May 2006 | A Berrett-Koehler Publishers Book
All Together Now
Common Sense for a Fair Economy
By Jared Bernstein
ISBN: 978-1-57675-387-3 or (1-57675-387-5)
$12.00, 120 pages, 5 1/2” x 8 1/2”
Available in May 2006 from Berrett-Koehler Publishers
Comments About the Book
“Jared Bernstein provides a smart look at the American economy, one deeply rooted in American values. All Together Now explains the importance of having an economy that puts people first and ensures a fair shake for all.”
—Senator John Edwards
“Jared Bernstein is to most economic writers what Red Bull is to a decaf latte. In All Together Now he makes such a rousing case for mutual responsibility and shared risk that you’ll leap out of your chair and into action. Everyone in the sub-billionaire class needs to read this book and send a gift copy to his or her elected officials.”
—Barbara Ehrenreich, bestselling author of Nickel and Dimed and Bait and Switch
“What does our national debate about economics most need? It needs ideas. It needs strong voices for justice who understand economics. And it needs economists with a passion for social decency. Jared Bernstein is a passionate economist who provides hard data to describe the world as it is, and ideas to make the world more just. All Together Now should be read and debated by all who know that the status quo is failing us and seek a daring and bracing examination of the reasons for our discontent.”
—E. J. Dionne, syndicated columnist, author of Why Americans Hate Politics and Stand Up Fight Back, and Professor, Georgetown University
“This vitally important and readable book couldn’t have arrived at a better time. Jared Bernstein examines the ever-increasing gap between our socalled ‘booming’ economy and the waning economic security of the very people creating that growth. With common sense and common decency, Bernstein shows where we’ve gone off course and how to find our way back.”
—Robert B. Reich, Professor of Public Policy, University of California at Berkeley, and former U.S. Secretary of Labor
Introduction
Ready or Not, You’re on Your Own
I once heard an allegory about mealtime in heaven and hell. It turns out that in both places, meals are served at a huge round table with lots of delicious food in the center. The food is out of reach, but everyone’s got really long forks.
In hell, everyone starves because, while people can reach the food with their forks, the forks are much longer than their arms, so nobody can turn a fork around and eat what’s on the end of it.
In heaven, faced with the same problem, people eat well. How?
By feeding each other.
Protecting the rights of individuals has always been a core American value. Yet in recent years the emphasis on individualism has been pushed to the point where, like the diners in hell, we’re starving. This political and social philosophy is hurting our nation, endangering our future and that of our children, and, paradoxically, making it harder for individuals to get a fair shot at the American dream.
This extreme individualism dominates the way we talk about the most important aspects of our economic lives, those that reside in the intersection of our living standards, our government, and the future opportunities for ourselves and our children. The message, sometimes implicit but often explicit, is, You’re on your own. Its acronym, YOYO, provides a useful shorthand to summarize this destructive approach to governing.
The concept of YOYO, as used in this book, isn’t all that complicated. It’s the prevailing vision of how our country should be governed. As such, it embodies a set of values, and at the core of the YOYO value system is hyper-individualism: the notion that whatever the challenges we face as a nation, the best way to solve them is for people to fend for themselves. Over the past few decades, this harmful vision has generated a set of policies with that hyperindividualistic gene throughout their DNA.
The YOYO crowd—the politicians, lobbyists, and economists actively promoting this vision—has stepped up its efforts to advance its policies in recent years, but hyper-individualism is not a new phenomenon. Chapter 1 documents archaeological evidence of YOYO thinking and policies from the early 1900s, along with their fingerprint: a sharp increase in the inequality of income, wealth, and opportunity. The most recent incarnation can be found in the ideas generated by the administration of George W. Bush, but the YOYO infrastructure—the personnel with a vested interest in the continued dominance of these policies—will not leave the building with Bush. Unless, that is, we recognize the damage being done and make some major changes.
One central goal of the YOYO movement is to continue and even accelerate the trend toward shifting economic risks from the government and the nation’s corporations onto individuals and their families. You can see this intention beneath the surface of almost every recent conservative initiative: Social Security privatization, personal accounts for health care (the so-called Health Savings Accounts), attacks on labor market regulations, and the perpetual crusade to slash the government’s revenue through regressive tax cuts—a strategy explicitly tagged as “starving the beast”—and block the government from playing a useful role in our economic lives. You can even see this go-it-alone principle in our stance toward our supposed international allies.
While this fast-moving reassignment of economic risk would be bad news in any period, it’s particularly harmful today. As the new century unfolds, we face prodigious economic challenges, many of which have helped to generate both greater inequalities and a higher degree of economic insecurity in our lives. But the dominant vision has failed to develop a hopeful, positive narrative about how these challenges can be met in such a way as to uplift the majority.
Instead, messages such as “It’s your money” (the mantra of the first George W. Bush campaign in 2000), and frames such as “the ownership society,” stress an ever shrinking role for government and much more individual risk taking. Yet global competition, rising health costs, longer life spans with weaker pensions, less secure employment, and unprecedented inequalities of opportunity and wealth are calling for a much broader, more inclusive approach to helping all of us meet these challenges, one that taps government as well as market solutions.
