President Obama is expected to announce Gene Sperling (L) as his new director of the National Economic Council, replacing the recently departed Larry Summers (R), at an even in Landover, Md., today.
In my White House days, I was known for tormenting the speechwriters by insisting that we should rip off Ben Franklin's caution that we "must indeed all hang together, or ... hang separately" with the economic refrain "we will grow together or grow apart." My line never made it into a speech, but with the spread of globalization it has never been more apt....
Perhaps a better phrase to capture the notion of shared prosperity was John F. Kennedy's observation that "a rising tide lifts all boats." For progressives, the rising-tide metaphor is not a causal assumption that growth will automatically raise everyone. Rather, it is the aspiration and test for economic policy: Does it both raise the tide and lift all boats? This vision of shared prosperity is not only demanded by the global, interdependent economy, but rooted in the historic values of the progressive vision of the United States. Moving forward, we must recognize that the economy is undergoing a profound transformation, making it distinct from both the industrial era and even the beginnings of the Internet Age just a decade ago. In such a world, economic growth can be explosive, but growth alone is not enough. For Americans, shared prosperity, an opportunity for upward mobility, and economic outcomes determined more by merit than the accident of birth are fundamental to who we are as a nation....
So what can the government do to save and create jobs? In the 1990s, with booming job creation, we focused on laying the foundation for job creation with smart long-term investments. This is what former Treasury Secretary Lawrence Summers and I used to joke was a public investment "Field of Dreams" strategy: If we build the right research facilities, have the right preschools and lifelong learning programs, and spread the reach of the Internet, they-middle-class jobs-would come. Implicit in that vision was that the "next big thing" would drive virtuous economic cycles of growth and job creation in ways we couldn't imagine at the time. Today, however, when a large percentage of workers think the nation is going in the wrong direction and are worrying about their jobs, a universal pre-K or research agenda-however good long-term policy-is understandably not the most comforting response.
The challenge for progressives today is to continue their "field of dreams" focus on vital long-term investments in education and modern infrastructure, but also to be more aggressive in devising policies that answer the "where are the new jobs coming from" question without falling into the trap of "picking winners" or relying on large public works programs. First, we should be focusing our policies on making the United States a magnet for good jobs. These days many corporations see themselves as international firms, with little preference about what is performed where, as long as it improves the bottom line. But while these CEOs may feel that their fiduciary duty to shareholders should make them indifferent about where productive investment and high-value jobs are located, it should matter to American policymakers. We shouldn't assume that what is good for GM or Intel is good for Americans; rather, we should look for the intersection of a company's bottom line with the interests of the workers, wages, and standard of living of our people and devise policy accordingly. Take tax policy. Currently, we reward any U.S. multinational firm that operates abroad by letting it defer taxes on operating profits in lower-tax jurisdictions. Companies may be right that they need this tax break to compete for foreign market share in low tax nations. Yet U.S. policymakers should take those arguments into account only if companies can establish that locating in such tax havens ultimately translates into more jobs and better wages at home-an argument that I suspect is getting harder and harder to make.
Second, we need an investment strategy targeted toward the innovation jobs of the future. Progressives must draw a distinction between the narrower "picking winners and losers" approach associated with industrial policy and strategies that encourage more high-value-added jobs in areas where we know America must be competitive. With the strength of our university system and our capacity to create high-return "clusters" of research parks, universities, and pools of entrepreneurs, the United States should engage in an all-out battle to keep research jobs on our shores. A crucial area of opportunity is energy. Rather than the government seeking to pick a single winning technology or oil alternative or relying on an energy-based public jobs initiative, we need a broad and dramatic commitment to energy innovation, incentives for energy efficiency, and climate-change targets that could unleash new export opportunities and millions of new private-sector jobs.
Finally, while high-wage, innovation-related jobs should be the primary focus of public policy, there is more that can be done to compete for lower-skilled jobs through non-protectionist means. For example, there is no reason there could not be more policy incentives to help poor rural and urban parts of the United States-with lower labor costs-compete for the call-center and back-office jobs that are increasingly outsourced to lower-wage nations.
Read the full story at Democracy (excerpted with permission).
Matt Yglesias in 2009 also rounded up a bunch of Sperlings' other writings.
Image credit: Pete Souza/ The White House
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If you want to know more about his philosophy, his 2007 manifesto on "Rising-Tide Economics," published in Democracy: A Journal of Ideas, is good place to start. He writes: