The Poverty of Affluence. Paul Wachtel

period and 16% in the second.² 1979 did bring a slight decline, and a somewhat larger one followed in 1980. But when the period 1976–1980 is looked at as a whole—a particularly significant span since it was the period referred to by Ronald Reagan when he asked, to great rhetorical effect, the key question of the 1980 Presidential campaign: “Are you better off than you were four years ago?”—it turns out that people were better off in 1980 than in 1976, at least as measured by objective economic indicators. The Wall Street Journal reported that even after correcting for inflation and taxes, per capita income increased 6% during the Carter years. Moreover, according to the Journal, that figure substantially underestimates the increase in total economic benefits; in the same period social security benefits, unreported income, and other sources of economic support not considered in the Commerce Department figures on which the article was based rose at an appreciably higher rate. The Journal concluded that the widespread conviction that most people were worse off economically was contradicted by the facts.³

      A number of other considerations make these figures—so at odds with our national mood and with the subjective experience of so many of us—even more striking. First of all, they do not include the “underground economy,” all that income and exchange that goes unreported and is not taxed. Estimates of the underground economy for 1980 range between $80 billion and $650 billion,⁴ and most experts believe it is growing, thus further raising questions about whether Americans actually have less now than they did. Moreover, all this has occurred despite an unusual age distribution in the population at present. Because of the “baby boom” of the 1950s, we have a considerably higher percentage of young people in the work force, who typically have less skills and earn lower income than those with more experience. Also, because of advances in medical care, we have a higher percentage of older, retired people in the population than in the past. These individuals do not earn income, but their numbers reduce the per capita income figures for the entire population. Thus, the comparisons of the rest of the population with their counterparts of 1960 or 1970 underestimate how well they are doing.^*

      Other figures also suggest our problem is not as much a strictly economic one as we typically suppose. Many people are dismayed by the price of new cars, for example, yet if one considers, say, the cost of a full-size four-door American sedan, the average American family had to work about twenty-five weeks to earn enough to buy one in 1960, about eighteen and a half weeks in 1970, and only seventeen weeks in 1981.⁵ Or, to approach our material situation from another angle, figures released by the Department of Commerce for up to 1979 reveal an increase from 1970 to 1979 of approximately 37% in the proportion of homes with air conditioners, a 62% increase in the proportion with dishwashers, a 38% increase for clothes dryers, a 43% increase for home freezers, a 24% increase for clothes washers, and an increase of 111% in the proportion of homes with color television sets (from 42.5% of homes in 1970 to 89.8% in 1979).⁶

      The above figures, moreover, present the more conservative of two possible comparisons. One must also recognize that the number of households increased substantially during this period. Thus, to yield an increasing proportion of homes so equipped, the supposedly sluggish economy had to provide an even more dramatic increase in the total number of such items. Furthermore, with a trend toward smaller households, these items were shared by fewer people in each house. If one looks at the absolute number of homes containing these items, there was a 70% increase in the number of homes with air conditioners, a 101% increase in the number with dishwashers, a 71% increase for clothes dryers, 78% for freezers, 54% for clothes washers, and an increase of 162% in the number of houses with color television sets.⁷

      All these figures suggest that the widespread experience of economic distress, the sense of having difficulty making ends meet, is not due to our having a smaller stock of material goods or less buying power than in the “good old days” when the economy was supposedly working as it should; indeed, they indicate that we have more. As a psychologist, I certainly want to take the experience of decline seriously. But I will argue that we have largely misunderstood what that experience is due to.

      The Exception: Unemployment

      Before proceeding further, it is essential to acknowledge one very important way in which the performance of the economy really has been a source of distress in a fairly conventionally understood way. That is in the matter of unemployment. Unemployment rose in the early 1980s to its highest point in forty years, and its effects on millions of workers and their families have been devastating. Especially is this true for members of minority groups and—to a degree whose implications for the future of our cities are truly frightening—among minority youths. Programs of unemployment insurance and public assistance have placed some limit on the material deprivations that the unemployed now undergo, but that deprivation is nonetheless real and substantial for many, and demoralization and disruption of normal family life is experienced by still more. Further, the effects of unemployment have an impact not just on the unemployed and their families but on those who are still working but fear they will be the next to go. In this sense, there is no question that our economy is a serious problem.

      But the sense of economic distress that pervades our land goes well beyond the confines of the unemployed or those soon to be. It is widespread among the solidly middle-class and even among many making quite substantial salaries, as numerous articles and interviews have attested.⁸ It is this more broadly experienced sense of decline and unease that elected Ronald Reagan as president in 1980 and that constitutes the puzzle to be addressed in what follows—the sense of deprivation amidst what once would have seemed like plenty.

      Looking Back at “the Affluent Society”

      It is possible to quibble about some of the figures I have cited. The choice of yardstick among, say, spendable income per capita, per household, or per wage earner will cause the picture to alter slightly. There are reasonable grounds for considering each as the appropriate criterion for judging our economic condition; depending on which one chooses, things look somewhat better or worse. For example, real income per family did not rise as much as real income per capita, but since families have grown smaller, an equivalent amount of money for a family now has to meet fewer people’s needs and is therefore more ample. We may also note that Census Bureau reports on real family income do not include such implicit economic benefits as Medicare and Medicaid, which yield benefits to many families, and those benefits increased substantially from 1970 to 1980.

      Some families have maintained their economic position by the woman’s going to work for the first time. In some cases, this has led to an exaggerated estimate of economic well-being since there are often extra expenses associated with another family member’s working and since valuable services previously performed by the wife (but not considered in official income statistics) are not as readily available. Yet this phenomenon too influences the set of figures available in contradictory ways: The increase in working women may lead to an effective overestimation of real family income but may lead to an underestimation of wage levels. This is because many women have entered the labor force in part-time positions, and their presence in the work force lowers the average weekly wage reported.⁹

      These various complexities and ambiguities not with standing, the figures I have cited make it clear that there are a number of key respects in which—contrary to what our national mood would suggest—we have made real gains in the last decade or so. There can be little doubt, for example, that the average family’s stock of major durable goods is substantially larger than it was a decade ago. And even the most pessimistic modes of analysis on real income do not reveal a precipitous decline.

      But there is another comparison we can make that particularly demonstrates how misleading are interpretations of our apprehensive state simply in terms of economic decline. Whatever can be made of the ambiguities in examining the economic figures for the decade from 1970 to 1980, there can be no doubts whatever when comparing our present economic status to that prevailing in 1958.

      The year 1958 is not chosen arbitrarily; I pick that year for comparison because it is the year that John Kenneth Galbraith’s highly influential book The Affluent Society was published. Though some of Galbraith’s policy recommendations were rather controversial, few questioned his characterization of the personal affluence of the American middle class;