Brad Delong, the economist and blogger at the University of California, Berkeley, has written a wonderful, brief piece on wealth, living standards, needs and wants. It’s an important reminder on a number of levels. Check it out:
The current recession may turn into a small depression, and may push global living standards down by five percent for one or two or (we hope not) five years, but that does not erase the gulf between those of us in the globe’s middle and upper classes and all human existence prior to the Industrial Revolution. We have reached the frontier of mass material comfort–where we have enough food that we are not painfully hungry, enough clothing that we are not shiveringly cold, enough shelter that we are not distressingly wet, even enough entertainment that we are not bored. We–at least those lucky enough to be in the global middle and upper classes who still cluster around the North Atlantic–have lots and lots of stuff. Our machines and factories have given us the power to get more and more stuff by getting more and more stuff–a self-perpetuating cycle of consumption.
Our goods are not only plentiful but cheap. I am a book addict. Yet even I am fighting hard to spend as great a share of my income on books as Adam Smith did in his day. Back on March 9, 1776 Adam Smith’s Inquiry into the Nature and Causes of the Wealth of Nations went on sale for the price of 1.8 pounds sterling at a time when the median family made perhaps 30 pounds a year. That one book (admittedly a big book and an expensive one) cost six percent of the median family’s annual income. In the United States today, median family income is $50,000 a year and Smith’s Wealth of Nations costs $7.95 at Amazon (in the Bantam Classics edition). The 18th Century British family could buy 17 copies of the Wealth of Nations out of its annual income. The American family in 2009 can buy 6,000 copies: a multiplication factor of 350.
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