Walking and chewing gum at the same time
from David Ruccio
Clearly, liberal economists and columnists are having a difficult time making sense of two key problems at the same time: unemployment and inequality.
Some (like Ezra Klein) think we need to focus on unemployment right now, and leave the issue of inequality until later. Others (like Dean Baker) argue that, since unemployment is a main cause of inequality, economic growth and tighter labor markets will reduce the unequal distribution of gains in the current economy. And then, of course, there are still others (like Paul Krugman) who, while they consider inequality to be a “Big Something Deal,” still think the real issue is how it negatively influences politics and thus prevents policymakers from enacting the obvious unemployment-reducing policies.
I suppose I should be happy that some progress has, in fact, been made: unemployment and inequality are both on the table right now. Finally!
Still, the problem has been staring us in the face for a long time, and liberal thinkers are only now getting around to considering the possibility that perhaps the two problems are related. No, it’s not an iron law: there can be and have been periods in U.S. economic history of growing inequality with low unemployment, and periods of high unemployment with falling inequality. But when inequality has returned with a vengeance and unemployment remains intolerably high—when the levels of inequality are simply grotesque and tens of millions of workers are unemployed, underemployed, and, if they have a job, are paid below-poverty wages—well, then, we have a problem that the liberal models of economics and politics simply can’t handle.
That’s when we have to look at the political economy as a system, one that for the past six years has generated disastrous levels of both inequality and unemployment with no end in sight. It’s not just a matter of looking at how high unemployment leads to more inequality or at rising inequality as a cause of excessive unemployment. What they need are theories, models, and data series that allow them to see how unemployment and inequality are both being caused by an economic system in which the decisions to create (or not) adequate jobs and to capture large portions of national income are concentrated in a few hands.
Then, and only then, will they be able to walk and chew gum at the same time.