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Reuniting Growth and Prosperity

April 27, 2015 at 12:15 PM

While the economy still has many uniquely positive attributes, something is fundamentally wrong: we can no longer count on economic growth to deliver broadly shared prosperity.  My new book, The Reconnection Agenda, presents a robust agenda to reunite growth with real improvements in low- and middle-income people’s lives.

Politicians of both parties have begun to decry wage stagnation, inequality, and lack of opportunity for children growing up in poverty.  But identifying these issues is only half the battle.  The Reconnection Agenda focuses on stocking up our policy toolbox with ideas to address them:

  • Fiscal and monetary policy improvements.  Chapters 3 and 4 explore how the Federal Reserve Board can most effectively promote full employment.  I also describe the importance of counter-cyclical fiscal policy and, using the example of a restaurant selling meatless meatballs (sounds delicious, right?), the complementary nature of fiscal and monetary stimulus.  Chapter 8 explains why future generations will require renewed investments in public goods and how to fund them.
  • Strategies to reduce our trade deficit, thus helping restore manufacturing jobs.  In particular, Chapter 5 recommends ways to counter currency management by our trading partners.
  • Proven approaches to reducing poverty, strengthening workers’ bargaining power, and expanding access to economic opportunities in both the short and long run.  Chapter 6 describes how subsidized jobs programs, “fair chance” hiring practices for people with criminal records, and apprenticeship programs can support society’s most disadvantaged workers in both weak and strong labor markets.  Maintaining and strengthening safety net programs like the Earned Income Tax Credit is also essential, as is pursuing universal pre-K and raising the salary threshold below which workers qualify for overtime pay (Chapter 8).  Chapter 9, on state efforts to reconnect growth with prosperity, explains why states’ experiences show that the minimum wage, worksharing, and policies to help balance work and family deserve a more prominent place in federal policy discussions.
  • Oversight of financial markets.  The economic shampoo cycle (bubble, bust, repeat) has all too often choked off economic recoveries before the reconnection agenda can take shape.  Chapter 7 outlines four ways to help keep our economic hair clean and our expansions . . . expanding!

Even while powerful economic elites block common-sense solutions, the demand for a reconnection agenda is growing, the last chapter explains.  It’s critical for Americans to recognize the difference between policies that will actually help and those that will only exacerbate the forces that for decades now have been preventing growth from reaching most Americans.

In this vein, I hope The Reconnection Agenda provides a reader-friendly and fun (really!) look at what’s gone wrong and how to fix it.   Also, the book is downloadable for free — how’s that for a whack at the forces of economic darkness?