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The 20 Percent Button is a useful heuristic for our politics: Imagine a button that instantly doubles productivity of labor market’s most productive quintile and causes least productive quintile to drop out of the labor force. Do you push the button? (RT your answer: Yes/No?) 1/
Top quintile is already more productive, so gain from doubling there exceeds loss at the bottom; tradeoff leaves our economy more productive and output higher. If you want, stipulate policy to tax/transfer some gains from top to bottom; everyone’s consumption can be higher. 2/
Posing this to a group of business school students last night elicited simultaneous “of course yes” and “of course no” reactions, then gasps at the disagreement. I've posed the question more broadly, but thus far I've found people prefer not to answer. 3/ city-journal.org/growth-for-who…
The differing views on this question are fundamental to the fights occurring right now within the Right and, I predict, there would be similar disagreement within the Left. The Democratic Party is becoming the party of button pushers and the Republican Party the converse. 4/
One view is that economic progress is the nonnegotiable starting point; it either adopts confidence that government can create a reasonable facsimile of labor force participation through redistribution or else attempts to negate the hypothetical with a promise of "training". 5/
The other view wants progress too, but sees broad inclusion in the productive economy as the nonnegotiable starting point. We earn the right to push ahead by proving we can do it without leaving people behind. 6/
No fair sidestepping the hypothetical by proposing to push the button and then retrain and re-engage the bottom quintile. We’ve not shown a good ability to do that. The question is, if you knew we couldn't do those things well, would you still push the button? 7/
I’m sure many people will argue that this is not an accurate description of what has happened or what will happen in our economy. Indeed! It’s an extreme abstraction for purposes of delineating vastly different perspectives among people who are accustomed to agreeing. 8/
My answer, by the way, is no. I wrote a whole book explaining why, and proposing the kinds of structural economic and social reforms we should adopt to ensure rapid economic progress compatible with a healthy and inclusive labor market. 9/9 bit.ly/theonceandfutu…
