Joseph Stiglitz and a team of his fellow economists have a new plan to reduce inequality, grow the middle class and get the U.S. economy to work better for working people. It is firmly rooted in the conviction that more government can solve most of America's economic challenges. It is a plan seemingly designed to rally liberals, enrage free-market economists and push a certain presumptive presidential nominee to the left. It is, to borrow a Howard Dean phrase, the plan from the Democratic wing of Democratic economics.
Stiglitz, a Nobel Prize winner, and his co-authors will unveil their report for the Roosevelt Institute at an event today featuring Sen. Elizabeth Warren (D-Mass.) and Mayor Bill de Blasio of New York. Among their 37 policy recommendations are several versions of the term "public option." There is a public option for health care - opening Medicare to anyone, not just retirees. There is a public option for home mortgages, a public option for expanded retirement savings (on top of the existing Social Security system), even an expanded public option for the financing of political campaigns (in order to counteract the influence of wealthy individual donors).
There is government-provided pre-school for millions more children, subsidized child care and mandated family leave and sick leave. There is talk of nationally funding state research universities. There are additional regulations of the financial sector. There are higher taxes on returns to capital investments, on high-earning individuals and on corporations that do business internationally.
"To fix the economy for average Americans," Stiglitz and company write in Rewriting the Rules: An Agenda for Growth and Shared Prosperity, "we need to tackle the rules and institutions that have generated low investment, sluggish growth, and runaway incomes and wealth accumulation at the top and created a steeper hill for the rest to climb. It would be easier, politically, to push for one or two policies on which we have consensus, but that approach would be insufficient to match the severity of the problems posed by rising inequality."
It's hard to read that last line as anything but a direct appeal to Hillary Clinton, the presumptive Democratic nominee. Many of the planks of the report mirror ideas that Clinton, or her close advisors, have embraced. But the former secretary of state has not come close to laying out a unified theory of the economy - its problems and their likely solutions - as detailed or government-heavy as the Stiglitz team does here.
That unified theory begins with a diagnosis: "Inequality," the Stiglitz team writes near the beginning of the report, "has been a choice." They continue: "Beginning in the 1970s, a wave of deliberate ideological, institutional, and legal changes began to reconfigure the marketplace." Deregulation promised to free up the economy to grow faster. Tax cuts for the rich promised to push money to private investment, not wasteful government. Social welfare cuts promised to encourage work.
None of those promises, they conclude, came to pass. Instead, inequality increased, the financial sector mushroomed and workers lost power at the hands of their employers. The U.S. economy today is distorted to favor speculators and the powerful. "This," they write, "is a stark picture of a world gone wrong."
The hurdle that Stiglitz and his team - including Roosevelt co-authors Nell Abernathy, Adam Hersh, Susan Holmberg and Mike Konczal - face in their proposals to set things right again is that voters are skeptical of government's ability to solve problems. If he hopes to persuade Clinton to pick up his banner, Stiglitz will need to make the case that his plan can sell - and he'll need to be more convincing than Howard Dean turned out to be.