Soothing Summers

Lawrence Summers wrote this last week in the Los Angeles Times.  Title and subtitle are:

Calming an anxious middle class

The incoming Congress will need to pursue policies that promote more economic fairness without hindering globalization.”

Speaking of the growing disillusionment of the middle class with their dwindling economic prospects and the new Congress’ cognizance of that displeasure, Summers warns corporate managers to beware of a populist backlash. He says:

“These economic and political trends should be of great concern to the business community as well as to policymakers in Washington. They will continue to lead to any number of populist proposals that cut against the grain of the market system, such as limiting free-trade agreements, restricting outsourcing or blocking the ability of successful companies to expand.

But the track record of populist economic policies has been dismal — they rarely achieve their objectives but incur huge collateral costs. Policymakers forget at their peril that globalization has enabled the U.S. economy to enjoy the very favorable combination of low unemployment and low inflation, and that without open markets, product prices would be rising much faster than they are, making living standards even worse for middle-class families.”

I’m no economist, but that last line, “making living standards even worse for middle-class families” sounds like a damning indictment of a professedly good economy.

If the “grain of the market system” is such that the great majority of citizens are suffering for it, then why wouldn’t  Congress want to do some targeted surgery, specifically, “limiting free-trade agreements, (and) restricting outsourcing”? Are they not derelict if they do not act?
I have no idea why he thinks economic populists want to block the expansion of successful companies. That’s just bizarrely paranoid.  And demonizing as well.

If, according to Summers, “populists” are the middle class who want a reinvigorated manufacturing sector, and who recognize that some market protections may be necessary to achieve that, then are the corporate barons who oppose them “elitests”?


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