Intended Consequences

When the administration announced it was making drastic changes to overtime rules, the media dutifully reported that the effects of the policy change were unclear; but the administration would never have changed the rules if it were not sure that they would lower wages. Or do you suppose that the U.S. Chamber of Commerce would have enthusiastically endorsed the changes if they were going to cost their constituents money?

This story has a context. The United States is running a huge trade deficit with the rest of the world at the same time that it the government is busy increasing the size of the national debt. As almost everybody admits, these excesses will be paid for sooner or later. What has become increasingly clear to me is that the restoration of balance is not some distant eventually but is already underway in the form of a de facto lowering of the real income of the majority of working people brought about by mechanisms such as the increasing use of temporary help and other forms of outsourcing, restrictions on health benefits, and the change in overtime rules. A decline in American wealth relative to the rest of the world is probably inevitable. The administration’s policies, especially its labor policies, make sense as a way of making sure that the burden of this decline falls squarely on the plebs.