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A NEWSLETTER WITH AN EYE ON POLITICAL MEDIA

How the Democrats' Economics Changed

Michael Tomasky on how a dissident, if realistic, assessment of the
economy became mainstream

Today's Altercation

**is guest authored by Michael Tomasky, former editor of this
publication, who now edits both**The New Republic

**and**Democracy

**and has just published a new book, described below.**

I want to thank Eric and the

**Prospect** for giving me some space today to tell you about my new
book. It's called The Middle Out: The Rise of Progressive Economics
and a Return to Shared Prosperity

and was published earlier this month by Doubleday.

What's it about, and why is it unique? I wrote the book to tell the
story of the effort over the past decade or so by hundreds of people to
change, as Joe Biden sometimes likes to say, "the economic paradigm
."
That is, before the pandemic, you'll recall that Biden was running as
a kind of restoration candidate-if we just go back to how things were
before Trump, we'll be OK. Then, after the pandemic, he started
talking bigger: This is a crisis, we have to act on an FDR-type scale.
Then, after the murder of George Floyd, he added a more explicitly
racial element: We have to address systemic racism in our criminal
justice and economic systems.

That was all good to hear, and of course he's had some successes and
some setbacks along these lines. But my point is this: When a sitting
president talks like that, it doesn't come out of nowhere. He does so
because those aforementioned hundreds of people-economists, political
activists, and people in the important foundation

and think tank worlds-have been talking like that for years, and
devoting considerable resources

to the effort. A few outlets, notably

**The American Prospect** and

**Democracy** journal, which I edit, have covered these efforts closely,
but the larger mainstream press has not. Despite that, these arguments
have finally found their way to the Oval Office.

Take the very phrase "the middle out." You've heard Biden use it many
times: "Economic growth doesn't happen from the top down; it happens
from the middle out and the bottom up." This is a direct refutation of
supply-side, trickle-down economics: Growth doesn't come from giving
the rich more tax cuts; it comes from investing in a strong and growing
middle class, which will be financially secure enough to spend money,
goosing demand and producing higher employment and more. The policy
implications are clear. Instead of tax cuts for the wealthy, the
government needs to invest in the middle class via the kinds of things
that were in Build Back Better-subsidized child care, paid family
leave, expanded health care-so that people can live better and more
secure lives (which in turn promotes growth a lot better than tax cuts
for the rich do).

Well, Biden didn't coin that phrase. I didn't coin it. It was coined
by Nick Hanauer and Eric Liu

back in 2011. The fact that the phrase is more than a decade old
reinforces my point above-a lot of people have been thinking about
these problems for a long time.

[link removed]

**** How can liberalism win the economic argument against the right?
People need to wrap their heads around four propositions:

1. Even when the economy today is "good," it's not really good. That
is, even when unemployment is low and the market is doing well and so
on, the fact is-a fact mostly unremarked in the daily media-we are
still in the midst of an economy whose main feature is that millions of
dollars every year are being transferred from the poor and the middle
class to the top. So even when the working class (the 50th percentile,
say) is doing better, the super-rich (the 1 percent and even the .1
percent) are doing way better.

2. Economics has finally recognized the existence of politics. For
decades, or centuries even, economics gave no thought to politics.
Wages, for example, were determined by a set of market forces, and
politics had nothing to do with it. That's how academics thought, but
it's not how the world works. In the world, workers make what they
have the political power to make. That seems obvious to you and me, but
economists were (and many still are) deeply resistant to acknowledging
this. The book tells the story of how this change came about, through
the work of people like Joseph Stiglitz

and groups like the Economic Policy Institute. It's a really important
change because it rejects the assumption of classical economics that
left alone, the market will find equilibrium. No-the state has to play
an evening-out role.

