Tag Archives: Inflation

It’s True. There’s a Sucker Born Every Minute. And He is Us.

Why is Everything is more expensive these days? Or is it?

One of the drawbacks of getting “older” is that I can recall, often in disheartening detail, the prices I used to pay for what I then might have considered, the staples of life.

That realization struck me while driving home the other day. It was a IMG_2493beautiful, sun-drenched afternoon and some neighborhood kids, fifth-graders, I’d say, were peddling lemonade on a nearby residential street corner. The beverage is not exactly a “staple” of my life but it is a staple of American childhood entrepreneurship.

And here’s where the sticker shock comes in. Emblazoned in crayon across a shaft of cardboard was the asking price for their lemonade:  $1.00 a glass.

I don’t recall that I ever personally staffed a sidewalk lemonade stand, but I do remember that the going price for a Dixie cup of lemonade when I was a kid in the 1950s was 5-cents a glass.

Now, you might say, “hey geezer, that was 60+ years ago. Of course lemonade costs more today because everything is now more expensive. It’s called inflation, dummy.”

Trouble is, that’s only partially true. An equally large part of the increase, IMHO, is marketing hubris, if you will, and our own gullibility. We are suckers in the image of P. T. Barnum. Vendors can seemingly charge anything they want for their goods and dummies like us will buy. You may grumble beneath your breath, but you fork over the cash.

Me? I grumble out loud and for good reason: Excessively high prices erode my percepti0n of what’s fair and honest in the marketplace. And of course that makes a mockery out of Adam Smith’s “invisible hand,” the so-called self-regulating behavior of the marketplace in which individuals can make profit, and maximize it without the need for government intervention.

Let’s go back to the Great Lemonade Ripoff and you’ll see what I mean. If you were to factor in inflation using the Bureau of Labor Statistic’s inflation calculator, that cup of tap water spiked with a dash of Crystal Light should retail for about 40-cents per cup. But these street corner scalpers were selling the drink for a buck (ice cubes not included). Why, I ask, is a glass of lemonade 250 percent more expensive even after adjustment for inflation? Why do we insist on paying more for many things that, frankly, just aren’t worth the over-inflated price?

In my personal experience, that’s just one example of hyper-inflation. There are many:

  • When I quit smoking around 1980, cigarettes cost 57-cents a pack. Now they average $5.51. That’s almost a buck more than inflation. And the suckers pay it—because they’re addicted to smoking and they don’t ask questions.
  • I paid about $75 quarter to attend the University of Minnesota in UofM1961. That comes to around $225 year a school year. My entire 4-year college education cost just $2700 (plus books, of course, and a fistful of dollars spent on frivolity at neighborhood bistros). In today’s inflated dollars that’s just $21,500. But tuition at the U of M now is actually $38,685 for a four-year degree, or $12,895 a year. Blame greedy state lawmakers for that inflationary double-cross. They brazenly shifted much of the cost of education to those who can’t afford a college degree without going so deeply in debt they’ll retire long before they retire their student loans. And without the education, they won’t even know they’ve been had.
  • When my son and I visited a nearby lakeside concession stand my icecreamsingle-dip ice cream cone costs $3.50. When I was a kid, a cone costs 5-cents a dip. Using my inflation multiplier of 8x, then, that scoop of sweetened and flavored milk fat I bought at the lake should have set me back 40-cents.
  • I purchased my first home, a Tudor-style duplex in south Minneapolis for $22,500. That place is now selling for $345,000. That’s an increase of $165,000 beyond inflation. What gives? This is the same dwelling, the same four bedrooms and two baths, the same basement, the same stucco veneer as it was 50 years ago. Why isn’t it selling for $180,000? I know why. Because dopes like us who are able and willing to pay that higher price bid the price up. I should point out that, during the real estate bubble of the early 2000s, buyers bid this property up to more than $450,000. Did I say “dopes”?
  • In my youth, I was at one time ball boy for the Minneapolis Millers Millersof the American Association. A ticket for a decent seat at that time was around two-bits in the bleachers; slightly higher for general admission. Today, you’ll pay $22 and more for a Minnesota Twins ticket —88 times more expensive. And for my 25-cents, I got to see the immortal Willie Mays as a Miller smash a towering home run over the left field fence. No foolin’.
  • Back when I was in high school, my father owned and operated a small shoe repair business. With patience and skill, my Dad could profitably apply new half-soles and heel to shoes for something like $5-$6. Obviously, this was a time in history IMG_0537when people actually repaired their shoes, rather than throwing them out and buying new ones. But no more. I spotted this sign at a nearby mall. Please note half-soles and heels are fetching $70 these days.
  • My first new car was a 1960 Corvette: $3500. That’s $28k with inflation. 2014 price: $53,000. (Worse yet, had I held on to that very car, it would be worth a bloody $90,000 today).

Well, there are hundreds of similar examples I could cite. Of course, it is arguably true that the Corvette I bought in 1960 is not the Corvette some Corvette20-year-old counterpart buys in 2014. Chevy has undoubtedly made perhaps thousands of improvements and refinements to the latter model. It should be more expensive than mere inflation.

In other words, I don’t mind paying full price for full value. But I don’t like getting ripped off. And I won’t pay $3.50 for an ice cream cone or $1 for lemonade or $25 for a ballgame ticket.

You’d think that with all our ingenuity, we Americans would have figured out a way to make quality goods cheaper, rather than more expensive. And thank heaven, I can offer a few beacons of pricing sanity. For example, I got married in a new $69 suit. Today, if you shop right, you can pick up a wool suit for $169 (on sale, of course), at something like Jos. A. Bank’s. That’s a good deal cheaper than what my trusty inflation calculator says I should pay:  $552.

In 1960, a 26-inch Schwinn Panther bicycle cost around $70 or $80. That’s more than $500 in today’s dollars. But $500 today will buy you one helluva nice bike or maybe 2 or 3 bikes if shopping Walmart is more your style.

Back in the 1960s when I actually drank beer, the price of a Budweiser six-pack of back was around $1.25-$1.50. Today it’s $7. Adjusted for inflation, a can of Bud is now actually cheaper than it was in 1960, since according to my government calculator, a six-pack of cool ones should cost $12.08. And so are many other alcoholic beverages.

Trouble is, I don’t ride bikes much anymore and I gave up drinking alcohol years ago. But if I hadn’t, I’d probably be drowning my sorrows today over the high-prices I’m paying for an ice cream cone and everything else I buy.

But don’t let my grievances stop you from taking out an 7- or 8-year loan to pay for that shiny new Chevy Suburban or forking over $5 for a $2 loaf of bread. Like I say, there’s a sucker born every minute. And he is us.

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