Tuesday, August 15, 2017

It’s the Economy, Democrats, but Inequality Is Not the Issue


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A sign at a campaign rally for Bernie Sanders, the Vermont senator running for president in 2016. A new Democratic slogan, espoused by the Senate minority leader, Chuck Schumer of New York, is “A Better Deal.” Credit Young Kwak/Associated Press

ASPEN, Colo. — Is income inequality the defining challenge of our time? Bernie Sanders thinks so. He ran for president as inequality’s most ardent foe. So does Elizabeth Warren, the other champion of the Democratic Party’s left.
Even President Barack Obama, in his understated way, seemed to agree. Notably, he engineered perhaps the most aggressive redistribution of income since President Lyndon B. Johnson in the 1960s.
But maybe the issue should not be the party’s lodestar. This month, a clutch of Democratic governors, members of Congress and city mayors gathered with Democratic fund-raisers, strategists and other champions of liberal causes in this secluded patrician resort in the Rockies to hear that all this attention to income inequality could actually hurt them.
“Income inequality is severe,” Jon Cowan, president of the centrist Democratic research group Third Way, told the assembled politicos. “And parts of the economic system are unfair. But these are not the central problems vexing most Americans. Many of the solutions proposed to meet them are not responsive to the aspirations, needs and values of those Americans.”
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The focus on inequality misses the mark on more than substance, he argued. In a country where only a quarter of voters identify as liberals, and two-thirds believe that “big government” is the main threat to the nation’s future — and where over the last decade the Democratic Party has hemorrhaged governorships, seats in Congress and half of its seats in state legislatures — focusing on income redistribution could amount to political suicide. Instead, he argues, Democrats should aim at what he defined as the scarcity of opportunity afflicting so many Americans, “the great moral cause of our time.”

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Senator Elizabeth Warren of Massachusetts is among the progressive Democratic leaders hoping the party can appeal to voters who feel as if their lives and aspirations have been derailed. Credit Manuel Balce Ceneta/Associated Press

Mr. Cowan’s exhortation might be understood as the typical call for repositioning that follows a lost presidential election. Third Way, which organized the gathering, is, after all, an intellectual heir to President Bill Clinton’s centrist politics — more skeptical of deregulation than in the Clinton era, and less interested in fiscal balance, but equally at loggerheads with the Democratic Party’s left.
And yet the Democratic infighting over message and strategy in the wake of November’s stunning defeat suggests that something existential is going on. Only eight years after they boldly proclaimed the economic crisis to be a critical opportunity, Democrats lost touch with their voters.
The financial crisis and ensuing recession scrambled Americans’ fears and desires, leaving an electorate defined by some variety of anger: at stagnant paychecks, at bank bailouts and government spending, at police shootings of blacks and at women’s lower wages; anger against a “rigged system.” Unfortunately for the Democratic Party — the party of government — most voters tend to think government is doing the rigging.
The most inspiring campaigners, Senator Sanders on the left and Donald J. Trump on the right, did not convince voters of the wisdom of carefully honed policy prescriptions. They ran on an apocalyptic vision of America under siege, with clear enemies in sight. Mr. Trump, an interloper of scant ideological baggage who took over a Republican Party at least as clueless as Democrats about voters’ preoccupations, offered the more powerful apocalypse.
The question for Democrats looking for a path out of the wilderness — for Mr. Cowan and Senator Sanders; for Senator Warren and the Senate minority leader, Chuck Schumer, who hopes to woo voters by offering a “Better Deal” — is whether they can appeal to voters still angry because their lives, their aspirations and their sense of self have been derailed over the last few years.
The problem is hardly unique to American politics. Across the Atlantic, populist parties have arisen to rattle the established political class, though nowhere have they achieved the sort of upset pulled off by Mr. Trump.
Two years ago, three economists from the Free University of Berlin, the University of Bonn and the University of Munich published an analysis of the political fallout from financial crises in 20 advanced economies, including the United States, over the last 140 years. On average, they estimated, far-right parties increased their share of the vote by 30 percent in the years after the crisis, as voters blamed minorities and foreigners for their plight.
Voting for governments in power declined, and the share going to the opposition grew. Politics became more fractionalized as voters who lost faith in standard political pitches sought alternatives. Governing, of course, got much tougher. And some of these effects persisted 10 years or more.
It is hardly surprising that government — not Wall Street or big business — gets the blame. As noted in another study by economists at Princeton, the University of Chicago and the University of British Columbia, it is the government that mediates the competing interests of creditors and debtors.
Banks got a bailout after the financial crisis of 2008. Homeowners whose mortgages were underwater got next to nothing.
“From this selective intervention, additional economic inequality and political polarization may ensue, compounding and amplifying the initial political effects of the crisis,” the researchers wrote.
How much attention to devote to income inequality is only one of the decisions Democrats have to make.
To recapture the presidency, Democrats must recover the support of the middle class — people in families earning $50,000 to $150,000, whose vote went to Mr. Trump. Three-quarters of voters in swing states are white, according to data from the Cook Political Report presented by Third Way. Mr. Trump won white voters by 21 percentage points.

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Donald J. Trump, left, as he campaigned for the Republican nomination in 2016, and Senator Sanders each ran on apocalyptic visions of America under siege. Credit Mark Makela and Max Whittaker for The New York Times

Does this mean Democrats should de-emphasize racial discrimination? Should they stop talking about guns and the right to choose to get candidates elected in, say, Louisiana? What will voters elsewhere think?
Joan C. Williams, a professor at the University of California Hastings College of the Law who this year published “White Working Class: Overcoming Class Cluelessness in America,” a critique of liberals’ inability to understand this constituency, argues Democrats can offer an inclusive platform that appeals to all Democratic constituencies, like the proposal presented by Senator Schumer focused on jobs.
“We must realize that we forgot an important sector of social disadvantage, which is social class,” she added. “But it is not convincing to say we should go beyond identity politics. That is like telling women and blacks, O.K., you had your 40 years of attention, and now we have to move on.”
Still, Professor Williams argues against a move to a Democratic center that is friendly toward Wall Street and favors trade agreements, “two of the reasons that the working class is so done with the Democratic Party.”
There is much that makes sense in Third Way’s approach. Mr. Cowan argues that the battle for redistribution of wealth that shaped Democratic politics over the 20th century culminated with the Affordable Care Act — the last missing piece of the social safety net, offering health insurance to all. Now, he adds, the critical task is to remedy the lack of opportunity faced by so many Americans seeking to make a decent living in the tech-heavy, globalized 21st.
Offering free college is not the way to do it. That can sound meaningless in the large swaths of the country where fewer than 30 percent of residents have a bachelor’s degree. Half of the people who start a four-year program do not finish it. A national apprenticeship program that could help connect people to good jobs is a more fruitful option.
The government could also encourage small-business formation — often stifled for lack of credit and seed capital. It could take a more proactive role to lean against market power that shuts rivals out of markets.
The challenge is not to prepare for a jobless future but to ensure available jobs offering decent incomes to working families, Mr. Cowan adds. A $15-an-hour minimum wage is a bad idea. But wage subsidies and a regional minimum wage adjusted for the cost of living might do the trick. To bolster retirement finances, employers could be required to contribute a minimum to workers’ private retirement plans.
This platform, by the way, would probably mitigate income inequality. It would just do so in a more business-friendly manner than the one suggested by the slash-and-burn talk further to the left. It has a shortcoming, however: It will be harder to sell a program that lacks villains.
NYT

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