The Good Life That Keynes Promised America Got Stolen

A century ago, economic experts thought everybody living in the present era would have it made. And broadly speaking, we do: We live longer, we seldom try benightedly to “cure” gay people, we no longer have to leave the house to watch a movie, and so on. But that’s not what the economic experts were talking about. They were talking about how much easier it would become to earn a living wage—and there, they were quite wrong.

Writing in 1930, at the start of the Great Depression, John Maynard Keynes attributed the high unemployment of that moment “to our discovery of means of economizing the use of labor outrunning the pace at which we can find new uses for labor.” But that would sort itself out, Keynes predicted confidently. Eventually, the glories of capital accumulation and technological advancement would end humankind’s “struggle for subsistence,” and we’d instead spend that time pondering “how to occupy the leisure” that “science and compound interest” would have granted us “to live wisely and agreeably and well.”

A new report by the Rand Corporation allows us to glimpse this alternate universe of Keynes’s imagining, and it’s lovely. There, the median income for a full-time worker in the United States is about $100,000. The median for a full-time U.S. worker at the twenty-fifth percentile is about $65,000. There’s just one hitch, though: The income levels in this Randworld fantasia are about double the size of the ones we’re stuck with here on planet Earth.

Even the affluent do better in Randworld. Median income for a full-time U.S. worker at the ninetieth percentile is more than 25 percent higher there than in the real world, and median income for a full-time U.S. worker at the ninety-fifth percentile is about 4 percent higher. At the ninety-ninth percentile, meanwhile, a U.S. worker’s median income is more than 25 percent lower than in the real world. That wouldn’t please the rich, but look on the bright side—in Randworld, it would be 25 percent easier to brag truthfully that you were a member of the very elite one percent.

What is it that makes Randworld so much better than our own? Merely that since 1946 (the year Keynes finally entered that long run in which we’re all dead), U.S. income growth, at all levels, has kept pace with gross domestic product. That may sound absurdly idealistic, especially in the midst of our job-hemorrhaging Covid recession. But it’s what Keynes expected, and it’s what actually happened for two decades after World War II. Indeed, for a little while in the 1970s, incomes actually grew faster than the economy, creating a crisis of inflation. But for the past four decades, we’ve had a different crisis. Incomes have kept pace with the economy only at the very top, and income inequality, which shrank or remained constant for most of the twentieth century, has risen steadily. Keynes failed to anticipate either of those things, and so the pleasant world he imagined never came to pass.

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