Everything Is Coming Up Roses, Isn't It?

• Author: LANDSBURG, STEVEN E.
• Position: Review

If your memory extends back as far as the 1970s, you won't need a book to tell you that American living standards have risen dramatically over the past generation. But if your memory is short, you should have a look at W. Michael Cox and Richard Alm's Myths of Rich and Poor (New York: Basic Books, 1999). It is a superb book, filled with facts and logic and clarity and wit, fun to read an impeccably argued, an encyclopedia of progress.

But is it really necessary? To remind yourself how much wealthier we've gotten in the past few decades, you don't need Cox and Aim; all you have to do is pick up a twenty-five-year-old mail-order catalogue, correct the prices for inflation (in other words, roughly triple them), and then ask yourself whether you'd rather buy those goods at those prices or today's goods at today's prices. I guarantee that if you carry out that experiment, you'll be stunned at how much the world has improved in the past few decades.

Think about what health care was like twenty-five years ago, or communications, or home entertainment. Heart transplants were rare, the Internet was not even a fantasy, and only the wealthy few had VCRs. Of course the world has gotten better, and that's obvious to everyone. Right?

Certainly it's obvious to my parents, who are awed by the $250 stereo system I take for granted--the one that holds sixty CDs, remembers what type of music is on each one, and will play, for example, all the jazz tracks in random order. But just when my parents' astonishment has me convinced that Cox and Alm's book is unnecessary, along comes Robert Frank, with his new book Luxury Fever (New York: Free Press, 1999) and his genuinely risible claim that the median American family has gained no ground in the past two decades. No ground! Can he be serious? Would Frank really be willing to return to the living standards of 1979? Does he want to sacrifice his personal computer, his microwave oven, his video camera, and his CD collection? Does he want to give up ibuprofen, disposable contact lenses, and effective antacids?

Reading Frank's book made me understand that we really need Cox and Alm's book after all. I'd have thought the wealth explosion was evident to anyone with open eyes, but if an economist of Frank's stature is blind to it, others probably are, too. In a world where memories are short, it's nice to have a collection of incontrovertible reminders of what the past was really like.

On the other hand, why should anyone care about aggregate wealth statistics? So what if the average American is wealthier now than a generation ago? Well, you might respond that wealth is somehow related to happiness. As to the exact nature of that relationship, Cox and Alm declare their agnosticism up front. (It is, however, a qualified agnosticism: "We don't know whether economic progress brings happiness, but we strongly suspect that the absence of it brings misery.") But that still doesn't explain why anyone should care about how the average American is doing. What you probably care most about is how you're doing--and that's not something you can learn from a book. The only thing you can learn from Cox and Alm is how your neighbors are doing--and why should you care about that?

Poor Me, You're Richer

Frank has an answer. He believes--and this brings us to the central theme of his book--that it's more fun to be rich when your neighbors are poor. If Frank is right, then you should view Cox and Alm's glad tidings with dismay. If, on the other hand, you view general economic progress as good news, then you are a living repudiation of Frank's position.(1)

Here's another test of Frank's hypothesis: When was the last time you heard a politician say "Vote for me! I've been in office for four years and times are really bad!" It's true that you wouldn't support a politician who has held back your own progress, but presumably you already know something about your own progress, and you've already accounted for that in your voting behavior. By advertising that he's held everyone else back, the politician can only make himself more attractive to you. The fact that no politician campaigns that way is evidence against Frank's story.

But it's hard to refute Frank's story decisively...