I've avoided it, but here goes: I think reformocons are making a giant mistake if they start pooh-poohing the pursuit of higher GDP and overstating the extent to which Trumpism is driven by economic anxiety. /1
It's a view shared by many reformocons I like a lot: @oren_cass in his new book, @nytdavidbrooks in today's column, @WilcoxNMP (I think), @henryolsenEPPC (I think), etc. All smart and great people, who have intellectual turf I'd dare not challenge. But I'll step onto this turf /2
@oren_cass @nytdavidbrooks @WilcoxNMP @henryolsenEPPC First, I think there's a risk of reifying The Producer to detriment of consumers. I care as much abt people having good jobs as the next person, but we should also remember that a lot of work isn't especially fulfilling. It's still the case that most ppl work to live, not reverse
@oren_cass @nytdavidbrooks @WilcoxNMP @henryolsenEPPC They work to consume (goods, services, and leisure), in other words. In my view, we place too much emphasis on consumption over community & family, but that's a problem for all of us, not a blind spot of policymakers' /4
@oren_cass @nytdavidbrooks @WilcoxNMP @henryolsenEPPC More to the point, there are few serious economists who would argue that the best way to *broadly* improve living standards is anything but faster productivity growth (GDP/hours). You like the 1950s & 1960s? You want that era's productivity growth. /5
Trade has been unambiguously good for Americans as consumers. Think about Walmart as an example. It has had more disparate effects for workers, hurting some in manufacturing who saw work go overseas. /6
But it's still the case that median compensation (wages plus benefits)--for men and women alike--is at an all-time high. Again, if you wish it were higher (as I do), you wish we'd had the productivity growth of the mid-20th c. /7
Compensation lower down--say, the 20th percentile, is trickier because we don't observe nonworkers. (More on that in a sec.) But at the 20th percentile of workers, pay is about where it was in 1973. Again, that's not great, Bob, but... /8
But deindustrialization does not appear to obviously have *lowered* wages, except perhaps in relation to a counterfactual in which Americans as consumers chose to keep paying high American prices rather than benefit from trade. /9
And those 1960s pay rates were artificially high because we paid breadwinner premiums to working-class men in excess of their productivity so we could limit the economic opportunities of married women. Good times. /10
Back to nonwork. I'm not sure how many times I can say this: very, very few prime-age men out of the labor force are able-bodied and say they want a job. Read p6 of the Social Capital Project report on inactive men lee.senate.gov/public/_cache/… /11
The evidence that rising male non-participation in the labor force is due to weak labor demand is just very weak. See my critique of the Obama CEA report on this mercatus.org/system/files/w… /12
(Again, let's not forget about women, whose trends in pay and in labor force participation since mid-20th c are often incredibly great.) /13
Anyway, I do NOT believe that everything is great and we have no problems. I support Oren's wage subsidy stuff and have proposed my own version (pgpf.org/sites/default/…). But if we go down one policy road, we bypass others. /14
My own view is that--as politically inconvenient as it is--the biggest economic challenge we face is the staggering and long-standing inequality between whites and blacks, which I've written about in several places (brookings.edu/research/the-i…, eg). /15
I know we have to win elections, but I hope that we'll not be overly-attentive to downscale white Trump voters at the expense of the nonwhite voters we need in the long run (and who need us, frankly). /16
This is obviously a big problem, because those downscale white Trump voters are mainly evincing *cultural* anxiety. Wrote about that here (freopp.org/economic-oppor…), but analyses keep coming out confirming it. /17
In that regard, John Sides' new book is a must-read: amazon.com/Identity-Crisi…. /18
One more thing: focusing on economics to fix social capital problems, in my view, is wholly misguided. I think Oren's view is that when more Americans are productive at work, they'll naturally be more productive outside of work building community. Not sure how that follows. /19
The bottom line is that affluence has produced our social capital declines--the demand for consumption. Nonpoor Americans need each other less than we used to, and that produces cultural change that weakens community and family life. /20
That cultural change then hurts poor Americans (eg, family instability) who lack the resources to avoid getting hurt by diminished community and family life. /21
This is all a wildly helpful perspective, I know. But sometimes the correct narrative isn't politically convenient. /22
Above all, I guess I wish reformocons would focus less on the supposed problems of the economy and more on expanding opportunity to reap the incredible benefits of the economy. That requires more experimentation with safety net reforms but also social programs. /23
Anyway, my instincts are always to argue with dominant narratives that I think are off. Hopefully no hard feelings! /fin
