On April 1st 2012, my book,”Dagbok från USA”, came out in Sweden. It will also soon be published in English (as an e-book for Kindle and for other readers) with the title: “Diary from the United States – Notes on a society in crisis“. As an appetizer for English speaking readers, I will the coming weeks publish some excerpts from the book.

“A rising standard of living for the great majority of our citizens has in effect been the American norm, and it is we, today, who are failing to achieve it.”

The average American no doubt feels that he or she has had less money to spend in recent decades. If one examines the numbers closely, it can be stated that, since the mid-1970s, household incomes after tax have had weak growth in real terms for the vast majority of Americans; for many incomes have fallen. And the further down the income ladder, the more incomes have declined.

This development is historically new. According to Benjamin M. Friedman, professor of political economy at Harvard, it’s the first time in 150 years that middle class Americans over such a long period, more than three decades, have seen their economic standard sink, or at least not rise as it regularly did in the past. He talks about the novelty of the situation in his book, The Moral Consequences of Economic Growth:

Broad-based economic growth in America was not a myth. Nor is it true that the growth Americans enjoyed in the early postwar decades [1950-70] was merely an aberration to which we nonetheless became accustomed. The pace of increase in living standards in those years was little more than what the nation had experienced on average during the previous century and a half. It is instead our own era, dating from the early 1970s, which stands out as exceptional. A rising standard of living for the great majority of our citizens has in effect been the American norm, and it is we, today, who are failing to achieve it.

That middle class American’s income has fallen since the early 1970s is thought provoking because, in Benjamin Friedman’s view, there’s a clear correlation between a fairly evenly distributed income growth and social advancement. Progress can mean more openness in society, extra tolerance towards immigrants or non-whites, higher social mobility, further economic justice, more democracy, etc. In fact, he shows in his book, credibly I think, that the periods in history in which middle-class citizens did better financially coincided with the periods when politicians made progressive decisions.

In the United States the last of these politically progressive periods was the first postwar era, from the late 1950s until 1970. During this period, there were a host of political decisions in Washington aiming at civil rights, better education, improved housing, greater employment, free medical care for the elderly (Medicare) and the poor (Medicaid), and environmental protection (the Clean Air Act). Interestingly enough, both Democratic presidents (Tru-man, Kennedy, and Johnson) and Republican presidents (Eisen-hower and Nixon) were involved in those decisions. Friedman shows that during progressive periods in the U.S. (dating from after the Civil War, roughly the periods 1870-1885, 1900-1920, 1933-1940, 1950-1970) there’s a surprisingly broad consensus across party lines; it seems as if everyone wants to contribute to social progress. It’s in turn, Friedman argues, a reflection of the fact that the middle-class citizen, recognizing that he or she is better off financially, wants to make it easier for those who have been less fortunate.

Benjamin Friedman also shows in his book that periods of weak or negative growth, and we are not talking about cyclical fluctuations, are characterized by political deadlock, partisan narrow-mindedness, and populism. In fact, the People’s Party, the archetype of populist parties, played a political role in the U.S. in the 1890s. The last two decades of the nineteenth century were, according to Friedman, characterized by low productivity and little or no real wage growth for the middle class, and these conditions gave rise to populist sentiments. It’s almost as if the populists of the 1890s are back in today’s Tea Party movement.

There are plenty of other parallels between the situation in Washington today and the situation a little more than hundred years ago: the harsh and abrasive words across party lines, the blockage in Congress of even straightforward decisions, and the apparent inability to agree on the most important issues like today a long-term plan to address the national debt. One positive note in this dismal situation is that things can change quickly. This is what happened a hundred years ago; populism literally went up in smoke and during the first decade of the twentieth century, the foundation was laid for a period of social progress.

Literature:

Friedman, B. M., 2005, The Moral Consequences of Economic Growth, Alfred A. Knopf, New York;

Flrst published (in Swedish): May 7, 2011