Jared Bernstein meets Milton Friedman with the body of Scarlett Johansson

Chuck Sheketoff

A economic story by Jared Bernstein a senior economist at the Economic Policy Institute and author of All Together Now: Common Sense for a Fair Economy.

I was working late in my D.C. office. I'd been running some new simulations on my macro-model, but nothing was converging, so I figured I'd close up my spreadsheet and find a corner in some dark speak-easy to lick my wounds.

That's when she walked in. She had a neckline as low as the Nasdaq in '01, curves like sine waves and a dress tighter than the global oil supply. She had my attention even before she pulled out two reports I'd seen that very morning.

"I'm sorry to barge in on you like this," she said in a voice that gave my calculator a power surge. "I didn't know where else to turn."

"You came to the right place, doll," I said. "I see you've got the first-quarter GDP report, along with the new compensation results." I'd been puzzling over these numbers all day, but what, I wondered, could this tall glass of ice water want with them?

"That's right," she purred. "I need to know why GDP is up 4.8%, the strongest quarter since 2003, yet real wages are falling." Yeah, I thought, you and everybody else who works for a living.

"Why the interest?" I shot back. She didn't look like a Democrat.

"I wish I could tell you. But I work for some powerful people" — now I knew she wasn't a Democrat — "and they'd be very upset if they even knew I was here."

"Why me? Why don't you ask your powerful friends to explain why the economy's racing ahead but leaving working stiffs behind?"

She got kinda sulky, and I kinda liked it. "They wouldn't know where to look. What's worse, most of them think it's great when wage growth decelerates because with no inflationary pressure from labor costs, it means the Fed can take a powder on rate increases."

"Tell me about it, sister. I've been leaning on Bernanke for months on that point, but he doesn't return my calls."

Needless to say, I took the case. I wasn't sure what game little Miss Conflicting Reports was playing, but I figured I'd play along for now.

Fact is, I'd been asking the same question myself. Every quarter we seemed to be getting great news on top-line statistics — GDP, productivity, profits — yet the typical workers' real earnings were down 2% over the recovery. Guys like me don't like it when things line up that way.

I headed for the union hall, figuring some of those guys might have an angle. Problem was, with private-sector unions down to 8% of the workforce, the hall had become a Starbucks. I got a vanilla chai latte to go and beat it.

I decided to head for the new economy, so I looked up some managers and professionals in the service sector. I found them, all right, but they didn't have any answers. As of the first quarter of 2006, their compensation had lagged inflation for three quarters running.

This was more serious than I'd thought. Whatever was driving a wedge between overall growth and living standards, it was reaching pretty high up the pay scale. I wasn't sure what mess I'd gotten into here, but it was time to confront the doll that got me into it.

I caught up with her in her penthouse, a place that had "housing bubble" written all over it. I know my wealth distributions, and this kitten came from the top 0.1%. I don't like playing the sap — it was time for some class warfare.

"OK, gorgeous. Drop the 'two Americas' line and give it to me straight. You know as well as I do where the growth is going. What's your game?"

She nibbled her lip and looked up at me real sweet. "I suppose if I told you I'm just a girl who cares about the bottom 99%, you wouldn't believe me."

She supposed right.

"All right, I'll come clean," she said, slumping in a chaise lounge that probably cost the average income of the bottom fifth. "I work for the Republican National Committee, and we're starting to get spooked by the president's poll numbers on the economy. We figured if we don't get a little trickle-down soon, it could hurt us in 2006, not to mention '08."

I kicked myself for not seeing it sooner. "So you don't give a damn about the structural factors driving the productivity/wage gap: the declining unions, low minimum wage, the profit squeeze, slack job creation and, most of all, the way globalization is sapping the bargaining clout of the American worker, blue and white collar alike."

"Why should I?" she said, finally showing her true colors. "Any intervention would just cuff the invisible hand, doing more harm than good." She was Milton Friedman with the body of Scarlett Johansson. I had to get outta there.

"You're wrong," I shouted, staggering toward the door. "You can't see it, but these two reports are a microcosm of everything that's right and wrong with this economy. Tell your people that whoever understands and articulates this disconnect, along with a convincing policy agenda to reconnect growth and living standards — that's who wins the big tamale."

I was wasting my breath. She had me bounced by a security guard as pumped-up as ExxonMobil's profits.

I brushed off the dust and headed for the office. You'd think a case like this would be dispiriting to a guy like me, but you'd be wrong. Sure, she made me mad, but I saw things clearly now, and her little scheme was about to backfire.

