The Democrats Continuing Search for a Unifying Economic Agenda

By Nell Abernathy |

In a presidential race where both candidates disputed the tenets of free trade, attacked tax loopholes for hedge funds, and promised big infrastructure plans, it seemed possible that the election served as a death knell for neo-liberalism in American politics. Even after the inauguration, some pundits and politicos, not to mention voters, believed Trump to be an exclusionary populist, fighting to empower white workers – but workers nonetheless*.

In reality, of course, the Trump campaign and administration have proven to be as committed to tax breaks for the rich and divestment from public services as they are to preserving the power of white men. Trump’s budget – along with his appointments, his tax plan, his attack on financial regulation, his approval of mega-mergers, his private equity-financed infrastructure plan, and his attack on Obamacare – should correct any continued questions about who Trump represents. His economic agenda remains firmly rooted in the trickle-down principles that have undergirded most policy-making in the US (on right and left) for the last forty years and have transferred both economic and political power to large corporations and wealthy shareholders.

The question that remains, then, is will Democrats be the ones to push for progressive policies that devolve both political and economic power to average Americans. There are sparks of hope that main stream Democrats will fight the administration on issues of inclusion – the immigration ban, civil rights enforcement, LGBTQ rights to safety at schools. They absolutely must push further on these critical fronts. However, if they fail to also articulate a progressive economic vision that tames corporate power, then mainstream politics will remain confined to a debate between exclusionary neoliberalism and multi-cultural neoliberalism. Not only does this expose the paucity of our public debate, but also the multi-cultural neo-liberals will fail to dismantle many of the structures that circumscribe opportunity for women and people of color. And they will lose elections.

To be clear, we are currently waging battles along two distinct ideological axes of political economy. We can imagine the Y axis as the spectrum where we answer the question – who belongs to America and define the breadth of inclusion in our polity. On one end of the spectrum we have ethnic nationalism – the full rights and privileges of citizenship are constrained by identity – say for example – white Anglo-Saxon Christian males. Taken to the extreme – perhaps an extreme beyond this map – one might situate Nazi Germany or slave-holding America. On the other end of the spectrum we have a civic nationalism that expands full participation to all Americans and their diverse identities– at the extreme negating the concept of citizenship and welcoming people of all nationalities to full and equal participation in American life. Since the Civil Rights Act, Democrats have generally pushed to expand the circle of inclusion, without dismantling the idea of a limited citizenry. Conservatives have generally resisted expanding rights to those who don’t resemble the founders in race, religion, gender, or sexuality. However, in the last thirty years the mainstream debate has consistently hovered near or above the top half of the graph.

Trump’s campaign greatly expanded the field of contestation by unabashedly pushing beyond the limits of “polite” exclusionary politics. Much of the resistance has been driven by outrage and fear at this side of Trumpism. Indeed, this battle against exclusion may even have been the force that drove CT suburbs like Greenwich and Stanford to switch from Romney to Clinton territory.

The success of activists and judges in killing the unconstitutional immigration ban provides some glimmer of hope that an exclusionary agenda will not triumph in the months and years ahead. But for progressives, success can’t simply mean stopping the bad things from happening. To truly deliver on the promise of inclusion and – more cynically – to generate enthusiasm among voters beyond the white liberal elite, Democrats must be even more ambitious in their vision for an inclusive politics. While important legal fights remain core to this agenda, we must move beyond the belief that legal protection – alone – leads to equality. Legal rights are necessary, but not sufficient. We must tackle the economic exclusions that have long been baked into the economy: a racial wealth gap that increases the burden of debt for communities of color; the New Deal legacy that renders feminized and non-white jobs lower paying and less secure; and neighborhood segregation that reduces educational opportunities and health outcomes for people of color, the disinvestment from rural communities that has left swaths of American without jobs. In particular, a true inclusion agenda must acknowledge that political and economic power are deeply intertwined, and build on the legacy of the many civil rights leaders and activists who coupled calls for legal reform with economic reform – most notably in a jobs agenda.

This call for a progressive economics that would truly allow all Americans to be agents in their own lives brings us to the second axis of our battle – the one focused on how we run our economy and on whose behalf.

