Because PRODUCTIVITY rose faster than government could confiscate the new wealth with increased taxes. There were revolutions in power generation, steel making, pharmaceuticals, medicine, transportation, cheap petroleum, electronics, and networking (and a dozen more areas, I'm sure). If the pie was expanding faster than the damned government could grab it, yes, we were all better off. Unfortunately, productivity gains in all these sectors are flat now and government is growing at an astronomical clip. Worse, government intrusion in all parts of the economy is leading to flatlined innovation, so future productivity gains will be nil. We are in for big trouble.
What you are saying (and I agree) is that so far producers have been slightly smarter than the takers/thieves. I think we’re getting close to the point where the thieves have overtaken the producers.