Sunday, May 16, 2010
Why does this feel like a sleight of hand?
BBC News: Household wealth grows five-fold in past 50 years
Household wealth in the UK has risen five-fold over the past 50 years, according to the Halifax.
The total worth of households' property, savings and investments, was £6.3 trillion ($9 trillion) at the end of last year.
It gives an average value per household of £237,000, three times the £73,000 in 1959.
The difference between household wealth and value per household is due to the rise in the number of homes since then.
Posted by powerofnow @ 04:45 PM (938 views) Add Comment
13 Comments
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1. yorkshireman said...
I dispute the £73,000 figure for 1959 as my father earned about £600 per year and bought a 3 bedroom semi-detached house for £1100 that very year. For £10,000 you could buy a mansion.
The main difference is that wealth was real in 1959 and now it is all an illusion.
2. alan_540 said...
Propaganda for the fact that we're all going to be a lot poorer in the next few years I suspect.
3. bellwether said...
The bulk of this "wealth" is based on the illusory (and still to be corrected) values the credit binge allowed us to put on our shelters.
In so far as these values are not supported by income/rent they are not real, and they will not stand the test of time. Actually in a sense even values supported by rents/income are not real wealth - ie in what sense are our homes a measure of wealth that the world outside our borders would place any store in? Compare if we were rich in oil or minerals.
4. clockslinger said...
Wonder what the stats on admission rates to psychiatric wards (admittedly skewed by the great Thatchers "care" in the "community" joke), divorces, elderly people scraping by and the divide between top and bottom 10% incomes and wealth have been doing over the same period...more informative and more pertinently would like to know if the figures suggest a correlation. Otherwise yet more "information" with no content from the hordes of number crunchers who should be doing something more meaningful.
5. alan_540 said...
clockslinger, psychiatric admission rates spiked last week when a one eyed slack jawed Scotsman was found homeless wandering the streets of Westminster.
6. tenyearstogetmymoneyback said...
As I have pointed out before it is impossible to compare like with like.
To grab a quote about computers from Wikipedia
IBM introduced a smaller, more affordable computer in 1954 that proved very popular.[66] The IBM 650 weighed over 900 kg, the attached power supply weighed around 1350 kg and both were held in separate cabinets of roughly 1.5 meters by 0.9 meters by 1.8 meters. It cost $500,000 ($4.05 million as of 2010)
How do you compare that price with a £200 Netbook. Just because people can afford a cheap computer does that mean they are better
off ?
There are thousands of other examples. A magazine from 1973 cost 50p. Inside there are adverts for 20 Cigarettes for 23p.
7. markj69 str05 said...
Stats, you've got to love them.
One man's 'spin', is another man's 'seesaw'!
8. icarus said...
I doubt if the UK is very different in this regard from the US. For what it's worth here's a relevant story. Senior US judge Elizabeth Warren has a long history of dealing with bankruptcy cases in the US and has undertaken extensive research in the area. When she started in this area a couple of decades ago her assumption was that personal bankrupts were feckless and/or cheats but eventually she came to the following conclusions about the massive spread of bankruptcy.
In real terms wages grew as the economy grew for the first 70-odd years of the 20th century. Since then a fully employed man's wages have stagnated or declined, necessitating two-earner families. This means a sudden drop in income if the second earner has to take off time to look after somebody. In real terms, compared with 30 years ago people spend less on food (including eating out), clothing, furniture and appliances and more on housing - the median family spends 80% more (inflation-adjusted) on mortgage payments than they did a generation ago (more than that for families with children, since there is a premium on housing in the catchment area of a good school), 75% more on health insurance and 60% more on cars (1 job = 1 car, 2 jobs = 2 cars), and a lot more on childcare (unnecessary when there was only one earner).
The two earners (with one often taking time off and not earning) have less left over than the one-earner family of the 1970s. If one loses his/her job the chances are lower now that he/she will find another that pays the same. They're also less secure in terms of retirement. More and more middle class families are living paycheque to paycheque, dealing with debt collectors and late fees and paying 20%+ interest on credit cards.
9. paranoia blue said...
@7 Mark
Perhaps a better analogy:
One man's spin, is another man’s roundabout!
However, it was all about the “swing,” but it certainly won’t be a “merry-go-round!”
10. markj69 str05 said...
@pb... My implication was that the 'spin' comes from teh 'roundabout', and that the 'seesaw' represents 2 extreme positions on the same thing. Ie BBC being bullish as per norm, and many hpc'er being bearish.
If you cherry pick the appropriate indicators, i'm sure you'll find an inverse arguement.
11. bellwether said...
The corollary to the Icarus post is that the decline in real income was effictively masked by the growth in credit, growth which was in fact sign of our incresed impoverishment.
The mask is now slipping and we are coming to realise the true situation. Something like extent of globalisation,and the imbalances it has engendered has rendered us in the west collectively poorer.
12. ontheotherhand said...
Icarus @ 8. It will be very similar here. When 2 earner families are necessary and they then get childcare and a cleaner, the GDP figures get a boost, since the housework and homekeeping was not counted, but employees are. Depressing to think that if one strips out longer hours worked and women working out of GDP growth in the last generation we've been stagnant. The main huge improvement came from computing.
Yes people spend less on food, clothing etc. and more on housing. This is a closed circuit though. The second people have more spare money because some costs of living have gone down, they will throw it collectively at housing with leverage from the banks. The only thing that stops house prices going up is when people collectively can't get their hands on more money to throw at it.
13. Chilli said...
"Household wealth grows five-fold in past 50 years"
"The difference between household wealth and value per household is due to the rise in the number of homes since then. "
Quality reporting as usual...