Friday, September 01, 2006

Quote of the day: We need "some smart, bold populist politicians" to reverse policies that have been screwing workers since the Reagan era

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"Wages may be difficult to raise, but we won't know until we try. And as for declining benefits--well, every other advanced country manages to provide everyone with health insurance, while spending less on health care than we do.

"The big disconnect, in other words, provides as good an argument as you could possibly want for a smart, bold populism. All we need now are some smart, bold populist politicians."


--Paul Krugman, in his NYT column today,* on "The Big Disconnect" "between overall economic growth and the growing squeeze on many working Americans"

The "big disconnect," writes Krugman, "will probably play a big role this November, partly because President Bush seems so out of touch: the more he insists that it's a great economy, the angrier voters seem to get. But the disconnect didn't begin with Mr. Bush, and it won't end with him, unless we have a major change in policies."

For "nonsupervisory workers," he writes, real wages (i.e., wages adjusted for inflation) "reached a peak in the early 1970's, at the end of the postwar boom. Since then workers have sometimes gained ground, sometimes lost it, but they have never earned as much per hour as they did in 1973." And the erosion of workers' benefits "began in the Reagan years, although there was a temporary improvement during the Clinton-era boom. The most crucial benefit, employment-based health insurance, has been in rapid decline since 2000."

Let's pause a moment to look at that timeline. After 1973 the great post-Vietnam inflation took hold, presided over by poor Jerry Ford. (Remember "WIN" buttons?) By the time Jimmy Carter became president, in 1977, buffeted by economic forces like the first great oil price shock and political traumas like the fall of the shah of Iran, he found himself unable to exert much control over the economy. And that, it seems fair to suggest, gave the Reagan mob that pushed him out of the White House ideal cover to set in motion the restructuring of the American economy we've seen completed by the mob that put Chimpy the Prez in the White House.

To return to Krugman, he concludes his case:

Why have workers done so badly in a rich nation that keeps getting richer? That's a matter of dispute, although I believe there's a large political component: what we see today is the result of a quarter-century of policies that have systematically reduced workers' bargaining power.

The important question now, however, is whether we're finally going to try to do something about the big disconnect. Wages may be difficult to raise, but we won't know until we try. And as for declining benefits--well, every other advanced country manages to provide everyone with health insurance, while spending less on health care than we do.

The big disconnect, in other words, provides as good an argument as you could possibly want for a smart, bold populism. All we need now are some smart, bold populist politicians.

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*As usual, in case the link doesn't work, in accord with our NYT Columnists Held Hostage program, the full text of the Krugman column will be posted in a comment.


ALSO TALKING--About Chimpy the Prez's shiny new rhetorical toy (from the "For Learning-Challenged Tots" line), "Islamic fascism"

"The White House is just looking for a way to scare us again."

--a caller to Jerry Springer's Air America Radio show this morning

2 Comments:

At 12:01 PM, Blogger Scott said...

I sometimes wonder if there is going to be a revolution in this country.

More often in the last few years.

 
At 4:55 PM, Blogger KenInNY said...

Sorry, I was in such a hurry to get on with my day off (yes, we actually got an extra day off!) that I forgot to post the Krugman column as promised. Here it is:

September 1, 2006
Op-Ed Columnist

The Big Disconnect
By PAUL KRUGMAN


There are still some pundits out there lecturing people about how great the economy is. But most analysts seem to finally realize that Americans have good reasons to be unhappy with the state of the economy: although G.D.P. growth has been pretty good for the last few years, most workers have seen their wages lag behind inflation and their benefits deteriorate.

The disconnect between overall economic growth and the growing squeeze on many working Americans will probably play a big role this November, partly because President Bush seems so out of touch: the more he insists that it's a great economy, the angrier voters seem to get. But the disconnect didn't begin with Mr. Bush, and it won't end with him, unless we have a major change in policies.

The stagnation of real wages--wages adjusted for inflation--actually goes back more than 30 years. The real wage of nonsupervisory workers reached a peak in the early 1970's, at the end of the postwar boom. Since then workers have sometimes gained ground, sometimes lost it, but they have never earned as much per hour as they did in 1973.

Meanwhile, the decline of employer benefits began in the Reagan years, although there was a temporary improvement during the Clinton-era boom. The most crucial benefit, employment-based health insurance, has been in rapid decline since 2000.

Ordinary American workers seem to understand the long-term disconnect between economic growth and their own fortunes better than most political analysts. Consider, for example, the results of a new poll of American workers by the Pew Research Center.

The center finds that workers perceive a long-term downward trend in their economic status. A majority say that it's harder to earn a decent living than it was 20 or 30 years ago, and a plurality say that job benefits are worse too.

Are workers simply viewing the past through rose-colored glasses? The report seems to imply that they are: a section pointing out that workers surveyed in 1997 also said that it had gotten harder to make a decent living is titled, "As usual, people say things were better in the good old days."

But as we've seen, real wages have been declining since the 1970's, so it makes sense that workers have consistently said that it's harder to make a living today than it was a generation ago.

On the other side, workers' concern about worsening benefits is new. In 1997, a plurality of workers said that employment benefits were better than they used to be. That made sense: in 1997, the health care crisis, which had been a big political issue a few years earlier, seemed to have gone into remission. Medical costs were relatively stable, and in a tight labor market, employers were competing to offer improved benefits. Workers felt, rightly, that benefits were pretty good by historical standards.

But now the health care crisis is back, both because medical costs are rising rapidly and because we're living in an increasingly Wal-Martized economy, in which even big, highly profitable employers offer minimal benefits. Employment-based insurance began a steep decline with the 2001 recession, and the decline has continued in spite of economic recovery.

The latest Census report on incomes, poverty and health insurance, released this week, shows that in 2005, four years into the economic expansion, the percentage of Americans with private insurance of any kind reached its lowest level since 1987. And Americans feel, again correctly, that benefits are worse than they used to be.

Why have workers done so badly in a rich nation that keeps getting richer? That's a matter of dispute, although I believe there's a large political component: what we see today is the result of a quarter-century of policies that have systematically reduced workers' bargaining power.

The important question now, however, is whether we're finally going to try to do something about the big disconnect. Wages may be difficult to raise, but we won't know until we try. And as for declining benefits--well, every other advanced country manages to provide everyone with health insurance, while spending less on health care than we do.

The big disconnect, in other words, provides as good an argument as you could possibly want for a smart, bold populism. All we need now are some smart, bold populist politicians.

Copyright 2006 The New York Times Company

 

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