Column: Why neither candidate will ever return America to its 1950s prosperity

As presidential candidates always do, both Hillary Clinton and Donald Trump have pledged to improve Americans’ economic lot. As was not the case for presidential candidates of yore, however, they’re talking to a public cognizant of some grim facts: the American economy ain’t what it used to be, with its growth rate stunted and its income distribution skewed to the very rich.

The American people may not have read economist Robert Gordon’s groundbreaking history of our economic growth, which notes that the great breakthroughs of the 1920 to 1970 period — universal indoor plumbing, electric power, heating and air conditioning, auto and air travel, radio and television — haven’t been followed up by anything remotely so life-altering. They may not have read Thomas Piketty’s landmark work that documents how income and wealth get redistributed upward or the work of his colleague Emmanuel Saez, the latest of whose studies showed the wealthiest 1 percent of American families pulling down 52 percent of all income growth from 2009 through 2015.

But regardless of what they’ve read or haven’t read, the American people know that the middle-income jobs that once predominated in the United States have become fewer, while the cost of some of life’s essentials — medical care and college educations in particular — have continued to soar. They understand that globalization has placed tens of millions of Americans in competition with much cheaper workers in the developing world, as Princeton economist Alan Blinder documented half a decade ago. They understand that technology has reduced the need for workers in manufacturing (and some of them understand how it has reduced the need for workers in construction as well). And if they’ve sought employment since the recession ended in 2010, they may well understand, as economists Lawrence Katz and Alan Krueger have documented, that the number of traditional 40-hour-a-week jobs as employees of their actual employer is not increasing, and that the vast majority of the jobs we’ve created since the end of the recession tend to be temp or perma-temp, subcontracted, part time or labeled as that of an independent contractor, whether rightly or not. They also understand that the kind of benefits that tens of millions of jobs used to provide — defined benefit pensions and comprehensive health insurance — can be nearly impossible to come by.

In short, the American capitalism that was the marvel of the world in the decades following World War II — the regulated capitalism that produced the first middle-class majority in world history — has slowly but nearly completely vanished.  Under pressure from Wall Street, whose regulations were largely lifted in the 1980s, corporations redefined their mission as rewarding their shareholders only, particularly once the pay and tenure of top executives were linked to the value of the stock. Even putting globalization and technological advances aside, the financialization of American capitalism has depressed employee income, encouraged or compelled employers to outsource jobs and cut benefits and diminished corporate investment in worker training and research and development. Also beginning in the 1980s, the unyielding hostility of employers to unions has reduced the share of unionized private-sector workers from nearly 40 percent in mid-20th century to just 6.6 percent today, making workers almost completely unable to resist any of these trends.

Restoring the widely shared prosperity of the mid-1900s, then, would be no mean challenge for a President Clinton, a President Trump or a President Anybody Else. Even if manufacturing were onshored rather than offshored, most factories are far more mechanized, employing far fewer workers, than those of the mid-20th century — and such jobs as would be created would still face competition from nations with far lower wages.

What policies could create a level of greater prosperity that wouldn’t flow uphill to the very rich? First, since workers have more bargaining power in a full-employment economy, public investment in needed infrastructure repair and construction and in the growing industries of care for seniors and children would not only be good in themselves, but also serve to tighten labor markets and increase the public’s purchasing power. The declining share of prime-age Americans even in the labor market has led some to speculate that technology will continue to reduce the labor force, compelling government to institute a basic yearly payment to all Americans. Such a policy may someday be necessary, but before we accept that expedient, we should strive to put more money in more Americans’ pockets, through a commitment to full employment and increasing worker power and income. Americans’ additional purchasing power might just compel employers to hire more of their countrymen, reversing the decline in labor market participation.

Second, all workers need the kind of bargaining power with employers that today are enjoyed only by the “activist investors,” who threaten employers with job loss unless company proceeds are directed to them through dividends or stock buybacks. Collective bargaining rights need to be extended to all workers in standard and non-standard employment relationships, and those rights must be protected with laws far stronger than the National Labor Relations Law, which employers violate with impunity. As in Germany, corporate boards should be divided evenly between management and worker representatives — an arrangement that has enabled the German economy to maintain the kind of vibrant middle class that Americans used to enjoy.

Third, the power of financial interests over employer behavior needs to be radically reduced, both by stricter regulations and by raising the marginal taxes on investment income to levels markedly higher than those on employment income, to levels comparable to those of the mid-20th century.

The United States will never again loom quite so gigantically and prosperously over the world economy as it did when it emerged from World War II as the one undamaged industrial nation. But we have the power to invest more of our resources into productivity-enhancing endeavors than we currently do and to commit ourselves to a new birth of New Deal economics, which ensured that postwar prosperity was widely shared. Making health care and a public college education taxpayer-supported rather than an individual responsibility, raising and indexing the minimum wage, restoring workers’ bargaining rights, cutting trade deals that reward workers over corporate interests, investing heavily in infrastructure and research and development, making full employment a government-financed priority — these are the policies that could help restore the American economy. Of the various presidential candidates, Bernie Sanders came closest to advocating most of these, with Hillary Clinton a clear second. Donald Trump has pledged to increase our infrastructure investments; that’s the limit of his enthusiasms for such proposals as these.

In the new world economy, pledging to recreate the kind of broad prosperity of the mid-20th century is a stretch even if all these policies are adopted. There is in both Clinton’s and Trump’s optimism — and anyone else’s — a touch of the Ghost Dance, the Sioux ritual, as the nation was being forcibly relegated to reservations, that the tribe hoped would magically bring back the buffalo. Ghost Dance or not, however, there are policies that could make what prosperity we have more equitably shared, and those are the policies we need to embrace. Not to do so — to acquiesce in increasing inequality and decreasing living standards — is to court a politics of racism, white nationalism and xenophobia that already looms large on the national landscape.

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