jenk

From The Economist by way of The Wealth Report blog:

IN 1904 Willie Vanderbilt hit a thrilling 92.3 mph (147.7 kph) in his new German motorcar, smashing the land-speed record. His older brother's sprawling North Carolina manse, Biltmore, could accommodate up to 500 pounds of meat in its electrical refrigerators. In miserable contrast, the below-average Gilded Age American had to make do with a pair of shoes and a melting block of ice. If he could somehow save enough for an icebox, a day's wage would not have bought a pound of meat to put in it.[...]

[C]onsumption numbers, [like income], conceal as much as they illuminate. They can record only that we have spent, but not the value—the pleasure or health—gained in the spending. A stable trend in nominal consumption inequality can mask a narrowing of real or “utility-adjusted” consumption inequality. Indeed, according to happiness researchers, inequality in self-reported “life satisfaction” has been shrinking in wealthy market democracies, America included, suggesting that the quality of lives across the income scale are becoming more similar, not less.

You can see this levelling at work in markets for transport and appliances. You no longer need be a Vanderbilt to own a refrigerator or a car. Refrigerators are now all but universal in America, even though refrigerator inequality [$11,000 for a Sub-Zero PRO 48; $350 for the IKEA Energisk B18 W] continues to grow. The lived difference, however, is rather smaller than that between having fresh meat and milk and having none. Similarly, more than 70% of Americans under the official poverty line own at least one car. And the distance between driving a used Hyundai Elantra and a new Jaguar XJ is well nigh undetectable compared with the difference between motoring and hiking through the muck. The vast spread of prices often distracts from a narrowing range of experience.

Note the distinction. The argument isn't that the Sub-Zero is the same as the IKEA. The argument is that the distinctions between the two are less relevant than the distinction between having any refrigerator and having NO refrigeration.

[W]hen the prices of food, clothing and basic modern conveniences drop relative to the price of luxury goods, real consumption inequality drops. But the point is not that in America the relatively poor suffer no painful indignities, which would be absurd. It is that, over time, the everyday experience of consumption among the less fortunate has become in many ways more similar to that of their wealthier compatriots. [...]

This compression is the predictable consequence of innovations in production and distribution that have improved the quality of goods at the lower range of prices faster than at the top. [...]

This increasing equality in real consumption mirrors a dramatic narrowing of other inequalities between rich and poor, such as the inequalities in height, life expectancy and leisure.

What surprises me is that their caption headed "Save money. Live better" is applied to how the poor spend less than the rich but live better than they used to anyway. I expected "Save money. Live better" to be a suggestion that those who want to increase their financial situation could spend less than than they actually can "afford", save the difference, and use the savings to take the next step they need to, whatever that is.* But maybe that didn't occur to the author...

*Examples: emergency fund, pay down debt, invest it for retirement, save for a down payment on a house, save for a replacement car, et cetera.