America is going through great changes. We always have done so -- it is the nature of our nation, and the nature of the times. But this is a recent phenomenon. In ancient eras, it could be millennia between great social transformations -- the discovery of fire, the invention of hunting or agriculture, the creation of the nation-state. Today, changes of comparable scale happen at least every generation, perhaps every decade.
How do Americans feel about where we are, where we've been, and where we are going? How accurate are their perceptions? America was built on the concept of giving one's descendents a better world than one inherited. Is that idea still possible?
Let's start with an overview of where we are, and how we feel about it. Gallup polling furnishes a wealth of data we can draw upon to form some idea of how Americans feel about our present, our recent past, and our future. In another article, I'll present some long-term objective data about where we have been and where we are likely to end up. For now, let's take a snapshot of how Americans are feeling.
According to recent Gallup polling, Americans are pretty pleased with the Obama economy. A record 81% of Americans say they are "satisfied" with their current standard of living, and with the things they can buy and can do. Of course, that question addresses only how Americans feel about their current situation, not whether they think they would continue to be satisfied if nothing were to change. Still, it's a good place to start. To an overwhelming extent, Americans say they are "satisfied".
If past is prologue, Americans expect things to change. A full 61% of Americans say their standard of living is getting better, nearly twice as many (33%) who felt that way in October of 2008, just before Barack Obama was elected President. Note that this is not merely a question about whether Americans' lives have gotten better. It is about expectations, which implies that if their expectations were to be dashed, they would not be so satisfied.
There is good reason both for Americans' feeling that things have improved, and for their expectations for the future. Since President Obama's election, Gallup's "Standard of Living Index" has improved from a low of 14 in October and November of 2008, to today's stunningly-improved high of 50. Of course, Gallup being a pollster, this "Standard of Living Index" is not based on any objective criteria or econometric data, but only on how people say they feel about how well they're doing. This index is a combination of the previous two questions, a combination of: "Are you satisfied with how things are?" and: "Are things getting better?" It says nothing whatever about a question like, "Are you over or under the federal poverty level?"
Americans do seem to love the direction of the Obama economy. Whether they are "objectively" doing better or not, they say they are "satisfied."
But let's look a little deeper. What is it, exactly, that Americans are happy with? Are they getting ahead in the world, in their own estimation? Are they moving up? Is that why they're so happy?
According to Gallup, no. Between 2001 and 2009, between 55% and 63% of Americans considered themselves "middle class". Since 2009, that number has fallen to 51%, with a low of 50% in 2012. Between 2001 and 2009, between 33% and 42% of Americans considered
themselves "working or lower class". Since 2009, that number has risen to 48%. Those considering themselves "upper class" fell from 3% in 2001 to 1% today.
Paradoxically, though Americans say they are satisfied with their economic lot -- and even feel it is "getting better" -- increasing numbers of them feel they are losing ground, class-wise. Perhaps being "satisfied" is not synonymous with "doing well" -- or even with "doing well enough."
What does this mean, that Americans both say they are happy with where they are -- even that they are doing better, and expect to continue doing better -- and yet that they feel they are falling in American's class structure? Perhaps it means they are convinced the whole economy is improving so much that their improvement isn't quite keeping up. To put it in technical terms, perhaps they are aware the GDP is improving faster than the rate of increase of their incomes.
Something like that explanation seems likely. According to Gallup, a significant majority feel the distribution of wealth in America is "unfair". The number of people who feel this way has fluctuated between 59% and 68% from 1985 to the present, with a peak in 2008. The idea of "unfairness" actually hit a low point shortly after the inauguration of G. W. Bush, but then rose throughout his presidency, indicating that his policies struck Americans as increasing unfairness. The current number, at 63%, is almost precisely halfway between the two extremes. The economic collapse of late 2008 caused a significant drop in this number -- Americans apparently felt the crisis improved economic equality.
A small minority of Americans -- around one third, between 27% and 37% -- feel the distribution of wealth is "fair".
In what way do Americans think the distribution of wealth is "unfair"? Do those lazy poor people have things too easy, what with all those giveaway programs? Are rich people being strangled by outrageously high taxes?
The following graph is particularly stunning. The change in American attitudes that it displays is nothing short of amazing. When asked, "Do you think our government should or should not redistribute wealth by heavy taxes on the rich?" increasing numbers of people think the government should do that, and the numbers have dramatically altered since the 1940s.
In the late 1930's, at the end of the Great Depression, 54% of Americans were opposed to this idea of redistribution, and only 35% agreed with it. By the late 1990's, the gap had narrowed to 51% opposed and 45% supportive. That has now completely reversed -- 52% of Americans agree that the government should redistribute wealth through higher taxes on the rich, and only 45% disapprove of this idea.
