They argue that it isn't true at all--people are, in fact, much better off! Look, people have the internet! Smartphones! Flat Screen TV's! Netflix! None of those things existed in the 1980's. They argue that the "utility" of these things is not captured in the "official statistics," therefore the longer hours, falling wages, debt servitude and precariousness of work is all cancelled out.
I'm not joking. I've seen this argument more times than I can count (especially on libertarian Web sites and podcasts - Marginal Revolution and Econtalk drop this one on an almost daily basis). This article in the Washington Post (owned by Jeff Bezos) sums it up:
But even if we have less money, you know what we do have that we didn't 15 years ago? Smartphones and social networks, Netflix and HD TVs, apps and whatever other technology you prefer to waste time on. Now, it's true, you can't eat an iPad, but it's also true that these things make our lives better in ways that are hard to measure...If you paid $400 for an HD TV today, for example, and $400 for a regular TV 10 years ago, did you really pay the same price? Technically, yes. But the fact remains that you got something better for the same amount of money than you would have before. And that's even trickier when you're talking about things that didn't even exist back then, like smartphones, that are really every electronic device from the 1990s rolled into one pocket-sized piece...
Try this thought experiment. Adjusted for inflation, would you rather make $50,000 in today's world or $100,000 in 1980's? In other words, is an extra $50,000 enough to get you to give up the internet and TV and computer that you have now? The answer isn't obvious. And if $100,000 isn't enough, what would be? $200,000? More? This might be the best way to get a sense of how much better technology has made our lives—not to mention the fact that people are living longer—the past 35 years, but the problem is it's particular to you and your tastes. It's not easy to generalize.Why your middle-class salary is better than you might think (Washington Post)
Believe it or not, this is a a very common argument. In fact, I would argue that it is the most common argument I see deployed by economists of late to justify the failure of the current status quo. Their argument is basically this: If Reagan hadn't drastically lowered taxes on the rich, we would still be looking at picture tubes, talking on land lines and using maps to find our way around in what would surely be a miserable hell beyond human imagination. Here's Dean Baker summarizing the same argument:
A survey of elite economists (you know, the type of people that couldn't see an $8 trillion housing bubble) found that the vast majority said that the official income data understated the increase in the standard of living for the middle class over the last 35 years.
The explanation for this view is that new goods like cell phones and the Internet have vastly improved our standard of living in ways that are not picked up in the data. O'Brien suggests a thought experiment that has been put forward by this elite group. Would you be willing to trade an income of $50,000 in 2015 for an inflation adjusted $100,000 income in 1980, knowing that you can only buy the goods and services available in 1980? The implication is that most of us would say no, since it would mean giving up our cell phones, Ipads and Ipods, smartphone cameras, wifi, and all sorts of other neat things.And Martin Wolf:
Those whom [Robert] Gordon calls “techno-optimists”—Erik Brynjolfsson and Andrew McAfee of the Massachusetts Institute of Technology, for example—respond that the GDP statistics omit the enormous unmeasured value provided by the free entertainment and information available on the Internet. They emphasize the plethora of cheap or free services (Skype, Wikipedia), the scale of do-it-yourself entertainment (Facebook), and the failure to account fully for all the new products and services. Techno-optimists point out that before June 2007, an iPhone was out of reach for even the richest man on earth. Its price was infinite. The fall from an infinite to a definite price is not reflected in the price indexes. Moreover, say the techno-optimists, the “consumer surplus” in digital products and services—the difference between the price and the value to consumers—is huge. Finally, they argue, measures of GDP underestimate investment in intangible assets.It's price was infinite? That's a bizarre argument. Theoretically, there are in indefinite number of goods whose price is infinite right now. Moreover, this was the case in 1990, 1980, 1880, 1776, and 1440 BC. If people couldn't buy them, then why did they care?
Who cares that you need to make six figures to afford the rent in many American cities? Who cares about the housing bubble or people being priced out of New York and San Francisco? Who cares about the 1 trillion dollars in college debt? Who cares that the 99 percent are getting poorer every year? Who cares that the fastest-growing occupations in America pay terrible wages? Who cares that we're commuting farther than ever to get to our jobs? Who cares that children never go outside anymore? Who cares about how many people we're incarcerating? Who cares about cities where the water is being shut off or the municipal bankruptcies? Who cares that getting sick will lead to being in debt for a lifetime in America? Who cares that three-quarters of Americans are living paycheck-to-paycheck, or have not been able to save enough money for retirement? Who cares that we are working one entire month more per year than in 1970, despite all our "labor saving" technology? Who cares about mass surveillance? Who cares about austerity in Europe? Who cares about climate change and species extinction?
