Last week former New York Times editor Bill Keller had a column that distinguished the “left-left” and the center-left. His left-left included people like Senator Elizabeth Warren and incoming New York City Mayor Bill de Blasio while his center-left included President Obama, most of the Democratic Party leadership and the DC-based policy group Third Way.
Keller’s left-left might more appropriately be called center-left (these are not radicals pushing for the overthrow of capitalism) and his center-left should probably just be called “centrists.” However what’s more important than the labeling is the main line of distinction Keller tries to draw.
Keller tells us that his left-left is just concerned about distribution whereas as his center-left recognizes the need to focus on growing the size of the pie so that there is more for everyone to share. Keller’s left-left is certainly concerned about distribution, but his center-left seems more concerned about promoting upward redistribution than pushing policies that actually will lead to growth.
Keller may not remember, but his center-left were in the driver’s seat putting in place the policies that gave us the stock bubble in the 1990s and the housing bubble in the last decade. The collapse of the second bubble gave us the downturn from which the country is still suffering. It has cost us millions of jobs and already more than $5 trillion in lost output, more than $15,000 for every person in the country. This economic collapse is the opposite of growth.
At the top of the list of policies pushed by Keller’s center-left was giving the financial industry free rein, even while it operated with first implicit and then explicit too big to fail insurance from the government. Keller’s center-left also pushed an over-valued dollar. This led to a huge trade deficit since an over-valued dollar makes U.S. goods and services less competitive internationally.
The demand lost due to the trade deficit was filled in the 1990s by a stock bubble and in the last decade by a housing bubble. The center-left also said bubbles were cool. Since actors in the market were smart people who understood risk and hedging we didn’t have to worry about a collapse bringing down these markets and the economy.
There are many other items on the center-left’s agenda that have at best been neutral to growth. For example, their trade policies put the bulk of the workforce in direct competition with low-paid workers in the developing world. This had the predicted and actual effect of lowering their wages. At the same time, doctors and other highly paid professionals have been largely protected from the same competition. And their trade deals have strengthened patent protection for prescription drugs, raising prices and sucking money out of the economy.
What seems to be the case with most of the policies at the top of the agenda of Keller’s center-left is that they redistribute income upward. In this sense, to say that they do not share his left-left’s concern about distribution is seriously misleading. They are every bit as much concerned about distribution; they just want to make sure that the money flows upward.
But it is simply the arrogance of power – to which a former New York Times editor might be accustomed – to claim that his preferred center-left crew has a concern for growth not shared by the left-left who he clearly does not like. Many of the policies that are promoted by people who populate Keller’s left-left are likely to be very good for growth.
For example, taxes that rein in a bloated financial sector may prevent hundreds of billions of dollars from being wasted each year shuffling financial assets. In addition to ending this drain, a smaller financial sector may make bubbles less likely in the future. Limiting the strength of patent protection, especially in the pharmaceutical sector, is also like to lead to more innovation and better health care. And pushing the value of the dollar down to get our trade deficit closer to balanced will create millions of jobs and could increase annual output by more than $750 billion.
These and other policies promoted by people deemed as too left by Keller are good candidates for increasing growth. (I really should say productivity – there is no obvious reason that we should want people to take the benefits of greater efficiency in more income rather than more leisure.) There are arguments that could be made by against any of these policies, but to assert that the left is unconcerned about growth is simply to make up your own truth and substitute it for reality. NYT editors and other honchos in the “center-left” may have the power to get away with just making stuff up like this. It is the responsibility of the rest of us to try to stop them.