Tuesday, 29 January 2013

STAGNATION IN THE EYE OF THE BEHOLDER?



Following an article in the WSJ by Donald Boudreaux and Mark Perry clearly titled ‘The Myth of a Stagnant Middle Class’, we have had a bit of a flurry of replies - both pro, with even nominal left wingers like Matt Yglesias more or less agreeing and, of course, against.

 

Boudreaux and Perry’s thesis is that, since the middle class has now more ‘stuff’ than 30 years ago, there has been no middle class stagnation. The three items most often trotted out by liberals such as myself to counter this thesis are a) education and b) health care whose price have been rising relentlessly (our never ending crisis seem to have calmed both down a bit, though) and c) housing costs.

 

On Heath care, Boudreaux and Perry get it spectacularly wrong: They say “[n]o single measure of well-being is more informative or important than life expectancy. Happily, an American born today can expect to live approximately 79 years—a full five years longer than in 1980 and more than a decade longer than in 1950. These longer life spans aren't just enjoyed by "privileged" Americans”.

Actually, they are.


As noted by Harold Meyerson in his funnily titled article How you and Bill Gates are just the same , not only are Americans living shorter lives than Europeans, Australians orJapanese  but the average longer life spans hide a drastic and uniquely American fact: Poor and uneducated people are seeing their life expectancy going DOWN while richer Americans do see theirs going up - http://content.healthaffairs.org/content/31/8/1803.abstract .


On education, Boudreaux and Perry remain silent but Yglesias comes to their rescue in his own post on the subject  and manages to add that, since the higher price of education, isn’t deterring people from going to college, the higher cost of college education isn’t an issue. On health care, he kinds of repeat Boudreaux and Perry’s mistake by stating that, since health outcome are better and life expectancy rising, the higher cost is just a reflection of a better, more costly, service or good.

 

Housing costs are similarly ignored by Boudreaux and Perry but Yglesias does concede that they are an issue, albeit a small one in the face of all the progress the middle class experienced.

 

My reply? First, saying we have more ‘stuff’ ignores what we have lost. Krugman points to the lesser amount of time spent with our families.

 

I would add that we lost a lot of job security. Maybe that’s not a problem for Yglesias, a minor internet celebrity since his college years or for Boudreaux and Perry, both secure in their economic professorship but most normal people tend to worry a heck of a lot more about job safety and about their retirement than they used to.

 

As we saw, health care getting better is also not true or at least the better average does hide some pretty big disparity and it’s not obvious that, if the present trend keeps going, the middle class will really not see much of the coming advances in health care.

 

Similarly, I do not get Yglesias’ point about education. Sure, more people are getting a college degree, at greater cost. This is not irrelevant or the proof that it doesn’t cost too much. People are paying an arm and a leg for college degrees because college degrees are seen as the ticket entrance you have to pay to access middle class lifestyles.


I suspect that part of the recent slowdown we’re seeing in the rise of the cost of education is due to the fact that people are slowly but surely realizing that, actually, a college degree is no longer the passport to good jobs it used to be. In this respect, Americans are discovering what French have known for some time as I mentioned in a previous post. Educating everyone will not reduce unemployment or usher in greater added value growth but just give you a better class of unemployed people.

 

But what pisses me off most is that intelligent people like Boudrieux, Perry or especially Yglesias fail to realize that poverty is always always relative.

 

I do not care whether I am better off than I was 30 years ago. I damn right believe I ought to be - due to something called ‘technological progress’.


The fact that we have more ‘stuff’, that many of us (if not all) live longer or survive diseases that used to kill our parents or grandparents has nothing to do with whether the middle class is stagnating or not. Technological progress may very well explain all of the ‘progress’ the middle class experienced - technological progress is absolute.


However, that doesn’t mean that the middle class is not getting robbed and should, at a given technological level, be able to have even more ‘stuff’ – or alternatively be able to worry less about retirement and unemployment or, why not, work less hours and get more quality family time… All of these are relative.

 

Next time someone tells you we’re living better than yesteryear so that there’s nothing to complain about, reply to him – Poverty is always relative.


Progressives of the time, rare as they were, protested the gap between Louis XIV and his peasants just as they now protest the gap between Bill Gates and the average Joe. When we progressives say that the 50s and 60s were golden years, it does not mean we hanker for 1960s black and white TVs or 1950s cancer mortality rate. It certainly does not mean we view favourably a lot of the 1950s and 60s mindset – with its self-confident, proudly assumed racism, sexism and homophobia. But we do hanker for quite a bit of its wealth distribution set-up. Call it progressive nostalgia.