Standards of Wealth

Great Debates
1

I think that in many parts of the world, people (in general) are a lot wealthier today than in the past. If wealth is measured by the value of the goods and services that people have access to.

How much would Cornelius Vanderbilt II have paid so that his children could get access to vaccinations?

What about Leland Stanford?

Heck, how much would Cornelius Vanderbilt II have paid so that his house could be air conditioned in the summer?

(Note, I’m not saying that all of today’s “poor” have it better than those who were “poor” 100 years ago. Some do and some don’t.)

At the same time, I wonder if people living in the West really appreciate all the advantages we have. Have standards changed along with our wealth? Do ordinary people living in the United States really appreciate that in many ways we are wealthier than the richest people in the country from 100 years ago? (Not in every way, of course.)

Some day, if we (everyone in the world) are a lot wealthier than we are now, will we really appreciate it? Will we all feel like Ira Rennert? Probably not.

2

I’m not sure that “wealth” is the right way to describe access to things that hadn’t existed before. In 1968, when I saw 2001, I would have killed to get a VCR or DVD player to be able to see it again without shlepping into New York. Was I poor for not having one? I don’t think so. Is even the richest person today poor for being subject to Alzheimers or cancer?

Wealth is relative, and I’m not sure stuff that we’re all equal in not having counts. I agree that in the future we’ll wonder how we got along with what we have today, just like Dr. McCoy sobbed about surgeons cutting people open with knives. I’m old enough to wonder how I lived so long without a microwave, but at the time I didn’t miss it.

3

It doesn’t really go with the OP except tangentially, but I thought this article on Yahoo! was interesting. It talks about millionaires in the US, and how they seem too be shifting in what they buy and how they act.

Interesting stuff. I think the whole concept of what ‘rich’ or ‘wealthy’ is seems too be shifting…as well as what people do when they get too those levels. As being ‘rich’ becomes more and more common (as the article seems too indicate) I think we are seeing a shift in what it even means too be ‘rich’.

If it’s a complete hijack my apologies too the OP…just thought it was interesting.

-XT

4

[QUOTE=Voyager]
I’m not sure that “wealth” is the right way to describe access to things that hadn’t existed before. In 1968, when I saw 2001, I would have killed to get a VCR or DVD player to be able to see it again without shlepping into New York. Was I poor for not having one? I don’t think so.
[/quote]

I agree that to a certain extent, the question is one of semantics.

I would say “yes,” compared to somebody 50 or 100 years from now.

Even if you think of wealth as relative, you must ask yourself “relative to whom”? Other people alive today? Other people in your country? Your state?

Does it make sense to say that the United States is much wealthier today than it was 50 years ago?

5

[QUOTE=brazil84]

Even if you think of wealth as relative, you must ask yourself “relative to whom”? Other people alive today? Other people in your country? Your state?

Does it make sense to say that the United States is much wealthier today than it was 50 years ago?
[/QUOTE]

Your question is about people in general, so I’ll answer it that way. Each of us stands in a different relative position to people in our city and state (and the US) so I don’t think that answer is very interesting.

But the 50 year ago question is. I was 6 50 years ago, and my parents were solidly middle class. I make more relative to the norm than he did, but I don’t think I spend anymore, being cheap. I don’t worry about money as much as my parents did back then, but we were never anything close to being poor.

I own a heck of a lot more stuff than they did, but they had all the standard things - a black and white TV, a record player, a car. Long distance was more expensive, so my mother couldn’t call her sister in California very often, while we talk to our faraway kids just about every day, thanks to cellphone family plans, which makes it free. Vacations were driving - airplanes were expensive and a big deal. So in that way I’m richer, since we can easily afford cross-country trips.

On the other hand, my mother didn’t have to work, and if we were in a similar income bracket today my wife would absolutely have to. So in that sense my father was wealthier. He had a pension and excellent health benefits, so he was wealthier in that way also. (His benefits were better than mine today, and I have no pension, only a 401K.) We both have nice houses in good neighborhoods, but the schools I went to were better than the schools my kids went to after we moved to California, and they didn’t have to pay extra for trips and stuff. Income ranges were more compressed then also. I’d say overall that he was better off than a similar person would be in his income range today.

I hope that answers the question. I do agree it is semantics.

Stuff, by the way, is interesting. A talk at a workshop I just attended showed a picture of a family in China who had no running water, but wireless internet access. I don’t know how you rate that situation on the wealth scale.

6

[QUOTE=xtisme]
It doesn’t really go with the OP except tangentially, but I thought this article on Yahoo! was interesting. It talks about millionaires in the US, and how they seem too be shifting in what they buy and how they act.

Interesting stuff. I think the whole concept of what ‘rich’ or ‘wealthy’ is seems too be shifting…as well as what people do when they get too those levels. As being ‘rich’ becomes more and more common (as the article seems too indicate) I think we are seeing a shift in what it even means too be ‘rich’.

If it’s a complete hijack my apologies too the OP…just thought it was interesting.

