How Is It That Our ‘Recovery’ Is Accompanied By Declining Household Income?

Median Household Imcome“God is not mocked” comes to us down the ages; if you are a fashionable atheist, you may prefer: “Reality sucks!” No matter, the result in real life is the same. We read that  US computers are replacing increasing numbers of workers and that in the U.K. Jobs   are increasingly available only at the poverty level. Duh!

Politicians in democracies are beholden to masses of people; the politicians organize such masses as they are able, behind them. U.S. Democrat have organized union labor and as the price of that, pushed union wages and benefits far above a market level. U.S. Republicans, the ‘opposition,’ has not touched that political bargain when they have held power. The same is likely the case in the U.K. where one of the parties is labeled: “Labour.” And throughout the West, generally.

But the rest of the world, once WWII was out of the way, seeing how the “rich world” of the West lived (a most odious comparison) decided to compete, using its abjectly cheaper labor to offset technological backwardness. Rich world investors sent their capital to help, in search of handsome returns. And both the capital and the labor have prospered as China and India and others now make many of our goods, even those full of technology. No surprise, right?

Economics is dubbed the “dismal science” for a reason; it relies or at least is supposed to rely upon reality. One reality says that the low cost producer will drive the high cost producer out of business in a fair market. Sensible. But now, the West is the high cost producer …

And yet the governors of the West are pushing wage increases and boosted ‘minimum wages’ even though present wages are too high against the world average. A wage raise in the West today, is a poisoned gift; making things easier for the (overseas) competition. Nevertheless, that is the program. It’s an easy political scam for vote-seeking politicians. And a lot more popular than telling voters to grit their teeth and compete. And with President Obama, most of the politicians will be out of office, safely retired on their generous government pensions by the time voters catch on.

Left alone, the American and even the European economies have proven their competitiveness to the world; burdened by the weight of today’s infesting governments, they have kick-started the ‘developing’ economies instead. The popular theory says that as the ‘rich economies’ dwindle and the previously abused ‘developing’ ones grow, they will meet in the middle, creating a prosperous, world-wide middle class and no significant poor any more. Right.Of course, they don’t advertise  that much in the rich places; only in the poor ones. There, it sells.

We recall the advent of forced public school bussing in Los Angeles. The Democrats in charge found it unfair that white suburban schools were significantly better than urban black and Hispanic ones; they legislated and litigated to compel black and Hispanic kids to be bussed to ‘better’ white schools and equal numbers pf white kids to be bussed to replace them at urban schools. A swap of kids among schools to even things out.

Only two years later, the Democrats in charge were forced to move away from the program by popular revolt (and outrageous cost): the result was not to raise the level of the ‘disadvantaged’ black and Hispanic kids; the result was to reduce all the participating schools to the least common denominator. Instead of some good and some bad schools, all were bad. Trashed by loading them with kids whose attitudes made their prior programs impossible. Our Irish great grandmother would have observed that “One bad apple spoils the barrel.” A physicist might have brought up the subject of entropy. We leave it at: You can’t get something for nothing. Not even in politics! (Which we note, never seems to stop politicians from promising it.)

The present policy path will end with the West and the ‘developing’ workers together right enough, but in poverty, not middle class comfort. The currently declining average household income in the U.S. might be a clue, if anyone were watching.

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About Jack Curtis

Suspicious of government, doubtful of economics, fond of figure skating (but the off-ice part, not so much)
This entry was posted in Economics, Government, Politics and tagged , , . Bookmark the permalink.

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