NDN Blog

Its been a good week for debating the merits of globalization, and the Bush economic record. As Krugman writes in this morning's times, in a thoughtful response to "conservative economic commentators" otherwise known as David Brooks: 

We can have an interesting discussion about questions like the role of unions in wage inequality, or the role of lax regulation in exploding C.E.O. pay, there is no question that the policies of the current majority party — a party that has held a much-needed increase in the minimum wage hostage to large tax cuts for giant estates — have relentlessly favored the interests of a tiny, wealthy minority against everyone else.

Yesterday we had a series of very stimulating posts on different aspects of globalization and policies of the current administration, not least Mark Thoma's two posts on inequality, and Bonddad on the housing crisis. Today we'll have some more, including Senator Evan Bayh on the importance of Intellectual Property, and our own Rob Shapiro on the need to work to rebuild the national consensus on trade. If you didn't catch it yesterday, have a look at our new economic report here. 

NDN have been going on about wages for some time now. We highlight the issue in the 3rd section of today's report - emphasing that flat wages and median income is the thin end of the administration's economic wedge. Today's papers, therefore, make heartening reading. Some revised labor stats seem to be suggesting that wages and benefits are growing strongly, says the Post. The FT is measured: wages are above expectations. Panic over? Not quite. Our current guest contributor Mark Thoma handily links to Paul Krugman's thoughts on the topic, in a discussion on the New York Times website:

So, are workers making out like bandits? Don't be surprised if you start seeing opinion pieces claiming that they are. But here's the thing: We have evidence from three different sources that tells a very different story. First, wages of non-supervisory workers, as measured by the Employment Survey, a survey of employers, are lagging slightly behind inflation. Second, median weekly wages, as measured by the Household Survey, a survey of (duh!) households, are lagging well behind inflation. Third, profits ... are growing much faster than G.D.P., which has to mean that labor costs are growing slowly.

We all want to see the pay packets of ordinary Americans begin to rise faster than inflation, something which hasn't happened under this administration. But don't think its happening just yet.

Last night I did two things. First, i began reading The Plan, Rahm Emmanuel and Bruce Reed's new book. Second, i had an argument with some friends online about the merits of Paul Krugman. The first task I approached with a degree of resignation. Pre-election books written by senior politicians (Emmanuel) or clued-in wonks (Reed) can often have a ghost-written "will-this-do?" feel to them. So imagine my surprise that the first couple of chapters make for very, very entertaining reading. The book is one of the sharpest overviews of the current political set-up i've come accross of late. The second task, on the other hand, was prompted by this post over at Brad De Long's website, where De Long says he finds "a certain horrifying fascination in watching the right wing's minions and useful idiots in the press attempt to attack Paul Krugman on matters of economic substance.... [which resembles an] air assault by a circular firing squad of flying attack monkeys."

Anyway, in the course of my night's activities i came accross two splendid quotes i thought worth sharing in full. The first, from the book, was from President Clinton giving his overview of Compassionate Conservatism:

"This 'compassionate conservatism' has a great ring to it, you know? It sounds so good. And I've really worked hard to try to figure out what it means. I mean, I made an honest effort, and near as I can tell, here's what it means. It means: 'I like you. I do. And I would like to be for the patients' bill of rights. And I'd like to be for closing the gun-show loophole. And I'd like not to squander the surplus and, you know, save Social Security and Medicare for the next generation. I'd like to raise the minimum wage. I'd like to do these things. But I just can't. And I feel terrible about it.'"

The second, from Krugman himself, is his reposte to people who acuse him of excessive partisanship.

Suppose, just for the sake of argument, that the Bush administration was, in a fundamental way, being dishonest about its economic plans. Suppose that the numbers used to justify the tax cut were clearly bogus, and that the plan was in fact obviously a budget-buster. Suppose that the Social Security reform plan simply ignored the system’s existing obligations, and thus purported to offer something for nothing. Suppose that the Cheney energy report deliberately misstated the nature of the country’s actual energy problems, and used that misstatement to justify subsidies to the energy industry......In this hypothetical situation, what sort of columns should I have been writing? Does the ideal of “nonpartisanship” mean that I should have mixed my critiques of Bush policies with praise, or with attacks on the hapless, ineffectual Democrats, just for the sake of perceived balance? Given what I knew to be the truth, would that even have been ethical?

Keepers, the both of them.

This is fun, from the National Journal:

The DNC launched Party Builder, its online social organizing and fundraising tool, last Friday. It's the answer to MyGOP.com. Both programs offer similar features, but most notable is how the GOP uses a homepage as its base (think MySpace), while the DNC's new tool looks a whole lot like The Facebook. Why re-invent the wheel, when it already runs so smoothly? MySpace and Facebook are in the top 20 sites in the country.

