Actually that is my cheap attempt to get your attention. Since Tyler apparently contradicted himself (which we all know is always apparent but impossible to prove) on this point, you could argue that I am attacking him.
Anyway, a bunch of people have been jumping on Tyler for the hypothesis in his new book that the US economy has “stagnated” since 1973. (Note that I haven’t read the book, or even a good review of it; I’m going entirely by the sniping the guys at EconLog are launching.)
Here’s Bryan Caplan:
I completely agree with Arnold when he remarks:
I personally do not think that the stagnation hypothesis can survive the thought experiment in which you offer somebody the choice between (a) today’s median income and today’s array of goods, services, and prices or (b) 1973’s median income (plus, say 25 percent) and 1973’s array of goods, services and prices. I think that so many people would reject the 1973 option that the stagnation hypothesis becomes untenable.
Even stranger: I learned this thought experiment over a decade ago from none other than Tyler Cowen himself! I think he called it the “deflationary century.” His point: Most of us would rather have $1000 nominal dollars to spend on year 2000 goods than $1000 nominal dollars to spend on year 1900 goods. Ergo: official statistics notwithstanding, the quality-adjusted price level has actually fallen over time. Years later he blogged it:
$5.00 back then goes a longer way, but I would rather earn $100,000 a year today, and yes that is not adjusting for inflation.
Of course, Tyler might say that his thought experiment works for 1900 versus 2000, but not 1973 versus 2010. But none too convincingly. Ultimately, though, I’m pretty sure he realizes that there’s been amazing progress over this period. But saying “slightly less amazing progress” isn’t as provocative as saying “stagnation.”
So here’s how I “defend Tyler” while at the same time attacking him: I would much rather have $1,000 to spend in 1973, or in 1900 for that matter, than today. I would use it to buy either 10 or 48 ounces of gold, which I could exchange for either $13,500 or $65,000 to spend on computers and sushi today.
If that is construed as cheating, I still would rather spend $1,000 on things from 1900. I could stock up on things that haven’t seen a big jump in quality. I don’t know exactly what; I’d have to go down to the Sears Roebuck or the general store and find out. But if nothing else, I could buy that cow and matching set of pigs I’ve always wanted.
I grant you that at some point, I would prefer having money to spend today. But if we cap it at $1,000? Heck yeah I would rather be able to buy stuff from 1900 than today. I can’t believe anybody says otherwise. Are you guys really taking the thought experiment seriously?
Last point: Like I said, I haven’t read Tyler’s book or even a synopsis. But if he’s claiming something mysterious happened in the US around 1973, that suddenly crippled its growth… Is he going to blame fiat money? My sources say no.
UPDATE: Duh I just thought of another one: Land! Think of how much prime real estate you could get with $100,000 in 1900.
I suppose they will say, “Bob c’mon, we’re talking about the CPI, so leave assets out of it.” So I don’t mean it as an investment. I’m saying, I think I would much rather have a $100,000 house built in 1900, than a $100,000 built today. So long as my neighbor has wifi and no password.