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NewsFlash: August 29, 2008

Obama speech hits major EPI themes on the need for economic change

In accepting the Democratic presidential nomination last night, Sen. Barack Obama spoke eloquently and passionately about the failures of the long-dominant U.S. economic philosophy, which has contributed to the greatest levels of wealth and income inequality since just before the Great Depression.

In his speech, he referred to “that old, discredited Republican philosophy — give more and more to those with the most and hope that prosperity trickles down to everyone else. In Washington, they call this the Ownership Society, but what it really means is — you’re on your own. Out of work? Tough luck. No health care? The market will fix it. Born into poverty? Pull yourself up by your own bootstraps — even if you don’t have boots. You’re on your own. Well it’s time for them to own their failure. It’s time for us to change America.”

The Economic Policy Institute, a Washington D.C. think tank that’s been looking out for the interests of American workers since 1986, applauds the recognition of this fundamental failure of our current approach to economics.

EPI senior economist Jared Bernstein, an informal advisor to the Obama campaign, introduced the on-your-own language in his 2006 book, All Together Now: Common Sense for a Fair Economy.He wrote of the contrast between the failed YOYO (You’re On Your Own) approach and the inclusive, uplifting, and ultimately more successful idea that We’re In This Together (or WITT). Bernstein explored these ideas in more depth in his current release, Crunch: Why Do I Feel So Squeezed? (And Other Unsolved Economic Mysteries).

Bernstein and other EPI economists have documented the unfolding and bad results of the on-your-own philosophy in a series of 11 biennial reference books called The State of Working America. The most recent, by Bernstein, EPI President Lawrence Mishel and EPI economist Heidi Shierholz and to be released in early January, is available as a preview here.

The 2008-2009 edition of Working America documents that the strong economic growth of the 2000s did not improve the well-being of most Americans. In fact, 90% of the new income generated during that period went to the top 10% — making America the most unequal of all industrialized countries. More recent EPI calculations based on data released by the U.S. Census Bureau last week show that family income has dropped $2,000 during the 2000s — a figure cited in Obama’s speech.

As current economic conditions tell us, this is not a path that can be sustained.

The good news is there are realistic solutions to our current economic problems that grow out of a more balanced economic approach. EPI has evaluated and compiled some of the best in a short, easy-to-read handbook called A Plan to Revive the American Economy. The plans grew out of a two year effort to identify policies that will lead to more fair and sustainable economic growth, our Agenda for Shared Prosperity.

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