Augustan America

Last weekend I had granite countertops installed in my kitchen.  The old Formica counters that I had installed back in 1997 were warped near the stove, water damaged near the sink, rusty, peeling, etc.  I never realized how materialistic I was until I saw those sleek dark granite slabs.  It almost makes washing dishes enjoyable.  Now I like to just stand and look at the counters, run my hands over the surface.  Like those cavemen in “2001,” examining the sentinel.

Augustus said; “I found Rome a city of bricks, and left it a city of marble.”  (He didn’t know that marble absorbs stains.)

I grew up in a Formica America, and will die in a granite America.  When younger economists claim that the real median income in American is no higher than in 1970 I just shake my head.  I’m old enough to remember what America was like in 1970.

PS.  When I retire I hope I can say; “I began working in a profession obsessed with inflation, and retired from a profession obsessed with NGDP growth.”  Yes, delusions of grandeur, but at least I’m not expecting a month to be named after me.

PPS.  Don’t know if they have Formica in other countries—it’s a sort of plastic laminate.

PPPS.  My house is brick, not marble.

PPPPS.  Yes, granite is very durable, which makes it investment . . .

. . . and of course saving too!


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53 Responses to “Augustan America”

  1. Gravatar of Jim Crow Jim Crow
    9. April 2013 at 18:49

    This reminds me of one of those nagging problems I’ve always had with inflation as a concept and a target. You always warn people to never reason from a price change. But lots of goods and services can get better or worse without noticeable changes in prices. And that includes commodities. How exactly does the ‘taste’ of something show up in hedonic modeling? Can’t always reason from a lack of price movement, either.

  2. Gravatar of Greg Hill Greg Hill
    9. April 2013 at 18:49

    Well, I used to surf uncrowded beaches in California in 1970, and although I can fully appreciate the beauty of contemporary countertops, I wouldn’t have traded uncrowded waves for the new tops. But that’s just me.

  3. Gravatar of David R. Henderson David R. Henderson
    9. April 2013 at 19:27

    Nice post, Scott.

  4. Gravatar of Benjamin Cole Benjamin Cole
    9. April 2013 at 19:40

    Greg-

    You should have seen the surf in 1960—but also polluted. The water was grey, not blue.

    Still, the 1960s saw real per capita incomes rise by more than 30 percent, despite population growth. It was a terrific decade.

    That means the average guy saw his real wages go up by perhaps 50 percent in the decade. Why? An average guy was say 23 at start of decade, and then 33 at end, so he migrated to better jobs or night school etc. Life got better and better, rapidly.

    The sense of real income growth was palpable in the 1960s. No one I knew sniveled about inflation popping above 5 percent in 1969. It was boom times baby, Fat City. You got a job by applying for one.

    Do we live better now? I think so, but in the 1960s almost anyone with a job could buy a nice house in Los Angeles. That may be true today, but only of the Midwest.

    Back in the 1960s, the schools were good.

    The air pollution was horrible though–lungs and eyes would sting in the smog, which was a visible blanket, even looking down one city block.

    Still, I know few people who grew up in the LA area in the 1950s-60s who were able to duplicate the living standards of their parents if they stayed in L.A. Housing and medical care and schooling had become so much more expensive. I think the same thing happened in NYC.

    But maybe if you live in Midwest, or upstate NY, it is better than ever. LA-NYC is not the whole nation (apologies to that famed New Yorker cover).

    But I will say this: The optimism of the 1960s, up until near the end (lost due to the horrible V. war, riots, and assassinations), is something I will miss the rest of my life. It was just getting better and better all the time. For people who had jobs.

  5. Gravatar of Neal Neal
    9. April 2013 at 20:36

    Gee, I wish I could afford to drop $750 on granite countertops for my kitchen out of my higher-than-median wages.

