AZspot AZspot

blue bits. red rocks.
Wednesday 3 October 2012
Liberalism works

The case for liberalism can be seen in a nutshell in this diagram, from Lane Kenworthy. Productivity (defined as GDP per capita) keeps rising, but it no longer benefits the median family.

These are per capita figures, so they already account for increasing population; and they’re adjusted for inflation.

(The economic definition of productivity is useful precisely because of its broadness and simplicity. It covers technological progress, capital investment, access to new resources or markets, organizational changes, even social changes like decreased corruption or a movement of women into the workplace. For the purposes of examining social progress, the importance of the number is that if it ain’t rising, we’re doing it wrong. There’s no iron law that makes wages go up over time. The basic mistake made by the USSR is that merely redistributing income at best makes for a stagnant and fairly poor society. Wages will keep rising only if productivity is rising.)

Before getting into the big bend in the income line, let me emphasize that productivity has risen at about the same rate over our entire period. I’d love to report that liberalism increases productivity, but I can’t. But more importantly, liberalism doesn’t decrease productivity. That means that various conservative charges‒ that economic progress is stifled by high tax rates, or by unions, or by large government, or by “regulation”, or by health insurance‒ just aren’t true.

Now, let’s look at that dividing line, at 1980.

  • Under liberalism, gains in productivity benefit the whole country, measured here as the income of the median family.
  • Under Reaganism, the median income stagnates, and gains in productivity go to the rich.

15 notes

  1. wateringgoodseeds reblogged this from azspot
  2. jaison96 reblogged this from azspot
  3. other-stuff reblogged this from azspot
  4. azspot posted this

A GNT creation ©2007–2013