Today most economists to the left of center will tell you that inequality has been rising for about thirty years, thanks to broader changes in the economy and government's failure to compensate adequately for them. But in the late 1990s, when the economy was humming along, not too many people were making a fuss about this.
Among the few exceptions were Jared Bernstein and his colleagues at the Economic Policy Institute--who repeatedly warned that lower- and middle-income people were not getting their share. As they wrote in the 1998-99 edition of The State of Working America, "although the current income boom has generated substantial improvements, by many measures of adequacy, inequality,
and income, the current economy still does not match up to reasonable
expectations." Bernstein himself added that "The recent gain in wages is a welcome reversal of
long-term wage decline, but most working families are still playing
catch-up. As economic growth slows,
they are likely to fall further behind," he adds.
Bernstein and his colleagues haven't always been right. (Who has been?) But those warnings certainly seem prescient now.
All of this is suddenly relevant because Bernstein is joining the Obama Administration. He'll be the Chief Economist and Economic Policy Director to the Vice President, an entirely new position in the executive branch. Exactly what that entails remains to be seen. But the idea, I gather, is that Bernstein's role will be more than cosmetic. And that's important.
As my colleague Jonathan Chait notes in TRB this week, the divide between the Robert Reich left and Robert Rubin center-left has largely closed. These days, you'll be hard-pressed to find a more passionate (and effective) spokeperson for large economic stimulus, a more progressive tax code, and universal health care than Larry Summers--who, within the administration, will most likely emege as the single most influential voice on economic policy.
But Bernstein, who has spent his career focusing on the well-being of lower- and middle-income Americans, brings a different perpsective to the table than Summers and the rest of Rubin's old associates will. That sort of intellectual diversity is always a good thing.
Of course, Bernstein's influence will ultimately depend entirely on that of his boss, Vice President-elect Joseph Biden. But, particularly with Hillary Clinton serving as Secretary of State, it makes sense that Biden include economic security as a major part of his portfolio.
Among the top administration officials who might weigh in on domestic policy, he's really the only one with strong ties to the labor movement. (We'll see if that changes when Obama taps a Labor Secretary.) Biden also has a uniquely working-class sensibility; all that Scranton stuff wasn't just for show. I'll be surprised if Biden doesn't emerge as a major player on economic policy, which means Bernstein could, too.
--Jonathan Cohn