While it never pays to get upset about the American public’s periodic fits of moral outrage, the rhetoric sometimes becomes so near obsessive, and so ridiculous, that it demands a response. In this instance, I am thinking of the last few years’ debates about the national standard of living, an issue that has surfaced so aggressively in this current election season.
One concern—namely, that of inequality—is dealt with easily enough. If you want to see a truly equal society, look at North Korea, where virtually everyone is a starving pauper. Equality of itself is irrelevant, and what matters is rather the standard of living, and the range of opportunities available to ordinary people. But here, too, we hear plenty of claims about the country’s alleged stagnation, how average incomes have frozen since the early 1980’s, allegedly because the superrich have grabbed resources that should have been more equitably distributed. In essence, we are told, Americans have been stagnating economically since about 1978.
Let’s think this through.
Assume for the sake of argument that I am a reasonably well-off person earning, say, $250,000 per year, and I have a net worth of a million dollars. Across town, John Smith earns a middle-class income of $50,000, and his net worth is negligible, perhaps approaching zero. ...