The new American Dream: the economy will prosper again when more Americans can do the work they love. The party that realizes this first wins

Should our economic goal be to enable every young person to earn a living as a rapper? Of course not. But conceptually, it's in the right ballpark. Recognizing and tapping creative talents, whatever those talents may be, is a pretty good starting point for a serious debate on how to keep our economy healthy.

Catering the Class War

Today, we have levels of income inequality not seen since the 1930s. And the issue isn't simply one of social justice or equitable distribution of rewards. It is a matter of functional inequality--and creative waste. Seventy percent of the workforce does not have the opportunity to do valuable creative work, as the favored 30 percent does. We are not close to hitting on all cylinders.

And I see little sign that either political party understands the real root of this inequality. Republicans tend to see inequality as the natural byproduct of a Darwinian system in which some people are more competent and industrious than others. True to a degree, but there's nothing either natural or desirable about letting it run to extremes. Historical evidence shows that periods of high inequality (like the 1930s) are also ones of low growth, while eras of lower inequality (like the "Great Compression" that followed World War II) are accompanied by high growth. Democrats tend to see inequality as damaging national unity and weakening consumer demand, and thus something to be remedied by government assistance or wage supports. As for the roots of rising inequality, liberal thinkers from William Julius Wilson to Paul Krugman and others have cited factors that range from the loss of high-paying manufacturing jobs to an assault by the rich and conservative on unions and other institutions that might help poorer people.

There are good points to be gleaned from all these analyses. But my research suggests that rising inequality stems mainly from the very nature of the emerging creative economy. If you define "class" as I do--by economic function--you see that the largest, at 44 percent of our workforce, is the lower-end service class, a category that includes janitors, food-service workers, healthcare attendants, office and clerical workers, and many others. The ranks of these people are increasing in large part because the growing numbers of busy creative workers require an army of "servants" to minister to the many things they don't have time for. As one astute Silicon Valley-observer told The New York Timer. "Behind every software engineer is a nanny or a food-service worker" This massive functional division of human labor produces the bulk of our income divide.

It also threatens our national competitiveness. Japan taught us this lesson in the 1970s, when its manufacturing firms leaped ahead of ours with their continuous-improvement methods that tap the intelligence Of every worker on the shop floor. U.S. firms--stuck in the old Fordist system, whereby engineers and top managers did the thinking while the masses did the rote work nearly had their doors blown off. Many of our firms have since caught on to the new way. But our economy as a whole replicates the outmoded, inefficient Fordist regime. Unless we can change that, we risk faltering once again.