I often hear people remark that the economy is really rough right now and seems like it will remain so into the foreseeable future. I know what they mean: unemployment is high, incomes are not rising, and structural shifts have destroyed the kinds of jobs many once relied upon. Although this is rough, there is nothing necessary about it. Moralizers and imbeciles endlessly ramble on about outsourced jobs, imprudent over-consumption, and any number of other things. The story they are trying to tell is clear: factors outside of our control have made it more difficult for the majority of Americans.
Consequently, we have no choice but to tighten our belts, take any jobs we can get, cut Social Security, cut Medicare, end the social safety net, and so on. None of this is true. Yes, the economy is rough, but we are making it that way. Over the last 33 years, real gross domestic product per capita has increased by nearly $20,000. That is, we are now producing nearly $20,000 more per person (in 2010 inflation-adjusted money) than we did in 1979:
Even with all the economic restructuring, the gutting of the manufacturing sector, and the move towards a more service-oriented economy, we are still more productive than we have ever been. The thing squeezing the majority of Americans is not a rough or declining economy; instead, it is our failure to distribute the benefits of our economy in equitable ways. Although average income has consistently risen, that income has been funneled disproportionately to the rich.
If median incomes had risen at the exact same rate as average incomes, those at the very middle of the income distribution would be making an extra $8,757 per year. Those below the median would also be making more than they do currently, albeit by a lower amount. Imagine how much better and secure people would feel if they had shared the prosperity created by the last 33 years of productivity increases, instead of all of it flowing to the very top.
All of the roughness and anguish experienced by those in the present economy is the result of conscious decisions and omissions that have denied the majority of Americans a fair share of the growth of the last few decades. The bad economy we are in and the way it harms so many could be completely eliminated with a different set of economic and fiscal policies. Thus, despair about the present state of affairs should not be directed at some abstract entity called “the rough economy.” It should be directed at the individuals and policies that have made it the way that it is.