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Wednesday, November 22, 2006

Avoiding a Family Feud

Two visions of the types of economic policies Democrats should pursue:

The Democrats' Economy Wars, by Harold Meyerson, Commentary, Washington Post: ...All wings of the Democratic Party seem to understand the extent of America's economic problem. The architects of Bill Clinton's economic and trade policies, as well as their more liberal critics, all agree now, in the words of Clinton Treasury secretary Lawrence Summers, that "the vast global middle is not sharing the benefits of the current period of economic growth -- and that its share of the pie may even be shrinking." ...

Concerned that the American dream is fading for the middle class, and fearful that said middle class may turn against the global free-trade order he helped erect, Rubin has created the Hamilton Project, which ... proposes ... greater public investment in education, health care, research and development, and infrastructure; balancing the budget; and wage insurance for workers compelled to take lower-paying jobs in our Wal-Mart-ized economy.

But are these solutions remotely adequate to the problem...? Even its proponents seem not to think so. "Let us be frank," Summers wrote... "[More] education [can't] be a complete answer at a time when skilled computer programmers in India are paid less than $2,000 a month." When Rubin was pressed ... as to whether he thought the project's proposals would arrest or offset the global convergence of wages, he said, "I don't know the answer to that. I would guess that the answer to that question is no."

For the Democrats who now run Congress, not to mention those planning to run for president, the fact that the party's economic gurus have devised a policy that they themselves believe isn't up to the challenge ... can't be greatly heartening. Happily, this is not the only project whose work the Democrats will be able to access. This June, ... a group of some 50 liberal economists loosely affiliated with the Economic Policy Institute (EPI) began work of their own. Their project, yet to be named (its founders have resisted the temptation to call it the Aaron Burr Project), will be unveiled in January. ...

For starters, EPI's project will call for a pay-or-play health insurance system (employers can cover their own employees in private plans or pay taxes into an expanded version of Medicare that will cover everyone else) and for a retirement system in which employers can offer their employees pensions or, with their employees, pay into a system administered by Social Security. It will suggest a series of policies to decouple globalization from downward pressure on wages -- adding some enforceable labor standards, for instance, to the rules of the World Trade Organization. ...

Over the next two years, both projects will barrage the Democrats with their ideas. At times their perspectives may converge. (Rubin seems to be edging closer to acknowledging a need to reestablish workers' rights to join unions, long a priority of the EPI crowd.) But the creation of EPI's project balances the scales in the Democratic universe. The Hamilton Project is the policy voice of the party's largest business donors. In the project to be unveiled in January, the party's voters get a policy voice, too.

This division is evident in comments, though I think the commenters identifying with the EPI group are, if not more numerous, certainly more vocal. There's no reason to expect or want everyone in the Democratic Party to always agree. There will be some issues - protectionism comes to mind - where Democrats will not agree and no amount of debate will change that. It will be disappointing if the initial policy proposals come in the divisive areas where the two groups disagree when there are so many other important policy areas where there is general agreement on what needs to be done. What policies should come first?

Update: Kash at The Street Light has more.

    Posted by on Wednesday, November 22, 2006 at 02:00 PM in Economics, Policy, Politics | Permalink  TrackBack (0)  Comments (6)

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