No Whining in Paradise: Economists Aren't Buying the Apocalyptic Economic Visions of Patrick Buchanan
Sands, David R., Insight on the News
Economists aren't buying the apocalyptic economic visions of Patrick Buchanan.
Call it the "no-whining" school of economics. They haven't been dominating the headlines or the airwaves in recent days, but a considerable number of analysts reject the suddenly conventional views that the American Dream is fading, living standards are declining, workers' pay is shrinking, job insecurity is rising and corporations are laying off vast numbers of workers while raking in record profits.
"People make up their minds what story they want to tell, then they go looking for the numbers to prove it," says Ken Deavers, chief economist at the Employment Policy Foundation. "But there are a lot of numbers out there that tell you a very different story."
W. Michael Cox and Beverly J. Fox, economists with the Federal Reserve Bank of Dallas, recently surveyed a broad range of economic indicators dating back to the forties. Their conclusion: "From the perspective of the two broadest and most long-term economic aggregates -- per-capita real GDP [gross domestic product] and consumption -- Americans' recent gains are on par with those garnered historically. There is little cause for alarm."
Liberals such as Labor Secretary Robert Reich as well as conservatives such as Republican presidential hopeful Pat Buchanan have described economic-insecurity scenarios populated with greedy corporate executives, short-term Wall Street speculators, low-wage foreign competitors and illegal immigrants -- spicing up their narratives with dour tales of technological change and a new downsizing ethic that they see taking hold in the United States.
"Twenty years of declining wages and disappearing benefits are taking their toll on American life," AFL-CIO President John Sweeney said during a recent address in Chicago. But some economists -- both liberal and conservative--say it just isn't so. Among the assumptions they call false:
* Stagnant wages. Inflation-adjusted median wages have fallen 13 percent since 1979, but overall worker compensation -- including health insurance, pensions, vacation and other fringe benefits--is up, hitting an all-time high in 1994.
Benefits, which, unlike wages, are not taxed, have risen steadily as a percentage of the overall paycheck, from 20 percent in 1953 to 41 percent today.
Furthermore, these official figures understate worker gains in two ways: First, the government's official index overstates the real inflation rate; second, the average U.S. family was 3.01 persons in 1973 and is 2.63 persons today, meaning less median family income goes toward food and orthodontia.
* Income mobility. …