Wages (after adjusting for inflation) have stagnated while regressive taxes have gone up. At the same time expenses have gone up in some areas.
In other areas expenses have gone down. Food, transportation, electronics, etc. are actually cheaper than they were 30 years ago. You can spend less money (adjusting for inflation) for a higher quality used car in 2009 than you could in 1979.
But health care, child care and real estate have gone up in price to more than compensate for the decrease in cost for food, transportation, etc.
The stuff you are talking about (cell phone, cable TV, computer technology) probably come to $100/month or less. Not a small chunk of change, but very little compared to the $1000/month for a health insurance policy for a family of 4.
What you are describing is the just world phenomena. The concept that the world is a fair, just place and that if people only made good decisions, then they would be free of negative repercussions. If people stopped wasting money on WoW, they’d be able to buy a house. It doesn’t work that way when real estate has gone up 100% while wages have stagnated.
After WWII, the USA went into a period of unbelievable prosperity-middle-class people (like my Dad) were able to afford:
a home, and a vacation home
-new cars every 3-4 years
-college educations for me and three brothers
All this on a salesman’s salary!
Now, college grads are stuck-housing prices are astronomical, cars cost (minimum) $20K
and college is increasingly out of reach.
What is the cause? The huge growth of government (on all levels)-the taxpayesr are carrying a burden unprecedented in US history.
It is only going to get worse!
You know ralph124c, I agree we have problems, but I don’t believe it is all due to the growth of government. If you look here, I have posted a plot of Government Outlays and Receipts as a percentage of GDP since 1940. The values for 2009-2015 are estimated. All of this data I downloaded from the OMB Website and if you want I will send you the Excel spreadsheet for you to play with. The size of government (as measured by the amount of money it spends) has remained roughly constant since 1950 or so with outlays at 20% (+/- ~3%) of GDP. I don’t really see huge growth in the federal government, but I do agree that the huge stimulus payed out out by the Bush Administration and the much smaller stimulus payed out by President Obama somewhat scary when viewed this way. Regarding your points above about military spending, I think you are off base. Here is graph of outlays by function since 1940. If you look at Defense Spending, it is actually pretty low as a percent of GDP compared to the previous 50 years.
You know, we talked about a lot of this before in a thread you started (this one), but I guess you just blew it off…
The salespeople I work with could do this easily. As our society advances, more and more people are going to go to college, thereby increasing the cost of college. Skilled labor is being replaced by automation and cheaper labor overseas. But, compare the quality of what your dad has with what is available today.
Well, there are some other differences. I didn’t have my kids until much later (mid 30s). So I didn’t have daycare. Insurance was just me - so no affording insurance for a family of four. I had pretty basic insurance back then too - I was young and healthy. Leaving the house I bought. I paid $59k for it in 1988 (and sold it in 1997 for $73k). The same house had a for sale sign on it a year ago, I looked it up when it sold - $180k. A 5.1% rate, but the person I sold it to did major work on it (new garage, back porch, deck, redid the kitchen, furnace) before reselling it.
Again, its the “just would’s” but if I had a family of four to support when I was in my twenties, I wouldn’t have been able to afford a house either.
Ypur analysis ignores the cancerous growth of state and local governement-the town I live in (in MA) has raised property taxes by 12% per year, for the past 10 years (services keep dropping). the state has created over 8 new agencies which levy their own taxes (fees)-and are totally out of control. the state keeps raising taxes, and adding employees. Therefore, the total tax burden keeps rising.
I made a choice not to follow a job offer to a high cost state and remain in the low cost state. We’ve made that decision four times now.
So I’ve made the choice, but I retained the status quo.
(And the Twin Cities has relatively low housing values compared to where we’ve been offered jobs, but isn’t really a low cost place. Its a mid-cost place. But it isn’t Boston or SF.)
So in other words, the only costs you might have paid are opportunity costs. No hard costs. Surely you recognize the difference. I live and work in Manhattan. If I were to uproot and get a job in Minneapolis at roughly half my pay, even for a more favorable cost of living ratio, I would incur tremendous transaction costs that would take me years to recoup. This effect would only be magnified by the fact that I would have, by necessity, taken a considerable pay cut. I have not yet taken any of the personal issues into consideration.
You can understand why this might be a very poor choice.
Yep, although you’ve been in your career for a while. If you’d paid those opportunity costs up front when you first graduated from school, they would have been smaller, less to recoup.
In fact, those same transaction costs apply to why we don’t move now. As well as other sorts of sentimental costs (our families are pretty local, our friends are here).
Which isn’t to say you should have done so…I have a number of friends who chose to move from the Midwest to live on the East Coast (generally right out of college when the costs of transition were really low - or they chose college out there). There are benefits to living in Manhattan (or San Francisco or Boston or…). Just cheaper cost of living isn’t among them.
Indeed. I moved to the Bay Area when I was in graduate school. My transaction costs then were essentially zero. So over time, I’ve gotten used to the high cost of living here. I’ve even managed to buy a house.