It is unfortunate that the question was apparently not asked between
the late 1930's and the late 1990s, so we have little idea when the majority of the
change happened.With more regular polling since about 2006, we can see that the numbers are fairly volatile. Even so, the magnitude of the change is striking, and the overall trend is undeniable. The idea of redistribution through aggressively progressive taxation is quite popular, and will figure in the next article.
To what can we attribute this amazing turnaround in attitudes? Perhaps it is the realization that programs once criticized as being "redistributive" actually work to improve Americans' lives. Not only do they work; they are necessary to the well-being of America.
As one example, consider Social Security. Though there is a segment of political rhetoric dedicated to convincing us that the program is near-bankrupt, and that it will not be there for the next generation of retirees, according to Gallup, Americans are increasingly relying on Social Security. Just since 2001-2002, the percentage of Americans asked if they think Social Security to be a major source of their retirement income has risen from 27-28% to 36%.
According to the linked article, this increase exists in all age groups; the campaign to convince younger Americans that the program won't be there for them, or to pit younger against older Americans, seems to be failing. In the period 2005 to 2014, among Americans 18 to 34, the percentage expecting to rely on Social Security as a major source of retirement income increased thirteen points from 13% to 26%. Though the number of adults aged 55+ who expected to rely on Social Security increased in that period only 6 points, it was already very high -- it went from 42% to 48%.
In contrast, though powerful forces have been urging Americans to rely on private investment programs such as IRAs and 401(k)s, the number who expect these programs to furnish a major source of their retirement income has dramatically decreased, from 58% in 2001 to only 49% today, with a low of 42% just following the worldwide economic collapse of 2008.
This question of retirement matters, for it relates to how Americans view themselves, both now and in the future, and how they view the assets they own (as I will deal with in the next article). According to Gallup, the percentage of Americans who are retired, and who are comfortable in their retirement, is falling, from 52% in 2002 to 40% today (with lows of 34% and 31% in 2009 and 2012). The number who are not yet retired, and who say they are comfortable now, but who do not think they will be comfortable in retirement, has remained relatively stable in the range 20% to 29%. The number of non-retirees who say they are not comfortable now, and do not expect to be comfortable in retirement either, has increased from around 20% in 2002-2004 to 30% today, with a peak of 36% in 2012.
This is important. Significantly more people view themselves as being comfortable today, than who feel they will get along well in retirement, with a gap of around 15%. And note that less than two-thirds say they are "comfortable" today, even though the very first graph presented in this article said that 81% of Americans are "satisfied" with their current lot.
Clearly, "satisfied" is a very different thing from "comfortable." Almost 20% more people are "satisfied" than are "comfortable" -- and 15% less than that think they will be "comfortable" in retirement.
This does not seem to imply that all Americans are happy with their current lot. Being "satisfied" may be something like "resigned to". It certainly does not necessarily mean people think they will be able to accumulate sufficient wealth to have a "comfortable" retirement.
There may be good reason for this possible sense of unease. Americans expect that they will be required to work longer before they are able to retire. The number who expect to retire before age 65 has fallen quite a lot since the mid 90s, from 49% to only 32% today, with a low point of 27% in 2012-2013. In contrast, the number who expect to have to work beyond age 65 has more than doubled, from a mere 14% in 1995 to more than a third -- between 36% and 39% -- in recent years.
These expectations may be a bit too pessimistic, however. Predicting the future is dangerous, but we can compare what actually happened in the past to what people expected to happen. When retired people were asked at what age they retired, the number of younger retirees can be seen to have fallen over the years (i.e., people worked longer before they retired), but not quite as dramatically as was feared. In 1991-1996, between 70% and 76% of respondents said they retired before age 65, as contrasted with around 49% of people in that era who said they expected to be able to retire that early. The number of under-65 retirees has fallen some, but not much, to around 65% today (give or take a few percentage points).
This may, however, be due to forced retirements, as employers push out older (and therefore more expensive) workers, in favor of younger, cheaper labor. If someone is forced to retire before he or she is ready to do so, that could well contribute to the expectation of being unable to retire in comfort. Note, though, that the number who retired past age 65 has more than doubled, from 7-8% in the early 90s to around 20% in 2014-2015.
All this, however -- everything above -- is a matter of surveys. The questions about when people actually retired are the only ones that deal with real data, as contrasted with perceptions. Perception is not necessarily the same as reality.
But does that matter? If people say they are happy with the way things are, does it matter whether they are objectively richer or poorer, healthier or longer-lived, better-off or barely getting by?
To some extent, that question deals with Orwellian brainwashing, and the ability of elites to convince serfs to be happy with serfdom. Or does it? It is meaningful to ask whether people are "justified" in being "satisfied"?
Let's look next time at a long view of how our economy has evolved, on the scale of centuries. There are aspects that are very special about where we are now. There is nothing -- there is no "law of economics" -- that requires we stay here. We can choose to return to a prior state, or to stay where we are, or to progress so some desired condition. Let's look at the possibilities.