In-Sourcing the U.S. Middle Class

In-Sourcing the U.S. Middle Class

Welcome back American manufacturing. U.S. in-sourcing (global companies bringing jobs back to the U.S. that were previously sent overseas) hit the mainstream news cycle again this month. An in-depth Atlantic article by Charles Fishman on GE’s plans to manufacture  high-end appliances has drawn exceptional attention. James Fallows, also in The Atlantic, provided the China context.

President Obama gave a January speech on bringing jobs back to the U.S. where he said:

 

“I don’t want the next generation of manufacturing jobs taking root in countries like China or Germany.  I want them taking root in places like Michigan and Ohio and Virginia and North Carolina.”

Among the notable companies announcing in-sourcing plans this past year Apple plans to spend $100 million on new domestic (U.S.) production capabilities and Starbucks’ $172 million investment in a Georgia plant (net 140 jobs, that’s some capital intensive, high-productivity work). White-collar workers appear to be gaining as well. General Motors plans to hire up to 10,000 U.S.-based IT workers, starting with 500 employees at an Austin, Texas innovation center.

The in-sourcing or reshoring “trend” isn’t exactly new. Otis Elevator announced plans to move jobs from Mexico to a new highly-efficient plant in South Carolina more than a year ago. Chesapeake Candle, one of the featured companies at the White House event actually opened its first U.S. factory back in July, 2011.

These jobs mostly aren’t the same ones that went overseas for lower-wage, low-skill workers overseas in the first place either. Garment manufacturing, for example, won’t be making a comeback.

What companies are finding, however is that the total cost for manufacturing abroad to sell back into the U.S. were never fully accounted for (shipping, training, quality control, etc.) When they are, it turns out, semi-skilled to high-skill work closest to where the products will be sold is more profitable than manufacturing overseas and sending them back.

Significant obstacle remain for these anecdotes to turn into a trend.

 

 

 

 

 

 

 

 

 

 

 

 

 

First and foremost worker’s need re-training. Without significant investment in, dare I say it during these tough fiscal times, education, the skilled workforce won’t materialize to make these now isolated cases cascade into a wave of better jobs for America’s workforce.

Beyond education there remains a stultifying restriction on educated immigrants. Vivek Wahda in a July Foreign Policy piece makes the case for focusing on reform as many talented students leave the U.S. after finishing their studies because they can’t get green cards to stay. And if they could stay they’d likely either fill the numerous unfilled tech jobs still floating around in this glum economy, or start businesses of their own.

The Republican-led House passed legislation in November to give 55,000 science and tech grads per year an immediate path to permanent residence. That’s a start but not nearly comprehensive enough. Millions of illegal immigrants on which this country depends need to be turned into tax-paying members of the workforce. The legislation is unlikely to pass both the Senate and the President’s desk without major additions.

Without changes to education and immigration the U.S. risks a serious and long-lasting hollowing out of the middle class. That would prove disastrous for an economy that relies on consumption for 70% of its annual gross domestic product.

 

For more Klein’s Commentary sign up for email updates or connect via Twitter @brianpklein.

Related Posts:

Photo: Wikimedia Commons, depression-era soup line.

Mfg Data: http://unstats.un.org/unsd/snaama/dnllist.asp

Half-Time in America is Over, It’s Decision Time

Half-Time in America is Over, It’s Decision Time

They lined-up half a block down the street, forty to fifty people at first, in 35 degree weather well before 8:00am. Parent’s with young children bundled up against the cold, women and men in business suits, in old jeans, in work-out clothes. Hispanic, White, African American, and Asian. No one forced them to show up. No one cut the line. All stood as strangers to each other in a simple, silent procession of cooperation and civic pride.

They came and they waited and then one by one they went inside. All the while the line outside grew longer, the wait half an hour or more. Some held coffee or a paper, but most looked around every time a person who entered came back outside, as if something important had just happened.

On election day everyone who votes is a celebrity, a representative, an agent of change in a social ritual that renews hope, promises a better future and gives an incomparable feeling of freedom.  Something important did happen behind those doors. Volunteers donated their time to help forge a more perfect union between citizens and their government. People voted and they were transformed.

And no matter what their beliefs, their race, their religion, education or profession, or how much money they have in their pockets, on this day, in this line, at this moment, they stand equal among their peers – one person, one vote.

