trickle-up or trickle-down?

Everyone today knows that we are in economic hard times. You’ve heard the litany. The top one percent of the population has cornered over 25% of the wealth. One out of seven people are in poverty. The middle class is declining in size and importance with less income, foreclosed homes, and meager prospects for the future. Unemployment is at a peak not seen since the Great Depression. At least that’s what most people hear, read and know.

Most people do not know, however, that we are 20 times as well off now as we were in this country when I started high school in 1940. The average family income in 1940 (corrected to 2005 dollars) was $1,725. Today the average family income is over $45,000. In fact the median family income was $47,550 according to government statistics released just last week.

(Actually the average income in 1940 was lower than it had been ten years earlier in 1930 when the average income was $1970. A 12.5 % drop in income, in other words, after all the pump-priming of FDR’s New Deal.)

Of course some things were also cheaper in 1940. A new house cost on average $4000. A new auto was $850. Gasoline was 11 cents a gallon.

When you correct all these wages and prices for statistical errors, inflation and whatever and then compare you find that … who knows? It’s confusing like so much in economics. I remember that President Truman always said he preferred one-armed economists. The ones he consulted told him things like “on the one hand,” but then followed it up “on the other hand.”

Some personal history might be more enlightening. How many people today have lived through the Great Depression, WW2, the booming 50s and 60s, the inflationary 70s, the prosperous 80s and 90s, and the gloom and doom of the early 21st century? Not too many. But I have.

I’m not a statistician or an economist but I know what happened to me and mine over this long stretch of the 20th century.

First of all, I know there are more people now. Traffic seems worse. I’m like everyone else caught in a traffic jam. ”There are just too many damn people today!” And in fact the population of the United States is three times what it was in 1940. Wages are higher but expenses are higher too. However our workers today, remember, are providing goods and services to three times as many people. All in all, it seems to me they have done and are doing a pretty decent job.

Just about all goods and services are far more available today to a far more diverse and larger population than they were seventy years ago to a much smaller and more deeply divided population. And just about all of these goods and services are of a much higher quality than they were seventy years ago. Again, not that bad a record. We must be doing something right.

The middle class houses, for instance, that my family rented during the Great Depression of the 1930s typically had one bathroom, no “family room,” no “great room,” no den, no basement rec room and no garage. They were usually heated by a soft-coal-burning furnace that spewed out a considerable amount of cancer-inducing smoke. The coal fire had to be damped each night and ash and cinders taken out every few days. Those were my jobs as a young boy. Air-conditioning, of course, was unknown even for the very wealthy.

My mother had to set aside a complete day to do the laundry. We did have a washing machine but after washing the clothes, she had to put them through a hand wringer and then hang them on an outside clothes-line. Rain or snow made it more troublesome. My mother then had to iron most clothes by hand, which took up another day. Part of that need I think was due to the fabrics available then. No nylon or other synthetic fibers, only good old fashioned natural cotton, linen or wool.

Automobiles were cheaper. They were also more unreliable, hogged more gas, belched more pollution, had no air-conditioning, seat belts, or air bags. Radio and heater were optional. Good food was available, though supermarkets and fast-food outlets were unknown. At least in our city, farmer’s markets were also unknown. In our northern winters the fruit and vegetable menu came mostly out of cans.

Schools were more crowded and offered fewer classes. My sister’s 4th grade class in the 1940s had over sixty students for one teacher. None of the schools I attended had gymnasiums. In fact they had no physical education programs at all. No art or music classes either. The two high schools I attended had football and basketball teams but that was it. No women’s sports.

Doctors did make house calls in those days. They couldn’t help much though if you got polio or any other serious infection or disease.

The 1950s were better. But not that much better. My first job as a teacher in 1953 paid the munificent salary of $2900 a year. With a young family in New York City that salary was barely enough to buy food and to pay rent on a basic cold-water flat. (“Cold-water flats” in New York in those days actually did have hot water, but no heat! We had to buy and use kerosene stoves with little or no exhaust to the outside. I don’t understand now why we did not suffocate or get permanently disabled from the fumes.)

With a teacher’s salary there was rarely money left over for travel, restaurants, a theatre or concert evening, or for anything beyond public transportation on the subway or bus. Rather than take a vacation in the summer when school was out, I typically worked at other jobs to make ends meet. One summer I worked selling ice cream bars as a Good Humor man on the streets of New York. I remember the time a cop chased me out of a promising cross-street stand. When I told him my winter job he commented “wow, I didn’t think teachers were that bad off.” The following summer I got a more interesting (but not more lucrative) job at a summer camp for boys and girls in New England.

