We have heard, lately, that there is assault on the middle
class. The disparity that exists between
the 1% and the 99%. Tax the rich. Redistribute income. Having lived these 78 years, I have heard
this before.
I grew up in a country that created an extraordinary social
safety net back in 1936. Social reforms
that were not duplicated in other countries (except in some Scandinavian
countries) for many years thereafter. We
had publically funded major medical insurance in the late ‘60s and universal
first dollar medical insurance by the mid seventies. Canada has good primary and secondary
education and (by comparison to the US) cheap college education. We have a redistribution program from “have”
provinces to “have not” provinces. We are taxed, personally, a little higher
than our neighbour to the south but, in my view, we get excellent value for tax
dollar spent.
So what happened? Why
do we have folks camped outside our business centers and stock exchanges
chanting slogans? One of the reasons
(among many others) is a rising level of expectations.
Life has gotten ‘way more complicated. When my parents were married home ownership
was not easy. Most people scraped by and
savings were hard to accumulate.
However, education was the hallmark of our family ethos. It was my job to become educated and to lead
a life that exceeded, financially and socially, that of my parents. I was expected to pay for my higher
education. True that I graduated high
school (when high school graduates were still able to get a decent job),
college and grad school at a time when jobs were plentiful and salaries and
wages allowed the worker to live a decent “middle class” life. Our parent’s and my expectations were, in
comparison to today’s workers, reasonably low.
Graduate, get married, buy a house and get “established”--all on a
one-income family. Vacations were summer
affairs and the extravagance of summer camps for children were reasonably
affordable.
While there are many reasons why jobs are less available now
than when I was college age including globalization, the wholesale reduction of
manufacturing jobs, the gutting of the labour unions, etc., there has been a
wholesale increase in the level of expectations of the average family.
Housing. We were
content to have, for our first house purchase, a (by today’s standards) tiny
house in a bland subdivision of tract housing.
We paid $17,000 that, in today’s dollars would be about $170,000. We did it in order to “get into the market”
and allow inflation to work for us. We
moved to a larger house (reasonable by today’s standards) that cost, land
included, about $35,000 or about $350,000 in today’s dollars. When I examine today’s housing market (aside
from those who move into established neighbourhoods) I see starter houses that
well exceed both in space and accouterments, what our second house had. In many cases this has resulting in couples
being “house poor” in that they can barely afford the house and cannot afford
to furnish it. A significant factor is
that land prices has skyrocketed and services that were once built into the
property tax system are now paid up front.
I am only making the point that the current ethos is to buy a first
house that is much more ambitious house than what we owned. Rising expectations.
Food and Family. In
real terms food is cheaper today than it was when we were a young family. Winter meant root vegetables and probably no
more exotic fruit than oranges. With
cheap sea transport we started importing exotic fruits and vegetables during
the winter months. There were not 30
brands of morning cereals and adding sugar to Rice Krispys was unknown. Kids played outside and ran off whatever
calories they took on. Junk food was
limited to potato chips and ice cream.
Now dense calorie foods are debilitating a generation of kids who, when
combined with a more sedentary life, become over weight or obese. That said, rising levels of expectations
ensnare us. We have become convinced
that mass produced foods are bad for us and pay astounding premiums for food
that is “naturally” grown. We pay
exorbitant prices for store bought coffee and coffee that comes in little cups
that cost about 50 cents each. It is not
unusual to spend $4 per day on specialty coffees and much more on snacks. Eating or cooking at home has become too
difficult. What with take out pizzas or
“assembled” meals (the supermarket has figured out that there is about a 15%
margin for whole lettuce and a $65% margin for cut up and bagged lettuce) a
larger part of our budgets are now consumed on eating food out or taking in. Family expenses now include expensive pastimes
for kids such as hockey and dance (which is now a competitive event) not to
mention expensive electronic toys such as mobile telephones, iPads, and large
HD TVs. Since wages are relatively
finite these expensive toys are financed, largely, by credit card
purchases. Hence, an unduly large amount
of family income is spent on debt service.
Cars and Trucks. The
basic car has now been enhanced by so much electronic equipment (both
operational and entertaining) that I suspect that the value of the actual
vehicle has not exceeded inflation when a car cost about $1,700 to buy in 1956. However, what people are willing to pay for
(and seem to have the money for) is a collection of gadgets and playthings that
would have defied the imagination of my parents and myself in the 1960s. We now pay for off road vehicles that are for
entertainment only. We have figured out
how to pay for these things through innovative financing such as leasing and 0
interest loans. This consumes an
inordinate portion of family income.
These are but a few instances of the impact that rising
expectations have on the cost of living.
But when our middle class says that life has become unaffordable they
should have a hard look on expenditures and what value for money these
expenditures represent. They might not
be as badly off as they think.
