No, really, no

Another way to make this point is that Dominic Frisby might want to reconsider his career choice. Economic journalism might not have been the right one. For we get this heart-stopping claim from him in a recent Guardian column:

The decline in the purchasing power of money
For a host of different reasons, the purchasing power of money has fallen by 99% in the past 100 years. That’s an average decline of 5% a year. Wages have not risen by the same amount. Those who rely on their salaries to get by have suffered an inexorable erosion of their wealth. Those who own assets have made good.

Sure, the rest of the article has far too much from Positive Money to be a reliable guide to anything other than the insides of the heads of the unthinking. But that really is a gobstopper of a claim. For it’s to insist that real wages have fallen over the past century. Something which, to put it politely, isn’t so.

We all have more leisure than our forefathers in 1918, we live in larger houses, have more clothes, longer lifespans, better medical treatment (yes, even the NHS is an advance upon “none”), are educated for longer, retire for longer, eat better food, travel further and faster and….well, there’s not really any economic manner in which life has got worse. Unless you want to talk about the disgusting expense of servants these days, something which is just another proof that real wages have risen.

As Brad Delong has pointed out:

The answer to the question “how much wealthier are we today than our counterparts of a century ago?” depends on which set of commodities you view as central and important. If you care only about personal services–having a butler around to answer the door and polish your silver spoons–then you would find little difference in national average wealth between 1895 and 1990: an hour of a butler’s time then cost about an hour’s worth of the time of an average worker; an hour of a butler’s time today costs about the same; on the butler-hiring standard we are no richer off than a century ago. But suppose you care a lot, instead, about your ability to by mass-produced manufactured goods–like bicycles. On the bicycle standard, the table shows that Americans today are some 36 times as rich in a material sense as their counterparts of a century ago were in 1895.

If you average over all the commodities they made then and that we made now, you find that the average productivity multiplication is about eightfold: an average worker today could buy with one hour’s work the average bundle of things that an average worker of a century ago took eight hours to earn.

Or, as we can and should put it, real wages now are 8 times what they were a century ago.

Mr. Frisby, really, some other line of work might suit better. One where, perhaps, you’ve got even a vague acquaintance with reality?

A writer
My first book, Life After The State, (‘Extraordinary’, James Harding, director of BBC News; ‘Incredibly thought-provoking,’ Al Murray; ‘Brilliant,’ Steve Baker, MP) has nothing to do with comedy. It is a book of political and economic philosophy.

Nor does my second book. Bitcoin – the Future of Money? (‘A great account. Read it!’ Sir Richard Branson), which tells the amazing story of bitcoin.

I co-wrote and narrated the acclaimed documentary about the global financial crisis, The Four Horsemen – 3 million hits and counting. (‘Excellent writing and narration from DF’ Front Row).

I write a weekly investment column for Moneyweek about gold and finance, as well as occasional pieces for Virgin, Breitbart and the Independent.

I have also written and produced numerous short-films, pilots and silly videos – among which Debt Bomb became a viral hit.

Dear God.

Support Continental Telegraph Donate


  1. For starters, “the purchasing power of money has fallen by 99% in the past 100 years. That’s an average decline of 5% a year” – No, it isn’t, it is under 1% (though it would be applied exponentially and not linearly so the power of money never goes negative). Yes, a pound note or dollar bill from 1918 won’t buy too much today, except that if you invested it, it would grow right along with the general price level.

    The money has lost 99% of its value! But it gets worse, a typical Walmart has lost over 100% of its current merchandise to pilferage, and with 1890 as a base year, the entire human population is dead! The saving grace is that all of these calamities happen so slowly that we can adapt.

    Delong’s numbers feel about right, but they neglect that the basket of commodities has changed over the last century. How much for my cell phone in 1918? for the pill that cures hepatitis? And his exercise of computing the value of the butler’s hour worked in terms of hours worked is pointless; it would only compare the relative value of various lines of work, not general prosperity or prices.

    And for Frisby, writing pap on economics for the Guardian might be exactly the right line of work. It suits his employers and it suits their target audience: Those who want action, not hard data.

  2. Frisby is not a leftie, at least not a typical Guardian leftie, as the other claims he makes in that article confirm (some of them are okay).

    And he doesn’t say that real wages have fallen by 99% in a century. He says that “the purchasing power of money has fallen by 99% in the past 100 years”, which is different, and then that “wages have not risen by the same amount”, which still isn’t the same (even if that claim itself is false).

    But having defended him so far, at this point I give up, as he does seem to generally be talking shit on this topic, for reasons that Tim and Spike have explained, as well as for many other reasons that could be adduced.

  3. The bullshit in this is that in purchasing terms wages haven’t risen in 100 years which is clearly wrong.

    It’s up there with the Corbynites claiming that globalisation has made people in developing countries poorer.

    Tell that to the folk in China and the ASEAN countries who are seeing their living standards improving rapidly.