Much has been said and written about the soaring price of gasoline, something that hits us every time we go to the pump. In 1962, regular gas cost about 40 cents a gallon – slightly under 10 cents a litre.
Gas is not the only thing that has increased in price. The dozen beer that cost $2.50 then will now cost $24 or $25. The basic family sedan used to cost about $3,000; today, you must pay at least $30,000. The bungalow you could buy then for $15,000 costs more than $300,000 today, although a lot of that increase is due to the cost of a serviced lot. Adjusted for the lot price and for building a garage, the cost of the house has gone from $16,000 to about $180,000 over the years.
Let’s look at this from another perspective. A litre of gas used to cost slightly less than half a beer, but today costs a little over half a beer. The family sedan used to cost 15,000 beers, and still does. The house that used to cost 80,000 beers now costs 90,000. Not much has really changed! But look at the dollar! In 1962, it was worth five beers. Today, it is only worth half a beer.
We are seeing in a practical way the long-term effect of government policies on deficits and inflation.
Ninety years ago, John Maynard Keynes told us it was not a good idea to balance the budget every year, that the practice made the “boom and bust” worse. He was right, but we need to look at the whole picture. He also called for governments to cut back their spending in boom times, and run large surpluses. Balancing the national budget every year is about as dumb as balancing the family budget every week – it may be possible but is not very practical. Balancing the national budget over the long haul is essential if we want to maintain the value of the dollar.
Dominic Willott, St. Albert
