The Song Remains The Same

by digby

This is interesting. From Queequeg the Harpooner:

In today’s speech, Bernanke sought to explain why the rich have gotten so much richer in the last few decades, leaving the poor and especially the middle class behind. (The people in the middle quintile of the income scale have advanced the least, in relative terms.)

Bernanke trots out the role of global trade and technological change, and then he comes up with this:

Finally, changes in the institutions that have shaped the labor market over the past few decades may also have been associated with some increase in wage inequality. For example, unions tend to compress the dispersion of pay for jobs in the middle of the skill distribution. Thus, the decline in private-sector union membership over the post-World War II period — particularly the sharp drop in the 1980s — has been associated with an increased dispersion of pay among workers with intermediate levels of skill. The sources of the decline in union membership are much debated, and certainly long-run structural changes in the economy, such as the decline in manufacturing employment, have played a role.

No mention of Ronald Reagan. No mention of PATCO. No mention of a decades-long effort to throttle unions until they constitute just 7.4 percent of employees of private companies.

Well, no. That would be partisan. Via Brad DeLong, I see that Bernanke also failed to mention tax policy. That would be partisan too.

Apparently, the answer to this pesky rising income inequality problem remains what it has been for the last two decades — retraining 50 year olds in new careers in the “service industry” and making sure we can take our $2,000 a month health care premiums with us when our jobs get moved overseas. It’s worked out so well so far.

Update: Read this. Maybe the debate isn’t as sterile as we think.

.