Reply To: Economic stagnation since the 70's?


Thanks for the answer Prof. Herbener

“As the linked blog discusses, it’s controversial to claim that government mandated benefits constitute part of standard of living in the same way that voluntarily chosen goods and services do.”
I have sometimes read by free market economists that usually the government numbers don’t show these benefits but the mere fact that the recipients use these benefits prove that they are useful in some way to the recipient. So surely we can’t discount them can we?

“So the direct measure of standards of living is to investigate what set of goods and services households have and see how it changes over time.”
I think Mises said that there is no scientific way of judging whether or not the living standard has been higher. That you can’t use any index per se to make a scientific claim one way or the other. If I understood that correctly I gues that means we have to make informed opinions. Is that right?

I remember a clip by Thomas Sowell where he said that income stagnation was a fallacy. He pointed out that the problem lies in the way we measure income in terms of households.

“It is an undisputed fact that the average real income… of American households rose by only 6 percent from 1969 to 1996… But it is an equally undisputed fact that the average real income per person in the United States rose by 51% over that very same period. How can both these statistics be true? Because the average number of people per household was declining during those years.”