Cafe Hayek - Latest Comments in Working for Sears Goods

Re: Working for Sears Goods

Anime9200 — Sat, 19 Sep 2009 00:14:13 -0000

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Re: Working for Sears Goods

Zach — Sun, 16 Apr 2006 22:49:31 -0000

Interesting article, I wonder if the current online tools like Price History at price comparison sites like PriceComparison.com (http://www.PriceComparison.com) could provide us with exact data perhaps 10 years from now?

Just a thought.

Zach

Re: Working for Sears Goods

John Pertz — Wed, 01 Feb 2006 21:21:30 -0000

Spencer

I was wondering if you have done any research on the effects of zoning laws on the price level. After all zoning creates ARTICICIAL scarcity within cities thereby razing values above their naturaly prevailing rate. I think this could be a significant reason why housing prices are up. Also, where I live, Winter Park, Florida, is a traditionaly planned city with grid street patterns and multi use development. People love the city because it is so unique for Central Florida. Most of Central Florida development is noted for its rather bland style of planning around big government roads and therefore people value land in Winter Park much more than they would under a naturaly occuring market order. I have a hypothesis that this current situation is one of the most severe causes of the impoverished peoples suffering. The only solution in my opinion is to restore development back to its normal market order.

Re: Working for Sears Goods

Anthony — Wed, 01 Feb 2006 15:05:32 -0000

"la" - cars of the 1970s are the reasons I only buy Japanese cars.

Houses here in California are more expensive now than then because local governments have made it so much harder to build new ones.

Re: Working for Sears Goods

JABBER — Wed, 01 Feb 2006 13:16:41 -0000

What you say about wages in the UK is correct, Liberty. Their professionals are grossly underpaid compared to the US, which is probably why their economy is so moribund (as is all of Europe's), as their is little incentive to innovate due to onerous taxes and state socialism.

Re: Working for Sears Goods

liberty — Wed, 01 Feb 2006 09:41:24 -0000

>I'm pretty sure they do NOT get paid 80% more!

No, in pounds they get paid a lot less, at least half. The median wage there is less than here even after adjusting for PPP. Kids get paid 3-5 pound an hour, instead of 6-10 dollars they are paid here, and the median wage when adjusted by exchange rate comes out only 80% of ours, meaning that if indeed a pound only goes about as far as a dollar, they actually only make 80% of 60% of what we make.

Re: Working for Sears Goods

liberty — Wed, 01 Feb 2006 09:35:08 -0000

>I think my original point about adjusting the data for the impact of wives working is

still valid.

And I disagree because you've missed my point and the data that I gave you to prove it. Yes, women are working more. True. But if the number of earners in a household has actually gone down slightyly or is the same (and in a family too in case you think that households are like roomates or something and don't count) then what does it really mean?

I posit you this.

In 1975 it was difficult to make ends meet and very often teenage sons had to get a job and not go to college and be one of the earners in the family. In part this was because women were busy with the younger kids and there was not a lot of extra income to pay for a baby-sitter etc. By 2000 this had changed, incomes were higher, women were *able* to go to work and kids were able to go to college or move away from home and set up their own household, rather han help out mom and dad.

Hence, the same number of earners brings in more income now, but it is different earners - then it was dad and son, now it is mom and dad.

Re: Working for Sears Goods

liberty — Wed, 01 Feb 2006 09:30:10 -0000

And families are not necessarily living together - which is why it is less appropriate.

Re: Working for Sears Goods

liberty — Wed, 01 Feb 2006 09:29:22 -0000

>Liberty -- you are confusing families and households. Family are related groups living together while households are unrelated individuals or groups living ogether. A freshman living in the dorm is a household but not a family. I will come back with the corect data.

I'm not confusing them because I'm not comparing them; I provided both because the families went back further, but households is more appropriate.

Re: Working for Sears Goods

Kevin — Tue, 31 Jan 2006 19:13:11 -0000

Liberty: way back to your original comment. I work for a UK firm and travel there. Curious juncture right now: things seem (anecdotally) to cost the same number of pounds there as they do dollars, here. i.e, 80% more across the board (except hotel laundry, which is about 4000% more). My UK manager backs me up on this.

