Populism has gotten a bad odor, and not just among plutocrats—for most of the political chattering class, it is at least faintly pejorative. But I think that’s about to change: When economic hope shrivels and the rich become cartoons of swinish privilege, why shouldn’t the middle class become populists?
Why shouldn't the middle class become populists, you ask? Because the American middle class is super-privileged compared to the vast majority of humanity, either historically or in the contemporary world. They have jobs, cars, most of them own their own homes, they take vacations at the seashore and a lot of them have even been to Europe, they work 40- or maybe 50-hour weeks (and the ones with less money work less, not more), they send their kids to college, they can get all the latest nifty electronic gizmos more cheaply than ever. They're politically emancipated, and they'll never get drafted into the military. Things like putting food on the table and clothes on their backs are taken for granted every single day of their lives. This is at a time when hundreds of millions of people in this world are living on less than $1 a day. I regard any middle-class American who thinks they deserve better as a-- to use Andersen's phrase-- "greedhead."
But what about the premise? Does the phrase "when... economic hope shrivels" actually describe the US economy today? There's no need to do a Google search to answer this question: Andersen has actually reported the fact that refutes him just a few paragraphs before!
Back before the Second World War, in the teens and twenties, the richest one-half of one percent of Americans received 11 to 15 percent of all income, but from the fifties through the seventies, the income share of the superrich was reasonably cut back, by more than half. The rich were still plenty rich, and American capitalism worked fine.
Starting in the late eighties, however, the piece of the income pie taken each year by the rich has once again become as hugely disproportionate as it was in the twenties. Meanwhile, the median household income has gone up a measly 15 percent during the past quarter-century—and for the last five years it has actually dropped.
Most economists would agree that the official measures of inflation systematically overstate the increase of the cost of living. This is because, first, the statisticians have to compare the same bundle of goods across years, but in fact people substitute from goods and services whose price is rising to those that are falling and thus get a better deal than the "dumb" statistics suggest, and second, because completely new goods are forever being introduced, which provide "surplus value" to consumers (they're worth more than they cost) that can't be measured in inter-year comparisons since the goods were unavailable in the previous years.
But put that to one side: if income has risen 15%, Mr. Andersen has no right to talk about "economic hope shrivelling." (If real income growth plateaued for a few years after the late-1990s boom, which is debatable, that's just the business cycle, and anyway it's making up for lost time now.)
Those who peddle a false sense of victimhood on the part of one of history's most fortunate classes of people deserve a stern rebuke from all people of good will.
Meanwhile, the really interesting question is: What is it that the new super-rich are doing with their money? Friedrich Hayek saw the rich as a sort of "scouts" of mankind's economic-hedonic advancement: their consumption patterns are leading indicators of what people want, and much of what they consume is later mass-produced and made available to the masses. But the money of the rich is often put to the service of humanity more directly: they donate it to charity. Given the choice between taking the rich's money by coercion and trying to channel it to the poor through bureaucrats and letting the rich apply the talents they proved in the private sector to the problem of making their money make a difference, the latter is certainly ethically superior, and it's likely to prove much more efficient. Better the Gates Foundation than the Great Society welfare state.
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