One often hears from right-leaning political pundits that most Americans would find repugnant the idea of living in a social order patterned after the West European social democracies. According to this view, typical Americans have instead a deep value-based attachment to opposing free-market principles. These include limited government, low taxes, entrepreneurship, corporate deregulation and growth, capital expansion, and the make-or-break imperatives of unfettered competition in the labor and capital markets, and the consumer marketplace.
In light of the 2010 mid-term election results and the current cultural “noise” – talk radio, cable talk and news, Tea Party gatherings, web postings, polls, etc. – it would seem that the pundits have at least one thing right. It is clear that a very large body of Americans, whether or not they understand the functioning of free markets, or even believe in their efficacy, opposes any meaningful role for the federal government in shaping their outcomes. They roundly condemn the near-trillion-dollar bank bailouts of 2008, to which the current administration is heir, along with Obama’s economic stimulus program, auto-company reclamations, and health-insurance reform. This rejection of government activism is not only widespread throughout the population, but visceral and politically potent. One must ask, however, whether it is also legitimate. How rational are the assumptions on which it is based?
At a time when millions of Americans have lost either their job or their home, or both, due to corporate avarice or malfeasance, it is curious that so many nevertheless oppose a government role in the economy and continue to place their faith, instead, in the workings of a largely unregulated free-enterprise system that has produced the very conditions from which they now suffer. It’s as if the Stockholm syndrome had re-emerged as a central dynamic in American politics.
A single question puts the apparent paradox in plain relief: Would a majority of Americans really be better off with an economy un-buffered by government and based totally on unregulated free enterprise? On the face of it, the very notion is absurd. Given the present state of the economy, how many of the jobless, or those at risk of joblessness, would actually reject or oppose extended unemployment benefits, a solvent Medicaid system, or government help in reshaping home mortgages? Similarly, how many retirees, vested in 401 Ks and other stock portfolios now greatly diminished in value, would prefer a life without Social Security or Medicare? In reality, far more people in even this land of opportunity would be made better off as beneficiaries of prudent government social programs than as participants in an unfettered system of free enterprise.
Why the Antipathy to Government?
Generally, the irrationality shown in supporting actions that oppose one’s own self-interest stems from two very destructive emotions: fear and resentment. In assessing their economic status, many Americans continue to be influenced by the dream that, with just a break here and there, they too can join the ranks of those made rich – and in some cases even famous — by their success in the competitive enterprise system. Of course, for most Americans, this “dream” is, in fact, a pipe dream. Those who hold to it seldom look to the findings of economic analysis for reasons that might explain their continued inability to make it real. Instead, many seek answers in the metaphysical realm, where there are “principalities and powers” both capable and desirous of destroying dreams.
For Tea Partiers and others who feel left out of the system, the most obvious candidate for inflicting such insidious despotism is the federal government, with its seemingly limitless powers and broadening involvement in matters of what are conceived to be private values and behavior. In the eyes of the alienated, the current “liberal” Washington establishment is not a protector of the personal freedoms they value, but an intrusive miscreant that seeks to expand its own power and dominance by massive spending that enriches the privileged and seduces the electoral loyalty of the poor. In prosecuting these ends through high taxes that lead to a weakened economy, it steals from the people opportunities to earn a decent living or to exercise their own economic initiative in the pursuit of their dreams. Those who hold these views understandably fear losing the freedom to shape their own future, and resent what they see as their exclusion from the good life by a consolidation of power and wealth in fewer and fewer hands.
For millions of disaffected Americans who have already suffered the loss of a job and the personal dignity that goes with it, the emotions of fear and resentment are compounded by a profound sense of injustice and powerlessness. Why, they ask themselves, does the federal government do nothing to generate new employment opportunities that could give me a chance to escape the joblessness for which I’m personally blameless? Why did it instead, despite historically massive debt, spend hundreds of billions of dollars to bail out Wall Street and the automotive companies — which, unlike me, are largely responsible for their own failures?
It is hardly surprising that people suffering the pains of economic insecurity and a loss of personal dignity viewed these government actions not — as they arguably were — a needed strategy to maintain a functioning economy, but as an overreaching misuse of their tax dollars, with themselves the powerless victims. They also saw the bailouts as unjust, since they appeared discriminatory against their own interests as ordinary people and blatantly in the interest of fellow members of America’s ruling elite. That perception was made especially keen by the many reports of top executives at rescued financial firms making off with huge bonuses and, as the figure has it, “laughing all the way to the bank.”