-XT
[/QUOTE]

Contrary to the posted article, being worth $1 Million is nowhere near rich enough to afford stuff like a yacht.

I probably have that much in assets, or more (if you include house equity and retirement fund). My family income is around $320,000. No way could I afford a yacht; nor do I consider myself “rich”, as part of my definition of that term is having enough money to not work unless you want to.

7

[QUOTE=Voyager]

I’d say overall that he was better off than a similar person would be in his income range today.

[/QUOTE]

But think of all the stuff that is ubiquitous today but would have commanded a king’s ransom in your father’s day; if it existed.

Cell phones, reliable and safe cars, big color TVs with 100’s of channels, advanced pharmacology, a huge variety of food and drink at dirt cheap prices, bigger houses, cheap information.

I would argue that the internet alone, which I pay about $20 a month for, makes me richer than almost anyone ever was in days gone by.

How much would Cornelius Vanderbilt have paid for a 2007 Cadillac, some Viagra, a Tivo and an e-mail account? A lot I would think, and most of that stuff is dirt cheap today, except the Caddy, which is still ridiculously cheap when you compare it to cars of old on a value basis. (Cadillac’s top of the line cost 13,000 in 1957, or about 95K today, and the car wasn’t as nice as today’s Honda Civic, let alone a 2007 DTS)

Note that having better stuff has little or nothing to do with happiness, but better stuff is better stuff.

8

[QUOTE=T_SQUARE]

How much would Cornelius Vanderbilt have paid for a 2007 Cadillac, some Viagra, a Tivo and an e-mail account? A lot I would think,
[/quote]

Are you talking about Cornelius Vanderbilt I or Cornelius Vanderbilt II? II probably would have skipped the Viagra. But given that his 21-year-old son died of Typhoid Fever while a student at Yale, I imagine that he would have paid a pretty penny for some antibiotics.

Anyway, I agree with your point.

The average westerner has access to far better goods and services today than in the past. Stuff that makes life more convenient, comfortable, and safe.

9

[QUOTE=brazil84]

The average westerner has access to far better goods and services today than in the past. Stuff that makes life more convenient, comfortable, and safe.
[/QUOTE]

I’ll respond to both of you at once. I thought I had covered this in my response. I might have felt non-wealthy from not having an early color TV set, but not from not having a DVD or MP3 player, which I never conceived of. If I should have felt poor then, do you feel poor now because you don’t have the opportunity to vacation in orbit (with 0-g sex :wink: ) or watch 3D TV? By those standards it is poverty all the way down, and the only people who could feel good would be those living right before a cataclysm that kicks the crap out of the standard of living.

I think it only makes sense to measure standards of wealth against what is currently achievable. I mean, are we less politically free because while any child can be President (so long as his name is Bush or Clinton :smiley: ) no child can be President of the Galaxy?

10

[QUOTE=Voyager]
I’ll respond to both of you at once. I thought I had covered this in my response. I might have felt non-wealthy from not having an early color TV set, but not from not having a DVD or MP3 player, which I never conceived of. If I should have felt poor then, do you feel poor now because you don’t have the opportunity to vacation in orbit (with 0-g sex :wink: ) or watch 3D TV? By those standards it is poverty all the way down, and the only people who could feel good would be those living right before a cataclysm that kicks the crap out of the standard of living.

I think it only makes sense to measure standards of wealth against what is currently achievable. I mean, are we less politically free because while any child can be President (so long as his name is Bush or Clinton :smiley: ) no child can be President of the Galaxy?
[/QUOTE]

I see your point, I think. If you want to talk currently achievable, I would posit that the production possibility frontier (how much stuff you can make with a given set of inputs) is a good measuring stick. In the U.S. and the world, the production possibility frontier has certainly expanded outward over time, both in absolute terms and on a per capita basis. For example, the United States can make a whole lot more stuff than we could 50 years ago. Therefore, I think it is safe to say without a doubt we are richer than we used to be.

11

[QUOTE=Voyager]

I think it only makes sense to measure standards of wealth against what is currently achievable. I mean, are we less politically free because while any child can be President (so long as his name is Bush or Clinton :smiley: ) no child can be President of the Galaxy?
[/QUOTE]

Really this isn’t so different from my point in the first post:

12

[QUOTE=xtisme]
It doesn’t really go with the OP except tangentially, but I thought this article on Yahoo! was interesting. It talks about millionaires in the US, and how they seem too be shifting in what they buy and how they act.

Interesting stuff. I think the whole concept of what ‘rich’ or ‘wealthy’ is seems too be shifting…as well as what people do when they get too those levels. As being ‘rich’ becomes more and more common (as the article seems too indicate) I think we are seeing a shift in what it even means too be ‘rich’.

If it’s a complete hijack my apologies too the OP…just thought it was interesting.

