Washington -- Hendrik Hertzberg once described Rep. Richard Gephardt as looking like "an earthling whose body has been taken over by space aliens. [You] keep expecting him to reach under his chin and peel back that immobile, monochromatic, oddly smooth face to reveal the lizard beneath."
In mid-December, this eerie visage appeared on the nation's televisions, calling for a middle-class tax cut. Mr. Gephardt's speech, with its weary soundbites ("trickle-down terrorists") did not play well with the press. It was typically dismissed as tired "class warfare," proof that congressional Democrats were still in denial.
That's what I thought too. Then I read the speech. Class warfare is not one of its major themes. Even "tax fairness," the staple Gephardt slogan of the Reagan years, is really only a footnote to the text. Mr. Gephardt has a larger point to make. Taken together with the pronouncements of Labor Secretary Robert Reich and President Clinton himself, Mr. Gephardt's speech represents the ascendancy of a particular, potent analysis of rTC American society that could guide the Democratic party for years to come -- perhaps to its doom.
Call it the Stagnant Wages thesis. "In the last 12 years," Mr.
Gephardt asserts, "productivity has increased by 18 percent while real wages have dropped by more than 4 percent." Democrats "came to power in 1992 promising to reverse that slide, but the fact is we didn't."
That, Mr. Gephardt says, is why the Democrats lost. They can win power back if they can deliver on their original promise: "Our goal again should be a rising standard of living."
Is this assertion about wages right? It's right enough. Economic growth has in recent years produced low unemployment, but not rapidly rising wages. Meanwhile, the 20-year trend toward economic inequality -- the skilled making more, the unskilled making less -- has continued apace.
Many workers, especially unskilled men, have seen large wage drops. According to census statistics, the weekly earnings of a man smack in the middle of the wage distribution dropped about 15 percent between 1973 and 1992. That certainly helps explain why the famous angry white male voters of 1994 were so angry.
The problem is that the Democrats lack a compelling plan for bringing wages back up again. Mr. Gephardt admits, "I don't have all the answers," promising "in the coming weeks" to lay out "some of the changes that must be made." It's clear, however, what the two leading Democratic strategies for wage-raising are.
First, training. This is Secretary Reich's preferred solution, and President Clinton's. If skilled workers earn more, why not give skills to everyone? Unfortunately, not everyone can learn to be a computer technician, and the government's track record at boosting wages through training is decidedly mixed. Even a successful training program would take decades to produce significant changes in income distribution. Mr. Clinton's proposed tax deduction for college education is especially ill-suited for leveling, since the deduction is worth more to the rich than the poor (and may have the perverse effect of allowing colleges to raise tuitions).
Mr. Gephardt's pet solution, meanwhile, is "a new program called Pay for Productivity." Through unspecified "special incentives" he will "encourage companies to let workers share in the profits."
Profit-sharing might well boost incomes at the bottom -- but again, how big will the effect be? According Douglas Kruse, a Rutgers economist who has studied the subject, profit-sharing plans seem to produce a one-time productivity increase of 4 or 5 percent. That's a sizable gain. But even if it were achieved nationwide and returned in equal shares to low-level workers, it would only make up for a fraction of the decline in wages since 1973.
There are other possible cures for income stagnation. The recovery, if it continues long enough, might finally deliver higher wages. Or, as economist Paul Krugman suggests, a "technical fix" -- say, computers delivering a giant productivity increase -- might "appear spontaneously, independent of government policy." (Mr. Krugman thinks this will "probably" happen.) Let's hope. But it could be that our current stage of capitalism generates such unequal incomes that only those at the top see big income gains from growth -- and that there's nothing Democrats can do about it.
When I was "counterculture" in the '60s, my Marxist professors speculated that capitalism would collapse if it could not promise continual increases in living standards. Why else would anyone do all those alienating jobs? "Breakdown theory," we called it. Mr. Gephardt, too, seems to believe that to survive we must be able to promise "a high and rising standard of living" to everyone.
The alternative is figuring out how to live, if necessary, with income stagnation. That means satisfying the legitimate non-economic concerns of the "angry white males" about welfare and affirmative action. It means building up common public institutions (schools, national service) so incomes don't matter as much. And it means learning a lesson from the counterculture: that money, ultimately, is not what is most important about America.
TRB is a column of The New Republic, written this week by Mickey Kaus.