With the current political system in turmoil, we face a generational opportunity to redefine liberalism and the Democratic Party. Over the last decade, once-fringe arguments about how we organize our economy and society, and on whose behalf, have moved into the mainstream. Today, vocal and powerful progressive constituencies are pushing the spectrum of these debates well beyond the status quo.
Conservatives have already embraced positions that only recently seemed radical. With Trump’s ascendance to the head of their party, Republicans moved towards the past, the jingoistic, and the nativist. But liberals need to move left not only to match the Right. They need to move because the ideological assumptions controlling liberalism over the past decade have collapsed, as we’ll outline in this essay, leaving people searching for new alternatives, which we’ll also describe. Progressives now have an opportunity to propose not just a new set of policies, but a new set of values.
From abolition to the fight against segregation and Jim Crow, from women’s suffrage to the fight for women’s liberation, from the establishment of the minimum wage to the push for democracy in the workplace and greater protection from economic insecurity, a vibrant and critical element of progressive movements has always been freedom. Throughout our nation’s history, we have fought both ideological and actual battles over the definition of freedom, how it is achieved, and for whom it is offered. These have gone hand-in-hand with fights over how we structure our economy and who it serves.
We can take this moment to expand the idea of what what it means to be truly free. Progressives can reclaim a long history of American political thought that ties economic power to political and personal freedom. We can demonstrate that progressive economic policy is essential to creating the conditions in which individuals can have agency and power over their lives.
To accomplish this, liberals need to embrace three key ideas and goals:
- Guarantee the public provisioning of truly universal goods.
- Ensure a level and quality of jobs that provide autonomy and dignity.
- Curb corporate power.
These three commitments, we believe, are essential to structuring an economy in which Americans across gender, geography, race and class can thrive. Our vision is rooted in the idea that our economy should indeed entitle individuals to life, liberty and pursuit of happiness. It harkens back to an older version of the Democratic Party, lead by such presidents as Franklin Roosevelt and Lyndon Johnson, that recognized that the government can be used as a tool that secures this freedom.
This essay is not meant to give the specific agenda, full of bullet points and specific budgetary projections. It instead sets boundaries and provides a compass.
It provides boundaries in that it outlines the old way of thinking that is no longer suitable to our moment. The idea that the problem of work is the problem of individuals, that markets police themselves, and that markets are the only way to provide for wellbeing can no longer be part of the mainstream liberal thought.
But there’s also a compass: a direction towards which to go. How far we can get, and what the exact process looks like, is an open question. But the goal right now is to lock down and set off in that direction.
What this essay does mean to do is to tie the question of social insurance and welfare to the question of structuring the economy and work broadly. One of the key insights of the past decade is that a focus on redistribution alone isn’t sufficient. This is not only because, in the words of political scientist Jacob Hacker, predistribution, or how the market assigns the income in the first place, matters. (Elements of the market such as how wages are set for workers, how profits are shared within a business, the rules of competition, and accountability are the real determinants of who our economy serves.) It is also because this line — between predistribution and redistribution — blurs quickly.
This view provides a foundation for liberals to answer the challenges going forward using the best wisdom of the past. It’s about empowering more Americans in the workforce, taming power at the top, and providing a baseline of security from which individuals can make their life choices. Each of the goals outlined above will be defined in its own chapter in this essay. They will each have their own data, statistics, and research documenting them. They will also have high-level policy that is available as solutions to begin tackling them. But at its core these are a diagnosis of what’s gone wrong with our notion of our freedom, and how we can begin to recover it.
One: Freedom From Poverty
Liberals must fight for public provision of truly universal access to the goods necessary for freedom. These goods usually have one of two features. The first is that they are essential to participating fully in our society, for us to take risks, engage in our communities, and grow the overall economy — education and childcare are examples. The second is that they are something that we handle better together, because they involve insuring against some sort of risk. They are either necessary at points when we can’t work for market income, such as when we are infants or elderly or unemployed, or in cases where the costs are very high and unpredictable, like a sudden, serious illness — health care or retirement, for example.
As the American economy and society transitioned to the industrial age, President Franklin Roosevelt faced a country where traditional community-based safety nets were fraying, and new needs — for education or wealth building — were being revealed. With the New Deal, FDR sought to level the playing field and, as he said as he signed the Social Security Act, provide a measure of “security against the hazards and vicissitudes of life.”
But in the last quarter of a century, we have witnessed an ideological and policy shift that has demonized publicly funded or provided services and their recipients. Private markets, policymakers assumed, could provide opportunity and security more efficiently and effectively. Above all, Americans would have the freedom of choice — they could purchase the kind of opportunity or security that they felt was right for them.
