Many people now believe the United States cannot afford to continue with the policies of the Bush-Cheney administration. Those policies have undermined global support for America – a key part of national security – and have produced an economic expansion that has bypassed working families and looks as if it will bequeath years of house-price pain.
However, if there is agreement that the heavy-fisted Bush-Cheney agenda is no longer acceptable, the question remains what will follow. Among Democratic presidential candidates, although there is much talk of change, its meaning remains unclear.
Beginning some 30 years ago, Ronald Reagan initiated a fundamental repositioning of American politics that was later completed by Newt Gingrich, Dick Armey and Tom Delay. That repositioning shifted the entire political spectrum to the right.
This raises the question: Does change mean sticking with the political playing field we now have and just giving control of the football to new Democrats such as Sen. Hillary Clinton? Or does it mean repositioning the playing field and shifting the political spectrum as proposed by progressive Democrats such as Sen. John Edwards?
Behind this difference lie vital real-world consequences that will profoundly impact America’s working families. For Clinton-style centrists, today’s economy works reasonably well. Globalization delivers prosperity by providing cheap imports that lower prices; a financial boom on Wall Street benefits all by raising stock prices; and higher corporate profits drive investment that increases growth and incomes. However, growth also creates losers, which means the market’s “invisible hand” must be accompanied by a “helping hand.” Consequently, policies are needed to supplement the incomes of the working poor and to assist workers who lose their jobs because of trade.
For Edwards-style progressives, the picture is very different. Globalization has created a divide between country and corporations, as companies abandon the United States by shifting jobs and investment offshore. That maximizes profits but undermines wages and future prosperity. Higher profits have not raised growth, but have instead come at the expense of wages and increased income inequality. And Wall Street has spearheaded these changes by demanding that companies raise rates of return, ripping up the old social contract with workers and their communities.
From a progressive standpoint, the problem with new Democrats is they tackle symptoms, not causes. Though helping-hand social policies are welcome, progressives believe such policies are not up to the challenge confronting America’s working families. Meeting that challenge requires deeper change, which is what the 2008 election is all about.
Yet, surfacing this difference has proved difficult. That is because the Clinton campaign has used the political tactic of “bunching” to obscure differences. The tactic holds for every major issue from health care, to trade policy, to taxing Wall Street hedge-fund incomes. On each issue, the Clinton campaign has bunched up and signed on, but always reluctantly and late.
This tactical success of bunching requires progressives to raise directly the question of change and its meaning.
For Sen. Barack Obama, change is a matter of political style. For Clinton, it means restoring the economic policies of the 1990s.
However, with the exception of tax cuts, those policies are the policies of today. Thus, the 1990s ushered in the North American Free Trade Agreement and free trade with China, and cemented trends from the 1980s regarding trade deficits, the separation of wages from productivity growth and the dominance of Wall Street. What really saved the 1990s were the Internet and stock market bubbles, which are not a sustainable foundation for prosperity.
Social Security exemplifies what is at stake. New Democrats downplay the problems of globalization and the power of corporations and Wall Street and instead identify the budget deficit as the nation’s No. 1 problem. That perspective establishes the predicate for cutting Social Security benefits, something Clinton has openly left on the table. Whereas Republicans have long been able to create much mischief around Social Security, they can change and cut benefits only with the help of Democrats.
The 21st century has gotten off to a rocky start as America has squandered much political and economic capital. Now, Americans want change. The Democratic caucuses and primaries offer two visions of change. One changes possession of the political football; the other changes the football field. That’s the debate the country needs, but it is still missing.
Copyright Thomas I, Palley
[…] The following op-ed by Thomas Palley appeared in the Des Moines Register on December 26. Unfortunately, its website crashed that day so the op-ed is not available there. […]
Thank you for a very cogent synopsis of the differences between the leading Democratic candidates. I completely agree with your characterization of the Progressive versus Business-As-Usual candidates and what they have to offer. What do you see as effective methods of promoting an Edwards candidacy addressable from those of us out here in the hinterlands?
Thanks for this analysis. I particularly like your football metaphor– do we just want to change who has the ball, or should we really be playing on a different field?
I see where you have joined a list of other distinguished economists in endorsing John Edwards. He’s my first choice candidate as well.
The economyic good fortune that America experienced in the second half of the 20th century is becoming a thing of the past. Big changes are coming to this country, driven by other change that is plainly observable in the world– the rise of China, India, and South America, peak oil, global warming, and the rest of the sustainability challenge. America’s former pre-eminence in education, industrialization, etc is reduced, and our former wealth of resources (such as oil) is fading as well. We could view this situation as “dire”, or simply as a situation that we have to deal with. Either way, there will be change, which for many will be disruptive or even destructive to their personal worlds.
In this context, I welcome Edwards’ awareness of and focus on poverty and the condition of the middle class. Clearly, Edwards sees what is going on in the lower ranges of the pyramid, and recognizes its importance. He seems determined to limit how bad things will be allowed to get down there.
It is vital for America that as we engage with inevitable change, people feel assured that their essential needs will be met and their human dignity respected. This is a moral issue, but also more than that. If we are to have the courage and confidence to deal with change in a positive manner, the American people need to know that there is a level below which no willing worker will be allowed to fall.
Tom –
I always enjoy reading your postings and I thought I would share the following inscription on the west side of the Jefferson Memorial which I just visted last weekend with my family:
“I am certainly not an advocate for frequent changes in laws and constitutions. But laws and institutions must go hand in hand with the progress of the human mind. As that becomes more developed, more enlightened, as new discoveries are made, new truths discovered and manners and opinions change, with the change of circumstances, institutions must advance also to keep pace with the times. We might as well require a man to wear still the coat which fitted him when a boy as civilized society to remain ever under the regimen of their barbarous ancestors.”
I thought the last sentence is particularly apt regarding the need for a single-payer health system that could arise simply by extending medicare to all citizens. I think Jefferson would likely agree that universal medical insurance is an “institution [which must] advance also to keep pace with the times.”
Regards,
Jason Hecht
I think you are quite correct that identifying the budget deficit as the top problem is dangerous. But you neglect to mention the role the Media can be expected to play. While major media outlets turned a blind eye to Reagan’s deficit spending, as soon as a Democrat took over in the White House in 1992, there was a hue and cry about the budget ‘crisis’ and the need for drastic spending cuts. In “Locked in the Cabinet” Robert Reich detailed Clinton’s rage when he realized that Greenspan and ‘the bond market’ could effectively veto his planned jobs programs. Shortly thereafter Clinton slashed parts of Medicare’s funding.
The role the major media can plan in defining what a budget crisis is and is not, should not be underestimated.
I believe there is a double standard the media betrays in it’s treatment of Republican and Democratic Presidents and the deficits they preside over.
We shall see where the same histeria is promoted by the media should a Democrat take the Oval office next Janurary.
Thomas Palley? I thought you said Thomas Paine. I love to hear you speak. Can you just say it a little louder, so everyone can hear?!
I think this time we may get our wish . . .
I find this analysis unsatisfactory, since it does not outline any economic policy ideas of “progressives” while denouncing thos of “new dems” as old hat. To just say that a change in style is necessary, does not seem much of an economic program.
As a European who in economic policy discussions with many Americans for years has been derided when showing concern about the current account imbalance situation in the world, I still find it strange that very little debate has occurred around the irresponsibility of major mortgage institutions in offering “subprime mortgages” to customers not being able to repay; little debate on proper regulation, little debate on the merits/demerits of ever new financial products.
It would be highly instructive if bloggers and other publicists would address some of these questions.
The United States has only one problem: INCOME DISTRIBUTION. It is clear by now that the country cannot go on with debt (given huge poverty at the bottom) and that the market alone does not solve problems.
Vincent