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December 04, 2006
Are We All Labor-Liberals Now?
For all the talk of divides between the left and the center-left on economics, it's becoming harder and harder to pinpoint the rifts. It's obvious, to be sure, where the players think the divides lie, but these imagined arguments appear increasingly unmoored from any debate I've recently heard. Over the weekend, Hamilton Project head and prominent neoliberal Peter Orszag stepped forward to caution against interfering in the direct workings of the market and instead institute a system of robust safety net programs, increased investment in education, and enhanced incentives for saving. Which is, so far as I've seen, all anyone, anywhere, is calling for.
So here's my question to readers: What are the poles in the progressive economic debate? And how far are they really? What does Peter Orszag and the Hamilton Project want that the Economic Policy Institute reviles, and vice versa? It's certainly true that both ends cling tight to historical enmity, but I'm having increasing trouble, in this era, of discerning precisely where they differ. And with all the op-eds, projects, and articles being written to further the fight, it would be nice to pin down what, in fact, they're fighting over. I'll start with the biggie -- trade -- but even there, it's not clear, given a Democratic Congress, exactly what one group would do that the other would not.
Update: In comments, Chris points to this article by Max Sawicky laying out the differences between liberals and "the left." That said, the liberals these days are a little more left, and the left seems a bit more liberal. I'm not suggesting that there's never been a difference, only that, in the Bush-era, there's been a real convergence.
December 4, 2006 | Permalink
Comments
The deficit might lead to some infighting, although I'm not sure how big an issue that will be in the immediate future (both sides want to repeal the Bush tax cuts, as far as I know).
Posted by: Brad Plumer | Dec 4, 2006 12:40:38 PM
Max Sawicky wrote this three years ago, describing where he sees the dividing lines. Since he's affiliated with the EPI, maybe this would be a good starting point.
Brad Plumer raises a good point about the deficit. This was a fight in the early Clinton administration between Robert Reich and Lloyd Bentsen, Alice Rivlin, Robert Rubin, etc.
Posted by: Chris | Dec 4, 2006 12:49:36 PM
Points of difference, and they are big, include:
1. Free v. fair trade
2. RR would "fix" Social Security with a package of tax increases and benefits cuts (not necessary -- mbs)
3. RR reflects narrow view of health care spending growth as a fiscal problem
4. RR indifferent to labor rights
5. RR backs budget balance
6. RR backs the Imperial Fed
I've elaborated on these ad nauseum on my own site. So has Dean Baker.
Posted by: Miracle Max | Dec 4, 2006 1:30:22 PM
"...What are the poles in the progressive economic debate?"
Populist/Fair Trade Dems/Labor
Civil Rights Liberals
Progressives
DLC/Corporate Dems/K-Street Dems
Green Dems
"Archie Bunker" Dems/"Reagan" Dems
Libertarian Dems
Gay Rights Liberals
Posted by: fightingdem | Dec 4, 2006 1:56:09 PM
The difference between "fix"ing Social Security and waiting to see whether we need to do so is not a great divide. The deficit is not a great divide because everyone will at least give lip service to wanting to close it. The difference between being supportive of labor rights and being indifferent (and I don't even really think that's fair) is not a great divide. Health care and trade do seem like issues where there are rather serious differences.
Posted by: Sam L. | Dec 4, 2006 1:56:36 PM
The SS hysterics insist we have to do something soon, not wait and see. They say if you wait it will be too late, which is b.s.
Closing the deficit and letting it ride at a sustainable level (about 2% of GDP) is a difference of about $250 billion (annually) at this point, which in the context of budget debates is huge.
I agree the labor point may be overstated.
I have been specific. Laying out differences is a prerequisite for an intelligent debate.
Posted by: Miracle Max | Dec 4, 2006 2:05:42 PM
I change my mind day to day on what is the single biggest dividing line between the left and liberals in economics.
