Bernie Sanders may not win the Democratic Party’s presidential nomination. But he has already succeeded spectacularly at nudging Hillary Clinton in a more populist direction while galvanizing an entire generation of young liberals around the idea that the United States could stand to look more like a Scandinavian social democracy—high taxes, big welfare state, and all. This is terrifying for some of the more business-friendly centrists that once dominated Democratic politics, especially during Bill Clinton’s White House years. And so on Tuesday, the moderate Progressive Policy Institute released a longish report, titled “Unleashing Innovation and Growth: A Progressive Alternative to Populism” that’s meant to act as a counterweight to Sanders’ ideological movement. Or as the Washington Post trumpets it, “The new Democratic Party proposal to rival Bernie Sanders’s socialism.”
I don’t think there’s going to be much of a rivalry. However, the document does offer an object lesson in why today’s centrist—read: more corporate-friendly—Democrats have so much trouble responding forcefully to Sanders. Say what you will about the senator from Vermont’s agenda of large-scale redistribution: At least it’s a logical and in some ways very pragmatic response to his version of recent economic history, which most liberals fundamentally seem to agree with. Income and wealth concentration have risen. Some of the biggest winners have been financiers, executives, and investors. Some of the biggest losers have been blue-collar workers. Taxing the former and giving to the latter is one guaranteed way to even things out a bit. This is not a mystery. Lots of other countries do it. If politics were no object, aping them wouldn’t be hard.
The think-tankers of PPI see things differently. “Both slow growth and growing inequality are symptoms of a deeper problem—ebbing economic dynamism,” they write. Business investment is low. Productivity growth has slowed, both here and in other rich countries. This is disconcerting, because young, fast-growing companies riding new technology are responsible for a disproportionate percentage of new jobs. “That’s why progressives should wholeheartedly adopt a new ‘Innovation Platform’ that focuses like a laser on stimulating more innovation and spreading it more broadly across the U.S. economy.” Stimulating innovation. Sex-y.
And what does this platform consist of? A lot of PowerPoint-ready buzzwords, for starters. “Digitize the physical economy,” the think-tankers exhort. Washington also needs to “prune the regulatory thicket” to make room for innovative companies and “democratize trade,” a phrase which apparently has something to do with small businesses selling things on the Internet. There’s less hollow stuff in the paper, as well—supporting paid leave for workers, infrastructure investment, a carbon tax—but it’s mixed in with some pretty flimsy economics. At one point the authors argue that the U.S. should tax consumption instead of income to, among other things, avoid discouraging work—even though basic theory says consumption taxes still do just that.
The specific lackluster ideas aren’t the main problem here, though. It’s the lackluster premise. First, there is a vanishingly tiny constituency of voters that’s going to get excited about a platform geared toward “economic dynamism,” most of which could probably fit in PPI’s offices. More importantly, economists don’t really know the secret to “unleashing innovation,” much less how to speed it up at this exact moment in American history. We don’t fully know why net business investment has fallen. We don’t know exactly know why the new business startup rate has been in a long-term decline. We don’t know why productivity growth is slowing. And if you can’t diagnose the illness behind those symptoms, you can’t prescribe policies to fix them.
The problem for Democratic centrists is that businesspeople, and those who love them, are much friendlier to this kind of nebulous filler than they are to discussions about wealth distribution and raising taxes to pay for new social spending. Clinton ran into this issue early on in her campaign, when she seemed to be straining to talk about inequality without “demonizing” the wealthy and thus decided to focus her economic agenda on fighting corporate “short-termism.” The idea was that, somehow, corporate America just needed to stop making decisions based on quarterly earnings and relearn how to be long-term greedy. Nobody cared, except the wonks who panned her big tax idea for making investors more patient.
In short: There’s a very good reason Sanders has successfully nudged her left. The center doesn’t really have anything to say.