To cite one potent example, 46 million people lack health coverage, and the share of our economy devoted to he
alth care is headed for unsustainable levels. We urgently need to begin planning a viable alternative, such as a system of universal coverage as exists in every other advanced economy. In every case, these countries insure their citizens, control health costs better than we do, and have better overall health outcomes. Yet our leaders want to solve the problem with an individualistic, market-based system of private accounts designed to cut costs by shifting risk from the insurer to the patient, unleashing more of the very market forces that got us into this mess in the first place.
As I stress throughout, those crafting such policies are trapped in the YOYO paradigm, one where common-sense solutions, even those embraced by the rest of the advanced world, are out of bounds. This book has but a few central messages, but this is one of them: we simply can no longer afford to be led by people wearing ideological blinders. We must seriously investigate a new way of thinking if we are to successfully craft an equitable approach to growth, risk, and the distribution of opportunity and income.
For decades in the post-WWII era, the income of the typical family rose in lockstep with the economy’s performance. As the bakers of the economic pie—the workforce—grew more productive, they benefited commensurately from their work: between the mid-1940s and the mid-1970s, both productivity and real median family income doubled.
Since the mid-1970s, however, family income has grown at onethird the rate of productivity, even though families are working harder and longer than ever. Recently, the problem has grown more severe. In late 2003, we finally pulled out of the longest “jobless recovery” on record, going back to the 1930s. Our economy expanded, but we were losing jobs. Moreover, despite solid overall growth since the recession of 2001, the typical family’s income has consistently fallen and poverty has gone up. The gap between the growth in productivity, which has been quite stellar, and the very flat pace at which the living standards of most families are improving has never been wider. This is a characteristic of YOYO economics: the economy does fine; the people in the economy do not.
How has this occurred, and what role do the people and politics of YOYO play? While the whole story might be made more interesting by a right-wing conspiracy, the rise of YOYO isn’t one. Though conservatives have introduced recent YOYO initiatives like Social Security privatization and private accounts for health care and unemployment, this is not a story of good Democrats and bad Republicans. It is the story of the ascendancy of a largely bipartisan vision that promotes individualist market-based solutions over solutions that recognize there are big problems that markets cannot effectively solve.
We cannot, for example, constantly cut the federal government’s revenue stream without undermining its ability to meet pressing social needs. We know that more resources will be needed to meet the challenges of prospering in a global economy, keeping up with technological changes, funding health care and pension systems, helping individuals balance work and family life, improving the skills of our workforce, and reducing social and economic inequality. Yet discussion of this reality is off the table.
We’re In This Together
We need an alternative vision, one that applauds individual freedom but emphasizes that such freedom is best realized with a more collaborative approach to meeting the challenges we face. The message is simple: We’re in this together. Here, the acronym is WITT.
Though this alternative agenda uses the scope and breadth of the federal government to achieve its ends, this book is not a call for more government in the sense of devoting a larger share of our economy to government spending. In fact, there is surprisingly little relationship between the ideological agenda of those in charge and the share of the economy devoted to the federal government. To the contrary, some of the biggest spenders of federal funds have been purveyors of hyper-individualism (with G. W. Bush at the top of the list). But, regardless of what you feel the government’s role should be in the economy and society, an objective look at the magnitude of the challenges we face shows we must restore the balance between individual and collective action. We simply cannot effectively address globalization, health care, pensions, economic insecurity, and fiscal train wrecks by cutting taxes, turning things over to the market, and telling our citizens they’re on their own, like the gold prospectors of the 1800s, to strike it rich or bust.
All Together Now aims to set us on a new path. At the heart of the WITT agenda is the belief that we can wield the tools of government to build a more just society, one that preserves individualist values while ensuring that the prosperity we generate is equitably shared. Importantly, under the WITT agenda, this outcome occurs not through redistributionist Robin Hood schemes, but through creating an economic architecture that reconnects our strong, flexible economy to the living standards of all, not just to the residents of the penthouse. As the pie grows, all the bakers get bigger slices.
Where YOYO economics explains why we cannot shape our participation in the global economy to meet our own needs, or provide health coverage for the millions who lack that basic right, or raise the living standards of working families when the economy is growing, WITT policies target these challenges head on.
As YOYOism rolls on, the amplitude of our national discomfort, the vague sense that something is fundamentally wrong in how we conduct our national and international affairs, is climbing. In poll after poll, solid majorities view our country as headed in the wrong direction, and there are signs that the YOYO infrastructure is not impenetrable. Though the administration may ultimately get its way, some members of Congress have unexpectedly been resisting White House demands for billions more in tax cuts for the wealthy. In a totally uncharacteristic reversal, the Bush administration was forced to reinstate the prevailing wage rule it suspended in the wake of Hurricane Katrina. In the off-year 2005 elections, a few closely watched races revealed that simply pledging to cut taxes wasn’t enough. In a couple of important cases, candidates and initiatives that delivered more WITTisms than YOYOisms prevailed.1 The climate of a few years ago has changed, and resistance is no longer futile.
