2nd Great Compression

We are living through the Second Great Compression. The first was in the 1950s, when income inequality in America declined thanks to the postwar boom, stable families, a lack of cheap immigrant labor, and a "big unit" economy of relatively few major corporate players insulated from global competition (which was largely nonexistent at the time). Here at the beginning of the twenty-first century, another compression is taking place. Millions of people are rising from poverty. A huge middle class is coming into being.

The problem? The compression I am talking about is not American. It is not national. It is global.

The economic liberalization of China, India, southeast Asia, and Latin America; the creation of a globalized marketplace for products, capital, and labor; the emergence of disruptive technologies in electronics and telecommunications—all of these phenomena have led to more wealth for more people than ever before in human history. But most of them aren't Americans. In the United States, globalization has given us cheap goods and cheap labor and fantastic personal devices. But it has also given us a service economy, a decade of wage stagnation, and rising income inequality.

Now, I am not an economic leveler. I think government exists to secure natural rights rather than to redistribute material goods. But that is a minority opinion. Most Americans expect the government to furnish them with a well-paying job with benefits, with health care, with an adequate retirement. The many would like to redistribute the wealth of the few, or the rich.

The second great compression has produced a political reaction in the Democratic party, in Occupy Wall Street, even in the "egalitarian right" and those elements of the Tea Party and Ron Paul Revolution which crusade against corporate welfare and undeserving bankers. The tradeoff they face is this: more domestic income equality, or more globalization? Choose wisely. You can have one only by sacrificing the other.

See you next week. And don't forget you can write me at editor@weeklystandard.com.

--Matthew Continetti