The Poverty of Affluence. Paul Wachtel

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      The Exception: Unemployment

      Before proceeding further, it is essential to acknowledge one very important way in which the performance of the economy really has been a source of distress in a fairly conventionally understood way. That is in the matter of unemployment. Unemployment rose in the early 1980s to its highest point in forty years, and its effects on millions of workers and their families have been devastating. Especially is this true for members of minority groups and—to a degree whose implications for the future of our cities are truly frightening—among minority youths. Programs of unemployment insurance and public assistance have placed some limit on the material deprivations that the unemployed now undergo, but that deprivation is nonetheless real and substantial for many, and demoralization and disruption of normal family life is experienced by still more. Further, the effects of unemployment have an impact not just on the unemployed and their families but on those who are still working but fear they will be the next to go. In this sense, there is no question that our economy is a serious problem.

      But the sense of economic distress that pervades our land goes well beyond the confines of the unemployed or those soon to be. It is widespread among the solidly middle-class and even among many making quite substantial salaries, as numerous articles and interviews have attested.⁸ It is this more broadly experienced sense of decline and unease that elected Ronald Reagan as president in 1980 and that constitutes the puzzle to be addressed in what follows—the sense of deprivation amidst what once would have seemed like plenty.

      Looking Back at “the Affluent Society”

      It is possible to quibble about some of the figures I have cited. The choice of yardstick among, say, spendable income per capita, per household, or per wage earner will cause the picture to alter slightly. There are reasonable grounds for considering each as the appropriate criterion for judging our economic condition; depending on which one chooses, things look somewhat better or worse. For example, real income per family did not rise as much as real income per capita, but since families have grown smaller, an equivalent amount of money for a family now has to meet fewer people’s needs and is therefore more ample. We may also note that Census Bureau reports on real family income do not include such implicit economic benefits as Medicare and Medicaid, which yield benefits to many families, and those benefits increased substantially from 1970 to 1980.

      Some families have maintained their economic position by the woman’s going to work for the first time. In some cases, this has led to an exaggerated estimate of economic well-being since there are often extra expenses associated with another family member’s working and since valuable services previously performed by the wife (but not considered in official income statistics) are not as readily available. Yet this phenomenon too influences the set of figures available in contradictory ways: The increase in working women may lead to an effective overestimation of real family income but may lead to an underestimation of wage levels. This is because many women have entered the labor force in part-time positions, and their presence in the work force lowers the average weekly wage reported.⁹

      These various complexities and ambiguities not with standing, the figures I have cited make it clear that there are a number of key respects in which—contrary to what our national mood would suggest—we have made real gains in the last decade or so. There can be little doubt, for example, that the average family’s stock of major durable goods is substantially larger than it was a decade ago. And even the most pessimistic modes of analysis on real income do not reveal a precipitous decline.

      But there is another comparison we can make that particularly demonstrates how misleading are interpretations of our apprehensive state simply in terms of economic decline. Whatever can be made of the ambiguities in examining the economic figures for the decade from 1970 to 1980, there can be no doubts whatever when comparing our present economic status to that prevailing in 1958.

      The year 1958 is not chosen arbitrarily; I pick that year for comparison because it is the year that John Kenneth Galbraith’s highly influential book The Affluent Society was published. Though some of Galbraith’s policy recommendations were rather controversial, few questioned his characterization of the personal affluence of the American middle class; most agreed we were an extraordinarily rich society. Yet now we are feeling pinched at levels enormously above those of the “affluent society” period. The increase in possession of major consumer items is even more dramatic than in the comparison to 1970 cited earlier. The proportion of homes with air conditioners, for example, rose 484% (from 9.5% at the beginning of 1958 to 55.5% at the end of 1979). For some other representative items the figures were: freezers, 134%; clothes dryers, 356%; and dishwashers, a whopping 743%. If one looks at the absolute numbers of homes possessing these items, the figures are even more extraordinary: air conditioners, 838%; freezers, 278%; clothes dryers, 628%; and dishwashers 1268% (from 2.5 million homes to 34.2 million).¹⁰ Even correcting for the increase in population over that period, the increase is unambiguous.

      Why, then, do so many Americans seem to feel less pleased with their economic situation than did their counterparts in 1958? Part of the answer, to be sure, is a fear that present levels cannot be maintained. Many feel that we are on the edge of a precipice, facing imminent decline unless something is done to turn things around. But that does not really provide an adequate explanation; upon sober reflection, few would conclude that there is any reasonable likelihood of our “decline” really taking us back to the levels of 1958—that is, to the level when we were characterized as “the affluent society.”^*

      Inflation too contributes to the illusory sense of decline. Our real buying power has gone up, but not nearly as fast as our income in dollars. A salary of, say, $30,000 doesn’t buy what one grew up thinking $30,000 would buy, yet psychologically at such an income one expects to live at “a thirty-thousand-dollar level.” One forgets that the job one holds paid only $15,000 when one’s image of what $30,000 would be was being shaped, and that one’s buying power is greater than was the buying power of one’s equivalent back then. Instead, mesmerized by the numbers, we are struck by how little “thirty thousand” is.

      The economist Lester Thurow makes a similar point in a somewhat different way. Referring to the period from 1972 to 1978, when the sense of economic decline began to be widely felt, he notes that

      [w]hile real incomes were rising 16 percent, money incomes were rising 74 percent. Suppose a money man were to deliver $74 to your doorstep in the morning. You put on your bathrobe to go down to pick up the money along with the morning paper but find that when you get to your doorstep only $16 is there. Are you happy or mad? You are $16 better off than you were, but you have seen the $74 and can imagine what life would be like with it. You may even be able to convince yourself that your real standard of living has gone down.”¹¹

      He adds that in some psychological sense people really may be worse off, a theme I will elaborate, though in a very different way.

      Our decreasing sense of economic well-being is also due in part to changes in our living conditions that change the meaning of certain goods. For example, in 1958 to have two cars in a family was more likely to be a luxury than it is today. Now for many families two cars are close to a necessity and bring little sense of amplitude of living. More women work; more families live in suburbs, and particularly in the more sprawling suburbs of the South and West; the quality of mass transit has declined as we have placed our resources more and more at the disposal of the private automobile; suburban shopping centers have largely taken the place of urban commercial centers; and factories too have tended to move away from cities and into areas accessible only by car. All these factors now make two cars necessary for many in order to accomplish the tasks of shopping and getting to and from work with any degree of convenience. The reader will doubtless be able to think of similar arguments as to why many of the other things we now have in greater numbers do not mean to us what they once used to.

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