Monday, October 30, 2006

Power vs. Pro-Growth Policies

Ezra Klein references a pay-barriered New Republic article which argues that pro-growth policies lead to inequality. It evaluates the growth in productivity in recent years but then notes that there's a problem:
Wages didn't track. Productivity and growth went up, but they weren't distributed across the economy. Wages increased somewhat throughout the mid-to-late 90s, but as the supercharged growth gave way to the robust numbers of the past few years, the rich began sucking up the gains .... The left has tried to explain this away as a consequence of Bush's fiscal policy. Sadly, the trends show up in pretax income also. The right has tried to explain this accelerating inequality as an unstoppable structural feature of the new economy: It's the meritocracy, or computers, or benefits, or global trade. Unfortunately, those explanations are largely bullshit. Europe also has computers, and trade, and mobility, and benefits, and has easily avoided the widening chasm we've seen. So what makes us different?

In a word, power. Or the distribution of it. Europe has strong unions and active governments; countervailing powers that wrest a portion of the pie for their constituencies. We don't.
Here's the problem - unfettered capitalism doesn't solve for the problem of inequality, money and power concentrate in a few, and the many suffer.

1 comment:

Drew You Too said...

And people thought the phrase Capatalist Pig was just an Anti-American slur uttered by Communists. Bravo for noticing the fundamental problem with Capitalism: When your primary motivation is Capital Gain you are prone to take advantage of others for personal benifit.