The best thing I can say about the latest from Sebastian Mallaby is that he does not give all of the credit for the return to full employment and rising compensation to the tax cuts:
Well, how about the fact that no less a critic than Greg Mankiw, the administration’s very own chief economist until recently, attacked don’t-tax-but-do-spend economics in a Wall Street Journal column three days earlier? … Faced with strong growth, full employment and a productivity miracle, Democrats insist that something is profoundly wrong. Responding to President Bush’s economic speech on Friday, the Senate’s top Democrat complained that “the benefits of economic growth still have not reached many hardworking middle-class families.” Sorry, but that’s only half right. It’s true that wages have done badly. But in five of the past six years, average compensation – that is, wages plus benefits – has risen faster than inflation, according to the Labor Department’s Employment Cost Index.
Hold the phone – did I say we were at full employment with everyone enjoying higher real income? Thank goodness for Daniel Gross reminded me to read Stephen Roach. Gross earlier noted that the employment to population ratio is still below 63%, that the category of real compensation that has increased is the rising cost of providing the same health care insurance, and that economic insecurity has increased.
Let’s remind Sebastian Mallaby that Daniel Gross is simply stating what we have been saying here at the Angrybear for a long time.