Volcker Group to “Raise Wages and Living Standards”


Former Federal Reserve Chairman Paul Volcker will chair a new economic advisory panel created by President-elect Barack Obama and designed to stabilize financial markets, the Wall Street Journal reported on Wednesday.

What caught my eye about this article was the following:

The panel will have several jobs, the paper said, including: helping design and implement programs to jump-start the economy; raising wages and living standards; and confronting the housing crisis.

This is the first time in a very long time I’ve heard anyone talk about “raising wages and living standards.”  Until now, the government has literally waged a war against such things.  The Federal Reserve has been positively paranoid about the possibility of rising wages adding to inflation.  In fact, it’s been one of the “benefits” of “free” trade that have been touted –  that the downward pressure on wages has helped to hold inflation in check.  Never mind that wages have fallen faster than the prices of imported goods or that falling incomes contributed to the foreclosure crisis.  Those are dirty little secrets that the government is too uncomfortable discussing. 

It’s just refreshing to hear that someone “gets it” – that rising wages and living standards go hand in hand and that we can’t just cost-cut our way to prosperity.  I know, I’m grasping for any signs of hope here, but at least we’re beginning to see signs at which we can grasp.

6 Responses to Volcker Group to “Raise Wages and Living Standards”

  1. Pete,

    Call me from Missouri, but they need to show me the plan and the numbers for raising wages and living standards.

    We can go from being foreign dependent for 70% of our energy, foreign dependent for our day to day financing, having the auto, airlines, banking, housing and retail industries in or on the verge of bankruptcy, having the highest personal debt level in our history and then shift to higher wages and raising living standards in the same sentence.

    I personally hope that Volker has some hidden talents that I am not aware of. I have never wanted to be wrong so much in my life.

  2. Pete Murphy says:

    My hope is that anyone who truly does an honest evaluation of what is driving down incomes in this country cannot help but arrive at the conclusion that the trade deficit is overwhelmingly the driving force. Then the question becomes, do they have the guts to do anything about it?

  3. Pete,

    I’m certainly on your side with the trade deficit. I think you have that one just right.

    Our entire legal system would have to be overhauled if jobs were to come back to the U.S. As an old Bush pilot and aircraft owner, I watched the legal system drain the blood out of my industry and general aviation. Iconic names such as Piper, Cessna, and Beech, were all driven to their knees and hundreds of thousands of high paying jobs were lost.

    Most ATVs are foreign made, much due to U.S. liability risks for after purchase accidents. The list of products that cannot be made in America due to liability is a very long list.

  4. Pete Murphy says:

    Mike, I’m no lawyer. Are foreign producers immune from liability? Is their liability limited in some way? Or is it just too difficult to sue a foreign company for most people to pursue it?

  5. purple says:

    Volcker’s track record suggests he is not much interested in increasing wages.

  6. Pete Murphy says:

    Purple, you are correct about Volcker’s track record. Like other Fed chairmen, he was paranoid about rising wages fueling inflation. I’m hoping that what’s different here is Obama’s leadership. If Obama is tasking this group to come up with a plan to raise wages and living standards, especially for the middle class, as he often says he plans to do, then we have something to be hopeful about.

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