    (http://www.lowes.com/Search=granite+vanity+top?storeId=10151&langId=-1&catalogId=10051&N=0&newSearch=true&Ntt=granite+vanity+top#!&N%5B%5D=0&N%5B%5D=1z12gbw)

  6. Gravatar of Liberal Roman Liberal Roman
    9. April 2013 at 20:56

    I found this photo expose of America in the 70s pretty cool:

    http://www.theatlantic.com/infocus/2011/11/documerica-images-of-america-in-crisis-in-the-1970s/100190/

  7. Gravatar of Benjamin Cole Benjamin Cole
    9. April 2013 at 20:59

    OT, but worth applauding: “Sadomonetarism,” a word coined by Krugman.

    I disagree with Krugman often, but he is clever.

  8. Gravatar of Rob Rob
    9. April 2013 at 21:43

    I would have gone with the internet or phones, I don’t know too many people that aren’t fairly affluent that possess marble counter-tops, but almost everyone has a smartphone and an internet connection, these things really change the way day to day life is lived. But it is definitely true that while CPI and the GDP deflator are okay estimates of inflation year to year their errors(most specifically not taking into account quality or having a good way of dealing with new goods) significantly compound when looking over any significant time horizon. I am not sure why so many professional economists are so reliant on aggregate statistics like GDP and inflation measures when their flaws are so well understood. To be clear I am not saying they are useless just that they always need to be approached and interpreted with caution, and too many world class economists seem to take them as biblical truth.

  9. Gravatar of Jim Glass Jim Glass
    9. April 2013 at 22:00

    When younger economists claim that the real median income in American is no higher than in 1970

    It’s not median income that matters (nor GDP) it is consumer surplus.

    Consider the consumer surplus in Google versus paying $1,000 (somebody’s income and counted in GDP) for a set of Encyclopedia Britannica and having to thumb through the volumes hoping they had what you wanted in a useable form, etc. Assuming your copy wasn’t years old and out of date. And that you’d spent the money to have one at all. But how much does Wikipedia contribute to national income and GDP?

    What is the consumer surplus in a smart phone compared to an old rotary phone? We know that people would pay over $1,000 plus $5 a call for the early cell phones that were the size and weight of bricks and only made phone calls, because they *did*. Geeze, think of how much per piece the *military* would have paid for today’s smart phones in the 1980s. But how much more does the production of phones today add to national income and GDP than did the old AT&T phones? I’d say the ratio of that number to the consumer surplus they produce has plunged.

    Consumer surplus is the great overlooked number in economics. I am sure that GDP and income numbers are understating it by more and more continually.

    I mean, just look at how life expectancy — and more than that, *expectancy of healthy years is old age* — has grown just since the 1980s. That is a result/reflects the growth of consumer surplus, but where is it seen in income/GDP numbers? What’s the consumer surplus in living each extra year of healthy life?

    A person was complaining to me the other day about a new drug that for the first time saves lives of those with particular ailment, saying it costs far too much. A new drug that saves lives for the first time is a setback, a sign of the failure of our times? I told him, hey, if the drug is really too costly so saving those lives isn’t worth it then just don’t save them. That’s a free choice and nobody will be the worse off for it. It’s that simple. Because when you have a new voluntary option it can only make you better off, since if it doesn’t you choose not to exercise it and are no worse off than before. So how can the new drug really cost “too much” in terms of being a setback, failure of modern society? If it’s not worth it, just don’t use it. If you choose to use it, *it is worth the cost*, certainly to you, for you believe using it and paying for it makes you better off than not doing so.

    Anyhow … IMHO, consumer surplus is leaving income and GDP behind as a measure of economic advancement, being ever more grossly understated by them, and the fact is being sorely neglected, simply because consumer surplus can’t be tallied up directly in dollar amounts like wages, profits, GDP.

    What is easiest to measure, and has always been measures, is what get measured, regardless of its importance.

    And this is all besides the fact that all the claims about income not increasing since 1970 are bogus on their own terms when you look at them.

