For the past 40 years, the United States and other advanced economies have been pursuing a free-market agenda of low taxes, deregulation, and cuts to social programs. There can no longer be any doubt that this approach has failed spectacularly; the only question is what will – and should – come next.The neoliberal experiment – lower taxes on the rich, deregulation of labor and product markets, financialization, and globalization – has been a spectacular failure. Growth is lower than it was in the quarter-century after World War II, and most of it has accrued to the very top of the income scale. After decades of stagnant or even falling incomes for those below them, neoliberalism must be pronounced dead and buried.Vying to succeed it are at least three major political alternatives:
- far-right nationalism,
- center-left reformism, and the
- progressive left (with the center-right representing the neoliberal failure).
And yet, with the exception of the progressive left, these alternatives remain beholden to some form of the ideology that has (or should have) expired.
The center-left, for example, represents neoliberalism with a human face. Its goal is to bring the policies of former US President Bill Clinton and former British Prime Minister Tony Blair into the twenty-first century, making only slight revisions to the prevailing modes of financialization and globalization. Meanwhile, the nationalist right disowns globalization, blaming migrants and foreigners for all of today’s problems. Yet as Donald Trump’s presidency has shown, it is no less committed – at least in its American variant – to tax cuts for the rich, deregulation, and shrinking or eliminating social programs.
By contrast, the third camp advocates what I call progressive capitalism, which prescribes a radically different economic agenda, based on four priorities. The first is to
- restore the balance between markets, the state, and civil society. Slow economic growth, rising inequality, financial instability, and environmental degradation are problems born of the market, and thus cannot and will not be overcome by the market on its own. Governments have a duty to limit and shape markets through environmental, health, occupational-safety, and other types of regulation. It is also the government’s job to do what the market cannot or will not do, like actively investing in basic research, technology, education, and the health of its constituents.
- The second priority is to recognize that the “wealth of nations” is the result of scientific inquiry – learning about the world around us – and social organization that allows large groups of people to work together for the common good. Markets still have a crucial role to play in facilitating social cooperation, but they serve this purpose only if they are governed by the rule of law and subject to democratic checks. Otherwise, individuals can get rich by exploiting others, extracting wealth through rent-seeking rather than creating wealth through genuine ingenuity. Many of today’s wealthy took the exploitation route to get where they are. They have been well served by Trump’s policies, which have encouraged rent-seeking while destroying the underlying sources of wealth creation. Progressive capitalism seeks to do precisely the opposite.
- This brings us to the third priority: addressing the growing problem of concentrated market power. By exploiting information advantages, buying up potential competitors, and creating entry barriers, dominant firms are able to engage in large-scale rent-seeking to the detriment of everyone else. The rise in corporate market power, combined with the decline in workers’ bargaining power, goes a long way toward explaining why inequality is so high and growth so tepid. Unless government takes a more active role than neoliberalism prescribes, these problems will likely become much worse, owing to advances in robotization and artificial intelligence.
- The fourth key item on the progressive agenda is to sever the link between economic power and political influence. Economic power and political influence are mutually reinforcing and self-perpetuating, especially where, as in the US, wealthy individuals and corporations may spend without limit in elections. As the US moves ever closer to a fundamentally undemocratic system of “one dollar, one vote,” the system of checks and balances so necessary for democracy likely cannot hold: nothing will be able to constrain the power of the wealthy. This is not just a moral and political problem: economies with less inequality actually perform better. Progressive-capitalist reforms thus have to begin by curtailing the influence of money in politics and reducing wealth inequality.3
There is no magic bullet that can reverse the damage done by decades of neoliberalism. But a comprehensive agenda along the lines sketched above absolutely can. Much will depend on whether reformers are as resolute in combating problems like excessive market power and inequality as the private sector is in creating them.
A comprehensive agenda must focus on education, research, and the other true sources of wealth. It must protect the environment and fight climate change with the same vigilance as the Green New Dealers in the US and Extinction Rebellion in the United Kingdom. And it must provide public programs to ensure that no citizen is denied the basic requisites of a decent life. These include economic security, access to work and a living wage, health care and adequate housing, a secure retirement, and a quality education for one’s children.
