How Can The Middle Class Be Saved? It’s Not An Easy Job- by Robert Samuelson in Investor’s Business Daily


History teaches us that we have less control over our economic destiny than is often assumed. At every juncture in the chronology, people, including “experts,” did not foresee the next major change. In the early 1960s, they didn’t anticipate high inflation; in the late 1970s, they didn’t expect its demise. In this respect, the surprise 2008-09 financial crisis was typical.

The same ignorance inhibits what we can do for the middle class. Government — aka politicians — can address some middle-class wants by redistributing income from the rich through tax breaks and subsidies. But this approach has limits, and not merely because the rich will resist.

Recall, as the CEA found, that inequality isn’t the main cause of sluggish middle-class incomes. It’s poor productivity. There are always rhetorical solutions: more infrastructure spending, better schools, simpler taxes, more research. Some policies may be desirable, but there’s no guarantee they will improve productivity.

We just don’t know how to arrange predictable productivity increases. Saving the middle class, while popular, is qualified by economic reality. Our ambitions often exceed our powers.

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