What is the key to boosting wages for US workers?

Liberals and conservatives disagree greatly on the best approach.

Greg Weiner is an astute observer of both our legal and political systems, and the author of “Madison’s Metronome: The Constitution, Majority Rule, And the Tempo of American Politics.”

His recent essay, “The Power of the Courts Is Messing Up Politics,” though, proves that it is possible to construct a logical, reasoned, coherent and incisive, even persuasive, argument and still come up with a reversed causality. It isn’t the courts that are messing up politics; it’s politics that is messing up the courts.

Economists might say, “Welcome to our world.” In economic data, causality is often a lot murkier than we might hope or think. In fact, one of the first efforts to calculate a real, not chalk board, demand curve — using market data for sugar — ended in failure because in analyzing the price changes it was impossible to tell which price movements were caused by demand changes and which were caused by supply differences. It’s trickier than it looks.

When it comes to politics messing up the courts, though, it is difficult to mistake the evidence of political influence. We need only to look at the federal judiciary to understand the effects of politics.

Those effects are most visible in the selection and appointment of federal judges. Under our Constitution, the President, “…by and with the advice and consent of the Senate,” has the power to appoint federal judges, including those on the U.S. Supreme Court. There is little doubt that these judges, and therefore their appointments, have the power to shape our economy, our beliefs, and even our national character.

There are over 800 judgeships in the district courts, courts of appeal, and the Supreme Court that make up the federal judicial system, and each appointment is for a life term. Each president gets to appoint new judges as vacancies arise from retirements, illness, or deaths.

Politics is so much a part of this aspect of the judicial system that it is now an important part of presidential campaigns. A “vote for me so I can steer the courts in the right direction” statement has become a standard feature of presidential campaign rhetoric. Usually these statements are referring to U.S. Supreme Court, but the other court appointments have strong effects in the long term also.

We might expect that the Supreme Court’s power to influence our country’s destiny would have a sobering effect on the Senate’s “advise and consent” confirmation hearings. But the Senate instead has repeatedly turned these hearings into political theater.

The courts did not exert their power in order to make a mess out of the judicial appointment system. It was a triumph of politics over the combined forces of reason, responsibility, and the best interests of the country.

It isn’t only our legal system that is working under the cloud of politics, of course. Economic theory, which also has a major impact on our national character, is increasingly affected by partisan perspectives and thought processes.

A new research study entitled, “Productivity and Pay: is the link broken,” by Anna Stansbury and Lawrence Summers provides an example of the extended reach of politics, not so much because of the study’s content itself but because of the political positions it inevitably challenges.

The economic theory of productivity had a life before politics. Adam Smith’s theory of the division of labor has productivity written all over it. Subsequent economic theoretical and analysis tended to make assumptions about the causes and effects of productivity increases. Those assumptions, though, have been challenged by our economy’s performance since the mid-1970s, when our productivity growth was no longer matched by wage growth.

What that said to thoughtful economists was that productivity’s effects needed more research. The latest view, expressed in the Stanbury-Summers research paper, is that the link between productivity and wages is as strong as it ever was but that other forces have entered the picture to change the net effect on worker pay.

The implications for economic policy are huge, and that is where politics, quite rightly, belongs. Many liberals believe that since there seems to be no direct link any more between productivity and wages, promoting economic growth won’t help anyone but the already well off. Economic policy should, instead, concentrate on income redistribution. Conservatives tend to believe that a return to robust economic growth, along with improved control over the labor supply, will not only increase wages but renew our country’s confidence in the economy and ourselves.

We are at a major turning point for the American economy and for American history. The decisions on economic policy will ultimately be political, as they should be. We can only hope, though, that the decisions are wise ones and that political theater is limited to out-of-town tryouts.

James McCusker is a Bothell economist, educator and consultant.

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