×

Fill out the brief form below for access to the free report.

  • George W. Bush Institute

    Our Ideas

  • Through our three Impact Centers — Domestic Excellence, Global Leadership, and our Engagement Agenda — we focus on developing leaders, advancing policy, and taking action to solve today’s most pressing challenges.

I'm interested in dates between:
--

Taking Action

Advancing Policy

Developing Leaders

Issues

I have minutes to read today:

Programs & Issues

Taking Action

Advancing Policy

Developing Leaders

Issues

Publication Type
Date
I'm interested in dates between:
--
Reading Time

I have minutes to read today:

Material Progress and the Plight of the Poor

March 1, 2012 7 minute Read by Ike Brannon
"And yet it may then be the mode to assert that the increase of wealth and the progress of science have benefited the few at the expense of the many, and to talk of the reign of Queen Victoria as the time when England was truly merry England, when all classes were bound together by brotherly sympathy, when the rich did not grind the faces of the poor, and when the poor did not envy the splendour of the rich."
- Thomas Babington Macaulay, "The History of England"

Economic and technological growth have brought every American citizen untold benefits during the past 30 years. But you wouldn’t know that from the collective hand-wringing over the recently released CBO study examining the changes in the income distribution over the last three decades.

Some of the commentariat have even declared that living standards have basically stagnated over the past 10, 20, or even 30 years. While there is no denying that the distribution of income has become more skewed in the last three decades (and there’s no shortage of explanations for why this has occurred), to extrapolate from that and conclude that the standard of living in the United States has stalled or even declined during this period flies in the face of reality.  Although the benefits can sometimes be difficult to quantify, we need to keep the elemental fact of our progress in mind if we are to correctly diagnose what truly ails our economy.

For starters, those of us who were alive during the supposedly halcyon years of the 1970s can remember when automobiles broke down regularly and were of low quality even when they weren’t broken. While some note the increasing age of the typical car on the street (currently just past 10 years) as a portent of poor economic times, a typical mid-market automobile produced in the 1970s would irreparably break down well before it reached 10 years of age. Owning a newish car was an (expensive) economic necessity for many.

Buying music in the 1970s meant paying the equivalent of $30 today for an LP (usually replete with scratches and skips) at a second-rate mall music shop with a selection that would be unimaginably limited today or else venturing to a head shop masquerading as a record store — if your town happened to have a college — for a similarly small but at least different selection of records.

Of course, the lack of selection fit with the general inability to listen to different varieties of music. In my hometown of Peoria — which I will submit is as good an example of Middle America as any — a teenager discovered new music by listening to one of the two FM stations or two AM stations that played popular music or rock and roll. A tape player in a car was virtually unheard of at the time, a pricey luxury few could afford. Even FM radios were not common until the latter part of the decade. Today there is an almost limitless array of choices available on the Internet, a cornucopia made even more wonderful (and almost daunting) by the fact that artists record roughly 10 times more record albums each year in the current decade than in the 1970s. The variety of books and other publications has grown even faster, with the attendant prices falling in turn.

In the 1970s “appliance repairman” was a blue-collar job in high demand. My family’s regular repairman (and every family had one) visited our house so often he merited an invitation to family events. Today, this occupation has almost ceased to exist, as refrigerators, washers and dryers, and dishwashers become more energy efficient, more reliable, and cheaper, declining in inflation-adjusted prices to the extent that they are almost disposable.

Two generations of steady technological progress — the fruit of economic growth — have benefited everyone in society, although the gradualness of the change can make it difficult to appreciate its scale. Baubles such as the iPhone or iPad, which would have been unimaginable even a decade ago, are affordable for everyone in the middle class today. The remote predecessor of such devices, the Walkman, may have been ubiquitous in the late 1980s, but it too represented an almost unfathomable toy to the denizens of the 1970s.

Being poor still sucks, and the fact that the poor are still with us today represents a failure of policy at some level, although conservatives and liberals may differ as to what precisely that failure is. But what we can afford with our income — whether it be the middle class, the lower classes, or the upper classes — has grown in scale and scope in a way that a visitor from the 1970s could never fathom. That represents a very real success of our economic system, and ought to be celebrated as such.

Simply arguing that the passage of time is prima facie evidence that market-driven economies don’t benefit the citizenry is contrary to common sense and a distraction from the true public policy issues we need to solve. A more accurate way to frame the problem that befalls society is to eschew the concern over relative living standards and think more about the absolute living standards of the people in the lower-income classes, as well as their income mobility.

The relevant questions ought to be whether the people at the bottom of the income distribution today are better off than those who were there a decade or two ago, and if those at the bottom back then managed to improve their standard of living. One message of the CBO report is that people do escape the bottom of the income distribution and that the income at the bottom has been growing over the last 30 years — but that escaping the lower class remains difficult, and the income growth there has been unacceptably slow.

This is far different from claiming that living standards have fallen, as television pundits are so prone to do. It is important that we be clear on the precise scope of the problem before proposing solutions.


Author

Ike Brannon
Ike Brannon

Ike Brannon served as an Economic Growth Fellow of the George W. Bush Institute from 2012 to 2015. He has a Ph.D. in economics from Indiana University and a B.A. in math, Spanish, and economics from Augustana College. View his full bio

Full Bio