Commentary Magazine


Sound and Fury on the Economy

For all the hubbub about the innovative format of last night’s debate among Democratic presidential candidates, what was striking was how little effect the new format actually had. The debate was still, essentially, a group press conference in which—a few brief exchanges aside—the candidates displayed their placards. Take their rhetoric on the economy. As in earlier gatherings, the candidates handed out the same semi-populist doom and gloom about a country losing economic hope while only the very wealthy improve their lives. To listen to the candidates, you’d think the poor were sinking deeper into poverty due to predatory lending practices, while a cabal of insurance, pharmaceutical, and oil companies were conspiring to turn the U.S. into a giant New Orleans.

But, as David Brooks notes in his column today, “after a lag, average wages are rising sharply. Real average wages rose by 2 percent in 2006, the second fastest rise in 30 years.” Similarly, he observes, “according to the Congressional Budget Office, earnings for the poorest fifth of Americans are also on the increase.” Nor, says Arthur Brooks, writing in the Wall Street Journal, are Americans sinking into a slough of economic despond. They continue to be optimistic about their chances for a better life. The National Opinion Research Center’s General Social Survey shows that in 1972, 30 percent of the population said that they were “very happy” with their lives; in 1982, 31 percent; in 1993, 32 percent; and in 2004, 31 percent. “In other words, no significant change in reported happiness occurred—even as income inequality has increased significantly.” “The data,” Arthur Brooks concludes, “do tell us that economic mobility—not equality—is associated with happiness.”

The Democrats definitely have some things right. They are leading the effort to expand the Trade Adjustment Assistance program—which aids workers who have lost their manufacturing jobs to foreign competition—to include service workers as well. But the Deomcrats are also looking to sink well-wrought trade agreements with South Korea and Colombia.

The Republicans definitely miss the mark at times, too, particularly on the genuine (and justified) anxieties of the public about the effects of globalization. Talk of the beauty, efficiency, and long-term benefits of markets is not enough; the public expects government to help balance large-scale risk and rewards in the here-and-now. The GOP would make a profound mistake, for both the future of free trade and for their own political future, if, as the White House seems inclined, they were to block the expansion of the Trade Adjustment Assistance program to include service workers.

“Feeding off pessimism about the war and anger at Washington, the candidates,” says David Brooks, “now compete to tell dark, angry, and conspiratorial stories about the economy.” This is not just a matter of rhetoric; these overheated arguments present a real danger. They might conflate the legitimate need to help cushion Americans from the increased risks of the global economy with an attempt to roll back the growth of free trade that has underwritten precisely the economic mobility so important to economic happiness. And that really would be bad news.