Progressive Capitalism Is Not an Oxymoron

We can save our broken economic system from itself.

Despite the lowest unemployment rates since the late 1960s, the American economy is failing its citizens. Some 90 percent have seen their incomes stagnate or decline in the past 30 years. This is not surprising, given that the United States has the highest level of inequality among the advanced countries and one of the lowest levels of opportunity — with the fortunes of young Americans more dependent on the income and education of their parents than elsewhere.

But things don’t have to be that way. There is an alternative: progressive capitalism. Progressive capitalism is not an oxymoron; we can indeed channel the power of the market to serve society.

In the 1980s, Ronald Reagan’s regulatory “reforms,” which reduced the ability of government to curb the excesses of the market, were sold as great energizers of the economy. But just the opposite happened: Growth slowed, and weirder still, this happened in the innovation capital of the world.

The sugar rush produced by President Trump’s largess to corporations in the 2017 tax law didn’t deal with any of these long-run problems, and is already fading. Growth is expected to be a little under 2 percent next year.

This is where we’ve descended to, but not where we have to stay. A progressive capitalism based on an understanding of what gives rise to growth and societal well-being gives us a way out of this quagmire and a way up for our living standards.

Standards of living began to improve in the late 18th century for two reasons:

  1. the development of science (we learned how to learn about nature and used that knowledge to increase productivity and longevity) and
  2. developments in social organization (as a society, we learned how to work together, through institutions like the rule of law, and democracies with checks and balances).

Key to both were systems of assessing and verifying the truth. The real and long-lasting danger of the Trump presidency is the risk it poses to these pillars of our economy and society, its attack on the very idea of knowledge and expertise, and its hostility to institutions that help us discover and assess the truth.

There is a broader social compact that allows a society to work and prosper together, and that, too, has been fraying. America created the first truly middle-class society; now, a middle-class life is increasingly out of reach for its citizens.

America arrived at this sorry state of affairs because we forgot that the true source of the wealth of a nation is the creativity and innovation of its people. One can get rich either by adding to the nation’s economic pie or by grabbing a larger share of the pie by exploiting others — abusing, for instance, market power or informational advantages. We confused the hard work of wealth creation with wealth-grabbing (or, as economists call it, rent-seeking), and too many of our talented young people followed the siren call of getting rich quickly.

Beginning with the Reagan era, economic policy played a key role in this dystopia: Just as forces of globalization and technological change were contributing to growing inequality, we adopted policies that worsened societal inequities. Even as economic theories like information economics (dealing with the ever-present situation where information is imperfect), behavioral economics and game theory arose to explain why markets on their own are often not efficient, fair, stable or seemingly rational, we relied more on markets and scaled back social protections.

We are now in a vicious cycle: Greater economic inequality is leading, in our money-driven political system, to more political inequality, with weaker rules and deregulation causing still more economic inequality.

If we don’t change course matters will likely grow worse, as machines (artificial intelligence and robots) replace an increasing fraction of routine labor, including many of the jobs of the several million Americans making their living by driving.

The prescription follows from the diagnosis: It begins by recognizing the vital role that the state plays in making markets serve society. We need regulations that ensure strong competition without abusive exploitation, realigning the relationship between corporations and the workers they employ and the customers they are supposed to serve. We must be as resolute in combating market power as the corporate sector is in increasing it.

If we had curbed exploitation in all of its forms and encouraged wealth creation, we would have had a more dynamic economy with less inequality. We might have curbed the opioid crisis and avoided the 2008 financial crisis. If we had done more to blunt the power of oligopolies and strengthen the power of workers, and if we had held our banks accountable, the sense of powerlessness might not be so pervasive and Americans might have greater trust in our institutions.

The neoliberal fantasy that unfettered markets will deliver prosperity to everyone should be put to rest. It is as fatally flawed as the notion after the fall of the Iron Curtain that we were seeing “the end of history” and that we would all soon be liberal democracies with capitalist economies.

Most important, our exploitive capitalism has shaped who we are as individuals and as a society. The rampant dishonesty we’ve seen from Wells Fargo and Volkswagen or from members of the Sackler family as they promoted drugs they knew were addictive — this is what is to be expected in a society that lauds the pursuit of profits as leading, to quote Adam Smith, “as if by an invisible hand,” to the well-being of society, with no regard to whether those profits derive from exploitation or wealth creation.

 

Dividers, Not Uniters

In a new book, Steve Kornacki looks back at the 1990s — and finds the roots of today’s polarization in the Clintons’ ascent.

