Obama economic advisor: Globalization is not the cause of income inequality

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Volcker, 81, will lead what Obama is calling his Economic Recovery Advisory Board, a new White House advisory group that he said would be composed of experts from outside the beltway.

Directing the staff will be Goolsbee, 39, a tax policy specialist who has quietly advised Obama on economic issues since he ran for the Senate four years ago.

Source: http://www.chicagotribune.com/business/chi...0,2958482.story

For the first time in almost 100 years, Goolsbee said, productivity growth is not translating into wage increases for the majority of Americans.

“The top income levels have blown off the chart, but that’s not the issue,” he said. “The bottom 95 to 98 percent of income have been stagnant for the last six years. … That is extremely disturbing.”

The solution to this problem will ultimately be a new education plan that sends more Americans to college, he said. While the United States used to lead the world in the number of young adults with college degrees, Goolsbee said, it now ranks 33rd, between Bulgaria and Costa Rica. As a result, income levels will fall to the equivalent of the levels in those countries unless the United States reverses the current trend, he said.

“Education is the human growth hormone of the masses,” he said. “But education reform is still a process that will take decades.”

In the meantime, he said, gasoline, health care and college are all getting more expensive, and people are feeling the financial squeeze. He said the nation will need comprehensive health care and tax relief for the lower and middle classes to offset economic struggles until wages begin to rise again.

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Although some of his centrist economic prescriptions may disenchant liberals who distrust the benefits of globalization, Goolsbee said economic data indicate that free trade leads to higher wages.

“The issue of globalization is overblown as the cause of income inequality,” Goolsbee said. “The principal causes are increasing technology and demand for skilled labor.”

Source: http://www.yaledailynews.com/articles/view/21789