It wasn’t supposed to work out this way. Barack Obama’s presidency was supposed to usher in The Great Liberal Restoration. With a conservative interregnum finally over, America could be nudged back onto the path toward becoming a European-style social welfare state. Here on the third anniversary of Obama’s 2008 election, however, those dreams lay in tatters. A recent poll by The Hill found that only one-in-three likely voters blames Wall Street for the country’s financial troubles, whereas 56 percent blame Washington. The public thinks the $800 billion Keynesian stimulus package was a miserable failure. ObamaCare is growing more unpopular by the day. Cap-and-trade is as dead as the dinosaurs. But left-of-center politicos think they might be getting a second bite at the apple. With the economy moribund—today’s anemic jobs report was more evidence of that—perhaps they can leverage the Occupy Wall Street movement into a broad backlash against business, markets, and free enterprise. (Oh, and against Republicans, too, natch.)
Which explains the sudden obsession with U.S. income inequality. This is the one-sentence story now being sold to America: “The middle-class is no better off than it was 30 years ago because the rich greedily grabbed all the money.” If this narrative—that America’s experiment with freer markets, lower taxers, and lighter regulation was a failure—can be successfully planted, it will be easier for Washington to tax, spend, and regulate in the future. And to elect politicians pushing that agenda.
On its face, the whole storyline’s a laugher—at least to anyone who lived through both the terrible, volatile, inflation-wracked 1970s and then the 25-year boom that followed. Indeed, brand-new research from the University of Chicago and Notre Dame finds “median income and consumption both rose by more than 50 percent in real terms between 1980 and 2009.” Incomes are never equal, of course. And the rich did somewhat better for a variety of reasons, including America’s failed government school system that can’t produce enough skilled workers for America’s high-tech economy.
But the last thing the U.S economy, stuck in slow-growth mode, needs is Buffett Rules, higher taxes, and more market-distorting regulation. In the new book Race Against The Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy, MIT’s Erik Brynjolfsson and Andrew McAfee offer some suggestions: pay teachers more but eliminate tenure, keep kids in school longer, encourage high-skill immigration, teach entrepreneurship in high schools, cut regulatory barriers to business creation, and cut payroll taxes.
Then again, that’s no way to gin up a mob.
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You can find statistics that show that the real income of various groups is no higher than it was 30 years ago. When you see these statistics, be aware of the these factors. (1) If your attitude toward education lags, your income will lag in this techno-world. Without education, you are competiting masses of the world who would be happy to work for $10 per day. (2) We increasing single-parent households that status limits the ability of the wage-earner — if one exists — to get ahead. (3) We have government programs that encourage the creation of additional households; therefore income per household goes down. (4) the list goes on.
“If this narrative—that America’s experiment with freer markets, lower taxers, and lighter regulation was a failure—can be successfully planted, it will be easier for Washington to tax, spend, and regulate in the future. And to elect politicians pushing that agenda.”
It was and is a failure. We must separate the model from the results. Teach the model. Explain the benefits. For heaven’s sake, don’t tell us the experiment worked. Tell us why it did not work. Better yet, figure out why. It is not for a lack in the model but in the modeler: man.
If free markets, minimal and beneficial regulation, tax policies about revenue requirements and not social engineering are ever to ascend in the public’s opinion it must first be admitted and then stressed that half a loaf is worse than none because when the model seems to fail it will be blamed, not the artificial impediments.
Giving just one case in point. Free trade agreements are vociferously defended. However, currency manipulations, tax policy differences and regulatory burdens and barriers artificial to foreign markets make it plain that there is no such animal. That to find oneself powerless and unable to overcome artificial obstacles to trade invites all kinds of exploitations.
It’s interest to me that liberals (and I’m using that much-debased term in its modern sense: i.e., “State-fellator”) are now crying “Lo, the Poor Middle Class!” I’m old enough to remember the heyday of Radical Chic, when left-wing “Park Avenue Pinkos” and “Beverly Hills Bolshies” allied with the inner-city lumpenproletariat against the hated middle class, with its despised “bourgeois values.” When, I wonder, did the party line change?
I’d say the middle class is far better off than thirty tears ago: cellphones, smartphones, personal computers, flat screen tvs, cable, the internet, any number of drugs and medical procedures, even the quality of cars is much better now than in 1980. You can add your own categories to the list, but life is much better and the quality of life is better for everyone even if your salary hasn’t changed much. The only thing that has got worse is government. It’s bigger, more costly, and more intrusive than ever before with zero increase in value provided.
As Willis said.. Another way of looking at is that many statistics on the poor count college students. Historically a student is really poor, in debt or depending upon their parents. They have nowhere to go but up and hopefully lots of potential. Also historically the rich are older. They’ve had time to accumulate stuff and advance their careers. The bulk of society grows wealthier as they age.
A more honest way to deal with this is to figure out how to deal with the ones that are poor generation after generation. To determine why some meta-cultures in American society are far less successful than others (we all know its a disrespect for education) and figure out how to change that to increase the number of successes. But of course that treads too close to racial issues and you can’t change anything in that regard without slurs of racist being banded around by the usual suspects so we’ll continue on pretending we just can’t figure it out.
“The middle-class is no better off than it was 30 years ago because the rich greedily grabbed all the money.”
Ah, yes. The old fallacy that the total amount of wealth is static, and its acquisition is a zero-sum-game.
They didn’t “grab all the money.” They made more wealth. Most of their assets are only of value because the people in the market value them. Stocks, bonds, boats, homes, art – they are subject to frequently changes in value based on the market. Watch Antiques Roadshow and see how often a beautiful painting is described as being worth more a few years ago, but the market’s cooled off – or the reverse, where something has increased significantly in value because of the demand, e.g., Chinese artifacts that the Chinese are now able to and interested in buying back.
