E.J. Dionne at the Washington Post takes another tilt at “An Economics of National Pride“:
… [Colorado Senator Michael] Bennet sees one overriding question in American politics: “How do we re-couple economic growth with job growth and wage growth?” Note that Bennet focuses not just on growth in general or even job growth. He adds the essential component of wage growth, as important in Ohio’s blue-collar neighborhoods as it is in Colorado’s suburban office parks.
Bennet’s emphasis on ending wage stagnation and decline is what distinguishes progressive economics — however moderate and pragmatic in form — from conservative economics, which sees business growth alone as solving our problems…
None of this surprises Sen. [Sherrod] Brown, a proud pro-union liberal who campaigned with Obama in Ohio last week. Brown notes that Obama has gained ground in his state both by being tough in enforcing trade rules on behalf of American companies and by pursuing a “high-end manufacturing strategy” that appeals to the nation’s “historical pride in manufacturing, and in making things.”
For Brown, who faces reelection this year, one of the voters he keeps in mind is the “guy in Zanesville who made big things with his hands and now has gone from $17 an hour to $11 an hour.”
The candidate who speaks to voters like Brown’s Zanesville worker — and to his white-collar equivalent in Colorado — is likely to win the election. Mitt Romney hopes the national unemployment rate will get them to vote Republican. Obama’s challenge is to offer an economics of national pride and renewal that answers the sense of betrayal these voters began feeling long before he took office.
My emphasis. Apart from more employment talk, what’s on the agenda for the start of another sweltering week?
geg6
A wonderful morning! Heat has broken and it’s currently about 65F on its way to a cool 85 today (believe me, that’s cool after the last week).
Back to work this week with our second round of freshman orientation staring tomorrow and running the rest of the week. Got a lot of catch up to manage.
And EJ is right, as is Senator Brown. O beat that drum while he was here last week. People ate it up.
geg6
Oh, and the Pirates are going into the All Star break in first place. Didn’t think I’d live long enough to see that.
Phylllis
@geg6: While I’m a Braves fan to my last breath, the Pirates hold a place in my heart since they Spring train in my hometown. The heat is supposed to break here mid-week, with a good bit of rain forecast.
I’m still on vacay, but need to swing by the office for a few minutes to check mail and messages.
Keith G
100 years ago, an American corporation hoping to grow to greater profitability had to locate near natural resources and transport hubs – and hire ever increasing amounts of local workers. Even though capitalists struggled against it (successfully at first), it eventually clear that to become more wealthy meant to share some of that wealth.
Decreasing cost of marginal product (due to lower resource and transport cost. and increased worker productivity) combined with a lack of viable competition helped to grow aggregate demand for labor. Overtime, more were employed and wages increased.
How indeed.
To do this, it may be necessary to de-couple a variety of assumptions that have been seen to be integral to our type of capitalism.
That will be an extremely difficult task.
Schlemizel
While on vacation I was forced to shop at a Wal-Mart (first time in nearly 20 years). I got one of those “answer our survey and get a chance to win a $100 gift card” things with the receipt. I filled out the survey last night & in the comments section I asked them who they thought they would have left to sell to since they forced so many jobs to China. “Unless you start buying more American made goods built for living wages even your low prices will not draw takers as we won’t have the money to buy anything”
Doubt I’ll win a card.
wobblybits
This is my last full week here in Germany so the agenda is to finish up some research work, attend a few meetings with academic types and begin to think about packing.
Also, has there been any news coverage in the U.S. about the massive protests happening in Mexico regarding the recent elections? The photos are amazing as is the story regarding what many see as a fraudulent election.
JPL
@Keith G: Steven Pearlstein had an article in the Washington Post yesterday on outsourcing and its effect on employment. He used the term mantest in what happened to corporations in our country. link
IMO, Corporations are not interested in the common good but rather their job and their stockholders.
We’re screwed because most folks don’t understand what a democracy is.
Kay
What I like about Brown’s approach is, it’s specific. He’s saying things can be done, now, and they make a difference. He lobbies for enforcement of trade rules that we have already have. Liberals like Brown worked hard to include worker protections and enforcement provisions in trade deals and he’s simply asking that the rules be followed and enforced where they haven’t been. In Ohio with Obama it started with tire imports, and now Brown is able to point to a success there. Brown can say “Obama’s better on trade enforcement than the last four Presidents”, which is what he has been saying.
The big picture stuff is important, but trade has a long arc, and I think they have to show people that they know how to make this better with the tools that they have. Telling people we need a complete policy shift to DO anything isn’t going to fly, and it really isn’t true. We don’t know what we can do. We haven’t even used the tools we have.
WereBear
Corporations have become free-riders.
Even a tight-fisted anti-Semitic lunatic like Henry Ford knew you need people with money to buy your products to make money. Wall Street simply threatens companies with stock price penalties if their balance sheet doesn’t show steadily rising profits; and they don’t care how it’s done, even if it means making up numbers and plugging them in.
This Land of Make Believe is completely untenable. That’s why corporations are struggling. That’s why the rich are getting frantic to pick every pocket they can find. That’s why nothing is working.
Kay
I also wish someone like Dionne would go ahead and say that when people at the very top make multiples more than they used to make, that leaves less for people at the bottom, in any one company or entity.