Democrats became comfortable leaving it to private markets to provide these essential goods, with the idea that subsidies and regulations would ensure access and fairness. Today Americans turn to private markets for a host of would-be public goods: From private childcare and charter schools, to student loans and for-profit colleges, Americans rely on private markets for their education, health and retirement. Where the public does play a role in people’s lives, it has become submerged, hidden through the tax code and private providers. These regressive measures not only fail to provide broad security; they also prevent everyday people from accessing public programs that they can build and defend together.
Rather than serving to share risk, these private markets have often left individuals to bear greater risks. The private financing of higher education provides a stark example of how privatization has reinforced inequalities as opposed to level playing fields. The cost of higher education has skyrocketed in the last two decades, driven by a large disinvestment from public colleges and universities. Public higher education is responsible for educating over 70 percent of young people, who, because of this disinvestment, have seen their tuition rise dramatically. As a result, student debt has skyrocketed; 70 percent of graduates have student debt, with an average debt load of over $25,000 for those who graduate from public colleges. This growing inequality also has a racial element: According to the Urban Institute, 42 percent of African Americans ages twenty-five to fifty-five have student loans, compared to 28 percent of whites. Black families carry a student loan debt that is 28 percent higher than that of white families.
Privatization efforts have also failed to improve retirement security. As fewer businesses offered defined benefit pension plans, policymakers shifted reliance to private markets to support retirement savings. The shift not only failed to increase access to retirement, it did the opposite: The rise of 401(k)s has widened the retirement savings gap between rich and poor.
Where the state remains powerful and visible it is punitive towards those most vulnerable, becoming the very threat to freedom described by those same people who push for the dismantling and privatization of social insurance. This includes and goes beyond mass incarceration. It involves a state that relies less on progressive taxation, and more on fees and fines. This, in turn, lays the groundwork for the plundering of communities of color and the general harassment that comes with this kind of state. Instead of an inclusive nation, dedicated to providing goods for all, people of color are faced with an antagonistic one, focused on the seeking out of broken windows. The move towards privatization in public services coincided with the privatization of prisons, the rise of theft through asset forfeiture, and the profit motive taking over law enforcement.
The Affordable Care Act, generally known as Obamacare, shows the tensions between the promises of private-market social insurance, and the reality. The ACA has made great strides in building security through expanding access to health care. 20 million more people have health insurance from the combination of the Medicaid expansion and the new ACA health-care exchanges. Americans are more financially secure, and less at risk of receiving a sudden, unpayable health-care bill. Americans with preexisting conditions now have access to comprehensive insurance. For the first time, more than 9 in 10 Americans have health insurance. This has made a profound difference for communities of color, with the uninsured rate dropping by 53 percent among African American adults and 27 percent among Latinos.
Yet the ACA is, as now-retired Senator Tom Harkin (D-IA) noted in 2010, a “starter home.” There still remain 25 million Americans without health care. And the private health-care plans provided through the exchanges remain problematic: Some have high premiums and deductibles, meaning health care still remain a burden for many Americans, including those who have bought plans through the ACA. Many places are underserved by the ACA exchanges, with only one or very few insurers offering plans. The U.S. still spends much more on health care than other similar countries, without receiving any additional health benefits for it. And as we’ve sadly seen, these private structures are uniquely subject to sabotage by presidential administrations looking to reduce the amount of health-care access people have.
It is precisely the part of the ACA that most embodies the older, public insurance vision, the Medicaid expansion, that has survived the best. The more market-oriented ACA exchanges are like a Jenga block tower of interlocking parts, and it is very easy for conservatives to pull out a piece and topple the whole thing. The Medicaid expansion is one of the reasons the ACA has been so difficult for Republicans to do away with entirely, and it is because it draws on the older way of thinking about and providing public goods.
Given the Republican sabotage of the ACA, the direction is clear. Over the past 40 years we’ve moved away from publicly provided, universal programs towards more targeted, private programs. The idea is that the market would provide more efficiency, choice, and unleash consumers’ to the freedom of the market. But we’ve hit a point where the market is its own form of unfreedom. Poor choices for Americans, higher levels of risk, and markets addressing the needs of the well off while leaving the rest behind, are the results. It’s time to push back on these changes.
There are clear steps that need to be taken. The important thing is to acknowledge how important the government’s role is in securing these programs, and the role they will need to play going forward. This can be thought of as a continuum, from private to public, from target to universal. Our compass, for the foreseeable future, points more in the universal and public direction. There are a few guidelines to keep in mind.
