A Most Dangerous YOYO

A Too Much review of
All Together Now: Common Sense for a Fair Economy
Jared Bernstein
Berrett-Kohler, 2006.

June 19, 2006

Early in his sprightly new book, All Together Now: Common Sense for a Fair Economy, economist Jared Bernstein offers an observation that most Americans would indeed likely consider “common sense.”

“Individuals, families, and communities need economic security to realize their potential,” Bernstein writes, “and thus, that should be one of government's core functions.”

But today, throughout the United States, that “core function” seems to be disappearing, at every level. Average Americans find themselves increasingly insecure — in their jobs, in their retirements, in their quest for decent health care — and government appears not to particularly care.

What's going on here? Why isn't government helping average Americans gain the economic security they want — and expect — government to provide? Jared Bernstein, in All Together Now, has the answer.

Over recent decades, Bernstein explains, a new economic orthodoxy has come to dominate American politics, a perspective that Bernstein reduces to the acronym YOYO, an evocative shorthand for "you're on your own.”

YOYO economics, Bernstein notes, sit at “the heart of contemporary conservatism.” This you're-on-your-own thinking preaches “freer markets, less government, and more individualism.” Cut taxes, the YOYOers urge, and give taxpayers back their tax dollars. Get government out of the way and let Americans find the good life — on their own — in the marketplace.

Presidents and lawmakers who share this YOYO perspective have been setting America's economic course for most of the last 30 years, and no one has been tracking the impact of their YOYOism any more diligently than Bernstein, an analyst at the Washington, D.C.-based Economic Policy Institute and the co-author of the most important factbook series on the U.S. economy, the biennial State of Working America.

YOYO policies, Bernstein's All Together Now helps us understand, have been snuffing out the American dream for an entire generation. The typical hourly wage for American men, he points out, has actually shrunk, from an inflation-adjusted $15.76 in 1973 to $15.62 in 2005.

“This is an amazingly sober statistic,” Bernstein notes. “Over a period when the economy grew by 150 percent, when productivity increased by 80 percent, the typical earnings of male workers went nowhere.”

Average workers have ridden the YOYO down. Wealthy Americans have ridden it up. Between 1979 and 2000, Bernstein relates, the real incomes of America's richest 1 percent soared 184 percent.

All this rightfully infuriates Bernstein, an economist who really does believe that economics, as a profession, ought to be about helping “society tap our collective potential.” In All Together Now, Bernstein lays out the elements of an economic policy that could do just that.

This alternative agenda — Bernstein dubs it WITT, for “we're in this together” — turns the YOYO approach upside-down. The YOYO approach shifts the risks of modern life onto the shoulders of isolated individuals and their families. Bernstein's agenda, by contrast, shares that risk, up and down the economic ladder.

In health care, for instance, the YOYO approach promotes Health Savings Accounts, devices that encourage people to save up stashes of “tax-free” cash they can use to purchase their own health care coverage in the private insurance marketplace.

Bernstein, instead, advocates “Medicare for All,” an approach that would expand this popular government insurance program to cover all Americans.

The author of All Together Now has much more in his economic policy toolkit. To help Americans survive the job-squeeze of globalization, he calls for a real safety net for the outsourced and a major national job-producing commitment to achieving true energy independence.

To raise the stagnating incomes of working Americans, Bernstein advocates a higher minimum wage, union organizing protections for all workers, and Federal Reserve interest-rate policies that give as much weight to creating jobs as fighting inflation.

Bernstein considers this package of proposals well within America's historic progressive mainstream, or, as he puts it, “think TR (Teddy Roosevelt, a competent Republican, meets FDR.”

“The hallmark,” he explains, “is an amply funded, competent, not too big government that undertakes measured interventions to help its citizens better cope with the challenges they face.”

Bernstein's we're-in-this-together agenda, unfortunately, lacks one element that figured prominently in the political projects of both TR and FDR — and almost every other major progressive leader of their times. Back then, in the first half of the 20th century, progressives defiantly challenged wealth and power at the top of American society. Bernstein's we're-in-this-together program does not.

“We simply can no longer afford to be led by people wearing ideological blinders.” Bernstein notes at one point in All Together Now, referring to the economists who espouse you're-on-your-own solutions and the pols who parrot their YOYO maxims.

But we also can no longer afford to let wealth and power continue to concentrate at the top-most rungs of America's economic ladder. TR and FDR understood that. TR railed against the “malefactors of great wealth” and fought to bust down — to a more democratic size — the vast corporate trusts that fueled the great private fortunes of his day.

FDR sought to rally Americans against the nation's “economic royalists,” even proposing, in 1942, what amounted to a “maximum wage,” a 100 percent tax rate on all individual income over $25,000 a year, the equivalent of about $314,000 today.

Congress didn't buy FDR's 100 percent tax. But Congress did set the top tax rate on high incomes at 94 percent, and that rate would hover around 90 percent for the next 20 years, an era that would see America's working families prosper more than they had ever prospered before — or since.

This quarter-century after World War II would see a historic blossoming of we're-in-this-together legislative action, programs like the G.I. Bill, a marvelous initiative that opened college doors for millions of working Americans.

Amid these popular commitments to mutual support, YOYO thought could find precious little political traction. In the years right after World War II, outside a handful of ivory-tower cranks, few Americans spent any time celebrating the marketplace as the be-all and end-all of human existence.

Now here today, a half-century later, economists and politicians inspired by those cranks run our country. But that shouldn't surprise us. Down through American history, you're-on-your-own ideas have always — and only — surged whenever wealth and income concentrate.

In eras of wealth concentration, those at the top come naturally to see their grand fortunes as a justifiable reward for their equally grand achievements. In the eyes of these super-rich, the system “works.” Work hard and you will be rewarded. They did, so why can't everybody else?

Now if the awesomely affluent of a society make up only a tiny bunch, and if these affluent hold not that much more wealth than everyone else, then their hyper-individualistism will seldom have much of a political impact.

But if these affluent come to be plentiful, and if their wealth amasses at unholy enough levels, then their presence — and biases — will tilt the political scales toward you're-on-your-own public policies.

That's what has happened over the last quarter-century, as wealth and income have concentrated at America's economic summit. And that's what happened over a century ago, in America's first “Gilded Age.”

Back then, in that first Gilden Age, progressives struggled to beat back YOYO thought — by directly confronting the source, the grand fortunes of America's most fortunate. Americans, as the great progressive newspaper publisher Joseph Pulitzer contended, needed to battle both “predatory poverty” and “predatory plutocracy.”

Progressives, to an amazing extent, would eventually win that battle. By the mid 20th century, they had successfully leveled America's first plutocracy — and set the stage for the we're-in-this-together victories that created the modern American middle class, the first mass middle class in world history.

We can score a similar victory today, here in the early 21st century. We can realize the we're-in-this-together future Jared Bernstein so powerfully proposes. But first we need to confront, directly and unapologetically, the grand concentrations of wealth that breed the YOYOism Bernstein so powerfully exposes.

— Sam Pizzigati

Sam Pizzigati edits Too Much, the online weekly on excess and inequality. For updates on inequality books — and everything else inequality-related — sign up here for a free subscription.