'Good Jobs and Wages Fuel Growth'

By Robert Reich, Robert Reich's Facebook Page

15 August 15

here are two views about the relationship between economic growth and good wages -- one incorrect and Republican, the other correct and commonsensical. You need to know the difference.

1. The incorrect Republican view is growth creates good jobs and wages. That’s what Jeb Bush, Rand Paul, and the other Republican hopefuls say. This is a variant on trickle-down economics, which has been tried since Ronald Reagan was in the White House. But it’s failed miserably. We’ve had some growth, but none of that growth has trickled down to most people. Almost all gains have gone to the top.


2. The correct view is good jobs and wages fuel growth. That’s because businesses won’t expand unless they have enough customers to justify expansion. And since the poor and middle class spend a larger portion of their income than the rich, growth occurs when the poor and middle class receive a substantial portion of its gains. The current “recovery” has been one of the most anemic on record because the poor and middle class don’t have the purchasing power to keep it going.

(By the way, economic growth itself is neither good nor bad. It depends on what that growth is used for. It's bad if it just uses up scarce resources and pollutes the environment; it's good if it's used for education, health, and environmental protection, for example. How we use growth is a political decision.)

Your view?