November 16, 2014
When a Washington Post editorial frets over weak wage growth is is a bit like ISIS wondering why foreign reporters don’t seek their leaders out for interviews. Come on folks, are you serious?
We’ve had three and half decades in which we have maintained much higher unemployment rates than in the Golden Age (1947-1973) when workers shared in the gains of productivity growth. As Jared Bernstein and I show in our book, wage growth at the middle and the bottom of the wage ladder is directly related to the level of unemployment. Of course the Washington Post has endorsed most of the high unemployment policies in the form of the Fed’s anti-inflation policy, a high dollar policy that gave us large trade deficits, and reducing budget deficits and thereby depriving the economy of much needed demand.
But the Post’s attack on wages goes well beyond these macroeconomic policies. It has supported trade deals that are designed to put downward pressure on the wages of large segments of the labor force by placing them in direct competition with low-paid workers in the developing world. Yet, it will not even consider policies that would allow consumers to gain by subjecting doctors, lawyers, and other highly paid professionals to the same sort of competition.
The paper also has been an enthusiastic supporter of increased protectionism in the form of stronger patent and copyright protection. As a result of patent protection, we now spend close to $400 billion a year (@2.2 percent of GDP) on prescription drugs alone. We would probably spend about one-tenth this amount if drugs were sold in a free market.
And, the Post has been a consistent opponent of policies that would restore the balance of power between unions and management. The plunge in unionization rates has also been a big factor in reducing wages for most workers.
And,the Post has been a protector of the vast rents earned by rich people in the financial sector. It has opposed the I.M.F. and others who want to subject the financial sector to the same level of taxation of other sectors.
So, the WaPo is troubled by the fact wages aren’t growing. Hmmm, maybe if they followed the news more closely they would be better informed on the topic.
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