Prices keep getting better

Today, my mother sent me an interesting email.  It was a chain email, one of many that my mother has the bad habit of sending to me but this one reminded me that occasionally you find a diamond in the rough. This email (read the email here) describes some details about how the world has changed since 1909, citing examples such as the average life expectancy of 47 years in those days, the small number of people who went to college, the presence of legalized narcotics and other interesting facts.  Although the observations were interesting, what caught my eye was the changes in prices. 

• Sugar was $.04 a pound
• Eggs were $.14 a dozen

 Clearly the author's intent was to point out how cheap those items were in 1909 but I saw the opposite.  From a real cost, those items were very expensive.  To the casual observer it might look like I'm off my rocker to make this claim but the math is there to support the claim. 

The cost of a product or service can be seen as a way of telling us how many hours we have to work, at our current rate of earnings, to afford an item.  When I say that an item is too expensive for me to buy, what that means is that it would take me too long to earn the extra money to buy the item or that I have the money for the item but, if I brought it, I wouldn't have money left to buy the other things I need so I would have to work even more.  So, in this sense, time does equal money.

For example, the average worker, the author states, made 22 cents per hour back in 1909 but a dozen of eggs cost him 14 cents.  This means that the average American had to work .61 hours to afford a dozen eggs.  (.14 / .22 = .63).  Compare that to today.  Today, the average American earns $20.67 per hour (based on the national wage average index from the Social Security Administration 2008 figures divided by a 2000 work year)  The average cost of a dozen of eggs is now $3.36 per dozen which means that the average American worker now has to work only .16 hours to get a dozen eggs (3.36 / 20.67 = .16) so eggs are cheaper; their prices having declined by 300%.  Using the same method, the price of gas went from .56 hours of work to .12 hours of work or a decrease in actual price of about 80%.  The illusion of products become more expensive is the result of inflation and the rapid increase in earnings resulting from the tremendous growth in productivity in America since 1909.

So prices are actually getting lower.

To highlight the point inflationdata.com has this chart that illustrates the real cost of gasoline over the past 90 years when the price is adjusted for inflation.  After adjusting, you can see that though the price of gasoline was about $.25 per gallon in 1918, in today's inflated dollars, that's the same as spending $3.57 per gallon in today's money.  Long story short....gas really hasn't gotten more expensive overall.

Democracy is little more than Mob Rule

There is a good reason why the United States was not founded as a democracy; because democracy is little more than Mob Rule.

One of my favorite blogs, the Rule of Reason has put up a great post on the topic of Republics vs Democracy