Now, just as there was in Teddy Roosevelt’s time, there is a certain crowd in Washington who, for the last few decades, have said, let’s respond to this economic challenge with the same old tune. “The market will take care of everything,” they tell us. If we just cut more regulations and cut more taxes — especially for the wealthy — our economy will grow stronger. Sure, they say, there will be winners and losers. But if the winners do really well, then jobs and prosperity will eventually trickle down to everybody else. And, they argue, even if prosperity doesn’t trickle down, well, that’s the price of liberty.
Now, it’s a simple theory. And we have to admit, it’s one that speaks to our rugged individualism and our healthy skepticism of too much government. That’s in America’s DNA. And that theory fits well on a bumper sticker. (Laughter.) But here’s the problem: It doesn’t work. It has never worked. (Applause.) It didn’t work when it was tried in the decade before the Great Depression. It’s not what led to the incredible postwar booms of the ‘50s and ‘60s. And it didn’t work when we tried it during the last decade. (Applause.) I mean, understand, it’s not as if we haven’t tried this theory.
I did the math taking US government provided data on Per Capita Personal Income over the years in question, and adjusting for inflation using CPI (which I understand is probably the most conservative inflation adjustment). Here is what I found out about how the average per capita income went up during those time periods. I added in the 1980's, because I noticed Obama left that one out, probably intentionally, I mean since we are rewriting history we may has well take Reagan out, he's always been such a nuisance.
Per Capita Average Income Increases in the United States.
1920-1930 35%
1950-1960 20.37%
1960-1970 33.84%
1980-1990 24%
Do those number look bad to you? If we get another four years of Obama are you expecting to have 20-30% more buying power at the end of it?
Remember that looking at these things per capitia and not by category is crucially important. In addition you can't look at household income, which is how almost all the government data is calculated. If you need to understand why, see my Income Distribution post on the subject.
More fuzzy math
According to Obama in his 60 minutes interview, the stimulus bill created 3 million jobs. Regardless of whether you believe that or not, that means each job cost tax payers $278,000. Does that really sounds like a good deal? I mean we could have just cut a check for $100,000 to each person and saved $427 million, as pointed out in this article.
