Wages - Inflation - Debt

[Rajiv]

The topic of wages/inflation/debt got me thinking and reminiscing

Back in the 1970s I came to this country as a graduate student -- my only income was as that of a graduate teaching/research assistant - along with non resident tuition waivers. I found that I could live well on that income -- in a year I had saved more than enough to buy a five year old car with 30,000 miles on it. In two years I had saved enough to make trips back to India. This was done incurring no debt. All this included paying the rent and the cost of books, as well as in state tuition and gas and insurance for the car.

It is hard to see anybody doing that today.

Comments?

[Jim Nickerson]

Rajiv,

How different would American society, as an example, be today, and for the past perhaps 40 years, IF people chose to only buy those things which they could afford (even without considering the difference between "needs" and "wants"--which might also include houses on which they placed at least a 20% down payment?

How many people reading here do this now? I do, not to hold myself out from anyone else.

If anyone is reading most of iTulip, or perhaps anything other than fairy tales, then the world is awash with problems--big ones as I see them. If there is any answer to the future of the planet then it has to involve population control--whether voluntary or forced by nature. Simply put this shit cannot go on unendingly.

Your speaking of India, I read somewhere perhaps you posted it, that most of the people in India have a net worth far greater than the average American's. That is because they are forced to live on what they earn and do not have credit available.

If people are fortunate enough to have skills, mental or physical, enough to be employed, in the United States they might accomplish what you accomplished if they have the discipline to do so. That would be the discipline not to spend all they earn, that is to save, and not to create circumstances wherein they cannot save--such as having even one, much less two or more kids to feed, and clothe and forget about higher education.

[Olduvai]

In the 70s a European high school teacher could maintain his/her partner and two kids on this income. Live in a detached house, go on holiday AND pay off his/her mortgage in the normal period of 30 years.
Nowadays you need two incomes and an interest only mortgage to accomplish the same lifestyle.

[World Traveler]

Yes, I had the same experience. In 1966-1970 (ages 18 to 22), I was an undergraduate student at a state university. I worked 16 hours per week during school year, and 40 hours per week during summer. Summer 1968 I did not work, spent it in Europe, I paid for Europe trip myself from savings. I worked at a low-level blue-collar type job at phone company. I earned enough to pay my univeristy tuition, paid my parents room and board to live at their house (1/2 wages during school year, 25% wages during summer), and paid all my own expenses. Never took on any debt.

In 1977-1978, I was a teaching assistant at a Texas university, while I was getting an MBA. It was bare bones living, but TA salary was enough to pay tuition and my rent/food/books/misc needs. I earned $400 per month and tuition was very low, $300 per semester. I took on minimal debt, around $1000, to buy a used car, because of transportation needs.

I've actually tracked the increase in costs at state universities, it's something that's interested me, because today it would be so difficult to do what I did, on a pay as you go plan.

In the U.S., public universities are funded at the state-level, not the federal level. The short answer is that universities were much more heavily subsidized by the states in the 1950's-1970's.

At that time, there was more focus on "the common good" in the U.S., and a consensus that investing tax dollars in education for the next generation was a wise decision for society and our future as a nation.

Things started to change in the 1980's. In the 1990's, I started seeing a few articles that compared spending by the states on education vs. spending on the prison system. These articles implied that to fund the prison-building boom and incarceration boom of the 1980's and 1990's, the states were cutting back their education budgets, i.e. lowering their subsidies to state universities and shifting the cost onto students and their parents. The thing to remember is that before the 1980's, the U.S. incaceration rate was within the normal range for a developed country, similar to Europe. Now the U.S. has both the largest number of prisoners in the world (2.1 million) and also the highest per capita imprisonment rate (1 in 100). A lot of this is due to the so-called War on Drugs (users and sellers).

Above is not the total answer, but it is part of the answer. Priorities have shifted and the states' budgets have changed in how they allocate tax dollars.

[friendly_jacek]

The topic of wages/inflation/debt got me thinking and reminiscing

Back in the 1970s I came to this country as a graduate student -- my only income was as that of a graduate teaching/research assistant - along with non resident tuition waivers. I found that I could live well on that income -- in a year I had saved more than enough to buy a five year old car with 30,000 miles on it. In two years I had saved enough to make trips back to India. This was done incurring no debt. All this included paying the rent and the cost of books, as well as in state tuition and gas and insurance for the car.

It is hard to see anybody doing that today.

Comments?

I was able to pull a similar stint myself in early 90s, but later acquired a wife and a few kids. Now, even the well above average salary doesn't seem much, especially if one wants to show the world to his children. Obviously I saved some, otherwise I would not be perusing this site.