I'm pretty sure they do NOT get paid 80% more!

Re: Working for Sears Goods

JABBER — Tue, 31 Jan 2006 18:57:29 -0000

Wow, "la." That's a nice planet you lived on! I wish I'd been there! How you can equate 1970s era TVs (!), health care, and cars (Are you kidding?! I know, I worked in the auto industry...the cars of the 1970s guzzled gas, were heavy, rusted out...in sum, they sucked!) is beyond me. And bell bottoms and polyester should utterly seal the deal!

Many moms work today, it's true, but more and more people are discovering that the incremental benefit of them (or their husbands...let's not be sexist) working is often negligible once you add in the incremental costs of childcare, work clothes, commuting (how many people in the 1970s had two or more cars, by the way?), etc., to say nothing of the intangible costs in terms of stress. But would I turn back the clock for that reason? Absolutely not, because women's human capital is being put to good use in the workforce, if not at home.

I think, "la," that your nostalgia has clouded your thinking.

Re: Working for Sears Goods

la — Tue, 31 Jan 2006 17:05:37 -0000

Exactly what planet are you people living on? I remember 1975 quite well, and appliances,etc., were made to last for years. We had TV's for literally my whole childhood. Clothing was higher quality made with better materials. My Levi's 501's lasted for at least my whole college time and beyond. Nowdays, we have planned oblesence. Products are part of the throwaway society and they suck.

In addition, everyone in CA where I grew up could afford a nice home and Mom's didn't have to work. Almost everyone could afford to go to the doctor. People were able to fix their cars themselves, and they were made of stronger materials, so you could keep them running forever. The cars were also built in America by well paid Union labor. There wasn't as much prepared cardboard food, and people weren't as fat.

I'd take 1975 over 2006 any day of the week. It is hard to imagine how much better life was in so many ways then.

Re: Working for Sears Goods

spencer — Tue, 31 Jan 2006 15:25:49 -0000

Liberty this is where you need to go: to

quote------

The data in Table 3 also show that there have been important changes over time within household types. One change has been the increased labor force participation of women. Table 3 data for married couples show that, from 1969 to 1996, the proportion of wives working year-round full-time rose from 17 percent to 39 percent in households with children, from 42 percent to 60 percent in households with no children and a householder less than 40 years old, and from 31 percent to 46 percent in households with no children and a householder between the ages of 40 and 64 years. Material presented later in this report isolates the income effect of these increases in labor force participation by showing time series data on the median incomes of married-couple households both when the earnings of wives are included in the income definition and when the earnings are excluded.

http://www.census.gov/hhes/...

the table 2 they refer to is at

http://www.census.gov/hhes/...

At the first reference be sure to look at this conclusion---

Although the median income of married-couples with children increased substantially between 1969 and 1996, the effect on this increase of excluding the earnings of wives from the income definition is striking. When the earnings of wives are excluded, the median income of these households showed a 2 percent increase over the period, rather than a 25 percent increase.

Married-couple households without children also had substantial gains in median income between 1969 and 1996, and again the increased importance of the earnings/income of the wife was very evident. Among households with a householder under 40 years old, median income increased by 34 percent over the period but only by 17 percent when the earnings of wives were excluded from the income definition. Households with a householder between 40 and 64 years old had an increase of 34 percent when the earnings of wives were counted, but an increase of 16 percent when the earnings were excluded.

The median income of households with a female householder with children and no spouse rose by 10 percent between 1969 and 1996, but the median income of households with a male householder with children and no spouse fell by 8 percent.

Note that this data is from Census, the same data source you used.

Moreover, if you go to the BLS you will find that the participation rate of females age 20 and over has grown from 46% in 1975 to 60% in 2005.

I think my original point about adjusting the data for the impact of wives working is

still valid.

Re: Working for Sears Goods

spencer — Tue, 31 Jan 2006 14:36:45 -0000

Liberty -- you are confusing families and households. Family are related groups living together while households are unrelated individuals or groups living ogether. A freshman living in the dorm is a household but not a family. I will come back with the corect data.

