The Rock and the Hard Place of Future Economic Growth

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Responding to Lane Kenworthy, who thinks that the Fed is unlikely to pursue full employment policies anytime in the near future, Jared Bernstein pushes back:

I’ve often stressed that progressives cannot give up on the “primary distribution”—market outcomes—and hope to fix everything with redistribution. Not only is that an incredibly hard lift, but as market outcomes continuously deteriorate from the perspective of the middle class and the poor, we’ll have to continuously ratchet up the redistributive function. Good luck with that.

This is one of the key economic questions—maybe the key economic question—for liberals these days. On the one hand, it’s plain that the best way to raise middle class wages is to engineer a tight labor market. It’s best for the workers themselves, who would prefer to earn wages rather than receive handouts, and it’s best for the economy, since it keeps our productive capacity at its peak. But over the past 30 years, we’ve only managed to engineer an unemployment rate under 5 percent twice—both times during bubbles, and both times for only a couple of years. There’s very little reason to think we know how to do this on a sustainable basis going forward absent some kind of massive change in our fundamental approach to economic policy. That level of change is pretty unlikely on its own merits, and when you factor in the headwinds from steadily improving automation, it’s all but inconceivable.

On the other hand, the prospect of simply accepting that (a) full employment is no longer a policy goal, (b) median wages will therefore be stagnant for the forseeable future, and (c) we should therefore massively ramp up redistribution—well, as Bernstein says, good luck with that.

But those are the alternatives. There is a third alternative, of course: shrug our shoulders and decide that stagnant or falling living standards for the working and middle classes is just one of those things that we can’t do anything about. This is Paul Ryan’s alternative, and I assume it has no takers among my readership.

So that leaves us with two choices: figure out how to engineer full employment (unlikely) or figure out how to persuade the top 20 percent to subsidize the rest of the country on an ever increasing basis. Anyone have any good ideas on this score?

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Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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