You want to know something important, dear reader? Something that really matters? Well, read on…
We’ve been saying that the boom is a fraud. It is a speculative boom, not an economic boom. It lifts up asset prices and makes rich people think they are richer than ever. But it doesn’t increase real economic output – at least, not in the United States of America – or make average people any better off.
Of course, the leftists have been saying this for years. But who cares what they say. Even when they do spot a real problem, they invariably come up with a solution – more government meddling – that makes it worse.
Still, this is something they’re not wrong about.
An item from yesterday’s news:
According to data from the Pew Charitable Trust’s Economic Mobility project, a generation ago, American men in their 30s had median annual incomes of about US$40,000. Today, men of the same age, make about US$35,000 a year, adjusted for inflation. That’s a 12.5% drop over the last 30 years.
What do you make of that, dear reader?
We begin by asking the obvious questions: how is it possible that the biggest boom in the most advanced capitalistic economy in history has not made ordinary people wealthier? How could it be that Reagan’s Supply-Side Revolution…the blissful Clinton years…and the super-debt, super-spending era of George W. Bush…have altogether failed to produce one solitary dollar of extra income for the average working man?
The leftists will have their silly prognoses and their quack remedies…the rightists will have their claptrap excuses and their pass-the-blame apologia.
And the average working stiff? He seems not to have even noticed. He’s living on borrowed time and borrowed money. He sees the new house his family lives in…he looks out in the driveway and sees his new, foreign-made car…and he goes on the Internet and finds new ways to get more credit. What me worry?
On the Yahoo News site, we found the following offer:
$510,000 Mortgage…Under $1,698 per month!
Let’s see, the average guy earns only US$35,000. Take some out for taxes and health insurance…yes, he might be able to swing it, if he doesn’t eat.
But even if he could make the payments – interest only – how could he ever put aside enough money to pay it off? But don’t worry, he’s getting used to things he can never get out of – tax obligations that follow him, no matter where he goes in the entire world…credit card bills…mortgages.
He has taken what Friedrich Hayek called ‘The Road to Serfdom.’ He is becoming a slave…to his credit cards, to his government, to his mortgage, to his nation’s foreign meddling and domestic commitments. The poor man has no way out.
Markets and Money