A Conversation With Robert Rubin

Here are highlights from a June 26, 2006, conversation between former Treasury Secretary Robert Rubin and The Nation's National Affairs Correspondent, William Greider.

Robert Rubin: Well, I can only give you my personal answer. I can't speak for anyone else. When President Clinton got elected, we had had a few years that were difficult...unemployment over 7 percent. The whole focus was on growth. Then you got further into the '90s and growth looked like it had taken hold. Then in the last five years of the decade, the median wage started going up.

I actually don't know what happened to inequality, but poverty was going down and incomes were going up. So it wasn't like the '80s, when the affluent were doing very well but most middle-income people had roughly stagnant incomes...although there were people like Bob Reich who thought there should be more focus on distributional issues. Bob and I used to have a discussion--if you could trade off some part of growth to have some better distribution, would you do that? I always said I wouldn't, because I figured you want to get maximum growth and then try to figure out how to get the distribution. Bob used to feel--and look, it was a reasonable position, it wasn't where I was--that if you have somewhat less growth and better distribution, that was a better place to be.

Did you change your mind about that?

No, because I still think that once you get the better growth, you can figure out the other part, the distribution. I still think I'd get the most pie I could and then figure how to get the distribution that results in everybody getting it--broad participation in it instead of the very limited participation we've had.

Now, what our project says, which is a next step in the discussion and which I have actually thought for a while but I don't think I've articulated, is that these are actually consistent, reinforcing objectives. There are two parts of that, aren't there? The measures that promote productivity promote growth and also promote broad participation in growth. Then take that one step further. Promoting broad participation in growth actually then feeds back into greater growth for two reasons, for it better equips people to get the education and healthcare and all the things that contribute to productivity. And also because it's also the only way over time that you're likely to have broad-based public support and therefore political support for trade, market-based economics and the rest.

But there was this pattern--except for this window in the last half of the 90s, when things began to line up again--that greater productivity doesn't get distributed in growth too broadly. That's why the inequality--wages don't keep up with productivity...

Except for those years, you are correct. My recollection is, if you take the last thirty years, roughly speaking, that for twenty-five of them, real median wages have been stagnant despite rising GDP growth.

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