If you had to distill the ambitions
of the Democratic Party down to a single word, you might well choose “Denmark”.
But “France” would also work. Or “Germany”. Any Western European nation,
really, with the social insurance options many of us envy: universal health
care and affordable child care, to name but a few. Much of modern American
liberalism is designed to close those gaps, to build here what already exists
there.
اضافة اعلان
I hope to close those gaps, too. But
what about building here what does not already exist there?
Over the past few years, social
insurance programs did much to ease suffering, but it was mRNA vaccines that
did the most to protect human life. And this points to a place where American
liberalism could dream bigger dreams. Most liberals can list the programs they
want the government to create or expand. Fewer can name the five technologies
they want the government to finance or the five scientific challenges they want
to see it mobilize to solve.
But technology is central to how we
make the future look different from the past. To leave that to the market or to
think it apolitical is abdication.
In an important speech at Davos,
Treasury Secretary Janet Yellen began building a framework for those questions.
The Biden administration, she said, was pursuing a “modern supply-side
economics”. She argued that the economy is not growing as it could because it
does not have enough of what it needs. We need more workers. We need more roads
and bridges and airports and broadband. We need more scientific breakthroughs.
Oh, and we need a stable climate, too. And to get all that, we need government.
That is a change. Supply-side
economics has traditionally been the redoubt of Republicans. They, too, said
the economy did not have what it needed to grow as it could. But they believed
the problem was too much government and too little private capital and
dynamism. The rich needed more reason to work. The poor needed more punishment
if they did not work. Corporations needed more reason to invest. Their
prescription followed logically: tax cuts for the rich, spending cuts and work
requirements for the poor, and a bonanza of financial and environmental
deregulation.
Yellen is arguing that even where
Republicans succeeded, they failed. The growth we have had in recent decades is
not an unalloyed good. Too much of it has gone to the rich, and too much of it
has rewarded those who are accelerating a climate crisis.
“We are not just focused on
achieving a high top-line growth number that is unsustainable,” she said. “We
are instead aiming for growth that is inclusive and green.”
Yellen’s speech attracted more
attention from Republicans than Democrats, perhaps because Republicans better
understood what she was trying to do and what it would mean if she succeeded.
Kevin Hassett, who served as chair
of former president Donald Trump’s Council of Economic Advisers, responded with
a blistering screed in National Review calling Yellen’s speech “one of the most
serious policy threats to the future of our economy launched by a treasury
secretary”.
Hassett’s piece was, in places,
bizarre. He worked himself into a lather over Yellen’s use of the word “modern”,
which, he said, is now “a weapon wielded by cancel culture’s activists”. Odd.
But Hassett is fixated on the word because he is trying to argue that the Biden
administration is in thrall to Modern Monetary Theory, a complex and
controversial economic framework that holds, among other things, that the
government can spend what it wants because it can print money to pay its debts.
Yellen does not believe in MMT, and the policies she is proposing are paid for
by the tax increases she is proposing — which Hassett must know, because he
decries those very tax increases later in the piece.
My worry is rather the opposite:
that the Biden administration’s supply-side agenda is stuck in the past and not
yet imagining the future.
In her speech, Yellen gave three
examples of the new supply-side economics, all of them drawn from Biden’s
foundering Build Back Better agenda. First, increasing the supply of workers
“by making it easier for working-age parents to participate in the labor market”.
She pointed to a few policies that fit: expanded prekindergarten, paid leave,
subsidies for child care, subsidies for elder care and a bigger earned-income
tax credit. Good ideas, but hardly unfamiliar.
Second, making workers more
productive. Here, she name-checked investments in community college; in worker
training; and in broadband, ports, basic scientific research, rail and
renewable energy infrastructure.
Finally, Yellen talked about Biden’s
tax agenda and, in particular, the effort to impose a global minimum tax. That would
raise US tax revenues, which could finance more investments, and push companies
to compete based on production and innovation rather than by gaming tax
systems.
Part of the problem here is that
Yellen is trying to fit her modern supply-side economics to the existing Build
Back Better agenda. Ben Harris, her assistant secretary for economic policy,
said as much.
“The idea was to be
forward-looking,” he told me. “The second part driving it was that there did not
seem to be a good organizing principle of what Build Back Better was designed
to do.”
Harris is right about that, and I
think it is a more damning observation than he intended. Build Back Better is a
grab bag of long-standing Democratic proposals jammed together into a superbill
designed to evade the filibuster. Or maybe I should say, that is what it was.
But Build Back Better is, at this point, a dead letter. Opposition from Sen.
Joe Manchin, D-W.Va., forced Democrats back to the drawing board. The silver
lining is that they now have the opportunity to design something that does have
a good organizing principle.
But that will require resolving two
fundamental tensions in how Democrats conceive of not just what the economy
needs but what the government can do to help and how to know when what the
government is doing has hurt.
Many Democrats still fear the
dreaded specter of “industrial policy” — of government picking winners and
losers and wasting money or reputation on bad bets and patronage. That pushes
them to extremely general goals: more workers, or more research, or more
broadband.
But that fear is now matched by a
horror of where markets are leading us: into climate crisis. Here, the Biden
administration gets specific. It names the technologies it wants and the kinds
of infrastructure we lack: better batteries, more electric car charging
stations, cheaper solar panels and next-generation geothermal and nuclear
technologies.
Yellen does not see this as a
tension. The government’s role is to step in when markets fail, and climate
change is a market failure.
If Democrats do not always admit how
much government can do to help, they also do not always admit how much it can
do to hurt. The market would build more housing if local zoning czars would let
them. Companies were clamoring to sell more rapid tests earlier, but the Food
and Drug Administration would not let them. All across the country, nuclear and
solar and wind projects are being tied up in red tape.
You can go too far with this, and
Republicans often do. The frustrating truth of regulation is, there is no one
position you can have on it. Good regulations are good; bad regulations are
bad. But bad regulations are hard to unwind, and they are often unseen.
This is a view Yellen shares. “In
some cases, regulation can have costs that greatly exceed the benefits,” she
told me.
“I am no expert on housing, but in
many localities, it seems the restrictions on local zoning make it extremely
hard to build affordable housing and keep prices high. There certainly is some
effort in the administration to convince states and localities to ease regulation
to increase the supply of affordable housing.”
That effort needs to become louder
and more insistent. If Democrats want to claim a bigger role for government in
shaping our future, they need to be the ones who are most outraged when it is
government that is holding us back.
But to do that, they need a vision
of America’s future that is not just lifted from Western Europe’s past.
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