According to this Washington Post article, for most of the past 35 years, full employment has been the exception, not the norm, so candidates for president need to tell us how they’re going to change that. The author Jared Bernstein, a former chief economist to Vice President Biden, is a senior fellow at the Center on Budget and Policy Priorities and author of the new book ‘The Reconnection Agenda: Reuniting Growth and Prosperity.’
Personally, I take exception with this viewpoint.
It’s necessary to look at the evidence provided by recent research published by the IMF. The paper argues that:
Total Factor Productivity growth in the US reflects a loss of efficiency or market dynamism over the last two decades. There are large differences in production efficiency across U.S. states, with the states having better educational attainment and greater investment in R&D being closer to the production “frontier.”
Returning to the Bernstein article, here’s the thrust of his argument:
The progressive economic agenda being debated by the Democratic presidential candidates is in sync with what ails us. While there are nuanced differences between them, their targets — excesses in finance, college affordability, income inequality, balancing work and family — are the right ones, especially compared with the big trickle-down tax cuts for the wealthy proposed by their Republican opponents. Such tax cuts will exacerbate inequality and, unless accompanied by massive spending cuts that will undermine government’s ability to do what we need it to do, blow a hole in the deficit the size of Trump’s ego.
Generalizing, the US economy is still very strong but these days it’s dependent upon advanced technology and cheap imports from global markets, rather than traditional heavily unionized industries. Despite growing problems, China is expected to replace the US as the world’s largest economy.
For me, the priorities of the Democratic presidential candidates highlighted by Berstein misses the point. The US is increasingly non-competitive because of ineffective education and underinvestment in R&D (see the IMF working paper which looks at the economic data by state).
Let me ask an open question:
Given the economic evidence cited by the IMF and two terms of Obama, surely another Democrat president will struggle revive the prosperity of America’s working and middle classes?