JWR Jeff JacobyBen WattenbergTony Snow
Mona CharenDr. Laura
Linda Chavez

Paul Greenberg Larry ElderJonathan S. Tobin
Thomas SowellMUGGERWalter Williams
Don FederCal Thomas
Political Cartoons
Left, Right & Center

Click on banner ad to support JWR

Jewish World Review Feb. 2, 1999 /16 Shevat, 5759

Thomas Sowell

Thomas Sowell Warning: Good news

(JWR) --- (http://www.jewishworldreview.com) WE HAVE GOTTEN SO USED TO hearing hogwash about politics that we just tune out a lot of it. But there is also a lot of hogwash about economic issues -- and too much of it is taken seriously.

According to popular hogwash and hysteria in the media and in politics, real wage rates have not gone up much in years and neither has household income. What has in fact happened is that more workers have taken more of their compensation in the form of various benefits, which are not taxed, instead of in the form of direct money income, which is taxed.

That makes sense. What does not make sense is ignoring the total compensation package, which has been going up substantially.

Hysteria over "stagnant" household incomes is likewise based on ignoring a simple and obvious fact: Households are getting smaller. When two people today have the same income to live on as three people lived on before, that is not stagnation. That is a 50 percent increase in income per person.

A recent book titled Myths of Rich & Poor shoots down innumerable examples of economic nonsense that prevail in the media and in politics. It authors, W. Michael Cox and Richard Alm, deserve a medal for bringing some sanity to a subject where insanity is the norm.

Many of the facts they bring out would be incomprehensible -- indeed, impossible -- if the gloom and doom scenarios we hear were true. For example, only about a third of the homes built in 1970 had both central heating and air conditioning. By the 1990s, four-fifths of the homes were being built with these two features. Only about a third of the homes had color television in 1970 but 98 percent do today.

The net financial holdings of American households in 1997 were three times what they were in 1980 and six times what they were in 1970. Not bad for people whose wages and household income had "stagnated"!

This is not even taking into account the qualitative changes in the products we use. The authors of "Myths of Rich & Poor" point out that steel-belted radial tires last more than 10 times longer than tires used to last. That means that the cost of tires per mile driven is cheaper than at any time in American history, even though steel-belted radials are more expensive -- per tire -- than the old tires were.

There are numerous other qualitative changes in other products. People today carry around laptop computers that can do calculations faster than a huge 1970 computer costing millions of dollars.

If you measure people's economic situation by how much time they have to work in order to earn enough to buy some product, the improvement is even more dramatic. Even where money prices have gone up substantially, the time it takes to earn that money has typically gone down.

A half-gallon of milk, for example, cost an average American ten minutes' work in 1970 but only 6 minutes' work in 1997. An air-conditioner that cost 45 hours' work in 1970 costs just 23 hours' work today.

A much-overlooked fact that is brought out in "Myths of Rich & Poor" is that most of the things that create a higher standard of living for the masses were once exclusive luxuries of the rich. It was precisely the fact that the rich bought these things when they were first produced -- and cost an arm and a leg -- that enabled these products to survive long enough to become mass-production items that the great majority of Americans could afford.

Within my own lifetime, cars, telephones, refrigerators, television and college education have all gone from being the luxuries of the few to the common "necessities" of the many. Those who rail against the luxuries of the rich ignore the fact that it was precisely the rich, paying through the nose for the prestige of having something new and exotic, who made it possible for initially very expensive products to develop to the point where they became affordable mass-production items found in virtually every home.

Statistics that are loosely thrown around about people in the top and bottom 20 percent in income overlook the fact that most of these are the same people at different stages of their lives. Only 5 percent of the 1975 "poor" were still poor in 1990 -- and 29 percent of them were "rich."

