Myths of Rich & Poor Why We’re Better Off Than We Think

276 Pages·1999·33.126 MB·English

by  W. Michael Cox

"Cox and Aim deserve a medal for bringing some sanity to a
—
subject where insanity is the norm." THOMAS SOWELL
MYTHS
DF RICH
POOR
WHY
WE'RE BETTER OFF
THAN WE THINK
W. Michael Cox and Richard Aim

f
Myths
of
Rich
&POOR
In Memory of
Robert F. Baker, Jr.
Myths
Rich
&POOR
Why
We're Better Off
Than We Think
W. Michael Cox
Richard Aim
BASIC
BOOKS
A Memberofthe Perseus Books Group
The information in Figure 1.3 and elsewhere regarding features found in
automobiles is courtesyofWard'sAutomotiveReports.
The views expressedwith thisbook are those ofthe authors and should not
be attributed to the Federal Reserve System or the Federal Reserve Bank of
Dallas.
Copyright© 1999byW. Michael Coxand RichardAim
PublishedbyBasicBooks,
A Memberofthe Perseus Books Group
All rights reserved. Printed in the United States ofAmerica. No part ofthis
bookmaybe reproducedinanymannerwhatsoeverwithoutwrittenpermis-
sion except in the case ofbriefquotations embodied in critical articles and
reviews. Forinformation, address BasicBooks, 10East53rdStreet, NewYork,
NY 10022-5299.
First Edition
DesignedbyRachelHegarty
A CIPcatalog record forthisbook isavailable from the Library ofCongress.
ISBN 0-465-04784-X (cloth); ISBN 0-465-04783-1 (paper)
98765432
01 02 03 /RRD 10
Contents
List ofTables andFigures vi
Acknowledgments ix
Preface xi
PartOne
Myths About Income
and Living Standards
1 Waking Up to Good Times 3
2 New and Improved! 23
3 Time for Symphonies and Softball 53
4 By Our Own Bootstraps 69
5 Still on Top ofthe World 91
Part Two
Myths AboutJobs
6 The Upside ofDownsizing 111
7 Somebody Always Flipped Hamburgers 139
8 The Economy at Light Speed 157
9 The Great American Growth Machine 179
Epilogue 197
Notes 203
Index 249
List of Tables
and
Figures
Chapter 1
Waking Up to Good Times
Figure 1.1 Average Hourly Wages 5
Table 1.1 The World Through Rip's Eyes 7
Figure 1.2 New Homes: Biggerand Better 9
Figure 1.3 BetterEquipped on the Highway 11
Table 1.2 Even the Poor Have More 15
Table 1.3 How People Spend TheirMoney 17
Figure 1.4 A Second Look atWhat We Earn: Per
Capita Income, Total Compensation,
and HourlyWages, 1953-97 19
Table 1.4 Estimates ofthe Bias in
Consumer Price Index Inflation 21
Chapter2
New andImproved!
Table 2.1 The Modern Age's Bounty 26
Figure 2.1 Working Less for Our Daily Bread 41
Table 2.2 Time Is on Our Side: Work Time Required
to Buy Various Products and Services 43
Chapter 3
Time forSymphonies and Softball
Table 3.1 Work Time 55
Table 3.2 Less Work, More Leisure 57
VI
List of Tables and Figures vii
Chapter 4
By Our Own Bootstraps
Figure 4.1 Slicing Up the American Pie 70
Figure 4.2 A Caste Society? 71
Table 4.1 Moving On Up 73
Table 4.2 The PoorAre Getting Richer Faster 74
Figure 4.3 Income Mobility by Education:
Even Dropouts Earn More 75
Table 4.3 Living Standards on the Rise 76
Figure 4.4 A Second Opinion from the Treasury 77
Figure 4.5 The Steepening ofLifetime Earnings 84
Chapter 5
Still on Top ofthe World
Table 5.1 Per Capita Income,
Job Creation Among Nations 94
Table 5.2 Americans' Living Standards
Still Stand Out 97-98
Table 5.3 Balance ofPayments,
by the Numbers 101
Figure 5.1 As Nations Grow Richer,
Economic Performance Converges 108
Chapter 6
The Upside ofDownsizing
Table 6.1 Job Creation and Destruction, 1985-96 114
Table 6.2 Job Creation by Firm Size 115
Table 6.3 America's Top 30 Jobs Since 1900 118-119
Table 6.4 The Churn: Jobs Then, Jobs Now 120
Table 6.5 New Companies Rising to the Top 122
Figure 6.1 Railway Employment 125
Table 6.6 Technological Unemployment 127
Table 6.7 Dialing for Pennies 129
Table 6.8 More Output, FewerWorkers 130
Table 6.9 Less Equals More 131
Figure 6.2 Save Jobs on the Canals 134
viii List of Tables and Figures
Chapter 7
SomebodyAlways Flipped Hamburgers
Figure 7.1 America's Jobs (A) and Output (B) Move
to Services 142
Table 7.1 A Snapshot ofWhere Americans Work 144
Figure 7.2 Growth Lies in Services 145
Figure 7.3 Hourly Earnings in Manufacturing
and Services 147
Figure 7.4a Higher Spending, More Services:
Household Spending on Goods vs.
Services, 1997 150
Figure 7.4b HigherSpending, More Services:
Per Capita Spending on Goods vs.
Services, 1947-97 150
Figure 7.4c HigherSpending, More Services:
Per Capita Spending on Goods vs.
Services, 1987 151
Figure 7.5 Relative Prices: Services vs. Goods 152
Figure 7.6 Higher-Paid Service Jobs Lead the Way 155
Chapter 8
The Economy at Light Speed
Table 8.1 Top 10 Inventions and Discoveries Since
the Civil War 160
Figure 8.1 Spread ofProducts into American Households 162
Table 8.2a Tools ofthe Ages 172
Table 8.2b What's a Person to Do? 173
Table 8.3 It's Not the Industry, It's the Education 176-177
Chapter 9
The GreatAmerican Growth Machine
Figure 9.1 Maslow's Hierarchy ofNeeds 182
Figure 9.2 How Progress Happens 188