Over the past couple of years--namely, those of the Obama presidency--who hasn't heard how horribly U.S. economic policy since the Ronald Reagan presidency (excepting, of course, the Bill Clinton presidency) has demolished the poor and middle class? If one was to believe the sirens, the sole demographic to reap the rewards of free market capitalism was the rich. In short, there was no "trickle down" effect.
Then, there's those statistics the sirens tout to support their propaganda. If the sirens are to be believed, median household income was just 5% higher in 2012 than in 1979. Using the Jimmy Carter economic malaise as the standard of measurement, that's how bad it really has been, the sirens have said. And worse yet, using that standard, the poverty rate rose from 11.7% to 15.0%. Omigosh! That's a whopping 22.8%!
To ensure that everyone listening takes the sirens at their word, they make sure everyone knows that these data have been verified by the Economic Policy Institute.
Yesiree, the sirens want all to know, there's so very much for those who fared so very well during this three-decade-plus economic malaise to feel so very guilty about. Talk about the "have's" putting it to the "have not's" over the past 3+ decades! It's now time to redistribute all of that ill-got gain!
The trouble is that these faulty conclusions were derived from faulty analyses, according to the Walter B. Wriston Fellow at the Manhattan Institute, Scott Winship.
The actual conclusion:
- Poor and middle class households are at least 30% richer today than their counterparts from 35 years ago.
The actual analyses:
- Most analysts of income trends use official Census Bureau data, assuming they're the best available data. However, the best set of inflation estimates are those of the Bureau of Labor Statistics (BLS). The trouble is that the BLS data date back only to 1999 and cannot be used to assess long-term income trends. The Bureau of Economic Analysis (BEA) publishes a similar set of data which date back to the 1920s and they indicate the same change as the BLS data in the cost of living after 1999.
- Using the BEA data's cost-of-living adjustment--the one the Congressional Budget Office and Federal Reserve Board use--the increase in median household income between 1979 and 2012 was 16% not the 5% that the sirens have been touting.
- Official Census Bureau figures indicate that households at the 20th%ile of income--poorer than 80% of households and richer than only 20% of them--were no better off in 2012 than in 1979. Using the better cost-of-living adjustment demonstrates a 10% increase and a 19% increase comparing the 1979 peak to the 2007 peak.
Why are the sirens so successful in getting so many people to believe their faulty analysis?
The Motley Monk would suggest that their success has to do with so-called "Attention Deficit Disorder" and the study of economics. How many people had the self-discipline to read this far?
Let the discussion begin...
To read Scott Winship's article, click on the following link:
"Poor and Middle Class Incomes Have Increased Significantly."