Here’s a letter that I sent back in June of this year to the New York Times:
Bob Herbert asserts that the United States economy “has trouble producing enough jobs to keep the middle class intact” (“Out of Sight,” June 10). While there are always cyclical ups and downs, Mr. Herbert’s statement – if meant as an indictment of the economy’s long-term performance – is contradicted by the facts. Not only is the unemployment rate still at a reasonable level, the Census Bureau reports that real median household income (reckoned in 2006 dollars) was $48,201 in 2006, up from $36,847 in 1967 – an increase of 31 percent. And this growth has been pretty steady over these 40 years.
Moreover, this figure underestimates the middle-class’s increasing prosperity, for it ignores the shrinking size of households. In 1967, the average household contained 3.14 persons; in 2006 it contained 2.57 persons. This fact means that the real income for each member of the average household grew from $11,735 in 1967 to $18,755 in 2006 – an increase of 60 percent.
Sincerely,
Donald J. Boudreaux
(For figures on U.S. household size, see Brad Schiller, “The Inequality Myth,” Wall Street Journal, March 10, 2008, p. A15.)
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{ 28 comments }
But household size per se isn't the relevant figure, is it? Wouldn't the number of hours worked per household matter more? And — since more families in 2006 had two full-time wage earners than in 1967 — wouldn't that account for much of that 31 percent gain?
and seriously — 31 percent over 40 years? that's a pretty crappy annual raise.
In addition to ignoring the hours worked, Don cherry-picked the numbers. According to the chart on page four of Don's source, household income has declined since 2000.
It doesn't matter, because all of these aggregate statistics are meaningless (not sarcasm). It's like you're arguing about the shape of a football, as if it has any impact on the score of the game.
Seems to me that choosing 2000 as a base year is to cherry-pick the data, for that year is famously at the peak of the tech boom.
More importantly, the complaints of people such as Bob Herbert is that the U.S. economy has been harming (or not helping) middle-class Americans for the past several decades. Comparing today to 2002, or 2000, or 1995 does not well address that claim of long-run, secular degeneration of the lot of America's middle-class. Going back forty years does.
Let’s hope this trend continues…
U.S. economy has been harming (or not helping) middle-class Americans for the past several decades.
The economy does not help or hurt anyone.
Out of control government spending does hurt people. It represent resources wasted and preferred consumption foregone in favor of empire, subsidy and protection, and wealth transfer.
That we are as well off as we are is indicative of high productivity.
Biggest power grab by the government, Biggest attack on the tax payers, probably including the great depression and yet I see no outrage from the Keynesians in Drag who call themselves libertarian.
You gotta love it.
It's not a power grab.
The government already exercises the power.
They are just rearranging the deck chairs.
The good news is the trend won't continue. The trend has been a bad trend for anyone who looks into the details. The bad news is… well just look around. The size of the federal debt is doubling overnight and it's gonna take excellent leadership to dig us out of our current giant hole that Reagonomics has dug for us.
An economy run on credit and debt that concentrates wealth amongst a small number of individuals at the top who really have produced nothing of value is doomed to failure. Our economy quite simply produces debt and it's also our number one export. This sort of thing can't go on forever and the end is here.
The ways out will be growing our economy via health care transformation, rebuilding the infrastructure and technological advances in energy, transportation and biotechnology. The market won't bring these changes on its own since the Invisible Hand has shown itself to have no eyes to plan for what is ahead of it. The idea that we should go blindly into the future is what lemmings do ( I saw them in the Arctic) it's not what evolved intelligent social beings do. Our ability to plan the future is what has raised us above all the beast. To deny that is to wish a return to living like beast. The next president will need to be a strong leader with good insight who uses the best brains available to him to help plan the future. The next president will set the trend of weather we have continued anemic fake debt created "growth" like the last 30 years that Hebert talks of or weather we have far greater and more equitable growth like the 30 years prior to the current anemic 30 years.
The ways out will be growing our economy via health care transformation, rebuilding the infrastructure and technological advances in energy, transportation and biotechnology.