But, the Orzsag piece makes me think (today) that the biggest difference is that (and this is weird) lefties have much more confidence in the flexibility of market economies, and, think they'll generate growth just fine even when markets are forced to co-exist with lots of government.
Orzsag's piece is dedicated to warning about the dire consequences if the US government starts engaging in "too much" intervention. Now, i think that's an odd political fear to have at the moment: Dems win thin majorities in Congress while the GOP still has the presidency, and, the primary concern liberals should be voicing is about a big expansion of government into the market sphere?
Putting the politics aside, I also think that it takes a lot of squinting at the economic evidence to come to some of the conclusions Orzsag does. He cites Peter Lindert (an economic historian and welfare state expert) as finding that government interventions have large economic costs.
When i read Lindert, i hear him say (loudly) that such interventions (even those he doesn't much approve, say hiring/firing regulations) don't harm GDP, don't harm productivity, and don't harm the overall unemployment rate, but, do tend to redistribute jobs from women and young adults to older men (obviously a bad thing).
However, even this insight about economic damage doesn't seem to gibe much with recent trends in Europe, where female employment rates have risen rapidly in the past 5 years (Lindert's take on this ends in 2000).
This post is too long, i know, but, one either has to conclude that lefties trust market economies more, or, conclude that what constitutes an intervention into the "market economy" is often a function of which intervention is actually being described (which is a really garbled description of what dean baker is getting at in his book).
Either way, lefties are much less scared about the consequences of a mixed economy, and, i think this lack of fear is pretty hard-headed on our part.
joshb
Posted by: joshb | Dec 4, 2006 2:06:06 PM
Sawicky seems more interested in laying out what he sees as the differences between the noble leftists and the sell-out Clintonista liberals than he is in helping define the terms of the debate.
A fair assessment might make similar points, but without saying that liberals see unions as only a tool that must adhere to Democratic party orthodoxy (whatever that is), or that liberals are satisfied with anti-discrimination laws that only address the superficial, etc.
The problem is that "leftist" and "liberal" are vague terms that are easy to invest with whatever meaning one wishes. Sawicky's article could have been written with the terms reversed, or with various adjectives added to them without anyone really noticing or caring.
Posted by: Stephen | Dec 4, 2006 2:31:38 PM
From what I can gather, the major planks of the"Aaron Burr Project" is more about direct regulation of economic actors (not allowing company's to "outsource") and stricter labor regulations (decreasing the circumstance underwhich a company is allowed to lay off or fire someone).
It prioritizes the concerns of unions & wants a moratorium on the further liberalization of trade.
The Hamilton Project seems to be about maximizing the efficiency of the market, minor tweaks & stricter pamarmeters, but otheriwse letting the market do it's thing, then redistributing the gains through a more progressive tax system & an expanded & strengthened social safety net. They want to completely overhaul unemployment insurance and implement "wage-loss" insurance for those affected by a globalized economy.
It's pro mininum wage, but like the EITC even better (Aaron Burr vice versa). This all combined with some techocratic solutions to increase savings & improve education through government action as well as some other good government proposals. It's pro liberalized trade.
It should be noted that a lot of the programs the Hamiltonians are proposing the Burrians say they are in favor of as well, and in fact they'll make a harder push for them than the Hamiltonians.
The Hamilton Project seems to be a conglomeration of diverse people from a lot of different areas; including prominent academics, economists, political scientists, policy analysts, think tankers from CAP, New America, NBER & Brookings & former Clinton people.
The Aaron Burr project I know less about but it's primary base seems to be the staff at the Economic Policy Institute & The Center for Economic & Policy Research; both in conjunction with the AFL-CIO.
Posted by: DRR | Dec 4, 2006 3:08:04 PM
Well, the main difference between labor-liberals and Robert Reich Clintonistas is that the liberals favor real restrictions on outsourcing, fair trade, and protection of our industrial base. In contrast, the Clintonistas are in favor of unlimited "free trade" but are willing to mutter a few words about how the losers should be compensated. They never, of course, actually get around to doing this, and that's why their time is up. They lied once too often.