3. Economics has changed profoundly in this century. In sum, much of
economics has moved from being based on theoretical modeling to being
based on empirical data. And as this change has happened, economics has
moved left ,
not because economists are leftists, but because the empirical data
showed, for example, that r > g, in Thomas Piketty's famous
formulation. That is, the data show that the system is rigged for the
rich in a way theoretical modeling did not. There are still, of course,
plenty of conservative economists, but a younger and more diverse
generation of economists is changing the profession, and those changes
are seeping their way into politics.

4. Finally, here's how the Democrats should explain all this to
people. Republicans and the right are not, of course, just going to lie
down and stop arguing economics. We're in for a long battle. I think
the best way for Democrats to win it is this: They need to attach their
economic

**ideas** to the

**ideals** that Americans are taught to cherish from an early
age-democracy and freedom. They should say something like: Yes, our
economic policies will put more money in your pocket. But they'll do
more. They are good for democracy, because as the founders knew
,
a healthy democracy depends on a strong middle class. Too much economic
and political power in the hands of the rich leads to oligarchy, and
that's where we're headed if the trend of the last few decades
isn't arrested.

In addition, our economic plans will advance freedom. The right has sold
people one definition of freedom: The free market means freedom. Well,
there are a lot of small towns across this country where people are
"free" to work at the dollar store or sell a little Oxy. That's not
freedom. There's another definition of freedom: making people free to
live up to their fullest potential. That's a kind of freedom that
dates to Franklin Roosevelt's "four freedoms" and the definition of
rights advanced in his 1944 State of the Union; it even goes back to
some founders, as Joseph Fishkin and William E. Forbath show in an
important recent book
. When that
single mom who works at the dollar store can go to free community
college and has a safe and affordable place to park her toddler while
she takes those night classes, she is doing exactly that: fulfilling her
potential, and in addition, contributing more to the economy. That's
freedom, too. I think the Democrats need to say that-especially after
the

**Dobbs** decision. When the right has taken away a half-century-old
freedom from women, the door is open to repossess that word and
radically redefine it.

Long-standing neoliberal economic assumptions are finally being
successfully challenged. If we can save our democracy in these next
couple of years, we can win this fight. And I think we're more likely
to win it when we make people understand that economics, democracy, and
freedom are not separate things. It's all one argument
.

Donate to TAP's Midterm Tracker Travel Fund

to send our reporters to cover elections around the country. You can
tell us where to go, too!    

Your 100% tax deductible donation goes directly to our edit team to
cover expenses for reporting and travel.
Thank you for your support!  

**** This seems appropriate today: Did you know, as Peter N. Hess
demonstrates in a recent article in the

**Journal of Post Keynesian Economics**
,
that not only does the U.S. economy perform better under Democratic
presidents than Republican ones, but that Democrats also show far
greater fiscal responsibility when it comes to public spending? Here
again, Democrats have been shockingly terrible, and the mainstream
media, horrifically irresponsible, for allowing the Republicans to
successfully argue the opposite all these years-just as they are today
,
despite having no economic program whatsoever.

Music Carefully Curated to Put Us All in a Better Mood

* Dion: "Runaway
" and
Bonnie Raitt's version

* The Righteous Brothers: "You've Lost that Loving Feeling
"
and Darius Rucker and Daryl Hall's version

* The Foundation: "Build Me Up Buttercup
" and
David Johansen's version

* The great George Jones: "Bartender's Blues
"
and James Taylor and Vince Gill's version

* The Swinging Medallions: "Double Shot (Of My Baby's Love)
," and
here they are four decades later, with the great man
.
(I don't know who these guys

are, but the whole scene looks like fun ...)

See you next week.

~ ERIC ALTERMAN

Become A Member of The American Prospect Today!

Eric Alterman is a CUNY Distinguished Professor of English at Brooklyn
College, an award-winning journalist, and the author of 11 books, most
recently Lying in State: Why Presidents Lie-and Why Trump Is Worse
(Basic, 2020). Previously, he wrote The Nation's "Liberal Media"
column for 25 years. Follow him on Twitter @eric_alterman

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