Jeff Faux

Jeff Faux is a distinguished fellow at the Economic Policy Institute, which he founded. His latest book, The Servant Economy (Wiley), was published in June 2012.

Recent Articles

Who Will Save the Middle Class?

Liberals must face the stark truth: Both parties have agreed to sacrifice the middle.

(Tim Bower)
I n the eyes of most of the world and in our own, to be an American is to be an optimist—entrepreneurial, positive-thinking, and future-oriented. It is not surprising, then, that our politics has not come to grips with the question of national decline. Yes, our governing elites have long debated America’s power in the world and whether it’s eroding. But about the future of Americans , as opposed to the future of the geopolitical hegemon, America, our most important politicians and pundits have much less to say. Despite the bitter public arguments over tax and budget policies, they share the implicit assumption that even harder times are ahead for the majority of Americans—if not 99 percent then at least 75 percent to 80 percent. But doom and gloom does not play well in American politics. So, whenever our policymakers cannot avoid the word “sacrifice,” it is gingerly presented as a temporary inconvenience, to someone other than the listener, necessary to rebalance the government’s...

The Myth of the Level Playing Field

The boast that American workers are naturally superior to other workers and would therefore “win” in any fair competition is problematic at best and at worst, a pander to our national delusion of exceptionalism.

(Flickr/twintermute)
" Our workers are the most productive on Earth, and if the playing field is level, I promise you: America will always win.” —Barack Obama, State of the Union Address, January 24, 2012 The Trans-Pacific Partnership (TPP) is the latest act in the tragic farce of American trade policy. Earlier versions included the 1993 North American Free Trade Agreement (NAFTA), the U.S.–designed World Trade Organization, the opening of the U.S. market to China, and the signing of more than a dozen additional bilateral free-trade deals, including last year’s agreements with South Korea, Colombia, and Panama. The script does not change. The president, congressional committee chairs, and lobbyists representing U.S. importers and foreign exporters announce that the proposed trade deal will create millions of new high-paying jobs for Americans. They assure the public that American workers will be protected from unfair competition from countries that exploit labor and/or subsidize exports. Editorials...

America's Trade Policy of the Absurd

Saving middle-class America will require a radically different conception of trade and the national interest.

For three decades, both Democratic and Republican administrations have been making trade deals with elites of other countries that favor the interests of multinational investors over the interests of American producers and workers. U.S.-based banks and corporations get access to cheap labor and to the financial systems of other nations. In return, U.S. workers are exposed to competition from countries where wages are suppressed (Mexico) or where government runs effective industrial policies (Germany) or both (China). As a result, a chronic trade deficit has made us the world's largest debtor, undercut the bargaining power of the working middle class, and hollowed out U.S. manufacturing. Because our labor markets are integrated, the damage has spread to virtually every industry, occupation, and region. Real wages and benefits have stagnated even as the value of what Americans produce keeps rising. Two-tier wage systems, off-the-books employment, and disappearing pensions make the...

Industrial Policy: The Road Not Taken

In the 1970s, Wall Street and its economists defeated manufacturing.

By the mid-1970s, cracks in the American industrial base were already visible. For the first time in the 20th century, the United States began running trade deficits. Factory closings that had earlier been limited to apparel, shoes, and plastic toys spread to steel, small appliances, and auto parts. And the decision by the Arab states to control oil prices signaled that the era of cheap energy that had fueled American manufacturing was coming to an end. These early signs of trouble set off this country's last serious debate over the question of whether the government should have a policy for supporting a healthy manufacturing industry -- that is, an "industrial policy." For its advocates, industrial policy seemed a no-brainer. The manufacturing sector was the generator of productivity and innovation. It had been the engine of America's rising prosperity and the bedrock of its political as well as economic power. Without America's capacity to become the "arsenal of democracy" --...

One More Bubble to Go

We've relied on a robust dollar to see us through the crisis, but that cushion is about to disappear.

The word from Washington and Wall Street is that the worst is over. Sure, it will take a while for jobs to recover, for housing to come back, and for wages to rise. But we are definitely on the road to recovery from the biggest debt-bubble collapse since 1929. Maybe. There were actually two debt bubbles. One was driven by Americans borrowing against unsustainable inflation in housing prices. The other was driven by America borrowing against unsustainable inflation in the price of the U.S. dollar. One more bubble is left to pop. When it does, our unique economic cushion -- privileged access to the world's savings -- will deflate. Like overvalued housing prices in the run-up to the 2008 crash, the dollar is headed for a substantial fall. The question is whether our political class can minimize the hit to working Americans' already-battered living standards. On the available evidence, the answer is, "No." The central threat here is not the currently rising federal deficit, which despite...

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