    The only way life can be not hugely better than in the 1970s is in the imagination of people who weren’t there.

    Look at re-run sit-coms from then, like All in the Family, and the life they reflected. I just saw one, the rotary phone rings with a person-to-person call for “Joe”, Mike tells the operator Joe’s not there, hangs up then chortles ‘message delivered’ that was a ploy to beat the person-to-person charge. And an argument about the ethics of stealing from the AT&T telephone monopoly breaks out.

    But things haven’t advanced since then, because “income is the same”, right? If you believe so, use your smart phone to post a comment supporting your case here, after using your smart phone to look up and watch the episode to get the facts of the show straight.

  10. Gravatar of To To
    9. April 2013 at 23:02

    I’m not sure the median American household can typically afford granite countertops. Maybe on credit…

  11. Gravatar of TravisV TravisV
    10. April 2013 at 02:06

    Hmmmmm

    “The Japanese Bond Selloff That Everyone Is Talking About”

    http://www.businessinsider.com/chart-of-the-day-japanese-30-year-bonds-2013-4

  12. Gravatar of Phil Phil
    10. April 2013 at 03:18

    Trading in jgb futures suspended after yields soar. Looks like you we’re right just took the big players a few days to work it out.

  13. Gravatar of Geoff Geoff
    10. April 2013 at 03:39

    “PPPPS. Yes, granite is very durable, which makes it investment . . .”

    I guess Twinkies and canned soup intended to be eaten, because they are very durable, are investments as well.

  14. Gravatar of Justin Irving Justin Irving
    10. April 2013 at 03:55

    But do your home improvements necessarily conflict with stagnant median wages/income? You have a PhD from Chicago and as you say have saved a lot. How has the kitchen of say…a bricklayer evolved?

    I hear that in the 70s one could put oneself through college (rent and tuition) waiting tables or other assorted nonprofessional work. Likewise, people raised families *without transfer payments* in respectable homes with blue collar salaries. Both would be fairly tricky propositions today.

    It seems to me that while the median worker has benefited from cheap computers and imported clothes, housing and education costs have at least dampened these benefits.

  15. Gravatar of The Line Between Saving and Consuming Is Pretty Blurry | squarelyrooted The Line Between Saving and Consuming Is Pretty Blurry | squarelyrooted
    10. April 2013 at 04:04

    […] Scott Sumner, lingua in bucca, swapped Formica for granite countertops and writes: […]

  16. Gravatar of ssumner ssumner
    10. April 2013 at 04:42

    Thanks David.

    Ben, I agree that living standards were improving more rapidly in the 1960s.

    Neal. They cost far more than $750!

    Rob, A friend told me that after he installed granite countertops his maid told him that she already had them in her house. I’m sure we are still far from a majority, but things are definitely trending toward granite.

    Jim Glass, As you know, I completely agree about the worthlessness of inflation data.

    To, They can afford them (most Americans have cars, which are far more expensive), but they certainly don’t have them.

    On the other hand I’m not dead yet!

    Thanks Travis and Phil. Looks like I should stop believing in the EMH—and get rich.

    Geoff. They certainly are until they are eaten, but most people eat them, er . . . consume them.

    Justin, You are wrong, take a look at the post I linked to in this post.

    You said:

    “I hear that in the 70s one could put oneself through college (rent and tuition) waiting tables or other assorted nonprofessional work. ”

    You heard wrong. I worked my way through college and grad school. Now most students getting PhDs get big aid packages. I got almost nothing (a total of $1000 over 3 years)

    Labor force participation among the young is dropping.

  17. Gravatar of ssumner ssumner
    10. April 2013 at 04:43

    Liberal Roman, Those bring back memories.

