“Can We Please Stop Lying About Obama?”
The indefatigable conservative columnist for the NY Times, David Brooks, has authored a strange and flawed essay, “Can We Please Stop Lying About Obama?” The strange part is who is lying about Obama and what the lies are? Despite a second read through I am left wondering about the title. Perhaps an editor imposed this as a catchy bit of audience attraction?
Brooks points out that the US economy has grown more vigorously over the past 40 years than the EU countries. So now there is a considerable gap in incomes between the US and the EU. “American G.D.P. per capita is around $83,000, while Germany’s is around $54,000, France’s is around $45,000 and Italy’s is around $39,000.” Fair enough.
Then, we take this leap: “Americans pay for greater prosperity with higher income inequality.” This is an amazing statement for two reasons. First, for most Americans, say 80% and more, the last fifty years have not exactly been prosperous. More shortly about that. Second, to claim that prosperity is dependent on higher income inequality defies the history of the boom years of 1945 to 19751
Higher income inequality has resulted from a series of legal and policy decisions by both Democratic and Republican governments in Washington, not incidentally controlled by the rich and corporations.
To fit David Brooks’ conservative leanings, he should look to American Compass, a self-described home of conservative economics, for a concise description of the questions we really need to answer.
“The Cost-of-Thriving Index (COTI) offers a better way to understand the challenge for working families. It avoids reliance on inflation adjustments by instead focusing on the ratio of nominal costs to nominal wages in each year. The Index measures the number of weeks a typical worker would need to work in a given year to earn enough income to cover the major costs for a family of four in the American middle class in that year: Food, Housing, Health Care, Transportation, and Higher Education.
In 1985, COTI was 39.7. Costs totaled $17,586, while median weekly income for a man aged 25 or older working full-time was $443 ($23,036 per year).
In 2022, COTI was 62.1. Costs totaled $75,732, while median weekly income for a man aged 25 or older working full-time was $1,219 ($63,388 per year).2
Or, he can look at a study by economists at the Rand Corporation3 that asked the question: What would incomes look like today if the income trends of the thirty years following WWII, the great boom years and outburst of the middle class in America, had continued?In the chart below, you will find the actual average income4 between 1975 and 2018 (a 38-year span) for segments of the population: the 25th percentile, median (50th percentile), 75thpercentile, and so on. The “Actual%↑ 1975-2018” column displays the percentage increase in this actual income over the period. Next, the “Projected Income – 2018” column shows what the 2018 income would have been if the income trends from the end of WWII to 1975 had continued. Finally, the “Projected % ↑” column illustrates the percent change (either increase or decrease) in the income projected for 2018 compared to the actual income in that year.
As you explore this chart, keep in mind that, accounting for the growth in the US population over this period, GDP per capita grew from $27,310 in 1975 to $69,287 in 2018, a 154% growth.
An update to the 2020 Price/Edwards report was made by Price in early 2025. He updated the total transfer of income from the bottom 90% of the US population to the top 10% from the $47 trillion in the 2020 report to $79 trillion in 2023.5
So, in discussing changes in the US economy over recent decades, we need to explain how the median income grew from $42,000 to 50,000, a 16% increase over 43 years, instead of $92,000, an 84% increase, if the earlier trends had continued.
As I have suggested earlier, the answer lies in the control of our economy and government by the rich and corporations. This led to five key factors driving income and wealth inequality: market concentration (monopolization), globalization, decline of unions, growth of the finance sector, and financialization of corporations (symptoms are stock buybacks and surge in dividends over reinvestment).
Footnotes
- The French refer to this period as the Glorious Thirty.
- https://americancompass.org/2023-cost-of-thriving-index/
- The RAND Corporation is a think tank consulting company founded after WWII. It is well-known for rigorous data-driven analysis. It works predominantly for US defense and security departments. More here https://www.rand.org. It is not a left-wing Washington think-tank.
- Note that all of these dollars are in inflation-adjusted 2018 dollars. Constant buying-power dollars.
- To be clear, the vast bulk of this money ended up in the hand sof the top 1%. Thus, the huge surge in the number and size of the billionaire class since the pandemic.
Leave a Reply