The problem with Now More Than Ever politics

The headline says "For Solution to Income Stagnation, Republicans and Democrats Revise Their Playbooks." It's intriguing stuff. And John Harwood's lead is even better. "For average American families," he writes, "the United States economy is like a football team that cannot move the ball, and has not been able to for 30 years. That is why frustrated economists in both parties are scrambling for a new playbook."

Exciting! Until, that is, you read the new playbook.

Among Democrats, that means greater government spending on education, infrastructure and even direct job creation. Among Republicans, it means far-reaching shifts in taxation and regulation. Those debates will help shape economic policy for the rest of President Obama’s term and during the 2016 campaign.

This is a textbook example of the frustratingly enduring appeal of "Now More Than Ever" politics.

Old wine in new bottles

The sense among politicians and intellectuals that at this particular moment in crisis, the ideal solution to the problems of the day are … exactly the things that were proposed five years ago. Now More Than Ever was excruciatingly evident during the most severe moments of the recession, when Republicans were pushing a tax cut extension they first devised in 2001 and Democrats were pushing a health care scheme they'd united around in 2007. But it's continued on a kind of slow burn as the disappointing recovery has gotten more and more people talking about stagnant incomes, even while continuing to offer the same policies as before.

One reason these ideas are enduringly popular is because they're ideas with merit. Physical infrastructure and education are, indeed, key foundations of national prosperity. The tax code really is poorly structured and there really are lots of bad regulations on the books. Deeper in the piece, Harwood looks at some people pushing ideas that really are out of the box. But he's right to highlight this set of excruciatingly boring ideas up at the top, because drawing up the same old plays in different colored marker really is the dominant approach in both parties.

But the big obvious problem with Now More Than Ever politics is that even when NMTE ideas have merit they generally don't respond to the specific question at hand.

Democrats' old ideas

If you look abroad to Nordic countries like Sweden, Denmark, and Norway it's easy to admire their better-than-America's infrastructure and their higher-than-America's college completion rates. It's also easy to image that these are the reasons they have more egalitarian income distributions than the United States. But it's not true. All the schooling and infrastructure don't change the fact that before taxes and transfers to redistribute income, these countries have poverty rates that are very similar to ours.

(Source: OECD)

Lane Kenworthy's excellent book Progress for the Poor makes the same point in a more general way. Basically no developed country, regardless of its education policies, saw an increase in market wages at the low end over the past generation.

Republicans' growth cure

On the GOP side what you have is the argument that high tax rates and burdensome regulations reduce the rate of economic growth.

And who doesn't want more economic growth? But even though economic growth has been somewhat disappointing over the past generation, it's simply not the case that there's been zero GDP growth. The middle and lower classes have been receiving a shrinking share of a growing pie. The rising tide is not lifting all boats.

We could use some idea about income stagnation

The income stagnation problem — and a different problem from the problem of traffic jams or slow economic growth — is a serious one, and it's worthy of either being specifically addressed on its own terms, or else explicitly dismissed as not-actually-problematic. We could use, in other words, an actual new playbook.

Instead we're getting now more than ever.

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