Lester Thurow
WHAT'S WRONG WITH OUR ECONOMY
LF5TER THUROW: I suppose we could try to put our current economic
situation in context by imagining it is November 2, right before the
election. The average American household on that day had some–
thing like an $18,000 per year income. With 2.7 people in that
household and 1.4 workers, the primary wage-earner made $13,000
and the secondary wage-earner made $5,000, and that family had no
income from capital. But the economic status of that $18,000
household was rising until the first quarter of 1979. Ever since then,
however, the real income of that household has been falling. This
puts a lot of things into context. So I would argue that there is no
ideological shift to the right at the moment. It looks like that, but
actually people are not changing their political conception of the
world, they are facing a harsh economic reality. Because if your real
income is falling, whether you are a liberal or a conservative, you
have to cut your expenditures.
Now, if your real income is falling, it would be very surprising
to me if you did not want to cut those expenditures called taxes, or
those expenditures called social welfare spending. That is money
going to somebody else, and one way to· recoup your income is to
take back what you have been giving to other people through the
government. I would start out by arguing that what we are seeing at
the moment is rational economic budgeting, rather than an ideologi–
cal shift.
ALVIN KIBEL: Why don't the people in this household get hot about
military spending?
DANIEL BELL: That has not gone up yet.
LF5TER THUROW: Yes, as of 1979, it had not gone up. We are just
putting it up in 1981.
In the context of our economic situation, Ronald Reagan's
victory is not a surprise. He had two great advantages over Jimmy
This is a taped talk and discussion at the
Partisan R eview
office in February, 1981.
