Re: standard of living?

At 04:28 PM 5/18/99 -0500, Alan Spector wrote:


>The standard of living of the average family in the U.S. is up 
compared

>to 1945. And 1919. And 1776.

>But it is down compared to 1980. Some estimates are that it is at the

>level it was back in the middle 1960's. And this doesn't factor in the

>impact of multiple wage earners in families.



I am confused by this claim.  Although the concept of "standard of
living" is imprecise from the point of view of economic theory, it
generally refers to a manner or way of living (i.e., a level of living)
that an individual or society feels it is important to attain (Greenwald
1994, 933).  The concept has many possible indicators, with some
widely-known deficiencies (Livesey 1993, 208), but it is commonly
believed to be determined by the quantity of goods and services
(including leisure) consumed (Pearce 1986, 400).   The most common
indicator of consumption of goods and services consumed by the average
person in a society is gross domestic product per capita (or per head). 
By this indicator, the U.S. standard of living has increased since 1980,
contrary to Alan's claim.  As indicated in the data below, the only
periods of decline occur during the recessions of the early 1980s and the
1990s (recession by definition, of course, implies a declining GDP per
capita).  


<center>Table 1


GROSS DOMESTIC PRODUCT PER HEAD

At the price levels and exchange rates of 1990

(US Dollars)


</center>1980     1982     1984     1986     1988     1990     1992    
1994     1996 


18858    18427    19852    20723    21689    22224    22134    23034   
23785



Source:  Statistics Directorate, Organisation for Economic Co-operation
and Development.  _National Accounts_ Vol. 1.  Main Aggregates,
1960-1996.  Paris:  Organisation for Economic Co-operation and
Development, 1998.



Since the same source indicates that the figure for 1965 was 14355,
Alan's suggestion that the U.S. "standard of living" may have declined to
the levels of the mid-1960s does not seem to be supported, if "standard
of living" is measured by GDP per head.


Perhaps Alan is thinking of real wages.  Here is some data from the
Bureau of Labor Statistics of the U.S. Department of Labor:


<center>Table 1


Annual Percent Change in Real Hourly Compensation


</center>Sector               1973-1979         1979-1990         
1990-1997


Business                0.6               0.2                 0.5


Nonfarm business        0.6               0.2                 0.5


Manufacturing           1.0               0.1                 0.5


Nonfinancial corporate  0.4              -0.1                 0.0


Source:  Dean and Harper, 1998, p. 5.



This data does not indicate an overall decline in real wages;
nevertheless it does seem to indicate extremely small average annual
increases over the last two decades.  This is consistent with the
argument that real wages have stagnated.


Alan continues:


 I can't speak for some of

>the other countries listed, although much of the so-called "Third
World"

>is worse off than 100 years ago, and most of Eastern Europe isn't 
doing

>too well either..I'm sure Japan is better off than 1945 also. Maybe
even

>better of than 1980.


Data or sources supporting these claims would definitely be helpful.  


But capitalism is a zero-sum game, despite the

>silly optimism of the "end of history" crowd. And big powers 
eventually

>bump heads. First economically. Then politically. Then militarily.



Actually, it's a "zero-sum game" primarily in the minds of people in the
world-system tradition.  The claim of Andre Gunder Frank and others that
development and underdevelopment are two sides of the same coin and that,
in effect, what one country gains another loses depends upon the
assumption that the total size of the economic "pie" cannot increase,
i.e., that worldwide aggregate growth is impossible.  This argument, in
turn, depends upon the assumption that the productivity of a finite set
of factors of production cannot be increased by technological change.  Is
anyone willing to argue that technological change increasing productivity
never occurs?  If so, is there any economic theory that can explain why
or in what sense it never occurs?


Now, notice that in most of the above, I've taken for granted the
orthodox notion that "standard of living" is sensibly measured by
consumption of goods and services.  It is entirely possible that if we
think of "standard of living" in other ways, we might come to different
conclusions about whether or not the U.S. standard of living has
declined, and whether or not capitalism is a zero-sum game.  But the
theory and indicators according to which rises or declines in a society's
"standard of living" are to be determined must be specified and defended.
 Moreover, if we declare capitalism a "zero-sum game," we have to decide
what the "game" is.  Is it a contest over consumption of goods and
services?  Is it a contest over "wealth" in some broader sense?  Is it a
contest over power.

<center>

</center>Let us discuss these questions before we draw conclusions.  

<center>


REFERENCES

</center>

Dean, Edwin R., and Michael J. Harper. "The BLS Productivity Measurement
Program."  Unpublished paper, Bureau of Labor Statistics, Feb. 25, 1998. 
Available online at http://www.dol.gov as lprdh98.pdf


Greenwald, Douglas.  _The McGraw-Hill Encyclopedia of Economics_.  2d ed.
 New York, NY:  McGraw-Hill, Inc., 1994.


Livesey, Frank.  _Dictionary of Economics_.  London:  Pitman Publishing
1993.


Pearce, David W.  _The MIT Dictionary of Modern Economics_ 3rd ed.
Cambridge, Mass.:  The MIT Press, 1986.


Statistics Directorate, Organisation for Economic Co-operation and
Development.  _National Accounts_ Vol. 1.  Main Aggregates, 1960-1996. 
Paris:  Organisation for Economic Co-operation and Development, 1998.





--


Jeffrey L. Beatty

Doctoral Student

Department of Political Science

The Ohio State University

2140 Derby Hall

154 North Oval Mall

Columbus, Ohio 43210


(o) 614/292-2880

(h) 614/688-0567


Email:  Beatty.4@osu.edu

___________________________________________________


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