But the first step, at least, which Krugman did in this column, is to clear the ideological ground and stipulate that Americans are not suffering from false consciousness when they tell pollsters they are unhappy about the state of the economy.  This is, essentially, the argument of George Will and others on the right who resent Bush's continued low polling numbers on economic questions despite the decent macro-economic #'s over the past year or so.

Notwithstanding today's remarks by Kevin Drum, the Dems should take another suggestion from him and say, in response to Will et. al, "median wages, median wages, median wages", whenever this argument is joined, as it was between Will and Bob Reich on This Week the other day.  Reich missed the moment, however. 

The point is a simple one linked to the broader income and wealth inequality problem, of course:  people don't think the economy is doing well unless they see evidence of that in their pay checks, as opposed to say, their doctor or Katie Couric or George Will.  The rest of the economic stats, especially GDP, don't describe this rather fundamental apprehension of quotidian experience, which seems to be occluded for both politicians and the elite mediaby the class blinders they wear , without even knowing they are wearing them--a doubled form of blindness.  Perhaps we should call this false unconsciousness squared and direct George Will to the real location of the ideological unreal in American society. 

Rolling up my sleeves, the first thing to note is that we're not experiencing a "high-growth" economy by any serious standard. This recovery lags previous ones in every aggregate indicator save two: corporate profits and residential investment. Check out this for evidence (and, yes, this is a shameless plug, but, it's right on point):

http://www.epi.org/content.cfm/bp168

And, this is *after* we've allowed a president to have all-but-absolute say over fiscal policy and pumped $930 billion in deficit spending into the economy.

 
Anybody who wasn't committed solely to upper-income tax cuts would have gotten much, much better macro performance out of this much deficit spending.

That wasn't actually that hard...

 
joshb 

"This recovery lags previous ones in every aggregate indicator save two: corporate profits and residential investment." - joshb.

The Corporate Sector has been making its profits the old-fashioned (since Reagan) way: by merging and cutting jobs.

The Private Sector has been surviving the new-fashioned (since Greenspan) way: by refinancing their over-valued house and taking out the equity in cash via low-interest (Chinese) loans.

When the music stops, where will we all sit? 

Matt, you can try to appear balanced by saying you can't "blame Bush" for the trend and that most Democrats don't want to do anything about it. But the bigger point to be made, heard and voted on, is that ZERO Republicans want to do anything about it. Never have, never will. At least during Democratic primaries we heard discussion of poverty, wages, middle class expansion, etc., even if it was primarily from John Edwards. The truth is that the party of Bush cares not one bit that the poor are becoming poorer. They still hold to the notion that if you give more capital to those that already have most of it and, hope really, really hard, that they will spend it on the masses then we will all flourish.

Democrats at least realize there is some pain happening below the top 10%, even if they don't have a canned, consistent response as to how to combat the problem, like "cut taxes." The focus that continues to be placed on Macro-economic numbers versus on the ground reality and the ever growing fight of the middle class with healthcare, energy costs, etc., in order to put the politics of the right in a better light explains all we need to know about the difference in focus.

Matt,



You get that sense too?

Maybe Ed Kilgore knows where the Katrina Revolution is hid...

Too bad it got lost...populism is the only route back into the South and the Democratic Party's pissed away yet one more opportunity

I'll believe employers don't rely on low-skilled immigrant labor the day I see white people in the fields picking strawberries and hanging on street corners in front of hardware stores waiting to be picked up for day labor. Economic forces, not immigration policies, are the driving engine of this issue.

I'm surprised at the helplessness of the suggestions here. Try this simple solution:
1. Tax the rich
2. Subsidise things that everybody needs
  e.g. Health Care, food, education. (But be careful how you do it with housing - interfering in the housing has notorious negative externalities.) Better to do it by improving and paying for services in poor neighbourhoods.

Shouldn't be too hard for a democrat to think of.

I don't disagree that low-paid (and especially undocumented) immigrant labor keeps wages low. What I do disagree with is the idea that immigration policies are to blame, and that the problem would magically go away if policies were reformed. It's like saying people would stop using drugs if we fought a giant drug war against suppliers.
I also disagree with the idea that the economy does not depend on unskilled immigrant labor. It does in many large industries, and that is a fact. We can talk about why that's true or ways to make it less true, but not about whether it's true. 
Of course immigration policies have a role to play in whatever solutions are crafted, but without an understanding of the economic forces behind the issue, there will be no progress.

BradtheDad mentioned the conventional free-market assumption that raising the minimum wage destroys jobs (he disagrees in the present instance). Perhaps the easiest way to look at it is this: If the minimum wage is set higher than the value of the marginal product that these workers would produce, it will lead to lower employment. If not, not. In other words, as long as what the worker produces is worth more to the employer than what the employer has to pay the worker, the employer will keep hiring, even if the minimum wage goes up.

BradtheDad also mentions the assertion that immigrants do the jobs Americans won't. While he takes issue with that, he doesn't go far enough. The fact is, there is no such thing as a job an American won't do. There are only jobs that Americans won't do at the wages currently on offer. As someone who calls himself "a free-maket kind of guy" BradtheDad should be the first to realize that if there is a shortage of something (in this case labor to do certain jobs), there is a perfectly good free-market solution: raise the wage for that labor until you get enough of it.