by Charles Hugh Smith, Of Two Minds:
While the view might be great from the top of the wealth/income pyramid, it takes a special kind of self-serving myopia to ignore the reality that the bottom 95% are not doing so well.
We’re ceaselessly told/sold that the U.S. economy is doing phenomenally well in our current slow-growth world — generating record corporate profits, record highs in the S&P 500 stock index, and historically low unemployment (4.9% in July 2016).
While GDP growth is somewhat lackluster by historical standards—less than 2% in 2016—it’s growth nonetheless. And the rate of consumer-price inflation is hovering around 1%; negligible by historical standards.
But this uniformly positive statistical view of the U.S. economy raises a question among those not in the top 0.1%: If everything’s going so great, how come I’m not?
Whether it’s struggling to keep up with the rising cost of living, a 0% return on savings, working longer hours while real wages stagnate, scrimping to pay back education loans, despairing at the abuses of power in our banking and political systems, or lamenting the loss of nourishing social interaction in our increasingly isolated and digital lifestyle — most “regular” people find their own personal experiences to be at odds with the rosy “Everything is awesome!” narrative trumpeted by our media.
To get a more concrete understanding of this gap, let’s establish a scorecard we can individually fill in to make an assessment of just how well we’re doing.
The key point about such a scorecard is this: We can only optimize what we measure. If we don’t measure (for example) leisure time and well-being in our assessment of Are we doing better than we were 10 years ago? then those issues simply aren’t considered.
And this is the flaw in using broad, easily-fudged statistics such as the unemployment rate as the primary measures of how great we’re doing (or not). What actually matters in life—our experiences, our stress level, our leisure time, our well-being and our sense of security, to name a few—is completely ignored by statistics such as GDP and unemployment.
I propose that a more accurate assessment requires responding to this list: Are you better off than you were 10 years ago in 2007, and 16 years ago in 2000?
1. Has the purchasing power of my earnings increased or declined since 2007 and 2000? That is, do my monthly earnings buy more healthcare insurance, college tuition, shelter and other goods and services than they did 10 and 16 years ago?
Here are a few charts to help you answer accurately:
These charts make it clear that real income (i.e. purchasing power) has declined markedly while big-ticket costs such as healthcare have skyrocketed for the majority of American households.
2. Is the quantity of packaged goods you buy now the same or less than in 2007 and 2000? That is, does the package that once contained 16 ounces now contain 14 ounces or even less?
3.Has the quality of goods and services you purchase now better or worse than the quality you received for the same share of your earnings 10 and 16 years ago? Do appliances last as long as they did then, or do they last longer? Do electronic devices last longer than they did in the past? How about furniture, clothing, etc.?
4. Does your children’s education better prepare them for a fast-changing economy now compared to 10/16 years ago?
5. How much shadow-work (to use Catherine Austin Fitts’ apt phrase) do you have to do now compared to 10/16 years ago? By shadow-work we mean work that was once done by businesses or the government that you must now perform yourself: pump your own gas, etc.
6. How much time do you now spend trying to fix administrative errors and things that are broken: incorrect billing, computer patches that don’t fix the problem, etc.?
7. Is your overall health and well-being better than it was 10/16 years ago, or worse? (Of course we have to allow for the advance of age, but the question is about how you feel and whether you now must deal with chronic diseases, pain management, etc. that you didn’t have 10 years ago.)
8. Is the quality of your healthcare better or worse than 10/16 years ago, in terms of cost, waiting time, co-pays, accuracy of diagnoses, ability to book an appointment in the near future, etc.?
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