The principles that rule this blog

Principles that will govern my thoughts as I express them here (from my opening statement):

  • Freedom of the individual should be as total as possible, limited only by the fact that nobody should be free to cause physical injury to another, or to deprive another person of his freedoms.
  • Government is necessary primarily to provide those services that private enterprise won't, or won't at a price that people can afford.
  • No person has a right to have his own beliefs on religious, moral, political, or other controversial issues imposed on others who do not share those beliefs.

I believe that Abraham Lincoln expressed it very well:

“The legitimate object of government is to do for a community of people whatever they need to have done, but cannot do, at all, or cannot
so well do, for themselves — in their separate, individual capacities.”

Comments will be invited, and I will attempt to reply to any comments that are offered in a serious and non-abusive manner. However, I will not tolerate abusive or profane language (my reasoning is that this is my blog, and so I can control it; I wouldn't interfere with your using such language on your own!)

If anyone finds an opinion that I express to be contrary to my principles, they are welcome to point this out. I hope that I can make a rational case for my comments. Because, in fact, one label I'll happily accept is rationalist.

Thursday, March 10, 2011

The psychological effect of inflation

Those of us who are older than your average Internet surfer made our associations of "what a dollar is worth" under different conditions than those occurring today. I've learned to divide everything I see by 10 to assess whether something is expensive or cheap, and that seems to be a slight overcorrection (the BLS inflation calculator says that $1 in 1951 money is equal to $8.47 in 2011, a 3.6% per year increase, compounded annually). So when I look aghast at movie admission prices of $10, I'm right. Those $10 tickets are $1.18 even deflated back to 1951, and that's a lot of money! (I remember that movie tickets were 40¢ for adults and 25¢ for kids back then.) So that's a good reason I haven't seen a movie in almost a decade. Stamps are another major increase — the 3¢ stamp of 1951 is now 44¢, which is more than 5¢ in 1951 money (almost double!) or putting it the other way, that 3¢ stamp should have only gone to a bit over 25¢ in 2011.

Still, making those conversions is hard on the mind, and I don't always remember to do it. I don't own a car, but $4 a gallon gasoline looks like a lot to me. I used to pass a gas station every day when I walked to school in 1951, and the price for gas was 27.9¢ for regular and 29.9¢ for hi-test. (There were only two grades of gas at most stations then, not 3!) Nowadays, that would be $2.36 and $2.53. Yes, $4 is expensive!

But I wish a dollar would stay constant. I guess that's the appeal the gold standard has for so many people. Prices stayed a lot more stable. A hundred dollars in 1913 (the earliest date the BLS calculator provides) equaled $131.31 in 1933 (the year we went off the gold standard), only a 1.4% annual increase (compounded). People in those days had no need to keep adjusting their psychology.

When I was a kid, my goal was to earn $100 a week. That was what a "good salary" meant. Now, I'm collecting Social Security, not working at all, and getting more than three times that. But I don't feel rich! I'm getting a lot more than the average Social Security payment, because I was, for a few years, doing really well, and that's factored into the payment. But let's be real! The $55,000 (roughly) I was making in 1994 was really $9,650 (again, rounded off) in 1951 dollars — yes, a pretty good salary, almost $186 a week where I thought $100 was a goal. But it was hardly the princely sum it might have appeared to me if I'd been told in 1951 that that would be my peak income! And the $1400 a month (again, rounded) that I'm getting in Social Security benefits would be about $165 in 1951 dollars — that's per month, not per week, so I'm subsisting on a pretty skimpy amount! But I am getting by; there are a lot of people getting much less than I am. So I can't really complain. I don't have to work any more, and yet I'm not starving. Still, it's hard to look at a price and understand whether it is high or low.


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