Economist and former Obama-Administration official Jared Bernstein answers his own questions based on the miserable U.S. Census Report on income and poverty in a post titled, "The Lost Decade for the Middle Class".
What does all this tell us about how the American economic model has worked for the middle class and the poor?
In many ways, the years since the median household income peaked back in 1999 have a something quite rare in economic analysis—a natural experiment testing an economic hypothesis such as these:
- if you cut taxes for the most wealthy, the benefits of their increased economic activity will trickle down, enriching the rest of the society.
- if you deregulate financial and labor markets, you will unleash innovation, investment, demand and again, the benefits will trickle down to the broad middle class and the poor.
- these markets will self-regulate—the inherent incentives in the deregulated system are all that’s need to ensure the best outcomes for everyone.
- gov't interference in any of this, from unemployment insurance to labor standards to safety nets, will only serve to dampen innovation and broadly shared wealth creation.
Well, based on these results, not to mention the fallout from the Great Recession that was very much an outcome of that economic experiment, it is fair to say that from the perspective of the vast majority of Americans, the experiment has been a devastating failure.
