Populist Poseurs Won’t Help American Families

New economic populists of the right are preening as saviors of middle- and working­-class Americans, who they charge were abandoned by Reagan-Era-Republicans.

In a recent issue of Chronicles, for instance, Declan Leary proclaims, “The post-war American right has been led by a Boomer intellectual elite in thrall to laissez-faire dogmatism. A new, aggressively populist generation of conservatives will have to recapture the heart of the common man.”

Their populist heartthrob is tariffs. A favorite way to posture as a friend of U.S. workers is to call for tariffs against goods produced by foreign workers. It is always possible to point to some rust-belt factory that would have survived had it been protected by a 25% tariff—and if free-market folks had not been so heartless. President Trump, however, may be using tariffs chiefly as a negotiating stick, threatening other governments with tariffs as taxes on foreigners, but not expecting to impose them. It’s “the art of the deal.” We wish him luck.

The implication of the new right populism, however, is that by favoring policies popular with some middle-class people, one benefits the middle class. That this claim is obviously untrue in the case of tariffs does not seem to matter. How many autoworkers lose their jobs when tariffs raise the price of steel?

The whole thing is political in the worst sense of the word, demagoguery, the goal being not to solve problems but to put together a coalition. Some of it is even worse than that: a right-wing version of virtue signaling. What they seem to think important is not “what is best to do?” but “whose side are you on?” Rah! Rah! and let’s all sing about Joe Hill.

Chesterton once wrote, “The reformer is the man who is always right about the problem and always wrong about the solution.”

These new economic statists, however, are wrong not only about the solution, they’ve got the problem wrong as well.

For at least a decade, we have been hearing the same chant: The Reagan era policies favored low prices over high wages. We got inexpensive goods—and inexpensive labor—in exchange for impoverishing American workers with our laissez-faire ways.

The latest supposed evidence is something called the Cost of Thriving Index (COTI). Invented by Oren Cass, a lawyer formerly of the Manhattan Institute, the COTI supposedly proves that since Reagan, a middle-class lifestyle has been pushed out of reach for middle-income families.

Wisely spurning consumer price indices (CPIs), as estimated by bureaucrats, Cass propounds a version of time prices that measure values by actual hours or weeks of work needed to earn goods and services.

Conceived by Yale Nobel laureate William Nordhaus, time prices have been defined and documented in detail through history by one of our favorite economists, Gale Pooley, co-author with Marian Tupy of the award-winning “SuperAbundance” (2023). (Pooley now is a regular contributor to the Gilder Technology Report.) Applicable across time and space, in any era or country, dividing a nominal money price by nominal hourly wage tells you how much time the worker must labor to afford, say, a loaf of bread, or a new car.

Tupy and Pooley’s classic example is the time price of Thanksgiving Dinner. Every year since 1986, the Farm Bureau has compiled a survey of the price of a canonical U.S. Thanksgiving dinner for 10, with a 16-pound turkey, 14 ounces of cubed stuffing, three pounds of sweet potatoes, a pound of green peas, a one-pound veggie tray, a 30-ounce pumpkin pie mix, 12 ounces of fresh cranberries, 12 rolls, two pie shells, a half pint of whipping cream, a gallon of milk, and miscellaneous condiments and complements.

This dinner cost $28.74 in 1986, but $46.90 by 2020, signifying some 60% “inflation” in prices. Adjusting with the CPI, the Farm Bureau estimated that this “inflation” actually represented flat prices over the 35 years.

Now try it in time prices. In 1986, the average unskilled laborer earned $5.25 per hour and the average blue-collar worker earned $12.90 per hour. By 2020, unskilled workers were getting an average of $14.34 per hour, an increase of 173%. Blue collar workers wages had reached $33.98, an increase of 163%. For both groups, wages went up roughly 2.5 times faster than the cost of the dinner. Workers had to work drastically fewer hours to earn their Thanksgiving repast.

Stating this in time prices, for the U.S. unskilled worker, the cost of Thanksgiving dinner for 10 declined from 5.48 hours in 1986 to 3.27 hours in 2020, a decline of 40.3%. The time price of the Thanksgiving dinner for the U.S. blue-collar worker declined from 2.23 hours in 1986 to 1.38 hours in 2020, or 38%.

Tupy and Pooley did not stop at Thanksgiving, or 1986. Going back to 1850, they show that for more than a century and a half, measured by time prices, resource abundance has been rising (time prices falling) at a rate of 4% a year. From smartphones and Netflix streaming to housing and transportation, time prices have been plummeting across the board for all goods and services provided by the market economy.

What causes these wonderful declines? Essentially, learning curves. Economic growth is learning, learning how to do more with less, with costs dropping between 20% and 30% with every doubling of sales. These gains mostly reflect the advance of technology and investment in better tools.

