Friday, September 5, 2008

Re-Examining the Bread Standard for 2008

Comparison of Bread  1957-2008 
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Sunbeam Bread    '57 Fresh (3)    '57 Day Old         2003 (4)      2008 (4)
Price per loaf             0.16                0.08            1.59 (5)        2.09 (5)
Sales tax (1)               .01                  .00              .10              .07

Mileage (2)                 .00                  .00              .73            1.17
Totals                      0.17                 0.08            2.42            3.33
 

Footnotes to table:
1.  1957 rate equals 3¢ per $1.00, beginning at 14¢.  2003 rate equals 6¢ per $1.00.  2008 rate equals 3¢ per $1.00
2.  IRS Mileage allowance of $0.365 per mile (2003);  $0.585 per mile (2008)
3.  Sunbeam bread baked in Clarksburg
4.  Sunbeam bread baked by Flowers Baking Co., North Carolina
5.  Kroger, Clarksburg.  Sept. 2, 2003; Aug. 14, 2008 _________________________________________
    Five years ago in this column, I compared the cost of a loaf of bread in 1957 with its adjusted cost in 2003; I called it the “Bread Standard.”  The comparison, updated for 2008, appears in the accompanying chart.

    In 1957, Sunbeam bread was baked daily in Clarksburg and delivered to the neighborhood grocery stores.  There were two grocery stores within a short walk of my house.  Grocers discounted day-old bread by half, because most homemakers would only buy fresh bread. 

    In making a like comparison, we must use the discounted price of day-old bread because Sunbeam bread is now day-old bread when it arrives at the grocery store.

    If we needed bread, I was allowed to walk or ride my bike to the neighborhood grocery but not to the nearest supermarket, which was one mile distant on a heavily-traveled thoroughfare.  Thus, the comparison chart includes the cost of a two-mile automobile trip for 2003 and 2008.

    In determining the purchasing power of one dollar, most economists opt to compare commodity prices such as oil or gold.  Throughout history, however, the daily ration of bread has been the most consistent measure of nutrition for all people, whether they lived in the ancient Nile valley or now live in Kansas.

    While not every civilization ate wheat bread, most of the world’s farmers could grow a cereal grain of some kind.  Our daily bread, whether made from wheat or corn, has its nutritional equivalent in rice, other grains, or non-grains such as potatoes (E.g.: the Incas).

    Human civilization managed for a long time without need of oil or gold but never a day without bread.

    In 1957-58, only the wealthy drove Cadillacs; the behemoths retailed for about $7,000.00.  Or put another way, if you could afford a new Cadillac, you could also afford 87,500 loaves of day-old bread.

    Today, a Cadillac retails for about $50,000.00 and is considered nice middle-class car.  And why shouldn’t it be?  Its worth is only 15,000 loaves of day-old bread.

    To match the social status of a 1958 Cadillac owner, you would have to spend $290,000.00 for your automobile and a whole lot more for the house, swimming pool, gardens, driveway and garage to go along with it.  And don’t forget to add in the associated property taxes and insurance policies.

    Along the way, we have seen depreciation in more than just the dollar.  The old neighborhood groceries provided free delivery service, and credit-worthy customers could run a tab and pay every two to four weeks.  A housewife could also call her grocery order in if she didn’t have time to shop.

    Fifty years ago, grocery shoppers demanded quality.  This was due to the fact that even city folks were not far removed from growing their own food, and they knew what fresh food looked and tasted like.  June Cleaver would absolutely scream if she had to fry a “fresh” egg from today’s supermarket. 

    Fifty years ago, people knew what fresh-baked bread tasted like because they were probably raised on home-baked bread.  Homemakers in the 1950s would try to do without something else on the grocery list before they would stoop to buy day-old bread. 

    In terms of food, the dollar has become worth a lot less for two main reasons.  The first is that government deficit spending for food stamps and agricultural subsidies have skewed the marketplace with inflationary pressures.  Import tariffs have done likewise.  And the ethanol-for-fuel mandate (ethanol is alcohol made from grain) is piling even more inflation on top of that.

    Secondly, Americans have lowered their food quality standards.  Shoppers will pay a grocer for a dozen eggs that are a month or more old but will balk at buying truly fresh eggs from the local farmer because those eggs aren’t USDA-inspected.  This is but one example of how food-ignorant Americans are. 

    Ignorant people make ignorant spending decisions—distilling corn for Cadillacs being just one.