..  the 1990s was until recently an invisible decade. “The holiday from history,” it was called, a “lull” where nothing much really happened, a candy-colored coma between the Berlin Wall’s fall on 11/9 and the 9/11 attacks less than a dozen years later.

.. The Red and the Blue, is a political procedural that sets out to explain how we went from giga-landslides in the ’60s, ’70s, and ’80s to Electoral College squeakers today, how Republicans disappeared from the coasts and Democrats died their final deaths in the South and Midwest.

.. it benefits from the context provided by Trump’s ascent, which has clarified that one big reason we’re seemingly reliving the 1930s today is because both the Left and Right spent the 1990s and early 2000s rehashing the culture wars of the 1960s and early ’70s.

.. Because cable and the Internet have so completely transformed American culture over the past two or three decades, it’s easy to forget (and younger people can’t even remember) just how norm-shattering Bill Clinton was, compared to the Greatest and Silent Generation leaders who came before him. To social conservatives and foreign-policy hawks, Clinton’s election was downright triggering, and deserved nothing less than full-on #Resistance. Historian Steven Gillon famously interviewed one who succinctly fumed that Clinton was “a womanizing, Elvis-loving, non-inhaling, truth-shading, draft-dodging, war-protesting, abortion-protecting, gay-promoting, gun-hating Baby Boomer!”

.. aside from Gary Hart, whose ill-fated career was recently reexamined in the Jason Reitman movie The Front Runner, America hadn’t had a youthful, truly sexualized major-party presidential nominee since JFK — until Clinton came along.

  • .. The Federal Reserve’s preference for financialization and neoliberalism was at its very peak under the influence of Paul Volcker and Alan Greenspan.
  • Nearly half of Americans still thought “sodomy” — never mind same-sex marriage or civil unions — should be illegal.
  • And while America was pro-choice, huge percentages of voters demanded restrictions to abortion-on-demand.

The Red and the Blue gives an excellent Gen-X-plaining of just how systemically, institutionally, and culturally impossible it would have been for Democrats to move even farther leftward than they did back then — of how much damage their “too far left” brand had done to the party in the ’80s and of the disastrous political consequences of Bill Clinton’s attempts to govern from the left in 1993–94, as epitomized by Hillary’s attempt at health-care reform. He reminds his readers with his trademark aptitude for facts and figures that America in the 1990s was still very much living in what Sean Wilentz called The Age of Reagan.

.. He manages, for example, to nail the most salient point of the abusive relationship between Bill Clinton and Newt Gingrich: that it was at heart a love story, and/or a co-dependency worthy of Dr. Phil. One man could simply not have managed to stay in office without the other.

.. It was Clinton hatred on the social right that gave us Gingrich, and it was Gingrich’s surefire ability to trigger the libs that protected Clinton year in and year out. “Do you want him – or me?” became the basic campaign pitch of both men.

.. his Officer Friendly approach to the media is just too naïve by half, especially for someone who is a cable-news host with considerable experience in online journalism. In Kornacki’s telling, reporters merely report, offering just the facts or serving as quickie Greek choruses and footnote sources. This might work for a tenth-grade term paper, but for a book that seeks to illuminate the decade that saw the rise of the Internet, the birth of Fox News, unprecedented media consolidation, and what Eric Alterman called “the punditocracy” at the height of its influence, it’s entirely inadequate.

From highly influential anti-Great Society “Atari Democrats” like
  • Michael Kinsley,
  • Joe Klein,
  • Sidney Blumenthal, and
  • Robert Samuelson and proudly un-PC pundits like
  • Camille Paglia,
  • Ben Wattenberg,
  • Bill Maher, and
  • Andrew Sullivan to donor-funded think tanks like
  • Heritage and
  • Cato, an entire intellectual infrastructure was shaping the national narrative for what became Third Way Clintonism well before the Clinton era began. Yet most of these people and institutions do not even appear in Kornacki’s index, or if they do, they’re curtly dispensed with in one or two lines.

.. It’s possible that with Donald Trump’s attacks on the press (and with some people using criticism of “the media” as an anti-Semitic dog whistle), Kornacki didn’t want to even go there.

.. But a book on 1990s polarization that omits Steve Jobs, Roger Ailes, and Bill Gates from its index? One that effectively ignores the O.J. trial, Maureen Dowd’s gendered, campy, sexist (certainly by today’s standards), Pulitzer-winning coverage of Monicagate, and Clarence Thomas vs. Anita Hill?