Then it’s over, sticker in hand, back out into the cold to go their separate ways. That’s America and that tens of millions of people will voluntarily go out of their way and spend time in civic ritual at polling stations all across this country renews a hope in the experiment of democracy that grows stronger, every vote, every election.

Half time in America is over. It’s decision time. Choose wisely, but choose.

De-Politicizing Benghazi – CNN Commentary

De-Politicizing Benghazi – CNN Commentary

(Also on CNN’s GPS website)

A recently publicized series of State Department email by CNN lays out in harrowing detail the attack on the U.S. Consulate in Benghazi. They are sure to provoke another round of finger-pointing and more politically-motivated pabulum.

At 4:05pm: “The Regional Security Officer reports the mission is under attack. Embassy Tripoli reports approximately 20 armed people fired shots.; explosions have been heard as well.”

Ambassador Stevens and four other personnel, according to the same email, are in the safe haven and the 17th of February Militia is providing security support. Based on this early assessment it appears the situation is under control. Diplomats are safe. Armed entities are defending.

Further reassurance comes at 4:54pm: “Embassy Tripoli reports the firing at the U.S. Diplomatic Mission in Benghazi has stopped and the compound has been cleared. A response team is on site attempting to locate COM personnel.”

Unfortunately all was not under control, the compound was overrun, and Ambassador Stevens died along with three other personnel.

The political spin machine has been busy politicizing this tragedy since its onset. The same Congresspeople that cut State security funding hauled up department officials to berate them on the lack of high security at the Consulate (the same happened after the disastrous 1998 bombing of the U.S Embassy in Nairobi.) In the second Presidential debate Romney berated Obama for taking so long to identify the attack not as an unruly mob but the work of a specific terrorist organization (even though Obama did characterize the attack as a terrorist act shortly after events unfolded).

In another email released by CNN Ansar Al-Sharia claimed responsibility on Facebook and Twitter. Aha, go the conspiracy theorists, proof the administration knew but didn’t say anything for weeks. But no, that doesn’t prove a thing.

On any given day in the complex world of threat analysis people and groups make all kinds of claims. It isn’t as if terrorists are holding a press conference for the world’s media to ask questions. Individual bits of information are simply that. Single puzzle pieces that tell very little about the full picture of what happened until amassed and reconstructed.  Details must be verified, cross-checked and analyzed before informed assertions are made.

This very small selection of email give the impression of control but information at the beginning of any crisis is often hard to come by and spotty at best. No single account could immediately identify a specific attacker. Even establishing the facts of a traffic accident requires a police report and potential review by a judge or jury. It’s a process. An armed assault on a U.S. diplomatic mission, thousands of miles away, in a far flung province recently freed of civil war creates an infinitely more complicated undertaking. It requires, it demands time to assess and judge.

There are ways to address the serious issues involved in the loss of our diplomatic personnel. Inquiries can and should be made. Did the rush to set up a presence in Benghazi trump normal security procedures? Why was a rosy picture being portrayed of a post-uprising Libya when in fact serious threats remained. How critical was it to set up a new consulate in the first place?

Using the attack in Benghazi as fodder for more November electioneering, however serves only the short-term interests of those who benefit by not giving the security of our diplomatic missions the thorough review (and funding) it requires. This does nothing to ensure the future security of our diplomatic personnel. They deserve better.

Post-Debate Wrap-Up: The Candidates on Asia

Post-Debate Wrap-Up: The Candidates on Asia

The final 2012 U.S. Presidential Debate went off without a hitch last night as both candidates stuck closely to their foreign policy talking points. China was meant to feature prominently with time devoted explicitly to the bilateral relationship. After brief opening remarks both Obama and Romney veered off topic and returned to the jobs question, a perennial favorite whenever China comes up.

What we know of the candidates’ positions from last night’s sometimes testy exchange paint a picture of a complicated U.S. relationship with the world’s second largest economy. These include concerns over the loss of domestic manufacturing, rule of law and growing military strength balanced against commercial opportunities half a world away (see full transcript starting with the China question here.)

Romney came out swinging with the now somewhat antiquated claim that China is a currency manipulator. In his own words:

“We’ll also make sure that we have trade relations with China that work for us. I’ve watched year in and year out as companies have shut down and people have lost their jobs because China has not played by the same rules, in part by holding down artificially the value of their currency. It holds down the prices of their goods. It means our goods aren’t as competitive and we lose jobs. That’s got to end.

