The Middle Class: How We Got One and Why We Need to Keep it

[psikeyhackr]

University graduates with Liberal Arts degrees can't explain how a piston engine works.

I have spoken to a PhD economist and he couldn't either.

The number of cars in the US passed 200,000,000 in 1995. There were only 8,000 in 1900. But how many cars were thrown on a junk heap in those 95 years? Can the economists tell us the losses due to depreciation in that time?

It is certainly curious how a turbine car almost won the Indy 500 in 1968 and suddenly turbines were banned. The airline industry learned that turbines last a lot longer than piston engines because they just spin but piston engines vibrate themselves to death.

At $1,500 in depreciation per car per year that is $300,000,000,000 per year. That doesn't count insurance and interest on car loans and maintenance. So if all cars lasted twice as long since 1970 what would have been the economic effect? Talking about economics without understanding technology makes little sense.

The computer biz is getting really funny. SanDisk just announced stamp sized 64 Gig SSD chips. Who needs more than 64 gig in their pocket? My PMA400 has a 30 gig hard drive. But I expect it to crash any week now. It's 3 years old.

How much of the economy is the middle class playing status games with clothes and cars and stereos and now computers? And then the economists ignore the depreciation.

psik

 

[antagon]

consumer goods depreciation is a theme for you. have you considered that price depreciation is more closely tied to the production of new models the following year than it is to the physical degradation of the (durable) goods themselves?

this is a market based reaction:

people like to have new things. while you criticize them for it, it is still fact.

this demand for new shit results in a supply response.

by supplying new goods, the value of the old goods relative to the new is less; when new goods come out, the goods from the previous model cycle are 'old' - at least 'not new' and don't garner the higher price which new good are afforded by consumers' specific demand for 'new'.

you make it out to be some kind of planned obsolescence conspiracy, but the truth is, people are willing to pay a premium for the concept of 'new', and as soon as it is not new, like when you drive a car off the lot, that premium evaporates.

 

[rdean]

Republicans think the Middle Class is actually something to be "squeezed". Like a "sponge". Only, instead of "water", you get "money".

 

[psikeyhackr]

consumer goods depreciation is a theme for you. have you considered that price depreciation is more closely tied to the production of new models the following year than it is to the physical degradation of the (durable) goods themselves?

That could be true of computers since 1960 but what has happened to the price of automobiles over the same time?

The problem is our economists have not tracked Demand Side Depreciation of any product over that time. Any phenomenon that the experts ignore does not exist. Economists consider money to be more important than natural resources and people's time.

Has anyone ever computed the dollar value of all of the time Americans have spent watching television commercials? One hour TV programs have gone from 50 minutes to 41 minutes over that time but who counts that as the depreciation or inflation of anything?

psik

 

[antagon]

there's all sorts of ways to conceive deflation or inflation. the work week has shrunken; the work day has shrunken. children have gone from being breadwinners to requiring tens of thousands of dollars investment just to get them to adulthood. if you want them to get a decent job, you'd better shell out another 100k on an education. look at family sizes as a result.

i argue that there is no better example of new-factor depreciation than the automobile. after you have broken in your brand new ride, it is a better piece of equipment than when you bought it, however, it is worth 20% less because it's not new.

 

[Tech_Esq]

consumer goods depreciation is a theme for you. have you considered that price depreciation is more closely tied to the production of new models the following year than it is to the physical degradation of the (durable) goods themselves?

this is a market based reaction:

people like to have new things. while you criticize them for it, it is still fact.

this demand for new shit results in a supply response.

by supplying new goods, the value of the old goods relative to the new is less; when new goods come out, the goods from the previous model cycle are 'old' - at least 'not new' and don't garner the higher price which new good are afforded by consumers' specific demand for 'new'.

you make it out to be some kind of planned obsolescence conspiracy, but the truth is, people are willing to pay a premium for the concept of 'new', and as soon as it is not new, like when you drive a car off the lot, that premium evaporates.

This is especially true in areas where there is a heavy technological influence, like computers, cell phones and items that contain those. This is because the marginal utility of the item changes so rapidly that a durable good might be perfectly fine to use 5 years after the purchase, but the relative satisfaction of the user decreases at a much faster rate because of the greater benefits of the newer technology. (Whether that is speed, new features or a smaller/better form factor).

