My Home About Me

From Cafe Hayek today:

This editorial in today’s New York Times -- entitled "Downward Mobility" -- does its best to extract depressing news from the latest report issued by the U.S. Census Bureau.

...Figure 1 on page 4 of the Census Bureau report shows the trend in real median household income from 1967 to 2004. It reveals that real median household income has increased, with the expected blips and surges, over the past 38 years. But being 31 percent higher today than it was in 1967 is not very impressive. This fact means that real household income grew at an average annual rate since 1967 of much less than one percent.

But I ask: would you prefer to live in 1967 with today’s real median household income ($46,326) or live today with 1967’s real median household income ($35,379)? (These figures are expressed in 2005 dollars, by the way.)

What follows is a long, long list of all the improvements in life that occurred between 1967 and today. The conclusion:

Sure, I’m happy that I live today with today’s income – but, again, if forced to choose between living in 1967...with today’s higher income and living today with 1967’s...lower income, I wouldn’t hesitate for as much as a nano-second to choose living today with the lower income from the past.

And I suspect that most people who reflect on this choice objectively would choose as I would choose. If I’m correct, then the growth in real dollar income between 1967...and today underestimates the improvements to everyday life brought to us by economic growth during the past 30 or 40 years.

In other words, we living today do not have to make the choice given in this thought experiment. We get higher income and all the improvements in daily life.

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