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Bob Higgs On the Recent Past and Future of the American Economy

Inspired in part by Pierre Lemieux’s recent Regulation article “A Slow-Motion Collapse,” Bob Higgs finds genuine reason to be concerned about ordinary Americans’ economic future.  (Note that this post by Bob – like Pierre’s essay – is emphatically not the standard middle-class stagnation myth repeated endlessly by Robert Reich, Paul Krugman, and other “Progressives.”)  A slice:

Adam Smith wisely observed that “[t]here is a great deal of ruin in a nation,” but he did not say that there is an infinite amount. It is a mistake to suppose that no matter how greatly the governments of the United States burden the nation’s private sector, they can never crush the life out of it.

Bob’s and Pierre’s essays are compelling.  (For further support of their thesis see this graph offered by Jim Rose.)  I continue to believe that it’s a myth – one that becomes more absurd the more one looks at all the data – that ordinary Americans enjoyed little or no improvement in their standard of living over the past 35 or 40 years.  Yet…

(1) I’ve no doubt that this standard of living would have improved even more had the burden of government been lower than it was during this time;

(2) it remains (somewhat*) mysterious to me that Reich, Krugman, and others on the political left refuse to make the case that the many government programs and bureaucracies still in place since before the mid-1970s, along with many newer ones put in place then and since – programs and bureaucracies such as Social Security, NSF funding, the 1979 creation of the U.S. Department of Education, increasing numbers of occupational-licensing regulations, and the 1990 Americans With Disabilities Act – noticeably improved the economic lot of ordinary Americans; and

(3) while markets are more robust than many people – left, right, and center – typically assume, markets are (as both Bob and Pierre argue) not indestructible.  Not only do the burdens of taxes, regulations, property seizures, and the on-going threats of such slow growth from rates that would otherwise attain, such burdens can indeed become so heavy that absolute growth stops altogether and decline sets in.


* I say somewhat mysterious because I suspect that those who wish to make a case for greater government involvement naturally gravitate toward accepting and trumpeting the gloomiest possible accounts of the current state affairs as a means of whipping up popular demand for ever-more government involvement.  But this suspicion is only just that.