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January 27, 2011

The President Ignored the Elephant in the Room

I think Reich nails it. The central focus has to be on increasing the share of American wealth generation that goes to the middle class.

American (big) business is already supremely "competitive" having rebounded to record-breaking profits, but without that translating to American jobs and increased wages. If the middle class does better that provides a ladder up for others, it increases tax revenue without increased tax rates and it reduces the need for government programs to support the middle class. It would be far better for the economy and government goal to make being middle class self-supporting.

If, as the American economy doubled in size over the last thirty years the middle class incomes had also doubled, we would not be in the situation we find ourselves today.

... the president's failure to address the decoupling of American corporate profits from American jobs, and explain specifically what he'll do to get jobs back, not only risks making his grand plans for reviving the nation's "competitiveness" seem somewhat beside the point but also cedes to Republicans the dominant narrative...

The Great Recession wasn't due to America's loss of "competitiveness" relative to the Chinese or anyone else. In fact, American corporations are now enormously competitive, racking up some of their highest profits in history...


What the president should have done is talk frankly about the central structural flaw in the U.S. economy -- the dwindling share of its gains going to the vast middle class, and the almost unprecedented concentration of income and wealth at top -- in sharp contrast to the Eisenhower and Kennedy years.

Although the economy is more than twice as large as it was thirty years ago, the median wage has barely budged. Most of the gains from growth have gone to the richest Americans... So the central challenge is put more money into the pockets average Americans...

[This narrative] would give [Obama] a convincing counter-narrative to the Republican anti-government one. Government exists to protect and advance the interests of average working families. Without it, Americans have to rely mainly on big and increasingly global corporations, whose only interest is making money wherever it can be made.


via www.huffingtonpost.com


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