Conditioned by these perceptions, disaffected Americans came also to regard the government’s follow-up economic stimulus program, with its manifest benefits limited largely to saving the jobs of state employees, as a further example of a misuse of government power and a waste of tax dollars. The same is true of the health care reform program, whose promised cost savings for the population at large were both deferred and unguaranteed. In all the extraordinarily costly government investments, most Americans saw little that benefited them. Instead, what they perceived was a federal government that had blatantly misused its powers and their own tax dollars to side with the corporate elite and against themselves. It is to this image that I think disaffected Americans really refer when they talk about their determination to “take their country back.”
Of course, this sense of alienation has been amplified by the banding together of disaffected citizens in groups like those associated with the Tea Party movement. In such gatherings, where positions are hardened by resentment- and fear-driven “group- think,” there is little room for a moderating influence by voices that may question and seek to modify preponderant assumptions. Few within the group would challenge the alleged lack of good faith and venal motives behind government actions, the ineffectualness of programs it puts in place, or the notion of self-correcting dynamics in free markets. Instead, a smothering closed-mindedness leads inevitably to the kind of demonizing of the Other – whether the government or supporters of its policies – that is often seen at Tea Party protests. One can only hope that the enmity falls short of violent confrontation.
The Progressive Vision for Transformative Change
Given the extent and depth of social alienation in America, it seems politically imperative that steps be taken as soon as possible to effectively redress the grievances of the disaffected. Regrettably, the daunting national debt, the current alignment of political forces in Congress, the looming presidential election year, and the President’s own political and personal bias for compromise over confrontation based on principle make meaningful policy changes highly unlikely in the short term.
In the longer term, it is only committed progressive lawmakers who can produce real solutions for the problems that plague the country. That cannot happen, however, without the participation, first, of progressive-minded citizens who are dismayed by the chronic joblessness, underemployment, income inequality, and social unrest they see around them. It is they who, in actions ranging from letters to congressmen and the opinion pages of local newspapers, to marching in the streets, must help shape and gain popular support for policies that can in reality bring us closer to economic fairness and a mutually supportive society.
Such policies could, in fact, gain a serious hearing as soon as next year, if a qualified progressive Democrat could be found and persuaded to challenge President Obama in the 2012 primaries. For now, that eventuality, though desirable, seems unlikely. Even in the absence of a formal campaign, however, it is nevertheless vital that progressive ideas for transformative change begin to resonate both in Congress and in our national political discourse. For that to happen, those ideas need to be consolidated by the progressive community into an overarching moral vision that is communicated to the public through every available channel. If carefully framed around the traditional American values of self-reliance and civic-mindedness, I believe such a vision can evoke a positive response from a wide cross-section of Americans, including Tea Party types. Specifically, I propose that progressives pledge to fight for the one right that working Americans hold most dear and are most afraid of losing; namely, the freedom to control and shape their own economic future.
To implement this vision, progressives could offer a strategy that seeks to shift the priorities of government from deference to the interests of the power elite to policies aimed at producing two transformative changes. One is to advance the common good, or general welfare, of the nation – a responsibility the Constitution itself assigns to the federal government; the other is to empower individuals to secure livelihoods that afford them a decent standard of living and a chance to pursue their own kind of happiness. By fostering a physical, economic, educational, and social environment that offers all Americans a better quality of life, and by helping create conditions conducive to the primary American value of economic self-reliance, the government can do much to replace the alienation and discord now plaguing the nation’s psyche with a wholesome sense of national community. It is only such change, in fact, that can make real the “One America” that so far remains no more than a figment of Presidential rhetoric.
Investments for the Common Good
Since the “Reagan Revolution,” the evidence of history itself has plainly disproved the “supply-side,” or “trickle-down,” theory of economics, which claims that widespread prosperity is best served by a system of tax-advantaged and largely unregulated corporate capitalism. During the G.W. Bush years, especially, policies supporting this theory not only failed to “lift all boats” on an ocean of prosperity, but served instead to turn massive projected annual budget surpluses into deficits, while concentrating wealth in fewer and fewer hands.
