Outside his office window at the Dallas Federal Reserve Bank, a tall building crane is working on another new building, yet more evidence of continuing expansion. With sunlight streaming in and stock prices sprouting like bluebonnets, it’s difficult to be dour.
“I think it’s pretty clear we’re in a long push,” economist W. Michael Cox says.
“From 1853 to 1953 our economy was in recession 40.2 percent of the time. But since 1982 we’ve been in recession a total of 9 months. That’s less than 5 percent of the time. There is a new paradigm view that we’re on a big wave.”
The big wave Mr. Cox is referring to is the economic growth that is coming from the invention of the micro-computer, the discovery of DNA, and the use of microcomputers to accelerate discovery in biotechnology. As he sees it, we are living in a period of growth that can only be compared to the invention of electricity— an invention so fundamental it made possible a multitude of other inventions that changed the face of the world and how we live.
Our economy, he points out, has added 35 million jobs since 1982, a growth rate almost four times the job growth in Europe. In the last six and a half years alone, our economy has added 15 million new jobs.
“And that’s net new jobs,” he says. “It’s been estimated that 25 million jobs were destroyed during that period so we really created 40 million new jobs.”
Is this a Pollyanna? A Dr. Pangloss? A compulsive optimist?
Not at all.
Michael Cox is an economic historian. While many in his trade look at data over periods of a few years, regarding ten years as the deep past, Mr. Cox regularly takes the very long view. And he likes what he sees.
Up close, in the here and now, there is conflict, upheaval, and uncertainty. Take a step back, measure carefully, and you see remarkable progress. While many economists are lost in the arguments about how to measure the consumer price index, Mr. Cox has researched how our cost of living has changed in hours, not dollars. He knows that time is the ultimate currency: we may talk in dollars but ultimately we trade in hours.
By that measure, life is better. Much better.
Skeptical? Then I suggest you call the Dallas Fed and ask for a copy of their 1997 Annual Report. In “Time Well Spent: The Declining Real Cost of Living in America”, Mr. Cox provides pages of examples showing how an hour of labor buys more today than it did in the past. Some samples:
- Household Appliances. As recently as 1970 it took 112 hours of work to buy a refrigerator. Now it takes 68 hours. During the same period, the “cost” of a kitchen range fell from 113 hours to 22 hours; a dishwasher fell from 69 hours to 28 hours; and a clothes washer fell from 72 hours to 26 hours.
- Food and Clothing. In 1919 a three pound chicken cost 2 hours and 37 minutes of work. In 1997 it cost 14 minutes. A dozen oranges cost 68 minutes then, 9 minutes now. A pound of ground beef cost 30 minutes then, 6 minutes now. A man’s suit cost 79 hours of labor in 1927, but only 40 hours in 1997. A pair of Levi’s now costs one third as much, in work time, as it did at the turn of the century, even with improvements such as zippers and fabric softening.
- Shelter. Although many people look back with nostalgia to the days when a new home cost less than one of today’s new cars, the cost of a home has declined since 1956. Back then, you worked 6.5 hours to buy a square foot of new house. Now, the figure is 5.6 hours. Why do houses cost so much more? Because they have grown from 1,150 square feet to 1,950 square feet. And while they’ve grown, amenities have been added. Only 28 percent had two or more bathrooms in 1956 compared to 91 percent today. Only 33 percent were insulated in 1956 compared to 93 percent today. Only 6 percent had central heat and air compared to 81 percent today.
One of the more intriguing examples Mr. Cox cites is the cost of a color television set— $620 in 1971 or 174 hours of work. Today, a better set costs $299 or 23 hours of work. In spite of its cost, more than 40 percent of all households had a color TV by 1971.
Today, with about 40 percent of all households owning a personal computer, you can buy one for less than $1,000… about 75 hours of work. Personal computers, in other words, are already less expensive in hours of work than a color TV was in 1971.
Is there any rain for Mr. Cox’s parade of progress?
Only taxes. “And that is another subject”, he says.
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Photo: SevenStorm JUHASZIMRUS
(c) Scott Burns, 2022