Are you better off than you were 40 years ago? That is a complicated question to measure. Wealth expands people's choices, and Americans are fabulously more prosperous than they were in 1968, says Veronique de Rugy, a senior research fellow at George Mason University.
According to the Census Bureau, income per capita adjusted for inflation has doubled in the 4 decades since 1968, from $13,374 to $26,804. Non-wage compensation, in the form of employee benefits, has also increased greatly during that time. However, there's a better measure of living standards than raw materials: consumption.
By this measure, the United States is doing very well. In fact, according to a recent study by the Federal Reserve Bank of Dallas, luxury goods that few could afford in 1968 are now standard in most households, including poor ones:
In 2005, a full 85 per cent of households that were classified as poor by the Census Bureau had air conditioning (compared to only 36 per cent in 1971).
Some 97 per cent had a colour television (compared to 40 per cent in 1971) and 40 per cent had an automatic dishwasher (as opposed to 20 per cent in 1971).
Almost 100 per cent owned a refrigerator (compared to 25 per cent in 1971).
Yet, the wealth accumulation of the last 40 years has also made the government bigger, says de Rugy. Real federal spending increased from $774 billion in 1968 to $2.5 trillion in 2008 a 225 per cent increase and federal spending per household grew from $11,800 to roughly $21,000 over that period, in constant dollars.
This forms a libertarian paradox: economic freedom and wealth breed not just more political freedom, wealth and choice, but also more government, says de Rugy.
Source: Veronique de Rugy, Are You Better off Than You Were 40 Years Ago? Reason, December 2008.
For more on Taxes: http://www.ncpa.org/sub/dpd/index.php?Article_Category=20
FMF Policy Bulletin/ 25 November 2008