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Economic Piety Is a Crisis for Workers

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Economic Piety Is a Crisis for Workers

The Atlantic November 27, 2018
EconomicsEmployment

Government policy should emphasize production, not consumption.

American workers are in crisis. Wages have stagnated for decades, and millions have fled the labor force entirely—the 19 percent of prime-age males lacking full-time work in 2018 would have marked the worst year on record prior to the Great Recession. Life expectancy is falling nationwide, driven by rising substance abuse and suicide among those without a college degree. This crisis was neither unforeseeable nor uncontrollable; it is the result of America’s choice to define prosperity solely in terms of consumption and shape economic policy accordingly.

The abandonment of the American worker can be linked with two major developments in midcentury economic thinking, which combined to produce the central metaphor of modern American politics: the economic pie. The first was the overwhelming importance assigned to measurement of the economy’s total size. This had been critical to the federal government’s Keynesian response to the Great Depression, which relied on public spending to boost demand and thus production. Such management of the economy required accurate knowledge of production levels and trends, so the U.S. Department of Commerce developed the system of national accounting that became the Gross Domestic Product, a Herculean effort whose leader, Simon Kuznets, would win the Nobel Prize in Economic Sciences. When the Depression gave way to a global military conflict, the outcome of which would turn on the industrial capacity of the Allied and Axis economies, GDP became an existential concern.

As the economy regained its peacetime footing, national accounts recorded fewer M4 Sherman tanks headed to the front and more Chevrolet Bel Air convertibles destined for the suburbs. Notwithstanding Kuznets’s warning to Congress that “the welfare of a nation can … scarcely be inferred from a measurement of national income,” GDP quickly became the primary measure of prosperity, and GDP growth the primary goal of economic policy. Long after saturation bombing ended, cross-country comparisons of GDP remained the means for assessing national power.

Continue reading the entire piece here at The Atlantic

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Oren Cass is a senior fellow at the Manhattan Institute and author of the new book “The Once and Future Worker.” Follow him on Twitter here.

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