Income and Per Capita GDP in Gold
July 8, 2012
This is something I've been mentioning a lot recently, so I thought
it deserved its own page here.
24, 2012: Who Destroyed the Middle Class?
This is the U.S. government's own statistics on the median male
full-time income in the U.S. I use this because it compensates for a
lot of things that have been going on, such as increasing female
participation in the workforce, changing demographics or family
size, or greater/lesser part-time work. These are "real" statistics,
which means that it has been adjusted by the government's version of
price statistics -- which have been buffed and polished to look as
good as possible. If the price statistics showed an additional 1% of
price rises per year, over forty years, this chart would look a lot
The interesting thing here is how there is such a definite
inflection point, right where we go from a gold standard system to a
floating currency system. A lot of other things have happened over
that time, but we don't see any other major inflection points. You
might think that the 1990s were really good for people, and the
2000-present era has been not so good, but oddly enough, there's no
particular difference you can see on this graph (although maybe the
government is monkeying the statistics more aggressively in
2000-present to make it look that way). This is one reason why I
think that the transition to funny money in 1971 is probably the
most important long-term event for middle-class prosperity in the
You can also see how the U.S. middle class steadily prospered in the
1950s and 1960s, despite the various ups and downs of the economy,
not to mention social turmoil, of that time period.
Here is the same information, but here protrayed in the value of the
median income in terms of ounces of gold. This is not so weird,
because the U.S. used gold as the universal standard of value for
182 years, until 1971. So, I'm just being a traditionalist here.
This chart is plain ugly, which is why, I think, that even though we
have transferred from a one-income household to a two-income
household, the average American family still can't afford today what
one median income could buy in the late 1960s.
Here is some long-term data, the per-capita GDP as measured in
ounces of gold. Any GDP statistics from before 1950 are highly
suspect, and that is especially true of figures from before 1914.
So, consider this suggestive rather than definitive. It tells much
the same story.
I smoothed things out a bit here by looking at average growth rates
over forty-year time periods. Was the average American better off
(as measured in per-capita GDP in gold ounces) than they were forty
years earlier. You can see that, even despite hardships such as the
Civil War and the Great Depression/World War II, the average
American was consistently better off than they were forty years
previous. The Great American Wealth Generation Machine kept on
ticking, even after huge setbacks. We haven't had any
Civil-War-scale disasters since 1971, but the funny-money
environment has nevertheless disabled the Great American Wealth
Generation Machine. The average American is now, for the first time
in U.S. history, consistently worse off (by this measure) than they
were forty years ago.