Where Has the Money Gone?
KRISTOL, IRVING
Thinking aloud Where Has the Money Gone? By Irving Kristol Why don't we feel as rich as we are? What I mean is, the United States today really is an affluent society not only in comparison with...
...Let us imagine, not an Englishman in 1750, but an urban American in 1940...
...Just what one can do about it is not so clear...
...If this American had then been told that his income, in real dollars, would increase by 100 per cent by the 1960s, what would he have looked forward to...
...and they utterly fail to appreciate that economic progress, far from meaning the best things in life are free, might mean something that approaches the very reverse of this proposition...
...and the new products and processes are not always what we might have chosen, given some divine power over our own destinies...
...Besides, what I have said about teachers and journalists also applies to the rich man: He, too, doesn't feel much richer...
...If we appreciate the way in which, and the extent to which, the citizenry of the affluent society are truly "victims of progress," we can better understand why it is, and how it is, that increasing affluence is so easily accompanied by increasing personal and social tensions...
...The second answer resorts to psychology for an explanation...
...Instead, he got electric lighting, cheap textiles, and the railroad...
...not according to the veteran schoolteacher or veteran journalist...
...For reasons that are not entirely clear, though they may be endlessly enumerated, crimes against person and property seem to have increased along with (if not nearly proportionately to) our standard of living...
...For not only did he not get these thing-she has probably ended up having less of them than before...
...To repeat: Where has the money gone...
...Apartment space is both absolutely and relatively more expensive than it used to be...
...The human animal, we are told, has insatiable needs and appetites...
...Well, as we know, his standard of living went up by 200 per cent, and he got nothing (or very little) of that sort...
...All of the statistics argue unequivocally that our incomes and our standards of living have increased to an astonishing degree...
...What is an illusion is the assumption that economic growth means an increase in the things we want and value...
...More than that: Ideally, we must be persuaded not to want too badly those things which cannot be produced at a lower cost...
...On the Upper West Side of New York City, where I live, there are hundreds of large apartment houses, where the rentals are fairly high and the crime rate even higher...
...So much the worse for him...
...It is precisely because of the highly irregular growth of productivity, and the almost random pattern of invention, that advertising plays so crucial a role in the modern economy...
...The first is to assert that such "average" figures are misleading, for they mask the possibility that the rich have been getting richer faster than the rest of us...
...But not, I think, as much as some economists claim...
...Human beings, in my experience, are neither that insatiable nor that indifferent to the actualities of their condition...
...For this increase results in a general rise in wage levels, as older industries and occupations compete with newer ones, and in the cost of many raw materials...
...Imagine, de Jouvenel said, an Englishman in the year 1750 who was informed that his standard of living would increase by some 200 per cent, {i.e., triple) in the next hundred years...
...When it is suggested to these tenants that the only practical solution to their problem is for everyone to chip in and hire a doorman round-the-clock (in effect, increasing their rents), they are curiously unresponsive...
...otherwise, there will be no economic growth at all...
...Anyone whose maturity spans the last few decades who has observed school teachers, or policemen, or salesmen, or business executives, or journalists finds it hard to translate the statistics into a corresponding reality...
...All this, of course, is excellent material for anyone who wants to write an anti-progressive novel after the fashion, say, of the early Aldous Huxley...
...A bit of household help for dear mom-why not...
...A bit better off, perhaps...
...But, being an incurable meliorist, I must hold that progress is not incurable...
...so is a good education...
...The gist of what de Jouvenel had to say is that the statistics are true enough, the feelings are authentic enough, and the gap is real enough...
...We need no fancy sociological or psychological theories to "explain away" these tensions...
...The increase in our wealth is real enough...
...And if he didn't much care for electric light, factory-made textiles, and railroad journeys...
...Economic growth is not an illusion...
...They arise legitimately and inexorably out of real frustrations...
...If anything, the rich have been getting richer slightly more slowly than the rest of us...
...But, in addition, the fact that there has been a spectacular increase in other areas (automobiles, air conditioners, communication via telephone and television, air travel, etc...
...so is household help...
...he was then a victim of progress...
...An airplane trip used to be an expensive luxury it is now a cheap necessity (for many people, anyway...