Cass and COTI come up with very different numbers. Here is Leary summarizing Cass’s findings, which can be found here.

“The COTI measures the amount of labor it would take an ordinary worker to cover the food, housing, health care, transportation, and higher education costs of his middle-class family of four in a given year.

“In 1985 (when the Baby Boomers were between 21 and 40), paying for these baseline expenses took 39.7 weeks of work at the median income. This meant that the income from roughly 20% of the year was left to cover other expenses and save. In 1922, for the median American man to cover his family’s costs in those same five buckets would have taken 62.1 weeks of labor,” or some 22 weeks more, requiring impossible exertions of overtime on his part and, if married, depending on a major earnings contribution from his wife.

“The year has not grown 10 weeks longer since the golden age of the Boomers. The conduct of the mass economy has simply been unlinked from the experience of the common man, both as a worker and as a consumer.”

Skeptical, we looked at Cass’s numbers and referred them to Gale Pooley.

Gale replied that there were two problems with COTI. First, the elements in the various index “baskets have been changing, and the model does not appear to fully account for this.” To this first objection, Cass would have at least a partial answer. It’s right for the indexes to be updated, he would say, because the updates reflect changes in what a middle-class lifestyle looks like. Cass writes:

“When inflation-adjusted figures report that a 2022 earner could afford roughly what a 1985 earner could, that assumes the 2022 earner still plans to drive a 1985 car, live in a 1985 house, watch a 1985 television, and receive 1985 medical care. That’s not possible, nor is it what being “middle class” in 2022 means. Consider instead the costs of a 2022 car, a 2022 house, a 2022 television, and 2022 medical care—the things a 2022 middle-class family should be able to afford—and the picture looks quite different.”

This introduces subjectivity into the comparison, with time prices giving way to rising envy and expectations. But as an explanation for middle and working-class anger, it is at least relevant. Still, it does not account for the greater productivity of these purchases, e.g., the longer life, richer features, and higher gas mileage of a 2022 car versus a 1985 car, larger and more commodious housing, or for that matter the declining time price of gasoline.

The key problem Gale points out is ever bigger government: how much of the increase in COTI comes from “housing, health care, and education” areas in which government dominates the market, and seems “resistant to innovation.”

That told us where to look in Cass’s numbers. And Gale was right.

We redid Cass’s numbers (from 1985 and 2022), pulling out his cost of college and the cost of health insurance for both years. We did not mess with housing, with average houses 30% larger but more hedged with regulatory intrusions, as the impact of government, though clearly considerable, is hard to estimate.

For 1985, when one average man could pay a family’s expenses with 40 weeks of work, Cass shows costs as $17,586 while median weekly income for a man aged 25 or older working full-time was $443 ($23,036 per year). College and health insurance, on his numbers, totaled $3,993, or 23% of the total costs, and 17% of income.

In 2022, costs totaled $75,732, while median weekly income for a man aged 25 or older working full-time was $1,219 ($63,388 per year).” The poor guy would have to work 62 weeks a year.

Notice though that by 2022 the costs for college (using Cass’s numbers) had risen to $13,593 and the cost of health insurance to $22,463. Adding the two together, they accounted for 48% of total costs and a staggering 57% of income. Including college and health insurance, the family’s costs rose by 330%. Exclude them and the rise is 213% and is dwarfed by income gains measured by time prices.

The table below summarizes. It does show some deterioration in affordability, but not nearly as much as Cass finds when including costs of government-controlled markets.

Gale would dispute many of Cass’s other numbers, for instance his transportation costs, but that really is besides the point. The populists claim that the damage to the middle class can be laid at the feet of that “Boomer intellectual elite in thrall to laissez-faire dogmatism.” Too much liberty is the problem. Let the young Maga-hats rule the economy and they will make everyone happy.

The Trump administration is on the right track, which so far is not the young statists’ track. Trump is dismantling government waste and wanton regulatory overreach, and attempting complete reversal of a previous commitment of a projected $6 trillion for value-subtracted climate cult mandates and subsides for obsolete and destructive windmills and solar panels.

This economic rapine is not only jeopardizing our power grid and other infrastructure and creating a largely fake crisis of “rare earth” minerals; it is also threatening the livelihoods of Americans of all classes. Big governmental blunders hurt all Americans from the now incinerated series of Hollywood grandees in the Pacific Palisades to schools and universities ravaged by DEI and runaway bureaucracies, from the Midwest Rust Belt to the nationwide plight of obesity and declining longevity.

We don’t doubt the sincerity of the populists. Socialists are always sincere. The purity of their intentions is how they justify the trail of tears, and blood, they always leave behind.

For instance, Gale points out, “When you look at medical services that are elective and not subject to regulation and insurance reimbursements, the time price decreases drastically. See: https://galepooley.substack.com/p/cosmetic-surgery-innovation