Most economic statistics don’t lie, but they mislead.
The statistics produced by the Bureau of Labor Statistics are pretty good, according to prevailing economic theory and statistical theory, but they are misleading to a fault. This is not because the government rigs the statistics. It is because objective statistics cannot deal effectively with subjective value. But subjective valuation is the essence of economic theory. This was discovered in the early 1870’s. The statisticians still have not come to grips with this development. They try hard, but the labor theory of value is wrong. They fail.
Let me prove this to you.
ANCHOR YEAR: 1970
Why 1970? Because that was a census year. Also, Nixon abolished the last traces of the gold standard on August 15, 1971.
Beginning sometime around 1973, American household economic real growth began to slow. The tremendous increase that had taken place from 1946 to about 1973 never again reappeared.
I like Dave Manual’s statistical insights. He offers a table that shows median household income from 1967 to 2012. In 1970, it was $46,000, adjusted for inflation. In 2012, it was $51,000. So, if we’re going to look at American economic progress from the point of view of median household income after price inflation, we have been in a period of stagnation.
But there is a problem with looking at our lifestyles in terms of the figures regarding median real household economic growth per annum. A great deal is concealed by the statistics. A lot of you cannot remember what it was like in 1970, but I can, at least vaguely. If I think back to what it was like to live in 1970, and I leave out anything controlled by government, there are only a few areas in my life where I would not regard a return to 1970 as a disaster.
One is housing costs. That is because I lived in Southern California in 1970, and the world of Southern California real estate is much more expensive today than it was in 1970. Also, I would enjoy the freeway traffic of 1970. But let’s face it: the big changes in Southern California have come as a result of a tremendous increase of population, all trying to fit into Southern California. That is because people want to live there. I wanted to leave, which I did in 1971.
(For the rest of my article, click the link.)