The
message to Democrats is clear: you must dump neoliberal economics
Joseph
Stiglitz
The party
must return to its progressive roots. A new economy is needed with new rules
and new roles
Thu 28 Nov
2024 06.00 GMT
As the shock
of Donald Trump’s victory sinks in, pundits and politicians are mulling what it
means for the future of the US and global politics. Understanding why such a
divisive, unqualified figure won again is crucial for the Democrats. Did they
go too far left and lose the moderate Americans who make up a majority? Or did
centrist neoliberalism – pursued by Democratic presidents since Bill Clinton –
fail to deliver, thus creating a demand for change?
To me, the
answer is clear: 40 years of neoliberalism have left the US with unprecedented
inequality, stagnation in the middle of the income spectrum (and worse for
those below), and declining average life expectancy (highlighted by mounting
“deaths of despair”). The American Dream is being killed, and although
President Joe Biden and Vice-President Kamala Harris distanced themselves from
neoliberalism with their embrace of industrial policies, as representatives of
the mainstream establishment, they remained associated with its legacy.
The
economics of the moment mattered, but monthly employment and inflation
indicators need to be understood in a broader historical context. As the Biden
administration stressed on the eve of the election, the economy looks strong,
especially compared with others in the G7. But this wasn’t good enough.
Americans haven’t forgotten that the Democrats let loose the financial sector
(Clinton), then bailed out the banks while homeowners and workers who lost
their jobs in the Great Recession carried the cost (Barack Obama). Moreover, it
was Clinton who unleashed globalisation, tacitly believing in a trickle-down
economics that would ultimately benefit everyone. The only real difference
between Democrats and Republicans on this score is that Democrats claimed to feel
the pain of those who were losing out.
The tragedy
is that Americans seem to have voted for mere disruption more than anything
else. Stalked by economic precarity and the spectre of downward social
mobility, tens of millions of Americans voted for Trump as a way of “sticking
it to the establishment”, and because many seem to believe that he has their
back.
Americans,
it seems, have lost trust in their institutions and the belief that government
will deliver for them.
He doesn’t.
Trump’s first term and his 2024 election campaign made it abundantly clear that
he has no intention of enacting the types of policies that ordinary Americans
need. He favours tax cuts for billionaires and corporations; an end to the
Affordable Care Act (Obamacare); and sweeping tariffs, which are effectively a
tax on US consumers and businesses. Most likely, the tariffs will be riddled
with corrupt exceptions bought by campaign contributions; and in any case, they
are sure to provoke retaliatory measures and a loss of American jobs.
Trump will
also generate massive budget deficits, which will lead to high interest rates
and less investment in America’s future. If he and congressional Republicans
follow through on repealing the Inflation Reduction Act (which includes
provisions to reduce prescription-drug prices) and Obamacare, Americans will
find themselves with less access to medical care and higher costs.
This is all
worse than neoliberalism, which at least purported to promote competitive,
undistorted markets. Trumponomics is ersatz capitalism, run for and by the
powerful, and according to the principle that money matters above all else.
Americans,
it seems, have lost trust in their institutions and the belief that government
will deliver for them. It is the predictable result of 45 years of Republican
(and neoliberal Democratic) campaigning, starting with Ronald Reagan’s famous
quip that “the nine most terrifying words in the English language are: ‘I’m
from the government, and I’m here to help.’”
The culture
wars also played a big role in Trump’s victory. His campaign successfully
pushed the message that Democrats are obsessed with gender, race and other
social issues at a time when most Americans are just trying to get by. Many
voters concluded that Trump would reverse or at least slow the pace of
disorienting changes that have challenged long-established social hierarchies
and roles.
Like
nationalists everywhere, Trump blames America’s problems on outside forces,
from immigration to “unfair” trade. But while it is true that neither issue has
been managed very well, his proposed solutions would be disastrous for the US
economy and the world. The extent to which his voters understood this is
unclear. Most seem to have been drawn to the political theatre. They wanted to
send a message of dissatisfaction, and now they have done so.
For the
Democrats, that message should be clear: abandon neoliberalism and return to
your progressive roots in the presidencies of Franklin D Roosevelt and Lyndon B
Johnson. The party needs to provide a new vision of a society that offers
education and opportunity to all; where markets compete to produce better
products that enhance living standards, rather than to devise better ways of
exploiting workers, customers, and the environment; where we recognise that we
have moved on from the industrial age to an economy oriented around services,
knowledge, innovation, and care. A new economy needs new rules and new roles
for government.
There is a
big difference between this new vision and the tweaks offered by the Harris
campaign (a little more education funding here, and a few dollars to help
first-time homebuyers there). Articulating a robust programme will not be easy,
and implementing it would be harder still. But the future of America depends on
it being done.
Joseph E Stiglitz is a Nobel laureate in
economics, university professor at Columbia University and a former chief
economist of the World Bank
Sem comentários:
Enviar um comentário