April 24, 2017

IT'S IMPOSSIBLE TO OVERSTATE DEFLATION:

Focusing on Flat Incomes Obscures Fundamental Economic Changes (JAMES R. ROGERS, 4/24/17, Library of Law & Liberty)

In General Sherman's memoirs, he reports that in 1850 the U.S. Army reassigned him from San Francisco to the east coast of the United States. He mentions that the passage from San Francisco back to the east coast of the U.S. cost him $600. I priced a ticket from SFO to NYC for a flight next month. It came in from between $200 and $550 on AA.com. So today, we can get from one end of the country to the other end for about the same nominal cost, and for stratospherically less time -- several hours instead of several months.

The qualitative improvements considered by themselves are astounding. But we shouldn't compare nominal cost of transportation. Annual income in the U.S. in 1850 (in 2005 dollars) was around $2,500. So it took about a quarter of a year's oncome (around 88 days at average wages) to pay for the travel from San Francisco to the east coast of the U.S. Today average income in the U.S. is around $45,000 (in 2005 dollars). It takes the average worker about three days of wages to pay for a ticket to cross the U.S. in a matter of hours.

Posted by at April 24, 2017 3:03 PM

  

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