They’re making some progress; they need to make more. That’s why on day one, i will label them a currency manipulator, which allows us to apply tariffs where they’re taking jobs. They’re stealing our intellectual property, our patents, our designs, our technology, hacking into our computers, counterfeiting our goods.

They have to understand we want to trade with them. We want a world that’s stable. We like free enterprise, but you got to play by the rules.”

Technical issues aside (as the Treasury Department has ruled against that legally very specific manipulator charge in the past), inexpensive Chinese manufactured goods are the result of low cost labor, economies of scale and exchange rates.

No matter what happens the jobs lost to China (and many other countries including Mexico, Turkey, India, and Bangladesh), including low-end garment production, household goods, and assembly work won’t be returning. If Chinese products became more expensive production would shift to other low-wage countries. Check the labels the next time you go shopping and you might be surprised where clothing is manufactured these days.

Even if Romney as President labeled China a currency manipulator, the remedy includes tariffs against Chinese goods. As the moderator Bob Scheiffer accurately pointed out, that would risk a trade war with China. Romney replied that China exports more to the U.S. than the other way around so they have more to lose. This simplistic version of trade does not reflect the realities of international commerce.

Sudden tariff increases would be a particularly reckless course of action which does absolutely nothing to solve the core problems facing U.S. labor, namely better paying U.S. jobs. The effects of punitive action would wreak havoc with trade on both sides of the Pacific and the intricately linked global supply chain.

China’s currency has also been appreciating over the past several years and labor costs are rising as well. Romney’s missive, along with the ear-catching phrase that they “must play by rules” which Obama also reiterated, did little to address real trade frictions like further opening of Chinese markets to U.S. goods, greater Chinese enforcement of intellectual property rights protection, and cracking down on counterfeits entering the U.S. That’s more of what we needed from both candidates.

Obama countered with his own “get tough” strategy including an increasing number of WTO cases levied against China (most of which are won by the U.S.) that did give temporary advantage to U.S. manufacturers of tires and steel. Both industries, however are slow growth and lacking in innovative strategies to remain globally competitive.

Clear examples and real world solutions were needed, only the solutions part was sorely lacking.

On the security front there was precious little mentioned about China’s rise, the U.S. pivot to Asia, tensions in the South China Sea, North Korea, or recent China-Japan disputes. Obama did say:

“We believe China can be a partner, but we’re also sending a very clear signal that America is a Pacific power; that we are going to have a presence there. We are working with countries in the region to make sure, for example, that ships can pass through; that commerce continues. And we’re organizing trade relations with countries other than China so that China starts feeling more pressure about meeting basic international standards.”

And then the conversation veered off into Detroit autos and cuts to education. There was no grand U.S. policy towards Asia offered by or asked of the candidates.

For the most part U.S. voters aren’t even that concerned about U.S. foreign policy when it comes to picking the president. What they want to see is a candidate capable of securing the country against threats, decisiveness and calmness under pressure. The real concern remains jobs, jobs, and then jobs. That’s why the debate consistently put foreign policy back into the domestic context.

All the candidates really needed to do was get in a few good verbal punches here and there and stay off the ropes. That’s what the debate delivered, but little else.

 

For updates from Klein’s Commentary connect via email, Facebook or Twitter (links above). Also available soon by subscription in the Kindle store.

U.S. Presidential Debate – A Foreign Policy Primer

U.S. Presidential Debate – A Foreign Policy Primer

With two weeks left before election day candidates Obama and Romney tackle foreign policy issues tonight. If last week’s battle royale over the economy is any indication this promises to be a no-holds-barred verbal slug fest. Tremendous changes have occurred over the last four years in the Middle East, Europe and Asia. Osama Bin Laden is dead, the wars in Afghanistan and Iraq are over. Dictators have fallen from decades in power. China continues to rise.

Still, the global economy has yet to fully recover with Europe teetering on the edge of recession and Japan mired in stagnant economic waters. Middle East political movements struggle to sustain new democracies and China’s economic and military advances raise questions about Asia’s future balance of power.

Here’s a primer on some of the big issues likely to be addressed and a few questions that need to be asked. The debate begins at 9:00pm EST.

Middle East

Since Obama took office four years ago a surprise Arab Spring swept across the region. Libya, Egypt, and Yemen saw leadership changes brought about by popular uprisings. Syria is still mired in its own civil war with little hope of quick resolution. While nascent democracies sprung up after the overthrow of decades of dictatorships serious questions remain about their stability and policies going forward.

