Monday, October 03, 2011

Let's hold off on the socialism thing

As a member of both the Milwaukee County and State Historical Societies, I really appreciate John Gurda's historical work. He is very much a local treasure. I've noted that his columns in the Journal Sentinel have become increasingly political. Yesterday's piece was completely political with virtually no historical insight. Nothing wrong with being political, but, in his case, the politics are misguided.

I don't write my own heads for the Journal Sentinel and I assume that John doesn't either, but the head for yesterday's column combined with its content is breathtaking. "A bipolar nation rejects reason," it says. What is the reasonable proposition that it has rejected? It turns out to be a "reassessment of American capitalism."

That doesn't surprise me. Gurda seems (somewhat anachronistically) charmed by Milwaukee's sewer socialists. But I think the notion that it is a rejection of "reason" to decline to depart from an economic system that has created what remains the most prosperous nation on earth is just a tad beyond the pale.

Yet I think that this is increasingly what we are going to see in the coming political season. Having failed to solve the economic downturn and getting owned at the polls in 2010, the left is going to double down on the Grapes of Wrath thing.

One of the arguments made in support of such an argument has to do with the "disappearing" middle class. It is always easier to make such an argument in an economic downturn, but it is usually combined with an argument that middle class income has been stagnant for a long time and there are certainly statistics that can be used to support such a claim.

But I've long had a problem with that. I've been around for awhile. I remember how the working class lived in 1966 because my family was smack dab in the middle of it. Many of them still are. And, I have to tell you, people today live a lot better than they did in 1966. They drive better cars and live in bigger houses. They enjoy better health care and are far more likely to have things - color TVs, a second car, air conditioning - that were considered a luxury back then. They have all sorts of gadgets that were unheard of at the time and, contrary to Gurda's implication that college has become unaffordable, there are a heck of a lot more people going to college today. I never flew on a plane until I was 22 and didn't really know many people who had. You won't find many middle class people for which that is true today.

All of this stuff can be verified empirically. So what gives? There are a variety of answers including flaws in the way that income growth over time is measured (e.g., overstatement of inflation and failure to measure improvements in quality) and the reduction in taxes on middle and lower income persons. Some of it may be an increased willingness to borrow, but even that begs the question of how persons have been able to borrow.

A fascinating discussion of these issues by University of Chicago economist Bruce Meyer can be found here along with links to some of the work that is discussed. He takes on some conservative shibboleths but deflates the conventional wisdom on the stagnation of the middle class.

And for more, you can follow this exchange between Tyler Cowan and Russ Roberts.


Aaron Rodriguez said...

If the middle class is disappearing, shouldn't we be seeing a steady rise in unemployment - recessionary cycles notwithstanding.

Anonymous said...

Gurda is great to read when he sticks to Milwaukee's history, but his increasingly political articles will cause him to lose a lot of his audience.

Dad29 said...


We have the "define 'middle class'" question embedded in your comment.

We DO know that the labor participation rate is down, smartly, over the last decade, and that unemployment is (currently) high, no matter 'prime' or U-6.

We also find that those over the age of 50 are in serious trouble if they have to find work.

Is that "disappearing middle class"?

You tell me!

Anonymous said...

"We also find that those over the age of 50 are in serious trouble if they have to find work."

So who is to blame when our experienced workers are being laid off for younger, cheaper labor, Dad29? Must be those darn unions!

Anonymous said...

44% of people reporting income do not make enough to pay Federal tax...while we have a deficit/debt problem that some think the rich should pay while it appears the rich think the poor should pay by cutting the costs of their safety net as P. Reagan called it.

The politics of this are that the middle class is going to pay it all if we don't get it fixed...making things even worse for our economy.