First, expand and strengthen, rather than cut, core programs. Social Security can be boosted through the expansion of the income cap on taxable payroll income. There are many proposals out there for how to replace 401(k) programs with more public and universal ones, as well as proposals to expand Social Security. This is the direction to take retirement policy.
Second, focus on creating and expanding free and universal programs to the greatest extent possible. Free college should be the goal at the state and federal level. There are a wide variety of ways to tackle this. The first should be the federal government taking on the cost of community colleges so that they are available for free. A sizable part of our student loan problems come from community colleges; a free college option would push back against this.
Some will say that this benefits the already well off, and it is better to simply ensure poor people have access. However, it is best to use the tax code to address these concerns. Splitting programs — offering services to the poor and not to others — creates divisions among everyday people, forcing middle-class people to see poorer people as their enemies, with whom they are competing for access to education and health care. It fuels the Right’s argument that society is full of makers and takers. We’ve already seen several state college programs buckle under this unnecessary class antagonism. Universal programs also create better buy-in; more people will defend them and argue that they work best for all.
Third, the punitive stance the government has taken in recent decades needs to be reversed. The U.S. is the world’s largest jailer, having quintupled our prison population in the past 40 years. There are several avenues necessary for reform. Prison sentencing needs to be rethought — not in a way that protects corporate criminals but instead one that genuinely reduces the time served by those who are minimal risks. Prosecutors and their actions need more scrutiny. Recent research has shown that prosecutors ramping up the scale and scope of charges is an essential driver of mass incarceration. The privatization and militarization of policing services needs to end immediately. The whole infrastructure that devalues the lives of people of color needs to be dismantled, starting with the school-to-prison pipeline.
Fourth, program expansions should be public for the foreseeable future, and should not rely on the private sector. For instance, Medicare should be expanded to build on the successes of the Affordable Care Act, and to counter the damages done by Republicans to the ACA exchanges. What that expansion looks like will be the subject of intra-progressive debates. But what is clear is that the future will rely on public, not private, programs.
Two: Freedom For Workers
A central aspect of American definitions of freedom is economic independence — meaning the capacity to earn a living without compromising dignity, welfare, or fundamental rights. When an employer can rely on a worker’s economic desperation to demand more while providing less, that worker is not negotiating as a free man or woman. Political liberty and legal equality — while critical — are simply insufficient to guarantee agency in our economy. President Franklin Roosevelt once argued, “for too many of us the political equality we once had won was meaningless in the face of economic inequality.”
This vision of work as a collective problem tied to issues of political equality and power was once a central part of the liberal vision of freedom. But it has faded, replaced with an idea that work was a fundamentally individual problem. The economy promised by the free-market revolution, which got rolling in the 1980s, was supposed to provide workers with more freedom. A high-pressure economy generated by unleashed competition and innovation would, the theory went, create new jobs and force employers to compete for workers, raising wages. Dismantling sclerotic and outdated labor protections and bargaining agreements would give workers better opportunities and a larger share of the economic pie. Those who worked hard would be rewarded. Under this new way of thinking, inequality, whether it was the runaway salaries for those at the top or the stagnating ones for those at the bottom and in the middle, simply reflected skill differences. That left a narrow role for the state: Making sure workers had the skills and education necessary to take advantage of all the opportunity.
The cracks in this story have always been obvious, and a decade after the Great Recession popular support for this narrative has collapsed. According to the Census, median wages in 2016 are only 1 percent higher than they were in 2000, even though the country as a whole is 30 percent richer. That new income has accrued to those at the top, the owners and managers. Wage stagnation has occurred even as the workforce has become more educated. Recessions have become even more difficult for workers. Unemployment peaked at over 10 percent in 2010, and came down only slowly since then. Even with unemployment below 4 percent, wages are not going up.
These high-level problems have changed and warped the very nature of work. Today, many Americans operate at the mercy of their employer — receiving too little in compensation for too much in sacrifice. Women workers, particular women of color, continue to be disproportionately represented in low-wage and insecure service jobs. 31.8 percent of Latina women, 27.7 percent of black women and 20 percent of Asian women work in the service sector, compared to just 7.4 percent of white women. Fieldwork from researchers consistently documents that women — and in particular immigrant women — are subject to wage theft and sexual harassment on the job.
At the same time, workers are often required to submit to onerous sets of rules that employers use to dictate the minute movements of their workers — University of Michigan professor Elizabeth Anderson calls this “Private Government.” New technologies are used to increase this power differential. Algorithms set just-in-time scheduling — which often alerts a worker just 24 hours in advance what his or her shift will be and for how long he or she will work. Not only does this foreclose the possibility of planning for childcare or family obligations, it also often results in uneven wages.
