The first thing you need to realize is that the PBP wing of the GOP views wage stagnation is something to be desired, not abhorred. That is why they talk about growth rates, not wages or inequality.
To the (limited) extent that the other candidates have an interest in this issue, their response is to say that tax cuts on capital and deregulation are the solution. The notion that we can help working people by cutting taxes on capital is, shall we say, counter-intuitive. If you tease it out, the argument goes something like this:
- Tax cuts on capital will lead to additional business investment.
- Business investment will mean new jobs.
- The new jobs will result in a tightening of the labor market, which will cause wages to rise.
The problems with this approach are:
- Tax cuts for the rich don’t necessarily result in productive investment and new jobs. The beneficiaries of the cuts may just invest it in government bonds (now that’s what I call recycling!), or overseas, or in real estate. Depositing the money in the bank or putting in the market just moves the issue from one set of hands to another; it doesn’t change it.
- The size of the labor market has to be viewed in light of globalization. If the nature of the individual business is such that management can credibly threaten the workers with off-shoring, it is unlikely that wages will rise. As I stated yesterday, I think this threat will diminish over time, but it certainly still exists today.
The bottom line is that the GOP approach to what most Americans view as a serious problem will not work, and in many cases is not even intended to work.