On one side of the X axis is an extreme neo-liberal agenda that views the “market” as operating according to laws of nature and “market” outcomes as efficient and optimal. This worldview exiles the role of institutions in constructing markets and perpetuating economic and political power. As we move toward the center, the gradient is colored primarily by the degree to which we want to intervene in markets either to improve efficiency or soften market outcomes. Republicans, of course, believe limiting intervention is both efficient and moral. Democrats have historically pushed for more regulation and more transfers – usually on moral terms. They don’t want to let people die because they failed to buy health insurance and they do want to provide public education so everyone has an opportunity. Where Republicans have pushed to dismantle the welfare state, the Democrats have pushed to end welfare as we know it. Despite the large gap between Republicans and Democrats on these policy debates, for forty years, mainstream elites from both the right and the left have supported slight variations on the same idea: that protecting capital domestically and internationally would lead to growth that would trickle down and benefit the masses. This did not happen. Instead, neoliberal economic policies firmly consolidated wealth and power at the top while delivering a low growth economy that rewards speculative investment – money making money on short-term trades or real-estate gains- rather than productive investment – in research and development, or worker training, or capital equipment. It’s now clear that Trump’s populist campaign rhetoric was nothing more than window dressing for the same neo-liberal economic agenda that conservatives have been pushing for decades.

A more progressive view of economic policy notes that de-regulation is really re-regulation on someone else’s behalf – all markets are constructed by rules and institutions that often reflect the interests of the powerful. Taxes and transfers may be necessary, but are not sufficient to empower workers, small business owners, families and communities with the autonomy to choose the direction of their lives. Dependency on either the one factory in town, the one medicine produced by one large monopoly, the performance of the stock market for debt relief, or relief through minimal government benefits, we cannot claim to be a free country. But we need not be powerless over economic trends. If markets are not objective, if they fail, if they are not efficient, there is a role for government to shape pre-distribution – or market income and wealth.

The battle of 21st century American politics has been waged within the fairly confined landscape of the top left quadrant – focused on how “free” we should make our markets and how broadly courts can expand civil rights – given that legislatures have often failed to do so. Americans are clearly eager to expand the contours of this debate. Trump offers to expand the debate in the direction of exclusion. A truly progressive populism must push for both a more explicitly inclusive agenda along the lines of race and gender and an economics platform that reigns in the excesses of capital by rebalancing the tax code, breaking up monopolies, regulating the financial sector and expanding public options to compete with private power.

While pushing public policy forward on either the political inclusion or the economic populist axes would be challenging in 21st century America, progressives are now required to fight both simultaneously.

And as the Democrats continue to search for a unifying economic agenda and a way to communicate with the American public about an economy that works for all, it seems possible they could vigorously fight the first battle while ceding on the second. In other words, they could advance a platform that protests Trump’s most egregious civil and human rights offenses while continuing to allow large corporations and big banks to run both our economy and politics. When the opposition is chauvinistic, xenophobic and potentially treasonous, standing up for the status quo can be cast as heroic. With a special investigation in the works, an unpopular and stalled Republican healthcare plan, and Wall Street realizing conservative tax cuts are nowhere in sight, Democrats may be inclined to adopt their current resistance approach as a long-term plan. This would be bad news for the country and the party.

If we fail to expand the concept of which Americans count as American, we will never overcome the economic status-quo that relies on a divided 99 percent. If we fail to dismantle the power of large corporations and the rich, marginalized communities will continue to compete in an economy that structures unequal outcomes. And while DC-elites may not have heard the bell tolling for 90s era moderation, toll it did. If progressive leaders continue to fall back on the familiar and safe language of neo-liberalism even as they defend critical civil rights and public programs, they will not only fail to build a truly inclusive economy, but also, they will fail to win over voters clamoring for economic change. This means they will lose elections and the only alternative to the status quo on offer– exclusionary oligarchy – will win.

 

*It is perhaps unsurprising that populist rhetoric took the face of white nationalism, given that the neo-liberal project (in the US and abroad) of discrediting government and dismantling public goods has always relied on stoking suspicion that “other” people were benefiting from public policy that was too generous.

Nell Abernathy is the Roosevelt Institute's Vice President of Research and Policy. She co-authored Rewriting the Rules of the American Economy.