Things are Getting Better, or at Least They're Not So Bad

Dan Griswold of Cato usefully summarizes some 2007 data released today by the Census Bureau.  Bottom line:  the middle class is shrinking because it's getting richer, median household income is up, the poverty rate is the same as 2006 and lower than 1997, and the number of Americans without health insurance is down slightly from 2006 and lower than it was a decade ago.  The forces of innovation are outdueling the forces of stupidity as we become better off even while government grows.

Could things be even better?  Absolutely and they would be with less government.  But is the middle class drowning and is poverty expanding?  Absolutely not.  And we need to constantly make this point not because the current size of government is fine, but because to the extent people believe the economy or the middle class are in trouble, they are likely to demand more government as a solution.  Call it playing defense if you wish, but without doing so, the awful world that people wrongly imagine is already here would indeed come to pass.

Comments

[Rob Davidson]

Considering that the government is full of pathological liars (and always has been), I fail to understand why anyone would just accept the alleged "data" that it's various agencies spew out.

For example, "median household income is up", but does that mean that the purchasing power is actually up, or is it simply that households have more FRNs (which are worth even less than they were previously) in their pockets? There are a LOT of billionaires in Zimbabwe these days, but most of them have trouble even buying a loaf of bread.

[Steve Horwitz]

Well if you prefer the "all government employees are evil" hypothesis, there's nothing I can say to persuade you. I will only add that such data is adjusted for inflation (i.e., it is in real not nominal terms). If you prefer to believe the US is going to hell in a handbasket sometime this week, there's also nothing I can say to persuade you.

[Dain]

A good place to look at real wages and the concomitant consumption basket for the median household is below. It looks to basically supports Griswold.

http://www.american.com/archive/2008/july-august-magazine-contents/how-are-we-doing

[Maxx Mantooth]

I enjoyed this post.
It seems amazing to me that the statisticians either cannot or will not show the data "jump" where those who were in one income bracket, have jumped up into another.
Too often we hear people telling us that the income levels of the lower 15% or whatever, has not changed. That "the poor are getting poorer". While this maybe true for a small percentage, many of those in that braket are students, or recent entrepreneurs just building a business.

For the full time student, when working and going to college (like myself), good luck earning over 15,000/yr. Or, as many know/believe, in many cases, the entrepreneur does not begin to see debt free profits from start up until his 3rd or even 5th year.

As the people change and grow, so do their incomes. We are innovating and adapting to new technologies all the time. When this occurs, those in the bottom bracket, jump to higher income bracket.

If what I saw was correct, the numbers of households earning more than $65,000 a year (fairly modest income in the DC area) is much much higher than it was even ten years ago. ($65,000 is a modest number, I'd be willing to bet that for 2 income households, 6 digit incomes have become much much more common, but this is mere speculation.)

IF economics has taught me anything at all, it is 1. be wary of statistics, 2. Always question the politicians, and 3. never accept anything simply at face value, without further analysis.

[Rafe Champion]

Positive results from a longitudinal study in Australia, with declining numbers below the poverty line (itself an upwardly mobile indicator) and very few stuck below the line for more than one year in the three years of the study. http://catallaxyfiles.com/?p=656

[gpawelski]

Maggie Mahar did a very good (and very depressing) piece on the fallacy of declining uninsured.

http://www.healthbeatblog.org:80/2008/08/poverty-health.html