I know that’s too simplistic, long-term, but there has to be a connection between the CEO making tens of millions and stagnant wages at the bottom. With all this talk about inexorable market forces that are “out of our control”, I can’t help but notice these people are paying themselves more and more every year. Seems to be plenty of money for that.
Let’s try paying those at the tippy-top something in the range of what they used to make, 30 years ago, relative to the lowest paid worker. See what happens. If it fails we can say we tried :)
JPL
@Kay: And then along came Reagan. He started the death spiral of the middle class. Brown is an amazing spokes person for the democratic party.
soonergrunt
getting ready to drive my kid and her cousins up to LA to go to Universal Studios today, spend the night in a hotel, drive to Knott’s Berry Farm, which I’ve never visited, and then back tomorrow evening. Just me and Soonerwife and two boys and three girls. The boy is hanging with his favorite uncle today.
I hear the heat in OK is breaking, which should be nice for them. It’s been in the lower-mid 70’s here in San Diego.
Boudica
@soonergrunt: One of my favorite family vacations that we took was to Knott’s Berry Farm. Kids were 3 and 6 years old (14 years ago….ack!). It was just the right size amusement park (for me) and was just really fun.
Jay C
PeakVT
@wobblybits: I think Americans have forgotten the about the Mexican elections. It’s really a shame that the PRI or whoever decided try to take Mexico back to the bad old days. It probably wasn’t necessary – I think the PRI would have won without any shenanigans, legal or illegal.
Peregrinus
Second week of grad school in Gainesville. I haven’t done serious classics in over a year, so research skills are only now reactivating in this prematurely-old brain of mine.
Elizabelle
@Kay:
I’m not sure that executive compensation is that simplistic an explanation.
I think it accounts for a sea-change in the way corporate leaders view their incentives and company goals.
I think it began changing radically by the 1980s, and maybe during the 1970s.
Realize that you have layers of sub-CEOs, also sucking huge compensation packages of cash that, in another time, would have gone to making more products, R&D, building a cushion for hard times, even to employees on the shop floor.
Think about how hard it became to learn precisely how execs were compensated.
Because they aren’t all above average, but their pay packages sure are.
debbie
NPR had an interview last night with the head of the NFIB. It wasn’t enough for him to say he didn’t support a minimum wage; he had to add that he believed that there were in fact some people who were worth no more than $1 to $3 per hour.
ksmiami
@Elizabelle: Not to mention that Boards are probably the worst entity to “protect” shareholders since members mostly end up being cronies of an imperial CEO. I think the massive failure that is board oversight in this country has played a big role in the overall corruption of american pay packages, corporate “leadership” and the disconnect between the 1% and everybody else.
brantl
I hate to be the voice of doom and gloom here, but what makes people think that wages will always increase? Is that in any way (gasp?!) sustainable? I think everybody deserves a living wage, and by living, I mean an income where you don’t have to scrimp constantly just to get by (decent health care, no bankruptcies unless you just piss your money away, etc.) But the idea that wages are going to constantly improve, for everybody, or even most of everybody? That’s what drives inflation, every time.
I came back to edit this, before everybody jumps my shit. The Republicans have the antithetical reverse of this, which is wrong on so many levels that I can’t enumerate them all (my family doesn’t live to extreme old age, in general), but democrats need to get back to their real argument, the poor need to be helped to get to sustainable wages, and everybody else (except the rich) need to quit losing constant ground.
PeakVT
@brantl: That’s what drives inflation, every time.
Inflation is a monetary phenomenon. It is entirely possible for wages to increase and inflation to remain low. See the 1950s, for instance.
brantl
@PeakVT: Locally, you’re right. But it means someone’s standard of living is going down, relationally, somewhere. It is possible in the short term, but it isn’t possible in the long term, unless people stop getting cyclic raises, at some time or other.
Pen
@Jay C: My solution? If you build it overseas it’s an import and should be treated, taxed, and restricted as such. This’d never happen because it would piss of pretty much everyone with money, but in my eyes if a company wants to do all it’s building in Asia and sell here in the states it doesn’t matter where their headquarters is because either way they’re not an American company.
In our world of “free” trade the only thing free to move is product and capital. People can’t, and so I have little respect for pretty much every free trade agreement I’ve ever read.
Origuy
@brantl: I wonder about this too, and also the parallel question: Is it possible that corporate earnings can always grow? Or necessary? If my bottom line doesn’t increase every year, why should my employer expect its to?
scav
@brantl: For that matter, what makes CEOs think their salaries and bonuses and profits always have to go up and that they don’t have to participate in the flatline raises over the last couple of decades? It’s not absolute poverty that get’s people riled necessarily, but overt, increasing, relative poverty can be a real trigger.
Hi @Origuy:!
schrodinger's cat
@brantl:
There is no clear one to one correspondence, the relationship between increasing wages and inflation is far more ambiguous then what UChicago economists would have us believe. Currently, the inflation is close to zero, while unemployment is high, so inflation is not what one should be worried about unless you are rentier like Romney.
brantl
@schrodinger’s cat: If everybody gets a raise, there is going to be inflation, unless businesses are willing to take a cut in margin (and they’re not), QED. Think about it.@scav:
I don’t know for sure, but I think absolute poverty would grind my ass pretty well.
brantl
@schrodinger’s cat: And real inflation isn’t really zero, as long as they aren’t taking energy costs into account.