January 9, 2006

THEY'VE MOSTLY BEEN MISSING FOR A QUARTER CENTURY NOW:

What Democrats Miss in Bushonomics (Sebastian Mallaby, January 9, 2006, Washington Post)

Faced with strong growth, full employment and a productivity miracle, Democrats insist that something is profoundly wrong. Responding to President Bush's economic speech on Friday, the Senate's top Democrat complained that "the benefits of economic growth still have not reached many hardworking middle-class families."

Sorry, but that's only half right. It's true that wages have done badly. But in five of the past six years, average compensation -- that is, wages plus benefits -- has risen faster than inflation, according to the Labor Department's Employment Cost Index. The exception was last year, and that was mainly because high oil prices caused an unexpected inflationary spurt.

When Democrats talk about a middle-class squeeze, they mean more than wages; they mean the quality of jobs. As my colleague Harold Meyerson put it last week , corporations used to "impart a structure to people's work lives." But now workers must contend with "a brave new world of short-term employment."

This complaint sounds plausible, but the evidence for it is slight. In a 1998 paper for the National Bureau of Economic Research, Ann Huff Stevens picked through two sets of data going back to the 1970s. She concluded that job insecurity had risen temporarily around 1990 but that old patterns of tenure had probably returned. In a new bureau paper last month, Stevens compared men who neared retirement in 1969 with men doing so in 2002. In both groups, just over half had been with a single employer for at least 20 years -- hardly evidence that things are getting worse.

Perhaps workers face more pressure, even if they're not being fired? Corporations may be ever more productive, according to this theory, but this comes at the expense of workers who are forced to sacrifice work-life balance.

Again, this theory is plausible -- and wrong. In a paper to be released today, a trio at the London School of Economics -- Nick Bloom, Tobias Kretschmer and John Van Reenen -- sort through a hard drive's worth of data on 732 manufacturing firms in the United States and Europe, assessing their policies on work hours, vacation, assistance for child care and so on. Then they test whether the most fiercely productive companies in their sample treat workers badly. They find no such correlation.

In sum, sweeping complaints about the "new economy" are a bad bet for Democrats.


While George W. Bush certainly deserves credit for the performance of the economy on his watch, it's important to recognize, in our 23rd consecutive year of economic growth, that Paul Volcker, Ronald Reagan, Congress, Alan Greenspan, Bill Clinton, and even George H. W. Bush deserve credit too--probably in that order--and that none if would be possible without the Puritan work ethic of the American people and the creativity and adaptability of American businessmen.

Posted by Orrin Judd at January 9, 2006 8:46 AM
Comments

Having just finished a discussion with two Democrats, retired from academia, they would only agree with your list if you removed all the players but Clinton.

In their world nothing good has happened because of Republicans, especially Bush and they all seem to be 9/11 deniers. When I mention 9/11 as a factor they look at me with increduality, probably wondering if I mean the emergency telephone system that seems to have been working well ever since Gore invented it.

Posted by: Genecis at January 9, 2006 10:49 AM

Surely Reagan goes before Volcker. It was Reagan after all who had to have the balls to deal with the political fallout from the 1982 recession that followed the straggling of inflation.

Posted by: Jim in Chicago at January 9, 2006 11:22 AM

The only thing Clinton deserves credit for is hastening the transformation of American politics with the Assauslt Weapons Ban.

Come on, that was not so long ago that even the young folks should be able to remember. Clinton, already riding on the Reagan economic boom, started right in with "gays" in the military, the AWB and dreams of socialized health care. He straightaway had his dupa handed to him, whereafter he governed in the shadow of the Contract with America.

Posted by: Lou Gots at January 9, 2006 1:01 PM

dupa?

Posted by: erp at January 9, 2006 2:44 PM

Polish - ass.

Or sometimes dupie in our household.


Lou!

Shame on you!

Why isn't the BTU tax included in your list??????

Posted by: Sandy P at January 9, 2006 3:09 PM

What's up w/the WaPo?

This doesn't sound like them.

Posted by: Sandy P at January 9, 2006 3:18 PM

"the Senate's top Democrat complained that "the benefits of economic growth still have not reached many hardworking middle-class families.""

And his proposed solution is to raise taxes, of course.

Posted by: fred at January 9, 2006 3:22 PM

Mr. Gots;

NAFTA.

Posted by: Annoying Old Guy at January 9, 2006 4:58 PM

AOG:

To the extent that he provided Democratic votes in the House, yes. But Clinton knew that if NAFTA failed, the market would have tanked hard, because it would have (correctly) concluded that there was an immature loser in the White House.

Posted by: jim hamlen at January 9, 2006 11:21 PM
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