March 04, 2017
Tony Blair, the former Prime Minister of the United Kingdom, who is best known for lying his country into participating in the Iraq War, lectured NYT readers on the evils of populism. Once again he gets many key points wrong.
He criticizes the left for abandoning centrist politicians:
“One element has aligned with the right in revolt against globalization, but with business taking the place of migrants as the chief evil. They agree with the right-wing populists about elites, though for the left the elites are the wealthy, while for the right they’re the liberals.”
Blair then tells us:
“The center needs to develop a new policy agenda that shows people they will get support to help them through the change that’s happening around them. At the heart of this has to be an alliance between those driving the technological revolution, in Silicon Valley and elsewhere, and those responsible for public policy in government. At present, there is a chasm of understanding between the two. There will inevitably continue to be a negative impact on jobs from artificial intelligence and big data, but the opportunities to change lives for the better through technology are enormous.
“Any new agenda has to focus on these opportunities for radical change in the way that government and services like health care serve people. This must include how we educate, skill and equip our work forces for the future; how we reform tax and welfare systems to encourage more fair distribution of wealth; and how we replenish our nations’ infrastructures and invest in the communities most harmed by trade and technology.”
Blair obviously is unfamilair with the basic facts about the economy. For example, even workers with college degree have seen almost no growth in real wages in this century. And with a large dispersion of earnings among male college grads, the bottom quartile of grads don’t really see any premium at all.
But more importantly, Blair is wrong when he treats globalization and technology as natural forces. The decision to put our manufacturing workers in direct competition with low paid workers in the developing world, while leaving doctors, dentists and other highly paid professionals largely protected, is a policy choice. It’s predicted and actual effect is to put downward pressure on the wages of most of the workforce, while benefitting the small elite in the protected occupations.
In the same vein, the decision to make patent and copyright monopolies longer and stronger was a policy choice to transfer more money from the rest of us to the people in drug companies, software companies and other segments of the economy positioned to benefit from these protectionist barriers. This is an incredibly wasteful policy, since these archaic mechanisms are extremely inefficient ways to finance innovation and creative work.
Similarly, the decision to leave the financial sector largely untaxed, which is criticized even by the International Monetary Fund, is the basis for the high incomes of some of traders and hedge fund types. (Tony Blair has worked as an advisor to JP Morgan and Zurich Financial Services, since retiring as prime minister.)
Given his background and associations, it is understandable that Mr. Blair would not want people to question the policies that have been put in place to redistribute income upward. However there is little reason for people not from the elite to take such arguments seriously. (Yes, this is the topic of my book Rigged [it’s free]. The short course for quick policy action is here.)
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