For now the Muslim Brotherhood in Egypt holds a tentative control with the military watching from behind the scenes for any signs of the nominally secular government turning into an Islamist stronghold. Libya meanwhile struggles with establishing a strong central government as events in Benghazi, where the U.S. Consulate was destroyed and diplomats killed by a terrorist attack, demonstrate.

In Iran a nuclear standoff continues with enrichment activities racing ahead and Israel threatening attack (though as sanctions take a deeper bit out of the Iranian economy Israeli President Netanyahu has eased off the war rhetoric).

The U.S. military withdrawal from Afghanistan marks the end of major U.S. operations in the region, closing a decade-long period of intervention initiated by the former Bush administration. The Afghanistan government still struggles with providing basic services to its people and countering threats of Taliban violence.

What will Obama or Romney do to further promote democracy in the Middle East without inflaming anti-U.S. sentiment? How can Iran’s nuclear ambitions be eliminated? Is Afghanistan going to slip into chaos once U.S. troops leave?

Asia

China’s inexorable rise gathered speed since January 2009. It completed construction on its first aircraft carrier, became the world’s second largest economy, and has survived the worst of the global economic meltdown with one of the world’s best growth rates. U.S. economic ties with China remains strong which has helped keep domestic inflation low.

Potential flare-ups, however in the South China Sea (with neighbors Vietnam and the Philippines) and East China Sea (with Japan) linger behind the facade of China’s “peaceful rise”. A once in a decade political transition is also underway with China’s new leaders expected to be officially acknowledged on November 8th and installed in March, 2013. Trade frictions are on the rise with increased WTO cases on goods ranging from tires to solar panels. The economy has slowed considerably from the unsustainable double-digit sprint of years past. Some economist predict much tougher times ahead as China’s new leadership faces a country in transition unlike any other time in recent history.

North Korea too has changed since Obama first took office. A young and relatively untested new leader, Kim Jong-Eun rose to power seizing every major military, political and governmental role in quick succession since his father’s passing. In one of the world’s most isolated regimes the family political dynasty remains intact. Hopes for significant economic liberalization have so far failed to materialize and tensions persistent on the world’s last Cold War front.

What does China’s rise mean for U.S. security and economic growth? Is China’s strategic intent to replace the U.S. as main regional influence and what will the U.S. do about it? What will you do as President to reduce tensions on the Korean peninsula and end the decades-long hostilities between North and South Korea?

Europe

Germany, the powerhouse of the continent, has lowered growth forecasts to a barely treading above water 1% for 2012. Most were hoping that the manufacturing giant could sustain strong growth against the headwinds of Spanish, Greek, and Portuguese recession along with a lackluster UK and newly integrated eastern European economies.  As the world’s engines of growth stall one-by-one, the threats of a larger global recession increase, as the IMF has warned with increasing regularity.

How will the European slowdown affect the U.S. economy and can the U.S. avert even more economic troubles if Europe stalls?

Terrorism

Attacks on the U.S. Consulate in Benghazi and a recently thwarted attempt in Jordan in addition to continued fronts in Yemen and now Mali show that the treats of terrorism have not abated. As long as arms continue to flow into the hands of radical groups and weak or failed states remain the threat of violence will continue. Concerted and sustained action can, however minimize the depths of the threat and seriously disrupt organizations bent on destruction.

What can and should the U.S. do to further combat terrorist organizations? Is the Al-Qaeda threat still a focal point of U.S. foreign policy?

For updates from Klein’s Commentary connect via email, Facebook or Twitter (links above).

U.S. by the Numbers – Recovery Still a Mixed Bag

U.S. by the Numbers – Recovery Still a Mixed Bag

A torrent of headlines came out today on the latest U.S. jobs numbers. Unemployment fell to 7.8%, below the psychologically important magic number eight. Hitting a four year low this certainly marks a change in the right direction, but we’re still talking baby steps (hand holding a toddler comes to mind.)

To have a substantial impact on the millions still unemployed this really needs to be closer to five or six percent. With only 114,000 jobs created we’re a far cry away from solid recovery. Numbers like 250,000 per month bring back better times from the abyss.

Still, current figures often underestimate the number of new jobs created (note the upward revisions of late) and the situation might be better than reported. We won’t know until after the November presidential election so whatever right direction/wrong direction spin the candidates want to put on these figures now’s their chance. Here’s what it looks like without the spin.

