My review of a proposed progressive platform around which the left should rally continues. In my first note, I discussed the political background of the effort. Then getting into policy regarding inequality, in Two I considered benefits of the platform for the bottom of the income distribution, and in Three, costs for the top. Today I focus on the broad middle, what some dinosaurs like me prefer to call the working class. Lifting the living standards and prospects of working people is the sine qua non of anti-inequality policy.
This is both the strongest and weakest part of the enterprise. Everything invoked, if vaguely in places, is relevant and important. Minimum wage, labor rights, an expanded Earned Income Tax Credit, these are all key in my book. But something huge is missing.
The most powerful force putting upward pressure on the entire spectrum of wages is high employment, made possible with the right monetary and fiscal policies. We want employers on their knees, begging people to work and offering higher pay and better fringes to entice them.
For all the gory details on what is involved, I invite you read Jared Bernstein’s new book (free PDF version here). For a summary, I’d direct your attention to Appendix C, starting on page 330. To save you the trouble of reading, I’ll try to give you the gist myself.
To get higher employment, in short, we need more government spending financed by higher deficits. That’s where the greatest inadequacies lie. There is no need to assign blame for the shortfalls; we could spread it liberally over both parties. The platform cites some worthy and important uses for such spending, but somebody needs to shout from the rooftops that austerity sucks. Reducing the deficit in a time of low employment is not an achievement, it’s a blunder.
Indicators often cited that attest to the health of the economy are bogus. We could start with the stock market, a source of income to relatively few, nor a harbinger of better days to come. Or GDP growth, not relevant to the working class when the benefits are concentrated on those with high incomes. Most importantly, the unemployment rate is not as informative when people who would work, given the opportunity, leave the labor force. A better fix on the labor market can be found in the employment population ratio for working-age people, or in the rate of growth of labor compensation. In those terms, economic performance is below par.
In short, the not-so-hip progressives of NYC betray the same fear of deficits as your ordinary politicians of other political stripes. Failure of policy in this realm positively cripples the working class. We have to do better.