Is Life Getting Better (Cont....)

A thoughtful continuation of the ongoing half-full, half-empty debate in the Economix collumn in this morning's Times. To Recap briefly. Some thinkers look at flat wages and incomes in combination with rising costs, and see Americans struggling. Not so fast, say others of more centrist or right wing bent - people's incomes now get them a far superior basket of goods, better health and the like. Here is how the Times puts it:

For the last few weeks, there has been a roiling debate, both within the Democratic Party and between Democrats and Republicans, about how to describe living standards in this country. Among Democrats, the debate is really about how to talk to voters about the economy as the party tries to reclaim control of Congress this year and the White House in 2008. One group of Democrats says that it’s time to stop pulling punches and acknowledge that, at best, life is marginally better than it was a generation ago. The other group argues that the middle class’s current problems should not obscure enormous progress made over the last few decades. President Bush and his aides agree with the progress part and go on to say that the middle class continues to do quite nicely today. Each group has its preferred numbers, which can be dizzying, but you don’t need to dig into them to figure out what’s really going on. You just need to understand snow blowers. [You have to read the article to understand why the example of snowblowers explains so much]

Of course, the latter group are right to a degree. Brink Lindsey, a libertarian guest at last friday's forum at the Hamilton Project, put the thought experiment well. If things are so awful, would you, he asked, swap today's median income, basket of goods and life chances for that in (say) 1973? Give up the iPod? Give back those couple of years of life expectancy? Few would. Nonetheless, these issues - precisely how inflation is counted in the CPI, or whether better consumer products make life better - only take us so far. As Dean Baker points out on his TAP blog, the extent of this goods bias is in question. And even then it doesn't explain why Americans are so grumpy about their economic prospects, or why they are unwilling to give the Republicans the credit they think they deserve for an economy which has grown at a fair clip since the end of the last recovery. And so it seems fair to say that the democratic critique of the Bush economy - like the one we put out last week - is not undone by these issues. People aren't content for a variety of reasons. Their incomes aren't going up, or at best they aren't going up as fast as they used to. They see other people's going up faster. They are sensitive to fast price rises in consumer goods, like gas. They feel less secure because the consequences of a job loss are ever-more severe. They feel less secure because the odds of income loss have risen substanially. And no ammount of talk of cheaper, inflation proof snowblowers seems to make people think otherwise.