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Tuesday, May 02, 2006

A Breath of More Realistic Air

This is refreshing. Compare these remarks by the new head of the CEA, Ed Lazear, to those made by other administration officials such as John Snow. We can debate the causes and cures for our economic problems, but at least he acknowledges the issues:

The New Guy Dives In, by Chris Conkey, WSJ Washington Wire: In his first speech as head of the president’s Council of Economic Advisers, Edward Lazear tackled two issues frequently cited by critics of the Bush administration’s economic record: wage growth and income inequality.

The average weekly wage has risen under President Bush, but not quite as fast as inflation. That means consumers’ weekly pay hasn’t kept up with price increases ... Mr. Lazear, speaking at the Hudson Institute, a Washington think tank, emphasized different numbers.

He said average hourly pay adjusted for inflation is up 1.3% per year since 2001. He acknowledged, however, that “other measures show less growth or even a decrease.” Wages should be rising at this point in the economic expansion... Mr. Lazear said wages will catch up to productivity gains in the months ahead, boosting average pay. “We are moving into that phase where we expect that wage growth will catch up and eventually take over productivity growth.”

Mr. Lazear was less optimistic on income inequality, which has steadily widened over the last two decades as income gains have risen for highly skilled workers but remained flat for those at the bottom. “The general picture cannot be disputed,” he said. “The difference between the earnings of individuals at the top and earnings of individuals at the bottom has grown.”

Mr. Lazear said rapid technological change has upped the minimum level of skills necessary to successfully compete in the economy, putting a premium on education. But he rejected suggestions that immigration and international trade have widened the inequality gap. “Inequality in skills and education levels means inequality in income. At the bottom end of income inequality, focusing on improvements in schools for those who are most disadvantaged, seems to be the best investment for society,” he said.

PGL at Angry Bear also notes:

Presidential economic advisor Edward Lazear argues against tax cuts for gasoline:

WASHINGTON (Reuters) - Senior White House economist Edward Lazear said Tuesday that proposals to cut the gasoline tax would take energy policy in the wrong direction by encouraging consumption.

Exactly – why do the pandering politicians wish to encourage more consumption of oil?

    Posted by on Tuesday, May 2, 2006 at 05:52 PM in Economics, Income Distribution, Politics | Permalink  TrackBack (0)  Comments (2)


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