Spread out Bill Gates’s portfolio among the masses, and its collective value will (probably) immediately plummet as the market is flooded by people trying to sell of their portion while no one is buying. Well, Bill Gates will, and he’ll get his portfolio back in very short order.
People just don’t get it.
The last 30 years have been good for me. Even the last 50 years. But it’s true that something happened in 1981 that I see now has been a problem. That was when I noticed the beginning of the decline in the most basic of American industries. Mining, steelmaking, and my own industry metalworking had hit a peak and begun to decline. It’s hard to see the decline from the peak, but now I can see it. It may have been tax policies, but it was also ever increasing wages and benefits.
They’re not obsessed with inequality – they just want other people’s money.
The protesters back in the 60s who behaved the way the OWS crowd is behaving elected Nixon in a landslide. The backers of OWS have to know this even if the rioters don’t. So the question for me is: why do the backers of OWS want a Republican elected?
Those of us in the middle class are lagging behind, only to the degree that we have bought into the Progressives’ Biggest Lie of All:
All you need to do is show up for work or go to school; we have experts who have the answers to your housing needs, your health care needs, your financial needs … no need to plan for your future or actively manage your career, since we can do a better job than you can; just trust us to solve those problems FOR you.
The facade of that Lie is disintegrating before our eyes, as millions of ordinary Americans find that they have been left high and dry by the promises of these “experts”, that they can work the same job for a lifetime in the same place, or turn WHATEVER they find “fulfilling” into a viable means of support, or “have it all” …
… while leaving the hard work of managing their socio-economic destiny — from contingency planning to continuous personal improvement to firing their management and finding a new employer when called for — to government/unions/employers.
This ENCOURAGED dependence upon our “betters” at higher and higher levels, flies in the face of the self-reliance, personal initiative and “neighborly” interdependence that is the hallmark of the American experience.
Those who didn’t buy the Lie and instead kept control of their destiny, are the ones better off today … and more and more people that bought the Lie before, are seeing it now for the Lie it is.
They are coming to the understanding that, while experts are good for advice, it is best to leave the decision-making to the 300 million problem-solvers who are closest to the problems … not to a few Best and Brightest in DC to make our choices FOR us on the basis of the socio-economic morality of that select few.
The rich did get richer, but the poor did not. And for very good reason. If the rich get richer, they’re still rich. If the poor get richer, they’re no longer poor.
Willis,
A profoundly succinct re-statement of my earlier post.
Thank you for that clarity.
The emphasis on income inequality is nothing less than an attempt to delegitimize free market capitalism. The ability of capitalism to raise living standards from an absolute perspective is now so obvious that even the left must concede the point. Instead, they are now focusing on well-being from a relative perspective in a bid to delegitimize laissez-faire, hence the emphasis on income inequality. Remember, the left must constantly invent new problems to justify their very existence. If there are no problems for government to solve, there is no need for the left and their agenda of regulation and redistribution. They must constantly be on the hunt for new windmills to attack.
One factor that I never see considered in the diatribes which point fingers at a “stagnant” middle or lower economic class is the dynamics of the U.S. population. Dick Morris recently pointed ou that the poverty rate is still 16% (what is was years ago), but that this is a different 16% than it WAS years ago. In other words, people (e.g., immigrants) often enter the economic classes at the lowest economic level but most work their way up and out to be replaced by a new wave of people just starting out.
So even if reports of a stagnant middle class (vs. a burgeoning upper economic class) could be construed as accurate (which this article refutes), it’s just as likely that the reason the upper class seems to become “richer” is because more people are entering it from below, not necessarily because those who are already there simply have more. This would explain the dynamic relationship of the American economic classes and make it look more like a mushroom cloud expanding in volume (rather than per capita net worth) than the rigid static system that opponents assume it is.
I’d really like to see an indepth demographic-economic study that looks carefully at this idea.
I offer my case as an example to support what you’ve written. When my wife and I married 28 years ago, we were still in college. For the first few months, our total income was about $400 a month. That likely put us in the lower 10% of wage earners. Today, our combined incomes put us around the top 5%. What happened?
1. We finished our degrees in useful, marketable subjects.
2. We worked to further our skills over the years, making us more valuable to our employers.
3. We avoided self-destructive behavior.
During most of our marriage, we’ve lived far below our means and saved/invested a large percentage of our incomes. Today, we’re 100% debt free and have a net worth of over a million dollars not even counting our (paid for) house.
We’re nothing special. If we can do it, so can just about anyone else. That mindset is one of the biggest differences between conservatives and liberals. Liberals believe people are too stupid to take responsibility for their own lives (and indeed, liberals generally are) and need big government to take care of them.
We strongly agree with Larry J. Our story is much the same, married for 32 plus years, advanced degrees in technically demanding fields, we’ve lived well under our income levels for all these years. Just retired with high seven figure savings and both defined benefit and 401k pensions as well as IRA’s. Funded three kids through college and 2 through advanced degrees. Own our 2 homes outright. No special favors or handouts, college loans paid off. Future plans include continuing to live below our means – and we’ll be “Shrugging” too. Specifically, seeking to eliminate all taxable economic activities. We refuse to aid and abet the “Corruption State”. We figure if we reduce or eliminate our tax profile we help starve government. The more people who take on this challenge the lower the revenues for government. Spenders are like the dinosaurs – big and powerful and impossible to engage in direct combat. But exceptionally vulnerable, big necessarily makes them very slow physically. Their “growth” and “livelihood” model (keynesianism) leaves them severely intellectually outgunned by the much smarter, much smaller savers and doers.