By Randall Margo, PhD
G.L.O.B.A.L Justice Commentator/Global Economy & Administration Adjunct Faculty, Golden Gate University; Public Administrator
I hope I’m wrong!
This is probably not the most erudite introduction to a topic that is dominating our politics and more importantly America’s historical optimistic verve. But, government efforts to fight high unemployment through stimulus spending, lowering interest rates and extending or revising income tax rates since 2008 have not addressed our declining labor force participation rate or a decrease in real wages. Nor have these undertakings boosted economic growth to levels commensurate with other recoveries over the past seventy years.
Why have these methods used successfully by American policy makers in the past resulted in such modest economic improvement, particularly for America’s workforce? Are there fundamental changes occurring in the labor market limiting the effectiveness of lower taxation, federal stimulus spending and monetary policies that induce lower interest rates? Have workforce changes in both America’s and the global economy been evolving over many decades accelerating more rapidly, and thereby, changing some of the underlying precepts of employment? And if this is all true, or even partially correct, what policies could be employed by governments to address these transformations? Moreover, since Europe and Japan are facing similar issues, and in some cases more dire circumstances then our own, can we benefit from examining their approaches? Consequently, statistics from Europe and Japan are included to broaden the analysis and to reveal whether the policies implemented in these other developed countries have been effective in countering their receding economic growth and prosperity.
Despite, or some might argue, because of unprecedented monetary policies, stimulus funding, austerity programs and tax changes – up or down – public policies in America, Europe and Japan seem unable to stem what appears to be persistent and prolonged economic transformations ensuing in these developed regions. If these policies, however well-intentioned haven’t worked, why not, and more importantly, should we continue employing are current methods, or are there better alternative strategies that could be deployed?
Believing it is better to show rather than tell, this book provides a series of charts and tables available in the public domain to show present and historical trends concerning economic growth, employment, income, and debt, thereby presenting readers with a graphic display of data in order for them to draw their own conclusions, or perhaps seek information that would dispute such findings. As always, the accuracy of any data or statistical constructs needs to be viewed guardedly and much of the information presented here should be consider more as estimates or approximations of actual or projected results.
Facts and figures presented suggest here, and notably, other recent books on this subject, serve to illuminate global marketplace trends that have surpassed the capability of public officials and central bankers in developed nations to adjust to the realities taking place within their own economies. As a result, monetary and tax policies, while still important components of economic growth, are playing a diminishing role in reviving job markets and compensation for workers in these industrialized nations.
Governmental policy recommendations proffered in this book are meant to commence rather than conclude what steps should be taken to mitigate the meager economic growth, lack of employment and stagnant compensation presently being experiencing by industrialized nations. The data presented reflects not just a recent trend, but rather, a shift occurring since at least the year 2000, and in some vital cases decades longer.
More plainly, the proposals reveal efforts to address the employment and compensation issues as presented, rather than trying to return to a bygone era. Using the old golfing adage “to play the ball where it lies” we should recognize that we are not in the middle of the fairway, but in the rough, and must adopt policies that reflect our current circumstances.