Biting my tongue…
The way out is to cut government spending, starting with the empire, corporate subsidies, various federal agencies that produce nothing, and eventually looking into transfer programs.
Also, there should be a halt to FED credit expansion and currency printing. Allow interest rates to rise thus encouraging people to reduce consumption and save more.
OK, the depth of your economic comprehension as revealed in your comment provokes me to suggest you go read some Mises. I still have a hard time believing you haven't advanced at all despite your long presence around these here parts.
The next president will not change things to any noticeable degree, and anyone who thinks they can plan the future of a nation is blind to reality.
What you are asking for is a coup by a wise and benevolent dictator.
Politicians plan for only one thing: re-election.
Now go open a dictionary and learn the difference between 'weather' and 'whether'.
Scarpy,
"and seriously — 31 percent over 40 years? that's a pretty crappy annual raise."
Actually, that's not crappy at all. This represents the *median* not one individual household's increase. Since the turnover is constantly moving, it means that a person makes 31% more than a person in a similar job 40 years go. It doesn't mean that the person makes 31% more than they, themselves did 40 years ago. Individual wage increases would need to be much higher than this to create such a median increase.
The good news is the trend won't continue. The trend has been a bad trend for anyone who looks into the details.
Posted by: muirgeo
Wrong.
Declining household size is a legitimate point, but the letter ignores the fact that the increase in median household income over the last 40 years is largely, if not entirely, attributable to additional income earned by women. So the increase indicates no increase in the median income of individuals who were working both 40 years ago and today.
We've discussed this point before. We've seen precise figures from the Census Bureau in this forum, with links to tables published at the Census Bureau's web site. Readers may check the archives or browse the Census Bureau's site, but Don himself concedes this point in a post dated Feb. 20, 2007 titled "A Note on Household Income and Women Entering the Workforce", only defending the fact on the grounds that labor saving devices like washing machines gave women time to spare. [Don't dare say this to my kids' mom.]
Even if women had increasing time to spare over the last forty years, the rise in median household income implies no rise in the income of individual householders over this period, even accounting for falling household size, because as average household size fell, the average number of individuals earning income (and the number of hours of paid labor) per household rose.
This fact seems at least as relevant to a thorough understanding of the statistic as a discussion of falling household size.
Furthermore, the median income statistic is only half the story. The other half is the far greater rise in income at higher percentiles. The question is: how much more might median income have risen if incomes at higher percentiles had risen less? That median income rose slightly has no bearing on this question. That the economy is not a zero sum game is also irrelevant.
The issue is the distribution of gains from real economic growth, and it's not simply about market forces and marginal value. According to the Cato Institute, state employee incomes rose much faster than other incomes over this period. We've also discussed this point.
Clarification: … the rise in median household income implies no rise in the income earned by individual householders over this period …
Quote from muirgeo: "The next president will need to be a strong leader with good insight who uses the best brains available to him to help plan the future."
Ziek heil!
Do you actually have any idea what you're really saying?
Muirgeo says:
"The ways out will be growing our economy via health care transformation, rebuilding the infrastructure and technological advances in energy, transportation and biotechnology."
Wonderful talking points… Did I mention that the talking points were wonderful?
No substance; all ideology.
Sounds like the New Deal all over again.
Muirgeo met Dr. Friedman…
http://video.google.com/videoplay?docid=6813529239937418232
Sam Grove,
"What you are asking for is a coup by a wise and benevolent dictator."
Agreed.
Muirgeo is an indoctrinated fascist – a true believer. He sees, and to some extent even comprehends, the problems created by fascism, but refuses to believe that there is any solution but more fascism. So, what is it about human nature that breeds fascists? Muirgeo calls it "planning". I think its more like the desire to control run amuck.
31% seems great but what has inflation done in the same amount of time. What did a loaf of bread cost 40 years ago. A can of Coke. Who cares if your income has gone up, it probably has not gone up as fast as the devaluing of your dollar.
Hey all, you have two choices as I see it. You can let the real-life capitalist run your world. We've seen what they do, privatize profits and socialize debt.
