Thursday, March 21, 2019

Some Welcome Honesty From a Neoliberal Centrist Points the Way Forward for Democrats

by Neil H. Buchanan

The narrative of the moment in the political press and the punditocracy tells the story of a veritable civil war among Democrats, with the two sides usually described as the "the left" and "centrists," although there are all kinds of near-synonyms in use.  The big idea is that the more conservative Bill Clinton-style establishment types are worried that the surge of energy on the left is going "too far."

I have already written quite a bit about this topic (see, e.g., here and here), with my principal argument being that the broad agenda that is being called far left is anything but, both as a matter of substance and in terms of political acceptability.  Notwithstanding the presence of people in the mix who call themselves democratic socialists, it is difficult to find a substantive proposal offered by the supposed extremists that is either extreme or unpopular.

Indeed, I recently claimed that the current avatar of the not-left Democrats, Joe Biden, is actually not that far from the supposed lefties.  As I put it: Biden "is certainly more of a cautious Obama-style type[, but his] reactions to liberal policies are not typically 'No, let's do something else instead' but merely 'Aw jeez, guys, not so fast.'"

That argument, however, at least suggests that there is no difference on substance among different camps of Democrats.  If anyone interpreted my words in that way, that is my fault, because I certainly do continue to have serious disagreements with many of the small-but-powerful group of Democratic power players who reach for the smelling salts every time a progressive idea hits the news.

As it happens, however, one of the economists who has been most closely associated with the Clinton-Obama model -- an approach that people have described alternatively as substantively centrist (or even center-right) or as merely a tactical disagreement with more openly progressive camp -- recently conceded that the time for his group is over.  This is an important moment, because it further isolates the establishment Democrats who are furiously working against the progressive agenda.

The economist in question is Professor Bradford DeLong of Berkeley, who recently sat for an interview with Vox after creating some genuine and well deserved buzz with a series of tweets that included this arresting line: "The baton rightly passes to our colleagues on our left."  Who is DeLong, what did he say, and why does it matter?

DeLong is in some senses a perfect distillation of the Clinton-era approach to economic policy.  He calls himself a "Rubin Democrat," referring to Clinton's first Treasury Secretary (and former Goldman Sachs bigwig) Robert Rubin.  Among other things, Rubin convinced Clinton during the transition period after the 1992 election to abandon his flirtations with a big public investment plan and instead to become a deficit hawk.

Rubin was the political/policy godfather of the line of advisors that surrounded Clinton, Obama, and the failed campaigns of Al Gore and John Kerry.  His associates and progeny included Lawrence Summers, the controversial former president of Harvard who succeeded Rubin as Treasury Secretary and Tim Geithner, who took the Treasury job during Obama's first term in office.  It also includes DeLong, Jason Furman (one of Obama's top advisors), and loads of others, many of whom spend their time when Republicans hold the White House putting out centrist policy papers from Brookings and related think-tanks.

If anyone was going to come clean from that group, it was going to be DeLong.  His blog, Grasping Reality, has been popular for years, and it allows him to exhibit an acerbic wit and a genuinely open mind with politically liberal motivations.  He is the opposite of a hack -- and I say this as someone who genuinely disagrees with him on many issues.

As it happens, I knew DeLong briefly in graduate school, where he was a few years ahead of me and was in charge of the teaching assistants (including me) for a sophomore tutorial in economics.  This did not involve as much contact as one might think, but I was always impressed by his intellectual curiosity, his open-mindedness, and his commitment to teaching -- the last of those being especially notable, because economists who are destined for professorships at top places like Berkeley are actively discouraged from bothering to teach well (lest it take time from one's research).

DeLong is not the only Rubinite who has lately awoken from the Clinton-era mindset.  Summers has been writing some excellent columns lately arguing that deficits and debt are not as scary as he and his group thought they were.  I was deeply skeptical of that conventional wisdom all along, but Summers has the pedigree that allows him to have a Nixon-in-China kind of approach to the issue.  I will soon write some columns about this revolution that Summers and others are leading in the government finance debate.

In any case, what makes DeLong so interesting is that his tweets and his interview with Vox include a frank admission that his version of cautious policy centrism was essentially a political compromise, not the result of a superior economic understanding of the issues.  That is, the Clinton/Obama approach -- with Clinton openly condemning "old Democrats" for being too Big Government-friendly while saying that "market-based approaches" (that is, neoliberalism) are superior -- was not based on proof that, say, something like the Affordable Care Act was actually better than single-payer health care.  It was politics pretty much all the way down.

