The Good Life Was 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 25
th 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 90
th 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 95
th percentile is about 4 percent higher. At the 99th 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 it is 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 GDP. 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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