A quick comparison of what can be done with both sites: The DNC has put all of its action tools under the Party Builder, except for the blog which can be accessed via the main home page too. Supporters create a profile, join groups, make "friends," create/join events, fundraise, sign petitins and send letters to the editor. Unlike the RNC's blog, users comments are a free-for-all under the post while the RNC's blog comments are listed by user.
 The RNC's Action Center and its MyGOP.com portal are seperate features on the site, but link to many of the same functions. At the Action Center, users can host a party, take a survey, contact their Rep., call talk radio, get GOP paraphenalia, join teams, recruit volunteers and register people to vote. At MyGOP, supporters can do all the above and show off their progress.

From today's Hotline. It seems Simon's talking point about this being an anti-republican year, not an anti-incumbent year, is being increasingly borne out. 

Conservative talk show host Hugh Hewitt interviewed Roll Call's Stu Rothenberg 8/29 on the GOP's '06 prospects (audio/transcript). Rothenberg told Hewitt:

The environment is not improving for Republican candidates around the country. There's no indication that it will. And increasingly, I am familiar with ... there's both public, but also private polling suggesting real problems for Republican incumbents. The Republican polling shows the Republican vote down. It shows Democratic challengers who are unknown getting a surprisingly large percentage of the vote. What we're really seeing is that voters are simply inclined to change, for change, and that's hurting Republicans.

With all the economic news in the last few days, Simon and Rob just sent out this e-mail to NDN's list.

-------------------------------------------

TO: NDN List

FROM: Simon Rosenberg

Re: Once again: it’s the economy, stupid.

A lot of attention this week has gone on two of the worst failures of conservative governance, the anniversary of Hurricane Katrina and the civil war in Iraq. But there is a third problem that is also beginning to rise up the agenda: the fact that economy is not working for most Americans. This administration seems almost indifferent to the fact that even as GDP and productivity have increased, the wages and incomes of most Americans have declined. And while the economic story is the most complicated of the three, its long-term damage to the country will be no less severe.

This week we’ve seen new data on incomes and wages. Yesterday the Census Bureau released figures that confirm deep economic problems for most Americans. The Bureau reported one of the smallest increases in median income on record for this stage in an economic recovery. Yet, even after this increase, median incomes are still 5.9% lower today than when President Bush took office. Even more worryingly, yesterday’s rise is entirely explained by gains for richer and older Americans. The median incomes of people of working age actually fell, by $275, over the last year. In short, our growing economy is not working for ordinary Americans.

Declining wages lie behind yesterday’s disappointing figures. As NDN’s Robert J. Shapiro said at the launch of our Globalization Initiative earlier this year “we’ve seen the strongest four-year growth spurt since the early 1970s – with no meaningful increases in real wages.” In fact, four full years into an economic expansion, real wages are actually falling for most Americans. If the economy begins to slow significantly there is a very real chance that this will be the first economic expansion in modern times with no real increase in American wages.

Put simply, most Americans are getting paid less than when Bush became President. This administration has the worst record on incomes and wages since World War II.

Does the administration have a plan to fix this? No. In fact, not only do they rarely admit the problem, they are actually deceitful in presenting the figures. Yesterday Bush’s budget director Rob Portman was quoted as saying “wages are rising” in America. The President himself, speaking on July 10th, said productivity gains were “leading to higher wages and a higher standard of living for our people.” Yet anyone who saw the front page headline of Monday’s New York Times – “Real Wages Fail to Match a Rise in Productivity” – knows that the Republicans are not being truthful with the American people over wages.

Most Americans aren’t gaining from this economy today. But long-term the situation looks even worse.

• America is borrowing billions of dollars daily from foreign governments to fund our huge current account deficit.
• The debt is up more than $2 trillion, passing the bill onto our children.
• Nothing has been done to prepare for the retirement of the Baby Boomers.
• Healthcare costs continue to rise, while the number of insured falls.
• The Doha round has failed, the cost of the war in Iraq grows ever larger, more Americans live in poverty, and the price of basic goods continue to go through the roof.

All of this represents an historic failure of economic stewardship. Progressives have an obligation to help Americans do better. And we all have an obligation to hold the administration to account for its three biggest failures of governance: Iraq, Katrina, and the economy. Next week NDN will be releasing a report which will give an overview of the administration’s economic failure. We are doing our bit to put the economy – and the issue of declining wages – on the agenda. We hope that everyone in our community will help us put these conservative failures front and center in the run in to November’s elections.

Best,

Simon Rosenberg

President

www.ndn.org

--------------------------------------------

A bravura day of GOP bashing in the New York Times Opinion pages today is capped with this splendid riff on how the fissures in the Republican coalition have left behind even the "South Park Republicans." And the last line of this quote - i love it:

The G.O.P. used to have a sizable libertarian bloc, but I couldn't see any sign of it at the conference. Stone and Parker said they were rooting for Hillary Clinton in 2008 simply because it would be weird to have her as president.  ''We're the long-suffering, battered spouse in a dysfunctional political marriage of convenience,'' said Nick Gillespie, the editor in chief of Reason. ''Most of the libertarians I know have given up on the G.O.P. The odds that we'll stick around for the midterm election are about as good as the odds that Rick Santorum will join the Village People.''

