The Language of Betrayal

[Seth Ackerman]

> ----------
> From: 	Nathan Newman[SMTP:nathan at newman.org]
> Reply To: 	lbo-talk at lists.panix.com
> Sent: 	Monday, November 27, 2000 3:21 PM
> To: 	lbo-talk at lists.panix.com
> Subject: 	Re: The Language of Betrayal
> 
> ----- Original Message -----
> From: "Seth Ackerman" <SAckerman at FAIR.org>
> 
> > From: Brad DeLong[SMTP:delong at econ.Berkeley.EDU]
> >
> > Yes. But look on the bright side! 4% unemployment. A bunch of
> > after-tax money transferred to the working poor via the EITC. The
> > first sustained growth in low-end real wages in a generation. And at
> > least a halting of the rise in income inequality if not a reversal in
> > relative inequality trends.
> 
> -Three out of four of these are mostly Alan Greenspan's doing.
> 
> What is it with the cult of Greenspan on both the left and the right?
> Suddenly, we are all monetarists and fiscal policy is irrelevant to the
> health of the economy and job growth?
> 
> Isn't it possible that it was precisely the support for low-end wage
> growth,
> both through EITC transfers, affirmative action, support for low-wage
> unionization struggles, etc., that has contributed to sustaining this
> economic boom?   I know Max and other folks hate Clinton's retreat from
> public fiscal Keynesianism, but there are also large components of private
> Fordist traditions that Clinton was publicly committed to and actually
> followed through on in a number of areas.
> 
> Not as much as any of us would like, but to give all credit to Greenspan
> and
> the bond market just seems a complete ideological surrender on left
> traditions supporting wage growth as a key component of improving economic
> growth.   Greenspan did not increase the minimum wage, expand the EITC,
> support unionization drives and contract wins, fund infrastructure, defend
> Davis-Bacon wage levels, or support a range of other initiatives that
> contributed to that lower end wage growth.
> 
> Of course, those initiatives were not enough and the wealthy made out like
> bandits, but the gains for the non-rich are real and, on the ideological
> front, may be a key part of why this boom has been so long.   But the cult
> of Greenspan just narrows the debate and avoids any discussion of private
> wage policies as a reason for growth.
> 
> -- Nathan Newman
> 
The labor policies you mention here are all good things and should be
expanded. But the most important reason for the post-1995 improvement in the
low-wage labor market is the Federal Reserve's abandonment of its NAIRU
policy, which allowed unemployment to fall far below the 5.5%-6.5% floor.
That policy tightened low-wage job markets for the first time since the
early 1970's. It's had all sorts of benefits for the poor, black
neighborhoods, and the country generally. (See, e.g., Richard Freeman's
paper attributing half of the drop in violent crime to the tight low-wage
job market.)

Sorry, but that's because of something Greenspan did, not Clinton. (Of
course, Greenspan should be strung up for failing to do this much earlier,
like in the late 1980's.) You can have all the labor laws you like, but if
the central bank is determined to keep unemployment above, say, 7%, people
at the bottom will be screwed. Just look at most of Continental Europe.

Seth