Contributor Post Created with Sketch. The Battle on the Left: Inequality Democrats vs. Innovation Democrats. Which Will Hillary Be?

 

pacific_trade_shutterstock_022315Yesterday was a bad day for the big Pacific trade deal as “Senate Democrats blocked consideration of giving President Obama power to accelerate a broad trade accord with Asia, a rebuke that the president helped bring on himself,” the New York Times writes. No, the deal is not dead, but the timing is getting funky with summer almost here — not to mention the political difficulties of the approaching election year. Beyond that, there is a fascinating Democrat vs. Democrat dynamic developing, which the trade troubles reflect. This Politico piece on the party’s internal struggles is amazing:

In the fourth quarter of his presidency, without another race to run, Barack Obama has gone to war with what he sees as an out-of-touch, stuck-in-old-thinking Washington liberal elite — Elizabeth Warren’s the most famous member, but AFL-CIO president Richard Trumka and a coterie of Hill Democrats are up there with her. Obama advisers say the president sees Democratic opponents of his trade agenda as just as detached from reality as Republicans in Congress who held four dozen Obamacare repeal votes or turned raising debt ceilings and fiscal cliffs into government crisis carnivals. … For Obama, there’s a direct connection between bringing the Democratic Party into the 21st century on trade and his sense of himself as ushering in a generationally transformative foreign policy. Aides say Obama views both ideas as pragmatic, dealing with the reality in front of him. Both are about engagement. Both are about what he says is an orientation toward the future instead of sticking with the ways of the past. You can’t be a progressive on trade, he believes, unless you’re willing to talk about a new way to make trade actually work.

Well, there goes the GOP theory that the trade push is just some elaborate charade since someone as far left as Obama couldn’t possible want a free trade deal. This piece makes Obama out to be more technocratic, third-way guy than hard lefty ideologue. More Tony Blair than Ed Miliband, you might say. At least on this issue. And certainly not Bill de Blasio.

In the WSJ, William Galston has a must-read take on the Dems’ economic split.Here’s a bit:

Democrats on the left focus on the conservative political mobilization of recent decades; policies that undermine labor unions; failed financial regulations; corporate self-dealing; and one-sided trade treaties that disregard the interests of ordinary Americans. Center-left Democrats emphasize technological change and globalization (as distinct from treaties); a mediocre educational system; a slowdown in innovation; and the failure of the public and private sectors to invest adequately in the future.

The Inequality Democrats vs. the Innovation Democrats. Or given the recent UK elections, maybe the Miliband Democrats vs. the Blair Democrats. Maybe the former would raise the top income tax rates, eliminate the capital gains tax preference, break up the banks, reign in executive pay, increase Social Security spending and taxes, support public unions, especially teachers. Protectionism on trade. On the redistribution vs. growth debate, a heavy thumb on the redistribution side. The latter would maybe support trade, eliminate high-end tax breaks rather than raising tax rates, support charter schools, lowering corporate tax rates, emphasize boosting public and private innovation investment. On the redistribution vs. growth debate,a heavy thumb on the growth side.

The Inequality Democrat agenda might be best represented by the recent Center for American Progress report on “inclusive prosperity.” The Innovation Democrats might look to this new report from the Information Technology and Innovation Foundation, written by Robert Atkinson, formerly of the Progressive Policy Institute, a Bill Clintonite, New Democrat think tank It has the rather pointed title, “Inclusive Prosperity Without the Prosperity: the Limits of the ‘Middle-Out’ Strategy.” And it has this handy chart summing up the two views:

051315dems

Right now, likely party presidential nominee Hillary Clinton — looking to stave off a primary challenge — seems to be going the Full Middle Out. But if elected, hopefully she would be more innovationist, though one could see how this could also descend into cronyism. Pro-business vs. pro-market and all that. But I really like innovation as the lens through which we judge public policy.

There are 5 comments.

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  1. Brian McMenomy Inactive

    Good stuff as always. Hillary’s problem, as in so many other areas, is she is a slave to her (perceived) political interests. Right now, she is obsessed with preempting a Warren (or Warren-like) challenge from her left. So, she makes a lot of noise about how the system is stacked against the little guy, while doing a nod-nod wink-wink to her Wall Street crony capitalists that she doesn’t really mean it, so she doesn’t have the money tap turned off. She really doesn’t believe anything.

    James’ analysis is probably more deep thinking than Hillary has actually done about trade. Free trade is about access to markets and efficient use of capital, labor and other inputs to economic growth. It is messy, long-term stuff, while 30-second soundbites about some multinational relocating 500 jobs from Fort Wayne to Bangalore or San Luis Potosi makes for better TV.

    Ironically, if Hillary did something smart, like point to the economic growth under her husband and tie it to freer trade (a la NAFTA), she would sound intelligent on a economic matter of importance and demonstrate independence from the worst of her party’s protectionists. Alas, she won’t do that, because she doesn’t believe anything and will listen to the John Podesta crowd over economic reality. Bad for the country, but maybe good for Republicans, if we have the wit to make the moral & economic case for trade (a big if, I grant you).

    • #1
    • May 13, 2015, at 12:50 PM PDT
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  2. Gumby Mark (R-Meth Lab of Demo… Thatcher

    Both, depending on the circumstances (and the polling).

    • #2
    • May 13, 2015, at 1:11 PM PDT
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  3. Ekosj Inactive

    Hmmm. No one as far Left as Obama could possibly want free trade? Marx before him wanted free trade too.

    “…in general, the protective system (of tariffs) of our day is conservative, while the free trade system is destructive. It breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favor of free trade.” – Karl Marx, January 1848

    Do you think Frank failed to teach him this? Free trade hastens the fundamental transformation of society. So of course Obama is for it.

    • #3
    • May 13, 2015, at 1:19 PM PDT
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  4. Richard Fulmer Member

    I’m for free trade, but what is in the deal that the Democrats oppose? We don’t know. It may not promote free trade at all. As for “Innovation Economics,” it sounds like the tired old “Industrial Policy” of the past in which the government sought to pick the winners and losers through tax breaks, subsidies, and regulation. We don’t need any more synfuels or Solyndras. What we do need is the government to get out of the damn way.

    • #4
    • May 13, 2015, at 7:49 PM PDT
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  5. Probable Cause Inactive

    I must give credit to President Obama for being on the right side of this issue. It’s a real head-scratcher. Ekosj’s point upthread is as good an explanation as any.

    • #5
    • May 14, 2015, at 8:55 AM PDT
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