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Wage stagnation is the real problem

David Frum

TEXT OF COMMENTARY

KAI RYSSDAL: Democrats hold the White House. They've got strong majorities in both houses of Congress. Fallout from the financial crisis continues to wreak havoc on the markets. And more regulations are surely just around the corner.

But commentator David Frum says that before Republicans start complaining they ought to ask themselves some hard questions.


DAVID FRUM: Like many Republicans, I don't much care for Barack Obama's economic plans. From our point of view, he is using an emergency in the financial markets as a cover to launch America into a huge, costly long-term spending program of little probable value.

Obama's infrastructure plans are bad ideas. But they do respond to a real problem.

Even before the recession, even before the financial crisis, the income of the typical American worker was stagnating. After inflation, the median American worker earned no more in early 2007 than he or she had earned seven years before.

Under any circumstances, this wage stagnation would have done the incumbent party terrible political harm. But the harm was especially great in 2006 and again in 2008 because Republicans offered no plausible idea about how to get wages growing again. Worse, we refused to acknowledge the problem even existed. We said the Bush economy was the greatest story never told. We dismissed those who disagreed as "whiners."

But there are conservative policies that offer real hope to workers at the middle. Here are two ideas:

The first is to reduce immigration flows. The arrival of more than a million very low-skilled workers, year after year -- at least half of them illegal -- has weighed heavily on the wages of less-skilled Americans.

The second is to throw open the national health care market to brisker competition. Right now, health care is regulated both by the federal government and the 50 states, with many states regulating in ways that drive prices up, not down.

That's one reason there is no Sam Walton or Henry Ford of health care, offering a reliable, inexpensive, standardized product nationwide. Instead, we have constantly rising health care premiums that devour potential wage increases.

Some Republicans and conservatives might not like these ideas. Fine. Do better. Because unless Americans are offered a better alternative, they will follow President Obama's worse one.

RYSSDAL: David Frum is a resident fellow at the American Enterprise Institute. His most recent book is called "Comeback: Conservatism That Can Win Again."

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