The Bad Math Behind Economic Doomerism

It’s not getting harder for families to purchase basic necessities.

By and
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Miguella Marcarew and John Fluharty hold their daughter, Zana Fluharty, outside of their home in the Huntington Terrace neighborhood on September 24, 2022, in Bethesda, Maryland. (Photo by Maansi Srivastava/Washington Post/Getty Images)

It’s a big week for American Compass, a think tank founded in 2020 that fancies itself as the “pre-eminent alternative to the Old Right’s market fundamentalism.” On the heels of its new policy book, Rebuilding American Capitalism, it hosts an event on Capitol Hill today with multiple Republican senators. It’s the latest sign of the intellectual confusion afflicting the right today. 

American Compass is a grantee of the Omidyar Network, started by Ebay founder Pierre Omidyar and his wife, Pam. The network’s website states that “the current form of capitalism is fundamentally broken” and Omidyar seeks “to shape a new, inclusive economy.” It has been a leader, with the William & Flora Hewlett Foundation—an even bigger American Compass donor—in bringing foundations together to “advance goals that include a bigger federal government, higher taxes on business and the wealthy, and an active regulatory state that reins in corporate influence.” That’s one alternative to the straw man of market fundamentalism.

More than any other organization, American Compass has blurred the lines between conservatism and progressivism by trotting out the same factually incorrect doomerism the left has relied on for decades. Three paragraphs into the new book, American Compass founder Oren Cass writes:

The economic system’s malfunction has dire human consequences. Whereas 40 weeks of the typical male worker’s income in 1985 could provide the middle-class essentials for a family of four, by 2022 he needed 62 weeks of income—a problem, there being only 52 weeks in a year.

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  1. Jeff J

    I read a lot of comments from people on various articles with the presumption that young professionals can no longer afford the lifestyle their parents did with same or similar income. Upon investigation, most of this revolves around the price of housing or home ownership. We simply have many metro areas which have low housing supply in comparison to demand. We should look at the reasons for this - it is harder to develop areas for housing due to a number of competing public priorities. My belief is we haven’t reconciled that well and want to just blame “capitalism” or some nonsense.

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    1. Kittyecws

      It was the same for me. My children went into higher paying careers so they eventually were better off than I was. It takes time though. I never expected to have the same material goods my parents had. We happily took their old appliances and furniture while they upgraded their housing and furniture.

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    Ben Connelly

    An important article. I’m glad the Dispatch published it.

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    Earl King

    Of the old adage that liars figure and figure lie....Many of the calculations meant to prove capitalism is a crap economic system that marginalizes the poor...are bunk. Phil Gramm recent book on “income inequality” had much to say disproving the Gap as a bit of fiction.
    For one, using the median income stat without accountant for taxes paid (net income) of course there is Gap between people living below the poverty line. Take taxes out and number substantially comes down. In another sleight of hand, the Federal Government doesn’t add a value to any of the poverty programs. Medicaid, SNAP, Housing subsidies, Child Care subsidies....the list is long of what they don’t give a value too. I believe the number was about $54,000 is services for the poor when you do add the value of taxpayer money going to the poor. In the end they showed the disparity of an about three to one. I’m sorry but that doesn’t get my hair on fire. the Federal Govt. does the same thing with pay gap between men and women. Much of the pay gap is do women taking care of their family. Meaning they choose not grab the corporate ring and spend 12 hours a day at work. There are many high paying jobs women don’t go for. Roughneck oil driller in the Arctic as an example.
    I am not saying that women might not get paid less, but think about this. There are more women in Med School than men. More women go to college than men....My wife chose to become a teacher when she went back to work after being a stay at home mother for a while. She choose a low paying job strictly be home during the summer with her girls. There are reasons some women make less than men. Sometimes it has nothing to do with their genes.

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  4. BenP

    I'm a statistician. I'm gonna avoid the details of this argument and address a more general principle: the use of simple phrasing to refer to a complex thing doesn't make that thing any less complex.

    A lot of comments here express frustration about how granular this debate is, and the "anyone can say anything with statistics" or "lies damned lies and statistics" sentiments understandably arise. But the source of this problem is not cynical eggheads trying to trick us with fancy numbers; it's that the staggering complexity of the topic at hand is masked by our use of simple sounding language.

    When we ask how "the economy" is doing, or how "standard of living" has changed in the past 40 years, we're asking questions so vaguely defined that the scope of seemingly reasonable answers is boundless. To give an answer using data requires so many assumptions and fine defintions that the complexity of the eventual answer arouses suspicion (or, at best, irritation). We sense the statistics must be deceptive, and the people presenting them must be trying to pull the wool over our eyes with all their hidden assumptions and qualifications and hair-splitting definitions. This is on full display here: do we adjust for family size? How do we operationalize "inflation"? Do we account for the size of a house? Advances in technology? Years spent on education? Changes in debt levels? Changes in discretionary expenditures? Definition of discretionary? Should income be pre- or post- tax? Etc etc etc.

