Mark Bernstein has been asking some interesting questions about how much is the value of money through history. For some reason I’ve always found this to be interesting – as a teen I didn’t understand inflation – all I knew was my workmates did ‘PJs’ – private jobs and got paid $4 per hour for doing architectural drawings. This to me seemed an astoundingly large sum of money. I got paid the princely sum of $70/fortnight/gross, for a fulltime week, ie 40 working hours. Note to self – don’t return to the architectural draughting world. Today I earn that in a few hours. But by way of comparison, I was cleaning out some drawers in the garage at home and found a newspaper from the time. A great four bedroom house, three car garage (and possibly a pool), in the best suburb – $10,000.
Assuming I had no need to eat, sleep, clothe, pay tax, or otherwise squander money, I could’ve bought that house in 11,428 hours labour. Today, to buy a rather less salubrious house, – say of $500,000 (which wouldn’t buy a house of the above specs in a reasonable, similar suburb here in Wellington), it would take me well over 14,000 hours.
There’s about 2,000 chargeable hours in a year. In 1973, when I had my first fulltime job if I could have worked and saved every penny I earned I would’ve been able to buy a great house in a great suburb in slightly over five and a half years (not allowing for interest). Today, it would take well over seven years. Gee, we’ve never had it so good. And for those of you wondering why you still don’t have a home of your own, or why your wife has to work just to make ends, please be assured it’s not because she throws out the crusts of bread instead of saving them to make your lunch tomorrow.
I don’t know whether it’s globalisation or a succession of delinqent govenments – or – ok, I’m going for it – Bring back Buck. There don’t appear to be simple answers – or better, someone to blame. But based on my relatively short lifetime, I suspect for the average kiwi – and I earn rather more than the average kiwi – the egalitarian dream of buying a house on the quarter acre section in a pleasant tree lined suburb will be a thing of the past in another generation or two; simply because of there not being enough time to earn and repay the money. I often hear people saying, ‘I don’t know how young people are going to get a start these days.’ And this is not unreasonable – people don’t always calculate things out to the cent, but they have a good general feeling about how much money isn’t in their wallets, and how sleep deprived they feel by the end of the week.
My family has wills going back to the 1600’s – to the time of the Black Plague, Cromwell, and Isaac Newton – we (my ancestors) avoided them all. I can remember when we got the copies we laughed with my Dad when we found that one of the ancestors bequeathed everyone a gold guinea. And this went on for generations. Everyone bequeathing everyone a guinea. A guinea – good grief – what could you buy for that? Well, in those days it bought you middle class. You didn’t have to go in the army, you were a free man (or woman). My old history teacher (later as a colleague) sniffed and said ‘You have always been bourgeois – neither poverty of the peasants nor the responsibility of the aristocracy’.
As if I wanted either – free is good enough for me. And it’s clear – no matter when the time you find yourself in – it’s not how much you earn that makes the difference, what counts is how much you’ve got left after you’ve paid the bills.