-Caveat Lector- <<All sides considered ...>> ------- Forwarded Message Follows ------- The DLC Update Monday, August 23, 1999 ***************************************************************** ******** **Welcome to "The DLC Update," the public e-mail service of the DLC. The Democratic Leadership Council Update is a weekly chronicle of New Democrat happenings--from policy initiatives to upcoming events and the latest at http://www.dlcppi.org/. ** ***************************************************************** ********* ** ***Idea of the Week: Enhancing Productivity*** With all the talk about the booming stock market and rising interest rates, it's easy to lose sight of the real economy--which is still about growing corn, making cars, building houses, issuing driver's licenses, giving haircuts, selling insurance policies, and a host of other activities that collectively make up the nation's economic output and consumption. And while stock prices and interest rates are certainly important, what really drives the economic well-being of Americans is how much we produce every day. If we can find ways to produce more of the goods and services we consume in less time, we are all better off. In other words, productivity is the key factor that determines long-term economic well being. This is why it's important when we think about the New Economy that we not limit our thinking to web pages, chip makers, and companies with ".com." The information technologies that have given rise to the New Economy make farmers, manufacturers, and service sector companies more efficient and therefore more productive, improving the standard of living for all Americans. Looking at the statistics, it's clear that productivity is the variable most closely correlated with workers' incomes. Between 1963 and 1973, business productivity grew 35 percent, while wages grew at 31 percent. Between 1985 and 1995, productivity grew 9 percent while wages grew 6 percent. If productivity had increased after 1973 the way it did in the 30 years before, half of all American households would now be earning at least $63,000, instead of the current $37,000. If productivity growth rates increase 1 percent faster from now until the year 2025, the average American household will earn $17,000 more per year than if growth continues at its current pace. Without faster productivity growth, faster wage growth is impossible. If we want to raise real wages in America, productivity is the key. Federal Reserve Chairman Alan Greenspan has publicly noted that much of the robust economic growth of the past several years is due largely to increased productivity from technological innovation, not increased consumer demand. That's why the Fed has kept interest rates relatively low despite the full employment conditions that usually fueled inflation in the old economy. Thanks to productivity increases, the "long boom" we appear to be entering is reminiscent of the golden era of American economic growth between World War II and the Vietnam War. Many argue today that the pace of technological innovation is creating "winners" and "losers" in the New Economy. The implication is that to solve the problem we need to slow the pace of technological change and protect companies and industries from change so that the losers can catch up. In fact, policies that attempt to stem the tide of technology and innovation will only serve to slow increases in productivity, ironically stalling the very engine that can create a higher standard of living for all workers. To expand the "winners' circle" we will need to increase the pace of technological innovation in order to spread productivity growth throughout the economy to raise real wages for all workers. Understanding productivity is critical to economic policy across-the-board. For example, the GOP's $792 billion tax cut proposal is a bad idea in part because it would stimulate consumer demand, thus risking an increase in inflation, while doing nothing to improve the productivity that can alone fuel sustained economic growth and fatter paychecks. Yet some tax cuts like a permanent tax credit for research and development and many key public investments from education and training to basic science and research can indeed contribute to more innovation, stronger productivity, and a better standard of living, without running the risk of boom-killing inflation or higher interest rates. This is not your father's U.S. economy, but it can continue to resemble the post-World War II boom in which a rising tide of growth did indeed lift all boats. It won't happen automatically, and it won't happen at all if we fear the pace of change, and fail to promote productivity growth. ***Enduring Values*** One of the earliest slogans of the DLC was "New Ideas, Enduring Values." It was intended to concisely convey that what makes a Democrat a Democrat is allegiance to certain fundamental values, not allegiance to the government programs or policies past Democrats enacted to promote those values. Indeed, constant innovation in organizing public resources to help Americans solve problems is one of the most important "enduring values." But many Democrats remain addicted to "programmitis"*a habit of talking about what they want to do in the language of government bureaucracy and acronyms, from "fully funding Head Start" to "keeping Republicans from gutting OSHA." Republican attacks on New Deal and Great Society programs from Ronald Reagan to Tom DeLay have fed this addiction by luring Democrats into a reactive defense of the programmatic status quo. From the beginning, New Democrats have fought against programmitis on several grounds: it identifies Democrats as the "Party of Government", it reflects an unwholesome dependence on organized constituency groups who are focused on "their" programs; and it reinforces the perception that Democrats do not share mainstream values; and cannot be trusted to promote these values in public life. Most recently, as some of you know, the DLC has been intensively training elected officials around the country on how to conduct "values-based policy development." This is a process in which they first identify the values they seek to promote, then create broad policy goals to reflect them, and finally develop specific ideas designed to advance values and achieve policy goals. The sessions employ a tool called "the policy tree," developed by professional trainer Anita Gottleib, in which values are the roots, policy goals are the trunk, and programs are the branches. It's excellent therapy for Democrats in recovery from programmitis, and the right way to keep priorities straight about the responsibilities of public office. Recently, others have joined us in worrying about the reluctance of Democrats to speak and think in the language of values. In her analysis of the biennial "Battleground" survey that she conducts with Republican Ed Goeas, Democratic pollster Celinda Lake has been warning Democrats that while they have a public opinion advantage over Republicans on many issues, the GOP is perceived as vastly more trustworthy on matters of values. Worse yet, she says, there is evidence that in 2000 "values will trump issues" unless Democrats respond. A front-page article by Alison Mitchell that appeared Friday in the New York Times examined the Democratic "values problem," and cited the DLC's training effort as the most important effort to address it. The piece also illustrated a continuing difference of opinion among Democrats about how aggressively they should seek to become the champions of mainstream values. Pollster Lake rightly argues that Democrats should "talk about the issues in values-oriented terms." But she also says Democrats must "move the agenda from values to issues...because we are only going to have so much credibility on values." We respectfully disagree. The public does not simply want people in elected office to share their values: They want them to advance them in public policy. At a time when Americans (as confirmed in Lake's own polling) are increasingly troubled by the moral condition of our society, Democrats, as the party of public-sector activism, need to respond by developing policies that help families and communities do their essential job of inculcating strong values such as citizenship, faith, mutual responsibility, and self-reliance. But too often Democrats are perceived as indifferent to such values, and as complacent with public life and public institutions as norm-free zones. As has been quickly forgotten, President Clinton did a masterful job during the 1996 presidential campaign of developing an agenda of initiatives (e.g., the V-chip, school uniforms, teen curfews, and family leave) designed to place the federal government in a position of support for families and institutions struggling to transfer our civilizational heritage of values to the next generation. Pro-values activism was also at the root of the 1996 welfare reform act, and of New Democratic efforts to take a clear stand against criminal violence. In the current "values" debate, Democrats need not be disarmed or outgunned. Vice President Al Gore's proposal to enlist faith-based organizations in the delivery of public social services is one good example of pro-values activism; so too is Maryland Lieutenant Governor Kathleen Kennedy Townsend's "character education" initiative, which Gore has also pledged to pursue nationally. It's not enough for Democrats to cure themselves of programmitis, important as that is. Defending or proposing programs is just a means to an end: but the end is found in our values. ### -------------------------------------------- Subscribe and Unsubscribe -------------------------------------------- You may subscribe to this list at any time by sending an e-mail to [EMAIL PROTECTED] with "SUBSCRIBE NEWDEMNEWS" in the body of the message. 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