Re: Working for Sears Goods

Robert Cote — Tue, 31 Jan 2006 13:05:18 -0000

Somebody mentioned software. I'd posit (with no way to defend the assertion) that the sales price of all the software stolen by our trading partners exceeds the balance of payments we see in the trade figures. If the Fed merely accounted for those loses we'd be more realistic about our relative performance.

Re: Working for Sears Goods

liberty — Tue, 31 Jan 2006 12:30:23 -0000

And by the way, yes, disney world costs the price is does because they buy plastic from China too.

You see, we have a comparative advantage making MRI machines, airplane tickets and disney world. They have a comparative advantage making blenders and other plastics. We can spend our larger salary buying nicer stuff because we do buy a cheap blender and our companies - like Disney - buy cheap plastics from China too.

WOuld you rather spend 10% of your paycheck on a belnder made in the USA or 2% of your paycheck on a blender made in China and 10% on a trip to Disney?

You get much more for your money - and are in the end a bigger boon to the USA - if you use trade to all of our advantages.

Re: Working for Sears Goods

liberty — Tue, 31 Jan 2006 12:21:40 -0000

>Not so much the case for a US production worker '05 buying a blender '05 from Sears '05, is it?

No, now you have an '05 US Software Developer buying a blender for much cheaper and far less out of his paycheck; that money goes to a Chinese man; then the remaining 99.99% of the US Software Devloper goes to buying a laptop, 2 airline tickets and trips to Disney World, seven nights out at a top-end restaurant and health insurance that will allow the Software Developer to realize that he has Carpal Tunnel Syndrome (so he can get a free massage) or epilepsy, using the new MRI machines and 5 day EEG monitoring.

Re: Working for Sears Goods

Thorn — Tue, 31 Jan 2006 11:49:32 -0000

How about noting the difference between a Sears '75 sale and a Sears '05 sale in terms of a dollar multiplier effect? That US production worker '75 buying a blender '75 was putting money in the pocket of a company that paid a US production worker '75 to produce something else for sale to a US production worker. Not so much the case for a US production worker '05 buying a blender '05 from Sears '05, is it?

Re: Working for Sears Goods

JABBER — Tue, 31 Jan 2006 11:42:49 -0000

Fascinating, Liberty. So, not only are we consuming more stuff, but it's taking us fewer people to do it? Imagine that...

Krowne makes a comment a few threads above that jiggered my memory. He wrote: "Yet for all the benefits of cheaper goods, services have picked up the slack. I wonder if one can show that the dramatic drop in the goods portion of cost of living is a major contributor to permitting things like health care to inflate..."

And, I would have to agree with him. But, whereas he SEEMS (and I may be wrong here) to think this is somehow a bad thing, I simply see it as people using that "excess" disposable income (vis a vis 1975) to purchase things they could never have dreamed of in 1975 like....Viagra! Can I get an "Amen!" :)

I think Krowne is right on...that disposable income has effectively translated itself into a rightward shifted demand curve in many services, including education (of all types) and healthcare, which has been exacerbated by gold-plated health coverage for most Americans, who then have NO incentive to do their personal part in reigning in prices. Econ 101, in other words.

But, rather than being "bad," per se (and much of it probably is bad to the extent that the incentives are wrong), think about what it brings us: improved health, quality of life, more leisure (as we hire others to do things we used to do ourselves in 1975, like clean our houses, etc). Meanwhile, think of all the cottage industries that have sprung up, such as the aforementioned house-cleaning industry (which, I'm convinced, would probably raise GDP by several tenths if it was all "on the books"!)

The memory Krown tickled was that, in the past month, I've had two people I respect a great deal tell me how hard it is to "make ends meet." I thought about that, and I realized that we ALL struggle to "make ends meet." Why? Because our consumption budget is like the proverbial goldfish...it grows to the size of the tank it's in. But that assuredely DOESN'T mean that "we're struggling"...that's just sheer human obliviousness to how good we really have it compared to...ourselves in 1975!

