In Search Of a New New Deal

By E. J. Dionne Jr.
Tuesday, June 13, 2006

There is no sturdier liberal or Democratic slogan than "Jobs, jobs, jobs." But liberals have a problem: The old capitalist job-production machine is not working the way it used to. The venerable promise that new (progressive) leadership will create masses of well-paying jobs is harder to make and even harder to keep.

In principle this is a larger problem for conservatives, whose main economic program involves reinforcing the status quo by giving tax cuts to rich people so they have more money to invest. Conservatives simply ignore the fact that fewer jobs are being created, particularly at home, for each dollar invested.

But conservatives are expected to stand up for the rich. Liberals are supposed to expand the standard of living for everybody else. That is harder than it used to be.

No one is more aware of this than those Americans who are losing what had once been secure, well-compensated jobs. In what will be seen as a historic document, the president of the United Auto Workers, Ron Gettelfinger, issued a brave and somber report to his union, which opened its convention yesterday in Las Vegas.

"The kind of challenges we face aren't the kind that can be ridden out," said Gettelfinger, whose union's membership fell from 1.5 million in 1979 to less than 600,000 last year. "They're structural challenges, and they require new and farsighted solutions."

The decline of good auto-industry jobs is a particularly dramatic example of a larger problem. In the June 10 issue of National Journal, staff correspondent Bruce Stokes argues that "the global economy's job machine may be breaking down, again."

Citing data from the Economic Policy Institute, Stokes notes that employment growth in the current recovery is much slower than in earlier upturns -- "the slowest in any recovery since the Kennedy administration," he writes.

Stokes is not making a partisan point about the Bush administration alone, since he notes a long-term trend toward slower job growth. But the job numbers help explain why the polls are recording so much economic discontent in the middle of an expansion.

For the past 15 years, progressive free-market politicians have offered an appealing mantra about how to save the middle class: What's needed, they've said, is heavy investment in education and job training to allow people to make the transition from the "old" economy -- those auto jobs -- to the new. "What you earn depends upon what you can learn," President Bill Clinton said over and over.

There's certainly some truth to that still, but in the global economy, competition is fierce even for high-end jobs requiring great skill and education. To think otherwise is to deny the obvious: that the people of India and China, to pick just the two obvious examples, are gifted, energetic, ambitious -- and numerous.

That's why Alan Blinder, a Princeton economist and former vice chairman of the Federal Reserve, was right to warn us about how many jobs are in danger of being moved abroad. In an article in Foreign Affairs this year, he wrote that "we have so far barely seen the tip of the offshoring iceberg, the eventual dimensions of which may be staggering."

Blinder is no protectionist, but he insisted that "the governments and societies of the developed world must face up to the massive, complex, and multifaceted challenges that offshoring will bring." The UAW's Gettelfinger would be the first to say: Amen.

Gettelfinger, Stokes and Blinder all point to the greatest challenge facing the American center-left. It's large enough that it should swamp all the silly arguments about whether Democrats need some sort of program for the 2006 elections. That is a tactical question -- of great importance to political strategists, but far less critical than whether progressives can, over the long run, keep their core promise to expand opportunities for the middle class and the poor.

Historically, voters turn away from conservative free-market politicians after they conclude that capitalism needs help in living up to its commitment to create widely shared abundance. After World War II, voters in rich countries entered a social democratic bargain in which capitalism became the bedrock of the economy but was tempered by a large public sector and a unionized industrial sector that provided social insurance, education, pensions and health care.

This week's UAW meeting is simply the most obvious harbinger: The old bargain is breaking down and is in urgent need of renegotiation. The most promising place to start would be in reforms of the areas where the old bargain worked best: health, retirement and schooling.

Because electorates are looking for a better economic bargain, the words "New Deal" never sounded more up to date -- though if the marketing specialists insist, A New and Improved Deal would do just fine.

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