In place of such policies, the progressive vision calls for strategic investments of substantially increased tax revenues in programs aimed at advancing the common good and empowering citizens to control their economic future. The goal would be to upgrade the nation’s physical, economic, education, and social infrastructure, while also affording all Americans ready opportunities to prepare for the work of their choice and to find the jobs in which to do that work productively and at wages commensurate with a comfortable standard of living.
Progress toward this goal can be achieved through a variety of strategic investments. They include major outlays for rebuilding roads, bridges, sewer systems, and other physical infrastructure; start-up money for green-energy R&D and green infrastructure development; investments in urban development, high-speed rail, and community medical centers; tax breaks and lending assistance to encourage small-business job creation; and support for education at all levels, especially Head Start, community colleges, and job training programs, which could be made persuasively attractive by being offered tuition-free. Further job creation and economic stimulus could be achieved through incentives and regulations that inhibit the export of jobs by multi-national corporations, provide vigorous support for union organizing, and work to reform invidious international trade agreements.
History Shows That Targeted Government Investments Work
In making its case for strategic government investments, the progressive community can look for support to many respected economists, including Robert Reich, Paul Krugman, and James Galbraith, who have argued that strategic deficit spending offers a much more effective means for climbing out of an economic downturn than do spending cuts in vital social programs accompanied by tax breaks for corporations and the rich.
In a January 2010 posting in the impressively credentialed progressive blog “New Economic Perspectives,” economist Eric Tymoigne argues that, even in conditions of deep recession and massive red ink, the federal government can indeed stimulate the economy and help create millions of new jobs — without inflation or the risk of insolvency — provided that the spending is high enough. Tymoigne cites the history of the New Deal to prove it.
He points out that initial deficit spending by the Roosevelt administration, beginning in 1933, reduced depression-era unemployment from 25% to 15%, not counting people directly employed by newly created government programs such as the Work Projects Administration (WPA) or the Civilian Conservation Core (CCC). As things turned out, however, despite this plain evidence that putting paychecks in people’s hands is an effective way to get an economy going again, political pressures in the 1936 election year pushed Roosevelt to return to a balanced budget. That brought back a recession in 1937, followed by rising unemployment. In the absence of continued domestic deficit spending, it took the massive defense spending of World War II to bring the country entirely back to economic well-being.
In the interim period, however, according to Tymoigne, Roosevelt’s public employment programs, which cost less than 1% of GDP, helped millions of people make a living, shored up the nation’s vital infrastructure, and flooded the private sector with cash, restoring profitability and making employers more willing to hire. The deficit spending that followed during the war years flushed banks and private businesses with money and created a long period of financial stability without breaking the federal treasury or leading to inflation.
The Tymoigne post proposes similar public spending in the current period, calling for a second “stimulus,” or, even better, a permanent policy that provides a buffer against unemployment through government-sponsored employment programs. What is most important, Tymoigne argues, is that spending be high enough to actually put people back to work, but at the same time targeted in such a way as to benefit the entire population. Instead of wasteful financial rescues, money should be invested in projects such as infrastructure repair and needed social programs, which can improve the country’s overall standard of living.
The history of New Deal “alphabet” programs indicates impressively how such projects can contribute to the common good. For instance, the largest of these programs, the Work Projects Administration, established in 1935, not only provided work for millions of the unemployed, but by 1940 had built or repaired countless highways, roads, streets, schools, hospitals, stadiums, parks, playgrounds, sewer systems, airport facilities, and forest trails, besides planting some hundred-million trees. In addition, it operated large arts, drama, media, and literacy projects, fed children, and redistributed food, clothing, and housing. The parks, bridges and schools constructed by the agency benefited almost every community in America, especially those in rural areas and the West.
Tymoigne acknowledges that if, in the current economic downturn, either the President or progressive voices in Congress were to push for deficit spending high enough to put millions of unemployed or underemployed Americans back to work in full-time jobs, they would incur the unbridled wrath of powerful balanced-budget and small-government advocates. He argues, however, that the nay-sayers have got it wrong. The advocacy of “small government,” he says, may reflect a “value” fed by conventional wisdom, but it is not sound economic policy supported by historical evidence. In fact, in recessionary times like the present, it can be downright dangerous to the country’s well-being.
In spite of this, Tymoigne reminds us, the conventional wisdom in favor of small government is so ingrained in American political culture that it is not easily overridden.