Posted by: Firebug | Dec 4, 2006 3:18:36 PM
While, in terms of policy, there may not be a huge gap in terms of current thinking, the politics may end up crippling House Democrats. This post by David Sirota seems to be typical of the feelings progressives harbor toward "moderates". There are slightly more veiled comments coming from the moderate camp.
Heres the link: http://www.huffingtonpost.com/david-sirota/the-people-party-vs-the-_b_35459.html
Posted by: Michael | Dec 4, 2006 3:21:16 PM
I can't speak to the theorectical or to the politicians, but practically speaking there is not much difference when you listen to most Americans when they talk about economic problems. The only real difference comes with the political class that seems disconnected from what the rest of society is saying on the issues. This blog, for example, in another diary suggests there is no political will for massive changes to the healthcare system- that maybe true of the political class- but that's not true of the average voter. The average voter is hungry for change. They simply don't trust anymore that the political class will do it.
Posted by: akaison | Dec 4, 2006 4:01:25 PM
...and even Peter Orszag is co-creator of one of the most progressive responses to Bush Social Security schemes, the revenue-based Diamond-Orszag plan.
Posted by: Adrian | Dec 4, 2006 5:07:01 PM
Well, another way to differentiate labor liberals from social liberals like Krugman is,
1. Labor liberals support dumping government-subsidized goods on third world countries. Social liberals support elimination of export subsidies, farm aid, etc.
2. Labor liberals think permanent deficits are sustainable. Social liberals support deficit spending only when it's necessary to get out of a recession.
3. Labor liberals don't support any tax increase that might lose them votes. Social liberals push through the levels of taxation that are good for the economy, not those that are popular.
4. Labor liberals never support tax increases as ways of promoting such things as saving and lower gas consumptions (see point #3). Social liberals use the combination of Pigouvian taxation, spending, and regulation that works best.
Posted by: Alon Levy | Dec 4, 2006 6:03:12 PM
In addition to Ezra's original question, I'd like to add another: to what extent are "left" and "right" positions within Democratic views of economic policy correlated with each other? For example, fair trade is understood as a left view within the Democratic spectrum, and free trade a right view. Reinstating estate taxes is understood as a left view, while allowing the repeal to be extended is a right view. Within the Democratic party, though, to what extent is a fair trader more likely to support reinstating inheritance taxes than a free trader?
In short, to what extent are these issues really organized into coherent platforms, and to what extent are they just independent planks floating seperately, picked up seperately by their adherents with little relation to each other?
Posted by: Julian Elson | Dec 4, 2006 9:26:45 PM
Julian, the example you picked is a pretty bad one, because eliminating the estate tax is a fairly right-wing issue, much more so than free trade. To pull numbers ex recto, if economic beliefs could be mapped onto a scale from -10 to 10, you'd need to be at least a 4 to want to do away with the estate tax, but it'd be enough for you to be a -4 to oppose protectionism.
Posted by: Alon Levy | Dec 4, 2006 10:09:21 PM
Alas, the House vote to permanently repeal the estate tax was 272 to 162 in favor. I'm baffled by it, but the estate tax seems to command less support among Democrats than free trade.
But I nonetheless think you're largely right, Alon, at least in terms of the views of activist Democrats and not congress or the public at large. Okay -- how 'bout repeal or modification of Taft-Hartley to make it more labor-friendly? Would that count as a sufficiently "left" issue to see how well it correlated with free or fair trade?
Posted by: Julian Elson | Dec 5, 2006 2:23:49 PM
Quite a few economists understand that limited deficits can be sustained indefinitely. You can find reports to this effect from CBO and GAO. It's not a liberal thing.
Posted by: Miracle Max | Dec 5, 2006 4:39:59 PM
