The Ultimate Test Cometh

It’s one thing to promise, and another to deliver. The time to deliver is approaching. Conservatives have now started to promise jobs and wage growth. What will happen if their promises are not delivered?

Conservatives have finally admitted that inequality is indeed a problem, a major problem. They tried for decades to say it was not a problem, that it is only fair that those who work harder or are smarter, or even by reason of inheritance or nepotism, have more income or wealth, get to keep what they have obtained.

And the rest of us…? Well, it’s a free country and I guess you just didn’t have the stuff, or you made bad decisions along the way. And that’s just how the ball bounces. I’m not responsible for your misfortune.

But while Conservatives may be self-oriented, they are not stupid. They now face a noisy and growing crowd of Americans demanding better jobs and better wages. Conservatives have discovered that about 1/3 of Americans are Liberal, about 1/3 are Conservative, but about 1/3 are somewhere in between, and that last 1/3 have yet to be persuaded that the Conservative agenda is good for them.  At this time, that 1/3 suspects the Conservative agenda is good only for the wealthy. And for that critical 1/3, the mixing in of gun rights, abortion bans, and no immigration is insufficient to  make the case for the Conservative agenda. They don’t see the connection to jobs and wages. There has been a steady rise in the income and wealth of the upper classes across the last 30 years, and only stagnant wage growth for the lower classes, along with employment becoming far more precarious.

Essentially, the sheer reality of inequality has been forced upon the Conservatives. If they don’t at least pretend to care about it, they will lose a lot of upcoming elections. And, if they only pretend and do not come up with real solutions, they will lose, just somewhat later, when broken promises come home.

So, now the Conservative message is being re-honed to broaden the appeal, trying to make the case that lower taxes, less government, and honoring the property and rights of the wealthy is in fact, good for the working class too. When asked just how all of this will benefit the middle and lower classes, the answer is the promise of a higher GDP growth rate. That alone will create the jobs and the wage growth that has been missing (and for which they blame the Obama administration).

Never mind that history shows the economy grew faster under Democrats across the last 50 years than under Republicans. This time around will be different, they say. Never mind that the supply side tax cut philosophy pioneered by Arthur Laffer has lost credibility. Savings from reduced taxes to the wealthy are not going into building businesses to create jobs. They are just going into the stock market or possessions of the wealthy. Never mind that “trickle down economics” has not trickled down–so far.

Whether we end up with Trump, Cruz, Clinton or Sanders, it seems inevitable that the Conservative agenda will prevail. It has prevailed and strengthened across the 8 years of the Obama administration, thanks to Citizens United and the explosion of “dark money.” That agenda claims that we will fix your frustration with jobs and wages. The prescriptions are reduced government, reduced taxes, reduced regulations, reduced immigration. These will bring you the jobs and the wages. Donald Trump claims we’ll get all these jobs back, “great high paying jobs,” by getting tough with China and Mexico.

Well…those prescriptions are not going to do it. There is more to it now. First, economic growth will be hard to stimulate in this global cycle. The proposed policies will not move it much. There are massive changes in technology and globalization that will not be countered by growth alone. Second, economic growth is necessary, but insufficient to achieve jobs and wage growth–i.e., to begin to move the inequality index slowly toward a more egalitarian country, like we had in the 60s and 70s.

And I imagine the smartest of the leaders of the Conservative movement are aware that this set of policies will not do it–will not create jobs and wage growth. But the promises will buy time.

There are approaches to the bad word “redistribution” which can be quite tolerable, even helpful to both ends of the economic spectrum. Among those are infrastructure improvement and education. Those will take a long time, even if we get political agreement, which in itself seems far away. The issues and broader prescriptions are laid out well by Joseph Stiglitz and Robert Reich, and also by Bernie Sanders.

Of course, the usual answer to failed promises, in business and in politics, is to blame it on something else or someone else. That is always tried. But, as time passes and it becomes increasingly evident that Conservative politics and economics are dominating, it will be more and more difficult to pull that wool over the voters eyes.

Two disclosures:

1-The opinions expressed in this blog are entirely my own and in no way should be attributed to any of the organizations with which I am affiliated.

2-There are good, intelligent, and capable leaders among both Conservatives and Liberals, among both Republicans and Democrats. I have friends across the entire spectrum. While it is not entirely fair to characterize any political group with a broad brush, time and space limitations preclude any attempt to be more granular. My apologies to all. My primary concern is with neoliberal economics and its impact in widening the inequality gap.


4 thoughts on “The Ultimate Test Cometh

  1. El-Erian:
    “ “rational fool” – Even under conditions of perfect information, you can end up with silly outcomes because of decision-making challenges and constraints.
    Gridlock will continue in Washington – accentuating inequalities, undermining inclusive prosperity, and American’s leadership on the global economic stage.
    The influx of greater cognitive diversity makes the industry more dynamic, including by encouraging providers to go beyond their traditional client acquisition and product focus to also encompass more holistic customer-centered solutions.
    No company and certainly no country will be able to harvest its realizable potential if it fails to embrace and empower human talent regardless of gender, race, culture, sexual orientation, and perspectives.”
    If we could require everyone running for office to take a test – perhaps we could bring about fair and just government. Mississippi just passed the religious freedom law – a law that allows discrimination. This law was put into place by the Mississippi tea party. The reason was that they did not want to get sued by anyone that they refused to serve.
    No greater example of right wing thinking – cut taxes, cut regulations, defund education or allow home schooling with state money (actually a voucher funded by public education; so they take money from the education fund and give out vouchers to whomever).
    Mississippi fails in almost every category: education, employment, GDP, income, most obese, least high school grads, worst roads, and shortest life expectance.
    However, we are the most Republican state in the union.


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