A growing chorus is calling for a more balanced role of government in our lives. In the words of Iowa governor Tom Vilsack, “Government is nothing more nor less than the instrument whereby our people come together to undertake collectively the responsibilities we cannot discharge alone.” If enough of us add our voices, we can reject messages like “It’s your money” and “You’re on your own” as divisive and counterproductive.
We can move the pendulum away from a politics that excessively focuses on individuals—the YOYO agenda toward an approach wherein we work together to craft solutions to the challenges we face. Embedded in these solutions is a healthy respect for markets and individuals. But that respect is not excessive. It does not lead us to stand idly by while the economy expands year after year as poverty rises and the real incomes of working families stagnate. Neither does it impel us to shy away from our goal: building a society where the fruits of economic growth are broadly shared with those who create that growth each day of their working lives.
A Return to Common Sense
The subtitle of this book invokes Common Sense, the most famous work of the American revolutionary Thomas Paine. What&r
squo;s the connection?
It’s partly, of course, the issue of whom our government represents. Paine was ready to throw off the yoke of British tyranny well before most of the nation’s founders were. In this spirit, part of what follows is a common-sense critique of the United States’ current situation. As discussed in chapter 1, hyper-individualism has held sway numerous times in our history, and a characteristic of these periods is the extent to which they favor the chosen few over the majority.
But what makes Paine so relevant today was his ability to see outside the box. While the majority of the colonists were unhappy with the Crown, most were unable to envision ending their relationship with England and seriously consider independence. Common Sense, which starts right off with a vitriolic personal attack on King George III, offered the colonists a radically different view of their options. Paine told the colonists that their humanity was a gift from God, not from the king. Thus, they had a responsibility to themselves and their children to construct a system of government that would free them from the constraints of the Crown to pursue their “natural rights.” We can see this philosophy clearly embedded in the Declaration of Independence, where the right to life, liberty, and the pursuit of happiness was enshrined as a God-given, self-evident right of humanity.
We have drifted too far from Paine’s vision. Many of us share a sense of deep discomfort and insecurity about the direction our country is taking. But there do not seem to be any signposts pointing to a better way. Why not?
It’s easy to blame the lack of leadership, and there’s something to that. The quality of many of our leaders does seem particularly suspect these days. Opportunists can always be found in politics, but their influence is often countered by those truly motivated to promote the public good (which is not to say that such people agree on how to do so, of course). Right now, the ratio of opportunists to idealists may be unusually high.
But the problem cuts deeper. The emphasis on individualism will always be a core American value, but it has been stressed to the breaking point. As the YOYO influence has spread, assisted by the muscular application of contemporary economics (as discussed in chapter 2), the YOYOs have implemented a philosophy of hyperindividualism that disdains using the tools of government to seek solutions. More than anything else, this policy has led to our current predicament. Under the banner of “You’re on your own,” we have lost a sense of common ownership of our government, an institution that many of us now distrust as feckless at best and corrupt at worst.
This abandonment of our faith in government to help meet the challenges we face—social, economic, and international—has been costly. We have shut off our critical faculties that under normal circumstances would lead us to be deeply angered by much of what’s going on. Despite the events of September 11, 2001, we are less prepared for a national disaster now than we were a few years ago. Our citizens are dying in an underfunded war launched on false pretenses, and our actions have helped to unleash powerful forces that are both lethal and destabilizing. A majority of our representatives are addicted to tax cuts with no regard for their future impact. Short-sighted vested interests are at the table, constructing self-enriching energy policies instead of incentives to conserve; polluters are editing the science out of environmental protection acts.
These are front-page stories. Yet in the absence of a broadly shared vision in which we see that each one of these calamities poses a deep threat to our common fate, it’s not clear how we should react. We have a vague sense that something important is off-kilter, but since the YOYOs have taken government solutions off the table, we have no means of crafting a suitable response. When the answer for every problem is a market-based solution—a private account, leavened with a tax cut for the wealthiest—we are trapped.
Clearly, we need to escape from that restrictive, cynical vision. Pursuing our collective, rather than strictly personal, interests will help. The plan I offer is straightforward: diagnose the point at which we got off course and chart the way forward.
The diagnosis begins in chapter 1, with a more detailed explanation of YOYO ideas and policies and a brief history of their evolution. Chapter 2 looks at the supporting role played by economists whose ideas in recent years have lent sustenance and support to the YOYO agenda. In chapter 3, I get proactive and lay out the WITT agenda. Chapter 4 addresses a set of challenges to the agenda, and the final chapter concludes with thoughts about how a movement to implement these ideas might be nurtured into being.
My hope is that the ideas that follow, along with some of the great work of others I cite along the way, will morph into a blueprint for such a movement to carry out. By working, thinking, and planning “all together now,” we can find our way toward a more hopeful future for ourselves, our families, and our society.