01/29/99: What is at stake?
01/26/99:Moral bankruptcy in the schools
01/22/99: Who is going to convict Santa Claus?
01/19/99: Seeing through the spin
01/13/99: A trial is a trial is a trial
01/11/99:Trials and tribulations
01/08/99: Rays of hope
01/04/99: Random thoughts
12/31/98: The President versus the presidency
12/29/98: The time is now!
12/23/98: World-class hypocrisy
12/21/98: The spreading corruption
12/17/98: Politically "contrite"
12/16/98: Polls and partisanship
12/14/98: The "non-profit" halo
12/11/98: Corruption and confusion
12/03/98: The health care "crisis"
11/30/98: Knowing what you are talking about
11/23/98: The impeachment legacy
11/23/98: Random thoughts
11/19/98: Tales out of bureaucracies
11/16/98: Scholarships based on scholarship
11/12/98: Forward march
11/09/98: Moral outrage
11/05/98: Will the Republicans ever learn?
11/02/98: A voter's duty
10/30/98: The poverty pimp's poem
10/29/98: Random thoughts on the election
10/27/98: "Partisan" and "unfair"
10/23/98: Ed-u-kai-tchun
10/21/98: McGwire, Maris and the Babe
10/16/98: Lightweight Boxer
10/14/98: A strange word
10/09/98: Impeachment standards
10/08/98: Alternatives to seriousness
10/07/98: Heredity, environment and talk
10/02/98: A much-needed guide
10/01/98: Starr's real crime
9/24/98: Costs and power
9/18/98: Are we sheep?
9/16/98: Judicial review
9/15/98: Hillary Rodham Crook?
9/14/98: Taking stock
9/11/98: Moment of truth
9/04/98: Random thoughts
8/31/98: The twilight of special prosecutors?
8/26/98: "Doing a good job"
8/24/98: America on trial?
8/19/98: Played for fools
8/17/98: A childish letter
8/11/98: Hiding behind a woman
8/07/98: A flying walrus in Washington?
8/03/98: "Affordability" strikes again
7/31/98: Random thoughts
7/27/98: Faith and mountains
7/24/98: Clinton in Wonderland
7/20/98: Where is black 'leadership' leading?
7/16/98: Do 'minorities' really have it that bad?
7/14/98: Race dialogue: same old stuff
7/10/98: Honest history
7/09/98: Dumb is dangerous
7/02/98: Gun-safety starts with
parental responsibility
6/30/98: When more is less
6/29/98: Are educators above the law?
6/26/98: Random Thoughts
6/24/98: An angry letter
6/22/98: Sixties sentimentalism
6/19/98:Dumbing down anti-trust
6/15/98: A changing of the guard?
6/11/98: Presidential privileges
6/8/98: Fast computers and slow antitrust
6/3/98: Can stalling backfire?
5/29/98: The insulation of the Left
5/25/98: Missing the point in the media
5/22/98: The lessons of Indonesia
5/20/98: Smart but silent
5/18/98: Israel, Clinton and character
5/14/98: Monica Lewinsky's choices
5/11/98: Random thoughts
5/7/98: Media obstruction of justice
5/4/98: Dangerous "safety"
5/1/98: Abolish Adolescence!
4/30/98: The naked truth
4/22/98: Playing fair and square
4/19/98: Bad teachers"
4/15/98: "Clinton in Africa "
4/13/98: "Bundling and unbundling "
4/9/98: "Rising or falling Starr "
4/6/98: "Was Clinton ‘vindicated'? "
3/26/98: "Diasters -- natural and political"
3/24/98: "A pattern of behavior"
3/22/98: Innocent explanations
3/19/98: Kathleen Willey and Anita Hill
3/17/98: Search and destroy
3/12/98: Media Circus versus Justice
3/6/98: Vindication
3/3/98: Cheap Shot Time
2/26/98: The Wrong Filter
2/24/98: Trial by Media
2/20/98: Dancing Around the Realities
2/19/98: A "Do Something" War?
2/12/98: Julian Simon, combatant in a 200-year war
2/6/98: A rush to rhetoric

©1998, Creators Syndicate, Inc.