Re: Working for Sears Goods

liberty — Tue, 31 Jan 2006 10:54:46 -0000

I followed up on my thought at the census site. I looked at family earners in 1975 compared with 2001 and household earners in 1980 compared with 2003 (those were the closest numbers they had). Interestingly there average *fewer* earners today, not more. I added up the number of households with each number of earners (0,1,2,3,4+) and multiplied by the earners (for four or more, I just used 4), finding the average number of earners:

in the 1975 family: 1.573

in the 2001 family: 1.569

in the 1980 household: 1.386

in the 2003 household: 1.312

So, rather than having more earners on the average contributing to the higher median incomes, we seem to have fewer.

http://www.census.gov/hhes/...

Someone can tell me if I've made a mistake.

Re: Working for Sears Goods

Robert Cote — Tue, 31 Jan 2006 10:48:15 -0000

7-11 or Circle K have 12oz cups of coffee, real coffee for 69-99 cents. StarLeafWhatever is not the metric for coffee.

Re: Working for Sears Goods

Owen — Tue, 31 Jan 2006 10:19:14 -0000

Things may well be better for the wealthy buyers of big fridges but struggling coffee-drinkers have fallen further and further behind. In 1975 you couldn't have paid more than 50c for a cup of joe -- today it's $4 for a simple decaf vanilla non-fat latte!

Re: Working for Sears Goods

liberty — Tue, 31 Jan 2006 10:10:02 -0000

>Sure, we can borrow the money from the Chinese to maintain a high standard of living. What we're doing is mortgaging the productivity of our children in order to keep up a high standard of living for ourselves.

Clearly you have no recognition of the fact that trade is what makes people prosperous. The Chinese can make plastics for relatively cheap - they only earn a few dollars but that is better than they had without the job and so they can sell them to us very cheap (because of this low cost of labor) and it will be *good* for them. If we made the products, we would not sell them as cheap because no Americans would do the work for less than, say, eight dollars an hour. So, instead, we build airplanes and write software, make 20-100 dollars an hour and then buy lots and lots of plastics from the Chinese. Guess who is better off? Both of us.

>the use of medium family income to adjust housing costs biases the measure in the other direction because the medium family income should be adjusted for two income families -- in 1975 that was just starting to become common.

Economically or politically? A few things. One is that in 1975 many more young men, teenage boys for example, had to work and put it toward a household income. Women may have worked part time, but a big reason that they did not work much was because they were needed around the house using primitive cleaning tools (1970 dishwasher or no dishwasher) and taking care of the kids - they did not have a way to leave the household chores behind and get a job.

Today women can get a job - part-time or full-time if they want. Still many families have only one income or one primary earner, with another part-time salary. You can divide the income by the number of earners (divide by 1.5 if one is part-time) and you'll still find that today's income purchases more. But you must also ask whether its a bad thing that more women work today, whether its a choice not a necessity, and whether what the family is able to purchase goes even beyond the higher dollar value.

Re: Working for Sears Goods

Aaron Krowne — Tue, 31 Jan 2006 09:39:54 -0000

The objections to your analysis of course bifurcate along the goods/services distinction.

No one is arguing basic goods are more expensive. They aren't. That's one of our key incentives in this whole temporary US/China/Developing world imbalance arrangement.

Yet for all the benefits of cheaper goods, services have picked up the slack. I wonder if one can show that the dramatic drop in the goods portion of cost of living is a major contributor to permitting things like health care to inflate...

My point (as usual) is that we shouldn't single-mindedly cheer lower prices on DVD players (etc.) because (1) services are eating up nearly all of our savings, (2) many of these goods are being bought on credit/we have negative savings, (3) the arrangement, at least to the current extent, seems unsustainable, and (4) the current arrangment is the result of government interference in the form of short-sighted, politically-effecatious macro-economic policies.

Re: Working for Sears Goods

spencer — Tue, 31 Jan 2006 09:30:56 -0000

the use of medium family income to adjust housing costs biases the measure in the other direction because the medium family income should be adjusted for two income families -- in 1975 that was just starting to become common.