By Robert Reich
Here’s the good news. The economic pie is growing again. Growth in the 4th quarter last year hit 3 percent on an annualized rate. That’s respectable — although still way too slow to get us back on track given how far we plunged.
Here’s the bad news. The share of that growth going to American workers is at a record low.
That’s largely because far fewer Americans are working. Although the nation is now producing more goods and services than it did before the slump began in 2007, we’re doing it with six million fewer people.
Why? Credit technology. Computers, software applications, and the Internet are letting us produce more with fewer people.
In theory, this is a huge plus. We can live better and have more time off.
But as Tonto asked the Lone Ranger, “who’s ‘we,’ kemosabe?”
The challenge at the heart of the productivity revolution — and it is a revolution — is how to distribute the gains. So far, we’ve been failing miserably to meet that challenge.
True, some of the gains are widely spread in the form of lower prices and higher value. My 3-year-old granddaughter gets more out of an iPhone in five minutes than my 98-year-old father ever got out of reading the daily paper (putting to one side their relative capacities to process the information).
But many of the gains are distributed narrowly in the form of profits to owners, and fat compensation packages to the “talent.” Read More
I participated in a debate Thursday morning on the role of government in poverty reduction. A couple of “curious” points came up from the conservative side which I keep hearing lately and which make little sense to me.
First, on inequality, Michael Tanner from the Cato Institute couldn’t understand why I kept going on about inequality. It doesn’t have anything to do with poverty (Scott Winship of the Brookings Institution made a similar argument in a Senate hearing a few weeks back). Tanner argued that if everyone’s income doubled, poverty would go down but inequality wouldn’t change, so inequality must not matter.
Um… ok… but that’s a total non-sequitur. What’s been happening for most — not all — of the past 30 years is the pattern of real income growth you see here, from a recent CRS study. Sure, if everyone’s income grew at the overall average of the first bar-20%-we’d have less poverty and less inequality. But in the real world, average income grew 20%, fell 6% at the low end, and was up 60% for the top 1%. …