There's an electorate out there that's looking for some economic stewardship. Maybe I'm just one economist in this big, crazy city, and maybe the other guys got the deep pockets. But the way I see it, we can shape our economic outcomes so that everyone gets a fair shake, not just the chosen few.

I opened up a spreadsheet and got to work.

Note: this column first appeared in the Los Angeles Times.

  • Ben (unverified)

    Wages are down in the U.S. due to the huge influx of Mexican illegals who are willing to work for peanuts.

  • Benkay (unverified)

    Classy. Classy as hell.

  • (Show?)

    Well-written stuff.

    Hgh Road Economics is indeed the grail. How can we do well and also do good.

    Lotsa questions for me going forward: -- Whither the delta b/w CEO pay and worker pay. -- How to be not just an ownership society but a WORKING society. -- The benefits of giving give rich kids estate tax cuts versus aiming gains at middle income workers. -- How to make sure growing oligopoly pressures don't stifle innovation. -- How to have a society with MORE CEO's, rather than merely more middle managers. (Not everyone can be a shoe-designer, but lotsa people can be shopkeepers and small business owners.) -- How to give "Good Housekeeping Seals of Approval" that States can give out to high road companies (local, employee-owned, union, and/or sustanable businesses that also are leaders in their fields). I.e., how to make a "Brand Oregon" idea that is more than a veneer. -- How to get a world-class (or even national class) university in Oregon so that we can play in the knowledge economy.

    Onward economists o' the future.

  • (Show?)

    I decided to head for the new economy, so I looked up some managers and professionals in the service sector. I found them, all right, but they didn't have any answers. As of the first quarter of 2006, their compensation had lagged inflation for three quarters running.

    Drat, those "Mexican illegal" managers and professionals are sure messing things up.

  • Winston Wolfe (unverified)

    To hell with all this "Mexican illegals" stuff, we are still a 100 years late with running out the Irish.

    All together now: GO HOME IRISH!

    Damn big-headed, potato eating, pope worshiping, baby factories. They are the real problem in this country! If we just ran them off then everything would be fine.

    "You have a corpse in a car, minus a head, in the garage. Take me to it."

  • (Show?)

    Nice one Chuck! Mr. Bernstein nails it.

    Noir is where a lot of us have been living for the past several years, so this one streams right through the filters.

  • PDX Lover (unverified)

    Scarlett Johansson is hot.

    As for the guy who hates the "illegals". What I think we should do is use the black helicopters and the jackbooted thugs and go to the trailer parks and public housing projects and round up all the non-productive people and send them across the border. We should allow the same number of hardworking, non-whining, productive Mexicans across the border. These people want to work. It'd be more than a fair trade for America.

  • Robert Harris (unverified)

    Many Professionals are providing services to the very same people who've sufferred wage stagnation. So can't really increase fees when your clients don't have increased wages. So increased costs to run a business, health insurance up 20%, utilities up 25%, I give COLA's to employees, advertising expenses up 10%, supplies and gas up and stagnated fee income. Not a strategy for success.

    One day the moderate middle and upper middle class who were suckered into the Bush tax cuts will see the damage Rep. policies have done to our economy, and how it has effected them so negatively in the long run. Maybe it'll be in November 2006.

    Some will hate this idea, but the Dem's better be ready to welcome these folks into the fold, accept their support and accomodate or tolerate some (not all) of their policy desires.

  • (Show?)

    i love this! Creative Writing 305 meets Econ 101.

    if you enjoy your politics & economics served up with a sense of humor, two websites to bookmark: Fafblog and Fanatical Apathy, the latter the work of the wonderful Adam Felber.

    (hm. Fafblog seems to be on hiatus. o well. that gives you time to catch up.)

  • Karl (unverified)

    What a great article... and so true. It's so irritating to constantly hear about the "economic recovery" that only exists on wall street. Not only are real wages down, but way more of those wages are now going into energy costs and health care. The shrinking middle class has far less cash to put into the local economy.

    The corporatist trade policies of the last administrations and out sourcing and the race to the bottom for labor costs are a cause. Part of that has been the suppression of the Mexican economy and the encouragement of massive illegal immigration of desperate workers to the US. Why are some of you guys jumping all over Ben for stating a fact. I saw no racism or hate in his statement, but i did feel some hate in your response.

  • Tom Civiletti (unverified)

    Great piece! Let's do a pilot for a TV series.

  • Emily (unverified)

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