Growth and its discontents
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I’m a bit unsatisfied with the final graphs of my Inequality-who-cares post from yesterday. Herewith a few attempts at clarification and extension, probably not for the last time.

There should be no question that for many, many people, faster economic growth is a matter of life and death, especially in the developing world. My GDP post speaks to where the U.S. is on that score. Faster growth doesn’t solve everything, and it can create other problems, but you can’t diminish its importance. As I mentioned previously, low or zero growth with increasing poverty provokes political interest in inequality, which is why Thomas Piketty is now rich. If you care about inequality for its own sake, however, growth is not enough. The burden of TP’s blockbuster book is that growth under capitalism has generated inequality and may continue to do so.

What are really in question are productivity, properly adjusted for environmental costs, and distribution. With higher productivity, we can work less, play more, and still have more stuff. We can decide how much of our increased productive capacity to deploy to leisure time. In that context, there is still the issue of distribution, or inequality. You can have more or less inequality with less or more growth. In circumstances of economic growth, is inequality still salient? I would say yes. It may not be as important to the poor as a higher floor on living standards, but it’s still a legitimate concern.

The growth agenda stripped naked of weak promises of greater social welfare is an invitation to a lottery, also known as greater mobility. People prefer limited, unfair chances at reward to no chance at all. So they buy Powerball tickets and they buy into Horatio Alger tales. For the sake of growth, we are encouraged to look askance at labor organizing and social insurance (‘don’t kill the Golden Goose’), the key components of an equality agenda.

People forget that mobility is a double-edged sword. Your lottery ticket’s prize can be hugely negative. It’s wonderful when by a combination of effort, talent, and good luck somebody rises from the bottom to the top. But with unchanging inequality, someone has also fallen from the top to the bottom, not necessarily because of any personal deficiencies.

There is also the politics of growth-meritocracy-mobility versus inequality. (Data point: an article alleging the Administration’s flagging interest in inequality, courtesy of Tom Philpott. By my previous post, this interest can be questioned.) I want to argue that the politics of anti-poverty are weak, beyond a minority, core constituency of some well-off liberals and some poor, mostly people-of-color people. There has been no integrated working class constituency for anti-poverty action for some time, even under conditions where poverty has recently increased. By contrast, an equality-anchored agenda under such conditions may carry promise, not least because growing inequality squeezes the lower sixty percent of the income distribution closer together. We become more like the old 19th century populist dichotomy of “tramps and millionaires.” We evolve to an appreciation of class.

In my previous post I contrasted my own view with what I described as the ‘liberal’ position. My liberal friend Bob Lucore pointed out that my view is coincident with that of the Americans for Democratic Action (on whose national board I once sat, so to speak, and would happily sit again). This is certainly true. Liberals are an ideologically diverse group. I wish the ADA had enough adherents to conquer the world. It would be a much better place. Alas, the common use of liberal is more closely associated with the president than with the ADA.

Some time soon we’ll unpack “neo-liberal.” That will be fun.

 


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Growth and its discontents — 2 Comments

  1. “For the sake of growth, we are encouraged to look askance at labor organizing…”

    I think we need to add to this some serious unpacking of how “the growth agenda” ASSUMED strong labor unions from the start and then kicked away the step ladder. I don’t want to suggest that this was some kind of conspiracy by Walter Reuther, Paul Samuelson, Leon Keyserling, George Meany and J. R. Hicks. But there was a convergence in the post-war period between the strategic objectives of organized labor, academic economics and crackpot realist policy elites.

    Economic growth was billed as the indispensable means for achieving the end of full employment. Government full-employment policy enabled organized labor to emphasize wage gains rather than work-time reduction. Meanwhile, economic textbook teaching ASSUMED union labor’s power to enforce worker preferences regarding leisure and income.

    Then somewhere down that garden path the means became the end and full employment was made redundant. The unions went Brazilian. The textbooks churned out the same old same old backward-bending supply curves. And the corpse of Jean-Baptiste Say was resurrected to preside over neoliberal think-tank nation and its wholly-owned, second-generation bastard Keynesian sticky-wage subsidiary.

    Growth ain’t what it used to be.

  2. “I want to argue that the politics of anti-poverty are weak, beyond a minority, core constituency of some well-off liberals and some poor, mostly people-of-color people. There has been no integrated working class constituency for anti-poverty action for some time, even under conditions where poverty has recently increased. By contrast, an equality-anchored agenda under such conditions may carry promise.”

    There is a corollary to this in the administration’s profound ineptitude in promoting the ACA with the majority of Americans. It’s talked about as something that benefits those who don’t have insurance — for most Americans, people not like me — rather than giving every American with insurance through a job the assurance that they can get health insurance even if they lose the job and its benefits. It’s only talked about as eliminating “pre-existing conditions” — typical inept Democratic and liberal belief that the fanciest way of saying things, like “single payer,” is the best way — without ever drawing out the meaning of that for every American.

    I’ve always thought more Americans of a moderate bent could be enlisted in anti-poverty programs by talking about high levels of poverty, entirely correctly, as a gigantic drag on the economy that hurts all Americans by pulling down their wages in most cases. But no, we always talk about it as something that morally need to do to help the less fortunate. Admirable, but not likely to succeed. I’ve got troubles, too, buster.

    These days, good policy equals good politics. That means finding the advantage for everyone, not just Democratic constituencies. Everything needs to be focused 100% on getting every Republican possible out of office. That is not partisanship. It’s a simple fact that nothing that will help Americans, and that American have clearly said they want, will be done, even with a Democratic President, as long as Republicans have 50+% in the House, at least 41 Senators.

    Do you hear any Democrat talking that way? Any prominent self-declared progressives for that matter? Why not?

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