To the left, America is always in decline – and that only more wealth redistribution from the coffers of the rich can pull us out of this imagined decline. From Braaaad DeLong, The American Economy Stumbles:
The American economy has done badly over the past generation or so. This is not to say other economies have done better: The American economy remains among the richest in the world. However, given the economic lead America had a generation ago, it really ought to still be well ahead of the North Atlantic pack, and it no longer is.
But it is. America is not just pulling ahead of the world, it’s running circles around it. I usually agree with brad on things like debunking the inflation doom and gloomers, free trade, and the efficacy of monetary policy, but he’s wrong here. Adjusted for inflation, the US economy has done better than all its peers since 2009. As Europe, Russia, Australia and South America and Teetered on either recession or hyperinflation due to falling oil prices and sluggish growth, in 2014, America, with its Goldilocks economy, is the superstar of the developed world. Look at the huge success of Facebook, Tesla, Uber other tech success stories. No shortage of innovation. Despite the whining from the left about America being in decline, US high-end real estate and most prestigious institutions of higher learning are still the envy of the world over and are inundated to no end with foreign applicants. It’s a great time to invest in America.
Regarding ‘bad schools’, remove the low IQ students and school performance shoots way up. If you compare American Koreans with Koreans in Korea, our Koreans score higher. But academic surveys lump everyone together. By ignoring the role biology plays in school performance, one may be mistaken to believe that our public schools are only churning out ignoramuses , when in fact, America has some some of the smartest and most talented students in the world; it’s just they they are mixed in with the dull ones, weighing down the average.
Yes, today Americans have remarkable access to incredibly cheap electronic toys. But those are a small part of expenditure, and the costs of securing the standard indicia of middle-class life–a home in a safe neighborhood with good schools and a short commute, college for the children, assurance that a major illness will not lead to bankruptcy, a secure and reasonably-sized pension–have all become more costly relative to incomes. This shift is astonishing: For 150 years before 1979 Americans had confidently expected that each generation would live roughly twice as well in a material sense as its predecessor, not find itself struggling against the current to stay in the same place.
Brad is also possibly alluding to bifurcated inflation, a topic this blog has covered extensively.
Entitlement spending is surging, indicating that while inflation adjusted prices may be going up, the government is fronting most of the the bills, not individuals. Hospitals, for example, cannot deny the latest, most advanced treatment to the uninsured, so that gets added to entitlement spending.
As the elite splinter form the rest of society, it doesn’t necessarily have to suck to be in the bottom 99%. Compared to generations ago, standards of living are much higher and your wages have more utility. Food expenditures fell from 18% of wages to only 10%:
In the 50’s, for example, you only had a couple channels on a blurry black and white TV, few choices at the black and white cinema, and a crackly radio with only a few stations to choose from. Now with Netflix you can theoretically watch any TV show or movie ever made, all at your command. Thanks to modern medicine, ff you get an infection there is a good likelihood you won’t die. Clean water, reliable electricity, food stores stocked with cheap, abundant food – all things that we take for granted that didn’t exist generations ago.
Maybe downward economic mobility is the new normal. We have to come to terms with the fact that biological determinism means millions of people are simply not smart enough to fully participate in the economic recovery and will have to wait their turn. They are falling between the cracks due to autonomous macroeconomic forces outside of anyone’s control, and no one can or should try pull them out.