This agenda is eminently affordable; in fact, we cannot afford not to enact it. The alternatives offered by nationalists and neoliberals would guarantee more stagnation, inequality, environmental degradation, and political acrimony, potentially leading to outcomes we do not even want to imagine.
Progressive capitalism is not an oxymoron. Rather, it is the most viable and vibrant alternative to an ideology that has clearly failed. As such, it represents the best chance we have of escaping our current economic and political malaise.
As Democrats move from success in the 2018 midterms to the early stages of picking a 2020 presidential candidate, a narrative is taking root. It holds that the key Democratic voter today is young, liberal and rebellious—in short, a version of Rep. Alexandria Ocasio-Cortez, the 29-year-old activist who became the youngest congresswoman ever and who appears to be pushing the party to the left.
There is one problem with this narrative. It largely misses the story of the voters who actually delivered success to Democrats last year—and who may determine the outcome of the next presidential race.The disconnect between perception and reality is important because it affects what Democrats do—now that they have a piece of governing power in Washington with their newfound control of the House, and because it affects the way the party views the nascent effort to choose the next presidential contender. In particular, it affects views of the largest name in the party not yet in the 2020 field: former Vice President Joe Biden.
It’s certainly true that there was a lot of energy among young, liberal Democrats in 2018, and that figures to be true again in the new presidential cycle.
Yet the Democratic electorate in 2018—the one that swung House seats and governor’s offices from Republican to Democratic—was neither as young nor as liberal as popularly imagined. AP VoteCast, a survey of more than 115,000 self-identified 2018 midterm voters, found that just 15% of those who voted Democratic last November were aged 18 through 29. The largest contingent of Democratic voters—36%—actually were ages 45 through 64.
All told, 60% of Democratic voters were aged 45 or older.
In ideological terms, there is no doubt that the party is moving to the left. An increasing share of Democrats are identifying themselves as liberal. Yet that movement also can be overstated. While half of Democratic voters last year identified themselves as liberal, 48% called themselves moderate or conservative. And moderates outnumbered “very liberal” Democratic voters by two to one.
Their switch is why many of those moderate Republicans washed out to sea; their fate was sealed more by moderate women rising up to vote Democratic than because of a left-wing insurrection. Indeed, candidates endorsed by the moderate New Democrat coalition flipped 33 of the 42 House seats that went from Republican to Democrat.
Geographically, the keys to Democrats’ success came not in the party’s coastal enclaves—such as Rep. Ocasio-Cortez’s district, which was held by Democrats long before she arrived—but rather in the industrial upper Midwest swing states of Michigan, Wisconsin and Pennsylvania. All three states were won by Mr. Trump in 2016, but Democrats won the popular House vote in those states last fall. Democrats also nominated moderates for governor in all three states—and all three won, by a margin of 1.3 million votes.This reality is important for Democrats as candidates begin drifting onto the 2020 presidential battlefield. The prevailing narrative suggests not only that the advantage goes to a fresh face who excites the party’s young progressives—think former Rep. Beto O’Rourke of Texas or Sen. Kamala Harris of California—but that such a choice has the best chance of success against Mr. Trump.
And maybe that’s the case. But consider the alternative, suggested by the reality of the midterm election results: The votes that will spell the difference for Democrats lie not on the left and on the coasts, but in the center and in the industrial Midwest.
That’s where Mr. Biden enters the picture. Perhaps the 76-year-old former vice president is too old. He certainly doesn’t meet the desire for “new blood” in politics cited last week by former President Obama.
On the other hand, if the Democrats’ key votes in 2020 will lie among centrists in the industrial Midwest, the more moderate profile of the favorite son of Scranton, Pa., will be an attractive one. Moreover, if voters generally are looking for somebody who knows how to get things done rather than simply create controversy, the guy who once prevented a government shutdown by cutting a big budget deal with Republican Sen. Mitch McConnell may have some appeal.
It’s too early to know, of course—but there is more than one narrative at work for Democrats.
President Donald Trump is a direct and serious threat to our country. On an almost daily basis, he attacks our Constitution, our democracy, the rule of law and the people who are in this country. His conduct has created a constitutional crisis that we must confront now.
