Managing Inflation, Industrial Policy Are Key To Fighting Inequality

To accommodate health risks in the workplace and political pressures to raise wages, we can expect even more automation on factory floors, in warehouses and at retail checkout. And a paradox of structural unemployment for those without sophisticated technology, medical, business or other professional skills alongside a booming economy.

Homelessness and hunger will grow and increasingly embarrass the world’s richest nation. BLM, AOC, the mainstream media and the professional class of the victim’s movement will play the race card, but the real problems are failures that have no color in our educational system and immigration policies.

Only accelerated growth in technology industries can drive demand and provide the money to pay for more jobs and higher wages in law, medicine and other service occupations. And in turn, reverse declining opportunities for lower-skilled workers making sandwiches, cleaning homes, staffing customer service lines and in warehouses. 

We are talking 3% growth or more — a terribly illusive target.

Mr. Powell is willing to endure prolonged inflation above 2% to find it, but he ought to consider that managing the 10-year Treasury rate. That rate powerfully affects not just mortgage rates but also the capital available in equity markets that funds high-tech startups. And it is as important as the Fed’s official monetary policy target — the federal funds rate.

Still, Americans must up their game. Subsidies lavished on high tech in China, Korea and elsewhere translate into lost jobs in America making computer chips and 5G infrastructure but also jobs in law, business, medicine, restaurants, fitness centers and dry cleaners.

Fewer jobs and wage pressures for the lower half isn’t just about import competition, automation and alleged monopoly abuses the left rails about but can never seem to be able to prove in court. It’s about the Republican Party’s failure to recognize that industrial policy is not a moral failure but a contest for global leadership with China. And the Democratic Party has a penchant to see every spending imperative as an opportunity to inflate sexism, racism, classism and generally promise to create the Garden of Eden.

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Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.

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