Morgan Housel is in fine form with this brilliant piece about how our happiness levels get dragged down by the weight of our own expectations. He then quite eloquently weaves in the aspect of inequality in today’s world which in turn plays havoc on people’s expectations.
He quotes Warren Buffet to set the scene in context about how we couldn’t have had it any better today than ever in history:
“Warren Buffett once told a group of college students that they all lived better than John D. Rockefeller: “I mean you’re warm in winter and cool in summer and can watch the World Series on TV. You can do anything in the world. You literally live better than Rockefeller. His unparalleled fortune couldn’t buy what we now take for granted, whether the field is—to name just a few—transportation, entertainment, communication or medical services. Rockefeller certainly had power and fame; he could not, however, live as well as my neighbors now do.”
This is another one of those technically-right-but- contextually wrong problems. Rockefeller never had Advil or sunscreen or penicillin. But nobody today wakes up feeling better off than Rockefeller because that’s not how people’s heads work.”
So the context which most people refer to as happier times is the the very progressive post war period when everything seemed to be optimal:
“…the war historian Frederick Lewis Allan wrote: “The enormous lead of the well-to-do in the economic race has been considerably reduced. It is the industrial workers who as a group have done best – people such as a steelworker’s family who used to live on $2,500 and now are getting $4,500, or the highly skilled machine-tool operator’s family who used to have $3,000 and now can spend an annual $5,500 or more.
As for the top one percent, the really well-to-do and the rich, whom we might classify very roughly indeed as the $16,000-and-over group, their share of the total national income, after taxes, had come down by 1945 from 13 percent to 7 percent.
This went beyond income – even the variation in consumer goods flattened out. Harper’s Magazine wrote something in 1957 that was so important to the era:
The rich man smokes the same sort of cigarettes as the poor man, shaves with the same sort of razor, uses the same sort of telephone, vacuum cleaner, radio, and TV set, has the same sort of lighting and heating equipment in his house, and so on indefinitely. The differences between his automobile and the poor man’s are minor. Essentially they have similar engines, similar fittings. In the early years of the century there was a hierarchy of automobiles.
If you look at the 1950s and ask what was different that made it feel so great?, this is your answer. The gap between you and most of the people around you wasn’t large. It created an era where it was easy to keep your expectations in check because few people lived dramatically better than you.
It’s the one thing – maybe the only thing – that distinguishes itself from other periods
The lower wages felt great because they’re what everyone else earned.
The smaller homes felt nice because everyone else lived in one too.
The lack of healthcare was acceptable because your neighbors were in the same circumstances.
Hand-me-downs were acceptable clothes because everyone else wore them.
Camping was an adequate vacation because that’s what everyone else did.
It was the one modern era when there wasn’t much social pressure to increase your expectations beyond your income. Economic growth accrued straight to happiness. People weren’t just better off; they felt better off.
… Today’s economy is good at creating two things: wealth, and the ability to show off wealth. Part of that is great, because saying “I want that too” is such a powerful motivator of progress. Yet the point stands: We might have higher incomes, more wealth, and bigger homes – but it’s all so quickly smothered by inflated expectations.
That, in many ways, has been the defining characteristic of the last 40 years of economic growth. And Covid-19 pushed the trend into hyperdrive.
The point isn’t to say the 1950s were better or fairer or even that we should strive to rebuild the old system – that’s a different topic.
But nostalgia for the 1950s is one of the best examples of what happens when expectations grow faster than incomes.
And all of us, no matter how much we earn, should ask how we can avoid the same fate.”