    But if you want a simple answer to a complex question, you gotta make assumptions. Lots of them. And then we argue over whose sets of assumptions are the most reasonable. And there's nothing wrong with that, but let's please remember *why* this happens in the first place. Questions like "are higher taxes better or worse for the economy?" or "are today's generation worse off than their parents were?" might sound straightforward, but there's a lot subjective detail packed in there.

    Statistics, on the other hand, answer precise questions. We can wish for straightforward answers all we want, but if the answer needs to be precise, the question must also be made precise. The process of turning "how's the economy doing?" into a sufficiently precise question that it can be answered using data is bound to test anyone's patience.

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    1. MathewA

      "if you want a simple answer to a complex question, you gotta make assumptions. Lots of them"

      agreed. I just disagree with a lot of their assumptions. Also strange how every time they revise CPI inflation goes down. It's almost as if they have a vested interest in reporting inflation lower than it us.

      Moreover, they don't report asset inflation in the official statistics (housing and stock market). But if it costs you twice as much to buy the same house as 10 years ago, or twice as much to buy the same cash flows from a stock, we aren't better off but worth off.

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  5. MathewA

    there's lies, damn lies, and statistics. Who am I going to believe, you or my own lying eyes...

    "when we apply conventional inflation adjustment to median weekly earnings"

    Conventional methods are massaged to hide the real level of inflation. You use technological advances to hide the real inflation costs. But that's not how it should work. Yes technology is getting better, but that's not changing the REAL cost of what people are spending.


    My wife and I bought a 60 year old 1200 sq ft track house. Driving 20 year old vehicles, no fancy vacations or going out to eat. And were still struggling to get ahead.

    VS our grand parents (teachers) who by the time they retired were able to own several homes.


    Yes technology is better. Look how great our TV's are. But cost of living REALLY is out of control, especially housing prices. And the CPI numbers are bull s**T

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  6. Paytonsimpson

    This story begs for a bridge/waterfall plot. Would love to see these data-driven stories include more graphics.

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  7. Paulkohlhoff

    It all reminds me that “numbers don’t lie…..fortunately, assumptions do”.

    I wouldn’t take any study serious that uses the increased cost of education as an example of a failure of free markets.

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  8. Andy

    Thank you for this. It is a great companion piece to National Review's Editors podcast that addressed this same conference.

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  9. Brett

    I appreciate you making the argument, I haven't read Cass' claims, perhaps they really are that silly, but you didn't do much to persuade me that it hasn't gotten harder to earn a good income. You just persuaded me I will probably find a lot of holes in Cass' analysis. So your conclusion that all of "national conservatism is empirically unfounded" is not supported by the evidence you cite.

    What I think is really going on: at the averages and means you don't see much difference between now and 50 years ago, but depending on how you count it there are something like 10X more ultra-wealthy generational wealth households than there were then with only less than 2x the population. Accordingly, the slightly to solidly above average in income but are not generationally rich, who make up the vast majority of the readership of things like this magazine and your books, feel especially poor and squeezed.

    This is really obvious from real world examples. This above average group, in the past, flew in first class with the rich, just less often than them and maybe with some miles help; now flies in economy which may or may not be plus or involve paying a few extra dollars for the aisle seat. This above average group used to eat at nice restaurants for a business lunch with the three martinis sometimes, maybe company would pay part or all, or maybe not they'd just go less often than the rich who did it every day; and perhaps this above average income family 50 years ago would go out occasionally, to the fast casuals which were slower then but similarly priced, and one of the nicest ones in town; today the idea of this middle income person having a $250 power lunch at one of the nicer restaurants in the city is ludicrous, even if work picks up some of the tab; meanwhile, this above average income group typically eats work lunch at Chipotle or Roti which is better than McDonald's was 50 years ago; likewise taking the family to one of the nicer restaurants in town is no longer affordable for the above average income group - the couple for date night, maybe - but the whole family will dine at a cheaper restaurant like a pizza place and eat much better pizza than we did 50 years ago

    TLDR: so yes our lives are improved overall but we feel worse and that shouldn't be discarded based on some stats.

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  10. Indisguise

    The author must be a Phd. It takes a lot of brains to ignore reality so completely. A regular person cannot compete. I am the head of a single income family. Yes necessities are getting more expensive. Not everyone has my income so they have to eat less well.

    I can get my background in going to the grocery store. I know people who are finding it tough and people who are ok. People always come up with a way to paper over the day to day expenses. well, houses are less expenses. and look how cheap a new lexus is. so everything must be fine.

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