Rallying around the banner of expanding “freedom,” Democrats must make full and secure employment an explicit goal and governing strategy, thus expanding the alternatives available to workers and increasing worker leverage. Full employment has historically been key to increasing worker bargaining power and reducing structural barriers. A jobs agenda must include policies that rein in the business trends restraining corporate investment and new business starts — namely, to create robust private sector job growth, Democrats must push financial reform and policies that encourage competition. Beyond this, Democrats must support the laws and institutions that will empower workers to advocate for themselves and negotiate compensation and conditions from an equal position of power.
What does this entail in practice? The compass should point towards programs that broaden the availability and security of work. That includes monetary policy and fiscal policy that provide a high-pressure economy that raises wages and begins to close racial wage gaps. A robust plan to tackle several of our pressing public challenges — namely outdated physical infrastructure and an underpaid care economy — would generate millions of new low- and high-skilled jobs. Finally, Democrats should champion public employment, which has been an effective tool in combating employment discrimination. Affirmative action policies in direct public employment and in federal contracting policies helped to build a black middle class from 1965 to 1980.
Democrats must support the laws and institutions that will empower workers to advocate for themselves and negotiate compensation and conditions from a position of equal power. This includes better enforcement of existing labor laws. But it also means adapting labor laws to support bargaining efforts in the disaggregated workplaces of the 21st century. The decline of unionization in the U.S. has directly led to declining wages and less secure work. And while employers often argue that global trade renders unionization a competitive disadvantage, other export leaders have maintained highly unionized workforces.
In the fissured workplace dominated by subcontracted and temporary employment, it can be a challenge for workers to even identify the employer with which to bargain. New models would allow workers to more effectively bargain across a supply chain or an industry. The Obama administration began to expand the definition of joint-employers — and the regulations that govern them — to include the firms setting wages and policy at franchised businesses, such as fast food chains. These efforts must be expanded to include firms that exert wage and policy control throughout a supply chain, with special attention paid to subcontracted or independent contractors whose compensation, hours, and even dress code are controlled by larger firms.
This is especially important when it comes to organizing and expanding the economic security of care work. Manufacturing is in a long-term decline as a percentage of the labor force, and it is unlikely to come back in a significant way. The future will involve more service work, much of which isn’t as legally protected. Home health-care workers, for instance, still have fewer rights than workers in many other professions. Formalizing these protections as the backbone of a middle-class life should be a central economic project.
Much of society’s essential work isn’t paid, formal labor. The work of childrearing, and the care labor that goes into keeping families running, is necessary. Beyond that, it reflects what is important to us. Yet employers don’t pay for it, even as they rely on it to keep their workforces running.
Democrats can argue for a broader social safety net — including such programs as a child allowance — to address this. A child allowance can be structured in several ways, but in general it is about ensuring that a stable, moderate payment is made to secure the economic wellbeing of young children. Evidence and international experience from such peer countries and Canada and the United Kingdom show that such a program can dramatically reduce childhood poverty, which we know has lifelong effects. But it also compensates caregivers for raising the child, work that could not be more important for society as a whole.
Three: Freedom From Corporate Power
Workers aren’t the only Americans who feel their lack of freedom. Too many Americans are powerless over the ways corporate decisions dictate the direction of their lives. Nearly three quarters of voters believe the economy is rigged in favor of certain groups — and they are not wrong. Yet this is not new.
Throughout American history, the privileged used private power to reinforce barriers to wealth building, labor markets, services, and overall opportunity for marginalized communities. In the wake of the first Gilded Age in the second half of the 19th century, President Franklin Roosevelt rallied against the way concentrated power can limit opportunity and the market itself. As he noted in a speech accepting the Democratic Party renomination in 1936, for too long “opportunity was limited by monopoly. Individual initiative was crushed in the cogs of a great machine. The field open for free business was more and more restricted. Private enterprise, indeed, became too private. It became privileged enterprise, not free enterprise.”
Yet this threat has been ignored in recent decades. In their ideological revolution of the 1970s, free-market boosters argued competition could keep private power in check and government alone was a threat to economic and individual freedom. Under the banner of freedom, they used the state to pass a sweeping agenda to expand corporate power. The idea that corporations, left to themselves, will regulate themselves and be held in check by a competitive market became a central point of both our institutions and conventional wisdom.
But this idea too, has fallen apart. On any number of metrics, the profitability of firms has increased significantly. The markups firms charge over the price of their products has increased over the past thirty years. Their rate of profits has increased, driven by falling interest rates and cost of capital. Under these conditions we’d expect to see an increase in investment, as profitable firms expand and new businesses start to compete away profits. Yet there’s been a complete breakdown in this mechanism. The financial valuations of companies compared to their assets have doubled over the past thirty years. Today, a tenth of economic activity takes place in industries where the top four firms control more than 66 percent of the market. The promise that competition would provide a check on corporate power is laughable.
