On Rich, Poor, and What Trends Mean

by Don Boudreaux on November 28, 2009

in Data, Inequality, Standard of Living

Here’s Steve Horwitz’s important follow-up to his earlier post on the poor getting richer: there’s some evidence that consumption “inequality” is declining.

By the way, interpreting the data in ways that suggest that the poor are getting richer and that consumption “inequality” is declining is not obviously ideological — as I argued in the second part of this post from April 2008:

My second point is that it is a curious phenomenon that those who want more government control over the economy tend to be those who insist that the American economy has performed poorly over the past thirty-five years.  Again, as regular patrons of the Cafe know, Russ and I are quite sure that the economy has done very well during these years, even for poor and middle-class workers.

But if I were a pro-regulation and high-tax kinda guy, why would I dispute the claim that America’s economy has performed remarkably well for everyone even since 1973?  Why would I not say “See, the government programs enacted from the New Deal forward are working!”  At no time during the past 35 years has Uncle Sam’s budget been severely reduced.  During those years, some welfare programs have been scaled back, while others have been expanded and even newly created.  Trade is freer today, but the post-WWII trend toward freer trade began in the 1940s, long before those allegedly blissful years of the early 1970s.  Since the early 1970s, some regulations have been repealed, while others have been created at both the state and national levels.

In short, despite what some pundits mysteriously assert, America during the past twenty-five to thirty-five years has emphatically not been a laissez-faire society.  Not even close.  So why do so many persons on the political left see in the economic data of the past three decades a compelling case for even greater government control over our lives and pocketbooks?  And why don’t more of these same persons on the left respond to those of us who advocate less government by pointing to the evidence of continued and widespread growth in prosperity by saying proudly “See!  We’re right and you’re wrong: government intervention does work well!”

I believe that I know the answer to my (non-rhetorical) question, but this post is long enough, so I’ll end it here.

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