I know you all have these fantasy's of how Libertopia will work out in your imagination but in the real world we see there are no people who truly believe in free markets.
The second choice is a choice that we can hope democracy works.
Some said I was sounding like the New Deal all over again.
Yes I am. After that time we had 40 years of good growth far better then the last 30 years of Markets Gone Wild.
I know you all think there is a third choice, Libertopia, but …. I feel bad about this…. ummm how do I say it. This is tuff… like when I told my daughter about the Tooth Fairy. Go ahead and sit down you all cause I have to tell you something you might not like. OK now there is no such thing as Libertopia… it's all make believe. OK OK I know you read about it in a book… but that's just what we call a Fairy Tale. Something that helps children with their imaginations. When you grow up its important to understand that there is a real world out there. And there are no Easter Bunnies, no Tooth Fairies, No Invisible Hands…. and no Wicked People doing the wickedest of things for the good of everyone. Libertopia is just make believe OK?
Muirgeo,
What there is no such thing as is "Democracy". Its make believe, ok? Yes, the political class has spent trillions of dollars on propaganda to get you to believe it exists, but the truth is that you live in a fascist state – of the politicical class, by the political class, and for the political class.
And, by the way, I can prove that there is such a thing as a free market. Very simply, the political class could not exist without it. The political class does exist, therefore there is a free market. That the political class survives by plundering the wealth created in the free market does not negate the existance of the free market.
P.S. Muirgeo, your understanding of the New Deal is warped by a logical fallicy – post hoc ergo propter hoc. You assume that because the New Deal came before the growth that it caused the growth. There were many other very significant factors in play, and there are many who believe that the programs of the New Deal were (and that those that remain still are) a significant drag on potential growth.
I raise my placard at the Fascist party convention. Seeing the overwhelming disapproval of other partisans, I sheepishly lower it.
Well, I'd vote against that too … if you'd put the issue to a vote.
I'd go even further and limit the entitlement of uncommonly wealthy capitalists to consume the yield of their capital, so they couldn't socialize their losses, and they couldn't exclusively consume their gains either, but no central planning bureaucracy would consume the gains instead.
Gains could only be used to reorganize resources seeking greater profit or parked in durable commodities or ancient artifacts in public museums or given to impoverished disabled people or something similar, as determined by common juries. We're tantalizingly close to this system now, and most people don't even realize it. If people like you would at least consider the possibility, we might move a bit closer.
I would also expire most of the entitlement at the capitalist's death, by auctioning his former assets and removing the monetary proceeds of the sale from circulation as decentralized creditors elect a new generation of lords by extending them credit. The deceased lord's preference would be available for creditors to consider, and the new lords would be subject to common juries as described.
If you want to know what I'd have my "elected leaders" do, that's it, among other things. I'm not the least bit interested in the Obama-McCain ticket, so don't waste your breath. Neither candidate represents me, and I doubt that either candidate will ever represent me.
Speaking of utopia … What does "democracy works" even mean in this context?
Biannual, majoritarian plebiscites electing a tiny (compared with the electorate) committee of central planners are not democracy at all in my way of thinking. You only understand the word "democracy" this way because you've been subject to this majoritarian, statutory system since birth.
I vote for what I want every day, not every two years, at Walmart, and my choices are far more precise than some list of bullshit artists, most of whom I hardly recognize and have never met and will never meet, chosen by one of two established parties, neither of which represent my preferences, and entitled to make countless choices "for me" with very little consideration of my wishes.
Right. No Easter Bunnies will appear on my ballot in November, if I bother to vote, not a single one; however, when I select my groceries at Kroger the same day (and the next day and the next), I'll have a far greater variety of choice.
The market is democracy.
Randy says:
"There were many other very significant factors in play, and there are many who believe that the programs of the New Deal were (and that those that remain still are) a significant drag on potential growth."
Spot on; and I'll go one further. The New Deal restricted freedom and promoted inefficiency.
In fact, the actions of the government after the crash of 1929 are what turned a recession into a depression and prolonged it for eight years.