 

[Tech_Esq]

Republicans think the Middle Class is actually something to be "squeezed". Like a "sponge". Only, instead of "water", you get "money".

That's just silly.

 

[Tech_Esq]

there's all sorts of ways to conceive deflation or inflation. the work week has shrunken; the work day has shrunken. children have gone from being breadwinners to requiring tens of thousands of dollars investment just to get them to adulthood. if you want them to get a decent job, you'd better shell out another 100k on an education. look at family sizes as a result.

i argue that there is no better example of new-factor depreciation than the automobile. after you have broken in your brand new ride, it is a better piece of equipment than when you bought it, however, it is worth 20% less because it's not new.

True there are all sorts of ways to conceive inflation and deflation, I would also take issue with psi when he says that economists don't value people's time. That's just incorrect. There's loads of economic data base on people's time especially as it relates to productivity analysis which is VERY important.

To your point, those are some cheap kids you're raising if they only require 10s of thousands of investment. The latest figure I've heard is $200k per not including college. Me, I'm with you, I have 4 kids and I'm not spending $800k on them. LOL.

I disagree with the college expenditure too. There are lots of VERY good jobs to get out there without an expensive education. I spent $7,500 for tuition, fees and book -- well you did....lol...(Veteran's educational Assistance Program - VEAP. I was between the GI Bills). And got an undergrad degree from a State University. Now, then I went and got an advanced degree from a private institution and blew that all to hell. (Still wasn't any $100k though....not even close). I would assume that a "good job" is one that will pay you over $100k/yr.

I think as the price of education goes up, people have to become more sanguine about whether it is worthwhile to shell out that kind of money for an education that probably will not be justified by the monetary reward. I'm not saying don't go to college, I'm saying that being more creative about the way you approach higher education is smarter.

 

[antagon]

there's all sorts of ways to conceive deflation or inflation. the work week has shrunken; the work day has shrunken. children have gone from being breadwinners to requiring tens of thousands of dollars investment just to get them to adulthood. if you want them to get a decent job, you'd better shell out another 100k on an education. look at family sizes as a result.

i argue that there is no better example of new-factor depreciation than the automobile. after you have broken in your brand new ride, it is a better piece of equipment than when you bought it, however, it is worth 20% less because it's not new.

True there are all sorts of ways to conceive inflation and deflation, I would also take issue with psi when he says that economists don't value people's time. That's just incorrect. There's loads of economic data base on people's time especially as it relates to productivity analysis which is VERY important.

To your point, those are some cheap kids you're raising if they only require 10s of thousands of investment. The latest figure I've heard is $200k per not including college. Me, I'm with you, I have 4 kids and I'm not spending $800k on them. LOL.

I disagree with the college expenditure too. There are lots of VERY good jobs to get out there without an expensive education. I spent $7,500 for tuition, fees and book -- well you did....lol...(Veteran's educational Assistance Program - VEAP. I was between the GI Bills). And got an undergrad degree from a State University. Now, then I went and got an advanced degree from a private institution and blew that all to hell. (Still wasn't any $100k though....not even close). I would assume that a "good job" is one that will pay you over $100k/yr.

I think as the price of education goes up, people have to become more sanguine about whether it is worthwhile to shell out that kind of money for an education that probably will not be justified by the monetary reward. I'm not saying don't go to college, I'm saying that being more creative about the way you approach higher education is smarter.

so far i've gone the cheapest route with the progeny... no kids as yet, here. that's probably why my hipshot fell short of the mark on the cost of rearing them. just the thought of 10s of g's has corralled the seed.

i went cadillac with university, but i am a testament to the fact that its not an absolute necessity. i've never worked in my field of study, and hardly worked for anyone but myself. its nice to fall back on, but there's a whole bunch of grads who are hoping to 'fall back' by default. there's going to be a burst in the ed. bubble on account of the fact that a diploma isn't a living in and of itself.

this is a back to reality period with respect to everyone being entitled a job and a house.