…And Tyler Cowen Predicts That Even Fewer Will Be Above AVERAGE In The Future
Garrison Keillor jokes that in the mythological town of Lake Woebegone, all the students are above average. This is humorous because it is mathematically impossible for everyone to be above average. If there is a normal distribution (as intelligence testers often assume) it is impossible for a majority to be above average because half are always above average and half are below. But the income distribution is always completely different. Income is always distributed with a strong skew where a few people have a lot of income and most people have very little. That means that only a small minority can ever earn above the mean earnings.
Mean income statistics are always going to make most people feel behind because they are. That is why median income is a better statistic for measuring the wellbeing of a population. It actually reflects the wellbeing of the average person because half of the population earns more and half earns less.
Tyler Cowen is one of the few economists who gets the importance of median income and yet, he doesn’t seem to care that it has been stagnating. His latest book predicts that median income will continue to be stagnant in the future, but instead of sounding a call to arms, Cowen’s tone suggests that we’d just better just get used to it! Instead of mobilizing the tools of democracy to improve the lot of the median, the book description claims that Cowen “identifies the best path forward for workers and entrepreneurs, and provides readers with actionable advice to make the most of the new economic landscape.” Instead of thinking about how to help everyone and benefit the median, Cowen describes strategies to beat the rat race to the top and become one of the elite overlords whose economic power can ride on top of the workers earning the median income and below.
Of course, Cowen probably earns not only above the median income, but well above the mean income. And his livelihood has long depended upon the favors of the billionaire Koch brothers who have been funding his work and they are fervently opposed to any government action to reduce inequality. Given the elite self-interests of his patrons, Cowen is probably pushing up against the limits of their comfort zone to even talk about the difficulties that stagnating median income at all.