October 27, 2016
Jeff Madrick on ‘High Wire,’ Peter Gosselin’s Look at the Economic Meltdown
Posted on May 2, 2008
By Jeff Madrick
Gosselin even makes a chapter on America’s poor sound original. The poor are not different—they are like you and me, he says, simply trying to make ends meet and get a life, especially for their kids, and even hold in their hearts a hope for the American dream. He finds conservative claims that we have conquered poverty nonsense. Gosselin is a little too optimistic that “deprivation” has been eliminated in America, as some conservatives like to say. How poorly those in poverty eat we now know. Diabetes is up, not because the poor are literally hungry—some in America do go hungry, by the way—but partly and maybe largely because bad food is
Gosselin, however, puts his finger on it. Poverty is not about black-and-white deprivations in the contemporary world. The poor in America live in total chaos—in his words, “...—pay cuts and eviction notices, car troubles and medical crises, hirings and firings—that keeps reversing their families’ advances, rattling their finances, nudging them toward the economic brink.” Some have the audacity to say the poor can use their credit cards to bail themselves out of disaster. Yes, at 18 percent interest. Bring on the Mob! What do the poor borrow for? A good restaurant meal? A pair of impossibly expensive sneakers? Maybe, once in a while. But Gosselin looks into a case or two: $170 to fix the steering on the car, a $300 cash advance for the rent, another $1,000 to bring a wife to the U.S. from Central America.
On education, Gosselin tells us that a college degree doesn’t guarantee a good job but often lots of debt. On housing, he sniffed out the subprime dangers early. Regarding health coverage, he notes the usual problems of a health-care system dependent on the job: reduced coverage, higher co-pays. But he delves into the even more alarming scandal of policy cancellations and rescissions by supposedly respectable companies, a stunning and growing national disgrace that doesn’t receive enough attention.
Gosselin doesn’t get everything, however. There is the shocking level of child poverty in America, higher by most measures than anywhere else in the rich world. There is highly unequal quality of public education.
But, most important, there is simply the long stagnation in earnings, most obvious when we isolate males from females. Gosselin buys too easily into the notion that the American economy has, based on the conventional data like the unemployment rate and the growth rate, done well for a generation and that it is essentially financial security that is the issue.
Not exactly so. To be precise, the 30-something median male—in the middle of the distribution—makes less after inflation today than did the 30-something male in the 1970s. As some perceptive commentators put it, the typical male today makes less than his father did 30 years ago.
This needed more attention in an otherwise excellent book. In other words, typical men have made no progress compared with typical men a generation ago. This experience violates the true American dream, not the one about how we can all get rich, but the one about how, if we work hard, most of us will do better over time than the previous generation. We can’t all rise higher on the pyramid, but the whole pyramid can rise. In fact, that is what happened in the U.S. since the beginning. That is what made the nation special and its people optimistic. But now it no longer does.
Meanwhile, women’s wages are up, and that’s what has mostly kept family income rising. But there is still an enormous gap between what men and women earn, far more than in some European nations, for example. In Sweden, men and women make about the same. Labor market discrimination? You bet.
At least men haven’t fallen much behind in America, some will answer. Well, high-school-educated males have fallen behind by a lot. College-educated males have seen median wages stagnate for 30-year stretches and longer. Here’s some of my own data, done with the estimable researcher Nikos Papanikolaou.
Note below that even typical men with a college education have seen no increase in earnings for 20- and 25-year stretches since 1969.
Data: Jeff Madrick and Nikos Papanikolaou, Schwartz Center for Economic Policy Analysis, The New School.
But more to the point, inflation-adjusted income, even if it rises slightly, does not mean that people are actually keeping up. The costs of education, health care, drugs and public investment have gone up much faster than incomes. So people can buy clothes, food or electronics more easily, but they can’t buy health care, or they have to move into an expensive house to get a good k-12 education for the kids. Or they can’t as easily afford their commuting costs. A subway ride in New York in the 1970s cost 35 cents; now it’s $2. That adds $50 a month to the commuting bill. This is why Barack Obama is right when he talks about bitterness and anger, and why claims that the political attitudes are only about culture shifts is wrong.
Now the experience of the 2000s has brought the message home. Wages haven’t gone up at all in the 2000s, despite record profits and decent productivity growth. Family incomes are down. These are unprecedented in the modern economy.
And all this follows a generation of rising insecurity, uncertainty, unrewarded effort and for many a treadmill of growing despair, cynicism and occasional chaos that this author describes so clearly, even elegantly. Gosselin’s gotten the new American condition better than anyone else I’ve read.
Jeff Madrick is editor of Challenge Magazine and senior fellow at the Schwartz Center for Economic Policy Analysis, The New School. A book of lectures, “The Case for Big Government,” will be out in June, from Princeton. He is also at work on a history of the U.S. economy since 1970, to be published by Alfred A. Knopf.
New and Improved Comments