You've got the Facebook!!!
It's basically the "Let them eat smartphones" argument.
This is the new argument that the economics profession is rolling out and testing in their latest desperate attempt to convince people that, no, capitalism really is working for everyone. As I've often said, economics is mainly used to persuade people that what they know is so just ain't so.
It also shows the built-in materialistic and hedonistic bias of economic "science." Who cares about the extreme levels of inequality, the increasing competitiveness of the job market, the precariousness of work, the alienation, the longer hours, the debt serfdom, the economic Balkinazation of society, the corruption of politics, the despoiling of nature, and the coarsening of culture generally. There's more stuff to buy! Therefore life is better for everyone full stop.
I'm not joking, this is seriously what economists like to argue. For example, in books and papers about the Industrial Revolution, economists like to tell us how much better off people were because of all the new goods on offer and the rising wages, even though the people buying them went from working for themselves on farms with their families in line with the rhythms of nature to working sixteen hour days in smoke-filled factories for a sociopathic boss. But hey, look at all the stuff they could buy! After all, thanks to rising wages, you could afford to be buried in a new linen suit and mahogany coffin when you died of black lung at age thirty. This is economic logic.
Now, of course, they don't even have rising wages anymore. Time for plan B. I love how economists discount anything they can't measure. But when they try to justify the status quo, suddenly all the benefits to our lives are "unmeasurable" and not captured in the statistics. New inventions justify everything.
It's doubly ironic, since one of the favorite arguments from political conservatives when you point out increasing poverty is "poor people buying things they can't afford," like - you guessed it - cell phones and flat-screen TV's! The implication is that if they just didn't buy these things then there would be no poverty problem. But where does that leave the above argument? Wouldn't poor people be better off if those things had not been invented, since they can't afford them anyway?
Also, what I don't understand about these arguments is that you can just as easily easily make the case that all these digital distractions have actually made us worse off, viz:
Thanks to digital technology, a significant portion of Americans are never off from work. Laptop on the beach syndrome means you are never on vacation either. I've gotten plenty of emails timed from 8:00-10:00 at night and on weekends. I've had plenty of people tell me that they've got their cell phone and laptop to be contacted when they leave at 5:00 or go on vacation (I don't, of course, one reason my career is DOA). And then of course, there is the whole digital Taylorism phenomenon where every movement and every keystroke is tracked, monitored and analyzed to increase "efficiency."
That didn't exist in 1980.
Are we really better off with all the "smart phone zombies" walking around everywhere mesmerized by their digital screens? Not talking or interacting with other people. Not able to spend more than three seconds idle without some sort of digital distraction. Texting and driving is now a thing.
I've lost track of all the destructive effect on teenagers due to all the novel pressures put on them because of "social media. " This includes everything from "cyberbullying" (which did not exist in 1980), to sexting, to cyberstalking, to distributing nude photos, leading in some cases to suicides which might not have happened otherwise. Now kids have yet another outlet to dispense social pressure and obligations, and all of us have yet more media designed to manipulate us, criticize us, sell to us, and make us feel miserable and inadequate. You "need" to be on social media like LinkedIn now just to get a job. That didn't exist in 1980, and neither did the algorithms that are picking who gets hired or not. If Facebook went away tomorrow, would anyone even care?
Not to mention the effect of these screens on our health has been terrible. They've been linked to disrupted sleep cycles and other health effects. Now we have to spend all day staring at a screen in a sedentary position.
Back in the 1980's if you wanted to listen to people's phone calls you had to bug their phone. If you wanted to record the conversation you had to tape it. Just like with nuclear weapons, we now have entirely new fields of warfare - "cyberwarfare," to worry about since we have made everyone dependent upon the Internet.
Are we really saying we're so much better off because we have bigger and flatter televisions and more ways to distract ourselves from life?
Of course I'm well aware of the hypocrisy of a blogger saying all of this. Sure there are some benefits, but in the cost/benefit analysis, is it all worth it? I've got to tell you, I'm not at all sure.
As for the scenario above of having twice as much money in 1980 than now, I think it's a no-brainer - of course you would want that!
In the 1980's most major cities were affordable and you could take an airline flight without being crammed in like a sardine and paying through the nose for the privilege.
Durable goods were also much higher quality. Plastic and cheap laminated particle board shit from China is nowhere near the quality of stuff you could buy in the past. When I was a kid (I'm 41) we had metal lunchboxes and snow shovels. Any trip to a house built before 1950 and any trip to a rummage sale selling stuff made before 1985 will confirm this fact. Look at the stuff owned by your grandparents - the tools, the furniture, the silverware, the clothes, even things like watches and sewing machines.
