The debate in the Democratic Party is being framed in much of the mainstream media as a struggle between a “pragmatic center” that wants to “get things done” and an angry populist wing – led by Sens. Elizabeth Warren, Bernie Sanders, Sherrod Brown and others – that vilifies enemies and creates division. This week, William Galston, a veteran New Democrat scribe, used his perch on the Wall Street Journal op-ed page to second Sen. Charles Schumer (D-N.Y.) in making the case for a “nonpopulist liberalism, more interested in diagnosing conditions than in identifying enemies.”
The problem, Galston suggests, is that while populist economics has found its voice, “nonpopulist liberalism” has not. That, he argues, will be the “most important test” for Hillary Clinton’s impending presidential run.
So what is the agenda of a pragmatic liberalism in a populist reality? Well, if Clinton decides to voice a “nonpopulist liberal” economics, she’ll have to look elsewhere for answers. Galston’s offering is a version of Gertrude Stein’s Oakland: There’s no there there.
The Central Centrist Myth: Inequality Just Happened
Like Schumer in his controversial post-election analysis, Galston accepts that the pressing question of the day is a populist challenge:
“The American people are sending a large and urgent message to Washington: We want an economy that works for all of us, not just a favored few, and nothing we’ve heard from either party so far convinces us that you know how to get us there.” (emphasis added)
Galston then echoes Schumer (and Barack Obama and the Clintons) in attributing the new economic inequality to anonymous “large forces – technology, automation and globalization.” These are not “inherently malign,” Schumer argues, so the task is to “figure out ways for the middle class to be able to thrive amidst these forces.”
But technological change and automation were with us when the middle class was thriving. Globalization isn’t an act of nature. Its form derives from a set of policies – tax, trade, monetary and investment. The middle class in Germany and elsewhere has fared far better than Americans in the same global economy.
Here, the wealthiest 10 percent captured all of the income growth of the society over the last two decades. This isn’t an accident or an act of nature. It requires systematically rigging the deck to favor the few.
In reality, multinational banks and corporations fixed our trade and tax policies to move jobs to low-wage centers abroad, driving down wages at home, while nominally stashing profits overseas to avoid paying taxes. Hedge fund billionaires figured out how to pay a lower rate of taxes than their chauffeurs. College costs soared because colleges have been slowly privatized, forcing students and families to pick up more and more of the tab. Retirement grew more insecure as companies gutted pensions. Service jobs aren’t inherently low-wage. Workers have poverty wages because companies like Wal-Mart ruthlessly suppress worker organizing while opposing efforts to lift the minimum wage.
By scorning those who “identify enemies,” Galston’s nonpopulist liberalism is bereft not just of villains but also of understanding.
Galston reveals just how barren the center’s shelf is when he turns to the reform agenda. In his current essay, he offers only questions, not answers: “On what terms should we engage with the global economy?” “What kind of tax reform will promote faster economic growth whose fruits are broadly shared?” etc.
In an earlier op-ed praising Schumer, Galston suggested some “reforms:”
“If soaring costs are reducing college attendance and imposing large debt burdens on students, can we use technology to deliver high-quality postsecondary education more affordably?” [Let’s figure out a cut-rate version of college for middle and lower class kids, rather than invest in world-class education for all.]
“If the public sector can no longer muster the funds required to meet our infrastructure needs, how can we create incentives for private capital to fill the gap?” [Rather than tax the rich to rebuild the country, let’s let Goldman Sachs and Citibank and JP Morgan figure out how to profit while financing it.]
“If we want a tax code that favors growth, job creation and opportunity for average Americans, what are the key ingredients of tax reform?” [Or, here we go again.]
Schumer, at least, understands this isn’t going to cut it. He argues that Democrats have to prove that government can be an instrument for the middle class and not the few. That means prosecuting a few bankers, taking on the more obscene tax breaks. “An element of populism, even for those of us who don’t consider ourselves populists, is necessary to open the door before we can rally people” to support a “strong government.”
Galston inadvertently makes one thing clear: Populism isn’t an attitude, a passing mood, a fashionable garb that can be worn as an accessory. It is essential not only to understanding where we are but also to figuring out how we get out.
Workers have more education but less power. Wall Street has turned banking into a casino, with taxpayers covering their losses. CEOs have multimillion-dollar personal incentives to loot their own companies rather than build them. Corporations get tax breaks for moving abroad, not for giving their workers a raise. The major source of wealth of the middle class – their homes – is taxed every year. The wealth of the rich – their holdings of stocks and bonds – is taxed only when they sell it (if their accountants fail to locate a loophole).
These aren’t accidents. They aren’t the remorseless workings of technology, automation and globalization. They are policy choices. They can be changed. But to change them, people need to understand just how the rich and powerful have rigged the game. A “nonpopulist liberalism” may make fund-raising easier, but it surely will make mobilizing people harder. It offers working families not a fair deal, but at best a little more loose change in a rigged game.