Myths Of Rich And Poor: Why We're Better Off Than We Think [Paperback]

Michael W. Cox (Author), Richard Alm (Author)

Book Description

Publication Date: January 13, 2000

Popular wisdom holds that the years since 1973—the end of the “postwar miracle”—have been a time of economic decline and stagnation: lackluster productivity, falling real wages, and lost competitiveness. The rich have gotten richer, the poor have gotten poorer, and most of us have barely held on while watching all the best jobs disappear overseas.As Myths of Rich and Poor demonstrates, this picture is not just wrong, it’s spectacularly wrong. The hard numbers, simple facts, and iconoclastic arguments of this book will change the way you think about the American economy.

Editorial Reviews

From Library Journal

Cox, a vice president and economic adviser to the Federal Reserve Bank in Dallas, and Alm, a business reporter for the Dallas Morning News, have written a remarkable book that uses government facts and figures to counter the pessimism regarding the performance of the U.S. economy over the last 25 years. Of particular note are their debunkings of 12 commonly accepted myths about jobs, income, and living standards; their comments regarding the impact of technology on existing jobs and the economy; their observations about income inequality, the individual nature of opportunity, the trade deficit, layoffs, and downsizing; and their prescription for keeping the U.S. economic system humming. A controversial mix that should entice readers in both academic and public libraries.?Norman B. Hutcherson, Kern Cty. Lib., Bakersfield, CA
Copyright 1999 Reed Business Information, Inc. --This text refers to an out of print or unavailable edition of this title.

From Kirkus Reviews

Cox, a Federal Reserve economist and adviser to the CATO institute, presents, with Dallas Morning News business reporter Alm, an aggressively rosy report on the nation's economy. I'm all right, Jack, and so are you, they say. Forget eroding living standards, foreign competition, rapacious CEOs, hedge fund crashes and endemic downsizing. Times, on the whole, have never been better, say the authors, and to prove it they offer a plenitude of charts, tables, statistics and figures. It is in the nature of capitalism that there are occasional disruptionssuch as corporate downsizingwhich they call churning, but this is still the best economic system, they claim: ``Layoffs arent a sign of failure, not for the economy, not even for most workers.'' Layoffs take place beside job creation. That a midlevel manager fired from AT&T might, with luck, finally end up as a low-level associate at Wal-Mart is part of the churn, not part of ``the hard numbers that define broad trends, averages, medians, per capita figures and rates of change.'' Good times, the numbers say, are here. We have more money than ever. We spend more for stuff (like VCRs, health care, and stealth bombers) and we spend more time at leisure. In the triumph of capitalism, minorities and women are doing better, too. As we change from a labor to a service economy, technology is improving life faster than ever. Don't mess with success, the authors say. Just protect property rights, keep taxes low, and eschew more regulation. There are, though, some unasked questions. Yesterday Standard Oil had to be dismembered; would a merger of Exxon and Mobil be a good thing today? Will the next decades be like the past 20 years or is something fundamental changing? Never mind. Just look at the numbers. Pangloss and Pollyanna tackle what Carlyle once called ``the Dismal Science'' in a polemic sure to attract dissent. -- Copyright ©1998, Kirkus Associates, LP. All rights reserved. --This text refers to an out of print or unavailable edition of this title.

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Product Details

• Paperback: 272 pages
• Publisher: Basic Books (January 13, 2000)
• Language: English
• ISBN-10: 0465047831
• ISBN-13: 978-0465047833
• Product Dimensions: 8 x 5 x 0.6 inches
• Shipping Weight: 9.6 ounces (View shipping rates and policies)
• Average Customer Review: 3.8 out of 5 stars  See all reviews (24 customer reviews)
• Amazon Best Sellers Rank: #332,684 in Books (See Top 100 in Books)

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Most Helpful Customer Reviews

34 of 44 people found the following review helpful:

4.0 out of 5 stars helpful data and analysis, but too breezy, November 2, 1999

By 

Arnold Kling (Silver Spring, Md USA) - See all my reviews
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This review is from: Myths Of Rich And Poor: Why We're Better Off Than We Think (Hardcover)

How pervasive is poverty in America? Cox and Alm argue convincingly that conventional measures overstate the extent of poverty. The conventional approach compares income to an arbitrary threshold, the so-called "poverty line." What Cox and Alm demonstrate is that many people who fall below that line nonetheless enjoy a lifestyle that would have been considered middle-class or even affluent 25 years ago.

Where the book is too breezy, in my opinion, is in its treatment of the policy implications of its statistics. Suppose we take it as proven, based on their data and analysis, that between 80 and 90 percent of the people below the poverty line are not truly poor, based on what they are able to consume. Two questions arise, which the book fails to answer.

1. To what extent have government programs, such as social security, food stamps, etc., enabled these people to escape true poverty? If government programs are what has alleviated poverty, then the official poverty line may still be a valid measure of the need for government assistance.

