THE DISTRIBUTION'S THE THING. Conservatives puzzling over this weekend's New York Times op-ed on "Freakoutanomics" would be well-advised to stop focusing so obsessively on growth numbers and begin paying a bit more attention to the distribution of growth numbers. That's basically the point of the op-ed, which argues that the 1870's saw a strong macro-economy that obscured a large class of economic losers. And it's what accounts for the contemporary disconnect between strong economic indicators and low economic polling, a case I've made more substantially in the L.A. Times.
As a larger point, the right really does have a tendency to over-fetishize growth. That's not to say growth isn't important -- it's unrelentingly important. But so is distribution. And that's what most forecasters and pundits seem inattentive to: The mean growth numbers no longer say much about median growth numbers. We can no longer simply assume that growth is broadly-shared. Inequality has simply grown too great, and expansions that are robust at the top of the income brackets have trickled into nothingness by the time they've finally reached the ladder's base.
To make this a bit more concrete, here' a not-so-extreme example of how distribution can foil a quick-growing economy's poll numbers: If the top 5 percent see their incomes quadruple, but the other 300 million or so can't keep up with inflation, the average voter isn't going to take comfort in the GDP's positive trajectory. But the growth could still be positive. Indeed, wage growth in May was a pathetic 0.1 percent, and while the month's inflation numbers haven't yet been released, the consumer price index rose 0.6 percent in April. So the economy may indeed be turning in a "glittering" performance, but from where the majority of Americans whose wages aren't keeping pace with inflation sit, it doesn't look nearly so shiny. And when your wages aren't keeping pace with prices, that's no optical illusion.