The “new economy” was an illusion. Neoliberals have to admit that before they can stop the bleeding
Is the American economy facing a lost decade? That is the wrong question to ask. The right question is this: Is the United States facing another lost decade? During the past 10 years, inflation-adjusted wages have stagnated or declined for working Americans; net job creation has been zero; and temporary, bubble-driven gains in the stock market have been erased.
This isn’t what Bill Clinton and the other “New Democrats” of the 1990s promised us.
Remember “the new economy”? In the second half of the 1990s, after years of stagnation, the U.S. economy briefly boomed. Members of the New Democrat wing of the Democratic Party, associated with the Democratic Leadership Council (DLC) and the Progressive Policy Institute (PPI), made a number of claims.
First: The source of the boom was not a bubble associated with tech stocks, but rather a permanent increase in U.S. productivity growth produced by the information technology (I.T.) revolution. Second: Foreign money was pouring into the U.S. as a result of well-informed expectations that the U.S. would lead the world in economic growth for a long period to come. Third: Increased inequality in the U.S. was a result of the global market rewarding skilled Americans at the expense of unskilled Americans, and could be cured by more higher education.
Something like this was the cheerful and optimistic New Democrat party line in 2000, the last year of the Clinton administration. How do things look from the perspective of 2010?
It is now clear that the boom of the second Clinton term was driven by the temporary tech stock bubble. It did not mark the beginning of a “new economy” fundamentally different from the old.