Explaining why DeLong believes that "that neoliberals’ time in the sun has come to an end," the Vox article frames it this way:
"The core reason, DeLong argues, is political. The policies he supports depend on a responsible center-right partner to succeed. They’re premised on the understanding that at least a faction of the Republican Party would be willing to support market-friendly ideas like Obamacare or a cap-and-trade system for climate change. This is no longer the case, if it ever were."
That is pretty potent, as I will explain in a moment, but it gets even better when the article includes this direct quote from DeLong:
"Barack Obama rolls into office with Mitt Romney’s health care policy, with John McCain’s climate policy, with Bill Clinton’s tax policy, and George H.W. Bush’s foreign policy.  And did George H.W. Bush, did Mitt Romney, did John McCain say a single good word about anything Barack Obama ever did over the course of eight solid years? No, they fucking did not."
Other than the f-bomb, why is this so important?  The neoliberals' pose has always been that they are above politics, that they have a super-sophisticated economic approach that shows that a business-friendly economic policy -- including, for example, Clinton's efforts in the late 1990's (enthusiastically assisted by Summers) to deregulate financial markets, setting the table for the 2008 financial crisis and the Great Recession -- is objectively superior to "anti-market interventionist" policies.

In other words, the idea was that we could get the best economic results by adopting a Republican-lite policy agenda.  This was music to the ears of the Democratic Leadership Council (DLC), the group of right-leaning business Democrats from which Clinton emerged, which has now morphed into the group that calls itself Third Way and others who push back hard against people like Elizabeth Warren and Bernie Sanders.

That reactionary movement, by the way, was central to the Democrats' virtual abandonment of organized labor under Clinton and Obama.  Longtime DLC leader Al From was openly contemptuous of unions, and the DLC's approach was essentially to undermine workers' rights, with Clinton-type Democrats assuming (correctly) that unions would still support Democrats because the alternative was so much worse.  But it was a slow form of political suicide.

Why would Democrats become anti-union?  The neoliberal approach is based on an economic model that tries to allow markets to reach their "natural" equilibria, in order to eliminate supposed inefficiency.  Government interventions (such as minimum wages, collective bargaining, or worker safety laws) interfere with the Invisible Hand's efforts to move markets toward efficiency, so those interventions are always presumptively bad.

At most, this view only allows governments to seek the absolute minimal policies necessary to smooth out capitalism's unfortunate harshness.  "Ending welfare as we know it" is important not for moral reasons -- or not only for those reasons -- but because of the supposed incentive effects of "paying people not to work" and the resulting inefficiency.  Today, Third Way and their ilk continue to act as if this is still the best approach, and they are horrified by government interventions like increased taxes and other progressive proposals.

As DeLong seems to concede, however, he and the other neoliberal economists were mostly playing a political game and not an economic one.  They were convinced by DLC-style political advisors that the Democrats could not win without moving to the right politically, and (as Vox described it above) their approach was "premised on the understanding that at least a faction of the Republican Party would be willing to support market-friendly ideas."

I am not saying that DeLong or any of the others are now admitting to having been disingenuous.  They surely believed that the supply-demand approach to economics was right, and they were trying to figure out how to be what they thought of as "good economists" while acknowledging real-world problems that their conservative brethren simply do not care about.

But notice that their approach was essentially to say, "Well, we'll get a better outcome if we compromise our approach, not because of an economic argument but because the outcome will be more politically stable if there is buy-in from Republicans."  That does not mean that DeLong actually believed in Sanders-style policies all along, but it does mean that the policy compromises he was willing to support were in a rightward direction for the purpose of political positioning.

Those of us to the left of Clinton and Obama have, of course, been saying for years that this was a suckers' game, that Bill Clinton's approach to nearly everything (certainly replicated by Obama in a lot of areas, most obviously in health care) amounted to having the Democrats negotiate against themselves and then offer the weakest proposal possible, only to have the Republicans move to goal posts further to the right.  (This happened again and again with the Family and Medical Leave Act, for example.)

DeLong concedes: "The world appears to be more like what lefties thought it was than what I thought it was for the last 10 or 15 years."  And with that, he says that he and others like him should stop urging non-neoliberals to preemptively accept defeat without even engaging in a fight, because playing nice is not working now (and probably never did).  DeLong gets the last word, a bit condescending but still offered in obvious good faith:
"Our current bunch of leftists are ... social democrats, they’re very strong believers in democracy. They’re very strong believers in fair distribution of wealth. They could use a little more education about what is likely to work and what is not. But they’re people who we’re very, very lucky to have on our side."