I don’t care what anyone says but it’s become totally clear to me that the economic path we have chosen is not working.  Our standard of living is in decline.  Sure, we may have more cars, more tvs, more iPods, but we’re working harder and harder to get them and borrowing more and more to afford them.  As a country, I feel that we are poorer today than we were 8 years ago, and perhaps even than we were thirty years ago.    

I believe at the root of the problem is one thing: the government’s calculation of inflation.

According to the government, inflation has remained tame over the last 8 years, rising less than 3-4% per year. Yet, we all know this number does not reflect reality.  Here are some interesting stats:

• The price of housing has more than doubled since 1997 in most parts of the country, resulting in mortgage payments that have taken a recent percent of a buyer’s salary.  This is true even with record low interest rates factored in.
• Health costs have been skyrocketing.  In 2007, the average rise in health-care premiums is expected to be 12%.  The average worker’s salary will go up less than 3%.
• The price of energy is at record highs and shows no sign of coming down.
• The price of food is increasing.  Check how much you pay for a gallon of milk.  I bet it’s almost double what you paid three or four years ago.  I will concede that the price of junk food and McDonald's has stayed the same or dropped.
• Many forms of entertainment have increased in price.  Been to a concert or sports game lately?  The prices are ridiculous.
• Trips and vacations in foreign countries now cost almost twice what they did just three or four years ago.  The falling dollar has made us poor in the international community.
• College educations are increasing at three to four times the rate of inflation.  An education at a four year private school costs between $40-50,000 per year.

Why does the government fudge the inflation rate number?  It does that to keep the cost of entitlement programs down.  If the government says that inflation is only 2% then it only has to increase social security payments by 2%.  This change was originally made to reduce entitlements without having to actually cut them and taking the political heat.  After all, if inflation is really rising at 5% and you only raise social security by 2%, you've effectively cut the benfit by 3%.

About the only thing that hasn’t increased in price are cheap lead-painted toys, cloths, and consumer electronics imported from China.

So, has our standard of living increased or decreased?

You tell me.  If you like buying cars, eating at McDonald's, living in a household where two parents have to work to pay the mortgage, sitting in front of 3 tvs while you listen to MP3s on your iPod, I guess the argument could be made that thing have gotten better.

But if you are looking to eat healthy good, have time to exercise and spend time with your kids, want to take a trip, want to send your kids to college,  want to see a  concert, want to buy cloths from a place other than Target, then I'd say things have gotten worse.

So, I still wonder, are we living better now than we did 50 years ago?