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hobo-jo
20-04-2010, 06:54 PM
There was an article in the Herald Sun - Monday 12th April - which outlined the difference in living costs comparing 1960 to now. Wages have increased by 27x, housing by 72x, tells a bit of a story...even with the increase in dual incomes this does not account for the huge increase in housing burden. I took the figures from the article and popped them into an Excel document so you can see the multiples of each expense:

http://img9.imageshack.us/img9/5164/costofliving2.jpg

http://img8.imageshack.us/img8/1530/costofliving1.jpg

The Prince
20-04-2010, 07:32 PM
http://img9.imageshack.us/img9/5164/costofliving2.jpg


I'll put my tin-foil libertarian hat on for a second and note something in your table:

Q. What components are more than 27 times the average wage compared to the 1960s?

A. Alcohol, Electricity/Gas, Water, Housing, Health, Phone, Public Transport, Games, Pets, Gambling, Education, Personal Care, Hotel/Restaurant.

I would suggest that the increased spending on phone, games, pets and personal care is a reflection of a more "leisure" orientated society. Ok, I'll add alcohol and gambling to that, just for the moment, but I'll come back to them.

What are we left with, and in some cases - at huge multiples?

Electricity/Gas, Housing, Water, Health, Public Transport, Education

All are supplied by government supported monopolies (e.g. energy companies, banks) and/or by the government services alone and all have huge political interference and "pull" in business and labor.

Yet everything else - everything left to (bad word coming) "capitalism" has gone down in price....food, clothes, appliances, cars, media, AV equipment, and even with MASSIVE taxes, booze and cigarettes are about the same amount as 50 years ago (a carton of XXXX would only cost $15 if it wasn't for the tax)

Thanks for the table hobo - puts things into perspective, doesn't it?

Pat
20-04-2010, 10:05 PM
What are we left with, and in some cases - at huge multiples?

Electricity/Gas, Housing, Water, Health, Public Transport, Education

All are supplied by government supported monopolies (e.g. energy companies, banks) and/or by the government services alone and all have huge political interference and "pull" in business and labor.

Yet everything else - everything left to (bad word coming) "capitalism" has gone down in price....food, clothes, appliances, cars, media, AV equipment, and even with MASSIVE taxes, booze and cigarettes are about the same amount as 50 years ago (a carton of XXXX would only cost $15 if it wasn't for the tax)



Of course, don't tell me you think that bloated government services that don't have to compete need to lower prices??

Did you think one of our 809 politicians might actually care abut this??!

I wonder how many politicians we had back in the 1960's...

Berks
22-04-2010, 11:42 PM
Thanks for that post hobo-jo, that was quite a good read.

Would be interesting to see the portion of the average weekly wage paid in taxes for the respective periods.

Dashing Leech
17-08-2010, 07:30 AM
Nick, I like the tin-foil libertarian ideas but alas I don't think they stand up too well. The increase in leisure prices doesn't mean an increase in leisure activity, and doesn't explain why they'd be higher in price. Why would phones be the worst of all when they are among the highest competition?

It's also misleading to characterize the others as government supported monopolies. Electricity and gas were deregulated many years ago and competition is has been high in many places. Housing is mostly a wide-open market. Health care/insurance has been private in the U.S. for a long time (and rising overhead cost is one of the reasons for the move toward more efficient public health coverage).

Tin-foil aside, it looks like standard economic trade-offs. Competition brings prices down in R&D areas but increases it in overhead. Increasing population with fix land available increases housing costs (not to mention speculative marketing). Transportation gets more expensive as communities get denser as retro-fitting urban areas is very expensive. Also as worker empowerment and standards of living increase, these cost more. (A large lower class of poor workers always makes for cheap labour; the converse is also true.)

Even for the monopolies there ain't much for a libertarian to gnaw on. Non-profit infrastructure monopolies (electricity grid, roadways, etc.) will always be much cheaper than a direct competition of infrastructures. (Imaging the cost of building multiple sets of infrastructures.)

It's also not clear where the data came from? What's the range? What is the region?

I don't think there's much here to support any sort of ideological viewpoint of any type (left, right, or other) since so many of the items have so many mixes of economic effects, not to mention the effects of changing population (increase overall, aging, etc.). But I do find it interesting to try to fit some economic principles to some of the markets.

Zulu
17-08-2010, 11:30 AM
Can't say I agree with the cost of the phone increasing since in 1960 it would have been just that, nowadays you get a lot more than a simple phone eg mobile, internet etc. We are not comparing like with like.

It's also very apparent to me that nearly all items that can be imported have fallen in price, thanks to cheap labour in Asia mostly I guess.

I guess the majority of the increase in Games/Toys/Hobbies can be attributed to video games?

Increase in Education is a worry . . . .

Also the housing figure would be distorted somewhat (depending upon how you view it) as figures are "per head" and people per dwelling has decreased over that period which means the figure quoted would be higher than if calculated per household. Would like to see the same items calculated per household (i.e. including dual incomes) we could then probably draw a more accurate conclusion based on both sets of figures.

flawse
17-08-2010, 12:39 PM
Yes I don't get the phone thing at all. My memory of those times was a local call cost about a bit under a bob (:-))(9 equiv 9 or 10 cents as they say) It now costs what 30c?.
Where the heck did the $16 figure come from?

The emergence of China as a major source of cheap supply from about 1988 on would be a major factor in the stabilisation of many prices. An artificially high $A and the accompanying de-industrialisation plays a major role in distortions.

Pat
17-08-2010, 12:47 PM
I'm sure most people I know have phone bills of at least $80 a month or so, Blackberry and iPhone have done wonders for the infrastructure suppliers.

Add to that I hear teenagers send furious amounts of texts. I'd say its less that phone costs have risen and more that people stay connected to the phone 24 hours a day.

stewart
17-08-2010, 12:56 PM
I would have thought that the idea of the article was to gove a relative cost of living?

I'm wouldn't read too much libertarian or whatnot into it personally....

I just more of an idea of how the relative cost of living seems to have increased disproportionately to wages...fair, or no?

...that we do seem to have it "harder" now thatn "they" did back then, particularly in housing....?

Stewart

flawse
17-08-2010, 01:12 PM
In 1960 most of the family income went on basics pretty much. A TV was a luxury!
It's hard to compare times economically. I'd say if we had to live off our income rather than increasing debt we'd sure be finding it pretty tough now. Were the 60's a better time to live? My opinion would be yes but it had its downside that's for sure..including the fear that nuclear obliteration was not far away. Our social cohesion etc was a lot better.

Dashing Leech your points are valid and thanks for making them. Just one consideration, the effects you describe have been very much exaggerated by the type of debt ridden centralised society we have chosen. A more decentralised society with more diversification of industry (that is more factories making stuff across Aus)would have much lower costs.

Re the point of the text about average cost of living vs cost of housing is very valid. Again land prices have been very much effected by the type of debt-ridden economy we have chosen. Further the houses in 1960 were very simple and much smaller compared to today. So. again it is hard to make a fair comparison.

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