"What Kind of Morons are We? Part Duh"
Prices, productivity, preferences...
and getting where you really want to go.
by Bill Bonner
Poitou, France - "A dear reader wrote to tell us, in effect, how dumb we are. He writes: 'The most ridiculous, crazy, imbecilic thing I’ve ever read of yours is the so-called ‘comparison’ between the cost of an early 1970s pickup and a 2020 pick-up.' He must be a new reader. Surely, over the years, we must have written things much stupider than that.
The gist of it was that working people get their income from selling their time. So, what really matters is how much they get per hour. In 1948, when the Ford F series began, each hour of his time, at an average wage of 40 cents/hour, bought him 1/3000th of the truck.
Yesterday, when we looked up the median hourly wage in 2023, we got $11. Today, we get – from the ListFoundation – $16 and change. The average wage is another thing, it includes the salaries of Wall Street executives and sports stars. It’s over $28 per hour. But it is irrelevant. The median actually measures what most people get…so let’s stick with that.
Goin’ Nowhere: At $16 an hour, a guy can buy – guess what – 1/2,937th of a new Ford F-150. Almost exactly the same as 75 years ago. And while new tech improved the truck, it should have improved the making of it at the same pace. Automated assembly lines, plastics, robots – all should have made the truck cheaper to produce. And it should have made him more productive…and raised his wages, too. But other studies show the same thing. Wages, adjusted for inflation, have not gone up in more than half a century.
Inflation-Adjusted Weekly Earnings of Full Time Male Workers, 1979 to 2023
We also got a response from George Gilder and Gayle Pooley – two of the leading proponents of the “time price” concept (the idea that prices are actually “tokenized time”). They agree with our Dear Reader, maintaining that our numbers are all wrong…and that today’s F-150 is far superior to the truck from 1948.
Losing: How come all this ‘tech’ and credit didn’t lift him up? More scientists. More capital. More Ph.Ds. Eight trillion in ‘stimulus’ from the Fed. More economists. More technology. More accumulated ‘knowledge’…available on our laptops. We don’t even have to think for ourselves anymore; we have AI. And who hasn’t read Jack Welch’s classic “Winning?” Jack laid it out for us. All we had to do was to borrow a lot of money, buy businesses, and hire some hotshots to run them.
It sounded so simple. And yet…it didn’t even work for Welch. His empire expanded…and then, overburdened by debt and dysfunction…it contracted. Today, the stock sells for about the same as it did in the mid-90s, nearly 30 years ago. Jack’s idea seemed new…but there was nothing new about it. Stripped of its trendy jargon, it proved only what we already knew, that credit only works when it is used to increase efficiency and output. Just buying things – whether consumer items or businesses – doesn’t help.
That is obvious in the national accounts too. The Fed, with its spiffy gold-free dollar, could provide credit. Welch, ahead of his time, used it to build a tottery business empire. Consumers used it to buy big screen TVs and granite countertops. The Feds used it to pay for, among other things, a 20-year war against nobody-in-particular, for no particular reason.
And now, credit is becoming more expensive…the screw turns…and the credit cycle (getting rid of bad debt) becomes painful, especially for the proletariat that depends on it. You can pump up an economy – temporarily – with credit. People think it is real ‘money’. They think their wages are rising…their stocks are going up…sales are increasing. Later, they discover that the boom was a fraud. It was a roundtrip to nowhere.
What if the same were true for “technology?” What if it were mostly a distraction…a diversion…an idle entertainment? Dot.coms…cryptos…the internet…TikTok…AI – the Fed’s EZ credit has juiced them up, one after another. But like Welch’s GE, the Feds’ wars, or Wall Street’s buybacks…what if they don’t really add to our wealth…but subtract from it, by absorbing time and resources that might be better used elsewhere?
The new Ford F-150 is said to have 1,000 silicon chips in it. What if none of them takes you where you really want to go? Stay tuned..."
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