One of the simmering intraprogressive arguments that’s been going on during the last decade involves the responsibiity, if any, borne by the Clinton administration for the economic conditions of the Bush Era.
The standard Democratic take has been that during the Clinton years the country was putting into place the building blocks for long-term growth, fiscal solvency, and real across-the-board income gains. The Bush administration systematically demolished these building blocks and returned to the ecomomic policies of the 1980s, and produced 1980s-style booms and busts, financial panics, big federal budget deficits, and growing inequality.
But alongside this narrative has been a persistent “minority report” arguing that Clintonomics differed in degree rather than in kind with Republican economic policies, and that the tech stock bust at the end of the 90s exposed the pro-corporate illusions of Clinton’s New Democrats and paved the way for the dangerously laissez-faire policies of the Bush administration. This take was especially popular among netroots activists convinced that both parties, or at least their “D.C. Establishments,” had largely been captured by corporate influences.
The revisionist argument has now gained new momentum among some progressives who are unhappy with the Obama administration’s economic policies, which they blame in no small part on the influence of Clinton administration economic advisors back in power in Washington.
This week the inveterate controversialist Michael Lind has published at Salon the most sweeping restatement yet of the hypothesis that today’s economic troubles were largely created by Clintonomics.
Indeed, Lind takes shots not only at the alleged results of Clintonomics, but at the whole notion beloved of New Democrats that a knowledge-based New Economy had emerged in which technology, education and skills had become prized national assets and the key to erasing income inequality:
Here’s what the New Democrats of the DLC and PPI who chattered enthusiastically about the “creative class” of “knowledge workers” in the “new economy” failed to understand: The main jump in income inequality took place in the 1970s and the 1980s, before the alleged new economy created by the tech revolution.
The relative decline of wages at the bottom had little or nothing to do with technology or the global economy and everything to do with the weakening of the bargaining power of American workers vis-à-vis their employers thanks to declining unionization, an eroding minimum wage and the flooding of the low-end labor market by unskilled immigrants from Latin America, both legal and illegal.
Having misdiagnosed the problem, New Democrats, including Clinton and Obama, have consistently prescribed the wrong medicine: sending more Americans to college. According to the Bureau of Labor Statistics, most of the occupations with the greatest number of openings in the foreseeable future require only a high school education or an associate’s degree, not a four-year B.A.
The most effective way to raise wages at the bottom would be to increase the bargaining power of workers, by unionizing the service sector and by tightening the labor market through restricting unskilled immigration. That would probably spur genuine productivity growth over time as employers substituted technology for more expensive labor.
Lind goes on to suggest that the Clintonians were blind to the damaging effects of the accumulation of paper wealth by tech entrepreneurs as well as Wall Street tycoons, and continued to promote “neoliberal” policies that ignored the real problems and perpetuated them–and now, as Obama advisors, they are making the same mistakes.
Since the Progressive Policy Institute was singled out by Lind as among the villains of Clintonomics, it’s not surprising that PPI president Will Marshall has responded at some length at Salon:
If you lived through the Clinton years, you might recall them as flush times. Some basic facts: The economy grew briskly, creating 18 million new jobs; rapid innovation, especially in information technology and online commerce, bred new businesses and helped to raise productivity in old ones; unemployment stayed low despite a steady influx of immigrants and women coming off welfare rolls; markets rose as the percentage of Americans owning stock jumped 50 percent; homeownership reached a record high (nearly 70 percent); the poverty rate shrank significantly; and the United States ran budget surpluses for the first time in three decades.
Not bad, right? Well, as reimagined by Lind, the 1990s were another “lost decade,” just like the Bush years, with their successive dot.com and housing bubbles, regressive tax breaks, zooming federal deficits and, of course, the grand finale: the near-meltdown of U.S. financial markets in the fall of 2008 along with the worst recession since 1982. If the comparison seems, well, strained, no matter. Lind’s real target is what he calls the myth of the “New Economy,” an illusion conjured by Clintonites (Progressive Policy Institute comes in for honorable mention here) to justify “neoliberal” policies.
Marshall goes on to cite research indicating that the “tech boom” did indeed increase labor productivity, and that higher education and skills do boost earning potential. And he has this to say about Lind’s alternative agenda for reducing economic inequality:
The causes of inequality are a subject of lively dispute among economists, but Lind is not hobbled by doubts. The reasons, he asserts, are to be found in the decline of unions, an eroding minimum wage, and unskilled immigrants. Yet by his own account, inequality really took off in the 1970s, when unions were relatively strong. (Plus, it’s strange to blame Democratic policies for growing inequality since 1980, since Democrats controlled the White House for only eight of those 28 years). Moreover, it should be obvious that falling union membership is the consequence, not the cause, of a massive shift in the U.S. employment base from manufacturing to services.
Because it affects only a small proportion of workers (including lots of kids working at part-time jobs), the minimum wage is a slender reed on which to hang the revival of good, middle-class wages in America. And there’s scant evidence to support Lind’s claim that immigration, legal or otherwise, has exerted significant downward pressure on native workers’ wages. The tide of unskilled immigration does have an impact on workers who graduate from high school, but not a very large one.
For readers who, like me, are not economists, the political implications of the Lind-Marshall debate are what’s really interesting. Marshall unsurprisingly accuses Lind of whitewashing the Bush administration’s record in his rush to blame Clinton for the economic problems of the aughts. And Lind obviously believes a major change in Obama’s economic policies is demanded by the times, though it’s unlikely that many progressives unhappy with Obama would embrace Lind’s call for radical reductions in immigration to relieve downward pressure on wages. (It’s also not clear, BTW, how Bill Clinton, facing Republican-controlled Congresses, was supposed to have pursued Lind’s other major prescription, the unionization of the service sector).
It’s easy to say that this argument would become largely moot if the economy now begins to turn around under Democratic management. But if and when the damage wrought during the aughts begins to abate, an economic policy consensus in the Democratic Party will become more important than ever, and areas of general agreement–the need for progressive taxes, an activist public sector focused on big national challenges, and careful regulation of big corporations–will be worth stressing, even if we disagree among ourselves about an increasingly distant past.