History:

Here is the short version:

1952 after working for the summer, a teen could buy:

  • Typewriter
  • Phonograph
  • 17” TV

2011, after working the summer, a teen could buy the functionally equivalent items as 1952:

  • Laptop & printer (if you can call that comparable to a typewriter)
  • Ipod,
  • 32” HDTV, blue-ray player, home theater system (just a tad bit more than a 17” TV, but still comparable functionality, sort of)

Plus in 2011 our hypothetical teen still would have enough money left over at the end of the summer to buy some bonus stuff on top of matching types of things from 1952: (more…)

Jim Ulvog

I can’t think of a better time to be alive. Or, is the middle class better off today than in 1975?

Don Boudreaux has a fantastic PowerPoint presentation posted at Café Hayek:  Stagnating Middle-Class? It is from a presentation he gave at Cato University.

He opened up a 1974/1975 Sears catalogue. He then calculated how many hours a person would have to work to buy something in 1975 compared to buying a similar item today.

To make the comparison he obtained the hourly wage of an average non-supervisory employee in 1975 and the same average wage today. Those average wages are $4.87 in 1975 and $19.00 today.

For example, in 1975, a 35mm SLR camera, pretty nice for back then, was $347. That is 71.3 hours work for an average worker. In contrast, a Nikon Coolpix 12.0 mp camera today is 4.8 hours of labor.

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Jim Ulvog

Space shuttle as illustration of opportunity cost and cul-de-sac

How to combine the idea of opportunity cost, cul-de-sac, and government overruns in one post?

Yesterday’s Wall Street Journal editorial (behind paywall) says:

When it was first conceived, the shuttle was supposed to be a kind of space truck, going into orbit 50 to 75 times a year and carrying large payloads at a cost of $54 million a launch in 2011 dollars. It didn’t work out that way. The shuttle went aloft an average of five times a year. The cost-per-launch averaged some $1.5 billion. Its heaviest payloads barely exceeded what an unmanned Delta IV rocket can carry.

Let’s do some math, shall we?

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Jim Ulvog

“If you care about improving people’s lives, then you really care about economic freedom”

How do we make life better for people?

Is there a relationship between the level of economic freedom in a country and the level of income, life expectancy, civil rights, and a cleaner environment? Is there an inverse relationship between the level of economic freedom and the level of corruption, infant mortality, and child labor?

The answer to both questions is yes.

The higher the level of economic freedom is in a country, the higher the level of those good things.  With more freedom there are less of those bad things. See this very innovative, creative video, from the Charles Koch Foundation, for a visual explanation:

 [youtube=http://www.youtube.com/watch?v=v1U1Jzdghjk&feature=player_embedded]

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Jim Ulvog