How Are We Doing?

Bob Herbert of the New York Times writes of an “undercurrent of anxiety in the land”, an anxiety that seems more intense than the usual concern for a cyclical economic downturn.  He notes that former U. S. Senator and President of the University of Oklahoma David Boren has introduced his new book, “A Letter to America”, with the words, “The country we love is in trouble; in truth we are in grave danger of declining as a nation…………”  And Herbert shares Boren’s biggest worries–the growing divide between the wealthy and everyone else and “the catastrophic drop in the way the rest of the world views us.”

In the same week, Harvard Magazine’s cover article by Elizabeth Gudrais is titled “Unequal America”, in which she bemoans the fact that “Americans, on average, have a higher tolerance for income equality than their European counterparts.  American attitudes focus on equality of opportunity, while Europeans tend to see fairness in equal outcomes.”

Meanwhile, a much different view is available from a recent article from which I borrowed the title of this essay, written and based on studies for The American magazine by W. Michael Cox and Richard Alm, economists of the Federal Reserve Bank of Dallas, which has the added virtue of reliance on the facts about “how are we doing”.  Here are some samples:

* Income and wages are often used as gauges of progress, but consumption is the best measure of rising living standards, and in the past 50 years, products that began as luxuries that only the very wealthy could afford have become commonplace in almost all U. S. households.

* All segments of society have shared in this material progress.  Their studies show that households defined as “poor” in 2005 have ownership rates of these one-time luxury products that are higher than the general population of the 1970s.

* In terms of time worked at the average pay rate, the total cost of a 12-item basket of basic foods has barely budged, and the cost of a gallon of gasoline in late 2007 still required less than 11 minutes of work.

* Real total compensation–wages plus fringe benefits adjusted for inflation–has been rising steadily for several generations, while at the same time, we are spending less time at work and have much more time for leisure activities.

There are other data points of interest–we are safer at work and home, transportation safety is much better, medical advances have reduced the toll of many diseases, and our higher health care costs are actually a sign of economic progress–all of which combine to paint a picture of steady, continuing progress for average Americans, much different from the one to which we are exposed on a daily basis by the popular outlets.

They make a final point: There is a price for pessimism.  In the early 1980s, when gloom and doom was popular (remember the Jimmy Carter “malaise” speech of 1979?), the safe investment havens of Treasury bills and gold would have proven to be bad choices for the pessimists.  A $10,000 investment in T Bills, gold, and the Dow Jones stocks in 1982 would have resulted in values today of $37,778, $22,525, and $288,163, respectively.

So is there any validity to the concerns of Herbert, Boren, and Gudrais?  Sure, but it has almost nothing to do with the ones they emphasize.  The American preference for equality of opportunity over equality of outcomes is a virtue that has been a foundation of American exceptionalism and success and the envy of the world outside of the circle of intellectuals among the European elite and the political and academic left here and there alike.

The gaps we should worry about have to do with educational outcomes: (1) between our at-risk, primarily low income and minority, children and their more affluent peers, and (2) between the overall educational achievement of our children and that of our international competitors.  These are the gaps that matter, both as civil rights and as the key to our future competiveness in a globalized world.