I have to say, Schiff is dead wrong about this whole "Ford's workers made more in the 1920s than today" thing he has been going on about for the last month. Wages are not denominated in Gold.
Schiff does not just state that he believes that it is a better way to measure inflation, but also that the workers were paid more back then. Even then, Gold Prices are not the best way to measure inflation. If we did that, it would mean that we have had 500% inflation in the last decade, and that during the early 80s we had 75% deflation.
You mean like the dollar index being 120 in 2000 and 75 today, or being 90 in 1978 and 150 in 1985, or exactly what do you mean?
It takes far less labor to produce anything now than it did before.
In 1901, Food, Clothing, and Housing Expenditures made up about 80% of expenditures. Today it is 55%. Not only that, but homes, food, and clothes are all of a higher quality today than they were back then. Houses back then were small, unsafe, made of crap, and had no electricity.
From Thomas Woods in 33 Questions About American History That You're Not Supposed to Ask
Today we also have access to washing machines, dryers, dish washer, cell phones, computers, televisions, commercially used radios, lots of cars, commercial planes, modern medicine, and a countless other things that did not exist back then.
Repeat after me "Wages equal Marginal Revenue Productivity".
Today it's 55%, but the rest goes to taxes which didn't exist in 1913, like, um, the income tax, for one.
Washing machines, cell phones, TV, etc., all cost money. Statistics prove the bulk of the cost is credit, which means they cost a LOT more than the advertised prices, which would change your statistical %. They are advertised to people like you as "modern conveniences" that increase productivity, but it's just an advertising slogan for the weak. The gains in free time are more than lost to paying for these conveniences, a battle which the majority of Americans are losing, as their net worth is lost to their rising debt burden, both personally and as a nation.
It takes the same amount of time today to mow a lawn as it did in 1920, only back then the homeowner had the tools and time to do it himself, whereas today he has to hire an illegal alien because he's too busy meeting his tax and debt demands (and being glued to one of those 'modern conveniences'... the TV).
Gold is not the best measurement of purchasing power.
When having a discussion about historical wages, changing the commodity that wages are denominated in is kind of going to throw things off.
So, what is the best historical determinant of purchasing power, the USD, which is only 40 years old? That would mean it's you who is changing the commodity wages have historically been denominated in, and only Ben Bernanke would deny the historical value of gold as a measuring stick with as straight a face as you do.
What you and others with similarly empty arguments always fail to mention is that in 1913 there was no income tax and from 1913 to 1930 the income tax was a flat 1%. There was next to zero debt burden, especially none at 15%, the average CC rate. There were also absent a myriad of other taxes, such as, since we're talking about auto workers, there was no gasoline tax in 1920. No one can compare real wages without including interest on debt and TAXES, regardless of what medium wages are paid in.
If you get paid $4,000.00 per month, but -$1,000.00 is income, SS, MC, MC tax, -$31.50 is gasoline tax, -$155.00 is sales tax, -$400.00 is state & local income tax, -$400.00 is health insurance, -$300.00 is rent on your automobile, -$150.00 is interest debt load payment, -$150.00 is phone/cable/ISP costs, etc., etc., etc. It means that in order to pay rent or mortgage you have to put in for a shit load of overtime and send your wife out to work or take in a room mate because you're upside down.
That cuts the comparison multiplier by at least 50% and must be factored into the productivity gains argument, or there is no argument at all.
Bosso