Bureau of Labor Statistics – Non-Farm Payrolls 2002 – 2012).

The gauge for recovery can’t really be measured solely by pre-financial meltdown levels anyway. Many jobs, especially in real estate and construction were unsustainably inflated by easy money sloshing around and unscrupulous mortgage lenders, traders and quantitative charlatans, but that’s another story.

What’s new is the housing slump appears to be in tentative recovery. The National Association of Home Builders/Wells Fargo Housing Market Index has been climbing for several months running now, albeit from a very low base and below even 1990’s levels. There’s ample room for improvement.  Considering the flack the U.S. economy has been hit with since 2008, especially among proponents of the inevitable decline meme (and the dozens of books it spawned) let’s stick with the glass half full version. That same glass used to be cracked, leaking and irreparable.

Other data points show that the economy as a whole can be about as undecided as some American voters with only four weeks to go. The Institute for Supply Manufacturers gauge hit a four month high of 51.5 indicating expansion had returned to the economy.  Alas, the Markit Index of Manufacturers fell slightly to 51.1 (still expanding but at a slower rate), from 51.5 in August.

These pesky social sciences. Conflicting data sometimes relegates the field more to a numbers running racket than say the mechanical precision of physics. Getting billions of electrons marching in single file across a TV screen remains far easier than accurately predicting the hiring and purchasing activity of a few hundred million people.

Since about 70% of the U.S. economy is driven by consumption and the holiday season represents a significant portion of consumer purchases for the year, perhaps better numbers are inventories and retail sales for October and November.

Wherever they end up, we still have a long slog ahead of us until the engines of American prosperity kick into high gear. On the bright side, innovation and ingenuity in the material sciences, biotech, information services and healthcare are expanding at tremendous rates. Once these go mainstream they’ll power an American renaissance sometime down the line. Just don’t ask for a firm date yet.

 

Photo: Depression Era Soup Kitchen, Wikimedia Commons

The Presidential Debate We Needed, but Never Saw

The Presidential Debate We Needed, but Never Saw

One question for the undecided voters of America – are you better off now than you were 90 minutes ago?

Despite a Romney landslide 67% “win” among CNN debate watchers and pundits parsing the candidates words in excruciating detail (worse than the actual number-laded debate itself), undecided voters remained decidedly, undecided.

What voters needed from the debate, a clear idea of the candidates’ plans for American renewal, remained lost in the thicket of questionable facts, long-winded replies, and tired rhetoric.

The debates did little to address the most pressing issues facing the U.S. economy. What can government actually do, in the short-term, to help increase employment, get the deficit under control, and ensure the social safety remains intact.

There was no clear vision for America, no soaring oratory, no sense of mission or purpose. Just two men, talking past each other through volleys of competing accounts of their opponents’ views and saccharine human touch stories. Remember the Denver woman with child in hand whose husband hasn’t had a full-time job in years? Or was it a man in (insert name of swing state here) who lost his insurance coverage and can’t get the operation he needs?

What seemed to get the most rise out of Colorado undecideds were phrases like “stop shipping jobs to China” and discussions on the importance of education. Old wine, new bottles.

How much do the candidates’ facts even matter? Probably not as much as we’d like to believe. Who is going to remember whether the Romney plan (with or without details) will actually add $5 trillion to the deficit. Did green energy companies really receive $80 billion in tax breaks and oil companies only a few billion? How many licks does it take to get to the center of that tootsie pop … no one really cares.

The fact checking cycle will run for the next few days and when the October truths come out they’ll be forgotten by November 6th. One zinger worth holding onto — Romney loves Big Bird, but won’t use taxpayer money to fund PBS.

Moving on to the next debate a youthful Paul Ryan faces off against the seasoned and outspoken Vice President Biden. In this match-up will an elder statesman school his less experienced upstart or does a Gen X politician goad the VP into saying something outlandish and damaging to the Obama campaign? It’s reality television on sedatives.

For the most expensive election in U.S. history one would have expected a better show. Maybe in the third and last debate the gloves will finally come off and we’ll get to see a real battle of ideas that make a difference.

South China Sea First Test for U.S. Shift – Business Insider Article

Tensions are rising again in Southeast Asia as competing claims over the resource rich South China Sea push closer to boiling point. One would hope that countries in the region would take concerted action. That hope would be misplaced.

