What's Missing in Democrats' Economic Debate?
Hint, it's also what's missing in their coalition.
Liberals are in the middle of an economic debate over the “abundance agenda,” and whether the electorate wants an “angry moderate” or a “combative centrist” to deliver a sensible pro-growth economic program. But what’s missing in all of this, at times generative, debate is discussion of the very thing the economy needs so badly: more power for workers.
A new consensus has emerged, (or rather, an old consensus has reemerged) among liberals. From populists to self-declared neoliberals, all have agreed to leave the culture war behind. They, by and large, agree that the Democrats need to win back the working class. And they agree that delivering real economic gains in policy, with a laser focus on economic rhetoric, is the way to do it.
Some on the Left have been banging this drum for a long time. Others have returned, like the prodigal son, to their old-ways. “It’s the economy stupid!” was once the unofficial slogan of the 1992 and 1996 Clinton campaigns. And true to form, today the Clintonian think-tank Third Way again insists that every time Democrats open their mouths they ought to say something about the economy. Prominent liberal writers like Matthew Yglesias have made the same case. And now New York Times journalist Ezra Klein and Derek Thompson have released a book “Abundance” which make the positive case for exactly how Democrats can talk about the economy.
This is a good development, and the debate has generated some good ideas. But for all the newfound attention given to economic issues, moderate liberals seem surprisingly silent on the question of working-class jobs and wages. For all their talk about the need to win them back, the emerging Democratic economic consensus seems really short on an agenda for workers. And that’s a problem. After all, the Democratic brand is underwater among blue-collar workers specifically on the question of work itself. As POLITICO recently reported:
Just 44 percent of those polled said they think Democrats respect work, while even fewer — 39 percent — said the party values work. Only 42 percent said Democrats share their values. A majority, meanwhile — 56 percent — said Democrats are not looking out for working people.
Many moderates are under the impression that working-class voters are helplessly conservative on economic questions. And so, much of the new policy agenda for centrist Democrats looks a lot like the old policy agenda for centrist Democrats. That is, its what economists call a “supply-side solution” to economic hardship. It’s about lowering costs. Not raising wages.
Cut red tape, incentivize growth, unleash the awesome power of the market to bring costs down, down, down.
There is, of course, some usefulness in this approach. It’s obscene, for instance, that almost every infrastructure project is mired in bureaucratic and legal hangups that result in insane delays and astronomical costs. But loosening supply-side constraints, as helpful as they might be, probably isn’t enough to fix whats really broken.
The fundamental problem in the economy can be summed up as follows: the rich have too much money and workers have too little power to force them to invest it.
Even preeminent neoliberal economist Larry Summers has, belatedly, recognized this. He complains of an “investment death” and a “savings glut.” In other words, the hoarding of wealth by the über-rich has become a huge drag on global economic growth. Billionaires just won’t invest their money at the scale needed to promote broad economic prosperity. And even when they do, their outsized social and political power ensures that wages remain stagnant. By removing supply-side constraints we could induce more investment but, given the falling costs of capital goods and the downward pressure on wages posed by automation, supply-side solutions won’t do much to prevent even more money accumulating at the top.
What’s needed, then, is more power for workers, so they can demand higher wages and increase the general rate of effective demand.
Now, some moderates may reply: ‘Okay, okay, but no one has any appetite for that!’ It’s true that many working-class voters aren’t interested in traditional tax-and-redistribute welfare programs. That’s why Third Way’s big economic idea is “middle-class tax cuts.” But is this really the horizon of progressive economics? Hardly.
It turns out workers have a number of good (and popular!) ideas for tilting the economy away from the power of the rich. As we noted a few months ago:
Our analysis of a host of questions from the 2021–22 waves of the ANES, GSS, and CES indicates strong working-class support for progressive economic policies, ranging from the 87.9 percent of working people who support lowering prescription drug prices to the 67.9 percent in favor of increasing taxes on the wealthy. The list goes on: 69.1 percent of working-class Americans favor import limits to protect US jobs, 64.8 percent prefer greater investments in state education spending, and 54.8 percent even have a positive view of a federal jobs guarantee. Likewise, substantial majorities of working-class Americans support policies to strengthen workers’ economic leverage, including 70.5 percent who support raising the minimum wage, 68.8 percent who favor putting workers on corporate boards of directors, and 54.8 percent who favor labor unions (a figure on the low side of other credible estimates).
In a forthcoming analysis, the Center For Working Class Politics, finds broad support for a number of populist economic programs that increase the power and leverage of workers and promote a more equal economy. What’s more, we believe that new policy proposals to stop stock buybacks that induce mass layoffs, legislation to speed up first contracts for newly unionized workers, and means to trigger big investments in high-wage industries, are no less likely to have popular support if only there were progressive tribunes to champion them.
Crucially, these policies all have a lot to do, not just with economic fairness, but with jobs and work. And as Sherrod Brown recently noted, to win back workers, progressives must put “the dignity of work at the center” of all they do.
Populist policies built around that goal are one means to do that.
Thank you for this post. Exciting ideas. Are any of the "populist economic programs" or "progressive economic policies" already in the form of bills we can rally around? Also, would you say that we are trying to help the working class by trying to prevent the federal tax cuts, paid for by cuts to Medicaid and other safety net programs?
correct king