Before getting my low-paying teaching job in those “booming” 50s I had other jobs. I worked driving a cab and then on a construction crew in Colorado. I spent some months working in a New Jersey and then in a Bronx factory. I got a somewhat better paying job as a fledgling engineer in a Wall Street office. The money I made on all of these jobs was better than a teacher’s salary but still barely enough to get by. Travel to Europe, the Caribbean or even to Florida was not even considered. That kind of travel was only for really rich folks.

My point is not to elicit sympathy but to point out that teachers and students, as well as almost all workers in America today, are much better off economically than they were in the mid-20th century. And that was the time some call the good old days or the “booming” decades. Of course rich folks improved their share of the prosperity pie even more. But the point is, the trickle-down economics of free-market capitalism worked pretty well. The second point is, it worked a whole lot better than its polar opposite, the trickle-up economics of socialist theory and practice.

For evidence supporting that judgment, go to Cuba as I did a few years ago. Castro came into power in those same “booming 50s” and promised he would do wonders for ordinary workers. Today, seventy years later, the average wage in Cuba is the only wage in Cuba, $16 a month. That’s what you make whether you are a street sweeper, a college professor or a brain surgeon. True, rent, food, education and health-care are very cheap. Also very shabby. There is no trickle-down. But not much trickle-up either. Instead everyone is equally poor. As they have been for 70 years.

Despite the recent increase in inequality in this country, teachers and other middle-class workers, blue-collar and white-collar, are able to take pretty nice vacations today. Many middle-class families have two cars. Some have fancy RVs and second homes. Most teachers, workers and even students are well enough off to travel to places I would have never considered in my wildest dreams back in the 50s. Students today go to Europe, South America or Asia to study or work almost as a rite of passage. Even the one out of seven of today’s population classified as in poverty have goods and services today that are far superior to those I and my family had as middle-class working families in the 1950s.

What do I make of all this?

It seems to me that all things considered the country has done pretty well in my lifetime. Looking further back in history it also seems to me the evidence is clear as to the causes of this prosperity. Credit for the good times most of us enjoy today goes overwhelmingly to advances in science, technology and decent government. These advances were for the most part made possible by an entrepreneurial environment of free trade and win-win transactions of free-market capitalism.

Our U.S. government has often played major roles. In my lifetime I can point to at least three major advances primarily due to progressive policies. (1) the GI Bill of Rights in the late 40s and early 50s that paid for many veteran’s college education (including my own). (2) the big infrastructure project led by President Eisenhower that gave us our interstate highway system. And (3) the civil rights laws of the 60s fathered by Martin Luther King and Lyndon Johnson that liberated such a large and important segment of our diverse population.

The U.S. government, of course, also deserves enormous credit for its leadership in the terrible wars of the 20th century. The prosperous modern worlds of Great Britain, Europe, Japan, South Korea, Singapore, Malaysia (as well as the recent prosperity booms in China and India) owe the U.S. a huge debt for leading the coalition of democratic states that destroyed tyrannies of the right and the left led by the likes of Lenin, Hitler, Stalin, Franco, Mao Zedong, Mussolini and Hirohito.

What about today? Is the country on the right path? Apparently the majority opinion in the polls says, no. Pessimism seems to be the rule in this first decade of the 21st century. It reminds me a bit of the “malaise” complaints back in the Jimmy Carter days. For myself I’m not that sure of the short run, but in the long run I still have a healthy amount of confidence that America is still and will be for the foreseeable future, number one. And yes, we are still as Lincoln claimed in a more perilous time, “the last best hope of earth.”

Bill Stonebarger, Owner/President Hawkhill

P.S. The best summary of this edition is probably my history program, Democracy in World History. One on-line reviewer wrote, “This voluminous work sets out on the daunting task of discussing hundreds of years of the evolution of democracy in a swift manner without seeming cursory. Democracy in World History accomplishes this with a balance of detail, analysis, and identification of overarching themes related to strings of significant world events. The series does an excellent job in demonstrating linkages of events and movements… This is an outstanding body of work, and is highly recommended for high school audiences and higher.” Michael J. Coffta, Librarian, Bloomsburg University of Pennsylvania.

P.P.S. If you don’t have the time or inclination to view the entire 6-part program you might consider Part 3: The Industrial Revolution, Capitalism and the United States of America and Part 6: Democracy in the 20th Century.

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