February 28, 2005
Madeleine Bunting on Economics.
I do wonder you know, puzzle over where some of these Guardian writers learnt their economics. Take Madeleine Bunting today:
In 1970, it took one parent to pay for a lifestyle that in 2000 takes two.
If true this is something of a story, something that we might want to run in 24 point headlines (hey, make that 36 point, why not?). What the labour of one person bought in 1970 now requires two person’s labour. Yes? That is what she is saying? OK, so let’s leave hedonics out of this (a slightly controversial method of trying to account for the fact that while some things do not get noticeably cheaper, they do get better at the same price. Computers the obvious example) and we get this statement:
Real wages have halved in 30 years.
Really? Does anyone believe this, anyone at all? Should we believe anything anyone tries to tell us when they indicate that they do believe this? Seriously, if it actually were true it would be the most explosive condemnation of the capitalist system possible, a complete and total indictment of the way the economy has been run over the past generation. In fact, if it were true, we would not still be running the world the way we do.
I have a feeling that Ms. Bunting might want to look at some economic statistics here...for the US I think it’s the Bureau of Labour, for the UK probably the Treasury...incomes in general rise faster than inflation meaning that real wages rise over time. If they didn’t we’d have riots in the streets.
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Bizarre, even by her standards. She might have cribbed it from an American columnist - over a certain period, real wages were pretty stagnant in the US (although the value of employer health insurance was skyrocketing at the same time); but here in the UK, they've grown handsomely for years.
Posted by: Blimpish | Feb 28, 2005 10:52:04 AM
Perhaps she means that housing has got pretty pricey round her way, especially now that people are paying for schooling since the state schools were Guardianised, and everyone wants a second bathroom, ideally ensuite, and a separate bedroom for each child, and then there's the little get-away in Provence, and perhaps a second family...
Posted by: dearieme | Feb 28, 2005 2:57:40 PM
Oh, Tim, for shame; where did you do *your* economics?
Saying that keeping up a lifestyle in 1970 could be done on one income and in 2000 the same quality of life would require two incomes isn't the same as saying 'wages are now worth half in real terms what they were in 1970', and you know it. Otherwise, Maddy Bunting would have said something along the lines of "the real value of wages has halved since 1970", which would be a sharper, more headline grabbing point. So your attempt to disprove her point is working from a faulty start-line.
If you want to understand what she meant, you need to have to some idea of a point to measure it from - so, say, in 1970 (when I was a small kid) we lived in our own house through a mortgage, had fairly up-to-date white goods and modern entertainment technology; ran a car and had a holiday every year. That was on my Dad's wages alone. Fast forward to 2005, and my lifestyle is broadly similar, but I live in rented accomodation, and can only manage what I do do because I'm lucky enough to be married and in a two-income household. Actually, it's a smaller house, and my job is better paid, in real terms, than my father's. The rising cost of housing actually means Ms Bunting is wrong - to keep to a 1970s standard of living, you'd probably need to have 2.5 incomes in 2005.
Tim adds: The LSE. You? You’ve just said the same thing that I said Maddy did. Real incomes have halved since 1970. Actually, worse. X housing, Y car and Z holidays now takes 2.5 times as much work as it did in 1970. Thats a more than halving in real wages. You want to make that argument, go ahead. I just don’t believe it.
Posted by: simon hb | Feb 28, 2005 4:45:48 PM
dearieme makes an excellent point: what we consider a middle-class standard of living today is not what was considered a middle-class standard of living in 1970.
My parents lived on one income with some occasional free-lance work from my mom for "extras." But they were happy with a 1,000 square foot house with 1 bathroom, 1 slightly used car (my mother didn't drive) and 1 black-and-white TV, wall-units for air-conditioning and heating instead of central, a stand-alone dishwasher instead of built-in, etc.
Today "middle-class" expectations include a 2,000 square foot living space at least, minimum 2 bathrooms, 2 cars, often at least a time-share for vacations, etc., and a host of electronic products such as home computers, play-stations, microwave ovens, DVD players, large-screen televisions, etc.
Posted by: Irene Adler | Feb 28, 2005 5:42:00 PM
"dearieme makes an excellent point": of course, c'est mon metier. What I don't make is an excellent living, judging by your list of middle-class expectations that we don't run to. I just have to pull my belt in, in all but the literal sense.
Posted by: dearieme | Feb 28, 2005 6:55:07 PM
How old is Madeline Bunting? I ask because only someone with a very dim memory of 1970 could argue her point. I'm not sure how many meaningful comparisons can be made between our lifestyles today and thirty-five years ago. In particular, not only has the price of food fallen through the floorboards, but the variety is simply incomparable.
Posted by: David Gillies | Feb 28, 2005 7:54:50 PM