By any measure, Vermont Sen. Bernie Sanders (I), an avowed democratic socialist, is running to Hillary Clinton’s left as they seek the Democratic Party’s presidential nomination. Surprisingly, though, it’s Clinton who has been proposing to push U.S. big business in a more social direction.
Sanders, to be sure, has long advanced positions more progressive than Clinton’s. Both view Obamacare as a step forward, but Sanders argues a better system would be Medicare for all. Sanders calls for a nationwide $15 minimum wage; Clinton has endorsed the $15 standard in high-cost cities and states. Sanders prudently opposed invading Iraq in 2003; Clinton, lamentably, supported it.
And yet, when it comes to reining in the worst practices of U.S. corporations, Clinton takes second place to no one (well, no one else running for president). Heeding the counsel of such liberal economists as the Roosevelt Institute’s Joseph Stiglitz, she has called for raising taxes on high-earners’ short-term capital gains and rewarding companies that share profits with their employees. Corporate chief executives, she has said, are devoting too many resources to major shareholders (among them, the CEOs themselves) and not enough to investment, expansion or their employees’ pay.
Sanders boasts a far stronger record than Clinton when it comes to opposing trade deals (including the pending Trans-Pacific Partnership) that have helped foster corporate offshoring. (Clinton’s stance on the TPP is still an enigma shrouded in mystery.) He favors across-the-board tax hikes on the wealthy that go beyond Clinton’s more targeted hikes on in-and-out investors. He is for breaking up the mega-banks; she’s not. He has carried legislation that would foster more worker-owned businesses. But when it comes to modifying corporate conduct through tax incentives and penalties, she’s surely been the more specific.
On the most fundamental issue confronting the U.S. economy — the erosion of workers’ power to obtain a fair share of the revenue they generate — both candidates favor strengthening employees’ ability to form the unions they need to bargain with their employers. Both see the upward redistribution of income and wealth, coming at the expense of the vast majority of Americans, as a problem that government must address by enhancing worker clout.
Both the convergence and the competition between Clinton and Sanders on how to fix our economy are salutary developments. Indeed, we have to hope they prod each other to go beyond their current positions on redistributing power and income, for the forces that have diminished the middle class are so entrenched that rebuilding a vibrant economy requires policies more radical than either candidate has yet embraced.
Last year, the Organization for Economic Cooperation and Development published a study of the distribution of income growth from 1976 through 2007 in each of its 34 member nations (those with the world’s most advanced economies). Nearly half the income growth in the United States during those three decades went to the wealthiest 1 percent, while the bottom 90 percent got less than one-fifth of that growth — a level of inequality vastly greater than that of any remotely comparable nation, and one that largely explains why so many Americans felt compelled to take on so much debt. Since the recovery began in 2009, as surveys of U.S. tax returns by University of California at Berkeley economist Emmanuel Saez document, all the income growth has gone to the top 1 percent.
An imbalance that profound requires the kind of redistributionist tax policies that Sanders advocates, the corporate reconfigurations that Clinton calls for, the boost to unionization that both demand — and then some. Using the tax code to incentivize profit sharing and investment and penalize the stock buybacks that reward short-term investors is all well and good, but why stop there? Why not use the tax code to incentivize practices that increase worker power, such as dividing corporate boards between worker and management representatives? Why not simply mandate that division for all sizable corporations, as Germany does? Why not require employers to pay into a fund that provides benefits for their workers who — because they’re independent contractors, or temps, or employed by subcontractors — can’t get the insurance they’d qualify for if they did the same work as employees? Alternatively, why not decouple benefits from jobs altogether and provide them socially?
Republicans routinely posit that an emphasis on redistribution would inhibit growth. Indeed, this falsest of choices fairly defines Republican economics. Having most (and lately, all) the growth go to the top 1 percent, however, plainly diminishes everyone else’s purchasing power, which diminishes investment, which diminishes growth. Clinton and Sanders — and their fellow Democratic candidates Martin O’Malley and Jim Webb — understand this, which is why they need to go beyond their commendable positions by proposing the fundamental changes we need to create a more balanced and prosperous economy.