Pictured above are some color TVs from the 627-page 1964 Sears Christmas Catalog, from the Wishbook Web website (no longer available).
The original prices are listed ($750 for the Sears Silvertone entertainment center and $800 for the more expensive one), and those prices are also shown converted to 2016 dollars using the BLS Inflation Calculator: $5,800 for the basic 21-inch color TV model and $6,200 for the more expensive model.
For an American consumer or household spending $750 in 1964, they would have only been able to purchase the 21-inch color TV/entertainment center from the Sears Christmas Catalog pictured above (includes phonograph and AM/FM radio).
An American consumer or household spending that same amount of inflation-adjusted dollars today ($5,800) would be able to furnish their entire kitchen with five brand-new appliances (refrigerator, gas stove and oven, washer, dryer and freezer) and buy seven state-of-the-art electronic items for their home—a Toshiba Satellite 15.6″ laptop computer, a Garmin 5 Inch GPS, a Canon EOS Rebel T5i DSLR Camera, a Sony 1,000 Watt, 5.1-Channel 3D Smart Blu-Ray Home Theater System, a Samsung 55 inch Smart HDTV, an Apple iPod Touch 64GB MP3 Player (6th generation), and an Apple iPhone 7 Plus.
Measured in terms of the “time cost” of purchasing household and electronic items working at the average wage, there’s a huge difference between 1964 and today.
To purchase the $750 Sears TV in 1964 would have required 293 hours of work for the average American at the average hourly wage of $2.56 in November 1964—that’s 7.33 weeks, or almost two full months of work to earn the income required to purchase the TV.
Today, the average American need only work about 23 hours at the average wage of $21.73 to earn enough to purchase a $500 Samsung Smart HDTV. A $400 laptop would have a “time cost” of only about 18 hours of work today (2.25 days), and an iPod touch would require only 13 hours of work (1.63 days).
And isn’t it an amazing sign of the economic progress achieved over the last half century that even a billionaire in 1964 wouldn’t have been able to purchase most of the items above that even a teenager working at the minimum wage can afford today, like a laptop computer, iPhone, iPod and Smart TV.
And because many of the low-cost manufactured goods we have access to today in the U.S.—like TVs, laptops and appliances—are manufactured or assembled overseas, where labor costs are cheaper, the powerful forces of international trade and global competition are an important part of the “magic of the global marketplace” and the “miracle of global manufacturing” illustrated above.
American consumers benefit enormously both directly from lower-cost imported manufactured goods and also indirectly because foreign rivals discipline U.S. manufacturers to behave more competitively and provide us with lower prices, higher quality products and better service.
As Don Boudreaux pointed out recently, trade is simply the wonderful opportunity to take advantage of the “lowest-cost method of production”—and it doesn’t matter whether that production takes place on the same side or the other side of imaginary lines we call city, state and national borders vis-à-vis the location of the consumer:
…when consumers buy imports, they are simply choosing to make things for themselves and their families using the lowest-cost methods of production available to them: They “make” their consumer goods using the roundabout method of working at their specialties and then transforming through trade some of their incomes into these goods.
Sometimes consumers trade with fellow citizens; other times they trade with foreigners. But in all cases the trades are the lowest-cost methods of production available to consumers for provisioning themselves and their families with the goods and services that they desire.
Why should the making of such choices ever be blocked?
Bottom Line: As much as we might hear people complain about a slow economic recovery, the lowest labor force participation rate in nearly 40 years, the decline of the middle class, stagnant median household income and rising income inequality, we have a lot to be thankful for, and we’ve made a lot of economic progress in the last 52 years—as the example above illustrates—thanks to the “magic of the global marketplace” and the “miracle of global manufacturing.”
Looking forward, let’s hope that the economic progress we’ve experienced over the last half century continues, unimpeded by consumer-impoverishing trade policies that would prevent or restrict American consumers from having access to goods manufactured at the “lowest-cost method of production”—whether that’s across the street or on the other side of the world.