Concentration of power affects everyone. It means declining investment and innovation, fewer new jobs, greater geographic inequality and, with it, limited access to goods and services. Without the pressure to compete, large firms are investing less in machinery, research and development, and are hiring fewer workers. A recent study found low investment in profitable firms linked to corporate concentration and share buybacks, when a company purchases its own stock from shareholders. When that happens, funds that might have gone to innovation or expansion are instead funneled to shareholders. Profits across Fortune 500 firms have been used to repurchase stock — since 1980, the share of corporate cash flow going to payouts for shareholders has nearly doubled, while the share going to investment has declined.
There are a range of strategies and tools available to begin to curb the power of the most privileged. First, Democrats must remove the advantages the rich and large corporations have written into our national rules. There are innumerable opportunities within the tax code, for example, to remove benefits accruing to large corporations and the rich. Taxes aren’t simply about raising revenue and redistribution, but rather about setting rules that determine the kinds of behaviors our nation rewards and penalizes. The current capital tax regime — rife with loopholes — rewards speculation and short-term investing at higher rates than work. It rewards hiring armies of lawyers to shelter income overseas. And it rewards the largest companies for paying their CEOs an average of 276 times the average worker salary. Democrats must defend global taxation while fighting to expand levies on capital gains income, financial transactions, performance pay, and the top marginal tax rate.
This is an issue of legislative and regulatory reform, but also of enforcement. There can be no liberty if a justice system incarcerates low income (often-black) individuals on petty drug charges, yet fails to hold CEOs or their shareholders accountable for corporate malfeasance. Criminal enforcement against Enron and WorldCom was widely successful. Yet this level of action wasn’t taken against the financial sector in the wake of the 2008 crisis, and abuses continue to this day, ranging from Wall Street manipulating interest rate prices to Wells Fargo creating fake accounts for its clients. Criminal investigations, with real consequences for the firms instead of the quickly forgotten deals that they normally get, are what Democrats need to fight for.
Anti-trust is an obvious potential starting point for those eager to demonstrate to voters that they take this seriously. Democrats can argue for a 21st century Antitrust Act that better policies monopoly power. Over the last half a century, regulators have narrowed the scope for antitrust enforcement to focus only on short-term outcomes to consumers, and they have blessed a range of anti-competitive business models that serve to concentrate power and profits and limit the autonomy of everyone else in the economy to make a living as they please. A 21st century Antitrust Act would adopt a new standard for merger review, acknowledging the full range of the effects on consolidation — including its effects on the quality of products and the availability of services, the ability of potential competitors to enter the market, innovation, and the stability of supply chains and the financial system.
This doesn’t mean small business boosterism or a knee-jerk revulsion against bigness for its own sake. This is also absolutely not about finding a perfect market structure out there that assumes competition alone will solve our problems. Progressives should view market competition as a tool, appropriate in some cases and not in others. This is instead an acknowledgement that market structure matters, and we are seeing the consequences of a system too top-heavy to meet society’s needs.
Beyond simple antitrust policies, we need to reclaim the idea of public utility, in which certain types of actions and prices have to have democratic accountability. Public utility places requirements and limitations on firms that provide essential goods or exist in noncompetitive markets. Net neutrality, preventing telecom firms from discriminating between sources of information, is a perfect example of how this needs to work. Once this was a centerpiece of progressive reform, today, this duty must be an even broader one.
One of the most remarkable things about the current moment is that, in the days and months since the Democrats’ 2016 loss to the Republicans and President Trump, the Democratic Left has not collapsed into endless infighting, relitigation of presidential race and despair. Though recent progress looks lost on everything from the Supreme Court to preventing the catastrophic heating of the planet, the last two years have brought about a renaissance of activism and debate on the broader liberal-Left flank. New people, especially women, are running for office in record number, and an agenda of better jobs, schools, and health care has driven it. This harmony among interests and activists on the ground (if not on social media) is a sign of a new opening. There’s a new path forward, and it needs to builds on the best of liberal policymaking, and on the best definition of freedom.
Mike Konczal is a Fellow with the Roosevelt Institute, where he works on financial reform, unemployment, inequality, and a progressive vision of the economy.
Nell Abernathy is Vice President for Policy and Strategy at the Roosevelt Institute, where she focuses on explaining the causes of the high-profit, low-wage economy, and promoting structural solutions around antitrust, corporate governance and tax policy.