Steven Pearlstein of the Washington Post takes a more forgiving view than mine of Fed chief Ben Bernanke's speech about rising inequality. Pearlstein calls Bernanke a desperately needed "trustworthy moderator for this national debate," and he says Bernanke
gently, but deftly, dismissed the favorite conservative arguments that the story is not one of greater inequality so much as one of greater mobility. At the same time, Bernanke exposed as myth all those overblown fears about the broad decline in standard of living and the death of the American middle class.
Pearlstein says there's little to be gained by debating the relative importance of various factors contributing to rising inequality -- technological change, globalization, superstar compensation for a tiny minority in every field, the decline of unions, deregulation. "Having followed this debate for nearly 20 years, I've come to the conclusion it has become a meaningless exercise," Pearlstein writes.
Instead of arguing about causes, Pearlstein says, we should discuss how "to preserve the political consensus for open and flexible markets by offering Americans a stronger economic safety net -- one that might include more portable and affordable health insurance and pensions, some expansion of income support in the event of a job loss and a big new investment in education and training, from early childhood through adulthood."
Pearlstein says this sounds like the idea of an economic grand bargain that's been bandied about since the election. Rep. Barney Frank has been a proponent of this grand bargain, where businesses get fewer restrictions on trade, and less regulation, in exchange for -- well, I'm not sure what the middle and working classes get out of it.
Maybe this is where the grand bargain is taking shape. The CEO of Wal-Mart and the president of the Service Employees International Union have agreed to lobby for universal health coverage.
As Katie Porter mentions in Credit Slips, the problem isn't merely one of income inequality, but also of income volatility.
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