Gordon Brown, likely future leader of Britain, writes in this morning's FT on the need for extra vigilent support for free trade and open markets.

Across the world, we are seeing not only the impact of terrorism and geo­political uncertainty on our economies. We are also seeing a surge of protectionism. Whether it is called “populism” in Latin America, the promotion of “national champions” in Europe or “nativism” in the US, the same sentiments are sadly fuelling isolationism in parts of the world, anti-Americanism in others and anti-globalisation forces almost everywhere.

These are now magnified by one of the most ominous summer setbacks – the damaging collapse of the world trade talks. We must all wake up to the reality that, without the forward momentum a new trade agreement would give, we risk rolling backwards to the age of beggar-thy-neighbour protectionism and the further threats to stability that would flow from it.

We couldn't agree more, Gordon. Simon and Rob are working on a new NDN memo outlining opportunities to support and defend the open trade consensus in the run in to the elections.

The headline on this piece is, i must say, a little unfortunate. Was there a time when the Labor movement was, you know, unfazed and mildly disinterested in the future of the economy? Anyway, apparently, if there was, that time is now over: Labor are to join the debate over the future of the economy. Hopefully this will be a cause for some genuine debate. The signs are mixed from the article, an interview given by the man behind the push:

In an attempt to devise an alternative, former Clinton Treasury Secretary Robert Rubin, a Wall Street executive, is pushing his own “Hamilton Project” through various think tanks – with the aim of getting the Democrats to adopt its principles as theirs for the future of the economy. But Rubin’s principles, Baugh says, mimic those of the GOP in key areas, including “free trade” and refusal to do anything about the deindustrialization of the U.S. That’s where IUC’s project comes in, as a counterweight on the workers’ side.
 

Problematically, this mimics the sentiment behind this long, slightly unhelpful interview with Rubin in the Nation last month. We'll put aside for a minute how curious it is to think the best way to begin a debate on the economy is knocking copy directed at probably the best Treasury Secratery since the Second World War. Rubin's record of prosperity is probably the single most important reason that the Democrats are now more trusted on the economy. Perhaps a better start might be to train all our guns on the Republicans? NDN will begin this next week, when we turn our blog over for a fews to talk of the economy with some exciting guest bloggers, and release a new report examining the economic legacy of the current administration. Pretty reading it ain't.

Last month, Rob and Simon wrote a memo here arguing that there was a growing progressive consensus on wages. We've noted further bad news since. The point was that the whole progressive family could gather round the issue of declining real wages for most Americans, and combine that with the campaign to raise the minimum wage, as a way to get a grip on the various complicated ways in which the Bush economy wasn't delivering for most americans. It turns out we were wrong. It is now clear this isn't just a progressive consenus. This long piece in the New York Times today makes clear that evidence of stagnant incomes is so overwhelming that this is now a national consenus too. And in particular we're delighted they picked up that this is now very likely to be the first post-war expansion in which median wages did not rise.

With the economy beginning to slow, the current expansion has a chance to become the first sustained period of economic growth since World War II that fails to offer a prolonged increase in real wages for most workers.

It is important to note that the Repbulican response is changing rapidly over time. There have been four phases: dishonesty, denial, assertion and admission. We began with outright intellectual dishonesty when the President argued that (nominal) wages were rising. It then morphed into denying it was structural problem, and emphasis of the lag effect to catch up with productivity. This changed again at Bush's weekend powwow, where he asserted the economy was good, without addressing this issue. In recent weeks - following the front page story in the FT - it is a mixture of admitting there is a problem and hoping for the best. And then on Friday we had Bernanke, speaking in Central banker code but speaking publically nonetheless:

In a speech on Friday, Ben S. Bernanke, the Federal Reserve chairman, did not specifically discuss wages, but he warned that the unequal distribution of the economy’s spoils could derail the trade liberalization of recent decades. Because recent economic changes “threaten the livelihoods of some workers and the profits of some firms,” Mr. Bernanke said, policy makers must try “to ensure that the benefits of global economic integration are sufficiently widely shared.”

Republicans can point to the unerlying wages problem being a long-term trend, at least for male workers. But they simply cannot avoid the fact that the issue is beginning to bite because of a set of interconnected "made under Republican leadership" issues they are doing noting to fix. In no particular order, these are: slowing housing values, sharply rising consumer debt, fast price hikes on commodites (.g. oil) and non-tradeable goods (e.g. college education); and the crisis in the funding of pensions and healthcare cost for American business. On these issues, it is clear it doesn't matter if the GOP chose denial or hoping-for-the-best: noting much is going to change. And the NYT piece backs this up:

Until the last year, stagnating wages were somewhat offset by the rising value of benefits, especially health insurance, which caused overall compensation for most Americans to continue increasing. Since last summer, however, the value of workers’ benefits has also failed to keep pace with inflation, according to government data.

Which is why NDN over the coming weeks will be putting this issue at the top of our agenda in the run-in to the elections.