It's the line workers in factories and people in service jobs that have gotten screwed. It used to be that you could make a steady middle-class income as a factory worker, airline stewardess, or retail clerk. Not so much now. Tradespeople and professionals have done okay because they have marketable skills that accrue to their person, but people whose only assets are owned by their employers haven't done so well.
Actually that was only true in a very short span of time in the fifties and sixties because there was a bubble in manufacturing since Europe and Japan needed to be rebuild, in some cases almost from scratch.
Compare today with a hundred years ago, and those people had it far worse.
Is health insurance which only pays for 1970's era medical care really that expensive today? Or did you mean to say that a financial product which pays for an MRI/viagra/chemotherapy today is more expensive than a financial product which paid for X-Rays/dying of cancer at home in the past?
Incidentally, I can only find data going back to 1987, but it suggests little change the number of uninsured since then.
The problem is that health insurance isn't continuously divisible. You typically can't buy a policy that will cover only 1970s-era medical treatments. Even if you could, it brings up a host of ethical issues that many doctors wouldn't be comfortable with. Say a kid gets strep throat. Okay, give him penicillin, it's cheap and he gets better quickly. Now say that the doctors don't realize it's strep throat, or do but forget to give him penicillin, or he's got a drug resistant strain. It gets into his kidneys. Suddenly, this is expensive, requiring hospitals and diuretics and possibly dialysis. But it's 100% fixable. Should the doctors let him die because his insurance doesn't pay for modern medical treatments?
This is the problem with basically all academic economics models. They make certain simplifying assumptions to make the math tractable, so that they can draw conclusions about the economy as a whole. And I have no doubt that the economy as a whole is bigger, stronger, and better than it was in the 1970s.
But that glosses over all the individuals that make up the economy, some of whom are decidedly not better off than they were in the 1970s. When someone is involuntarily laid off, they're strictly worse-off than they were beforehand (otherwise, they would've voluntarily quit). The economist would say "They'll get a job in some other sector of the economy, one that's growing where their talents can be more productively employed, and be better off in the long run." And that's absolutely true, but it doesn't make things any better for that person right now when they need to put food on the table.
Some 1970s-era medical treatments simply aren't purchasable, either, either due to practical/economies-of-scale reasons or due to changes in the world.
Anything that requires technology/manufacturing has a sort of cliff, where you can use the current technology (or perhaps one generation back), or you can use very primitive treatments, but not much in between. You could dig through the history of technological advances for some particular device, and make the rational decision that Generation 3 of the device is the optimal one for you on the price/benefit curve. But if we're on Generation 9 currently, you simply can't use Generation 3 machines, sorry, because nobody makes them and no hospital/doctor still uses them, and the FDA might not even allow their use anymore; you use a recent one, or none at all.
Some drugs have a not-really-available effect as well. I might actually be happy with penicillin as my antibiotic of choice... if it had 1970s levels of efficacy. Unfortunately, resistance to penicillin has greatly increased, so "1970s penicillin that works like it was the 1970s" just isn't a product you can buy anymore.
Somewhat of interest to me, because if it were possible to buy 1970s-era health insurance that worked like it was the 1970s, I might actually do it, with a few a-la-carte exceptions. I've read some of the literature that tries to quantify the effect of new medical technology on health outcomes, and the single biggest one for adults appears to be better vaccinations, so I'd definitely still get a modern vaccination schedule. A second worthwhile one is improved surgery techniques, especially arthroscopic surgeries that reduce the need for traditional open-wound surgeries, and thus also reduce many infection/etc. complications.
But a lot of the increase in expense is stuff I would be willing to opt out of if it were an option: 1) huge increase in heroic last-6-months care; and 2) chronic-condition drugs like Viagra, SSRIs, Ritalin, statins, beta blockers, etc. Not that those have no arguable benefits, but if I had the choice to purchase a health-insurance plan that excluded those categories, that would fit my cost/benefit analysis.
It is true - the specific composition of illiquid financial derivatives varies wildly from year to year.
But lets address the question from a different angle. I can't find data going back to 1970, but since 1987, the number of people without insurance has been flat at about 15%.
I don't know if I buy that. Is there data that shows retail clerk wages declining over time? I happen to have a factory worker, airline stewardess, and retail clerk in my extended family and their wages have all increased over the past 20 years. I mean, not by amazing amounts, but definitely I wouldn't say they are doing worse than they were before.
From 1964-2010, weekly manufacturing wages rose from $102.59 to $765.08/week. "Private service-providing" jobs (which includes retail) went from $98.10 to $606.14. Over that same time period, the CPI rose from an index of 30.9 to to 216.687, an increase of 7x. In real terms, retail wages have fallen by about 12%, manufacturing wages have just barely kept pace with inflation.
It's really funny to have you arguing in one subthread that inflation is overestimated by the official numbers, and then have some other guy arguing in another subthread that inflation is underestimated by the official numbers:
My position is basically that the CPI, like all statistics, is fundamentally inaccurate, but it's as likely to be biased high as it is to be biased low. I think you're both proving my point on this. :-)
Anyway, the table I linked to was published last month, so presumably they've already taken the Boskin Commission findings into account and retroactively fixed the earlier numbers.
I was more arguing that CPI is meaningless. My position on the economy is that if you bought your house 20 years ago, you can sit in it and buy all the junk you'll ever need, on even a shit salary. If you didn't buy a house 20 years ago, you never will, but you can rent someone else's house and buy all the junk you'll ever need.
Does the CPI take into account that cars have improved in fuel economy, that TVS are now in color and with a remote control, not to mention a lot bigger?
Does the CPI take into account that a wristwatch today has more power than all IBMs computers in the mid sixties?
Does the CPI take into account that $X that either didn't exist then, or has been so improved that it wouldn't be recognized?
Try to compare it with the M3 money supply, shifted about 18 months ahead and that should give a much better idea of the real means of inflation.
The CPI indeed abstracts over the fact that the basket of goods available today isn't identical to the basket of goods identical 30 years ago. They're not all improvements, though. For example, the CPI doesn't take into account that the same car/gas combination drives you more slowly in Chicago than it used to, due to increased traffic; or that penicillin's efficacy has declined; or that a college diploma now largely serves the role that a high-school diploma served in 1975.
Not to derail, but the thing about wristwatches/pocket calculators being more powerful than the best sixties computer is a frequently-quoted and entirely wrong bit of BS. That is all.
Both my wristwatch and my pocket calculator are my Nexus One, which has 4G of storage space (500x the top of the line System/360) and a 1 GHz processor (200x the top of the line System/360). It was free for me, but retailed for about $550 (1/2000th a top of the line System/360).
That's interesting. I will admit I am a CPI skeptic. I do not understand how it is being calculated. Half the stuff people buy today did not exist 20 years ago. There is such an abundance of the other stuff, it is always heavily discounted. Essential things that have obviously increased in price, like homes and food, are not included in the CPI. Is there a "CPI for Dummies" anywhere out there?
It's the line workers in factories and people in service jobs that have gotten screwed. It used to be that you could make a steady middle-class income as a factory worker, airline stewardess, or retail clerk. Not so much now. Tradespeople and professionals have done okay because they have marketable skills that accrue to their person, but people whose only assets are owned by their employers haven't done so well.