Sunday, November 08, 2015

Technology vs. the economy: only one improved

As an American member of “Generation X,” I've spent pretty much my whole life hearing the glum prediction “Yours is the first generation of Americans who can expect to be worse off than your parents were.” And as bad as my generation had or has it, the generation after mine – the so-called “Millennials” – have it even worse.

Or do they? For as long as I've heard “Americans today are worse off than their predecessors,” there's been the equal reaction “Nonsense! Today's Americans are richer than ever before – trouble is, they just don't appreciate just how good they have it!”

The two sides of the argument usually play out like this: “My generation is poorer than my parents. In their day a single wage-earner with only a high school diploma could earn enough to support a family, buy a house and take a nice vacation every year! But for my generation, high school isn't remotely enough; you need a college degree, and the cost of that degree has risen faster than inflation every year for more than two decades now, so we graduate deep in debt. Meanwhile, housing and medical insurance costs are also much higher than ever before, to the point where two-income families are the norm because an average family can't get by on a single income, and even two-income households often struggle.”

Which inspires the standard counter-argument: “Nonsense. Young Americans today are richer than ever before! Your rented apartment might be smaller than the house we owned at your age, but that  apartment contains a computer with an Internet connection! I never could've had that at your age. And you have smartphones with unlimited long-distance calling, so you can afford to chat with friends and family on the opposite side of the continent, anytime you want. Back in my day, we had to pay long-distance charges by the minute if we wanted to talk to anybody more than a few miles away. And your other appliances are better and cheaper than what we had, too: your refrigerators are more energy-efficient, your television sets are bigger and nicer than anything we had, your personal music and video collection is simultaneously larger than anything I could have afforded at your age, yet small enough to fit on a single device in your pocket.”

Last year I wrote an article for ConsumerAffairs describing how I was “the richest person in history (plus or minus a few billion),” and asking “We're all rich by world historical standards, so why aren't our lives easier?” The article started off like this:
An old proverb says that “The rich man has his ice in the summer, and the poor man gets his in the winter.”
Of course, that proverb predates the Industrial Revolution, discovery of electricity and invention of refrigeration, not to mention the other technological and economic reasons why, in early 21st-century America, things like refrigerator/freezers aren't “rich-person luxury items” but actual legal requirements — if you're a landlord renting out residential properties, local tenant and zoning codes almost certainly require that you equip those apartments with a working refrigerator and the electrical infrastructure to power it, among other things.

I first came across the “rich man's ice” saying as a little girl, during whichever summer I read Laura Ingalls Wilder's Little House books. Like most young kids, even those whose parents provide all necessities, I was absolutely rock-bottom “poor” in terms of “How much money do I, personally, have to spend?” (Usual answer: None, unless I'd recently received some as a gift.)
But that summer, reading library books about American pioneer life in the 1870s and '80s, was the first time I ever felt rich. Ice in the summer? Anytime I wanted; I didn't even need to ask permission first. In one scene, Wilder described how excited she and her sisters were the day Pa came home with a very special (and expensive) present for the whole family: little panes of window glass, so natural light could enter the house and the family could see outside even when the weather was too cold or rainy to leave the window open. That was a red-letter day in the Ingalls household, even better than when Pa put smooth wooden boards down over the house's original packed-dirt floor.
Indeed, when I'm feeling down I'll often cheer myself up by reading books about days gone by and comparing my own lot to that of people in previous centuries:
By contemporary American-kid standards my financial status had always been average-to-poorish, but I'd have been the richest character by far in any of my “life in olden times” storybooks. And the further back in time I go, the richer I become. In fact, if you exclude “everyone who lives or has lived these past hundred years or so,” I'm richer than any person who has ever existed.
Consider these random facts: in late Elizabethan England (a peaceful and prosperous period by the standards of the day), a single loaf of bread cost twopence (2d), when the average unskilled laborer's income was only 3 to 4d per day, and 12d per day was the high end of a skilled laborer's pay scale.

Queen Elizabeth I had an enormous income — 60,000 pounds per year (at 240d to the pound) — but for all her wealth she had no access to basic dental care, which is why foreign ambassadors at the time noted that several of the English Queen's teeth were missing, and the remainders rotted to pure black.

