“It’s called the American Dream because you have to be asleep to believe it.” –George Carlin
That quotation best sums up the last 3o years. Baby-boomers are finding that they will never be able to retire, and college students are moving back in with their parents. All are mired in mountains of consumer debt or student loans. This is the situation that Edward Luce sees, in his article “The crisis of middle-class America.” What is clear is that (mainstream) economists do not have a good explanation of why the middle class living standards have stagnated over the past three decades. It’s about time we start looking at more relevant data than the stock market and GDP, as Luce cites:
The slow economic strangulation of the Freemans and millions of other middle-class Americans started long before the Great Recession, which merely exacerbated the “personal recession” that ordinary Americans had been suffering for years. Dubbed “median wage stagnation” by economists, the annual incomes of the bottom 90 per cent of US families have been essentially flat since 1973 – having risen by only 10 per cent in real terms over the past 37 years. That means most Americans have been treading water for more than a generation. Over the same period the incomes of the top 1 per cent have tripled. In 1973, chief executives were on average paid 26 times the median income. Now the multiple is above 300.
Only once we start looking at the relevant economic data can we begin to address the structural problems that have been rewarding the few at the expense of the majority.