Now’s a time for big economic ideas
The headlines may talk about growth, but we are living in a dark economic era. For most families, income and wealth have stagnated in recent decades, barely keeping pace with inflation. Nearly all the bounty of the economy’s growth has flowed to the affluent.
And if you somehow doubt the economic data, it’s worth looking at the many other alarming signs. “Deaths of despair” have surged. For Americans without a bachelor’s degree, one social indicator after another — obesity, family structure, life expectancy — has deteriorated.
There has been no period since the Great Depression with this sort of stagnation. It is the defining problem of our age, the one that aggravates every other problem. It has made people anxious and angry. It has served as kindling for bigotry. It is undermining America’s vaunted optimism.
So what are we going to do about it? The usual answers — technocratic changes to the tax code and safety net — are not good enough. They don’t measure up to the problem: an economy that no longer delivers a consistently rising standard of living. They also aren’t very inspiring. In 2016, Hillary Clinton offered many thoughtful proposals, precisely none of which she got to implement.
This is a time for big ideas. One of the Trump presidency’s only silver linings is its proof that our political discourse had been too narrow. Frustrated Americans don’t feel bound by old rules. Almost 63 million of them voted for a man who had no political experience and made of mockery of politics as usual.
“Donald Trump’s victory implies that people need to be more bold,” as Ro Khanna, a Democratic congressman, has said. “People yawned at the smallness of American politics, at the stagnation of American politics, at the same faces, the same ideas, the same talking points.” Or as Neera Tanden, who runs the Center for American Progress, a progressive think tank, says, “Donald Trump has widened the aperture for policy discussions in the United States.”
Some observers remain confused about all of this. They imagine American politics as a simple two-dimensional spectrum on which Democrats must move to the centre. But every issue isn’t the same. Yes, there are cultural issues, like abortion and guns, on which the country is classically divided. On these, moving to the centre, or at least respectfully acknowledging our differences, can help Democrats. Rep Conor Lamb recently showed how to do it in Pennsylvania.
Economic policy is different. Most voters don’t share the centrist preferences of Washington’s comfortable pundit class. Most voters want to raise taxes on the rich and corporations. They favour generous Medicare and Social Security, expanded Medicaid, more financial aid for college, a higher minimum wage and a bigger government role in job creation. Remember, Mr Trump won the Republican nomination as a populist. A clear majority of Americans wants the government to respond aggressively to our economic problems.
I think they’re right about that, too. Lawrence Summers, the former Treasury Secretary, has a nice framing. He says that the late 1960s and 1970s should have moved a reasonable person to the right on economic policy, in response to rampant inflation, rising crime, sky-high top tax rates and breakdowns in Europe. The last 15 years — with “widening inequality, financial crisis, zero interest rates, rising gaps in life expectancy and opportunity”, as Mr Summers notes — should move that same person to the left. Different eras require different solutions.
Fortunately, policy experts have begun working on those solutions. One possibility is a federal jobs programme, putting people to work earning $15 (472 baht) an hour on vital projects like infrastructure and child care. Sen Kirsten Gillibrand, who seems to be eyeing a presidential run, favours an ambitious version called a federal jobs guarantee.
Another option is a strong response to growing corporate power and consolidation. The Open Markets Institute and Roosevelt Institute have sketched out new antimonopoly policies. Other economists are talking about something called wage boards, where companies and workers would negotiate over industrywide pay. Such boards exist in New York, California and Australia.
On health care, there are proposals to open Medicare to people younger than
65. On child poverty, two senators have proposed a $3,600-a-year annual allowance for children younger than six. On education, states and cities have created free pre-K or community college. To help pay for it, experts are studying how to raise taxes on the wealthy — who can afford to pay more.
The details will be important. Done wrong, any of these ideas could fizzle. They could make people lose even more faith in government. Done right, though, the ideas could mimic the grand successes of government: Social Security, Medicare, the military, the Securities and Exchange Commission, the highway system, public universities, medical research and a Defence Department project that became the internet.
It’s time to dream big again.
‘‘ There has been no period since the Great Depression with this sort of stagnation.