Bernie Sanders has given an interview to CNBC’s John Harwood that lays bare some of the real differences among Democrats when it comes to the story of what has happened to the American economy in the last few decades. While it remains very likely that Hillary Clinton will not face much trouble en route to winning the Democratic nomination, it’ll be interesting to see how Clinton responds, if the Dem primary — such as it is — at least forces these differences to the forefront.
Here’s Senator Sanders, unabashedly calling for a downward “transfer” of wealth, from the top one percent back to the middle class, in response to what he calls a “massive transfer” of wealth in the other direction:
“Ninety-nine percent of all new income generated today goes to the top 1 percent. Top one-tenth of 1 percent owns as much as wealth as the bottom 90 percent. Does anybody think that that is the kind of economy this country should have? Do we think it’s moral? So to my mind, if you have seen a massive transfer of wealth from the middle class to the top one-tenth of 1 percent, you know what, we’ve got to transfer that back if we’re going to have a vibrant middle class. And you do that in a lot of ways. Certainly one way is tax policy.”
Later Sanders was asked for his take on the “pivot” of the Reagan presidency in favor of the idea “that we need less government and more market forces.” Sanders’s response:
“I think there is obviously an enormously important role for the free market and for entrepreneurial activity. I worry how free the free market is. In sector after sector, you have a small number of companies controlling a large part of the sector.
“Certainly, in my view, the major banks should be broken up. We want entrepreneurs and private businesses to create wealth. No problem. But what we’re living in now is what I would call — what Pope Francis calls — a casino-type capitalism, which is out of control, where the people on top have lost any sense of responsibility for the rest of the society. Where it’s just ‘It’s all me. It’s all me. And to heck with anybody else.’ I want to see the result of that wealth go to the broad middle class of this country and not just to a handful of people.”
The differences among Democrats on economic issues tend to be exaggerated; in the wake of the economic crisis there may be more agreement among them on these issues than there has been in a long time. But some philosophical differences remain, and Sanders’ quotes get at them.
As I’ve noted before, at risk of oversimplifying, there are two poles that define the economic debate among Democrats. There’s the agenda that tends to focus more on boosting wages and economic mobility and opportunity: Family-friendly workplace policies designed to remove barriers to work, such as paid sick leave and universal child care; more investments in education, job training and infrastructure; a minimum wage hike; and so on. These policies are embraced by most mainstream Democrats.
Then there’s the agenda embraced by Sanders, Elizabeth Warren, economist Joseph Stiglitz, and others. This agenda is more focused on diagnosing inequality as the result of an economy and political system that are broadly rigged (as they like to put it) in favor of the very top. The main culprits are, among other things, insufficient financial rules and oversight; lopsided influence over the political process enjoyed by the wealthy and corporations; and a tax code that is not only not progressive enough, but is unfairly gamed to protect certain types of wealth.
This narrative tends to place more emphasis on the idea that inequality is the result of active policy choices — or policy failures — that have resulted in decades of upward wealth redistribution. In this diagnosis, what is required is a robust policy response designed to reverse what those choices have wrought, and to prevent them from doing more of the same again. This agenda includes things like a financial transactions tax to incentivize more stable, longer-term investments; breaking up the big banks; major campaign finance reform; and much tougher financial regulation and enforcement as part of what Warren calls a “structural” overhaul of Wall Street oversight. These are the sorts of policies Sanders is talking about.
To be sure, there is plenty of overlap between these two agendas; Clinton will probably end up supporting prescriptions from both. Clinton has embraced workplace flexibility policies, but she has also spoken out against the influence of big money in politics, and appears to favor calls for doing away with some high-end tax loopholes. But we don’t know how far she’ll go in terms of calling for higher taxes on the wealthy or more Wall Street oversight and accountability; or more generally, how directly she’ll embrace redistributive goals (which Sanders has now done with extreme forthrightness).
I don’t really know how much this will matter politically. For all the talk about the supposed problems Clinton has with the left, it’s not even clear that Democratic primary voters will clamor for the more robust Sanders/Warren inequality agenda.
But it remains true that we don’t have a well-developed sense of where Clinton is on a lot of this stuff. As Jim Tankersley put it recently, Clinton “has not come close to laying out a unified theory of the economy.” Perhaps Sanders’ presence in the race will at least challenge her to do so, even if she doesn’t end up moving all that dramatically in his and Warren’s direction.