FiveThirtyEight and New York magazine have pieces which look at the prosperity which was the norm in the second half of the 1990s with a soft glow. I was not in the labor market back then, but I recall the excitement, and just how easy it was to get a job for those who wanted one. It seems that these articles reinforce the basic thesis of Tyler Cowen’s Average is Over, looking back to the last golden age for the middle class.
But there’s another angle on this. Would you go back to 1999 if you had twice the income you did today? Probably that depends on your income. But imagine going back to the technology of that era. For many of us the world would be a sluggish and gray place. Cowen would point out that this is not the typical person. But it’s a lot of us, and it isn’t as if smartphones and their various features are low penetration technologies in terms of cultural ubiquity. So a simple apples to apples comparison of income is somewhat misleading. Because of rising demand from China I’m not sure that decreasing expenditures on food is sustainable (though perhaps better GMO would help in that domain). But it does seem to me that public policy is what’s keeping housing prices high, in particular in Blue State urban areas. Make the libertarians happy by getting ridding of rent control. Make the conservatives happy by allowing more sprawl. Make the new urbanists happy by allowing more vertical residential housing.
I think the bigger issue here is not economic, but social. Economic productivity is such that a guaranteed minimum income is probably viable for society. A minority may work so that the majority may eat and recreate. But human psychology is such that it seems implausible that a democratic citizenry can be maintained by passive consumption by those who themselves are not economically productive. Many of these discussions about the passing of the middle class society focus on economic well being, or lack thereof. I don’t think that’s the major issue at all, because economic productivity will continue to increase, at least on the margins, and population growth outside Africa has tailed off. Rather, the larger change will be cultural and social. Even in antiquity when societies were highly stratified the great thinkers understood that social well being rested upon the broad shoulders of the free peasantry, who were the ultimate source of most economic activity. This is very different from the model of stratified societies of the future, where both power and productivity will be concentrated nearer the top of the status distribution.
Comments are closed.