Barone on Income Inequality

http://www.futureofcapitalism.com/2011/02/barone-on-income-inequality

Michael Barone has some analysis of all that data purporting to show middle-class income stagnating:

My own assumption is that economic statistics have been painting an unduly bleak picture of modest-income America. When we measure real incomes we use inflation indexes, which over time inevitably overstate inflation, because they're based on static market baskets of goods.

The problem is if one item spikes in price, we quit buying it. In addition, inflation indexes cannot account for product innovation and quality increases.

Liberal writers look back to 1973 as a year when real wages supposedly peaked -- just before a nasty bout of inflation. But back then a pocket calculator cost $110. The smartphone you can buy today for $200 has a calculator and hundreds of other devices.

If you get out beyond the Beltway to middle America, you find supermarkets with wonderful produce and big box stores with amazing variety, all at prices that are astonishingly low. You can eat well and dress stylishly at prices far below what elites in places like Washington and New York are accustomed to pay. In many ways people with modest incomes have a significantly better standard of living than they did four decades ago.

by Editor  |  Feb 27, 2011 at 9:03 pm Related Topics:  Income Inequality receive the latest by email: subscribe to the free futureofcapitalism.com mailing list