Stagnant Thinking: An Introduction

Stagnant Thinking: An Introduction May 13, 2009

The recently canceled television series Life on Mars featured a somewhat unusual premise. The show’s protagonist, Sam Tyler, is a cop in present day New York City who, after being hit by a car, finds himself mysteriously transported back to the year 1973. The show was a strange blend of police drama and science fiction, as Tyler sought to undercover how he had ended up in the past, and whether anything that was happening to him was even real.

The premise of the show was, as I said, somewhat odd. But equally odd is that, according to plenty of pundits and commentators across the political spectrum, Tyler may actually have lucked out in being sent back in time. The reason for this, according to these commentators, is that once you account for inflation the material condition (or at least the wages) of the typical American are no better, and may in fact be considerably worse, than in the early in 1970s. The following snippet from a recent Bob Herbert column in the New York Times is typical:

As hard as it may be to believe, the peak income year for the bottom 90 percent of Americans was way back in 1973, when the average income per taxpayer, adjusted for inflation, was $33,000. That was nearly $4,000 higher . . . than in 2005.

Men have done particularly poorly. Men who are now in their 30s — the prime age for raising families — earn less money than members of their fathers’ generation did at the same age.

While the claim that the wages of the typical American have stagnated is most often found on the left, the idea is hardly confined to such quarters. Many libertarians have also been pushing the claim (though whereas those on the left tend to blame Reagan and “neoliberalism” for the supposed stagnation, among libertarians government is the natural culprit). I know that several of my co-bloggers have also made some version of the claim at one point or another.

Can this really be right? Is Sam Tyler better off, at least materially speaking, back in 1973 than he was in 2008? I don’t think so. To me, the claim that the typical American is no better off today than 35 years ago is initially implausible, and gets more implausible the more it is held up to scrutiny. To explain what is wrong with the claim, however, is not the work of an instant, and I recognize that the subject is a contentious one, with many different aspects. I propose, therefore, to do a series of posts on the subject, each looking at the issue from a different angle and articulating some of the reasons that I don’t think the stagnation story holds water.

I am, of course, only to keenly aware of how statistics can be used to mislead and obscure, rather than to clarify. As the sage Homer once put matters: “People can come up with statistics to prove anything; 14% of people know that.” To some extent this is unavoidable. I will, however, try to limit the chances of providing a misleading account as best I can. To that end, in what follows I will try as much as possible to use general statistics, rather than cherry picking narrow statistics that would seem to bolster my case. When you see someone trying to make the case for a general proposition using curiously precise or narrow statistics, chances are that the statistic being quoted is not representative of the larger picture, and hence is misleading.

I know that this can be contentious subject, but the response to my series of posts last year on the equally contentious subject of race gives me hope that it can be a productive endeavor.

Next in Series: The Price of Progress?


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  • M.Z.

    90% of the game is half mental my friend. 😉

  • Joe Hargrave

    BA,

    It all depends on how you operationalize your terms, doesn’t it?

    I think that when you look at a whole host of variables, what we see is that the potential for massive gains for the few has gone way up, while the potential for decline for the vast majority has also gone up.

    It’s easy to look around today and conclude we are better off – there’s more stuff on the shelves and its cheaper.

    But when looked at in the context of any number of indicators – the decline of public education, the decline in value of a college degree, a shrinking job market for grads, broad shifts in the economic base that have resulted in less job security, union busting and the corruption of many of the unions that survived, the skyrocketing of consumer debt, and so on, and so forth, it is kind of hard to deny that we are in a decline.

    So, I ask you, what does ‘better off’ mean? Are we better off as consumers? Maybe. As workers? I doubt it. As citizens? Not at all.

    I don’t think it is entirely a bad thing, by the way. Americans have enough. But I don’t like the way it is being done – autocratically, because the bosses say so to maximize their profits.

    Society is capable of producing such great quantities of wealth and goods that economic democracy is now a basic requirement of social justice. I think the Church has been building up towards it for some time now, condemning economic liberalism and philosophical individualism, and supporting distributist ideas.

    Pope Benedict is reportedly going to have a lot to say about the Wall Street fiasco and the ‘new economy’ in his next encyclical.

  • Pingback: Stagnant Thinking II: The Price of Progress? « Vox Nova()

  • ben

    I have long thought that it was pretty obvious that the decline in real wages was the result of increasing numbers of women entering the workforce, which is linked to the availibility of cheap and effective contraception, shrinking family size, and a rise in divorce rates.

    Low wages are the outcome of the sexual revolution more than anything else.

  • BA,

    Life on Mars was uniquely entertaining. The characters had depth and the story lines always kept me glued to the tube.

    The ending seemed to be a major downer since it precludes any sequels, but with a show that good, it would be difficult to replicate a year-in and year-out show with that kind of quality.

    Oh well.

    The music was good, especially considering I’m not a big fan of music from the 70s.

  • Joe Hargrave

    Ben,

    I’m not so sure about that. The unionization rate of the American workforce has fallen 20%, the low-wage service sector has grown by leaps and bounds while many high paying jobs have been lost forever, and many companies seek to avoid wage increases – which are harder to claw back – by offering ‘flexible’ benefits that don’t really show up in the paycheck.

    There are many factors involved.

  • ben

    I don’t doubt that there are a vast number of contributing factors.

    But what is too often ignored is that in 1970 the typical worker was supporting a wife and children.

    It is very uncommon today for a worker to be supporting another adult.

  • blackadderiv

    I have long thought that it was pretty obvious that the decline in real wages was the result of increasing numbers of women entering the workforce

    There hasn’t actually been a decline in real wages, but it probably is true that the slower growth in real wages among white men over the last 35 years (relative to women and minorities) is precisely that more women are working and that much of the former employment discrimination against women and minorities has abated (see the second post in this series for details).