The Miracle the Middle Class Is Waiting For
Is anyone running this place?
The pressures on America's middle class confront America's political leaders with their hardest possible test -- one that, to be frank, they're going to fail. That's because the problem doesn't lend itself to one-shot fixes. Instead, it requires a lot of smaller ideas all pulling together. In Washington, this kind of strategic coherence doesn't come naturally.
That's no excuse for inaction. Intermittent progress is still progress. As a matter of practical politics, it's important not to let the perfect be the enemy of the good.
Read more in this series:
How to Save the Middle Class
Bring Back American Enterprise
Robots Versus the Middle Class
Simplify Taxes and Make Work Pay
The Middle Class Has a Debt Problem
America's Coming Retirement Crisis
A good example of what happens when you ignore that advice is playing out at the moment.
For months, President Barack Obama has been asking Congress for so-called fast-track negotiating authority, which would allow him to conclude the Trans-Pacific Partnership agreement, a far-reaching plan to promote commerce among the U.S. and 11 of its trading partners. Many on Capitol Hill -- especially the president's fellow Democrats -- are opposed both to fast tracking and to the TPP, seeing a new threat to the living standards of working Americans.
With so much opposition, it's unclear whether this and other pending trade deals can get done. If they can't, that would be unfortunate, because openness to trade is indispensable for the kind of economic growth that is necessary for an aspiring and steadily more prosperous middle class.
This isn't to say that rejecting the TPP and other new trade-boosting arrangements would be an economic catastrophe. The U.S. would still be one of the most open -- hence competitive and productive -- economies in the world. Blocking the TPP would merely squander the best opportunity in years to build on this strength by taking international economic integration further.
To be sure, making the most of that opportunity does require other steps. Increased competition through trade, like any other kind of competition, means new and better products at lower prices -- which is good for the middle class (and everybody else). But the process isn't painless. Some workers would see their wages fall, and others might lose their jobs. The dislocation can be tempered but not eliminated.
Tempered how? If domestic demand is strong enough to keep the labor market tight, workers displaced by increased trade will find other work more easily. Better opportunities to train or retrain for new jobs would help. So would fewer obstacles to starting new businesses. A safety net fit for the purpose, protecting people without pushing them away from employment, is vital. What about other measures to make families more financially secure? They're needed as well.
It can't be done all at once, though, and insisting that the creative destruction of market forces has to pause in the meantime would be a formula for stagnation. The interests of the American middle class will be better served by expanding trade -- meaning enterprise and ambition on a global scale -- than by stasis or retreat.
On policy, you make progress when and where you can. An opportunity to encourage trade and competition presents itself? Seize it. Then move swiftly on the broader agenda, acting on every chance to promote employment, widen opportunity and spread prosperity.
Ideally, do all of the above. Realistically, do any of the above rather than nothing.
To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at firstname.lastname@example.org.