Like everyone else in the DC area, my consciousness this week has been massively diverted to snow. I love snow, always have. I was giddy when the first storm hit, more so when the second was forecast. I’ve searched myself for the roots of this attraction, and there are many – from winter’s part in the annual journey of spiritual renewal inherent in the four seasons, to snow’s enabling role in my latent agoraphobia. And the pleasure I derive from snow is compounded by my dislike of weather-whining.
People love to whine about the weather. Have you ever noticed that every adjustment “they” make to temperature makes it more extreme? In the summer, we add humidity to temperature to get a heat index. In the winter, we factor in the wind chill factor, to show it’s really colder than we thought. Where’s the index that measures the breeze in summer? It’s pandering, if you ask me – an opportunity to kiss up to people’s instincts to complain.
Here again, my buttons are pushed. I come from a long line of complainers – my family worked in affliction the way Rembrandt worked in oil. I see my life’s work as reversing this perspective, and snow gives me a chance to take my equanimity for a walk. Too cold? Dress warmly. Don’t like shoveling? Exercise and fresh air. Troubling getting places? Plan ahead and don’t go anywhere. Power outages?
Ah, now there’s the rub. Because power outages in a snowstorm are not just an inconvenience. They’re a form of time travel, a return to previous centuries, and a good way to understand an important economic reality – that the average person today has a higher standard of living than the Kings and Queens of prior centuries.
We talk about “modern conveniences,” and think about the quantum improvements in our standard of living in big bites – medicine, communication, mechanical work and power, and their stepchild, transportation. Medicine is an easy one – many people I know, like myself, can count the number of times that they would be – had they lived in prior centuries – dead today. It is amazing to recall stories of my family’s ancestors back in Europe, a century ago, and consider the things that killed them – scarlet fever, high blood pressure, and the like. Or to consider the regularity with which people experienced the loss of a child, a burden that robs one’s soul today.
That’s all relevant at a level other than maudlin because it demonstrates that our rising spending in health care isn’t just “health care inflation.” It’s real product. Sure, there’s gold-plating and inefficiency in the system – defensive medicine, pay-per-procedure, absence of preventive medicine and inattention to public health issues such as obesity, and so on. But the tripling in health care’s share of household consumption from around 6 percent fifty years ago to over 19 percent today is also about the ability to treat disease, which argues against being able to solve the health care “problem” by squeezing inefficiency alone. There’s plenty of medicine being practiced in the economy today. The issue is whether it’s being distributed both fairly and justly.
Communication and transportation also combine to be an important source of your regal standard of living. Until the advent of trains, transport of both ideas and things were limited to the speed of a horse. The average person reading these words will have journeyed greater distances and seen more of the world than all but a subset of the merchants and soldiers of past centuries. And will be exposed to orders of magnitude more knowledge. I used to give an information pep talk when I was back at Unisys 20 years ago about how if you know one fact about a person, you can talk to them instantly – their phone number – and that one day if you know a similar “fact,” you’ll be able to know anything. I thought it was wild futuristic stuff, and within a decade, it was true – their Internet address.
I raise these examples not out of some triumphalism –this “wonders of the modern world” stuff often ends up concluding that the poor have it pretty good and ought to content themselves, which isn’t the point. The point is that the secular, long-term trend in the world is not inflation, but deflation. And that’s because it’s easy to identify inflation when it occurs – the cash price of one thing or another goes up – but it’s far more difficult to figure out the change in price of a product or service that’s changing rapidly or hadn’t existed before, which is where much of our deflation comes from.
Darcy, the aloof, sometime-dickhead hero of Jane Austen’s Pride and Prejudice, was considered pretty well off in 1813 (when P&P was written), because he had an income of ten thousand pounds a year. (Let’s let Brad Delong, one of my favorite economists, go over how much that is “today’s dollars.”) http://delong.typepad.com/sdj/2009/07/hoisted-from-comments-how-rich-is-fitzwilliam-darcy-archive-entry-from-brad-delongs-webjournal.html
A pound is worth around $1.56 or so today, so that’s $15,600. If Darcy was rich back in 1813, then inflation must have eaten the value of that money up in the intervening two centuries -- a dollar was worth a dollar back then, right?
Tell you what – let’s use a thought experiment once suggested to me by the late Ned Gramlich, http://www.fordschool.umich.edu/news/?news_id=113 who ascribed it to Richard Ruggles, to figure out whether Darcy was better off than, say, you.
http://www.econ.yale.edu/news/ruggles/ruggles_obit.htm Austen’s Darcy was a pretty rich guy. Let’s double his income, meaning $31,200 a year. Now which would you rather have that $31,200 in 1813 but only be able to buy what was available in 1813, or would you rather have that $30,000 today, but be able to buy what’s around today, even if it’s in limited quantities?
Think about it! Are you prepared to give up the mobility, the ease of access, the medical improvements, all of the components of our modern standard of living for what Darcy had – a house in the country and a place in town with flue-based heat, a bunch of servants to spare him from having something to do, no running water or sanitation, a provincial life without exposure to the outside world, ideas that travel at the speed of horse, and so on?
It’s an easy choice – being poor today is better than being rich 200 years ago, and if that’s true, then prices have fallenover that time period, not risen. A dollar goes a lot further today, because it has somewhere to go. And if you don’t believe it, stay home during the next Snowmageddon when the power goes out.
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