The times may require a productive use of government to improve economic well-being, but such a strategy will only be pursued if the people themselves are willing to demand it – quite possibly through street protests and, if necessary, strikes. Such actions may be messy and inconvenient, Tymoigne notes, but he reminds us that they are perfectly legitimate expressions of a healthy democracy.
Moreover, he says, evidence suggests that government actions in behalf of the common good would likely be backed by a large portion of the American electorate. Polls show that most U.S. citizens enthusiastically support existing public programs such as Social Security, Medicare, and the air-transportation and national highway systems. Given that predilection, it seems reasonable to expect widespread popular support – even active agitation — for new public initiatives that promise to generate jobs, stimulate the economy, and improve the national standard of living. This is especially so, in Tymoigne’s view, because the contrary specter of negative consequences sure to be raised by small-government advocates can be reasonably discounted. Any new stimulus programs would be highly unlikely to risk bankrupting the government, as spending outlays would be significantly offset by a dramatic increase in tax revenues and by reductions in welfare supports made possible by a revitalized economy. The additional spending would also not lead to inflation, according to Tymoigne. That is because production capacities are underused in a weak economy, and companies can meet all the additional public or private demand stimulated by government spending without increasing their prices.
In summary, Tymoigne and other progressive economists argue that, in a period of high unemployment, even with massive budget deficits, it is better for government to increase deficit spending for useful projects than to fall in line with policies based on the worries of small-government advocates over deficits and debt. Policies that are limited to cutting taxes and curbing government spending, in their view, not only do nothing in the short run to relieve millions of citizens of the miseries of joblessness, underemployment, or insufficient income, but fail indefinitely to create the consumer base that would stimulate economic growth and the expanded tax base that could in the long run actually close budget deficits and reduce the national debt.
There Must Be Cost Cuts Too, but Progressive Ones
Naturally, new government investments aimed at enhancing the common good and restoring economic self-reliance have little chance of taking wing in the current Congress. Those proposing them could surely expect hootin’ and hollerin’ at the highest pitch from many quarters both inside and outside government. It would be charged, of course, that more stimulus spending would bankrupt the economy, this time irretrievably.
In fact, the galloping increase in our national debt is a very real problem, both as an adverse economic reality and as a football for adversarial politics. In all likelihood, progressives can only gain the political space necessary for “selling” new strategic investments by a demonstrated willingness to join with deficit hawks in efforts to cut government spending. By displaying their own commitment to fiscal soundness, they could more effectively build the case with political leaders and the nation that the strategic investments they propose would, in fact, lead not to more red ink, but instead to broad-based economic growth and sustained reductions in annual budget deficits.
In seeking to do their part to cut spending, however, progressives would not join anti-government conservatives in looking first at relatively small, but vital, social programs such as Head Start and community health centers. Instead, they would carefully re-assess programs in the bloated military that are not directly connected to defending the American homeland from attack. Deep cuts could be made by a drawdown of our military bases around the world, by pulling troops out of Europe and Asia, by withdrawing totally from Iraq and Afghanistan, by ending the policy of pre-emptive wars, by accelerating nuclear arms reductions, and by eliminating further development of weapons systems that are not essential to defending our own shores. Progressives should also join open-mindedly in efforts to make domestic entitlement programs as cost-efficient as possible.
Higher Taxes and Regulation of High Finance Are Also Essential – and Fair
Having created the necessary “political space” for investments in economic growth, progressives would need to pursue two additional initiatives to fund the investments responsibly and insure their viability. First, the income-tax code would have to be revised to make sure that multi-millionaires and billionaires no longer pay taxes at the same – or even lower – rates than are paid by working people. Instead, in line with common ethical standards, the very rich would be taxed at a rate that represents a substantial reinvestment in the society that has made their wealth possible. In addition, effective government regulations would have to be enacted to ensure that Wall Street institutions serve as responsible partners in building the economy, not as casinos willing to risk the American house for their own aggrandizement.
In a recent online article (AlterNet, March 3, 2011), Robert Reich, labor secretary in the surplus-generating Clinton years, agrees that strategic government investments are necessary to restore a vigorous economy and full employment. He also agrees that the outlays can, and should, be paid for in significant part through added tax revenues collected from those who have benefited most from the American economy. Reich offers these specific proposals:
- Hike taxes on the super-rich. Reform the tax code to create more brackets at the top with higher rates for millionaires and billionaires. Absurdly, the top bracket is now set at $375,000 with a tax rate of 35 percent; the second-highest bracket, at 33 percent, starts at $172,000 for individuals. But the big money is way higher.