The Framers of the Constitution designed a remedy to address such a constitutional crisis: impeachment. Through the impeachment clause, they sought to ensure that we would have the power, through our elected representatives in Congress, to protect the country by removing a lawless president from the Oval Office.
We already have overwhelming evidence that the president has committed impeachable offenses, including, just to name a few:
- obstructing justice;
- violating the emoluments clause;
- abusing the pardon power;
- directing or seeking to direct law enforcement to prosecute political adversaries for improper purposes;
- advocating illegal violence and undermining equal protection of the laws;
- ordering the cruel and unconstitutional imprisonment of children and their families at the southern border; and
- conspiring to illegally influence the 2016 election through a series of hush money payments.
Whether the president was directly involved in a conspiracy with the Russian government to interfere with the 2016 election remains the subject of Special Counsel Robert Mueller’s investigation. But we do not need to wait on the outcome of that criminal investigation before moving forward now with an inquiry in the U.S. House of Representatives on whether the president has committed impeachable “high crimes and misdemeanors” against the state: abuse of power and abuse of the public trust.
Each passing day brings new damage to the countless people hurt by this lawless president’s actions. We cannot undo the trauma that he is causing to our people, and this nation. Those most vulnerable to his administration’s cruelty are counting on us to act — act to remove the president and put this country on a path to true justice.
Democrats shouldn’t put themselves in a fiscal straitjacket.On Thursday, the best House speaker of modern times reclaimed her gavel, replacing one of the worst. It has taken the news media a very long time to appreciate the greatness of Nancy Pelosi, who saved Social Security from privatization, then was instrumental in gaining health insurance for 20 million Americans. And the media are still having a hard time facing up to the phoniness of their darling Paul Ryan, who, by the way, left office with a 12 percent favorable rating.
There’s every reason to expect that Pelosi will once again be highly effective. But some progressive Democrats object to one of her initial moves — and on the economics, and probably the politics, the critics are right.
.. The issue in question is “paygo,” a rule requiring that increases in spending be matched by offsetting tax increases or cuts elsewhere.
You can argue that as a practical matter, the rule won’t matter much if at all. On one side, paygo is the law, whether Democrats put it in their internal rules or not. On the other side, the law can fairly easily be waived, as happened after the G.O.P.’s huge 2017 tax cut was enacted.
But adopting the rule was a signal of Democratic priorities — a statement that the party is deeply concerned about budget deficits and willing to cramp its other goals to address that concern. Is that a signal the party should really be sending?
.. Furthermore, there are things the government should be spending money on even when jobs are plentiful — things like fixing our deteriorating infrastructure and helping children get education, health care and adequate nutrition. Such spending has big long-run payoffs, even in purely monetary terms.
Meanwhile, the federal government can borrow money very cheaply — the interest rate on inflation-protected 10-year bonds is only about 1 percent. These low borrowing costs, in turn, reflect what seems to be a persistent savings glut — that is, the private sector wants to save more than it’s willing to invest, even with very low interest rates.
Or consider what happened after Democrats enacted the Affordable Care Act, going to great lengths to pay for the additional benefits with tax increases and spending cuts. A majority of voters still believed that it increased the deficit. Reality doesn’t seem to matter.
.. Anyway, the truth is that while voters may claim to care about the deficit, hardly any of them really do. For example, does anyone still believe that the Tea Party uprising was a protest against deficits? From the beginning, it was basically about race — about the government spending money to help Those People. And that’s true of a lot of what pretends to be fiscal conservatism.
.. In fact, even the deficit scolds who played such a big role in Beltway discourse during the Obama years seem oddly selective in their concerns about red ink. After all those proclamations that fiscal doom was coming any day now unless we cut spending on Social Security and Medicare, it’s remarkable how muted their response has been to a huge, budget-busting tax cut. It’s almost as if their real goal was shrinking social programs, not limiting national debt.
.. So am I saying that Democrats should completely ignore budget deficits? No; if and when they’re ready to move on things like some form of Medicare for All, the sums will be so large that asking how they’ll be paid for will be crucial.