Introduction: Your "financial anxieties" are something everyone experiences.
"With the current costs of raising children, the burden of medical expenses, and mortgage payments... can I really make ends meet with just my own earnings?" Many readers may be wondering this. The figure of $140,000 in household income (approximately 22.4 million yen – unbelievable!), which became a hot topic in American society, attracted attention worldwide.
Two important facts emerge from this article. First, "the calculations are flawed." As many economists have questioned, the figures were not strictly accurate. Second, "the anxiety of the middle class is justified."
Beyond the mere accuracy of the numbers, why does this "fear of money" arise? We will unravel the underlying changes in the economic structure and the paradoxical fact that society as a whole is becoming wealthier.
The discussion about an annual income of $140,000 (22.4 million yen) is a calculation error, but it does capture the anxieties of the middle class.
This figure, proposed by asset manager Michael Green, has a clear problem. As many economists have pointed out, it is a calculation error to be nearly 701 TP3T higher than the median household income (approximately $80,000, or 12.8 million yen).
However, the important thing is the two perspectives we can learn from this:
1. Essential expenses such as medical and educational expenses are increasing.
The following costs have skyrocketed over the past few decades:
When these expenses are added up, they amount to nearly half of the middle class's disposable income, an amount that was once only about a third.
Why does "money-related anxiety" increase even as society as a whole becomes wealthier?
The core of this discussion lies in the insights gained by understanding this contradiction.
- The difference in productivity growth is the cause.
"Tradable goods," such as clothing and electronic devices, which are mass-produced, have seen a dramatic drop in price due to technological innovation. On the other hand, in service sectors such as healthcare and education, productivity improvements are slower because they require the skills of workers.
- William Baumol's theory of 1967
As economies develop, the cost of tradable goods decreases while the cost of services increases. This is a common pattern across developed countries.
- Increased opportunity cost
There used to be people within families who provided childcare and elder care free of charge. However, nowadays, with more attractive options available in the labor market, the cost of staying home and caring for children has increased significantly.
American journalist,Matthew IglesiasThere is something he said frankly."As we become wealthier, the opportunity cost of staying at home to raise children and care for the elderly is increasing."
In other words, we need to understand the paradoxical fact that it's not that we've become poorer, but rather that we feel this burden precisely because we've become wealthier.
The important fact is that the proportion of total expenditure remains at historical levels.
While the focus has been on the increased spending on essential services, a different perspective is actually important when looking at the bigger picture.
- Total expenditures are stable.
Even after offsetting the price increases of essential services, the decline in prices of mass-produced goods such as clothing and home appliances has brought the overall price level below the average of the past 20 years.
- The paradox of prosperity
An increase in essential expenses does not suggest a decline in living standards; rather, it is evidence of overall increased prosperity in society. The ability of service sector workers to justly demand higher wages is a testament to economic vitality.
This understanding is important:The problem isn't just "fear of money," but also the need to consider how that fear can be reconciled with the other reality of societal prosperity.
Summary: New insights about work
Those of us living in economically developing countries need to understand the underlying structures before we become pessimistic and say, "Life has become harder."
1. Prosperity manifests itself in the form of increased costs.
As society as a whole develops, prosperity takes the form of "pain" through rising service prices. This does not signify poverty or inequality, but rather a result of high economic vitality.
2. The importance of changing the point of comparison
Focusing solely on price levels in a discussion can lead to misunderstandings. It's important to take a multifaceted perspective, not just comparing the "past 10 years" with the "present," but also considering factors such as "differences in price structures between mass-produced goods and services" and "patterns of international cost changes."
3. Mindset at the individual level
“Understanding the burdens that come with increased wealth changes our perspective when considering economic policies and lifestyle strategies. Instead of viewing rising healthcare costs solely as a "failure," we can re-evaluate them as "investment costs in service sectors that support the prosperity of society."
True economic literacy begins not with numerical analysis, but with understanding the underlying structures and contexts. Consider how this knowledge can transform your life strategies and work perspective.