2. What sort of solution is there for hard-core poverty--the 2 to 4 percent of the population who are poor by any definition? How much of their poverty is amenable to economic solutions, and how much of it instead requires medical treatment--for mental illness, substance abuse, etc.?

While Cox and Alm help set the stage for more informed policy discussions, they do not really undertake those discussions.

35 of 47 people found the following review helpful:

3.0 out of 5 stars The "we" in the title is the middle class., March 31, 2004

By 

Eric S. Schliesser - See all my reviews
(REAL NAME)   

This review is from: Myths Of Rich And Poor: Why We're Better Off Than We Think (Paperback)

I teach this book in my philosophy of social science class. It is easy and entertaining to read, and full of provocative claims because it makes no attempt at being balanced or cautious. In general, they do a decent job explaining basic economic concepts. It is, thus, an excellent book to analyze statistical reasoning. For example, throughout the book they offer data on the "average" or "per capita" American rather than providing the more illuminating median figures, but when they deal with executive pay suddenly the median (the middle of a distribution) is the right number, thus, underplaying excess at the top. When they try to convince the reader that wages are not the right tool to measure living standards, they use the buying power of a "typical manufacturing worker." Not only is that worker disappearing (as their own data shows, but they call it "improvements in productivity") and thus not very typical, he cannot be a good proxy for somebody on minimum wage, which has not kept up with wages in manufacturing sector. Nevertheless, the book is unintentionally very insightful: it turns out that on the authors' own account the reason why even the poor are better off (as measured by their ability to consume) than they were a generation ago is, besides the lower real cost of some necessities, the existence of welfare payments! Of course, this is not trumpeted. Moreover, when trying to show (in chapter 4) that minorities and women are sharing in rising living standards, they inexplicably shift, as my students pointed out to me, from their favored measure (consumption) to data on wage-income, which they had castigated as misleading earlier in the book. Even so, they conclude the chapter with the remark, "income distribution doesn't say much about...the opportunities [an economy] offers." (88) Thus, undermining their own argument! Finally, when they analyze upward mobility they fail to control for class; so the post-collegiate income performance of students, including those that have upper middle-class and wealthy backgrounds, is cited as evidence of upward mobility. Furthermore, their data-set excludes the homeless and others that do not have regular sources of income. So, their result tells us little about the upward mobility of what is known as the (new) "underclass."

17 of 22 people found the following review helpful:

5.0 out of 5 stars Antidote to daily barrage of economic doom by the media., May 24, 1999

By 

Chris Cardiff - See all my reviews

This review is from: Myths Of Rich And Poor: Why We're Better Off Than We Think (Hardcover)

Review from AWL News, the monthly newsletter of All Ways Learning of Silicon Valley.

Shattering Modern Economic Fables

The media bombards us daily with stories about economic hardship: corporate layoffs, trade deficits, homelessness, minimum wage battles, families in poverty. Bad news sells newspapers and increases television ratings - it's ironic that the media's own economic interest is served by trumpeting economic disaster.

These messages have been repeated so often they've been exalted to the position of Conventional Wisdom. Everyone knows by now that the poor are getting poorer while the rich are getting richer, that we've become a nation of hamburger flippers, that both parents need to work in order to support a family, and that our children are the first generation in our history who will not be better off than their parents.

Enter Michael Cox, an economist with the Federal Reserve, and Richard Alm, a business journalist. As they state in Myths of Rich & Poor, "these statements of America's economic failure are not just wrong, but, in each and every instance, spectacularly wrong." A combination of statistics and elegant methodologies are the tools they use to shatter these modern economic fables. The clarity of their writing doesn't hurt either.

It's impossible to read this book without realizing that we are winning the war on poverty. Today's average "poor" families have goods and services that rival yesterday's middle class families: 60% have microwaves, 50% have air conditioners, 93% have color televisions, and 60% have videocassette recorders.

More impressive is the income mobility within our economy. Most poor families don't stay poor. Over the sixteen year period tracked by one study, 95% of the families in the lowest income quintile climbed the economic ladder to higher quintiles. Over 80% moved to the top three quintiles, qualifying them as middle class or better. As Cox and Alm repeatedly demonstrate, "the rich may have gotten a little richer, but the poor have gotten much richer."

In another enjoyable section, Cox and Alm deftly reverse the perception that we are becoming a "nation of hamburger flippers." Fast-food jobs supposedly represent the shift of our economy to low-paying service sector jobs. But Cox and Alm point out that everyone from brain surgeons to computer programmers are considered part of the service sector.

Reading this book gives you a perspective you would not otherwise get from the mainstream media. With their relentless daily focus on bad economic news, the media completely miss the big picture - the American Dream is being realized by more people than ever before. As we prepare our children to participate in this economic miracle, it's good to know that boundless opportunities lie ahead for them.