Monday, September 5, 2011

Labor Day Blues

As usual, Labor Day has brought articles about what is wrong with the job market today. Robert Reich, Labor Secretary under President Clinton, published “The Limping Middle Class” in yesterday’s New York Times.

He starts with this stunning statistic, “The 5 percent of Americans with the highest incomes now account for 37 percent of all consumer purchases, according to the latest research from Moody’s Analytics.” Our economy has become seriously dysfunctional, with the super-rich earning most of the income and the great bulk of the population barely surviving.

Reich makes it perfectly clear that this dysfunction is the result of political choices, not an inevitability, by comparing the U.S. to Germany:
Germany has grown faster than the United States for the last 15 years, and the gains have been more widely spread. While Americans’ average hourly pay has risen only 6 percent since 1985, adjusted for inflation, German workers’ pay has risen almost 30 percent. At the same time, the top 1 percent of German households now take home about 11 percent of all income — about the same as in 1970.
In the U.S. the top one percent earn approximately 24 percent of all income.

Reich suggests that, “the rich are now being bitten by their own success. Those at the top would be better off with a smaller share of a rapidly growing economy than a large share of one that’s almost dead in the water.” Wouldn’t it be nice if the rich actually believed that?

Harold Meyerson’s op-ed in today’s Washington Post, “The Fallacy of Post-Industrial Prosperity,” actually evinces some optimism. After beginning with the declaration that, “Of all the lies that the American people have been told the past four decades, the biggest one may be this: We’ll all come out ahead in the shift from an industrial to a post-industrial society,” he ends with the hopeful news that some businesspeople and economists are recognizing the theory’s fallacy:
Since that new economy blew up three years ago, many of those elites have been disabused of the financial fantasies that ordinary Americans long ago ceased to entertain. The fact that Greenstone and Looney’s study [of the decline in men’s wages] emerged from the Hamilton Project — a pillar of new-economy thinking, founded by Clinton Treasury secretary Robert Rubin — is evidence of a paradigm shift in economic vision. From centrist Democratic groups such as the Progressive Policy Institute and Third Way, to economists such as Hoover Institution Nobel laureate Michael Spence, to chief executives and former chief executives such as Dow Chemical’s Andrew Liveris and Intel’s Andy Grove, the new watchword for America’s future — however challenging it may be to get there — is manufacturing.
Reich also ended his article with an optimistic thought:
As the historian James Truslow Adams defined the American Dream when he coined the term at the depths of the Great Depression, what we seek is “a land in which life should be better and richer and fuller for everyone.”

That dream is still within our grasp.
I wish I could share their optimism.

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