Serious persons, they just can't seem to agree on how to do it:
Economists are still trying to sort out what broke those historical links between growth and jobs/incomes. Robert Shapiro, an economist who advised President Clinton on the campaign trail and in the White House, traces the change to increased global competition.“It makes it hard for firms to pass along their cost increases---for health care, energy, and so on---in higher prices,” he said. “So instead, they cut other costs, starting with jobs and wages.”
Shapiro said the best way to restart job creation is to help businesses cut the costs of hiring, including by reducing the employer side of the payroll tax and pushing more aggressive efforts to hold down health-care cost increases.
Obama seems to have embraced an approach pushed by the Harvard economists Claudia Goldin and Lawrence Katz: helping more Americans graduate college and go on to high-skilled, higher-paying jobs.
All of these prescriptions are totally inadequate.
Cutting taxes on corporations won't change anything at this point besides increasing dividends for shareholders. Cutting health care costs will help, but it does nothing for the plight of healthy young people who can't find jobs out of college. And while college is important, if the jobs of the future don't require a four-year college degree (and many don't, particularly in IT, health care and homeland security), other educational alternatives are equally essential. (This was one of the few agenda items the President raised last night that I agreed with completely.)
More adequate: raising income taxes on rich people to pre-1980 levels. Taxing investment income and estates above $1 million as earned income. Eliminating "private equity" loopholes for interest-payment deductions, or raising the corporate income tax altogether. Imposing a windfall profits tax. Imposing a financial transactions tax. Imposing a carbon tax. Then take all that money that's flowing into the government's coffers, and make post-secondary education at any state college/university/vocational school free to any state resident who qualifies for admission. Make Medicare available to everyone. Then take the money that's left over and give everyone who wants one a unionized government job until public-sector employment approaches pre-1980 levels. If the money runs out, borrow more. In the meantime, re-enact every banking law that has been repealed since 1980, and re-instate every industry regulation that has been repealed since that time.
I know these are all deeply unserious proposals, but our private sector has managed to kill off millions of jobs on its own without being burdened by any of these measures. Yes, China, computers and robots have all played a part in driving wages down, but the big-obvious problem that too many of the most serious among us refuse/fail to acknowledge that we have been laboring for the last 30 years under an economic model that was expressly designed to make rich people richer while impoverishing everyone else, and while both Democrats and Republicans have taken turns running the government during that time, the post-1980 economic model has been modified only slightly, and only at the margins. In other words: get rid of Reaganite economic theory, and the problem goes away. At least that's what I'd be willing to bet, if anyone would care to take me up on it. Of course, the only way we'll ever know if people like me are wrong or not is to enact all of these proposals, give them five years to take effect, then see where we stand in terms of "economic growth" and who is or isn't sharing in it. If it doesn't work out, I'll be the first to admit I was wrong.
But either way, you want more people to have more money, create an economy that gives more money to more people. Because the economy we have, well, doesn't by intent.
--Baron V
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