Sunday, March 11, 2007

Abundance Denial

In a previous post, I wrote about the significant increase in household net worth in 2006 to a record $56 trillion. IBD prepared the chart above for its Friday edition editorial "Getting Richer" and made the following points:

1. We've added as much wealth in the last decade as we did in our nation's first 220 years. It's an amazing boom — all the more so because hardly anyone talks about it.

2. $56 trillion dollars is 4 times the size of our economy, and nearly a quarter bigger than the size of the entire world economy.

3. The average household in America owns about $487,095 worth of stuff, free and clear. That's a big jump from recent years. As recently as 2001, average household wealth was $373,170. So in five years we've become a third richer — a truly amazing fact.

4. A variety of recent readings on the economy show people surprisingly glum about the future. We hear that we don't 'save enough,' that there's a widening 'income gap' and that the middle class is shrinking. But we seem to be afflicted with what author Gregg Easterbrook recently dubbed 'abundance denial.' Because the economic reality is something quite different.

5. In addition to being richer, we live longer, healthier lives than ever. Even people on the lowest rungs of the economic ladder have far more than they did a decade ago. The fact is, we've never had it so good.

MP: Psychologically, there is some kind of persistent cognitive dissonance going on, Easterbrook calls it "abundance denial," others have called it the "paradox of progress." Never in history has there been such wealth, prosperity and abundance for the AVERAGE person (Exhibit A: the typical junior high school can afford a camera cell phone AND an iPod), and yet "the media constantly dwells on minor problems without celebrating the broader, more upbeat context in which they exist," according to Easterbrook.

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