The Hole in TNR's Big Obama Theory

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April 24 2009 6:29 PM

The Hole in TNR's Big Obama Theory

Friday, April 24, 2009  

Plot Holes: In their New Republic cover story divining Obama's "new theory of the state"-- which turns out to be "Nudge-o-cracy," or having the state "monkey around with the choices people face, seeking to influence decision-making rather than mandate decisions"--Franklin Foer and Noam Scheiber declare that:

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Obama has set out to synthesize the New Democratic faith in the utility of markets with the Old Democratic emphasis on reducing inequality . [E.A.]

They go on to describe Obama policymakers' shift in attitude since the Clinton administration: 

In recent months, several of the architects of Clintonomics--Larry Summers, Gene Sperling, Rahm Emanuel--have reassembled to take another crack at creating broad-based prosperity. What's striking is the change in their thinking about how to pull it off.

In fact, the center-left had revised its economic theories while the bubble was still inflating. Beginning in 2004, the data gradually began to undermine the Clintonites' central assumption: that the benefits of growth would accrue to the poor and middle class. Their policies, it turns out, had only temporarily tamped down the income inequality that had been rising since the 1970s. Workers' wages had once tracked productivity growth. Now workers were producing more, but only the wealthy were reaping the rewards; everyone else's income had basically flattened out.[E.A.]

But Foer and Scheiber's description of Obama's attempt, in the face of these realities, to restore "the old Democratic emphasis" on reducing income inequality never gets around to giving us Obama's nudge-o-cracy plan for reducing income inequality. Just thought I would point that out! I suspect it's because there is no Obama nudge-o-cracy plan for reducing income inequality--which, I suspect, is because there is no conceivable nudge-o-cracy plan that could reduce income inequality in the face of the global economic forces of trade and increasing returns to skilled labor.

Obama at least claims to have a non-nudgeocratic plan, based on restoring the power of labor unions through the Employee Free Choice Act ("card check"). But a) the Employee Free Choice Act is dead in the water, for now, b) Obama doesn't seem to be pushing it very hard ; c) the idea that signing up more workers in labor unions will reverse growing inequality (at least while maintaining prosperity) is wishful thinking untested. The backup EFCA mechanism for propping up middle class incomes--mandatory arbitration--is pretty much the opposite of mere "nudging." It's the direct mandating of wages by federal mediators. ... 4:08 P.M.

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