.. writers as far apart as Ann Coulter and Eric Alterman blamed Al Gore’s loss in 2000 on the media’s hatred of him (and his hatred of them)?

.. Limbaugh’s pioneering tactic (soon perfected by Gingrich, Coulter, and Karl Rove) of branding anyone whose politics were even slightly to the left of, say, Sandra Day O’Connor or Dianne Feinstein, as a Loony Liberal, Radical Leftist, or Femi-Nazi. From Clinton and Dubya well into the Obama years, red-meat conservatives intentionally fuzzed the line between corporate social-liberals and the true hard left of Michael Moore, Pacifica Radio, and Thomas Frank, and Kornacki captures their strategy perfectly.

.. Aside from the Obamas themselves, no other politician would even remotely disrupt or challenge Clintonistas’ hold on the Democratic party for another ten or 15 years. But Clintonism could only continue as long as the true far-left remained repressed, and as long as the economy kept humming.
.. When a fist-shaking socialist senator from Vermont lined up an army of Millennials in formation behind him eight years after the dawn of the Great Recession caused in no small part by Clinton-era financial policy, it became crystal clear that Newt Gingrich had won the war.
.. When they exited the White House, the Clintons left behind a Democratic party that working class, rural, and/or religious whites had become almost allergic to, one more dependent on African-American and Latino voters than ever.
.. Donald Trump cruised to triumph in 2016 using all of the dog whistles and wedge issues that Gingrich, Rove, Buchanan, and Ross Perot had refined to perfection.
.. And just as education-conscious, socially liberal white professionals reacted against Gingrich’s and Buchanan’s reactionary rhetoric in the late ’90s, Trump’s Republican party has now been effectively evicted from places as once-synonymous with the GOP as Long Island, Maine, New Jersey, San Diego, and Orange County.

Anthony Kennedy’s Imperial Legacy

In the American republic’s slow transformation into a judicial-executive dyarchy, with a vestigial legislature that lets the major controversies get settled by imperial presidents and jurists, Anthony Kennedy occupied a particularly important role.

He was appointed to the Supreme Court at a time when the Republican Party was officially interested in curbing judicial activism and restoring power to the elected branches of government. As the court’s swing vote, though, he instead consolidated the judiciary’s imperial role — taking the expansive powers claimed by judicial liberals in the Warren era and turning them to his own purposes, his own vision of the common good.

He did this without a particularly coherent constitutional theory

.. showing neither humility nor rigor in his ultimate decisions

.. overruling state and federal law more frequently than any justice to his right or left, pontificating in sweeping and self-righteous and faux-poetic prose

.. seeking to establish the court as the decisive and unifying authority for a sprawling and divided country.

.. Without being a completely consistent libertarian, he was a general champion of freedom

.. Kennedy was the modern court’s most “neoliberal” justice, embracing corporate freedom and sexual freedom as a kind of unity, attacking restraints on campaign spending and mandates to buy health insurance in the same spirit as restrictions on pornography or flag-burning or abortion.

.. I admired Scalia’s originalism precisely because it establishes plausible (if, of course, debatable) limits on judicial activism

.. Even when he was right on the merits of an issue, he was still too aggrandizing, too eager to impose his own judgment, too quick to short-circuit legislative debates.

.. what he delivered was, in some sense, what both the political class and the public increasingly desire from their government: not republican deliberation but quasi-monarchical action.

.. judicial activism increasingly fills the empty space created by legislative sclerosis and political cowardice

.. unwillingness of elected representatives to act on controversial issues.

.. tried to act as the “good emperor” that our decadent system and polarized country may require — by balancing his own liberal rulings on abortion and same-sex marriage, for instance, with subsequent decisions that allowed some space for pro-life activism and protected some religious liberties against the anti-clericalism of the left.

.. even if you accept that our country increasingly craves a kind of stabilizing central power, Kennedy’s freedom-first synthesis did not succeed in supplying it.

.. Instead, our age of opioids and suicide and sterility, and the heartland populists and Bronxian socialists that anomie has conjured up, strongly indicates that his neoliberal model needs correction — that the freedom of capital and genitals is not enough for human flourishing, that community and solidarity need to have their day, even if it comes at the expense of certain liberties and transcendentalist idylls.

.. John Roberts, Kennedy’s likely successor as our First Archon, is better suited than his predecessor to the imperial task. We know that Roberts is more temperamentally cautious than Kennedy

.. he’s both more friendly to religious conservatism (witness his Obergefell vote) and more willing to

let social-democratic policymaking stand (witness his vote to save Obamacare).