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Look at the Markets. Look at the Economy. Are Income Inequality and Immigration Our Two Biggest Issues?
In my new The Week column, I highlight the weakness of three key policies — tax increases, raising the minimum wage, and universal preschool — in Hillary Clinton’s anti-inequality agenda. But the bigger point is that Clinton should focus more intently on policies to boost economic growth, rather than redistribute it. After all, it looks like the US economy (again) didn’t grow much more than 2 percent last year, according to official stats — with 2016 looking like more of the same. Even worse, right now it looks like a recession is more likely than a growth spurt.
William Galston makes a similar point in the WSJ, arguing that early in the Clinton campaign, “she delivered a well-crafted speech outlining her strategy for creating strong, sustained and inclusive growth. … Since then, however, she has been busy immunizing herself against attacks from the left, pursuing transactional politics with the Democratic Party base.” In short, blame Bernie.
But things aren’t much better on the GOP side. The Republican presidential contest has been dominated by immigration — but not, unfortunately, on how to increase immigration to boost growth. What mostly passes for pro-growth policies are unaffordable. across-the-board tax cuts. Indeed, many plans lose the most revenue on the bits that would theoretically produce the least amount of GDP growth.
Even if you believe that GDP growth and productivity are better than official numbers suggest — and I sort of suspect this is true — we could be doing far more to increase America’s growth potential. Economist Robert Gordon has been a doom-and-gloomer about America’s future growth prospects, for example in his must-read new book, The Rise and Fall of American Growth: The US Standard of Living Since the Civil War. Yet Gordon highlights some pro-growth ideas. Here are two, as summed up by David Wessel in the WSJ: “Roll back regulations that hurt the economy and the less affluent, including copyright and patent laws (which have gone too far), occupational licensing (which is a barrier to entry and employment), and zoning and land-use regulations (which boost housing costs). … Reform immigration laws to encourage high-skilled workers, including those trained at U.S. graduate schools.”
We should be concerned, as I write in The Week, “that America’s changing economy may be less adept at providing shared prosperity than in the past.” Likewise, less-skilled immigration poses both fiscal and governing challenges. But tackling the Two Percent Economy should top policy agendas in both parties.
Published in Economics
Kind’a hard to generate ecenomic growth when your corporate tax rate is among the highest on the playing field.
Worried that cutting taxes costs revenue? STOP SPENDING SO DAMN MUCH!!!!
Income inequality should not be a problem at all. It just doesn’t matter if one person makes billions, the more that person spends, or reinvests their wealth the more jobs etc there are for the rest of us. What matters is velocity of money, not how much of it various people have. Except in static point source analysis one person having more, does not mean the rest have less. Usually the rest gain resources faster than they would if the government forced equal outcomes.
Income inequality is simply a natural reflection of a free market; you mess with that and you destroy liberty in favor of equality.
Karl M said it best: The theory of Communism may be summed up in one sentence: Abolish all private property.
The folly of telling Hillary what she should do on the economic front is risible. Doesn’t JP understand what these people are about? I mean really, in this age of specialization and wonkery, does he know ANYTHING about politics and ideology? Is he really that naive?
Or is this just pablum for the masses, so that we have the sense that our Democrat politicians want growth and prosperity for anyone other than themselves and their friends?
I could go on but it’s not worth it.
As a longtime member of Ricochet, I’ve had it with these kinds of posts. The main feed is becoming emblematic of everything that is wrong with the Republican Party and the almost daily postings of JP spouting this nonsense wonkery while the ship sinks is just too much for me to take. Pathetic.
Clearly the two biggest issues facing us are global climate change/warming/ice age and Donald Trump might win the nomination.
Haha. But it’s not funny anymore for those of us who’ve worked their asses off to develop assets and have something to protect.
No kidding, but the federal reserve that has enabled so many to accumulate and inflate assets can also destroy them.
I agree that income inequality is a byproduct of a free market and not always a bad thing.
It’s the law of nature! People have varying skill sets, levels of intelligence, and genetic disparities. When govt interferes, it does nothing but inhibit the skilled and the talented.
There is no such thing as liberty and equality.
I have a book for you to read (recently recommended to JoE as well) entitled: The Great Divide by William Gairdner.
It received a terrific review in NR print.
“Are income inequality and immigration our two biggest issues” only for the primary season; when intraparty differences are magnified. The general will be decided on the economy more generally, including growth not just inequality, and foreign policy. Likeability and trustworthiness will probably be in the mix too, but I doubt income inequality arguments are the effective heavy cudgel described and probably will play a less prominent role in the general.
I think liberty ensures equality of opportunity, but should never be confused with equality of outcome.
Thank you.
Exactly right.
When it comes to income inequality, you know what I am sick to death of? (one of my NY’s resolutions is to get over it; I’m not there yet)
Going to the retirement parties of people around my age (57)who are public sector employees.
My neighbor (60) is retiring in a few weeks. She works for a local Cal State college. You know what she said to me? “Giving up all those raises was sure worth it; CALPERS is terrific.”
WHAT raises?
IF we stay in Cali (and now that I have a grand daughter, that’s likely) my husband and I will be working til our mid 70s, then hopefully we’ll kick the bucket soon after.
Much time and money is spent to avoid the consequences of diversity. Reducing immigration is one way to ameliorate those costs to the middle class. (Does keeping your neighborhood’s crime low or its schools good figure in GDP? How about your home’s value plummeting when the local demographics shift?)
As for income inequality, the Democrats are communists. This is as much as they can get away with for now. After the US gets more diverse, they’ll ask for more extreme measures.
The average citizen is paying between 15-30% more for healthcare this year than last, with less coverage and higher deductibles, food is way up, businesses are struggling to meet the new demands within healthcare, tax increases, layoffs and part-time employment will increase because of this, the stock market is unstable – eating into retirement accounts, I am not sure what is left to redistribute…
Your neighbor clearly hasn’t done any math whatsoever. I have a buddy who has made the same statement, talking about “making less” than he would in the private sector, when he’s making over 125K per year in a public sector gig, with a guaranteed pension.
Btw, his skills would not translate to the private sector well. But I think he buys the whole “I get paid less while working but get a good retirement” line, when it’s been demonstrated that public sector employees are paid on par (based on education and experience) with the private sector, AND have a ridiculous (and hideously under-funded) retirement plan – that the private sector will be paying for.
Regarding inequality, it’s income mobility that should be the metric, because there will always be poor and rich and those in between. It’s the mobility between income levels that indicates there’s an ability to move up, and it’s there.
Yet no one touches this discussion. Why? Because it’s easy to point to a poor person and say “We should do something”. The solutions offered by progressives is the “something” that should NOT be done.
Agreed CC. None of the public sector peeps in my life have a clue.
One friend was complaining that she can afford to retire (she’s 57, she’ll get 60% of her current salary for doing nothing for the rest of her life) except for the health insurance premium. She will be paying less than what I am paying now – and have been for years. To date she has paid pennies on my dollars.
Of COURSE her job is super stressful. (Parks and rec) So I told her to retire and get a job at 7 11 to pay the ins premium. (For whatever reason this wasn’t considered good advice )
She’s never worked in the private sector , has no clue and no interest in learning.
“Reform immigration laws to encourage high-skilled workers, including those trained at U.S. graduate schools.” That’s one of the most urgent things we need to do if we’re going to be competitive in the coming century. We used to be the beneficiary of a global brain drain. Now that’s reversing.
Our self-defeating immigration policy makes it hugely difficult for the world’s most talented people to bring their drive and intelligence to the US — and it’s getting easier and easier for them to put it to good use in the Pacific rim. The venture capital is following them.