The US Political Economy: What’s
Gone Wrong and How to Fix It
Jared Bernstein
CBPP
[email protected]
4/17/2013
What’s Gone Wrong?
• Dr. John: “Refried confusion is making itself
clear…”
• Deep, deep confusion about almost
everything important in terms of economic
and fiscal policy.
– Tax policy: responsiveness, supply-side fairy dust,
its role in economic growth, distribution.
– Fiscal policy: deficit attention disorder, austerity,
not enough CDSH’s.
What’s Behind Deficit Fetishism?
• To be clear, structural budget deficits are bad and
should go. Be a CDSH!
• BUT, 3 reasons for fetishism behind austerity:
--A strategy has become a position;
--Misinterpreting the Clinton years;
--Strategy to shrink government vs. the national
conversation we had in election and need to keep
having.
• Markets and governments are complements,
not substitutes!
Refried Confusion, cont…
• Inequality
– Income, compensation/productivity split.
– Only now are progressives articulating what’s wrong with
it; linkages to opportunity.
• Social Welfare
– Actually, some real success here.
– But relentless attack, most notably in budgets (and, though
they’re a lot worse, it’s not just R’s).
– Limits of redistribution.
• Political Dysfunction
– Gridlock: it’s a strategy!
– Diagnostic failure.
Sources: Census, EPI
What’s To Be Done?
• The University Approach: Fight back with facts
• Social Work: Helping people hurt by all the
above; systems change through better policy.
• Finding the way back to fact-ville:
– Money in politics
– He said, she said
– Better frames, messaging, etc.
Spare Any Change (Theory)?
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Get out of cramped DC debate
Get back on offense
Yes, raise the minimum, but also the median
Full employment!
It takes a movement…ala immigration reform
Economic rights?
OWS? Opportunity/Accountability for All!
Bonus!
Things I wish I knew when I was you.
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Market failure, yes…but government failure too.
Simpler is much better.
Working for a good prof is about the best thing you can do.
The Zen of the dissertation.
Power (political, financial) is even more important than you think.
Implementation matters, but you probably can’t learn that much about it
here.
Governments and peoples relationship with facts is…um…complicated.
It’s not just about the poor.
There’s a tilt toward class over race; I don’t buy it.
The economists haven’t exactly distinguished ourselves. It’s up to you to
fix the world.