  18. Gravatar of Philo Philo
    10. April 2013 at 05:31

    Why settle for a month? Haven’t they named a whole season after you? (Sumner … summer …)

  19. Gravatar of interfluidity » A bit more on savings and investment interfluidity » A bit more on savings and investment
    10. April 2013 at 06:01

    […] Roth (1, 2), Scott Sumner (1, 2, 3), Bill Woolsey, and Matt Yglesias have been debating questions of saving versus investment and […]

  20. Gravatar of Doug M Doug M
    10. April 2013 at 08:21

    My ex-wife the interior designer would tell you not to get Granite. Granite is on its way out, and in a few years your Granite counter-tops will look as dated as avocado green appliances. She is exagerating, she does that.

    The trendy materials are quartz, glass, composite, and concrete.

    There are people who get mable because it stains. Or more precisely, they like they way it weathers.

    But, is your purchase an investment or is it consumption? Is the purchase of a house an investment or a luxury? From an economic point of view, an investment is something that improves your productive capacity.

    From a finance point of veiw an investment is something that you expect to geterate a return over time. I have advised people to not think of a home purchase as an investment. A house you rent is an investment. A house you live in is not. It is impossible to monetize your investment unless you move out. And then, where are you going to live? That doesn’t mean that I am against buying houses, they are just not investments.

  21. Gravatar of TallDave TallDave
    10. April 2013 at 08:27

    I never realized how materialistic I was until I saw those sleek dark granite slabs

    Haha, there’s nothing quite like a giant hunk of polished Gaia flesh 🙂 That was actually one of the major issues when we were house shopping — I find most varieties of granite to be aesthetically unacceptable and I wasn’t going to pay another $20K to redo them.

    Back in 2004, before I bought my last townhouse, I would go to Home Depot every couple weeks and drool over the Blue Pearl, drove my gf nuts. They’re the only thing I really miss about the townhouse (my new house actually has about twice as much granite in the kitchen, but a different kind, which I still like but not quite as much).

  22. Gravatar of TallDave TallDave
    10. April 2013 at 08:30

    Best things about granite, btw — absolutely impervious to heat and virtually scratchproof. It makes every surface a cutting board and you never have to worry about a pan being too hot.

    Just don’t use harsh cleansers on them, that’s about the only thing that will damage them. Dishsoap, or just water.

  23. Gravatar of Bill Ellis Bill Ellis
    10. April 2013 at 08:56

    … “Sadomonetarism”… I love the term too. But Krugman ( who I also love ) got it from some English dude.

    … Granite may not be the next “it” thing… but it never goes out of style.
    We have had Granite for about 15 years and it is still like new. The only thing other than Granite I might recommend is those new composites made from recycled Glass and such. Some are very pretty and they are “supposed” to be as durable as Granite… and they are less expensive… Time will tell.

  24. Gravatar of Justin Irving Justin Irving
    10. April 2013 at 09:31

    Scott. The typical undergrad does not get a big aid package. ~$20k in debt is the mean; $50k is common for a Northeast state school. Point is, getting a diploma from a real school w/o meaningful debt is contingent on aid, it is not possible to pay for college through wages for most students. It was in the 70s, even if the dorms were inferior, you could buy a ticket to the middleclass waiting tables.

    I don’t see how your linked post answers the question of the bricklayer’s kitchen. People who can program SQL or use a Bloomberg terminal are doing well, but when was the last time you saw the counter tops of a refrigerator repairman? How many hours would a high school grad need to work to pay for a modest house with a backyard in 1970? How many to pay for a child to get a degree from a ho-hum state school? I’ll bet it would be fewer hours than today. Divide the median wage by NGDP, it is not a great time to be median, hardly a nightmare (iphones compensate) but the wage data mean something.

  25. Gravatar of Geoff Geoff
    10. April 2013 at 09:46

    Dr. Sumner:

    “Geoff. They certainly are until they are eaten, but most people eat them, er . . . consume them.”

    People who shop at Wal-Mart for canned soup, to be eaten at some future date, are “investors”?

