Some folks may think I made too big a deal over pension costs; that in the grand scheme of things it is but a small entrapment. However, I have witnessed people become absolutely miserable because they stayed with the same employer to maximize their pension. And little things add up; pensions are not the only entrapment that binds people to the same employer. Take health insurance, for example. This next series on The Middle Class Forum will be almost too easy. There is probably a hundred graphs I can present to render silly the arguments of good scholars at places like The Heritage Foundation and Mises Institute. I choose but a few, beginning with the one below.
Right Click on Graph for Better Image
The graph show the rates of growth of some of the most important economic indicators featured in the National Income and Product Account tables. They all were normalized to start at a growth rate of one in 1974. Here is what happened with each indicator.
Growth Domestic Product (GDP) increased by a factor of 9.2 by 2007
Personal Income (PI) increased by a factor of 9.5 by 2007
Personal Consumption Expenditures (PCE) increased by a factor of 9.9 by 2006
Social Insurance (SI) increased by a factor of 10.1 by 2006
Private Group Insurance (PGI) increased by a factor of 25.5 by 2006
As you can see from the graph, four of these indicators track each other pretty well, indicating they are somewhat balanced with each other. What we earn and spend tracks closely with what we produce, which only makes sense. Some might raise an alarm that we are spending at a slightly faster pace than what we are earning, but that is not the focus of this discussion. Some “free market libertarians” from the Powell Cabal might be all in a tizzy at the slightly faster growth rate for social insurance costs, over the production, earning and spending indicators. Some have indeed used figures like these to chastise us for the inefficiency and socialist direction of our economy since the seventies. In doing this they ignore the remaining indicator featured here, which I will comment on tomorrow.