ECONOMIC GROWTH….Over at TPMCafe, Gene Sperling is defending his new book, The Pro-Growth Progressive, from a determined onslaught led by the redoubtable David Sirota. Unfortunately, amid all the fireworks over the meaning of fair trade, the meaning of progressive, and the meaning of straw man, there hasn’t been time yet to discuss the meaning of the most important word of all: growth.
If I could have one wish in arguments about the economy, it would be for the default definition of “growth” to be changed. Normally, it’s taken to mean overall GDP growth, and it’s certainly true that steady GDP growth is a good thing. But really, what’s the point of economic growth if all the extra money is going to Donald Trump and the average guy is just treading water? What’s the value of growth like that?
If I had to choose one single thing as the most important determinant of a genuinely strong economy, it would be median wage growth. After all, if median wages are increasing smartly, it’s a sure bet that the economy as a whole is growing too and everyone ? including Donald Trump ? is doing well. It’s quite possible to have strong GDP growth that still leaves two-thirds of the country stagnant ? which is roughly what’s happened for the past 30 years ? but it’s almost impossible to have strong median wage growth and not also have a booming economy.
I’d argue that headline writers should stop paying so much attention to inflation rates, GDP growth rates, and unemployment rates ? as important as they are ? and spend more time highlighting median wage growth. That’s the single biggest sign of a healthy economy.