Baker: his message struggles to be heard because a lot of money goes into calling the other tune.
Dean Baker explains how calls for a new type of market – one that doesn’t offer a choice of death or bankruptcy – are hard to hear over a well-funded establishment band.
Technocrats are forming policy in a way that most people don’t really understand. The Mint asked economist and author, Dean Baker, whether this was his view of how politicians and their economic advisors are rigging the US economy? “Exactly,” he says.
A “combination of theories people don’t understand,” and people acting in their self- interest is, according to Baker, behind policy decisions in the US since 1980 that have made ordinary people unemployed and burdened them with unnecessary costs. “This is conscious policy,” Baker says. The Federal Reserve board, – the US central bank – has, he says, run “unnecessarily high unemployment rates” under an inflation-curbing rationale.
“The cost of that was that people at the middle and bottom of the wage distribution were more likely to be unemployed, and also saw much lower wage growth. And this is a period where we saw a big upward redistribution in wage income,” says Baker.
Hence the title of his latest book – Rigged.
“I’m an economist, I know the literature, I know the people who work in central banks,” says Baker. He summarises their outlook: “Many of them really believe that inflation’s this horrible threat and we have to keep unemployment rates high, because if the unemployment rates were lower, very soon we’d have double digit inflation like we did back in the ’70s.