The Resilient American Dream – Econlib

The American Dream has long been a symbol of hope and opportunity for many, but there are those who believe that it is no longer attainable for a large portion of the population. Some argue that increased government regulation and spending are necessary to restore this dream. However, economist Norbert J. Michel challenges this notion in his new book, “Crushing Capitalism: How Populist Policies Are Threatening the American Dream.” Through extensive data analysis, Michel argues that the American Dream is still alive and well, and that government intervention may actually be hindering its full realization.

One common argument is that real wages have stagnated over the past few decades. Oren Cass, chief economist at American Compass, claimed that the median worker’s wages barely increased between 1975 and 2015. However, Michel disputes this claim by pointing out flaws in Cass’s methodology. By using the Personal Consumption Expenditure index instead of the Consumer Price Index, Michel shows that real wages have actually grown by 22 percent during this time period. Additionally, the growth of nonwage benefits as a component of total compensation further supports the argument that real wages have increased significantly since 1973.

Another commonly held belief is that household incomes have remained stagnant. Brookings Institution economists Isabel Sawhill and Eleanor Krause stated in 2018 that American households in the middle of the distribution have experienced minimal income growth in recent decades. However, Michel challenges this assertion by highlighting the increase in median real household income from $44,895 to $57,230 between 1967 and 2015. Adjusting for household size and using the PCE index for inflation, Michel shows that real household income per person rose by 140 percent during this time period.

Michel’s research suggests that the American Dream is resilient and that government intervention may be impeding its full potential. By analyzing data on wages, household incomes, and poverty, Michel makes a compelling case against further government regulation and spending. His book serves as a thought-provoking exploration of the current state of the American Dream and the role of government in shaping its future.

To read more about Michel’s findings, you can access the full article on the Hoover website. The data presented in his book challenges conventional wisdom and provides a fresh perspective on the state of the American Dream in today’s society.