Two headlines today, Thursday, March 29, captured the confusion--and, in some cases, disingenuousness-- of commentators regarding the true state of America's economy.
"Why is trade scorned in a time of prosperity?" headlines The Wall Street Journal on its front page. The paper wonders why people are angy about globalization if America is doing so well. The answer was in a headline in today's New York Times business section. "Income Gap is Widening, Data Shows," says the Times. The top 1 percent received their largest share of income since 1928.
The fact is there hasn't been prosperity for most Americans in a long time, and that's why they are so skeptical of free trade. Doesn't require a giant to figure that out. Despite twisted arguments about a rising standard of living even by many Democrats, Americans haven't been doing well since the early 1970s.
To say the problem is inequality misreads the data. Since the late 1980s, it's been a runaway at the top of the income ladder and relative stagnation for the rest. The exception was the late 1990s. Then incomes grew for everybody, but even that was dependent on over-the-top speculation in the financial markets to stimulate growth.
In the 2000s, it's really been bad. There's been almost no growth in wages. Some recent data research colleagues and I have done at the New School shows that incomes are up pathetically slowly for many Americans, literally down for many others, and the typical male in particular makes less than his counterpart did after inflation thirty and forty years ago, even if he went to college.
Once we refine the data, we'll publish them. But for now, read these media stories skeptically--and I'd add incredulously and maybe angrily. Especially when they tell you that taming government and lowering taxes are what saved prosperity for America, like Times columnist David Brooks does today. I could surely add the qualification that some reforms were useful. Of course there were good correctives. But on balance far more damage was done by the new conservative ascendancy since Reagan than was good.
We have neglected serious issues for a generation. Prosperity was not saved--except for, relatively speaking, a dazzling few. There is a lot of ground to make up. The Democrats particularly need a clear perspective on how the nation has fared.