Friday, October 15, 2010

Squirrels Go Up, Squirrels Go Down

Before you decide economics reporting can't get any more incoherent, read this analysis from Rick Newman:

[M]any longer-term gains in living standards are still in place. So while the middle class is clearly under stress, millions of Americans are still much better off than they were 20 or 30 years ago.
Granted, it's not a perfect epitome of the form, but this is an instance of The Stossel*: the claim that we have microwave ovens, smart phones, abs-strengtheners, and varieties of Chinese-made footwear that would have made our forebears vomit with delight, and therefore poverty is somewhere between a relic of yesteryear and a phantasm of limp-wristed freedom-haters. According to The Stossel, anyone who frets over declining economic standards needs to stop worrying, turn on the television, focus his rage on marginal tax rates, and otherwise repent until he thinks of something to buy at the mall.
[C]ompared to 2000 levels, the low-income bracket has swelled, the middle bracket has shrunk, and the upper bracket has shrunk too, though by less. People constantly move up and down on the income scale, and everybody who left the middle bracket didn't automatically fall into the lower bracket. But the numbers make it clear that proportionately fewer people are in the middle bracket, and more people are in the lower bracket. [emphasis mine]
People skitter up and down that rascally income scale like squirrels on trees trunks at the park! Why worry? It would only trouble the squirrels to note that only one bracket grew over the period in question, and it is the low-income bracket. Some skittering is getting more common than other skittering.

Newman's sunny analysis declines to linger on that point, choosing to obscure it instead. Where again are people's economic prospects going, Rick Newman?
Upward, that's where. Here's the percentage of households with incomes over $100,000, again, adjusted for inflation:

2009: 20.1 percent

2000: 20.6 percent

1990: 15 percent

1980: 10.4 percent

1969: 7.6 percent

The biggest income change since the late '60s, in fact, hasn't been in the low- and middle-income groups. It's been a huge jump in both the percentage and the number of high-income households.
Before we were talking about 2000-2010, but that turned out to be a downer, and therefore out of step with the prevailing norms of reporting on the dismal science. Let's change the conversation in Don Draper style and marvel at the gains over 1969-2010 -- what's an extra 31 years subtracted or added here and there so long as we're trying to make readers happy? Squirrel goes up, squirrel goes down:
[M]uch of the added wealth over the last couple of decades came from women working more, which raised household incomes but also masked problems like fewer jobs and falling pay for manufacturing workers. There's also a much bigger gap between middle and high earners today than there was in the '60s and '70s, which means the wealthy are capturing a larger and perhaps unfair share of the nation's wealth.
Whatever, right? Squirrel goes down, squirrel goes up:
A middle-class revival depends on two things: A healthy and growing economy that creates more wealth for everybody, and middle earners able to capture a share of the new wealth that's at least proportionate to their size as a group. It might seem improbable, but if America's middle class is as durable as we'd like to believe, then it may already be mounting its own comeback. [emphasis mine]
It may be, right? It isn't, but one must admit it may be. Mayn't it?

So long as we keep 1969's economic numbers firmly fixed in our minds, and resolve to stare only at current numbers that stay ahead of them, we will know Everything Is Fine. What goes up must come down in gravity, squirrel climbing, and living standards.

* Mustache.

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