Worth reading: A joint American-British report today prescribed new policies aimed at reducing the growing gulf between haves and have-nots in Western democracies, using case studies from several countries.
The middle class has not fared well lately in advanced economies roiled by globalization, technological change and a shift in economic power from people to corporations, said the report. Headed by Lawrence Summers and Lawrence Balls, it said “economic growth, even coupled with productivity growth, is no longer enough to ensure middle-class income growth.” It called for “progressive public policy choices … to ensure that all of their citizens share in economic success.”
Produced by the Center for American Progress, the report cites case studies and makes recommendations on minimum wages, family-friendly labour standards, profit sharing, education, infrastructure investment, governance and climate change. Its recommendations aim to “create stable, sustainable growth by encouraging both the public and private sectors to focus on the long term,” and calls for cross-national cooperation to “boost economic and financial stability, all the while preventing a race to the bottom on international tax competition.” An excerpt:
History tells us that societies succeed when the fruits of growth are broadly shared. Indeed, no society has ever succeeded without a large, prospering middle class* that embraced the idea of progress. Today, the ability of free-market democracies to deliver widely shared increases in prosperity is in question as never before. The primary challenge democracies face is neither military nor philosophical. Rather, for the first time since the Great Depression, many industrial democracies are failing to raise living standards and provide opportunities for social mobility to a large share of their people. Some of those countries that have produced economic growth have done so in a manner that has left most of their citizens no better off. This is an economic problem that threatens to become a problem for the political systems of these nations—and for the idea of democracy itself.
The citizens of industrial democracies continue to value their freedom and their opportunity to participate in the task of self-government. But they also count on their political systems to create circumstances in which they can use their talents and their labor to provide a decent standard of life for themselves and their families. When democratic governments and market systems cannot deliver such prosperity to their citizens, the result is political alienation, a loss of social trust, and increasing conflict across the lines of race, class, and ethnicity. Inclusive prosperity nurtures tolerance, harmony, social generosity, optimism, and international cooperation. And these are essential for democracy itself.
The economic troubles of the democracies also erode support for the democratic idea around the globe. In our time, advocates and apologists for anti-democratic regimes argue that the democracies are no longer capable of managing their problems or creating a sense of social dynamism. Democracies are cast as sclerotic, inefficient, and ungovernable. We believe that this critique is wrong today, as it has been historically. But countering this persistent attack on democracy requires that free economic and political systems restore their vitality and reclaim their ability to deliver on the promise of prosperity for all.
It has always been the mission of progressives to ensure rising prosperity and opportunity. A strong, inclusive economy is the platform for a socially mobile, optimistic, and successful society. While the economic mission of progressives is unchanging, the means of its achievement change from generation to generation as the economy evolves. Today, we are living in the age of globalization and technological revolution. Both have delivered much benefit to society, but have reshaped the political economy of western industrialized countries in ways that challenge the middle class and those striving to get into it.
Our report is about embracing the new economic opportunities of the 21st century by finding ways to ensure they serve the vast majority of society. In previous eras, political institutions have responded to economic transformations to ensure prosperity is shared: the New Deal in the United States and the European social welfare state; the “third-way” politics of putting people first of Clinton and Blair by investing in people and reforming institutions. Just as it took the New Deal and the European social welfare state to make the Industrial Revolution work for the many and not the few during the 20th century, we need new social and political institutions to make 21st century capitalism work for the many and not the few. …. read Report of the Commission on Inclusive Prosperity on the site of the Center for American Progress. (You will leave F&O’s site)
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