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Prof. Mark THOMA - New Economic Thinking is Needed to Stop Charlatans Like Trump


DP Veteran
Dec 13, 2015
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From here, excerpt:
After the positive employment report last week, we are hearing that faster wage growth may be “around the corner.” This is not the first time this hope has been raised, but workers have not yet realized significant gains. Will this time be different? The average hourly wage is up 2.6 percent relative to a year ago, and there are some signs of wage acceleration in recent months. However, part of the increase appears to be a shift from health care benefits to wages so the gains up to this point have not been as large as statistics on wage growth alone suggest.

If there is acceleration in wage growth that is not offset by a further decline in benefits, it would certainly be a welcome change from the wage stagnation and rising inequality that workers have experienced in recent decades. But faster wage growth won’t solve the problem of rising inequality on its own.

Economists have identified many potential reasons for rising inequality, but there is no universally agreed upon set of causes. However, inequities in the distribution of income, an unfair distribution of the costs of technological change and globalization, and a political environment that supports wealthy business interests over the interests of the working class appear to be important factors.

Not just important (as the article says), but key to any solution. As Bernie has pointed out innumerable times. By most measures America is a Great Country because its people are rather well-off - much more so than similar economies elsewhere. (The EU comes to mind as a comparison.)

But America, like the EU, has also a very high incidence of poverty. Fully 15% of American live below the Poverty Threshold, and have done so for quite some time:
Number in Poverty and Poverty Ratio.jpg

Trump has no answers for those poor enough to find themselves below the Threshold. He has a good deal of rhetoric, but he has no real answers. He talks tough, but he does not have a BigStick.

Because, if he did what he says he wants to do (like pulling the US out of the WTO*), he will only alienate the US even further from trade and that will have a chilling effect upon employment. And at the end of his "adventure" in four-years time, the American poor will find themselves no better off for his having been at the helm of the Republic and perhaps even worse ...

*World Trade Organization

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