Living Standards and Ideology

by Don Boudreaux on April 4, 2012
Cafe Hayek

Commenting on this post by Russ, Spencer England writes:

But, But, But the GMU libertarian mafia keeps telling us that government interference in the economy keeps this from happening.

To me, it looks like the modern mixed economy does a great job.

Overlooking his sarcasm, he usefully points to an important and larger consideration – namely, that a determination of how well or how poorly the living standards of ordinary Americans have fared since the 1970s supplies no obvious support to any political ideology. I made this point in this earlier post.

Contrary to a narrative often heard in popular discussion, the U.S. economy circa the late 1970s through 2008 was – as Spencer recognizes – mixed. It was not close to being laissez faire. There was some deregulation (such as, for example, in air and surface transportation); there was some additional regulation (such as, for example, the 1990 Americans with Disabilities Act). Probably on the whole the economy did become freer during those three decades. But unambiguously it was throughout, again as Spencer correctly describes it, a “modern mixed economy.”

Therefore, any improvements in ordinary Americans’ economic prospects during those decades – or any declines in, or stagnation in, those prospects during those decades – standing alone supply no ‘ammunition’ to any ideological ‘side.’ Put differently, a libertarian might, with like snarkiness, reply to any of the many “Progressive” pundits (such as, e.g., Robert Reich) who insist that the past thirty or so years have been quite bad for ordinary Americans:

But, But, But the “Progressive” mafia keeps telling us that the living standards of ordinary Americans have stagnated since the 1970s.

To me, it looks like the modern mixed economy does a lousy job.

To be clear, I believe that the living standards of ordinary and poor Americans have improved significantly over the past thirty-odd years. (I believe also that these living standards would have improved even more had the economy been saddled with fewer government intrusions.) But this empirical assessment of the actual course of living standards over the past three decades cannot fairly be attributed to any ideological bias.