    Don’t investors earn money profits or incur money losses? What money profits or money losses are associated with “investing” in a can of tomato soup?

    I suppose the most pertinent question is at what age does a good’s serviceable life have to end, for it to be considered a capital good, as opposed to a consumer good? Why that lifespan, but not a little older or younger? From where does that quantity of time arise?

  26. Gravatar of Geoff Geoff
    10. April 2013 at 09:53

    Also, if a good is an “investment” due to its durability (however that is defined), then does that mean materials that last only a short while in a production process, are not goods that are “invested” in by the producers who buy them and transform them into other goods? Those are consumer goods, not investment goods?

  27. Gravatar of Blackadder Blackadder
    10. April 2013 at 10:02

    Augustus was the guy who ended the Roman Republic, right? I realize you aren’t a fan of Congress, but still.

  28. Gravatar of Don Geddis Don Geddis
    10. April 2013 at 10:19

    @Geoff: You’re getting confused, because you’re trying to use a single word “investment”, which has multiple meanings in different contexts. You’re coming up with scenarios about individuals, and how ordinary people talk about, e.g. “investing in the stock market”.

    Obviously, on this blog, we’re talking about “investment” from a macroeconomics perspective, which essentially is at an aggregated national level on an annual basis. When the nation produces something of value, but doesn’t consume it (during the year). Where “S=I, by definition”.

    These two uses of the word are related, but not identical. You’re not doing yourself any favors, coming up with examples in some non-macro context, and then trying to complain “but most ordinary people would use the word here, to refer to this concept.” What you’re observing may be true, but it’s irrelevant. The answer is obviously that those people in that different context are using a different definition of the word, than we are here on this blog.

  29. Gravatar of Geoff Geoff
    10. April 2013 at 10:30

    Don Geddis:

    “Obviously, on this blog, we’re talking about “investment” from a macroeconomics perspective, which essentially is at an aggregated national level on an annual basis. When the nation produces something of value, but doesn’t consume it (during the year). Where “S=I, by definition”.”

    Macro phenomena are generated by micro phenomena. Investment in the aggregate only makes sense if you define and describe investment at the individual level.

    “These two uses of the word are related, but not identical. You’re not doing yourself any favors, coming up with examples in some non-macro context, and then trying to complain “but most ordinary people would use the word here, to refer to this concept.” What you’re observing may be true, but it’s irrelevant. The answer is obviously that those people in that different context are using a different definition of the word, than we are here on this blog.”

    I notice that every time you respond to my posts, you always try to argue that I’m wrong because I am not abiding by the “rules of this blog.” You do realize that this doesn’t do you any favors because it is tantamount to declaring that one cannot be regarded as wrong by anyone outside the “guild”?

    You ought to adopt a common standard that is applicable to all individuals, not just individuals on this blog. Sitting in your ivory tower or your dustry corner office and pretending that what is true in there, is true in the real world, is something that isn’t doing you any favors.

    You might as well say you’re not wrong because you’re of a specific race, or gender, or living in a certain location.

    I’m not going to concede on the weak basis you are presenting here. It’s not a rational standard you’re using.

  30. Gravatar of Bill Ellis Bill Ellis
    10. April 2013 at 10:33

    Scott says… I grew up in a Formica America, and will die in a granite America. When younger economists claim that the real median income in American is no higher than in 1970 I just shake my head. I’m old enough to remember what America was like in 1970.

    I am old enough to remember what America was like in the 70’s too. Yes we have more and better toys now. We eat way more Mac Donald’s too.
    Yeah Capitalism !

    But in the seventies (at least the early 70’s) ONE parent could work full time at almost any job (My dad owned a small bar. My father-in-law delivered potato chips. ) and still support a family… They could OWN a home.

    Now it takes TWO parents working to do the same. (Do median income figures factor that in… or are they based on Household income ? )

    Conservatives like to say it is all about choices. That a guy delivering potato chips could still support his family in our times if he would forgo the toys. Maybe so, but only in decaying America… Not on the coasts fer sure.

