We often hear that incomes at the middle and lower tiers have been stagnant since the 70’s. It is true, but that statistic misses some important nuances. We can measure incomes and compare them to an inflation rate, but that is a deeply flawed measure of relative well-being.
Buffalo writer Steve Cichon dug up an old Radio Shack ad, offering a variety of what were then cutting-edge gadgets. There are 15 items listed on the page, and Cichon points out that all but two of them — the exceptions are a radar detector and a set of speakers — do jobs that can now be performed with a modern iPhone.
The other 13 items, including a desktop computer, a camcorder, a CD player and a mobile phone, have a combined price of $3,071.21. The unsubsidized price of an iPhone is $549. And, of course, your iPhone is superior to these devices in many respects. The VHS camcorder, for example, captured video at a quality vastly inferior to the crystal-clear 1080p video an iPhone can record. That $1,599 Tandy computer would have struggled to browse the Web of the 1990s, to say nothing of the sophisticated Web sites iPhones access today. The CD player only lets you carry a few albums worth of music at a time; an iPhone can hold thousands of songs. And of course, the iPhone fits in your pocket.
Measuring relative incomes completely misses the most radical and amazing transformation that has occurred in our time. The rise of global capitalism over the past two generations has triggered a collapse in the real cost of almost everything. The happy exception to this deflationary spiral is the cost of human expertise, reflected in the price of things like education and medical care.
Almost everyone in the stable corners of the world is, as I’ve written before, rich beyond the wildest imaginings of anyone living in 1975. It is certainly true that income distribution has been growing wildly more unequal over the past few decades, but understanding the differences in lifestyle for ordinary people that have accompanied that change is an important part of the equation that we often overlook.