The American Enterprise Institute just published a study of how the overall welfare of Americans has evolved during the last thirty years. You can read the abstract of the document, as well as download a PDF file of the complete study, by clicking on the link.
The most remarkable aspect of the study is that its authors dismissed outright the use of income as the primary metric of individual welfare. Instead, the authors centered their study on consumption, where “consumption inequality” is defined as the inability of Americans with average or below average incomes to access items traditionally considered to be luxuries – electric appliances, central heating, air conditioning, computers, video games, televisions and DVD’s, cable/satellite access, cell phones, automobiles, etc.
The findings of the study should not be surprising: access to luxury items for Americans with below average incomes has steadily increased during the past three decades. In fact, there is very little difference in consumption between their lowest household income bracket (earning less than $20k annually) and households earning up to $99k annually with respect to televisions, satellite TV, digital converter boxes, and DVD players. The only area where a noticeable gap still exists is access to computer technology and the Internet, and lower income levels still indicate a diminished likelihood that a household will own a computer or have an Internet connection. However, the study does not include access to wireless devices or cell phones, which obviously have a significant affect on the ability of individuals to access the Internet or use email and social networking applications.
The fundamental difference between how liberals and conservatives view the welfare of Americans revolves around the relative importance of income vs. consumption. Liberals tend to dismiss increased consumer consumption as an automatic function of a forward-moving society, and choose instead to focus on inequalities in income, or methods to preserve income levels for working Americans during times of economic distress. On the other hand, conservatives point to consumption data and argue that “poverty” is a relatively useless term, since “poor” Americans are just as likely as upper-class Americans to have access to items considered luxuries in most second and third-world nations. They dismiss “income equality” as a chimera that will never be achieved because of intrinsic differences in culture, goals, education, and opportunity that we must allow among different groups of people, if we are to live in a truly free society.
But there is one thing about the arguments of liberals that strikes me as very ironic. In their quest to achieve income equality, they continuously advocate central economic planning and increased state control of banking and financial systems. Yet in the “worker’s paradise” nations that have taken these ideals to the extreme — North Korea, Cuba, the former Eastern Bloc, the former Soviet Union — consumption inequality has been manifest and seemingly incurable. There was simply no way for average citizens to own luxury items, except by joining the Party or the military, and exploiting the bureaucracies of either in order to obtain promotions and rewards. Part of this was due to the fact that most socialist states simply could not mass produce luxury items. And when those states attempted mass-production, the quality was poor, the waiting lists were long, and the lion’s share of the items still went to military officers or ranking party members. All of this, from states that proclaimed “absolute equality” to be their highest ideal.
In reality, it is our evil, selfish, greedy, corrupt, and hopelessly unfair free enterprise system that provides all of our people with the best, lowest-cost access to the latest advances in transportation, communication, and time/labor/energy-saving devices. In other words, the most equal access to the economy, for everyone. In contrast, planned economies of the past could provide wages, basic living accommodations, basic education, basic transportation, and basic necessities to most all of their citizens in a somewhat uniform fashion. And by “basic” I mean “poverty-level” with “technology from the 1950’s.” If you wanted more than that, you had to join the ranks of the elites.
The next time you see a group of Occupy knuckleheads or other clueless progressives lamenting the evils of capitalism — while talking on their iPhones or Facebooking with their iPads — remember these observations and ask yourself which group you’d rather be a part of.