... You asked me, rather triumphantly, as if this settled the matter, whether I knew of a single case where prices have declined permanently. Well, yes, I have seen some prices drop.
If you will allow my point of reference to be the year 1937, when I first began to understand what prices were, I have seen prices drop on the following items, among others: penicillin; aspirin; polio vaccine; computers; overseas telephone calls; transatlantic passenger tickets; color television sets; sulfa drugs; rubella, chicken pox, and influenza vaccines; laser surgery; no-press trousers; life-size, natural-color, busts of Elvis Presley with a night light inside; plastic ducks to play with in the bathtub; wrinkle-free suits, microwave ovens, polyester ninja suits, VCR cassettes of Buckaroo Banzai Through The Eighth Dimension, and a lot of other things.
Of course, you say. Since these things were simply not available, their price was nil; my view is that, since they could not be purchased even by the richest of the rich, they were priceless, and that their cost has therefore fallen considerably. "Stop!" you say. "This is mere sophistry and semantics. Smoke and mirrors." I am sorry that I have disturbed you so, because I believe that you have hit on the truth. I am deeply convinced that market forces, prices, and all the arcane argot of economics is sophistry and semantics. It is all smoke and mirrors, but mainly smoke. Perhaps a story of my youth will clear up all this confusion (although I doubt it).
There used to be a small, dark, little Mom and Pop store near every grade school. Maybe there still is, but I haven't been in one for years. Their stock in trade was forbidden items of all sorts: pea shooters (Try our Pea Wee! Only two inches long! Easily hidden!), Mexican Jumping Beans (They moved because of larva inside. If you were really lucky, one of them might hatch out in class, and you could drop it into Betty Prohaska's hair.), Yo-yo's (Once a year the World Yo-Yo champion, who was always from the Philippines, would hang around outside the school fence, doing marvelous things with a yo-yo while his manager offered Genuine Autographed by the Champion Himself Championship Caliber Yo-Yo's for only twenty-five cents. Of course, none of us ever had twenty-five cents at a single time. We might have had that much collectively, but a Championship Caliber Yo-Yo would scarcely have been a suitable investment for an unchartered, very limited liability, co-operative of six-years olds).
Under the counter there was usually a selection of eight-page Mexican "comic books", Surprise Your Friends Trick Pocket Knives (Remember that this was South Chicago. The trick to which the ad referred was that the knife had a button that you could push with your thumb and cause a six-inch blade to snap out and lock in place. It was not really designed to fool your friends, but we all recognized this as merely a bit of advertising license.) There were also Steel Knuckle Protectors, water pistols, little wax figures filled with brightly-colored and noxious liquids, Mexican itching powder ("Watch Your Friends Squirm", which, in this particular case, was not simply advertising license. Mexican itching powder was not only effective, but the source of many golden moments in my youth, purchased largely, I am pleased to say, at the expense of Betty Prohaska), but enough of inventory.
Bernard and I had gone into our local school store, which had an old sign above the door, reading "Whi e You W it." I was going after the passion of my youth, which was pistachio nuts. Like other stores of its kind, our local school store had by its door a small bank of glass globes mounted on short iron posts. Each dispensed something desirable, such as jawbreaker candies that could last you the entire morning but which could never go undetected by even the most lax pedagogical eye; another offered peanuts; a third yielded up rock-hard chunks of liquorice and so forth. I turned as always to the upside-down fishbowl containing the red-dyed shells of pistachio nuts, ready to pay the piper as long as I could call the tune. I would put a penny in the slot of the machine, turned a knob, and a few pistachio nuts would fall into my waiting hand. I liked the nuts, but the real attraction lay in the shells, which had a million uses. Since I had lost my two front teeth (Bernard had knocked one out, and had wanted to split the proceeds from the tooth fairy with me. Bernard was incurably romantic and still believed in the tooth fairy.), I could spit shells about as far and certainly as accurately as the two-cent, two-inch Pea Wee. I scarcely ever got caught, since half the kids in the class, including the girls, could, and did, do the same. John Fiske Public School, 61st and Ingleside, was one of Persia's major trading partners.
Anyway, the proprietor came over with a ingratiating smile, and said, "Go ahead, my boy, put in your penny. You've got a surprise coming." I was a bit dubious at that remark, figuring that he had found a cockroach in his pistachio nut machine, but I decided that if I ended up with a cockroach in my hand, I would just toss it up for Bernard. He was always showing off about how he could catch nuts in his mouth, and I knew that his reflexes would be much faster than his vision. So I put in my penny (it had an Indian with a war bonnet on it. I have no idea of how many such I have put into pistachio nut machines in my lifetime, but I have since seen similar pennies commanding very high prices from coin dealers. Which, if you think about it, is simply another proof that John Maynard Keynes was the only economist ever who knew what was really going on, although champagne is hardly comparable with really spittable pistachio nuts).
I looked down and was disappointed to find only a few pistachios in my hand. No cockroach. No look on Bernard's face when he found out why the pistachio shell wasn't hard, why it had tasted so funny, and why it had.... But enough pining for those things that might have been. I was remembering things that, in fact, once were. Nevertheless, at that particular moment, I would have traded all the pistachio nuts in the store for just one cockroach. I had the vague feeling that I had been cheated of something truly desirable.
The owner, however, was beaming. I remember that clearly because his teeth were the same yellow color as most men's first and second fingers. "You see! The price of pistachios has gone down!" (And you thought that I would never get to the point, didn't you?) "Whachuh bei? I hadduh pay duh penny dint I?" (I said, in a peculiar pronunciation that was part South Chicago and part two missing front teeth.) "But, don't you see that they can't cut the price on a penny machine, so they fixed it to give more pistachios," he pointed out. "That means they dropped the price on pistachio nuts."
I answered him with devastating logic, "Whachuh bei? I hadduh payuh penny. I don't got nonuvit left, do I?" "No," he shouted, "Aber du habst mehr nutzen, messhugenele!" Just then the school bell rang, and Bernard pulled me away. The red dye from the pistachio shells had gotten my hand all red, so I wiped it on my shirt. I figured that I would tell Mom that I had gotten into a fight with Bernard and that he had bled on me.
As we got out into the street, Bernard told me with some heat, "Don't mess widdah guy! He's crazy inna head and if yuh get his spit on yuh, it'll get you crazy too." He was quite right about this, in fact. Only the past Saturday we had watched a movie at the Lex where Gene Autry had backed the mysterious cobra man into a corner. The cobra man had opened his mouth and sort of coughed, and Gene had fallen down like he had been shot and just lay there, twitching and frothing at the mouth. "Geez!" Bernard continued, " If there's one thing you can bet on, it's that you don't never get more than a penny's worth of pistachios for a penny."
I hope that clears up the entire matter of economics for you. The longer I live, the more I come to realize how very right Bernard was. At the time, however, I hit him.