Much and more has already been written about Nick Hanauer’s brilliant and blistering piece in Politico Magazine about the ever-shrinking half life of social and political stability in a time of unrestrained capital accumulation by the very rich.
Hanauer’s main point–one that I expounded on myself at length yesterday at Alternet–is that supply-side economics isn’t working. It’s advancing the interests of the very wealthy in the short term, but at the expense of demand-side growth and stability that helps business succeed in the long run, and that also helps keep the angry pitchforks away from the gated mansions.
But I wanted to highlight one short graf of Hanauer’s that has been largely overlooked:
Sadly, no Republicans and few Democrats get this. President Obama doesn’t seem to either, though his heart is in the right place. In his State of the Union speech this year, he mentioned the need for a higher minimum wage but failed to make the case that less inequality and a renewed middle class would promote faster economic growth. Instead, the arguments we hear from most Democrats are the same old social-justice claims. The only reason to help workers is because we feel sorry for them. These fairness arguments feed right into every stereotype of Obama and the Democrats as bleeding hearts. Republicans say growth. Democrats say fairness—and lose every time.
This is really key. Most of the rhetoric around income inequality and economic fairness on the American left is about helping those who have “been left behind in our economy” or “need a helping hand.” While there has been some very welcome focus on broader structural challenges from some, including from President Obama in this superb 2013 speech on economic mobility, the vast majority of liberal rhetoric is framed in terms of either the decline in the middle class or compassion for the poor. Even Hanauer himself falls into this trap somewhat by focusing most of his policy attention on the minimum wage.
But while empathy for the poorest Americans and those who have fallen into poverty is an excellent and important thing, it’s not actually a prerequisite for fixing America’s broken economic system. There has been a widespread and fatally flawed acceptance since at least the 1980s of the notion that unrestrained asset and capital growth is a good thing, and that all we need do is soften its edges by making sure that the people left out of the churning growth-mobile have a safety net to support them.
Very little attention has been paid by either side of the aisle until recently to the problem of stagnant wages, or the problem of overinflating asset bubbles, or even to the problem of inequality itself. There is even less talk around the nation’s capital about broader Keynesian principles, or about how all of this inequality is actually bad for business as well. It is simply presumed that conservatives know what is best for business (even if it’s at the expense of workers), that what is good for the Dow Jones index is good for the economy, that rising housing prices are an unadulterated benefit, and that the biggest difference between conservatives and liberals is how much the rest of us should pay in taxes to help the few who get lost along the way.
Consider by contrast the far more structural, wage-centered approach taken by FDR in his fireside chats, including this one:
Now I come to the links which will build us a more lasting prosperity. I have said that we cannot attain that in a Nation half boom and half broke. If all of our people have work and fair wages and fair profits, they can buy the products of their neighbors, and business is good. But if you take away the wages and the profits of half of them, business is only half as good. It does not help much if the fortunate half is very prosperous; the best way is for everybody to be reasonably prosperous.
Note how mechanistic FDR’s approach is here. We’re not being asked to give more of ourselves to aid the needy. We’re being told that the best way to support everyone is for the people who are booming at the expense of everyone else to give up their loot so that we can all succeed.
And in case they refused? Well, then FDR had an even stronger answer:
We had to struggle with the old enemies of peace–business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.
They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.
Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me–and I welcome their hatred.
I should like to have it said of my first Administration that in it the forces of selfishness and of lust for power met their match. I should like to have it said of my second Administration that in it these forces met their master.
There is no question that New Deal liberalism had ample compassion for the poorest Americans. But that compassion wasn’t a sine qua non for effective liberal politics. A better understanding of the interconnectedness of the economy was the key to liberal ideology of the time, and the motivation to enforce it was less a function of bleeding hearts than of righteous indignation against the forces that conspired to break the economy for their own shortsighted benefit.