What turned things around?
The end of Smoot-Hawley, for one.
The mess we are seeing now is not a failure of the market, but a predicted failure of government meddling in the market, and unmitigated credit expansion by the central (read government controlled) central bank.
Tell us of the deregulated financial markets…, oops, the SEC has been at the scene of the crime all along, as has the FED and congress.
Deregulated, my butt.
Any hierarchical power system will be played by the powerful and moneyed interests for their own benefit at our expense.
Muirgeo has a secret cure, a brilliant plan for a government so powerful that it can take over all those big corporations and run them for our benefit.
Excellent, muirpidity # 24:
"The market won't bring these changes on its own since the Invisible Hand has shown itself to have no eyes to plan for what is ahead of it. The idea that we should go blindly into the future is what lemmings do ( I saw them in the Arctic) it's not what evolved intelligent social beings do. Our ability to plan the future is what has raised us above all the beast. To deny that is to wish a return to living like beast.
Posted by: muirgeo | Sep 20, 2008 5:55:38 PM"
muirduckie, you are just so fucked up.
Least we forget.
MUIR(STU)PIDITY OF THE (muir) DUCK
All of these are stands alone stupidity. Context is not necessary to understand that the person who created these is mentally defective.
1. “The rising income discrepancy is what prevents people from obtaining affordable housing.”
Posted by: muirgeo Nov 2007
or
2. “If you are advocating a free market system say for schools you need to show one that works.”
Posted by: muirgeo | Mar 10, 2008 7:24:41 PM
or:
3. "Suffice it to say individualism where ever it surfaces is ultimately self-destructive.”
Posted by: muirgeo | Mar 15, 2008 11:29:41 AM"
or
4. “Planning and tinkering will definitely have a place in creating a strong competitive market. The invisible hand……YOU'RE FIRED!!!… well or at least demoted.”
Posted by: muirgeo | Mar 17, 2008 9:13:45 AM
or
5. “Natural cycles will often effect(sic) conditions on a short term basis but will not effect the larger man made trends.”
Posted by: muirgeo | Mar 18, 2008 10:15:41 AM
or
6. “I honestly believe the principles I support would increase our liberty not decrease it.”
Posted by: muirgeo | Mar 18, 2008 6:57:16 PM
or
7. “5,000 year old vegetation has been found in multiple areas around the world in the paths of recently receding glaciers.”
Posted by: muirgeo | Mar 18, 2008 7:00:43 PM
or
8. “First , the idea of climates "natural course" is invalid. There's no magic here climate responds to things we understand pretty well.”
Posted by: muirgeo | Mar 20, 2008 9:02:34 AM
or
9. "When some one says the climate is warming because it is following its natural course they need to be more specific. That's all I'm saying. Is it warming from the Sun, El Nino…. what? And provide evidence."
Vidyohs… your ego so controls you. You should learn how to tame it. You'll be a happier person.
Posted by: muirgeo | Mar 20, 2008 10:28:10 AM"
or
10.”I compete with other doctors for my patients and market forces are somewhat in effect. A government single payor(sic) system could actually increase consumer choice and market competition.”
Posted by: muirgeo | Mar 21, 2008 9:10:06 PM
or
11. “ If I was(SIC) to summarize my position it would be that I believe we need more democracy not less ( ie. a government represents the needs of its people more then(SIC) of its economic institutions).
I believe in competitive markets but understand they work best with good regulation.
Posted by: muirgeo | Mar 26, 2008 12:56:01 PM
or
12. “Seriously, the only historical reference I can think of was back in the days of the feudal system. Then the markets were completely unencumbered. Property rights were strictly observed and all property was held by a minority of wealthy people with everyone else an indentured servant.”
Posted by: muirgeo | Mar 26, 2008 2:48:31 PM
or
13. “Poorly worded. Maybe qualifies for a murpidity but it's a fact that there is no "natural state" of climate. Indeed it's always changing.”