The source of income shouldn’t matter — salary, wages, capital gains, other unearned income — all should be treated the same. There’s no reason to reward speculators. (Don’t penalize true entrepreneurs, though. If they’re owners who have held their assets for at least twenty years, keep their capital gains low.)
- And while you’re at it, raise the ceiling on income subject to Social Security taxes. And bring back the estate tax.
“Do this,” says Reich, “and we can afford to do what we need to do as a nation” – by which he means, of course, to make investments that will create jobs and grow the economy. Reich also believes that requiring the very rich to carry a larger part of the country’s tax burden represents the fairest means by which to finance investments that will generate the revenues needed to close budget deficits and reduce the national debt. “Do this,” Reich adds, “and you prevent Republicans from setting the working middle class against itself. Do this and you restore some balance to a distribution of income and wealth that’s now dangerously out of whack.”
Creating the Reality of “One Nation”
If actually pursued by progressives in Congress, Reich’s proposals would, of course, provoke umbrage among many — though by no means all — of the privileged and their supporters in Congress, just as initiatives for further stimulus spending would bring down the wrath of small-government deficit hawks.
In response to such an outcry, the offended might be reminded in turn that all those who enjoy great success and privilege in our society operate in, and depend upon, an economic infrastructure that is created and maintained by the daily efforts of millions of ordinary Americans. That reality ties them to their fellow citizens by a moral obligation. Today, when many Americans, through no fault of their own, are falling into deeper and deeper states of penury and insecurity, surely the sense of fair play — said to be a characteristic American trait – must at long last come into play. It demands that the very well-off share a somewhat larger portion of their excess affluence to help those now steam-rolled by the recession get back to at least a decent life.
Any advocacy for higher taxes on the rich is also subject, of course, to anathema from free-market ideologues. Some conservatives believe as a matter of principle that any taxation is tantamount to theft, and that no government with the power to tax can seek moral ends, but only its own continual growth and more stringent domination. Those who hold this view would seem to be outside the reach of progressive appeals to political conscience.
Many more Americans, however, are simply caught up in a conservative political culture that is characteristically averse to government intervention in the free play of market forces. They are skeptical of government’s right to seek, and capacity to find, workable solutions for social problems, but they are not doctrinaire in impugning its motives. Their mindset can therefore be influenced by persuasive counter-arguments.
Now is surely the time to advance those arguments. Following the collapse of Wall Street and the accompanying evidence of its reckless willingness to risk the economic security of the nation for personal gain, progressives can make a strong case that Americans need to reconsider their uncritical faith in the reliability of unregulated markets. They need also to point up the many examples of sweeping government programs that, unlike recent Wall Street schemes, have, in fact, worked well: most notably, perhaps, Social Security, Unemployment Compensation, Medicare, and the GI Bill.
Such rational arguments alone, however, will not be enough. Given today’s massive debt, aggravated suspicions of government, widespread social alienation, and partisan extremism on the right, it will take something more to win a critical mass of support for new government investments. To do that, progressives must appeal foremost to the moral sense of Americans.
They will have to make clear that, in view of the obscene gaps in income and wealth that now separate America’s richest citizens from all the rest, the past privileging of the nation’s economic and political elite must now come to an end: that a simple respect for justice requires that all Americans be empowered to secure a livelihood and pursue their own happiness.
Progressives should also emphasize another point that is too seldom made. It is that the government of the United States properly represents all of the people as a single community, not only their elite corporate and political leadership. If it were to actually operate on that principle, it would be obliged to look first after the common good, not the interests of the powerful few.
The obvious benefit of such a shift in government perspective would be to enable ordinary Americans to lead more secure and rewarding lives. In addition, it could have a powerful spiritual effect. Today, millions of Americans fear and resent their government as an “Other” that wastes their tax dollars and inflates its power at the expense of their own freedom to shape their economic future. A government that seeks instead to empower its citizens to control their future, while also enriching the common good, could well transform that fear and resentment to a renewed sense of hope and community with other Americans.