Brink Lindsey
06/01/2007
Dire warnings about rising economic insecurity are increasingly prominent these days. The litany of ills should be familiar to anyone who even casually follows the news: outsourcing of jobs overseas; 47 million people without health insurance; a shrinking middle class; and the widening inequality of income and wealth. The overall economy may be growing, but most Americans fail to benefit—according to CNN’s Lou Dobbs, Paul Krugman of The New York Times and many others.
Don’t buy into the doom and gloom. Sure, our country has plenty of problems. But of all the things we could be worrying about, the general level of material welfare for middle-class Americans should fall near the bottom of the list. Ordinary Americans enjoy riches unmatched in any other country—or any other time in human history.
The current hand-wringing over the plight of the middle class is just the latest scare. |
Of course, Americans have vigorously filled their bigger houses with gobs of new consumer goodies. Back in 1971, 45 percent of American households had clothes dryers, 19 percent had dishwashers, 83 percent had refrigerators, 32 percent had air-conditioning and 43 percent had color televisions. By the mid-1990s Americans below the poverty line had surpassed all of these ownership rates.
Choices and Outcomes
The more serious deficits in our country today—the ones we really ought to worry about—are not material, but cultural. Specifically, too many Americans lack the values, habits and skills needed to thrive in an affluent society of high productivity and proliferating choices.
The problem is most visible in the despair and dysfunction of
the nation’s underclass. Dropping out of high school, having children outside of
marriage, and failing to hold a job are a trio of bad decisions that define and
perpetuate the culture of poverty. In 2005, 12.6 percent of Americans fell below
the poverty line, but for those who failed to complete high school, that figure
jumped to 21.6 percent. That same year, 36.2 percent of families headed by a
single female were defined as poor, compared to 6.5 percent of married-couple
families; only 2.8 percent of adults with a full-time, year-round job fell below
the poverty line.
Another less stark cultural barrier is the one that separates
those who invest heavily in upgrading their human capital and those who do not.
In today’s highly complex information economy, the returns of investing in high
skills have grown by leaps and bounds. In 1980, college graduates earned about
40 percent more than workers who completed only high school, while individuals
with graduate degrees earned about 60 percent more. Today the college premium is
up to 60 percent, while the grad-school premium has soared above 110 percent. In
this new environment, children not brought up to conscientiously develop their
talents face the danger of being left behind.
The current hand-wringing over the plight of the middle class
is just the latest in a series of bogus economic scares. Since the 1980s, we’ve
heard about the specter of deindustrialization, despite the fact that American
manufacturing output has more than doubled during the past quarter-century. We
endured warnings that Japan was about to replace us as the world’s leading
economic power—until that country went into a decade-long slump. For some
people, the sky is always falling.
Short-selling American capitalism is a fool’s game. Our
economic system is a wonder of creativity and dynamism. Where we need work is in
getting more people to take full advantage of the opportunities that system
provides.
Brink Lindsey is vice president for research at the Cato Institute
in Washington, D.C. His latest book is The Age of Abundance: How Prosperity Transformed America’s Politics
and Culture.