Economist, Economic Policy Institute
Jared Bernstein’s new book combines a sober critique of economic policies with a clever set of acronyms. Bernstein labels the Bush administration’s approach to the economy as "YOYO" thinking—that is, a "you’re on your own" philosophy. The better alternative, Bernstein argues in All Together Now: Common Sense for a Fair Economy, is the "WITT" stance. Some "we’re in this together" policies include an end to the Bush tax cuts and some flavor of national health care, Bernstein says. He recently spoke to Workforce Management staff writer Ed Frauenheim.
Workforce Management: It seems this idea of "we’re in this together" is mostly a call for government action. How does it apply to employers?
Jared Bernstein: Employers benefit when they operate within an environment where rational and efficient economic policy prevails, as opposed to policies that generate greater insecurity—insecurity among working families, but also insecurity regarding some fundamentals of the macro economy, including indebtedness. The YOYO agenda, where policies are crafted to basically shift risk from government and firms onto people, leads to greater economic insecurity, and it leads to much higher levels of government indebtedness.
WM: How so?
Bernstein: One of the main strategies of YOYO economics is to "starve the beast"—that is, to cut tax revenues by regressive tax cuts. They’re much less willing to cut spending. So what you end up with is big budget deficits. Many in the business community worry about the impact of budget deficits on the economic environment, both in terms of crowding out private investments but also in terms of simply hobbling the government’s ability to meet basic functions. That comes anywhere from providing America’s employers with a trained and educated workforce to protecting us from Force 5 hurricanes.
WM: Employers might be interested in your argument for just the health care reason.
Bernstein: This notion of a universal, single-payer approach to health care, or something that takes it out of the employer-based system, is something that’s no longer viewed as a radical, left-wing idea. It’s viewed under the heading of competitiveness. It’s difficult to compete in world markets if you’ve got this albatross around your neck.
WM: The counter-trend that many employers are moving toward is consumer-directed health care.
Bernstein: I think that that’s a big mistake. Every other country has solved this riddle by taking health care out of the market, because market solutions are incompatible with health care—which in an advanced economy like ours is correctly viewed as a right. If you need heart surgery, you’re not going to go shopping for it.
WM: A counter-argument to what you’re saying is that people are most creative when their backs are against the wall.
Bernstein: You don’t want to create disincentives to be creative and to work and to get ahead. But, paradoxically, individuals cannot realize their economic potential if there are no safety nets in place. If those safety nets become too cloying, then sure, you’ve got a different problem. But that’s never been our case.
Workforce Management, August 14, 2006, p. 7 -- Subscribe Now!