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Home Publications Blogs Beat the Press The Socialist in the White House: Richard Nixon

The Socialist in the White House: Richard Nixon

Wednesday, 05 September 2012 04:42

Eduardo Porter has an interesting piece pointing out that in many respects Richard Nixon's economic policy was well to the left of Barack Obama's (no doubt attributable to his Kenyan socialist background). Clearly the center of economic debate has moved well to the right.

Porter attributes much of this shift to the rise of global competition. Increased international competition can help to explain the desire to push down wages of ordinary workers, but it doesn't explain why corporations have not felt the need to push down the wages of their lawyers, the doctors they indirectly pay through employer provided health insurance, or their CEOs. The pay for these groups are hugely out of line with international standards even though there is zero reason to believe that the professionals who fill these jobs in the United States perform their work any better than their peers elsewhere.

The explanation would seem to be that these professionals have been able to secure protection for themselves in ways that autoworkers and textile workers have not. In the case of CEOs, they essentially pay off board members to turn the other way as they pilfer the corporations they run. In short, the end of decent paying jobs for ordinary workers is not due to globalization, it is due to the fact that certain powerful interest groups have been able to use the forces of globalization to their advantage.

Comments (4)Add Comment
In America, Comparative Advantage of Upper Class is Monopoly Rent Advantage
written by Last Mover, September 05, 2012 5:48
Just wait till Adam Smith hears about this. Wealth of Nations indeed. It was supposed to be about the self interest and comparative advantage of the butcher, baker and candlestick maker that results in postive sum wealth outcomes for all.

In America, comparative advantage by the upper class has morphed into monopoly rent advantage that takes a larger slice of the economic pie from others in zero sum fashion rather growing it larger with postive sum outcomes.

Whenever somone complains about this and recommends a solution, either regulation that results in competition or the equivalent of competitive outcomes, or more direct competition itself - as already faced by the middle and lower class on a regular basis - the standard refrain from behind the wall of monopoly power that is suffocating America is always the same:

Anything that dares threaten the monopoly structure of the upper class will result in less output. Services will be withdrawn. Quality will be reduced. It's socialist rationing. There will be death panels. Providers will not take risks. Providers will not provide at lower prices for failure to cover cost. History proves regulation never works and always results in less growth.

Lies. Damn lies. Let them eat the cake of competition like those classes below them on whose backs they exist.
"Some" "Many"
written by jayackroyd, September 05, 2012 7:51
Social scientists have some alternative hypotheses of our great conservative shift.

The big government strategy from the 1940s through the 1970s produced a spectacular improvement in living standards. But many economists now say they believe the focus on full employment and income redistribution at the expense of everything else also contributed to the strategy’s demise, removing the fear of joblessness and encouraging excessive wage increases.

That's the part that pissed me off. A policy of full employment meant that wages were too high, and workers, apparently, got too large a share of productivity gains. That's obviously "excessive" and public policy must be put in place to make sure that labor doesn't get too big a slice of societal technological progress--even if it does mean a lower long term growth path and, um, needless misery for some.
written by Jennifer, September 05, 2012 9:03
While I don't have numbers in front of me--I know I could just make them up but I don't work for the Post--there is a lot out there how lawyers are suffering. Many firms are downsizing and outsourcing as computers are able to do what teams of lawyers used to do and the lack of employment has led to some sueing of law schools regarding supposed employment. While there is no question who has got the worst of trade agreements to suggest the upper class professional are immune is not completely true.
At least lawyers pay is falling
written by Floccina, September 05, 2012 11:06
At least lawyers pay is falling but in all the discussion of rising healthcare spending few people point out what you do, the wages are high. The system is mercantilist and corrupt.

As for CEOs the problem is that executive compensation is still a small part of corporate profits. Still we can invest with Carl Icahn through IEP to help combat these rediculous pay ackages of CEOs.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.