>The final paragraph in the "Statement to German Colleagues" on the economic
>policy of the Schroeder government - issued by 81 US economists and
>published by the Preamble Center Sept 29, 1999 - reads:
>
>"In this country [i.e. the U.S.], there is increasing recognition of the
>vital role of government to support low-income working people, to support
>the elderly through a strong Social Security system, to provide critical
>infrastructure, to support education at all levels, to expand access to
>first-quality health care, and to properly regulate the financial sector.
>Germany should look to these positive features of U.S. policy, and not to
>our most destructive recent phase."
>
>May I add two questions to list members inside the U.S - especially to
>those who signed the statement:
>
>1) Who increasingly recognizes the vital role of government to support
>different forms of the social security system by expanding public
>expenditure? The Clinton Administration? - And what's about proper
>regulations of the financial sector?
>
>2) What are - in concrete terms - the results of "these positive features
>of U.S. policy" which should give governments and economists outside the
>U.S. directions?
The whole statement is an exercise in overstatement - it almost reads like an early contribution to the Gore campaign. Though it claims a decline in U.S. inequality since the mid-1990s, the just-released 1998 income figures show only a slight decline in inequality between 1997 and 1998, to a level still above 1996's (as measured by the gini index). Wage figures show a bit more of a decline - e.g., the ratio of earnings at the 90th percentile to the 10th - but that says nothing about the contribution of income from capital to overall inequality. Yes, the working class is better off than it was 5 years ago, and sustained low unemployment rates and higher minimum wages have helped. But we need about 20 years more of this, and I doubt we're going to get it.
As for point 1), it's pretty hard to say who "increasingly recognizes the vital role of government" expenditure. Clinton's annual budgets pay great lip service to this, but the actual money isn't there. Financial and other forms of regulation are pretty dead issues in the U.S. As for point 2), I'd say the lesson from the U.S. is to tolerate a low unemployment rate and run up your foreign borrowing to 22% of GDP.
Doug