-XT
[/QUOTE]

I’d like to see numbers for how many people are millionaires after removing the value of their family home. The run-up in real-estate prices has made a lot of relatively cash-poor people ‘millionaires’ on paper, but that’s kind of a meaningless definition to use if you’re trying to determine what the lifestyle of a millionaire is. Hell, over the past five years our house has appreciated in value by about $500,000. It’s tripled in price. So our net worth is well over half a million dollars now, but our financial situation on a monthly basis is only a little better than it was when a $250,000 mortgage was a financial strain and we were almost living paycheck to paycheck. So unless we sold this house, our ‘wealth’ has no real effect on our lifestyle, and by the time we do sell it the market may have declined again and all this ‘wealth’ will vanish as quickly as it appeared, without us ever using a nickel of it.

Take the primary dwelling value out of the equation, and I thnk you’ll find that millionaires are still pretty rare.

13

[QUOTE=T_SQUARE]
I see your point, I think. If you want to talk currently achievable, I would posit that the production possibility frontier (how much stuff you can make with a given set of inputs) is a good measuring stick. In the U.S. and the world, the production possibility frontier has certainly expanded outward over time, both in absolute terms and on a per capita basis. For example, the United States can make a whole lot more stuff than we could 50 years ago. Therefore, I think it is safe to say without a doubt we are richer than we used to be.
[/QUOTE]

Our average income has increased, adjusted for inflation, from 50 years ago, so in that sense we are wealthier. There are fewer (in proportion) children going hungry thanks to Food Stamps etc., so we’re wealthier in that way also. That is easy to measure, but I don’t think the number of possessions is a good metric. And, like I said, in some senses we are worse off.

But the answer will vary depending on what the standard is.

14

[QUOTE=xtisme]
It doesn’t really go with the OP except tangentially, but I thought this article on Yahoo! was interesting. It talks about millionaires in the US, and how they seem too be shifting in what they buy and how they act.

[/QUOTE]

Except what that article doesn’t seem to take into account is that $1 million doesn’t necessarily buy all that much any more. A modest home within commuting distance of New York City, LA or San Francisco can easily cost almost a million dollars. And I’m not talking about a mansion here.
People perceive wealth relative to their communities. A person making $100,000 in a place where the average salary is $60,000 is a lot wealther than someone making the same amount where everyone makes $200,000. Taking NYC for example again, the second individual may have to make 3x the rent payment of the first person just to afford a one bedroom appartment.

15

[QUOTE=Voyager]
Our average income has increased, adjusted for inflation, from 50 years ago, so in that sense we are wealthier.
[/quote]

At the end of the day, what that really means is that people can buy more stuff now than in the past.

Sure, and that’s the big problem. It’s quite possible that in 20 or 30 years, we will have access to goods and services that will make 2000 seem like 1890. Will everyone be jumping for joy at how rich we are? Quite possibly not.

16

True, for some definitions of “stuff”. To the extent that there is stuff that is harder for us to get now than in the past, we are poorer than our predecessors.

For example, due to greater abundance of wildlife, a number of foods that we now consider luxury items were ordinary staples of life to people a few centuries ago. in the early 19th century, many people in the coastal regions of the eastern US could just scoop up as much oysters, lobsters, and salmon as they wanted from their own local beaches and rivers. Farmers used lobsters for pig feed and fertilizer: that’s how much wealthier they were than we are.

17

[QUOTE=Voyager]
If I should have felt poor then, do you feel poor now because you don’t have the opportunity to vacation in orbit (with 0-g sex :wink: )
[/QUOTE]

I reckon that prospect is a bit over-rated, or at least would involve a bit more netting/restraint than I’m usually comfortable with. My safety word is “Newton”.

18

[QUOTE=brazil84]
At the end of the day, what that really means is that people can buy more stuff now than in the past.

[/quote]

Oh yeah? Try to buy a 78 rpm record today. People used to be able to buy lots of stuff. It was less technically advanced, but on the other hand it was better made. And cheaper for equal quality. I’m typing this on an antique roll top desk that my in-laws were able to afford on one teacher’s salary. Today you can get Ikea stuff. Now I like Ikea, but the quality is nowhere close.

Still, our quality of life is better, but I’m not sure that counts as wealth.

19

[QUOTE=Struan]
I reckon that prospect is a bit over-rated, or at least would involve a bit more netting/restraint than I’m usually comfortable with. My safety word is “Newton”.
[/QUOTE]

I’d think that some experimentation would certainly be in order.

20

Except that handmade furniture and suchlike was just as expensive back then as it is now, it’s just that there was no alternative. You can still get the same stuff, except people don’t like the idea of plunking down a month’s salary for a desk.

And then there’s weird things like food vs rent. In a lot of old stories you have situations where people are living in a cheap apartment but are starving and can’t afford to buy food. Or they do something like pawn their coat to buy food. Something that is pretty much impossible today…free food is available to anyone who has enough mental wherewhithal to ask for it, food is cheap. If you’re broke you’re not going to starve, but you will be out on the streets, you can’t starve in a garret anymore, garrets are too expensive and food is too cheap, and your coat is worth only a few bucks.