Friday, July 13, 2012

How much is that in our money?

"Medium One Topping 899” Of course, they dropped the decimal point and of course everyone knows that: $8.99 is a reasonable price for a one-topping medium pizza.  But it is only a matter of time until that is $899.00 and the average part-timer makes $1,000 per hour. 

Working on some documentation for an international market, I came across a table of prices for wine: 24.99 and 21.99… and it seemed OK for good wine.  Then, I remembered that this was not in US Dollars, of course, and this really is your $5.99 and $6.99 bargain.  But again, it is only a matter of time. 

I remember Mars, Snickers, and Three Musketeers for five cents.

This article from The Financial Times (2001), pegs historical prices to Mars Bars.

The U.S. Department of Commerce Bureau of Labor Statistics offers more facts (and less whimsy) here.

The Morris County, New Jersey, County Library built a database from newspaper advertisements, 1900-2012, here
“Whenever possible, we selected items/brands (Hershey's cocoa, Bayer aspirin, Sears Kenmore refrigerator) that are still being manufactured. This makes it possible to take a 1920 "shopping list" to your local supermarket or department store and compare prices.”
The only real change has been in the value of the US Dollar.  The government spends more than it takes in from taxes, and the difference is inflation.  The dollar gets smaller.

Of course, productivity and technology bring more value to money.  Last night, at dinner with friends, we marveled at the true price of a $3,000 Apple II in 1980.  Today, the Goodwill has stacks of Dell laptops for $199 each.  But if not measured in today’s inflated money, they would be twenty dollar items... or two dollar, because these changes are only in my lifetime.  Look over the course of a century and you realize that the dollar has lost about 90% to 99% of its value: what costs a dollar today – candy, for instance – used to cost one cent in 1912.

2 comments:

  1. Imagine two islands -- one where everyone is extremely productive, and another where residents fish a little and sleep on the beach, having no other assets.

    A case of candy bars falls from the sky and lands on each island. The "lazy" islanders trade two fish for each candy bar. How much does the "rich" island trade for each bar?

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  2. Glasgow, thanks for another insightful comment. You grace my blog. I with yours were more active. I gave your challenge some thought this past week. I assume that the productive islanders will pay less and do so by offering a wider array of exchanges. The lazy people have only fish to offer and so the candy bars are relatively more valuable to them as the only alternative to fish. Moreover, the lazy folk will likely consume the candy immediately, whereas the productibists may find that the bars have some shelf life.

    In short, I can ascribe many economic virtues to the hard working people. I assume that you have the same model.

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