What they say is that the Democratic Party changed its character from a New Deal party, from the Franklin Roosevelt presidency through Lyndon Johnson, and took a neoliberal turn in the ’70s, after which Jimmy Carter, Bill Clinton, and Barack Obama, led a neoliberal, corporate Democratic Party that doesn’t have the same fundamental aspirations of the Democratic Party of the postwar years. What do you make of that analysis?
I think there is an element of truth, but it’s not the entire or even the dominant truth. Obviously, I’m not a historian, and what I say may be a little bit overgeneralized and imprecise, but people tend to forget, for example, that FDR in 1937 went full-blown deficit hawk, right? Which is part of the reason why America lurched back into recession. And the reason he did was not necessarily because he believed that that was sound economic policy but he was trying to placate elements both within the Democratic Party and outside the Democratic Party that were bludgeoning him as somebody who was a spendthrift socialist-communist. FDR was not immune to concerns about public opinion in these issues. The New Deal itself was a hodgepodge of efforts — some of which were really significant and some of which have taken on a great symbolism in our minds but were actually pretty modest. And even the huge victories like Social Security, if you were a Black domestic worker in Birmingham, Alabama, or in Atlanta, Georgia, Social Security didn’t mean much to you. And if you had been a socialist or leftist or just somebody who wanted social justice back in the ’30s, you’d be pretty angry about Social Security because it left out huge numbers of people, deliberately, to placate racist Dixiecrats, right? Sometimes we forget that these political constraints have always operated. That’d be one thing.
What is true is that post–World War II, because of the position of the American economy, the coalition that got built based on a strong labor movement and not just laws but also customs within corporations — that say, “Let’s work with rather than against unions”; and the huge upsurge in the middle class that arises; and the relatively flat income distribution that results from the American economy being dominant when Europe is in rubble and there’s no competition coming out of Asia; you do get this golden period where workers are seeing their lives improve consistently. The market is constrained by a bunch of laws, in part because the heads of big companies, they’re feeling pretty fat and happy even with those regulations and constraints.
And it’s the combination of no-holds-barred, free-market ideology and Milton Freedman’s arguments about shareholder value, and the weakening of norms inside the corporate boardroom, combined with foreign competition that starts unraveling that social compact. What is true is that there are a bunch of Democrats who start saying, Well, yeah, maybe the free market can do it better, maybe we don’t need these regulations. And maybe unions are too stodgy and outdated and preventing increases in productivity and the key is that we have to grow the pie and not just worry about dividing the pie. And then Ronald Reagan comes in, wins over a big chunk of those same workers in a coalition despite doing everything he can to bust unions, and a bunch of Democrats think, Look, this isn’t working for us politically. And what’s a fair criticism is the fact that through Clinton and even through how I thought about these issues when I first came into office, I think there was a residual willingness to accept the political constraints that we’d inherited from the post-Reagan era —that you had to be careful about being too bold on some of these issues. And probably there was an embrace of market solutions to a whole host of problems that wasn’t entirely justified.
You also get a weakening of antitrust enforcement that in retrospect created problems long term for our economy. There was greater faith in globalization as an engine for prosperity without examining the downsides. There were decisions — for example, I write about admitting China into the global trade regime and not being as concerned about how they’re gaming the system and cheating and not anticipating that they could eat our lunch on the costs of manufacturing internally. So, I guess my point is this: I don’t think it is as clean a break between the New Deal and what you see in the ’80s and ’90s up until I become president. What I can say for certain is by the time I become president, I’m not particularly enamored with or subject to illusions about these problems.
As I write about in the book, I was pretty clear about the need to challenge China and get tougher with them on trade. I very much wanted to see stronger labor rights. I very much was interested in finding ways in which we could reduce short-term thinking and increase corporate responsibility. So the lessons that had been learned, whatever mistakes had been made from the ’80s and the ’90s on through the aughts, those were ones that I think a lot of Democrats, even on the center left, had embraced. The question remained the issue of politics and could you win back independent voters, even working-class voters, who were suspicious in some cases of the idea that if you raise taxes, somehow that’s gonna be good for me. As opposed to good for somebody else.
