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If you and your friends order a medium pizza and there aren't enough slices to make everybody happy, someone will probably state the obvious: it would have been a good idea to order a large. Among Democrats looking back at Tuesday's results, though, there isn't much talk about a bigger pie.
Analysts had been pointing out for several months that economic growth has not led to wage growth, and that the working class hasn't really experienced the recovery for themselves yet. As a result, the reasoning goes, they're frustrated with President Obama. Since the election, liberal Democrats have reprised this theme. Sen. Elizabeth Warren's supporters are arguing that her style of egalitarian populism would have helped Democrats reach white, working-class voters. Harold Meyersonexcoriates Democrats for failing ordinary Americans. "What, besides raising the minimum wage, do the Democrats propose to do about the shift in income from wages to profits, from labor to capital, from the 99 percent to the 1 percent?" he asked.
A note of despair is audible in questions like these, a sense that while a rising tide might once have floated all the boats, America's tide is going out. Maybe that despair is justified, but Christina and David Romer don't think so. Their recent paper argues that some developed economies recovery quickly, even from relatively serious financial crises. Ours did not, but things didn't have to turn out the way they did. "Maybe the policy response was just bad," Christina Romer says. In other words, policymakers considered a menu of options, and they ordered a medium recovery with no toppings.
Her argument amounts to a serious critique of the Obama administration's economic policy from someone who was crucial in planning the response to the financial crisis. There was more the White House should have done, even though Republicans in Congress insisted on austerity rather than fiscal stimulus.
To be sure, the policies considered in the paper, such as providing financial relief to underwater homeowners, would have both reduced inequality and contributed to growth. Sometimes, the size of the pie changes depending on how it's sliced. The point is making sure there's plenty to go around.
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