    I guess we could all be Amish too.

    Maybe it is all about choices… shifting priorities.

    As much as you like to point out that it is a mistake to confuse the individual with the aggregate, aren’t you doing the same here ? Aren’t you focusing on one anecdotal bit of info? Sure we have more toys… but we have less in other areas.

    In the seventies a collage education was damn near free in some states and affordable in all. In the Seventies medical cost were not as out of reach. Taking everything, the aggregate , in to account are we better off ?

    I guess the fact that all the gains in productivity since the seventies have shown up in the incomes of the elite, should not bother us because our stagnate income buys more entertaining toys?

    According to conservatives the awesomeness of the average guy getting better toys is his reward… his share of the gains in productivity.
    But don’t the elite enjoy the same benefits of better toys too ? Yet they get better toys AND all the gains in REAL income.

    I know some will believe that people like me are just jealous, (Me and Warren Buffet ) and that It has nothing to do with believing that too much inequity is bad for the economy and society.

    Honestly at the age of 51… Materially I have all I need… and I want almost nothing else. We own our home out right. We have a nice 401 k. We have had enough income to pay for our kids collage too ( for the last 7 years. One more year and we are FREE. ) Baring some complete economic collapse, my wife and I should have a nice modest standard of living for the rest of our lives… I am not jealous. In fact I am pretty smug.

    I want my kids to have the same opportunities … not just better toys.

  31. Gravatar of Geoff Geoff
    10. April 2013 at 10:34

    Don Geddis:

    The weakness of using a “macro” context to define concepts, as that “society” doesn’t invest. Individuals invest. Society doesn’t consume. Individuals consume. So when you think you’re talking about “macro increase in investment”, you’re invariably talking about individuals investing.

  32. Gravatar of Bill Ellis Bill Ellis
    10. April 2013 at 10:39

    Geoff, … “People who shop at Wal-Mart for canned soup, to be eaten at some future date, are “investors”?”

    Only in time of high inflation… right ? More example of how S=I is situational.

  33. Gravatar of TallDave TallDave
    10. April 2013 at 10:45

    TravisV– Interesting, perhaps the liquidity effects are beginning to give way to expectations of higher NGDP growth.

    Blackadder — OTOH Congress hasn’t stabbed Obama to death on the House floor.

  34. Gravatar of ssumner ssumner
    10. April 2013 at 12:58

    Doug, That’s a common mistake. A house is definitely an investment. It may or many not produce a positive monetary return (probably not in present value terms) but it is definitely an investment. I produces a flow of quite useful housing services each year.

    I consider the granite countertop to be an investment.

    BTW, I don’t care what others think is “in style”.

    Bill, I hate the term “sado-monetarism” as the views he described have nothing to do with monetarism. Why not call it “sado-Keynesianism?”

    Justin, Living standards have nothing to do with what Americans can “afford” it depends on how they live. And they live in more luxurious conditions than in the 1970s in virtually every way I can imagine. Perhaps they cannot “afford” it, but nonetheless their living standards are higher.

    You said;

    “People who can program SQL or use a Bloomberg terminal are doing well, but when was the last time you saw the counter tops of a refrigerator repairman?”

    I’d guess my refrigerator repairman lives in a nicer house than I do, based on what he charges per hour.

    Blackadder, That’s true, but then I never said I was a fan of his.

    Bill, In response I’ll refer you to the post I linked to.

    People do not work harder than in the 1970s, BTW, they work less hard. I work less hard than in the 1980s (other than blogging).

    You said;

    More example of how S=I is situational.”

    Yup, in exactly the same sense that 2+2=4 is situational. Or MV=PY, or C+I+G+NX =GDP.

  35. Gravatar of Geoff Geoff
    10. April 2013 at 13:16

    Dr. Sumner:

    “Doug, That’s a common mistake. A house is definitely an investment.”

