November 11, 2014
David Leonhardt had an Upshot piece that discussed the prospects for future wage growth in which the only two “experts” cited were Gene Sperling and Roger Altman, both Clinton administration officials with strong ties to Wall Street. While the piece includes assurances from Gene Sperling that no mix of the policies he advocates are likely to lead to wage growth any time soon, it is worth noting that a policy he likely opposes is likely to offer near-term benefits.
Specifically a lower valued dollar could reduce the trade deficit by making our goods and services more competitive internationally. This could get us back to full employment which would allow workers at the middle and bottom of the wage distribution to share in the gains of economic growth.
The Clinton administration explicitly pursued a high dollar policy which led to a massive trade deficit. This deficit created a gap in demand which could only be filled with the demand generated by the stock and housing bubbles. Wall Street tends to prefer a higher dollar both because it increases its power internationally and reduces inflation.
It is amazing that Leonhardt relied on such a narrow range of sources when so many experts with differing views were readily available to speak on this issue.
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