Simon Tilford, Workers Must Get a Bigger Slice of the Pie, New York Times Op-Ed (Nov. 22, 2012).
Over the last 30 years, wage growth has lagged behind productivity across the industrialized world, leading to a steep fall in wages, salaries and other employee benefits as a proportion of G.D.P.
Simultaneously, there has been a big rise in inequality as the benefits of economic growth have accrued to those at the top of the income scale, as well as a steady increase in corporate income and profits. These trends have gone hand-in-hand with a steady decline in business investment.
There is no doubting the need for reforms aimed at increasing competition and opening the way for the adoption of new technologies. But governments need to combine market-led reforms with measures aimed at preventing a further decline in labor’s share of the pie.
With households now highly indebted across the industrialized world, a sustained recovery in private consumption will require a rise in the share of national incomes accounted for by wages and salaries.
The op-ed goes on to suggest a number of actions that governments should take: redoubling efforts to ensure that students complete school, providing that executive compensation relates to performance rather than stock prices, making tax systems more redistributive (including increasing the tax burden on capital and reducing it on labor), ending their "obsession with 'competitiveness'" and instead "boosting domestic demand", and being more "skeptical" of business lobbying.
Sound advice, I'd say.
Peter Diamond, Down with Supercommittees, New York Times op-ed (Nov. 19, 2012).
Diamond suggests that our government's fascination with commissions charged with coming to grand bargains on federal fiscal policy and congressional super-committees similarly charged cannot succeed.
Discussion of the debt trajectory is focused on some sort of grand bargain. Even if one is achieved, there’s reason for pessimism: any bargain is likely to sidestep, or even enshrine, many of the root causes driving inefficiencies in our nation’s spending and taxes.
Instead of wide-ranging, politically motivated panels, we need narrowly targeted commissions, without sitting members of Congress, modeled on the successful Base Closure and Realignment Commissions of recent decades.
What we need ... is a set of narrowly targeted commissions, each with a clearly articulated task and the ability to require a no-amendments, up-or-down vote — and all without sitting members of Congress.