We're painfully aware that the U.S. economy is generating too few good jobs and that people are mad as hell about it. What's surprising is that influential bastions of the Establishment are starting to agree with us.
The latest surprise came from the Council on Foreign Relations, an august group that has as its members high-ranking government officials, world business leaders and prominent media figures. Last month, the CFR published a working paper called "The Evolving Structure of the American Economy and the Employment Challenge" (just the kind of snoozer headline you'd expect from such an august group).
Here's the CFR's take on all that Ayn Rand crap about market outcomes, especially efficient ones, always making everyone better off in the long run:
That seems clearly incorrect and is supported by neither theory nor experience. It is true, as in the United States, that many goods and services are less expensive than they would be if the economy were walled off from the global economy, and that the benefits of lower prices are widespread. But these cost savings do not necessarily compensate for diminished employment opportunities, and it would be presumptuous in the extreme for policymakers to tell voters what their values and preferences should be. People might trade cheaper goods for assurances that a wide range of productive and rewarding employment options would be available, now and in the future, for themselves and their children and grandchildren, even if the cost of goods they consumer were to rise.
Reuters economics editor Chrystia Freeland agrees with us that it's pretty damn interesting who this is coming from (a winner of the Nobel Prize for Economics is a co-author). She characterizes their conclusions this way:
Globalization and the technology revolution are increasing productivity and prosperity. But those rewards are unevenly shared – they are going to the people at the top in the United States, and enriching emerging economies over all. But the American middle class is losing out.
And, she says, this is unsurprising to most people. BUT,
...the analysis and its impeccable provenance matter, because this basic truth about how the world economy is working today is being ignored by most of the politicians in the United States and denied by many of its leading business people.
The Council on Foreign Relations isn't the only influential bastion of the Establishment that's growing alarmed about what capitalism is doing to people. Just last week, the World Bank put out a report saying that unemployment "was overwhelmingly the most important factor cited for recruitment into gangs and rebel movements." World Bank President Robert Zoellick said,
If we are to break the cycles of violence and lessen the stresses that drive them, countries must develop more legitimate, accountable and capable national institutions that provide for citizen security, justice and jobs.
Think about it: this guy was George W. Bush's U.S. Trade Representative and a managing director at
giant vampire squid Goldman Sachs before he ran the World Bank.
Just as amazing, the International Monetary Fund came out with a paper in February saying workers need more collective bargaining power. That's a big turnaround for the IMF, kind of like Fred Smith inviting the Teamsters to come organize FedEx workers. According to the U.K. Telegraph on Feb. 1,
The IMF has published a paper entitled Inequality, Leverage and Crisis arguing that the extreme gap between rich and poor – with echoes of the US in the late 1920s – was an underlying cause of the Great Recession from 2008-2009.
The paper, by the Fund's modelling unit, warned of "disastrous consequences" for the world economy unless workers regain their "bargaining power" against rentiers. It suggests radical changes to the tax system and debt relief for workers.
If only they'd listened to us all along.