How to restore the middle class
In part 1 of this series, I argued that the President got the diagnosis exactly right in his recent speech in Kansas.聽聽 I then suggested some more granular policy meat to put of those bones, and promised some more (ergo, Osawatomie Policy Agenda, or OPA).
Ezra Klein also yearned for more policy granularity and wrote about this problem鈥攖he 鈥渓ast-chapter problem鈥濃�攚here policy makers and analysts give a great diagnosis but kind of punt on the prescription.聽 Ezra goes on to worry that it鈥檚 not just political dysfunction, either鈥e鈥檙e not sure what to do.
鈥ven if the magic wand could be waved and the blockages of Washington lifted, we would still be far from solving our economic problems. Think tanks fairly burst with good ideas for changing the tax code and improving the health-care system and rebuilding our infrastructure. But when it comes to explaining why, exactly, median incomes have stagnated for decades and what, exactly, we can do about it, the conversation gets a little quieter. We鈥檙e much better at solving policy problems than we are at solving economic problems.
I鈥檓 sympathetic to this view, and interestingly, more so having worked at top levels of federal economic policy making.聽 That is, solutions came to me more easily before I spent a few years inside the machine.聽 This isn鈥檛 just 鈥測ou don鈥檛 wanna know how the sausage is made鈥� or 鈥渢he Senate is where good ideas go to die.鈥澛� It鈥檚 more that good economic policy making, whether it鈥檚 preventing a credit crisis or creating jobs, is harder than you think.聽 As one example, it鈥檚 one thing to conceive of effective stimulus; it鈥檚 another to implement it (and before opposition types go reading too much into that observation, let me assert that VP Biden鈥搈y former boss鈥揹id a pretty amazing job as implementer-in-chief; that was an $800 billion program with thousands of moving parts, and nothing of that magnitude goes off without a hitch, but the VP got as close as you could get).
That said, I humbly submit that the policy solution set is perhaps not as elusive as all that.聽 Here is my list of what it would take to restore broadly shared prosperity to the middle class, push back on inequality and promote mobility for the less advantaged.
鈥揻ull employment to increase workers鈥� bargaining clout
鈥搈ore union membership as a countervailing force to the YOYOs
鈥揳 lot more infrastructure investment
鈥搈ore progressive taxation to support gov鈥檛 investment in the economy, the safety net, and education/training
鈥搖niversal health care
鈥搑obust tax credits for low-wage jobs and a minimum wage set at a decent level and indexed
鈥搕ough financial regulation
鈥搖niversal pre-K
There it is.聽 And sure, the devils in the details (how do we ensure full employment; what鈥檚 a 鈥渄ecent level鈥� for the min wage?) and we鈥檙e obviously miles away from a politics that would entertain such ideas.聽 But I鈥檒l bet you they would work.
Any takers?
