Keeping the focus on every day people, part 2

As Rob Shapiro argues in this recent video report on the economy, Washington policy makers are faced with three distinct, but related, economic challenges today - the housing crisis and the weakening of our financial system, the emerging recession and the increasing struggle everyday people face in a more globalized world. Given that our great Capitol has limited time, attention and money, tackling all three of these effectively in the next few years will be hard. Choices will have to be made. It is our belief that of the three big challenges the most important - and perhaps the most difficult - challenge that must be addressed is this need to restore broad-prosperity in a much more global, fast and dynamic economy of the 21st century.

In yet another powerful column in the Times today, For Many, A Boom That Wasn't, David Leonhardt writes:

the now-finished boom was, for most Americans, nothing of the sort. In 2000, at the end of the previous economic expansion, the median American family made about $61,000, according to the Census Bureau's inflation-adjusted numbers. In 2007, in what looks to have been the final year of the most recent expansion, the median family, amazingly, seems to have made less - about $60,500.

This has never happened before, at least not for as long as the government has been keeping records. In every other expansion since World War II, the buying power of most American families grew while the economy did. You can think of this as the most basic test of an economy's health: does it produce ever-rising living standards for its citizens?

In the second half of the 20th century, the United States passed the test in a way that arguably no other country ever has. It became, as the cliché goes, the richest country on earth. Now, though, most families aren't getting any richer.

"We have had expansions before where the bottom end didn't do well," said Lawrence F. Katz, a Harvard economist who studies the job market. "But we've never had an expansion in which the middle of income distribution had no wage growth."

More than anything else - more than even the war in Iraq - the stagnation of the great American middle-class machine explains the glum national mood today. As part of a poll that will be released Wednesday, the Pew Research Center asked people how they had done over the last five years. During that time, remember, the overall economy grew every year, often at a good pace.

Yet most respondents said they had either been stuck in place or fallen backward. Pew says this is the most downbeat short-term assessment of personal progress in almost a half century of polling.

Laying out an agenda that restores broad-based prosperity has been at the core of our economic work these past three years, and is certainly one of the most significant governing challenges of our time. The President's refusal to work with Democrats to offer such an agenda is at the core of our disapointment with the President's strategy on the current Colombia FTA, and is a subject I visited extensively in a recent post, excerpted here:

What this all means for economic policy is that whatever set of policies are put into place to put the economy back on track they must be capable of addressing the struggle experienced by every day people prior to the current slowdown/recession. Offering up such a strategy has been at the heart of our economic work at NDN these past several years, and based on our recent major survey of American public opinion, is what Americans are desperately looking for. Looking back at the exit polls in 2006, there is even a very strong case that it was unhappiness with the economy that was the primary cause of the extraordinary GOP defeat in the fall elections.

Some highlights of what we've been advocating for:

A New Economic Strategy for America that makes globalization work for all Americans - In a recent paper Rob Shapiro argues that America needs a comprehensive new economic strategy, one that tackles rising health care and energy costs, accelerates innovation and makes significant investment in human capital and infrastructure.

A More Modern Approach to Trade Liberalization - In a major paper about the future of US trade policy, Rob Shapiro and I argue for a a continued commitment to global liberalization but only if coupled with a substantial new domestic approach to help those struggling with globalization prosper.

A New Committment to 21st Century Skills - In two papers, A Laptop in Every Backpack and Tapping the Resources of America's Community Colleges, NDN makes the case for a new national strategy to ensure that all Americans have the capacity to work in the much more IT-intensive work environment of the 21st century.

A Better Understanding of What is Driving Growth - In a new paper, The Idea-Based Economy and Globalization: The Real Foundations of American Prosperity in the 21st Century, Rob Shapiro describes how the American economy is undergoing an historic transformation from one built on hard physical assets to one built on intellectual property and intangibles - "ideas." The implications for policy makers here and abroad are only just being understood, and need to be if better understood in crafting future American policies to accelerate future growth.

The Need to Invest in our Aging Infrastructure - In a major new paper, NDN Fellow Michael Moynihan makes the case a major new commitment to investing in domestic infrastructure will help drive future growth and improve America's quality of life.

A 21st Century Immigration System - We need a much more modern approach to bring both high and low skilled workers into America, in ways that meet the needs of our modern economy and does so in a way consistent with our values. NDN has been one of the leading institutions championing a thoughtful approach to immigration reform, and certainly for those looking to relieve downward pressure on wages and benefits for American workers bringing the 5% of the workforce that is undocumented under the protection of American law, giving them access to the minimum wage and the ability to unionize would be a good place to start.

NDN also recently announced a major new initiative, tentatively titled the Green Project, which will be looking at ways to help transition our nation to a post-carbon economy while maintaining growth.

The economic path forward will not be easy, inexpensive or full of quick fixes. Globalization is bringing about structural changes in our economy that are not well understood, and helping make the American Dream a much more distant reality for too many. Whatever set of policies the nation pursues in the years ahead, it is critical we take a long-term view, and advance a comprehensive agenda that tackles the underlying structural challenges of what was already a very tough go of it in the age of Bush.

If you are interested in talking more about all this come see the Chair of our Globalization Initiative, Rob Shapiro, and I in SF tomorrow morning or in NY on May 5th. And be sure to pick up a copy of Rob's compelling new book, Futurecast.