The Poverty of Affluence. Paul Wachtel

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      TWO

      The Illusions of Growth: Economic Abundance and Personal Dissatisfaction

      IT IS VERY LIKELY THAT THE reader of this book feels more pressed economically than he or she did a decade or more ago. The sense of economic decline is widespread nowadays. Both left and right, while disagreeing on methods and priorities, seem to agree that we must “get the economy moving again.” Consequently, this book may seem at first to fly in the face of everyday experience when it argues that greater economic productivity is not what will relieve our distress and that the pursuit of economic growth may actually make things worse.

      You will find, however, that the analysis that follows is very much rooted in everyday experience. It does not deny the feeling of deprivation and economic difficulty that today pervades our society. It questions the explanations for why we feel that way. The common answer is that declining productivity has pinched our pocketbooks, that inflation has eaten up our buying power, that we can’t catch up, much less get ahead. This common perception, however, is at odds with a number of facts about the actual performance of our economy.

      Let us look at some figures which must be taken into account if we are to understand what is happening to us. They suggest that our distress is not due as much to objective economic conditions as we have been led to think. For the entire decade of the 1970s, for example—a decade marked by a major OPEC oil shock, a serious recession, the onset of “stagflation,” and discouragement of Americans about their economic situation—real per capita income rose 28%. This increase was about equally divided between the first and second half of the decade, and is almost identical to that of the 1960s, a decade looked back upon as one when the economy did work well.¹

      A similar picture emerges from a comparison of the boom years 1966–1972 and the inflation-ridden years 1972–1978. Real per capita income—again after correcting for both taxes and inflation—rose 17% in the first period and 16% in the second.² 1979 did bring a slight decline, and a somewhat larger one followed in 1980. But when the period 1976–1980 is looked at as a whole—a particularly significant span since it was the period referred to by Ronald Reagan when he asked, to great rhetorical effect, the key question of the 1980 Presidential campaign: “Are you better off than you were four years ago?”—it turns out that people were better off in 1980 than in 1976, at least as measured by objective economic indicators. The Wall Street Journal reported that even after correcting for inflation and taxes, per capita income increased 6% during the Carter years. Moreover, according to the Journal, that figure substantially underestimates the increase in total economic benefits; in the same period social security benefits, unreported income, and other sources of economic support not considered in the Commerce Department figures on which the article was based rose at an appreciably higher rate. The Journal concluded that the widespread conviction that most people were worse off economically was contradicted by the facts.³

      A number of other considerations make these figures—so at odds with our national mood and with the subjective experience of so many of us—even more striking. First of all, they do not include the “underground economy,” all that income and exchange that goes unreported and is not taxed. Estimates of the underground economy for 1980 range between $80 billion and $650 billion,⁴ and most experts believe it is growing, thus further raising questions about whether Americans actually have less now than they did. Moreover, all this has occurred despite an unusual age distribution in the population at present. Because of the “baby boom” of the 1950s, we have a considerably higher percentage of young people in the work force, who typically have less skills and earn lower income than those with more experience. Also, because of advances in medical care, we have a higher percentage of older, retired people in the population than in the past. These individuals do not earn income, but their numbers reduce the per capita income figures for the entire population. Thus, the comparisons of the rest of the population with their counterparts of 1960 or 1970 underestimate how well they are doing.^*

      Other figures also suggest our problem is not as much a strictly economic one as we typically suppose. Many people are dismayed by the price of new cars, for example, yet if one considers, say, the cost of a full-size four-door American sedan, the average American family had to work about twenty-five weeks to earn enough to buy one in 1960, about eighteen and a half weeks in 1970, and only seventeen weeks in 1981.⁵ Or, to approach our material situation from another angle, figures released by the Department of Commerce for up to 1979 reveal an increase from 1970 to 1979 of approximately 37% in the proportion of homes with air conditioners, a 62% increase in the proportion with dishwashers, a 38% increase for clothes dryers, a 43% increase for home freezers, a 24% increase for clothes washers, and an increase of 111% in the proportion of homes with color television sets (from 42.5% of homes in 1970 to 89.8% in 1979).⁶

      The above figures, moreover, present the more conservative of two possible comparisons. One must also recognize that the number of households increased substantially during this period. Thus, to yield an increasing proportion of homes so equipped, the supposedly sluggish economy had to provide an even more dramatic increase in the total number of such items. Furthermore, with a trend toward smaller households, these items were shared by fewer people in each house. If one looks at the absolute number of homes containing these items, there was a 70% increase in the number of homes with air conditioners, a 101% increase in the number with dishwashers, a 71% increase for clothes dryers, 78% for freezers, 54% for clothes washers, and an increase of 162% in the number of houses with color television sets.⁷

      All these figures suggest that the widespread experience of economic distress, the sense of having difficulty making ends meet, is not due to our having a smaller stock of material goods or less buying power than in the “good old days” when the economy was supposedly working as it should; indeed, they indicate that we have more. As a psychologist, I certainly want to take the experience СКАЧАТЬ