Loser Liberalism is a Winner

November 10th, 2011 at 10:57 pm

I just finished Dean Baker’s new book, The End of Loser Liberalism.  It’s a great read, and somehow elating.  Dean offers a compelling way forward.

The thesis is that when it comes to the central economic debates of our day, progressives are stuck on the losing side of a false dichotomy.  They/we:

…have accepted the conservatives’ framing of political debates…a framing where conservatives want market outcomes whereas liberals want the government to intervene to bring about outcomes that they consider fair.

This is not true. Conservatives rely on the government all the time, most importantly in structuring the market in ways that ensure that income flows upwards.

As Dean sees it, conservatives are not at all the free market advocates they claim to be.  You’ll be hard pressed to find Adam Smith’s invisible hand anywhere in the story he tells, but you’ll see conservatives’ thumbs on policy scales throughout the economy.

There’s the anti-inflation bias at the Fed, which puts more weight on price stability than on low unemployment, thus providing greater protection to the assets of the wealthy than to the livelihoods of working families.  There are the strong dollar and trade policies that put our manufacturing workers at a comparative disadvantage to our competitors.

There’s anti-union bias, the government bailout backstopping the biggest banks, government-provided patent monopolies, corporate liability protections, favorable tax rates for non-labor income, and housing policies that disperse the biggest benefits to the richest homeowners.

In every case, the wealthy have used their money, power, and clout to tweak the politics and the market in ways that make money float up.  Yet their rhetoric is all free markets, with lots of deep caterwauling against liberals and their socialist ways.

Dean’s argument is not, however, that liberals should embrace true free market ideology.  While he wants the market to work out the details around those issues that markets handle most efficiently—pricing commodities, for example—he has no beef with structuring market returns.  He just wants them structured on behalf of the broad middle-class on down to the poor.

Liberals stop losing not by showing conservatives what free markets are really about, but by beating them at their game—by restructuring issues like those above in ways that deliver prosperity far beyond the top 1%.  Labor laws that balance the collective bargaining playing field, a Fed that pursues full employment, progressive taxation, an end to inefficient patent monopolies, balanced trade policy, universal health care, and so on.

To me, this is a truly hopeful agenda in the following sense.  Too often, it seems like progressives are trying to lead a parade with hardly anyone marching behind us.  We argue that the broad public is with us in our advocacy for government policies that would help them, or at least they should be, or they would be if they understood the issues at hand.  But why on earth should they be with us?

Especially today, most people see government much more in the way Dean describes it than in the way progressives envision it.  That is, they view government as bought and paid for by moneyed interests, a place where politicians would never waste time helping the little guy or gal get ahead when they could be raising funds from their corporate sponsors.  Why support a jobs program when you could bail out a bank or cut taxes on a high-end constituent?

If Dean’s right, then conservatives should love the government because it tilts the market and its returns their way, and visa versa: the bottom 99% should feel estranged from it for the same reason.

But what if this were reversed?  What if government supported market structures that rewarded working families throughout the pay scale; that dampened inequality and boosted mobility; that fostered collective bargaining, supported manufacturing, fought to keep unemployment low, kept banks from growing TBTF?

Not only would growth be far more likely to reach more people under this model; not only would the living standards of the majority once again have a chance to grow with GDP and productivity.  But the government would be viewed as an ally, not an enemy.   If government were good to a lot more people, a lot more people would be inclined to support good government.

I think Loser Liberalism is a winner.  Let me know what you think.

Update: A commenter aptly chides me for not mentioning that the book is FREE at the link above…something about breaking that patent monopoly…

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15 comments in reply to "Loser Liberalism is a Winner"

  1. Altoid says:

    Haven’t read the book, but it sounds right as you describe it. There is no taxation or spending that isn’t redistribution, the question is just who it’s taken from and who it goes to. Government stands with the creditor or it stands with the debtor. These have been national-level issues at least since Shays’s Rebellion.

    I’d add that we need to be able to explain things in simple terms and few sentences, avoiding jargon. Libs in general have had a tendency to use technocratic shorthand that assumes the big picture, when it’s the big picture that needs to be drawn. (Though really w bush and some other Rs like Gingrich have been much worse about this, it’s just that their big picture is often already out there.)

    One thing: I think you mean “comparative DISadvantage” in the graf about price stability.

    Thanks for the reference.


  2. sven says:

    I can’t believe you forgot to mention that the book is available for free!! I just downloaded a copy as a pdf but a Kindle version also appears to be available.


  3. foosion says:

    It’s a great book.

    The right-wingers have gotten where they are today in large part because they’ve made up a free market story which resonates with many. Dean’s book effectively debunks their mythology.

    Highly recommended. http://jaredbernsteinblog.com/crass-warfare/#comment-14879


  4. Tyler says:

    James Galbraith has written a similar book called, “The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too”.


