Arkady
President
We have a tendency to imagine that rising poverty, stagnating incomes, and the supposed need to cut back on government payrolls is due to the nation having hit some hard times. But, the truth is, the times have never been better. US Real GDP per capita is (at least as of last October), $49,998.58. At no point in American history was it ever higher.
http://www.multpl.com/us-real-gdp-per-capita/table/by-year
In fact, in prior eras that we tend to think of as more prosperous, it was much lower. Real GDP per capita is up 12% from the end of the Clinton era. It's up 115% since the end of the 1960s. And it has tripled since the middle Eisenhower years. And keep in mind, that's median real GDP per capita, so it already adjusts for the growth of the country and for inflation.
Yet, the sense we have that we're less prosperous isn't a figment of our imaginations. It's the reality for the middle class. Relative to the Clinton-era peak (which is also the all-time peak in American history), median real household income is down a little over 9%. For the median household, things are, in fact, considerably worse than they were at the end of the last century.
Relative to the end of the 60s, median real household income is up a bit (9.8%), but keep in mind that's through a time when real GDP per capita grew 115%, and consider that it's mostly a matter of a mass expansion of the labor force, as women joined the workplace. A huge number of households put out a whole extra worker for a paltry gain of less than a 10% increase in income, even as the nation as a whole was more than doubling its wealth.
To give you a sense of just how dramatic this change has been, in terms of the ratio of the median household income to the GDP per capita, imagine for a moment that a median household still earned the same proportional share of the GDP that it earned in 1969. Well, in that case, a median household would now be earning more than $47,000 extra each year -- a rise from the 2012 median income of $51,017, to $98,397. Imagine what you'd do with an extra $47,000 each year!
In essence, the median Americans are getting screwed. There's more and more wealth to go around, but it isn't actually going around. It's being horded by the super-rich. The nation as a whole is richer than it's ever been, but the leaders are pretending we're almost broke, to justify unprecedented government employment cuts and the stingiest social benefits in the first world. Real per capita production rises robustly, year after year, and yet those in the middle go between getting a few extra table scraps (as in the Clinton years), and actually losing ground (as in the last 15 years).
The effect of that can be seen here:
http://www.nytimes.com/2014/05/15/o...he-canadian-dream.html?_r=0&assetType=nyt_now
http://www.multpl.com/us-real-gdp-per-capita/table/by-year
In fact, in prior eras that we tend to think of as more prosperous, it was much lower. Real GDP per capita is up 12% from the end of the Clinton era. It's up 115% since the end of the 1960s. And it has tripled since the middle Eisenhower years. And keep in mind, that's median real GDP per capita, so it already adjusts for the growth of the country and for inflation.
Yet, the sense we have that we're less prosperous isn't a figment of our imaginations. It's the reality for the middle class. Relative to the Clinton-era peak (which is also the all-time peak in American history), median real household income is down a little over 9%. For the median household, things are, in fact, considerably worse than they were at the end of the last century.
Relative to the end of the 60s, median real household income is up a bit (9.8%), but keep in mind that's through a time when real GDP per capita grew 115%, and consider that it's mostly a matter of a mass expansion of the labor force, as women joined the workplace. A huge number of households put out a whole extra worker for a paltry gain of less than a 10% increase in income, even as the nation as a whole was more than doubling its wealth.
To give you a sense of just how dramatic this change has been, in terms of the ratio of the median household income to the GDP per capita, imagine for a moment that a median household still earned the same proportional share of the GDP that it earned in 1969. Well, in that case, a median household would now be earning more than $47,000 extra each year -- a rise from the 2012 median income of $51,017, to $98,397. Imagine what you'd do with an extra $47,000 each year!
In essence, the median Americans are getting screwed. There's more and more wealth to go around, but it isn't actually going around. It's being horded by the super-rich. The nation as a whole is richer than it's ever been, but the leaders are pretending we're almost broke, to justify unprecedented government employment cuts and the stingiest social benefits in the first world. Real per capita production rises robustly, year after year, and yet those in the middle go between getting a few extra table scraps (as in the Clinton years), and actually losing ground (as in the last 15 years).
The effect of that can be seen here:
http://www.nytimes.com/2014/05/15/o...he-canadian-dream.html?_r=0&assetType=nyt_now
Consider that the American economy has, over all, grown more quickly than France’s. But so much of the growth has gone to the top 1 percent that the bottom 99 percent of French people have done better than the bottom 99 percent of Americans.
As has long been understood (and more recently studied in a methodical way by Thomas Pickety), wealth tends to trickle up. The more laissez faire your approach, the more that upward-trickle will turn into an upward flood. But there are things that can reverse the flow, or at least reduce it. We see that in the way US inequality has been rising so much faster than in other leading nations that have more interventionist economic policies. And we see the outcome of those bad choices on our part in the way income mobility in the US has crashed relative to most other wealthy nations. We're a democracy. The choice is ours. But step one is educating ourselves about what's actually happening.