Posted by: muirgeo | Mar 28, 2008 1:30:17 PM
or
14. There will always be regulation. The key is to make it minimalist but effective. The biggest danger to effective regulation is allowing the regulated too near the process of making regulations and too near the process of enforcing them.
Posted by: muirgeo | Mar 31, 2008 1:41:01 PM
or
15. Hardworking people are whining because the fruit of their labor has been stolen by the financial wizadry of wall street paper pushing assholes making pyramid schemes and calling them fancy names like derivatives. That's not free market economics it's common thievery and it's the end result of allowing unfettered greed run our markets and assuming beyond all reason that the invisible hand will slap these bad boys when they get out of line. – Muirgeo, March 27 2008
OR
16. I'm no Jefferson but like he I'm as interested in maximizing liberty contrary to what you all claim. It's a cheap shot when you claim force is being used to steal your liberty when in fact it is being used to spread liberty. Yes force for liberty! There is NO other way. I'm a pragmatist and a reductionist and THAT is what I suspect you all dislike of my post. You don't get to tell us about your beautiful ideology with out telling me how it plays out in the real world as Karl Marx so aptly described. Posted by: muirgeo | Aug 16, 2008 1:26:52 AM
OR
17. I'm not a libertarian. I'm a pragmatic promoter of liberty in the real world. My views would provide health care for all as part of the social contract that recognizes a right to life and health. We all recognize a right not to be attacked by a foreign invader and thus we impose a military cost to all. Why not also recognize a right to health care a lack of which has killed millions more then any foreign invader of our country. Posted by: muirgeo | Aug 16, 2008 3:45:53 AM
Or (muriduck’s answer to muirpidity #1)
18. It's called Gentrification. It's a well described social economic / market phenomenon.
" Rising housing costs in gentrifying districts may ensure that poor residents who do move leave the neighborhood, rather than settle elsewhere in it. Since their places usually are taken by more affluent, better educated people, the neighborhood's character and demographics change."
gen•tri•fi•ca•tion
Pronunciation:
\ˌjen-trə-fə-ˈkā-shən\
Function:
noun
Date:
1964
: the process of renewal and rebuilding accompanying the influx of middle-class or affluent people into deteriorating areas that often displaces poorer residents
or
19.
I'm pro-democracy. Not a socialist or a communist by any definition. Posted by: muirgeo | Aug 18, 2008 8:46:04 PM
Or
20.
Now, I have to be honest. Like the Founding Fathers I fear even legally gotten massive accumulations of wealth. I struggle with this but my guess is even when the means to wealth is set on an even playing field we might all, at the start of the game have to agree that those of us through luck and hard work fortunate enough to prosper disproportionately will have to pay back disproportionately to the system that allowed us to succeed. Likely it doesn't have to be a massively progressive tax structure but I'm pretty sure it can't be done with out some progressively.
Posted by: muirgeo | Aug 23, 2008 12:37:37 PM
Or
21.
Maybe because before the law existed and Wall Street did what it wanted we had a GREAT FRICKING DEPRESSION! That was no fun. Wall Street then as now proved free-markets a bogus dangerous concept.
Posted by: muirgeo | Sep 9, 2008 10:24:08 AM
Or
#22
"Seperation of church and state…separation of money and state
Posted by: muirgeo | Sep 10, 2008 2:22:21 PM"
Or
#23
"Having tasted this easy way of living the people wanted more and ever more."
Posted by: vidyohs
YEP! And that's why you will never get rid of the welfare state so the best you can do is to optimize it's efficiency… like FDR, Kennedy or Johnson or Clinton did.
Posted by: muirgeo | Sep 11, 2008 10:29:56 AM
Or
#24
The market won't bring these changes on its own since the Invisible Hand has shown itself to have no eyes to plan for what is ahead of it. The idea that we should go blindly into the future is what lemmings do ( I saw them in the Arctic) it's not what evolved intelligent social beings do. Our ability to plan the future is what has raised us above all the beast. To deny that is to wish a return to living like beast.Posted by: muirgeo | Sep 20, 2008 5:55:38 PM
Wow, I don't even know where to begin.