By Robert J. Samuelson
Wednesday, May 10, 2006
You hear the refrain all the time: The economy looks good statistically (4.7 percent unemployment), but it doesn't feel good. Although the United States is the wealthiest nation in history, our quarrels and quibbles with our prosperity are unending. Why doesn't ever-greater wealth promote ever-greater happiness? It is a question that dates at least to the appearance in 1958 of "The Affluent Society" by John Kenneth Galbraith, the former Harvard University economist who died recently at 97.
"The Affluent Society" is a modern classic because it helped define a new moment in the human condition. For most of history, "hunger, sickness, and cold" threatened nearly everyone, Galbraith wrote. "Poverty was the all-pervasive fact of that world. Obviously it is not of ours." No, indeed. After World War II, the dread of another Great Depression gave way to an economic boom. In the 1930s unemployment had averaged 18.2 percent; in the 1950s it was 4.5 percent. In 1946 only 8,000 households had TVs; by 1960 about 90 percent did.
To Galbraith, materialism had gone mad and would breed discontent. Through advertising, companies conditioned consumers to buy things they didn't really want or need. Because so much spending was artificial, it would be unfulfilling. Meanwhile, government spending that would make everyone better off was being shortchanged because people instinctively -- and wrongly -- stigmatized government only as "a necessary evil."
"Automobiles have an importance greater than the roads on which they are driven," he wrote scornfully. "Alcohol, comic books and mouthwash all bask under the superior reputation of the [private] market. Schools, judges and municipal swimming pools lie under the evil reputation of bad kings [government]." The book argued for more government spending and less private spending.
By and large, these ideas have not aged well.
For starters, material desires seem infinite. They are not simply contrived by advertising. In January 1985 the number of U.S. mobile-phone subscribers was 91,600; by December 2005 it was 207.9 million. In 1984, 8 percent of households had home computers; by 2003, 62 percent did. Were all these consumers simply conned? Are Chinese, Indians, Brazilians and others who exhibit comparable tastes similarly duped?
Galbraith also underestimated the spontaneous demand for government services. Even without his preaching, people believed that their prosperity entitled them to public programs for common needs. In 1956, two years before he complained about neglected roads, Congress created the interstate highway system, the biggest road-building project in U.S. history. Social spending and regulation (for education, anti-poverty programs, health care, the environment) have consistently expanded. In 1954 defense accounted for 69.5 percent of federal spending and "human resources" (programs such as Social Security, Medicare, job training and food stamps) only 18.5 percent. In 2005 defense was 20 percent and human resources 64.2 percent.
It's often said that only the rich are getting ahead; everyone else is standing still or falling behind. Well, there are many undeserving rich -- overpaid chief executives, for instance. But over any meaningful period, most people's incomes are increasing. From 1995 to 2004, inflation-adjusted median family income -- for families precisely in the middle -- rose 14.3 percent, to $43,200, the Federal Reserve says. People feel "squeezed" because their rising incomes often don't satisfy their rising wants -- for bigger homes, more health care, more education, faster Internet connections.
The other great frustration is that it has not eliminated insecurity. People regard job stability as part of their standard of living. As corporate layoffs increased, that part has eroded. More workers fear they've become "the disposable American," as Louis Uchitelle puts it in his book by the same name. Galbraith expected the affluent society to be a placid society. Giant corporations would control markets and provide safe jobs; government would regulate business cycles. Underestimated were the disruptive effects of new technologies, globalization and activist shareholders.
Ours is a post-affluent society. Because so much previous suffering and social conflict stemmed from poverty, the advent of widespread affluence suggested utopian possibilities. Up to a point, affluence succeeds. There is much less physical misery than before. People are better off. Unfortunately, affluence also creates new complaints and contradictions.
Advanced societies need economic growth to satisfy the multiplying wants -- public and private -- of their citizens. The social order depends on it. But the quest for growth unleashes new anxieties and economic conflicts that disturb the social order. Affluence liberates the individual, promising that everyone can choose a "unique way to self-fulfillment," writes historian Avner Offer. But the promise is so extravagant that it preordains many disappointments and sometimes inspires choices that have antisocial consequences, including family breakdown and obesity. Statistical indicators of happiness, Offer notes, have not risen with incomes.
Should we be surprised? Not really. We've simply reaffirmed an old truth: The pursuit of affluence does not always end with bliss.