Kamis, 05 Agustus 2010

The Five Boxes of Populist Economics

One strategy aimed at populist economic insurgency is to depict it as obsessed with trade. That enables populism to be muddied by association with neo-fascists like Pat Buchanan, the anti-immigrant lunacy of Lou Dobbs, and economic crankery. This is reinforced by the accurate observation that trade policy alone is woefully inadequate to significantly lightening the burdens of the working class.

Populism is really much more, broader and deeper. Its point of departure is the domination of monied elites who jury-rig commerce and call it free enterprise, who marginalize dissent and call it democracy. It rejects the Horatio Alger myth, with its false promise that if you study, work hard, and play by the rules, economic security will be yours.

Now to the economics: here are my nominations for the five leading concerns in populist economics:

1. Trade is most prominent, but it may be the least important of my top five. Measures to protect better-paying jobs in the U.S. are feasible but only promise results to a limited extent.

2. Deficit dementia. The dirty secret in economic policy is that most economists, radical, liberal, moderate, and conservative, understand that the Federal budget need never be balanced, that moderate deficits can be sustained indefinitely. The implications of tolerating deficits of two percent of GDP -- over $200 billion in today's terms -- rather than a deficit of zero are huge.

3. Social Security. Forget "there is no crisis," the clarion call of anti-Bush campaigners. The new slogan should be, there is no problem. No benefit cuts are necessary for the foreseeable future. If anything, there is a projected shortfall of income tax revenue required to repay debts to the Trust Fund, as per current law, as well as for maintaining other Federal programs.

4. Health care. There is no crisis. There is, rather, huge projected growth in demand for an ever-expanding menu of treatments, and the burden of managing efficient, ample, and fair public sector finance of this care.

5. The Imperial Fed. Our true economic overlords, the Federal Reserve Bank's Board of Governors, have arrogated to themselves the right to ignore their mandate for full employment, elevating slow-growth anti-inflation policy over the unparalleled benefits of tight labor markets.

Trade is important, but in the grand scheme of economic security, it is also a pigeon-hole.

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