Market Correction

I elaborate at the two posts below:

http://cafehayek.typepad.com/hayek/2006/01/a_1975_sears_ca.html

http://cafehayek.typepad.com/hayek/2006/01/working_for_sea.html
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16 January 2008

Editor, Washington Post
1150 15th St., NW
Washington, DC 20071

Dear Editor:

Harold Meyerson again asserts that ordinary workers today are no better off than they were in the 1970s ("A Different Recession," January 16). Data backing this claim, however, are questionable - and are questioned frequently by serious scholars.

So let's explore for the facts using a different empirical technique: Ask workers today if they'd just as soon use their 2008 incomes to shop from, say, a 1975 Sears catalog (and pay 1975 prices) as shop at Sears.com (paying today's prices). If ordinary Americans in the 1970s were as well off as are ordinary Americans now, today's workers should jump at the opportunity to buy mid-70s goods at mid-70s prices while spending 2008 incomes. Alas, I'll bet that almost no one would choose the 1975 option. A small sample of what was unavailable back then includes CD and DVD players, home computers, food processors, digital cameras, camcorders, cordless phones, cell phones, and spandex clothing. Of course, the 1975 shopper did enjoy a nifty selection of typewriters, stereo turntables, 8-track players, black-and-white television sets, and heaps of clothing and bedding made from polyester.

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University