He blogs @ http://www.economonitor.com/dolanecon/
This blog is based on a wonderful website, www.wishbookweb.com, that I ran across by chance while doing research for the national accounts chapter of my econ textbook. The site archives full-color, page-by-page images of dozens of old mail order catalogs from as far back as the 1930s.
Here is my data-free test for what inflation has really done to us: If you could choose between shopping on line today at today’s prices, or buying from a mail order catalog of the past at past prices, what items, if any, would you buy from the past? If the past looks like a shopper’s fantasyland to you, then you are right, inflation has ruined our country. If not, then maybe the good old days weren’t quite as good as we remember them.
My destination catalog today will be the 1962 Sears Christmas edition. I picked it partly because it was published an even 50 years ago, and partly because 1962 was just before the Kennedy-Johnson inflation got underway, the first of three big waves that hit the United States in the 1960s and 1970s. So get ready to dive through that window on your computer screen—let’s go shopping!
We’ll start in the clothing department. True, there have been changes in style. Some of the 1962 specials would draw odd looks if you wore them to the office or golf club in 2012. But not everything is out of fashion. How about a turtleneck sweater for $7.95 (women’s sizes a dollar less), or a pair of fleece-lined leather gloves for $6.95? Classic style, quality materials, and where could you beat the price today? You’d snap those up for sure.
Need a watch? Here are the men’s models on p. 164. There’s a nice, basic Timex for just $14.95. Good deal, huh? But oops, better read the fine print. You have to wind it every day; and reset the time, too, or you’ll miss your bus. Wait, though–there at the bottom of the page is the newest thing, an electric watch. How does it compare to what the on-line store at Timex.com has for sale today? The 1962 electric model had a price of $43.95; the 2012 version costs just 4 bucks more, and probably keeps better time. So you won’t come back from 1962 with a watch, after all.
How about a TV? Here’s a top-of-the line 23-incher on p. 200 for $189.95. And check this out: “Silicon rectifiers as used in military missiles provide great reliability and long life.” Tempted? But, uh, “Controls conveniently grouped on the front?” Does that mean no remote? And color? Ya gotta be kidding! In 1962?
Before you grab that Sears Silvertone beauty, you’d better check out what the TV department at Amazon.com has on offer today. Here’s a nice 23-inch model: Color? Yep. Remote? Yep. Built-in DVD? Of course, dummy, this is 2012, after all! True, the 2012 model, at $229, will cost you an extra $50, but I think it’s still a better buy. How about you?
The bottom line? Yes, higher prices are bad, and monetary policy in the 1960s and 1970s was really awful; but if you’re shopping for basic consumer merchandise—clothing, personal accessories, electronics—maybe quality-adjusted inflation hasn’t been such a disaster after all.
That impression is even stronger if you translate the 1962 prices into hours worked. In 1962, average hourly earnings for nonsupervisory production workers were about $2.50 an hour. That means you would have had to work almost two weeks to earn enough to buy the TV. Today, average earnings are just under $20 an hour, meaning you can buy the color model with built-in DVD for just 12 hour’s wages.
OK, you’re back from your shopping trip. Take off your gloves, slip into that classic turtleneck, and switch on your TV—just in time to watch some politician ranting about the good old days, before inflation.