More thoughts on home ownership (part 1 of 2)
In the beginning, back in 1955...
I warned my editor at The Patriot Post that I may do this, and indeed I am extending my remarks from the piece I wrote for last Wednesday.
Here’s how I started that article:
Let’s go back to the America our ancestors grew up in; more specifically, the era after World War II. Many would argue the prospects for American prosperity for young men aspiring to be middle class was then at its peak, as a laborer could work his factory job yet potentially be able to afford a new car for his wife, a go-to-work car for himself, and a starter home as a place to start or grow a family in one of the quickly growing suburban areas around urban centers That economic boom begat a baby boom, with 1957 considered its peak year.
Yet those 68-year-olds whose parents lived the era of liking Ike saw us slip into a time when the factory jobs left, Rust Belt cities like Detroit hollowed out, and the close-in suburbs with their little tract houses were no longer as desirable.
The house shown above wasn’t new in 1955, but it was a reasonable starter home for my ex, her elementary-age daughter, and I in 1991 - we bought it for $37,500. It was (barely) in the school district we desired and something we could afford. I don’t have my tax form for the year handy, but I think between us we made about $30,000.
Imagine, then, you are in that position back seven decades ago. At that time, the median income was supposedly $3,400 a year but I suspect a factory worker in Toledo made a little bit more than that - $2 an hour would translate out to about $4,000 so we’ll use that number. With an inflation calculator, I found that prices in 1991 were about fivefold what they were in 1955, so by myself I was a little bit behind the factory worker yet reasonably close to the median.
But you wouldn’t believe the house prices, and cars were relatively cheap as well: $2,000 would fetch you a nice new Chevrolet, and the five-year-old second-hand Ford may have set that factory worker back a grand. Oddly enough, back in 1991 we owned his-and-hers Ford Festivas, - the econo-box car cost us about $5500 new in 1988 and the two-year-old used one maybe $3000. However, these were low-end cars on the market, not the midstream ones like those featured in the vintage ads. (I drove a red ‘88 model and she drove a white one from 1989.)
The point is: by 1991, which was almost 35 years ago and just about halfway between the time I compared and the present day, we were already in a situation where both spouses had to work in order to afford what a single breadwinner with a decent job could garner when my mom and dad were teenagers.
Let me look at one more point in comparison: the federal budget, which weighed in at $65.6 billion for the 1955 fiscal year that started in July 1954. In his note introducing the document, President Dwight Eisenhower noted:
When this administration took office on January 20 of last year one of its first concerns was the budget for the 1954 fiscal year, which had been sent to the Congress on January 9, 1953, by the previous administration. With the cooperation of the Congress that budget promptly was revised and reduced. This new budget is the first prepared entirely by this administration.
It provides adequately, in my judgment, for the national defense and the international responsibilities of the Nation — responsibilities which we must undertake as a leader of the free world. On the success of this leadership depends our national security and prosperity. The budget also provides adequately for the current needs of the Government and for constructive forward steps in our domestic responsibilities and programs.
(Interesting that, upon leaving office, President Eisenhower would warn us about the “military-industrial complex.” Moving along…)
In preparing this budget the administration has directed its attention to essential activities and programs rather than to those which some might consider desirable and appropriate, at this time, for the Federal Government to undertake. It assumes fairly stable conditions, internally and externally, during the period it covers. It allows for the continuing heavy demands of the national security programs on the budget. But as we continue to reduce and eliminate the less desirable or the unnecessary Government expenditures, it will become possible to turn to other purposes which are the most desirable in terms of their benefits to all of the people.
This budget marks the beginning of a movement to shift to State and local governments and to private enterprise Federal activities which can be more appropriately and more efficiently carried on in that way. The lending activities of the Reconstruction Finance Corporation; the services provided by the Inland Waterways Corporation; certain agricultural activities; and some aspects of our health, education, and welfare programs are examples of this type of action. In those cases where Federal participation is necessary, the effort of this administration is to develop partnerships rather than an exclusive and often paternalistic position for the Federal Government. (Emphasis mine. Now THAT’s conservative, limited government. Too bad it didn’t take.)
That budget as proposed took in $62.7 billion and spent $65.6 billion for a deficit of $2.9 billion - the smallest deficit since 1951, when the federal government ran a $3.5 billion surplus.
If I quintupled those numbers using the inflation calculated to 1991, though, we would have expected $313.5 billion in revenue and $328 billion in expenditures for a $14.5 billion deficit. Instead, we got $1.17 trillion in revenue and $1.23 trillion in expenditures for a $63 billion deficit - a debt roughly equal to the entire FY1955 budget! We had increased spending at a nearly fourfold clip to actual inflation, which itself was a fivefold increase in the cost of goods and services in 36 years. Where did the money come from?
Had I been one of those who studied economics long enough to receive a doctorate on the subject, I might be able to give you a detailed explanation for that query.
But the simple, common-sense one is that we had to work four times as hard to supply the government with its money - some of it which we received back in services and handouts, but much of it accruing to the aforementioned military-industrial complex and those in a position to take advantage of it. Instead of one worker being able to provide for his family and live a middle-class lifestyle with a decent 40 hour a week job, it was now necessary by 1991 for both spouses to work, one full-time and one part-time. Obviously that takes away from time with the kids, so, unless you were lucky enough to have a grandparent or trusted relative handy, there was yet another expense of child care to deal with.
Since 1991 inflation has only risen by a factor of 2.36, but again government spending has surged at a much faster rate to the point where we are now talking about $7 trillion federal budgets, which would be about sixfold the 1991 budget level. It’s why both husband and wife are almost required to both work full-time and have a side hustle or two in order to make it, because once again that money has to come from someone.
In part two I’m going to discuss what local governments are doing about this, and perhaps what else needs to be done.
In the meantime, though, you can Buy Me a Coffee, since I have a page there now.