Economics, Politics

Paul Starr on a New Progressive Era

Free Photo: World’s Columbian Exposition, 1893

Paul Starr, the Bancroft and Pulitzer prize-winner historian, has a new article at The American Prospect that addresses some of this blog’s earlier questions about what a new progressive era might look like. The article is titled “How Gilded Ages End.”

I’d recommend reading the entire thing. For my interests, the key passages come toward the end, when Starr concludes that a new progressive era, like the progressive advances of the twentieth century, should center around “three critical domains for curbing oligarchic dominance.” These are: “taxation, the rules of the market, and the rules of politics.”

In a nutshell, reforming the rules of politics makes it possible to reform the rules of the market (which determine wealth before taxes and transfers) and the rules of taxes and transfers (which determine how much wealth everyone ends up with). In turn, reforming the rules of the market and of taxation will help reduce wealth inequality, which will lead to less inequality in political power, which will make reforms of the rules of politics more likely.

Where one starts may depend on political contingencies. But no matter where one starts, the “three domains for curbing oligarchic dominance” should reinforce each other in a virtuous cycle.

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Politics

Background Part III: Today

The current moment in American politics is a chaotic one characterized by frequent, unpredictable alternations in power and no clear, dominant vision of governance. A similar moment appears to have occurred in the Gilded Age, when control of the House shifted back and forth for decades after the Civil War, and few presidents left a lasting ideological mark.

On the one hand, the Reagan era vision of government has collapsed. Contrary to the dreams and promises of the Reagan era, the core programs of the New Deal era remain in place, and show every indication of continuing to remain in place, because the American people support them—as President George W. Bush’s failed attempt to privatize Social Security illustrated. In addition, the conservative promise of “smaller government” rings increasingly hollow in the wake of the growth of government spending, and the worsening of deficits, under both Presidents Reagan and the second Bush. Above all, the 2008 financial crisis definitively discredited the economic assumptions of the Reagan era. Financial deregulation led to the crisis, and those who bought into the core economic assumptions of the era failed to see the crisis coming, failed to understand the nature of the crisis as it happened, and continued to make inaccurate predictions in the wake of the crisis. The predictions of generally Keynesian economists were far more accurate.

The Bush administration’s failed response to Hurricane Katrina, and the inequality laid bare in the aftermath of the hurricane, further undermined the credibility of the Reagan-era dream of enhancing freedom by disabling the government.

The economy of the Reagan era has also shown itself to be generally inferior to what preceded it. While the New Deal era was defined by rising wages, decreasing inequality, relatively low unemployment, and decades without a financial crisis in the United States, the Reagan era has offered stagnant middle-class wages, increasing consumer debt, rising inequality, declining or at least stagnating social mobility, and a steadily escalating series of speculative bubbles and financial crises. The economic policies of the Reagan era did not cause all of the weaknesses in the American economy over the last three decades. But it is likely that many of the economy’s pathologies were exacerbated by the Reagan-era embrace of deregulation, and especially financial deregulation; decreased taxation, disproportionately to the benefit of the wealthy; reduced spending on public goods; a smaller safety net; opposition to organized labor; a heavy reliance on corporate subsidies; and in macroeconomic policy, a strong dollar and a greater focus on low inflation than on low unemployment.

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Politics

What would a progressive Milton Friedman say?

Or, to put the question more clearly: If a progressive today were to write a book like Milton Friedman’s Capitalism and Freedom, what would it say?

The politics posts on this blog will be, in part, an attempt to think through some future intellectual directions for the American left. The blog occupies a relatively neglected but I think important part of the political conversation among American progressives. On the one hand, the blog is concerned with electoral politics and practical, plausible, short-term to medium-term policy changes—as opposed to the radical left of Occupy Wall Street, anarchism, and parts of humanities academia in the United States. On the other hand, the blog is interested in thinking about bold ideas that push at the outer limits of what is politically plausible in America today—as opposed to those center-left institutions that are more concerned with immediate electoral calculations than intellectual and political change. As Occupy Wall Street showed, the American left can benefit from radical voices; and there is always a need for tactical thinking by insiders about the next election. But this blog is concerned with different questions.

Before turning to the particular question at the top of this post, a little intellectual background. The next few posts offer a brief recapitulation of a probably familiar historical narrative about where we are now in American politics, and how we got here. You can hear variations on this story from historians like Sean Wilentz, essayists like GeorgePacker, lawmakers and reformers like Elizabeth Warren, economists like Paul Krugman, and many other sources of progressive thought.

In a nutshell, the story goes like this: The Reagan Era is drawing to a close, but nothing has replaced it yet.

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