About March 2015
We all care about living standards, but they are notoriously hard to measure over time. A strong case can be made that present-day living standards are better than, say, those of the 1930s. But are today’s Americans better off than those in the 1970s? Or the 1990s? If wealth is increasing, is it taking everyone more or less equally with it – or are some being left behind? What are the right metrics to use in studying these phenomena, and what are the appropriate public policy responses if we find that things aren’t going as well as we’d hoped? Just how much of a society’s wellbeing is in the hands of government, anyway? And how much of it should or can be?
This month, we will look at American standards of living over time, how to measure them, where they are going, and what to do about whatever it is that we find. Our lead essay is by financial journalist Megan McArdle. She is joined by the Cato Institute’s Brink Lindsey, Jared Bernstein of the Center on Budget and Policy Priorities, and Richard V. Reeves of the Brookings Institution. Comments are enabled, and we welcome feedback from our readers, whether here or elsewhere on the web; discussion will continue through the end of the month.
Megan McArdle makes the complicated case for optimism: Present-day Americans generally enjoy lives that at a comparable age their grandparents could only dream about. Technology has turned many onerous chores into trivial ones. It entertains us and supplies us with a wide variety of consumer goods. We spend more on health care, but it’s better care, and it’s also an accomplishment that we can spend so much on it at all. Yet many problems remain: Life is good for college graduates, but for others it can be increasingly hard. Mass incarceration raises questions about how good prisoners’ lives can possibly be. And family and community breakdown seems by many measures all too great a problem. As a result, McArdle’s optimism is decidedly guarded.
Brink Lindsey argues that improvements to our standard of living have been real and easily measured. But there have been significant areas of decline as well, and these, while real, are often harder to measure: We can measure increased life expectancies, or declines in the crime rate, but it’s harder to measure the alienation that comes from lost social status, or the long-term effects of pervasive single parenthood, or the fact that fewer and fewer men of working age are staying in the workforce. These negative trends are mutually reinforcing, he warns, and they may represent a growing threat to future generations, no matter how much life may improve by some metrics.
Jared Bernstein argues that the less privileged take no comfort from improving living standards. The privileged of today are the relevant comparison cohort, and until the less privileged are comparable in wealth, liberty, and dignity, they have every right to complain. People should - and indeed do - think about inequality in relative terms, and in present-day ones. They are rightly uninterested in historical comparisons. And they are correct to complain when the wealthy get still further ahead than they have. Absolute progress over time is real, but it’s also irrelevant in any conversation that values equality.
Richard V. Reeves finds it “offensive” to read that poverty has been eradicated in advanced countries. Poverty is always relative, he writes; it otherwise has no meaning at all. And relative poverty we still certainly have. The relative poverty of Americans – even those who are affluent by historical standards – has had real and indeed devastating effects on their lives. The gap continues to grow between rich and poor, and although our economic development is not to be regretted, its ill effects are certainly to be mitigated through policies that directly benefit those who are paying its greatest price.
An essay by Richard V. Reeves. Conversation to continue through the end of the month.
Related at Cato
Book Forum: The Age of Abundance: How Prosperity Transformed America’s Politics and Culture, with Brink Lindsey, May 30, 2007
Capitol Hill Briefing: Globalization and the World’s Rising Living Standards, with Johan Norberg, June 6, 2008
Cato@Liberty: “International Data on Living Standards Show that the United States Should Not Become More Like Europe,” by Daniel J. Mitchell, August 1, 2012