It’s Impossible To Deny The Progress Of Capitalism

It seems many people on the political left have a vested interest in pushing the narrative that the average person is worse off today than 50 or 60 years ago. Just the other day the top headline in the politics subreddit (which is dominated by progressives) was “In 1969 the median salary for a male worker was $35,567 (in 2012 dollars). Today it is $33,904. So for 44 years, while wages for the top 10 percent have continued to climb, most Americans have been caught in a ‘Great Stagnation'”. The comment section on this post and others is littered with left wingers flagrantly denying economic progress has been made over the last half century. And of course this isn’t a new phenomenon.

What is so stunning, however, is just how divorced this narrative is from reality. Let’s just look at a few data points (h/t to Steve Horwitz for linking to much of this on Facebook).

The following images are from: Christmas shopping 1958 vs. 2012 illustrates the ‘miracle of the marketplace’ which delivers better and cheaper goods.



Notice not only the incredible increase in quality, but also the dramatic reduction in the number of labor hours an average person must expend to acquire one of these products.

The following table does the same thing for a wider range of goods:


Source: Are We Better off Today?

How about the poor? How have they fared over the years?

% Households with: Poor 1984 Poor 1994 Poor
2003
Poor
2005
All 1971 All 2005
Washing machine 58.2 71.7 67.0 68.7 71.3 84.0
Clothes dryer 35.6 50.2 58.5 61.2 44.5 81.2
Dishwasher 13.6 19.6 33.9 36.7 18.8 64.0
Refrigerator 95.8 97.9 98.2 98.5 83.3 99.3
Freezer 29.2 28.6 25.4 25.1 32.2 36.6
Stove 95.2 97.7 97.1 97.0 87.0 98.8
Microwave 12.5 60.0 88.7 91.2 1.0 96.4
Color TV 70.3 92.5 96.8 97.4 43.3 98.9
VCR 3.4 59.7 75.4 83.6 0.0 92.2
Personal computer 2.9 7.4 36.0 42.4 0.0 67.1
Telephone 71.0 76.7 87.3 79.8 93.0 90.6
Air conditioner 42.5 49.6 77.7 78.8 31.8 85.7
Cellular Telephone 34.7 48.3 0.0 71.3
One or more cars 64.1 71.8 72.8 (2001) 79.5

Source: The Economic Condition of Poor Americans (and the rest of us) Continues to Improve

Now one of the typical objections is “Sure the price of things you don’t need has gone down, but the price of things like food, that you need to survive has gone up.”

Now right off the bat, this just sounds wrong given the existence of dollar menus and what not. So I decided to look it up. Sure enough, according to the USDA in 1958, 15.1% of disposable income was spent on food. In 2012 that number was just 5.7%. Also, caloric intake up about 23% since 1970. In other words, just like toasters and televisions, it takes significantly fewer labor hours to purchase the same or even greater quantity of food.

Some class act on Reddit replied to me, “Why yes, it truly is miraculous! Just look at all the happy elves building your cheap consumer goods!”

Only to have someone else point out, “Yes, look how happy they were before they had the opportunity to work in export industries.”

Finally Horwitz points out:

Some prophets of doom might expect to see fewer households in the upper brackets as the highest income categories are dominated by a few people getting very, very rich.

The reality, as it turns out, is different.  From 1980 to 2006, the percentage of US households earning $100,000 or more (in constant 2006 dollars) grew from 8.6% to 19.1%.  The percentage between $75k and $100K grew from 10.3 to 11.3 percent.  At the other end, the percentage under $15K fell from 16.6% to 13.4% and the percentage between $15K and $34K fell from 26.2% to 23.3%.  Thus all three categories below $35K fell a total of 6.1 percentage points.

The middle classes fell too, though by less.   The sum total across the $35K to $75K categories fell by 5.4 percentage points.  In other words:  the net movement of households was an 11.5 percentage point gain in households above $75K and a net reduction of 11.5 percentage points in houses below $75K.  So the percentage above $75K rose from 18.9% to 30.4%.  That is, it increased by over 50%.

Let me repeat that:  over 30% of US households in 2006 earned above $75K compared to under 20% in 1980.  Over the same period, the percentage of US households earning under $35K fell from 42.8% to 36.7%.  Fewer households are poor, fewer are middle class, and a hunk more are above $75K.  (And in case you were wondering, those general trends hold for black and hispanic households too – with the percentage of black households under $35K falling by 10.9 percentage points and the number above $75K increasing by 8.9 percentage points, for example.)

Throw on top of this the fact that most everything people buy costs less in real terms and you have a recipe for increasing wealth across the board.  Not bad for what so many people claim is 30 years of stagnation.

I’ll end with the chart the American Enterprise Institute is calling the most remarkable achievement in human history. An 80% reduction in the number of people leaving on less than a dollar per day in just the last 36 years.

worldpoverty1

AEI president Arthur Brooks explained:

It’s the greatest achievement in human history, and you never hear about it.

80 percent of the world’s worst poverty has been eradicated in less than 40 years. That has never, ever happened before.

So what did that? What accounts for that? United Nations? US foreign aid? The International Monetary Fund? Central planning? No.

It was globalization, free trade, the boom in international entrepreneurship. In short, it was the free enterprise system, American style, which is our gift to the world.

I will state, assert and defend the statement that if you love the poor, if you are a good Samaritan, you must stand for the free enterprise system, and you must defend it, not just for ourselves but for people around the world. It is the best anti-poverty measure ever invented.

Given the enormous evidence that people are indeed much better off than a half century ago, it’s hard to believe the people pushing the stagnation narrative are doing so out of honest error. Nonetheless, it’s important to push back against the narrative or else people will become convinced to abandon the economic system that created these miracles in the first place.

One thought on “It’s Impossible To Deny The Progress Of Capitalism

  1. Pingback: [VIDEO] The greatest achievement in human history, and you never hear about it | pundit from another planet

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