The Disconnect

Paul Krugman makes a seemingly notable observation about the recent economic expansion (“Where’s My Trickle?,” [$ | free], The New York Times, 10 September 2007):

As far as I can tell, America has never before experienced a disconnect between overall economic performance and the fortunes of workers as complete as that of the last four years.

It is a strange fact that throughout the Twentieth Century the benefits of industrialization, productivity gain and comparative advantage have been so well spread among workers. It is also a strange fact that over perhaps the last thirty years this has so progressively ceased to be the case. One might think that some serious analytic attention could be brought to bear on this transformation, but instead it seems that more tightly squeezed shut eyes and more urgent repetition of past dogma has been the response.

Oddly enough it is the center that is most in denial here. On the far left there is Robert Brenner and others around the New Left Review and the world-systems people like Immanuel Wallerstein and on the far right (the paleoconservatives) it seems like Patrick Buchanan and the people around The American Conservative are genuinely concerned about theses issues as well. Where are the neoliberals who will squarely face the problem and propose neoliberal remedies?

And in his usual fashion, Mr. Krugman doesn’t shy from a boldly leftist position, at least of a sort:

Guaranteed health insurance, which all of the leading Democratic contenders (but none of the Republicans) are promising, would eliminate one of the reasons for this disconnect. But it should be only the start of a broader range of policies — a new New Deal — designed to turn economic growth into something more than a spectator sport.

That’s all fine and good but I hope that Mr. Krugman will devote a future column to an outline sketch of what such a policy would look like, because short of direct redistribution — with all the problems that entails — I really don’t know. But Mr. Krugman is an economist and remains at least half-beholden to the idea of economic efficiency. Perhaps some Robert Reich-like scheme of investment in labor plus grand bargain between trade liberalization and labor entailing significant deals of the same, not the pathetic job retraining micro-initiative included as a part of the NAFTA legislation. But what programs, specifically? There’s only so much job retraining the government can do.