The Growth Gap - The American Spectator | USA News and Politics
The Growth Gap

If Ronald Reagan will be forever known as the “Great Communicator,” Barack Obama is on track to go down in history as the “Great Divider.” His single-minded message over the last several years—and especially in recent months—has been highlighting the gap in wealth or in income between different groups of people. One week he obsesses over the gap between rich and poor. The next he talks about the gaps between races. And that is followed by the gap in earnings between the sexes. What next? Tall versus short? Lefties versus righties? 

There’s a good possibility that this preoccupation with our differences is meant to divert attention from the real enduring economic legacy of Mr. Obama’s presidency: Just about everyone is doing worse. For the middle class, incomes have fallen by almost $3,000 since Obama was sworn into office and almost $2,000 since the recovery began.

Americans are not in normal times an envious lot, and polls show we don’t care much about how the rich are doing, as long as our own situation is improving. But when the economy isn’t growing, we become like piranhas in a fish tank with a dwindling food supply that start nibbling on each other. 

The big untold success story about gaps in the U.S. economy over the last half century is how much they have shrunk over time. For example, let’s take the gap between men and women. In 1950, women earned about 60 cents for every dollar earned by a man, mostly because they on average had less work experience, went into lower paying occupations, and had fewer educational opportunities. The gap narrowed over the next fifty years to about 85 cents for every dollar, with most of the rest of the differential resulting from skills and education. Since women are now more likely to go to college and grad school than are men, it might be that they will begin outearning men in the years to come. 

The racial gap in America has shrunk even further and faster. In the 1950s, a black male earned about 40 to 50 cents for every dollar a white man earned. Now the typical black male earns 75 cents on the dollar. Pretty much the same pattern is true of Hispanics as well. The table above shows what has happened to the income gains for each of these groups over the last thirty years. Blacks have done better than whites and women have done much better than men.

Surprised? Why don’t politicians and those in the media talk about the greater equality in America and the decline in wage discrimination? It may be due to the old adage that in the media, good news is a contradiction in terms. But it is also true that the Left in America loves to accentuate all of our faults, while in European and Asian nations the custom is to celebrate even the smallest of advances. My favorite example was the scam story from several years ago that the U.S. had a higher infant mortality rate than not only most industrial nations, but that America was even in the league of some third-world countries. The press reported these statistics alarmingly and uncritically as an indictment of the retrograde state of our health care. As it turned out, almost all of the supposed problem was explained by differing definitions of infant mortality. A child that was born dead in America would be counted as an infant death in the statistics, but ignored in many other countries.

[[{“type”:”media”,”view_mode”:”media_original”,”fid”:”95209″,”attributes”:{“alt”:””,”class”:”media-image”,”style”:”float: right;”,”typeof”:”foaf:Image”}}]]Even the gap between the rich and poor is overstated. If we look at income and wealth statistics, there is no doubt that the top one percent holds a far bigger slice than ever before, largely because of a new super billionaire class that includes the likes of Warren Buffett, Bill Gates, Sergey Brin, and others who are as rich as some entire nations. So today the top one percent earn about 20 percent of all the income each year, which is the highest share since the 1920s and the Gilded Age. But the living standard gap, which is based on what we can buy with our dollars, from health care treatments, to vacations, to cell phones and computers and air conditioners and dish washers and Air Jordan sneakers is falling. These items are nearly ubiquitous not just in middle class but even in poor households today. The average middle class family today lives better than did the rich of yesteryear.

None of this is to say that all blacks and Hispanics and women are getting ahead. Clearly that isn’t the case, and some would say the gaps aren’t closing fast enough. But the most important gap is the one between where the economy stands today versus where it ought to be. According to the Joint Economic Committee of Congress, if the economy had grown as fast under Obama’s recovery as it did during the first five years of the Reagan recovery, American GDP would be more than $2 trillion larger today. As long as we stay on the path toward only anemic 2 percent GDP growth per quarter, this gap will get wider all the time. 

By the way, $2 trillion is the equivalent, if spread to all households evenly, about $15,000 per year. These are big, painful numbers. It’s no wonder that voters hate Congress, the Fed, the Obama administration, and anything else that resides in Washington, D.C.  

What should be most disconcerting to liberals is to look at what has happened to the earnings of the groups that were most likely to have voted for the president in the 2008 and 2012. I identify four primary demographic groups that carried the day for Obama: blacks, Hispanics, single women, and young voters. These groups all voted for him at least 60 percent to 40 percent, and blacks supported him by a margin of more than 95 to 5. Yet the earnings of these groups have fallen the most. 

Americans seem to be getting all of this. And the Great Divider’s message of classism, sexism, and racism is losing steam. An April Washington Post poll asked Americans whether it is more important to have Democrats in charge of Congress to help pass Obama’s policies, or to have Republicans in charge of Congress to check them. Respondents sided with the GOP, 53 percent to 39 percent. That shows the country has heartburn over the growth gap, the one Obama refuses to talk about: the divide between what is, and what could have and should have been. 

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