    It’s not a “mistake” such that it is about right or wrong. Your criteria makes a house always an investment good. But that doesn’t make Doug “wrong.” It just means he has different criteria.

    According to your criteria, there are no such thing as consumer goods. Any “final” good, to the extent that it is “there”, in “inventory”, on a business’ shelf, or in someone’s basement, or fridge, or garage, then it is an investment good from the time it is held, to the time it is consumed (destroyed/used up).

  36. Gravatar of Geoff Geoff
    10. April 2013 at 13:24

    Bill Ellis:

    “Geoff, … “People who shop at Wal-Mart for canned soup, to be eaten at some future date, are “investors”?””

    “Only in time of high inflation… right ? More example of how S=I is situational.”

    Define “high inflation”. Do you mean only during times of inflation that is so high so as to make already purchased cans of soup rise in market price?

    Well, Dr. Sumner said the canned soup is an investment good because of its durability. You’re saying the canned soup is an investment good if it can be resold at a higher price.

    Your definition is closer to mine, because I define investment goods as goods that are purchased with the intention of making subsequent sales.

    Hence, canned soup you have in your basement, bought for the purposes of consumption, is a consumer good. That same canned soup in your restaurant, bought for the purposes of making future sales, is a capital (investment) good.

    I ground all my economic definitions on humans, not the physicality of goods. Defining economic concepts on the basis of the physicality of goods is, IMO, the same mistake as the mistaken tradition of ascribing value to goods based on their physicality. Just like value comes from us, namely our activity, so too do the definitions of investment goods, consumer goods, and other definitions come from our activity.

    The activity that makes a good an investment good is the activity of making future sales.

    The activity that makes a good a consumer good is the activity of not making future sales.

  37. Gravatar of Don Geddis Don Geddis
    10. April 2013 at 13:27

    Re: Standard of living. I also remember waiting in line at the bank for an hour on Friday afternoons, in order to deposit my payroll check. Now we have direct deposit and ATMs, and I haven’t talked to a teller at a bank in a long, long time.

    Surely I’m getting more quality of life per hour now, than then.

  38. Gravatar of Bill Ellis Bill Ellis
    10. April 2013 at 15:16

    Scott says… “People do not work harder than in the 1970s, BTW, they work less hard.”

    Sure, per person. But not per household. Households are working way harder.

    And that hard work is what has raised, by your anecdotal measures , our standard of living. It was not by sharing in any in any significant increases in productivity per hr worked.

    Direct compensation for labor has been divorced from productivity. Is that OK ?

    For those of us who got bigger houses, Granite counter tops, jet vacations to Disney World or Europe, more eating out at nice places, and slightly shorter work weeks… it was because Moms wanted to go out and work.

    Not because we got raises. Not per worker.

    So a laborer’s compensation for the increase in productivity has been limited to enjoying the positive externalities of it. Things like better tech, and more choice in entertainment and information.

    That people should be content with the positive externalities of the economic activity they are an integral part of… Seems kinda like Feudalism. Maybe that is just my liberal brain talking.

    I did read the link by the way… Did not agree with it… but loved it.
    Some really nice turns of phrase.

  39. Gravatar of Morgan Warstler Morgan Warstler
    10. April 2013 at 17:06

    I just want to REMIND EVERYONE:

    If we we’re auctioning the unemployed, the cost of granite counter tops, or more beautiful and less costly, stained concrete, and even less expensive but far less expensive spreadable stone, all becomes accessible to the median wage earner.

    http://www.morganwarstler.com/post/44789487956/guaranteed-income-auction-the-unemployed

    50K new low end craftsmen, fanned out and fixing up 1990’s kitchens – much better than community organizing!

  40. Gravatar of Neal Neal
    10. April 2013 at 18:33

    MORE than $750? That certainly bolsters the case that the median American is better off because of them 🙂

  41. Gravatar of Doug M Doug M
    10. April 2013 at 18:40

    “Investment” has different meanings as ecnomics term than it does as finance term.