As for Elizabeth's subject William Shakespeare, historians think he wrote his plays (at least his early ones) while sitting in a pub — not because writers prefer noisy, distracting environments, not even so he could eat or drink while writing, but because the pubs were illuminated, and lighting was too expensive for ordinary people, let alone struggling writers, to afford much at home.

There's some dispute over exactly when and where “glazed ceramics” and “glassware” were first invented, but everyone agrees they were extremely popular innovations mainly for eating and drinking purposes: when you eat and drink out of unglazed pottery, some of its sediments will blend in with your food.

Everyone who lived in ancient Egypt, even the rich and powerful Pharaohs, had horrible tooth problems because the food-processing methods of the time resulted in bits of sand or stone mixed in with your bread, grinding the teeth down so badly that those of most Egyptian mummies were “worn down to the pulp.”

So, yeah — technology, cheap manufacturing, agricultural innovations and countless other advances since Ye Olden Days mean even a poor American today has what would have been literally impossible luxuries for most of history.

That slummy one-room off-campus apartment where I lived while attending Cheap State U … still bigger than the claim shanties where Laura Ingalls lived with her family of six, and equipped with everything from non-dirt floors and glass windows to indoor plumbing and all the light I wanted.

Paying for my own food was a rude shock after a lifetime of parents providing it — but even the most overpriced loaf of handmade artisan bread wouldn't cost me two-thirds of a day's pay. I bought cheaper bread, still much better than what Pharaoh had because it didn't wear down my tooth enamel. 
I'm not trying to impress you by bragging about my vast wealth, here — glass windows, stone-free bread, a bathroom — because in modern terms they're not really considered “wealth” anymore; you can have all this stuff and still be poor. Your house's being infinity times nicer than any pioneer shack is irrelevant when you can't afford the payments to keep it.
Of course, the material differences between Millennial or Gen X Americans today compared to their parents or grandparents at the same age aren't remotely as stark. Bread and glass windows remain in reach for practically everybody nowadays; the lifestyle debates usually run like this:

“I'm worse off than my parents and grandparents at my age. For starters, they had a house whereas I live in an apartment.”

“No, you're better off than your parents, because your apartment is equipped lots of wonderful things your parents and grandparents never had at your age, including a computer with Internet connection, a telephone with free unlimited long-distance calling, and a microwave oven, too. And you also got far more higher education than those before you, too.”

“Yes, but I need that college degree to get the same jobs Grandpa could get with a high school diploma. And as a result of that degree, I'm up to my neck in an enormous bankruptcy-proof student loan debt.”

At the Washington Post this weekend, Jim Tankersley published an opinion piece saying “Baby boomers are what's wrong with America's economy: they chewed up resources, ran up the debt and escaped responsibility.”

After quoting and criticizing politicians such as Marco Rubio for offering to cut Social Security and Medicare benefits for future generations while keeping benefits intact for current beneficiaries, Tankersley said:
That’s smart politics: The biggest generational voting bloc by far in the upcoming election will be baby boomers, a group that is just starting to draw its first Medicare and Social Security benefits — and does not want anyone messing with those benefits, thank you very much.
It’s also bad economics.

Boomers soaked up a lot of economic opportunity without bothering to preserve much for the generations to come. They burned a lot of cheap fossil fuels, filled the atmosphere with heat-trapping gases, and will probably never pay the costs of averting catastrophic climate change or helping their grandchildren adapt to a warmer world. They took control of Washington at the turn of the millennium, and they used it to rack up a lot of federal debt, even before the Great Recession hit.
If anyone deserves to pay more to shore up the federal safety net, either through higher taxes or lower benefits, it’s boomers — the generation that was born into some of the strongest job growth in the history of America, gobbled up the best parts, and left its children and grandchildren with some bones to pick through and a big bill to pay.

