Consultation: How Democrats’ Economics Has Changed

today altercation Guest post by Michael Tomaski, former editor of this post, who now edits both New Republic And the democracy And I just published a new book, shown below.

I want to thank Eric and Prospect To give me some space today to tell you about my new book. it’s called The Middle: The Rise of a Progressive Economy and a Return to Shared Prosperity It was published earlier this month by Doubleday.

What are they and why are they unique? I wrote the book to tell the story of the efforts hundreds of people have made over the past decade or so to change, as Joe Biden sometimes likes to say, the “economic model.” That is, before the pandemic, you’ll remember Biden was a candidate as a kind of restoration — if we go back to how things were before Trump, we’d be fine. Then, after the pandemic, he started talking more: This is a crisis, we have to act on an FDR-type scale. Then, after the murder of George Floyd, he added a more explicitly racist element: We have to address the systemic racism in our economic and criminal justice system.

That was all good to hear, and of course he had some successes and some setbacks along those lines. But my point is: When a president in office talks this way, it doesn’t come out of nowhere. He did so because the hundreds of people mentioned above — economists, political activists, people in the worlds of important institutions and think tanks — have been speaking this way for years, and have dedicated significant resources to the effort. Few ports, in particular American expectations And the democracy The magazine, which I edit, has covered these efforts closely, but the larger mainstream press has not. Despite this, these arguments finally found their way into the Oval Office.

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Take the phrase “middle”. I’ve heard Biden use it many times: “Economic growth doesn’t happen from top to bottom. It happens from the middle and from the bottom up.” This is a direct refutation of supply-side economics and distillation: growth does not come from giving the rich more tax cuts; It comes from investing in a strong and growing middle class, which will be financially secure enough to spend money, increase demand, and create higher and more jobs. The policy implications are clear. Instead of tax cuts for the rich, the government needs to invest in the middle class through the kinds of things that have been in rebuilding better — subsidized child care, paid family leave, extended health care — so that people can live better and safer lives (which In turn, it promotes growth much better than tax cuts for the wealthy.

Well, Biden did not coin that phrase. I didn’t spend it. It was coined by Nick Hanauer and Eric Liu in 2011. The fact that the phrase is more than a decade old reinforces my point above – a lot of people have been thinking about these problems for a long time.

How can liberalism win the economic argument against the right? People need to wrap their heads around four propositions:

1. Even when the economy today is “good,” it is not really good. This means that even when unemployment is low and the market is doing well and so on, the fact – which is a fact mostly unnoticed in the daily media – is still in the midst of an economy whose main advantage is that millions of dollars each year are moved from the poor and middle class to the top. So even when the working class (the 50th percentile, for example) is better off, the super-rich (1 percent and even 0.1 percent) are better off.

2. The economy has finally recognized the existence of politics. For decades or even centuries, economics did not think about politics. Wages, for example, were determined by a set of market forces, and politics had nothing to do with them. This is how academics have thought, but it is not the way the world works. In the world, workers make whatever political power they have to do. This seems obvious to you and me, but economists have been (and many still are) very reluctant to admit it. The book tells the story of how this change came about, through the work of people like Joseph Stiglitz and groups like the Economic Policy Institute. It is a really important change because it rejects the assumption that classical economics left alone, the market will find equilibrium. No – the state should play the role of the evening.

3. The economy has changed profoundly in this century. In short, much of economics has gone from being based on theoretical modeling to being based on empirical data. With this change taking place, economics moved to the left, not because economists are left-wing, but because empirical data has shown, for example, that r > g, in Thomas Piketty’s famous formulation. That is, the data shows that the system rigged the wealthy in a way that theoretical modeling did not. There are, of course, still plenty of conservative economists, but a younger, more diverse generation of economists is changing the profession, and those changes are seeping into politics.

4. Finally, here’s how Democrats should explain all this to people. Of course, the Republicans and the right will not just lie down and stop arguing about the economy. We are in a long battle. I think the best way to win the Democrats is: They need to hook up their economy Ideas to me ideals Americans learn to cherish it from an early age – democracy and freedom. They should say something like: Yes, our economic policies will put more money in your pocket. But they will do more. It is good for democracy, because as the founders knew, a healthy democracy depends on a strong middle class. Excessive economic and political power in the hands of the wealthy leads to oligarchy rule, and this is where we are heading if the trend of the past few decades is not stopped.

In addition, our economic plans will promote freedom. Right has sold people one definition of freedom: the free market means freedom. Well, there are plenty of small towns across this country where people are “free” to work at the dollar store or sell a little Oxy. This is not freedom. There is another definition of freedom: to make people free to live up to their fullest potential. This is a type of freedom that dates back to Franklin Roosevelt’s “Four Freedoms” and the definition of rights given in his 1944 State of the Union; It even goes back to some of the founders, as Joseph Fishkin and William E. Forbath demonstrated in an important recent book. When that single mom working at the dollar store can attend a free community college and have a safe and affordable place to park her little one while she attends those nighttime classes, she does just that: realize her potential, as well as contribute even more to the economy. This is also freedom. I think the Democrats need to say that — especially after Dobbs resolution. When the right robs women of a half-century-old freedom, the door opens to restore that word and radically redefine it.

Long-standing neoliberal economic assumptions have finally been successfully challenged. If we can save our democracy in the next two years, we can win this battle. And I think we are more likely to win it when we make people understand that economy, democracy, and freedom are not separate things. It’s all one argument.

This seems relevant today: Did you know, as Peter N. Hess explains in a recent article in Post Keynesian EconomicsIs that not only that the US economy has performed better under Democratic presidents than Republicans, but that Democrats also show much greater fiscal responsibility when it comes to public spending? Here again, Democrats have been shockingly awful, and the mainstream media, horribly irresponsible, for allowing Republicans to successfully argue the opposite all these years—just as they are today, despite no economic program whatsoever.

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