An increasingly militarized land and sea grab continues despite calls for peaceful resolution. With the U.S. in full Asian tilt, the South China Sea dispute is shaping up to be the first major test of its Pacific re-engagement. What the U.S. can or should do remains woefully undefined.

Full article available here.

What Really Ails America This Election Season

The internet is abuzz with criticism of Niall Ferguson’s factually-challenged rebuke of President Obama’s performance in the latest Newsweek cover story. His views include a steady stream of slanted statistics circulating these days (which is not to say there aren’t reasonable criticisms out there). But that’s nothing new for the historian turned pundit.

Consider his January 16, 2012 Newsweek article “Rich America, Poor America” in which he uses Charles Murray’s book “Coming Apart” as evidence for the uneducated, lazy and irreligious poor in America essentially being the cause of their own misfortune. After all educated people simply self-segregate themselves, have smarter children, go to church more, and work harder than the poor (his assessment). By the end of the article he recommends Romney read the book as a guide to fixing the country (article here).

In “The Cure for Our Economy’s Stationary State”, 7/16/12, he focuses on rising disability claims and people not moving around the country as much as they purportedly did in the past to find jobs as reasons for U.S. economic stagnation. Again it’s the “lazy” poor abusing the system or just not working hard enough.

Disability claims have been rising. Yet he doesn’t bother to address precisely how much is due to an increase of the aging population and other factors or exactly how much fraud is occurring (or its cost on economic growth). Instead he leans on overly general statistics and insinuation. Here’s a certainty, something definitely happened back in 2008 on Wall Street that stinks like abuse. Maybe that was a plot by overnight janitors to sneak derivative trading schemes into the computers at night and pad their retirement accounts, maybe not.

Then he uses the overplayed China card saying:

“It is Westerners who are in the stationary state, while China is growing faster than any other major economy in the world.”

As economists and well informed historians know all too well countries in different stages of economic development grow at different rates. That China is in a growth spurt coming out of a very low developmental base starting in the late 1980’s is a well studied phenomenon. Rwanda, Indonesia and Lithuania have all been growing (and outpacing the U.S.) lately as well. Good for them. That says absolutely nothing about what ails America.

And finally he says:

“The mood disorder is especially bad for investors. Only seven out of 47 national stock markets around the world have posted gains in the last 12 months.”

Is he suggesting that U.S. markets are among those without gains and U.S. investors have fallen on hard times? Fact check: The Dow Jones Industrial (DJI) is up over 22% from 12 months ago. Maybe he meant since January, 2012. Um, nope. Still up. Here’s the chart.

Okay, okay, maybe he was referring to NASDAQ. Wrong again. A gain of almost 24% since a year ago, and up since January too. Take a look here. These two data points took all of five minutes and basic math to figure out.

Mislead and misdirect appear to be the commentary tricks of the trade these days rather than fact-based opinion. Maybe this is what you get when a historian tries to play economist, except that he isn’t even playing economist but simply an information-twisting partisan hack.

As we go into election season what America really needs is informed debate. There are plenty of thinkers who take the future of this country very seriously and have good arguments to support their positions (conservative and liberal alike). Ferguson is not among them.

World Politics Review Article on the Global Middle Class – Part II

World Politics Review Article on the Global Middle Class – Part II

The damage done to the global middle class, while significant, is not irreparable. The solutions are as varied as the countries themselves, but they all share several key features that influence whether a consumer-driven economy will flourish or not.

First and foremost is access to capital for small and medium-sized enterprises. In developed and developing economies alike, funding all but dried up during the economic crisis that began in U.S. and quickly spread around the world. Especially during recessionary periods, start-ups are critical job creators compared to existing firms, which tend to shed employees. During the 1991 and 2002 U.S. recessions, start-ups added nearly 3 million new jobs, while established firms laid off 4 million to 5 million people, according to a Kaufmann Foundation report.

Misguided government regulations have also been thwarting the return of the middle class. Breaking up the excessive influence of conglomerates in emerging economies is another way to create room for the middle class, but doing so often proves to be difficult and controversial. Policymakers, no matter where they are, need to shift their fixation from top-line statistics like GDP growth, which can obscure wealth-gap and purchasing-power problems, and focus more on the health and size of their middle class. Until the world’s middle class recovers, there will be no global recovery.

Full article is available on the World Politics Review website.

Photo: President Barack Obama signs the Middle Class Tax Relief and Job Creation Act of 2012 in the Oval Office, Feb. 22, 2012 (White House photo by Pete Souza).