Dismantling dozens of firmly-held beliefs, Cox and Alm show that: "Real income" is an unreliable measure of living standards. Real wealth - the lifestyle Americans routinely enjoy - has skyrocketed; the poor have not gotten poorer. In fact, the average family living below the poverty line today is doing as well or better, in terms of material possessions, as middle-class families in 1971; corporate downsizing creates jobs in the long run; income mobility is alive and well.

Of people at the bottom fifth of the income distribution in 1975, almost 3 in 10 were in the top fifth by 1991; and America's trade deficit is a sign of strength. We can afford to import more than we export because America is such an attractive haven for overseas investments.