Progress or Regress? - New York Times
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September 15, 2006
Op-Ed Columnist
Progress or Regress?
By
PAUL KRUGMAN

Is the typical American family better off than it was a generation ago? That's
the subject of an intense debate these days, as commentators try to
understand
the sour mood of the American public.

But it's the wrong debate. For one thing, there probably isn't a right
answer. Most Americans are better off in some ways, worse off in others,
than they
were in the early 1970's. It's a subjective judgment whether the good
outweighs the bad. And as I'll explain, that ambiguity is actually the real
message.

Here's what the numbers say. From the end of World War II until 1973, when
the first oil crisis brought an end to the postwar boom, the U.S. economy
delivered
a huge, broad-based rise in living standards: family income adjusted for
inflation roughly doubled for the poor, the middle class, and the elite
alike.
Nobody debated whether families were better off than they had been a
generation ago; it was obvious that they were, by any measure.

Since 1973, however, the picture has been mixed. Real median household
income - the income of the household in the middle of the income
distribution, adjusted
for inflation - rose a modest 16 percent between 1973 and 2005. But even
this small rise didn't reflect clear gains across the board. The typical
full-time
male worker saw his wages, adjusted for inflation, actually fall; the
typical household's real income was up only because women's wages rose
(although
by far less than everyone's wages rose during the postwar boom) and because
more women were working.

The debate over the state of the middle class, for the most part, is about
whether these numbers understate or overstate the true progress achieved by
typical
families. The optimists point to technological advances that, they argue,
don't get reflected in official estimates of the standard of living. In
1973,
you couldn't chat on a cellphone, watch a video or surf the Internet; many
medical conditions that are now easily managed with drugs were untreatable;
and so on.

The pessimists point to ways in which life has deteriorated, things that
also aren't counted by the official statistics. Traffic has gotten far
worse, and
commutes have gotten longer. The economic riskiness of life has increased:
year-to-year fluctuations in family income have grown much larger. The rat
race
has intensified, as families, no longer confident in the quality of public
education, stretch to buy houses in good school districts - and often go
bankrupt
when misfortune strikes in the form of a layoff for either spouse or high
medical bills.

Does the good outweigh the bad? Never mind. As I said, the ambiguity is the
message.

Consider this: The United States economy is far richer and more productive
than it was a generation ago. Statistics on economic growth aside, think of
all
the technological advances that have made workers more productive over the
past generation. In 1973, there were no personal computers, let alone the
Internet.
Even fax machines were rare, expensive items, and there were no bar-code
scanners at checkout counters. Freight containerization was still uncommon.
The
list goes on and on.

Yet in spite of all this technological progress, which has allowed the
average American worker to produce much more, we're not sure whether there
was any
rise in the typical worker's pay. Only those at the upper end of the income
distribution saw clear gains - gains that were enormous for the lucky few at
the very top.

That's why the debate over whether the middle class is a bit better off or a
bit worse off now than a generation ago misses the point. What we should be
debating is why technological and economic progress has done so little for
most Americans, and what changes in government policies would spread the
benefits
of progress more widely. An effort to shore up middle-class health
insurance, paid for by a rollback of recent tax cuts for the wealthiest
Americans -
something like the plan proposed by John Kerry two years ago, but more
ambitious - would be a good place to start.

Instead, the people running our government are fixated on cutting tax rates
for the wealthy even further. And their solution to Americans' justified
economic
anxiety is a public relations campaign, an effort to convince middle-class
families that their problems are a figment of their imagination.

Copyright 2006

Posted by Miriam V.