The Economist, for example, says:
“There is no denying that for some middle-class Americans, the past few years have indeed been a struggle. What is missing from Mr Obama’s speeches is any hint that this is not the whole story: that globalisation brings down prices and increases consumer choice; that unemployment is low by historical standards; that American companies are still the world’s most dynamic and creative; and that Americans still, on the whole, live lives of astonishing affluence.”
This is yesterday’s orthodox argument. And most serious economists take this story less and less seriously.
Why not? Because…ummm…the global economy is in a state of shock. If this story was true, we wouldn’t be melting down.
A much more plausible story is this – one that forward-thinking economists are beginning to take very, very seriously.
Real wages have stagnated for decades. But corporate profits are at their highest. That means the net effect of global price competition is just to transfer wealth from the poorest to the richest.