As a follow up to my earlier piece on income inequality and stagnation, here is a great chart from the Minneapolis Fed study I cited:
Many recent reports portray stagnation—household incomes increased little, wages increased even less, and rising expenses drove families into debt. In contrast, another set of reports describe large gains—income per person almost doubled, people are healthier and living longer, and the quality, quantity, and variety of goods and services being consumed are greater than ever. It seems that life for middle America is stagnating at the same time it’s getting much better.
Claims of long-term middle America stagnation—such as those quoted at the beginning of this article—are often part of a broader argument about the adverse impact of globalization, outsourcing, and free trade. And middle class stagnation is used as motivation for a specific set of policies. But if middle America has not stagnated—as this analysis has shown—then this motivation for those policies is without merit.
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Using stagnation as motivation for those policies is already without merit, because there aren’t proven causal relationships between those policies and stagnation.
In fact, it’s totally irrelevant whether stagnation is high or low. If stagnation is low, as you allege, it can still be argued that it is still much higher than it would have been without a specific set of policies. Or that America is poised to stagnate, and certain policies can prevent it.
It’s irrelevant whether America has stagnated. The real question is whether policy X has a causal impact on people’s well-being.