Today at Huffington Post, Robert Reich resurrected the progressive shibboleth that the period after WWII and before Reagan was a veritable economic golden age when the rich were taxed down to size and unionized workers enjoyed a bounteous income:
For three decades after World War II, America created the largest middle class the world had ever seen. During those years the earnings of the typical American worker doubled, just as the size of the American economy doubled…”
Over the last thirty years, by contrast, the size of the economy doubled again but the earnings of the typical American went nowhere.
Unfortunately, far too many folks actually believe this myth. Let us instead take a look at the facts.
During the post-WWII, pre-Reagan progressive golden age (1945-1982):
The United States suffered through seven recessions (1946, 1949, 1953, 1958, 1960-61, 1969-70, 1973-75), ending with the terrible 1970s stagflation and bottoming out into the 1980-82 mega-recession.
Real per capita GDP (2011 dollars) rose from around $16,500 when WWII ended to around $28,500 in 1982 at the depths of the progressive stagflation – up an average of $405 a year.
Real per capita income (2008 dollars) rose from $12,042 when WWII ended to $23,382 in 1982 at the depths of the progressive stagflation – up an average of $306 a year.
Let’s compare that to the Reagan Prosperity (1982-2007):
This was the longest period in American history without a major recession. We had a minor recession in 1991 and one near recession in 2001.
Per capita real GDP rose from around $28,500 in 1982 to around $49,500 in 2007 – up an average of $840 a year.
Per capita real income rose from $23,382 in 1982 to $39,562 in 2007 – up an average of $770 a year.
In sum, American GDP and income grew at nearly double the pace during the Reagan Prosperity.
The difference is that Reich and other progressives are counting the pre-Reagan inflation as actual economic growth and are comparing the income of wildly different households rather than looking at individual (per capita) Americans.
Next time a progressive friend starts spinning the urban myth of a progressive golden age, please feel free to link them to this post.