Politicians shouldn’t be talking about holding that generation harmless. They should be asking how future workers can claw back some of the spoils that the “Me Generation” hoarded for itself....
Naturally, this inspired an outpouring of outraged emails, which Tankersley shared two days later. The first one, presumably written by a Baby Boomer who grew up in a family of six children, indignantly listed all the wonderful technologies which today's young people are the first in history to enjoy:
"I will be the first to admit the selfishness and self-centered attitudes of my generation.  But we passed those traits on to the X'ers and the Millenials in spades...your generation and what followed took greed and the desire for material things off the charts. Growing up in the 60s and 70s, in a middle class environment, we had 1 family car for 8 people.  One tv, one family stereo, one vacation a year.  No computers, cell phones, suv's, microwaves, big screen tvs, video games, dvd  players, netflix, and the list goes on and on.  I could still live without the latter list, but I wonder if your generation could...when economies go bad, you can't cope as well because you refuse any sacrifice of consumer products.  Then comes your bitching and blame games."
Of course, in today's economy a computer with Internet connection isn't really a “luxury,” any more than a car is a luxury in American suburbs laid out to make walking impossible. As for other items on the list: my DVD player cost me $60 several years ago. Today I've seen players on sale for as little as $19. My current apartment came equipped with a microwave oven; the apartments where I lived before did not, but buying a countertop microwave only cost me $50, and it lasted more than 10 years until I discarded it upon moving here. Microwave-oven owners in bad financial straits could not have avoided them if only they'd known better than to buy an electricity-saving microwave oven at an amortized cost of under five dollars per year.

And so on. It's practically a tautology: technological improvements mean each generation enjoys  technological benefits previous generations didn't have. Today's kids grow up with smartphones, the Internet, free realtime worldwide communication, and music and video formats that make it unbelievably cheap to amass a personal music and movie collection larger than anything previous generations could dream of having. Before them, Generation X was the first to grow up with color television, cable TV, microwave ovens, video games, VCRs, plus the first primitive home computers and home gaming systems. The Boomers were the first kids to grow up with black-and-white television, portable transistor radios, cheap pre-recorded music (on vinyl records), and cheap and abundant canned and frozen food, among other things. And the Boomers' parents were the first to grow up with radio, moving pictures, telephones ….

There's no denying that all of these things are wonderful. But how relevant are they to discussions about the economy? Even during the Great Depression, Americans enjoyed technologies which earlier generations would've envied: “Stop complaining about your low-paying jobs and high cost of living, young people! Here you are with radio, glass windows, moving pictures with sound, and other luxuries your great-grandcestors never could've afforded! Then when economies go bad, you can't cope as well because you refuse to sacrifice any of your consumer products. Then comes your bitching and your blame games.”

Translation: if you hadn't blown that fifty dollars on a microwave oven, you could've invested it responsibly and retired on the proceeds by now, you greedy slacker.


Anonymous Dave said...

I have always enjoyed this argument, even though I doubt it will ever be resolved. Some say that wealth is measured as an absolute quality. According to that measure, I am richer than King George III, because I have modern plumbing, cell phones, TV sets, and medical care. (Also, I don’t have to fight wars against Americans or French).

On the other hand, George’s apartments (such as Windsor Castle and Buckingham House) were fairly nice even if the toilets didn’t flush properly. He had no cell phones, but if he wanted to speak to William Pitt (or anyone), he could just send for them. He had no television, but I don’t have any riding stables either. He had no medical care, but he still lived for 81 years, (and might have lived longer had they not tried to treat his porphyria with arsenic.)

In addition, there are some benefits of wealth that are purely relative. My son will (most likely) have to work hard all his life, and it is doubtful that any of his descendants will be photographed dating supermodels in the French Riviera.
Does relative wealth, or the lives of your offspring, affect your happiness in any objective way? For most of us, it does. Andrew Carnegie never got to play with an iPad, for example, but I would be happy to give away my iPad if my son could spend his entire life just giving away money.

And naming 3000 libraries (and a couple of universities) after yourself? That has to be pretty cool, too.

10:08 AM  
Blogger Jennifer Abel said...

Thanks for your comment, Dave! And yeah, it IS hard to accurately compare wealth and standards of living across the ages: my rented apartment has amenities George III could barely have imagined -- but on the other hand, George never had to worry about paying his high rent every month.

1:45 PM  

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