Truth-out is carrying the blog post Bye Bye American Pie: The Challenge of the Productivity Revolution by Robert Reich.
Insufficient demand – as everyone but regressive supply-siders now recognize – is a big reason why the current recovery has been so anemic and the pie isn’t growing faster.
So while the productivity revolution is indubitably good, the task ahead is to figure out how to distribute more of its gains to more of our people.
For a long time I have been promoting this understanding of the problems and potential of productivity growth.
Reich proposes a solution to the problem:
One possibility: higher taxes on the rich that go into wage subsidies for lower-income workers, combined with job sharing.
I have a “market” based solution to the problem that I think will work much better. It is time for the U.S. Government to start enabling the formation of labor unions instead of trying to strangle them. Rather than centralize the planning of wealth distribution in the government, let each union in each industry help decide what will work best in their particular situation. Let the workers negotiate with the capitalists on how the rewards of productivity growth should be shared. Since we are now in a more global economy, we also need to ensure that other countries promote real labor unions also. Unions are not the problem, they are the solution.
Without unions, the only way that people have of enforcing their power of numbers is to take action that will be much less acceptable to the 1% who are hoarding all the wealth.
I think Reich’s post also falls into the category of Greenberg’s Law of Economic Progress:
Any measure of economic growth that counts progress as an increase in the total amount of wealth in the country while a large number of people are still unemployed is a faulty measure.
Any measure of economic growth that counts progress as achieving full employment while decreasing everybody’s wealth to the poverty level is a faulty measure.
The Republicans (and probably the Democrats, too) have tried to fool the public about the health of our economy. While many individuals have realized that their personal economic situation was getting worse, the politicians have been trying to fool the people into thinking they are alone in their problems. They use the faulty measure of growth to pretend the overall economy is growing, when, in fact, the only growth is in the money flowing to the 1%.