    As an economics term 85% of home purchases are neither savings nor investment. Only new home sales can be considered an investement. Existing homes represent an investment made in a prior era.

    As a finance term, it is questionable whether a house is or is not an investment. I lean toward saying that it is not.

  42. Gravatar of Bill Ellis Bill Ellis
    10. April 2013 at 19:32

    Unionize the Auction !

  43. Gravatar of Bill Ellis Bill Ellis
    10. April 2013 at 19:38

    Don Geddis,

    Where did you live that you had to wait an hr in line at the bank ? Never happened to me.

    Ever been stuck on the phone going thru a maze of computer vice prompts… Ever been stuck on the phone for an hr with tech support for you computer ?

  44. Gravatar of Saturos Saturos
    11. April 2013 at 00:57

    @Liberal Roman I still think cars looked better back then.

  45. Gravatar of Saturos Saturos
    11. April 2013 at 01:03

    Also, I love 70’s futurism.

  46. Gravatar of Morgan Warstler Morgan Warstler
    11. April 2013 at 05:53

    Bill Ellis,

    My plan increases pay of Wal-Mart type employees A LOT while reducing their cost of services they spend their paychecks on…

    I’m the next pro-labor movement. Labor movements HAVE ALWAYS been about a given class of workers, not all workers.

  47. Gravatar of ssumner ssumner
    11. April 2013 at 06:41

    Bill, We’ll have to agree to disagree.

    Doug, Only economics has a clear definition of “investment.” Finance does not, although I presume finance textbooks use the economics definition, since finance is a branch of economics.

  48. Gravatar of Doug M Doug M
    11. April 2013 at 07:21

    So I decided to see what the internet had to say about the definition of investment.

    Wikipedia…

    “Investment has different meanings in finance and economics.”

    Miriam Webster
    1a archaic : vestment b : an outer layer : envelope
    2: investiture
    3: blockade, siege

  49. Gravatar of Floccina Floccina
    11. April 2013 at 07:27

    Great post overall and this:

    Yes, granite is very durable, which makes it investment . . .

    . . . and of course saving too!

    is especially great. People seem to not know what saving and investing are.

    Also I have argued the same as you about inflation and standard of living but most people seem to believe that if they complain enough about how bad they have it someone will give them stuff.

  50. Gravatar of Floccina Floccina
    11. April 2013 at 07:32

    Greg Hill Writes:
    Well, I used to surf uncrowded beaches in California in 1970, and although I can fully appreciate the beauty of contemporary countertops, I wouldn’t have traded uncrowded waves for the new tops. But that’s just me.

    But perhaps you cannot fully appreciate the beauty of contemporary women (you know those making the beach crowded). BTW it is cheaper to travel now so perhaps you find an uncrowded beach a little further from home.

  51. Gravatar of Floccina Floccina
    11. April 2013 at 07:55

    People who can program SQL or use a Bloomberg terminal are doing well, but when was the last time you saw the counter tops of a refrigerator repairman?”

    I have a friend who is an appliance repair man and he lives well. I am not if he has granite countertops but he does have a nice home where he raised 3 children with a stay at home wife.

  52. Gravatar of Geoff Geoff
    11. April 2013 at 08:08

    Floccina,

    “I have a friend who is an appliance repair man and he lives well.”

    It’s more difficult today to separate career inducing prosperity, from debt bubble inducing prosperity.

  53. Gravatar of ssumner ssumner
    12. April 2013 at 05:29

    Doug, I think it depends on whether you mean Wall Street finance or academic finance. Obviously that’s correct for Wall Street finance, where people talk about “investing in the stock market,” when economists might call that saving.

    This is an econ blog, so I’ll stick to econ terminology to avoid confusion.

    Thanks Floccina.

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