The C.S.O. does most of our grocery shopping, which insulates me against certain data that would otherwise arrive regularly in my awareness. However, now and then we go together to a “warehouse” style discount store for items we know to be available there in bulk, usually less expensively than at a commonplace supermarket. On those occasions, the otherwise unwitnessed changes in prices and consumption patterns hit me with considerable force.
One of the mixed-blessing aspects of being both:
- Old; and:
- The possessor of a near-perfect memory;
…is the ability to contrast the conditions of my youth to those of today. Some of the details of such contrasts are already well known, even to much younger Americans. But some that are even more dramatic are not.
We all know what’s happened to gasoline prices. But how many Americans are aware that in 1964, whole turkeys that averaged around twenty pounds each – i.e., the entrée for a typical family Thanksgiving dinner – were available for $0.29 per pound? At that “warehouse” store, a ten-pound turkey goes for $14.90. (That’s $1.49 per pound for the arithmetically disabled. There are no twenty-pound birds for sale.)
Ground beef in 1964 was typically around $0.79 per pound. Have you priced it lately? At the store nearest me, it ranges from $6.99 to $8.29 per pound, depending on the amount in the package. As for other cuts of beef, the price escalations have been even more dramatic.
Bacon, orange juice, lamb chops, cold cuts, veal, grapes…the list could be extended indefinitely. Huge increases in price have made these things into near-luxury items, whereas sixty years ago they were common presences on middle-class tables. Throw in fuel and electricity, medical care, and housing, and life begins to look pretty expensive. But perhaps the increases in price of such things have been counterbalanced by decreases of the prices of other items. What would those items be?
Ah! Here we are: technology! Electronic goods, especially digital electronics, are falling in price as we speak. It’s not just computers, Gentle Reader. That “warehouse” store I frequent is selling 85-inch flat-panel televisions for less than $1000. A 37-inch flat-panel TV can be had for under $300. In contrast, my family’s first color TV, which my father purchased in 1964, was 19 inches diagonally and cost him nearly $500.
This isn’t a grump about the cost of living. It’s more of a meditation on how little we actually know about the patterns people make as they buy and sell: i.e., the art of economics.
The consensus among professional economists is that “frontier” goods – items only recently made available for purchase, which constitute luxuries and discretionary items at that point – will exhibit price behavior that inverts the usual demand-versus-supply curve. Thorstein Veblen made a career out of exploring the phenomenon. In 1964, the most conspicuous such item was the Ford Mustang, which increased in retail price as more were manufactured and sold. But Veblen and others had to allow that “mature” goods, which had been around for a while, would exhibit steady or gently falling prices.
In a healthy economy that features stable money, “frontier” goods deemed discretionary / luxury items will tend to move upward in price as initial demand for them swells. Simultaneously, “mature” goods will remain static or become less expensive when measured in labor-hours. But I left a clause out of those statements, one that economists of earlier years would take for granted: all other things being and remaining equal. Those earlier economists had to make that assumption. Without it, economic analysis is impossible. Forecasts become less reliable than witchcraft.
But all other things are not equal. In particular, interventions into the economy by government have become ubiquitous. Often they overwhelm all other influences on production and exchange. For example, consider price controls, for the return of which a number of people have agitated.
When we add the effects of inflation – which, for those in the back row, is entirely a government-produced phenomenon — it’s a wonder that anyone even attempts economic forecasting today.
The normal economic order of things – a free market featuring stable money – gave birth to the greatest economic expansion the world has ever seen: the United States of America from 1789 to approximately 1912. Except for a very few “frontier” goods, everything declined gently in price from year to year. Americans could count on an ever-improving standard of living, no matter what occupation they pursued. Businessmen could have confidence in their forecasts, and therefore in their decisions to produce or expand. It was in the nature of a free market that it should be so.
The inversion of that economic order produced the current environment, which is dominated by anxiety. For today, the big player is the State. Governments at all levels exercise unlimited authority over all economic matters. It’s not just about the money, though that is a significant part of the puzzle. Government decrees about who may produce and who may consume, and what, and at what prices and under what constraints, and which industries will be regulated and which ones will be subsidized, and who will be provided with what at taxpayers’ expense, utterly overwhelm the economic mechanisms that produced the original boom and gave confidence to the entrepreneurs who propelled it.
None of this should be opaque to an intelligent Gentle Reader. If of two football teams, one is permitted to deploy gorillas for its linemen, the results can hardly be in doubt. (Remember this GEICO commercial?) It’s worse when a troop of gorillas is allowed to invade the game in the middle, which is a fair analogy to the actions of government in distorting the economy. And while we’re discussing such things, did you know that women’s roller derby – the one and only sport in which I remain interested – has been invaded by transgender players? But I suppose I should save that subject for another screed.
