The Financial Times

If a prize were given for the best political coverage of the American economy over the last 6 months, it would be won - hands down - by the Financial Times. They were the first to spot that wages and incomes would come to define the debate about why the growing economy isn't electorally popular. And despite a solid pro-business line (and readership), their DC writers have been exceedingly fair and balanced on the issues. Over the last two days they have had two exceptional, long interesting articles - the first yesterday explaning why the economy isn't winning the GOP any votes, the second today looking at the comensurate rise of economic populism (and anti-trade rhetoric) during the election. I'll quote from both of these later in the day when i can get the text; the FT doesn't give it away for free, sadly. They do, however, let you read their editorials. And this, from today's paper, is bang on the mark.

Republicans have presided over a period of exceptional economic growth. Yet this will not, apparently, win them next week's mid-term elections. This is only partly because of the chaos in Iraq and the scandals that beset them. It is also because middle-income American families have gained so little from the surging economy. The Republican response has been to ignore the problem. The Democrats have pandered to protectionism. Both reactions are -misguided.....

.....The forces behind this development include technology, the rise of winners-take-all markets, globalisation and also, perhaps, immigration. Together, these pressures have exacerbated inequality by increasing the rewards of skilled labour and, at the very top, of the most successful business-people, sports stars and entertainers. At the same time, they have undermined the position of lower-skilled workers...... The charge against the Republicans is that they have done nothing to stem the relative deterioration in middle incomes. True, wages may yet rise sharply later in the cycle. True, too, median real incomes have been adversely affected by the jump in the price of energy. But the impact of policy should not be ignored. In particular, Mr Bush's tax cuts of 2001 and 2003 predominantly benefited the rich......

.....The challenge for the Democrats is to find a credible political alternative. The right long-term strategy for them must be to embrace globalisation, while tackling its distributional impact. They should not shy away from higher taxes on the richest. But that is just a start. They should also suggest ways of using the proceeds to create opportunity for all.