When I was a kid we bought things from local stores owned by local people and made in America - WalMart had not taken over the country with its low wages and shoddy crap from China, and neither had the associated poverty culture. Middle class people routinely shopped at stores like Sears and Gimbels and "dime stores" like Ben Franklin.
And the above argument that people are living longer? Is he really arguing that people are healthier now than in 1980? Are you fucking kidding me??? Look at any photo before 1980 and you know what you won't see? The ridiculous levels of obesity. Bloated and distended bodies form a steady diet of corn syrup. People living on fast food. Forty-year-olds riding around on scooters. Thirteen-year -olds with Type 2 diabetes. Children with asthma and food allergies. Drug ads on TV. Children zonked out on pharmaceuticals. Strip malls being converted into dialysis clinics. Hospital complexes as the largest employers in most small cities. Some of this is due to population aging, of course, but as we've seen before, 90 percent of young people are rejected from militarily service due to health problems. I doubt this was true in 1980.
Here's Matt Breunig on the "Would you prefer 1980?" thought experiment:
...We actually have people who are alive right now who were in their adulthoods in 1980. These people know what the technology was like then and now. And, at present, they have some degree of control over which set of technologies they use.
Using smartphone adoption as a proxy for these people's technological preferences, it's clear that the people who actually lived as adults through both technological periods overwhelmingly prefer older technologies.The super-majority of people over the age of 55 do not have a smartphone. Additionally, a good chunk of those over that age that do have a smartphone don't really use it like a smartphone (instead they treat it more like an older phone).
Judging from these people's preferences, you'd have to conclude that, in fact, older technologies are preferable to newer technologies. You don't need a hypothetical to determine whether living in the past was better: these are people who lived in the past and the present and clearly prefer the way they lived in the past, at least when it comes to the technologies that are supposed to have made life dramatically better (as incomes stagnated).
In saying all of this, I realize there is a semi-obvious rebuttal: older people only prefer older technologies because they grew up with them, were habituated to them, and feel familiar to them. This is a very compelling rebuttal, but it ends up swallowing the entire argument that people are better off than income trends show. Old people prefer older technologies because they are habituated to them, but the same is also true for younger people and newer technologies.People Aren't Better Off Than Income Trends Show (Demos)
The first point is a narrow one. These folks are upset that our price indexes don't have a way of picking up the benefits of new goods like television, refrigerators, and the polio vaccine. (Sorry, guess those are pretty old now. But the point is that important new goods are not new.) But good economists know that price indexes also don't pick up the cost of these new goods. To be specific, we can complain that the consumer price index doesn't pick up the gain from the wonders of a cell phone. That's true. But it also doesn't pick up the cost of buying the phone and paying for monthly service. (It picks up the change in these costs once they are included in the price basket, but not the initial cost.) With an important qualification that we will get to momentarily, we can assume the benefits are greater than the cost since people opt to buy cell phones, but that gap is much less than just counting the benefits alone, which it seems is how our elite economists view the issue.
The second point is that we adjust our society and living patterns around the technology we have. Ask someone who lived in the suburbs in the 1960s how they would feel living without a car. It would be pretty awful, but just 30 years earlier most middle class families did not have a car or think they needed one. To take a slightly more recent example, imagine living without air conditioning in the summer. Most middle class families did fifty years ago.
We have constructed a society that is built around cell phones and the Internet. Asking people to go without these items would be a real hardship because they have become integrated into their lives. Does this mean that we are better off in a society with these things than without? It probably does, but asking how our Internet/cell phone addict would do in a world without the Internet or cell phones is a silly question.
There is one more point worth mentioning. Our elite economist friends presumably don't want to believe that well-being is relative. This could be important because there is a much sharper gap between the living standards of the rich and famous in 2015 than in 1980. Some people may take this into account in their assessment of their well-being. In other words they may feel deprived to some extent because their living standards are so much lower relative to the rich than was the case in 1980. We know the elite economists don't want people to think like this, but some of the ignorant masses might anyhow. Maybe if they just took more economics ...Is the Middle Class Better Off? Economists' Poor Logic on New Goods (Beat the Press)
These points are correct. But they are nothing new: all of this has repeatedly been true since the nineteenth century. Indeed, past innovations generated vastly greater unmeasured value than the relatively trivial innovations of today. Just consider the shift from a world without telephones to one with them, or from a world of oil lamps to one with electric light. Next to that, who cares about Facebook or the iPad? Indeed, who really cares about the Internet when one considers clean water and flushing toilets?Rising wages and technological innovation did not used to be mutually exclusive. In fact, they used to be linked. Are economists actually contending that they are not anymore? Is this what they are having to resort to? And what does that mean for the economic system?