Monday, March 28, 2016

Middle Income Stagnation: Great Fodder for Budding Politicians...

I find myself presently in a state of waiting. My cell phone, through some magic, allows me access to dozens of books to keep me well occupied while I sit here. Should my wait take me deep into the evening I'll want for little as I'm finding the ebook on technical analysis to be quite interesting.

Makes me think:

Popular opinion/analysis says middle class folks have seen zero by way of inflation adjusted income gains for years. A find that proves to be great fodder for budding politicians.

Let's assume that those politically convenient findings are spot on: That a family with a $50k income, say, 25 years ago, survives on $82k today. Which, again, assuming 2% annual inflation, means said family has seen zero real income growth.

That is, same number of mid-priced TVs in the home, same number of mid-priced cars in the garage, same number of dinners out each month, same one family vacation a year, and so on. 25 years have passed and nothing, no lifestyle improvement whatsoever; or so the politician would have us believe.

Well, not so fast! Let's think about those mid-priced TVs for a minute. I wonder how many channel options today's family enjoys compared to the family of 1991, not to mention the high definition. And how about those mid-priced cars with the Bluetooth and the backup cameras; luxuries not available on the '91 mid-pricers. As for the dinners out, suffice it to say that along with a growing population, in a capitalist market, comes dining options that the '91 family could not have imagined. We can delve into entertainment options (like my ebooks) and other amenities/opportunities, such as cell phones and connecting with friends and loved ones through face-time and social media, but you get the point.

Bottom line, a middle income family today enjoys a vastly richer lifestyle on the very same real dollar of income than did the middle income family of a quarter-century ago.

That's free market capitalism at work!

If you find yourself warming up to the message of a Sanders/Clinton/Trump,etc., please understand that you're allowing the most thoughtless statistical analyses/interpretations to cloud your senses. And understand that the results of taxing producers to pay for the items that only a candidate desperate to win might propose (free college education and the like)---or, say, the walling off of trade (international trade being chiefly responsible for the above mentioned luxuries)---can only serve to limit the rate of enrichment that the family of 2041 will have otherwise enjoyed.

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