Newspapers around the U.S. -- among them, the Palo Alto Daily News -- carried an AP story over the weekend about proposed increases in the first class postage rates, with an accompanying graph created from data supplied by the Postal Rate Commission. The graph is labeled:
First class postage rates for regular mail since 1920, real and adjusted for inflation
"Real?" I asked. The Real part of the graph, in darker color, climbs steadily upwards, while the Adjusted (unreal?) part, in lighter color, looks like a city skyline, with peaks in the 30s and 70s above 40 cents, a trough in the 50s around 20 cents, and small-scale variation a bit below 40 cents for the past two decades. I would have thought that the Adjusted figures, which represent an approximation to the buying power of a first-class postage stamp for each year, were the real values; the Real figures are only apparent, or face, values. The graph is talking like an ordinary person -- who tends, rather literally, to take prices at their face value, especially for certain commodities (notably gasoline and postage stamps) -- rather than like an economist.
The choice of labels isn't without consequences, of course. Calling face values "real" encourages the perception that prices are rising out of control. While, really, they might be holding steady, or even falling. I do remember penny postcards and pay phones that charged a nickel for local calls. But I also remember earning 75 cents an hour as a newspaper reporter.
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Posted by Arnold Zwicky at April 12, 2005 11:43 AM