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Myths of Rich and Poor: Why We're Better Off Than We Think.

By W. Michael Cox and Richard Alto. Basic. 256 pp. $25

Despite the booming economy, declining unemployment, and quiescent inflation, many commentators accentuate the negative. There is still poverty. (An emphatic yes, the worst fault of the American system.) Income inequality keeps growing. (Yes, but almost everyone is better off in today's less-equal system than in yesterday's, which was more equal at a lower level.) The information economy rewards the educated. (Yes, but the same system's prosperity now allows the country to offer higher education to almost everybody.) The economy has intractable and incurable structural problems. (Didn't we just hear that about the federal deficit?) Wall Street might collapse. (Sure, but that would be true even if the economy were weak.)

A few writers, among them Derek Bok, Robert Samuelson, and David Whitman, have made the case that, for the majority of Americans, living standards - the most important overall gauge of the economy - keep rising. Joining this literature is the impressive Myths of Rich and Poor. Cox, an official of the Federal Reserve Bank in Dallas, and Aim, a reporter for the Dallas Morning News, set out to "provide an antidote to the prevailing pessimism" regarding the economy, and they deploy a profusion of facts and data in behalf of their cause.

Myths of Rich and Poor is strongest where it marshals evidence on the physical betterment of American life - bigger homes, safer cars, dramatically improved health care, abundant (perhaps overabundant) affordable food, easier access to higher education, greater retirement security. Baby boomers often sing the blues about how their parents had a better life in the 1950s, but measured by material standards, nearly everyone is much better off today.

The authors engagingly make this point by estimating how long a typical worker (that is, a nonsupervisory, hourly wage earner) would need to work in order to afford various consumer goods. A square foot of new house cost 6.5 hours of work time in the 1950s; now it's 5.5 hours. Home air conditioning systems once cost about 40 hours of work per 1,000 BTUs; now it's four hours. The McDonald brothers' original cheeseburger of the 1950s cost a half-hour's wages; now it's three minutes'. A gallon of milk now costs less than half as many work-minutes as it did in the 1950s. And so on. Calculations such as these demonstrate that, judged by buying power, the American economy is serving most citizens well.

Cox and Aim also provide the historical perspective that's often missing from laments about the contemporary economy. Almost half of the economy was agrarian a century ago, and the service sector overtook manufacturing in size not in the 1990s but in the 1930s - facts frequently overlooked by those who think an economy based on a relatively small heavy-industrial sector is unprecedented and spooky. Myths of Rich and Poor also contains some hysterical past predictions of economic doom, such as Martin van Buren's 1829 warning that the construction of railroads would end prosperity by undermining the canal system - and, at any rate, "the Almighty certainly never intended that people should travel at such breakneck speeds."

Where Myths of Rich and Poor falters is by equating a high living standard with a happy citizenry. As the University of Michigan researcher Ronald Inglehart has shown, there is surprisingly little correlation between affluence and happiness. Most Americans are better off in material terms than they were even a short time ago, and that's good. But affluence is only one aspect of what really makes human beings rich or poor. Love, community, morality, and spirituality can mean just as much.

- Gregg Easterbrook
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Title Annotation:Review
Author:Easterbrook, Greg
Publication:The Wilson Quarterly
Article Type:Book Review
Date:Jun 22, 1999
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