Lane Kenworthy is Professor of Sociology and Political Science,
. University of Arizona
Corporate profits are up, but jobs and wages remain weak. How can competitiveness help to tackle important economic and social issues?
Competitiveness clearly helps, if we think of it, following the World Economic Forum, as "the set of institutions, policies, and factors that determine the level of productivity in a country." But competitiveness is no guarantee of rising wages or employment. In the
, productivity has risen in recent decades. But wages in the bottom half of the distribution have been stagnant. And during recent recessions employment in low-end households has tended to fall sharply, erasing gains made during the growth phase of the business cycle. United States
Why does full employment matter? Is it a necessary condition to achieve sustained economic growth and to reduce poverty?
Theory and empirical evidence suggest that full employment, if we define it as an unemployment rate below 4%, tends to spur wage growth. On the other hand, looking across the rich countries over the period since the 1970s, we observe some countries with few years of full employment that nevertheless have had healthy economic growth, low poverty, and other good economic outcomes (read more). So it does not seem to be a necessary condition.
The increasing moralization on economic issues suggests that the political division in the
has deepened since the outbreak of the financial crisis. What do you think? US
It's important to separate two aspects of political division ("polarization"). The two political parties have become more divided. The economic crisis may have contributed a little to this, but it began in the 1970s. It's mainly a function of the increased coherence of the two parties. Conservatives in the south have moved from the Democrats to the Republicans, and liberals in the northeast have done the opposite. The two parties, which once were incoherent collections of individual candidates, now more closely resemble European parties with distinct ideologies.
The American public, by contrast, has not changed much in its degree of polarization, at least according to public opinion survey data. People on the extremes have gotten louder and more visible, but they haven't increased in number.
Thank you very much.