Battlepanda: Talking pro-growth progressivity


Always trying to figure things out with the minimum of bullshit and the maximum of belligerence.

Thursday, November 10, 2005

Talking pro-growth progressivity

Gene Sperling's new book, The Pro-Growth Progressive, has been generating a lot of discussion. Some of it contentious. But it's all good. I don't agree with many of Sperling's specific proposals, but his overarching goal to reconcile progressive goals and economic growth is admirable. These are the conversations we need to be having. Talking Points Memo has a book club featuring Sperling himself, as well as other opinions. More can be found from Baker, chez Max, there is a lot of good stuff from Kevin Drum, and Brad Plumer. Atrios has some interesting thoughts on the cult of the GDP that does not refer directly to Sperling, as well as this to say:
Now we're in this world where people just scream "free trade good!" Well, it isn't good for everyone. There are winners and losers, and all basic trade theory says is that enough extra income is created so that the winners could, in theory, more than compensate the losers for what they lost. But that's "class warfare" and "socialist redistribution" so we don't do that.
Remember the luddites? Now they have become a byword for irrational fear of change. But what people forget is, it was entirely sensible for the luddites to oppose new weaving technology -- the gain in cheaper cloth spread throught society might be greater in aggregate, but they cannot make up for the loss of to the individual of his livelihood. We are always being told by economists to look to self-interest as the explainer and engine for societal change. Yet when it comes to the benefits of trade they seem to come over all socialist and talking of the coming reward as if what's good for the aggregate must also be good for the individual.

This New York Times business column by Virginia Postrel typifies this attitude. The title is bold -- Yes, Immigration May Lift Wages. It is not until the very end of the article that you read this:
Professors Ottaviano and Peri find that recent immigration has had the most negative effects on the least educated.

Immigration in the 1990's, they estimate, raised the wages of native-born high school graduates, college dropouts and college graduates by at least 2.5 percent. By contrast, they estimate that the wages of American-born high school dropouts fell by 2.4 percent because of immigration.

In an interview, however, Professor Peri noted that Americans are increasingly well educated, so that high school dropouts make up a small, rapidly declining portion of today's native-born work force. In 2000, he said, only 9 percent of American-born workers did not have a high school degree.

"If you look at the U.S. labor force," he said, "those people born in the U.S., I am talking about a negative effect for about 9 percent of the population and a positive effect for 91 percent of the population."

91 percent benefits versus 9 percent hurt. Sounds like a good deal, right? Except those likely to be hurt are the most marginalized and vulnerable sector of society anyhow. Even more disturbing is the statistical evidence that an economic setback of being laid off can have consequences on earning power not just over the lifetime of the worker, but it would also have a negative impact on the wages achieved by the laid-off worker's children. From a social justice point of view, there is no escaping the responsibility of taking care of those who are hurt by changes that might benefit most of us. Heck, from a purely cold-blooded economic point of view, I doubt the spectre of a new underproductive underclass of have-nots is good for overall economic efficiency in developed countries.