Talking Growth, Inequality, and More on “Need to Know”

March 30th, 2013 at 8:02 pm

Here’s a free-ranging panel discussion I took part in on many of the hot econo-topics of the day, well managed by Jeff Greenfield.  One notable point:

Though the discussion was broadly focused on inequality, mobility, and growth, note how we kept going back to debt, deficits, and tax policies.  This, IMHO, is a Washington disease (in fact, the panel seemed to agree on this point pretty far into the discussion).  Of course, these things matter, but they’re not obviously central to questions of growth and inequality.  The growth in inequality, for example, has been very much a market driven, pre-tax, phenomenon.  And as I point out somewhere in there, the historical record, both here and abroad, comes nowhere close to showing even correlation between low tax regimes and better growth or jobs outcomes, much less causation.

By endlessly engaging in the obsessive debt discussion, even when we set out to talk about something else, we play into reactionary hands.  The discussion becomes, or at least, it has become, one where everyone agrees on cuts and thus the argument devolves to “I’ll balance the budget in X years, while you only get to primary balance*.” Then we squabble over whether your budget really gets to balance in X years or X+5 years, all the while failing to address the real problems of narrowly shared GDP growth leading to weak job and wage growth for most households.

Again, don’t get me wrong.  We clearly need to raise more revenues, strengthen our public goods, refund those parts of the budget–I’m thinking of the non-defense discretionary budget, with few defenders and many defunders–that invest in low-income kids and their families, and build on recent progress in slowing health care spending.  And that means arguing about debt and deficits.  But wouldn’t it be nice if instead of starting from “what’s the optimal debt level?” the debate began with “what are the investments and policy changes that will ensure broadly shared growth?”

*The House budget by Rep Ryan allegedly gets to balance in 10 years; the Senate budget gets to primary balance, which is enough to start reducing the debt/GDP ratio–detail on these concepts here.

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6 comments in reply to "Talking Growth, Inequality, and More on “Need to Know”"

  1. Fred Donaldson says:

    John Adams had some thoughts on government that have evaded most modern pundits:

    “We ought to consider what is the end of government, before we determine which is the best form. Upon this point all speculative politicians will agree, that the happiness of society is the end of government, as all divines and moral philosophers will agree that the happiness of the individual is the end of man. From this principle it will follow, that the form of government which communicates ease, comfort, security, or, in one word, happiness, to the greatest number of persons, and in the greatest degree, is the best.”

  2. Kevin Rica says:

    Inequality is the policy of the land by consensus among the leaders of the two major political parties. According to Senator Graham, the proposed bipartisan immigration bill would have the goal: “to allow employers who can’t find American workers at competitive wages to hire guest workers.”

    If one has any knowledge of elementary economics, that gives employers the alternative to raising wages to middle-class levels: a right to fix and keep wages at low levels.

    If you want the right of even the lowest-paid worker to get a decent salary and benefits, then you cannot support the right of employers to pay a lower salary. Supporting both rights is logically impossible.

    When push comes to shove, the Republican Party (or at least it’s conventional, establishment conservative wing — like the Bushies) supports the latter right and the establishment Democratic Party supports neither (since you cannot logically support both).

    If you want to support the right of even the lowest-paid worker to get a decent salary and benefits, then you need to support another party. (The Tea Party is incoherent, but has lots of old Reagan Democrats and some might support that right but there is no other organized political support for that right).

    • Jared Bernstein says:

      If he really said that, then I must and will amplify it–we disagree on CIR but guest workers…that’s just a lousy idea.

      • Kevin Rica says:


        How do you know if you agree or disagree on CIR if it hasn’t been defined yet? For example — Did you support Simpson-Mazzoli? In what material way does CIR with Simpson-Mazzoli? How does CIR affect wages? Do you approve of the impact of CIR on wages? (and do you do so in a way that wouldn’t cost you a full letter grade on my Econ 101 exam?)

        And, of course, if I told you that Sen Graham said that, then of course I had a good source: The Huffington Post!

        Right there in the middle column between you on the left and a shot of “side boob” on the right.

        • Jared Bernstein says:

          Apparently, the labor/biz agreement over the past few days has this requirement (NYT): “Labor groups wanted to ensure that guest workers would not be paid less than the median wage in their respective industries, and the two sides compromised by agreeing that guest workers would be paid the higher of the prevailing industry wage as determined by the Labor Department or the actual employer wage.”

          • Kevin Rica says:

            That fixes the prevailing wage unless there is an increase of the minimum wage to a higher level. Under such a program a maximum wage is established at the current “prevailing wage.”

            This proves what I said above: “If you want to support the right of even the lowest-paid worker to get a decent salary and benefits, then you need to support another party.”

            We Truman Dems don’t have a party. Ours was snatched.