  5. Scott Supak says:

    I’m still reading Baker’s book, but one thing it has taught me is that the Fed could be making a huge difference right now, but is not, because it ignores the dual mandate in order to make sure rich people don’t lose money to inflation. I was also shocked to see how much money we could save if the Fed just held all those bonds and returned the interest to the treasury.

    But what really surprised me is that the Treasury Department could, right now, take steps to lower the value of the dollar, which would create millions of jobs for exporters here in the US. Obviously, Wal Mart likes the strong dollar, not only because it makes imports cheaper, but because when people don’t have good paying jobs in manufacturing for export, they have to shop at Wal Mart.


  6. John Chambless says:

    Why do I almost never hear anyone talk of ONE solution to solve Health Care inflation? Why is there NOT A TRUE PUBLIC OPTION for Health Care/Pharmaceutical Insurance?

    Repeal (NOT “FIX”} 1945 McCarran–Ferguson Act [en.wikipedia.org/wiki/McCarran–Ferguson_Act] …, 15 U.S.C. §§ 1011-1015, is a United States federal law that exempts the business of insurance from most federal regulation… The only other “business” exempted from anti-trust federal regulation is baseball.

    If Speaker of the House [@SpeakerBoehner] Rep. John Boehner [@johnboehner], House Majority Leader [@GOPLeader] Eric Cantor [@EricCantor], artificial (corporate) entity @McConnellPress want “less regulation” for “We the People,” they cannot now each say, “where do I start?”


  7. perplexed says:

    Looks like we may finally be getting some people to “step up to the plate” and redirect these discussion to more honest place. We’ve been waiting way too long for our Teddy Roosevelts & FDR’s to stand up to these deceptive practices and misleading memes! Its not at all surprising that its people like Dean Baker, James Galbraith, and Hacker & Pierson stepping up. Hopefully we can get behind them and stop allowing the oligarch’s to control the discussions. We need to get past the current distractions and on to discussion and implementation of real solutions.


  8. the buckaroo says:

    …I believe the working title was Crumbs From the Cupboard, a recipe book of Conservative Values in Hard Times.

    Redistribution of welfare, as Hicks, Kaldor & even Little saw it, increases the efficiency of society & thus is to be recommended…name a sane economist that can argue the contrary.


  9. John Chambless says:

    Why do I almost never hear anyone talk of ONE solution to solve Health Care inflation? Why is there NOT A TRUE PUBLIC OPTION for Health Care/Pharmaceutical Insurance?

    Repeal [NOT "FIX"] 1945 McCarran–Ferguson Act [en.wikipedia.org/wiki/McCarran–Ferguson_Act] …, 15 U.S.C. §§ 1011-1015, is a United States federal law that exempts the business of insurance from most federal regulation… The only other “business” exempted from anti-trust federal regulation is baseball.

    If Speaker of the House [@SpeakerBoehner] Rep. John Boehner [@johnboehner], House Majority Leader [@GOPLeader] Eric Cantor [@EricCantor], artificial (corporate) entity @McConnellPress want “less regulation” for “We the People,” they cannot now each say, “where do I start?”


  10. Rick McGahey says:

    Adam Smith was hard pressed to find the “invisible hand” as well. Smith was no romantic about business people (“merchants” or “masters” in his day). Smith saw them as having the same self-interest as others, and thus saw them as prone to tilt things their way whenever they could. A few choice nuggets from The Wealth of Nations:

    “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”
    (Book 1, Chapter 10)

    “We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject.”
    (Book 1, Chapter 8)

    “It is not very unreasonable that the rich should contribute to the public expence, not only in proportion to their revenue, but something more than in that proportion.”
    Book V, Chapter II


  11. Tom Cantlon says:

    I’m a little confused (not unusual). I thought what we liberals and progressives were supporting and pushing for was to get government policies that did that whole list you had, of supporting workers, etc. Why is this a revelation?


    • Jared Bernstein says:

      I think the point is less that we’re pulling for those who need help and more that the policy goals of conservatives are not really for free markets but for policies that redistribute money and power upwards.


  12. Mike Sax says:

    What I think Jared is what you think: I just finished it and it is a winner. Baker makes a great point that while we liberals are so opposed to extending the Bush tax cuts-which I believe we should be-most of us are pretty unaware of things like monetary policy and the power of the Treasury.

    He also makes the important thing that even in good policies liberals have to understand you will never please everyone even among your constituents.

    I have become a lot more aware of monetary policy recently. However the part of the Treasury and the overvalued dollar is a dimension I far from properly appreciated. I agree, Baker is a must read.

    Please give this a try for the economic debates

    http://diaryofarepublicanhater.blogspot.com/2011/11/illusion-of-fiscal-discipline-part-2.html


  13. Bill says:

    The Presidental race is toast. We need to start looking at what’s going on down ticket.


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