...Well, then: Where has the money gone...
...On the other hand, I know an awful lot of Americans who honestly and genuinely feel that, whatever statistics say, they are not twice as rich today as the American of 25 years ago...
...The reason for this sad state of affairs is, in part, obvious...
...so is medical (and especially hospital) care...
...But people do not take kindly, or accommodate easily, to such a transvaluation of values...
...A doorman used to be an expensive luxury he is now, in most of our big cities, an even more expensive necessity...
...For what it adds up to is the fact that one of the conditions of economic growth is personal frustration...
...The consequence is that, if an American's home is to remain his private castle, it needs more expensive fortifications than hitherto...
...I know precious few people who would not be aware of and who would not be appreciative of a doubling of their real income, even if this occurred over a longish period...
...What we find astonishing, however, is how strangely little difference it seems to make...
...But there is a serious aspect to it, too...
...Is a schoolteacher or journalist today really twice as rich as his counterpart of 25 years ago...
...Now, there is unquestionably some truth in this...
...The paradox arises because the statistics refer to one set of things, while the feelings refer to another...
...There just hasn't been much of an upsurge, if any, in productivity in these areas of the economy...
...I prefer to think that their feelings must be respected, and that between the statistics and the reality there is some kind of mysterious gap that needs to be bridged...
...means that the laggard areas are, in a sense, penalized...
...An even greater pressure, therefore, is put upon less "productive" areas, whose products become ever more expensive and scarce...
...The money "saved" by cheaper air travel and cheaper long-distance phone calls has to be diverted to protecting oneself against mugging, rape and burglary...
...Everyone is indignant about this state of affairs, and there are frequent meetings of tenants all upper-middleclass and college-educated which issue anguished appeals to the mayor, the governor, and the equally impassive heavens above...
...A greatly lessened financial vulnerability to sudden medical expenses, almost surely...
...Or so the Statistical Abstract reports...
...The third answer does bridge this gap...
...My favorite example, since it is a homely one, is the case of physical security against criminal aggression...
...He is not, according to my memory...
...They are not used to paying a premium for not being raped or mugged...
...A little place by the seashore, perhaps...
...it is diminished in our minds only because it is so small an increase when compared with the cornucopia that men so easily represent to themselves in their imaginations...
...A better education for his children, no doubt...
...But productivity never increases across the board, as it were...
...A larger apartment, certainly...
...but not twice as rich...
...The trouble with this explanation is that it is untrue...
...The result is an incongruence between the popular notion of economic progress and the econometrician's concept of economic grow than incongruence that is a source of perpetual irritation...
...This, however, even our potent advertising agencies have been unable to accomplish-whence the malaise of the citizen of the affluent society, who doesn't feel nearly as rich as the statistics say he is...
...Economic growth arises from an increase in productivity in other words, from making things more cheaply than before and the discovery of new things that can be produced economically...
...The point is that we are all, to some extent, victims of progress...
...So far as I know, he has not published this paper...
...He would have a very keen image of what this would mean for him: a somewhat larger house, a few more servants, a modest carriage-and-coach something of that sort...
...not, certainly, according to today's young schoolteacher or journalist, straining to adjust his expenditures to his income...
...so are seaside places...
...One could extend this list indefinitely, but it would be too depressing...
...In fact, it might mean a decrease in these things and the introduction into our world of things we hadn't given thought to wanting for the very good reason that they didn't exist or were in scarce supply...
...He is, essentially, an ingrate: Give him more and he demands still more, improve his condition and all he can think of is what room there is left for further improvement...
...There are three possible answers to this question...
...We must be persuaded to buy the things nay, to want the things that can be produced at lower cost...
...The disposable real income of these and other people (after allowing for price inflation) has more than doubled since 1940...
...What I mean is, the United States today really is an affluent society not only in comparison with other nations, but also in comparison with the United States of 50 years ago, or even 20 years ago...
...At the same time, the cost of preventing and/or discouraging these crimes has also increased the "productivity" of a policeman has, in a manner of speaking, lagged behind the "productivity" of a criminal...
...I first heard it suggested, a few years ago, by Bertrand de Jouvenel in a paper presented to some worthy international conference...
Vol. 48 • May 1965 • No. 11
