Tuesday, December 14, 2004

Capitalist Populism

In a recent post, Praktike, citing a post by Brad Plumer, rebukes fellow leftists for being preoccupied with meta-commentary and their tendency to analyze the major trends in American politics while offering new versions of leftist weltanschauung and prescriptions for electoral success, all the while failing to put these grand designs into practice. They contend that the left consistently misses the trees for the forest. Like Praktike, I admit some guilt when confronted with these charges, but I also think I have tried to offer practical applications of my overview. For example, rather than simply extolling the abstract virtues of Lakoff's discussion of framing, an important exercise in its own right, I tried to offer real world examples by parsing the realities of tort reform and tax reform. Similarly, I have been harping on the perils of Social Security privatization, as well as the suspicious conservative movement for academic diversity. Despite my defensiveness, I will once again engage in a bit of meta-commentary about the recommended direction for the Democratic Party - hopefully infusing this discussion with a dose of the practical.

There is no doubt that the legacy of Bill Clinton looms large in Democratic circles. There seems to be two competing camps in the Party at this time reacting to his presidency: Clintonian third-way Democrats, ensconced in the Democratic Leadership Council (DLC), and the anti-DLC reformers, with Howard Dean being the most visible leader of this movement. I agree with
Nick Confessore that these cleavages are not as clearly defined as some would make them out to be, and that attempts to paint the differences as a question of liberalism vs. centrism obscures the real thrust of the debate.

Nevertheless, the centrifugal force of the conflict of ideas has dragged many to the poles, and led to absolutist and simplistic assessments of complex policies and historical figures. So, many are left suggesting that Clinton was either good or bad for Democrats, as if anything as multifaceted as an eight year presidency lends itself to such black and white conclusions. Come on, isn't the left supposed to be the political persuasion of nuance? In truth, Clinton was both things and in that vein, we should look at what Clinton did right, and where his administration might have strayed too far from the reservation.

One particular aspect of the debate that warrants further consideration is the economic policies enacted by the Clinton administration. In many ways, for better and for worse, Clinton liberated the Democratic Party by redefining the historical positions of the Party on issues like welfare reform, fiscal discipline, free trade agreements, tax policy, and the institutional relationship with big business. It didn't hurt that Clinton presided over a booming economy that seemed to vindicate his "third way" approach to economic issues. As is often the case with an iconoclastic movement, however, in the aftermath we must reconstruct our principles building on the positive lessons from Clinton, and discarding the aspects of his strategy that have either outlived their efficacy, or perhaps never were. In this sense, Clinton has provided Democrats the valuable opportunity to re-evaluate their policies and philosophical directives.

a post in July, I argued that the future of the Democratic Party lies with an updated version of economic populism. Borrowing from Publius, I would like to call this rendition Capitalist Populism. The distinction, or evolution of the concept, lies in the fact that unlike populist movements of the past, it openly embraces capitalism as a force for good, jettisoning the vestigial remnants of economic rhetoric left-over from prior generations' class struggles. Capitalist Populism seeks to empower and invigorate the entrepreneurial spirit of Americans - a continuation of the Clintonian model that steps outside the paradigm which held that in order to be pro-labor, Democrats had to be hostile to business interests. Rather than appearing like proponents of a nanny state offering hand-outs, or condescendingly railing about the need for the government to pull working class Americans along, this new platform demands empathy not sympathy, an important lexical distinction. Emphasizing the common cause of working Americans, and seeking out the mutuality of interests between all sectors of our economy (labor and ownership alike), it strives for the win-win scenarios. Capitalist Populism seeks to strengthen the timber of small business, the true engine of the American economy, in its struggle against big corporate dominance, supporting family farmers in their daunting battle with agri-business, and seeking to monitor and regulate the corruption in our government and in our markets in order to insure their optimal efficiency and appeal. As a philosophical movement, Capitalist Populism is based on the virtues of opportunity, fairness, responsibility, and hard work, while decrying a system that is out of balance in its favoritism of wealthy insiders at the expense of all others.

Capitalism, when tempered by intelligent reform and regulation as promulgated under Theodore and Franklin Roosevelt, is a marvel of human innovation. Capitalism left unchecked, as in the days before the Roosevelts, and increasingly under the new Republican leadership, can be a brutish and inefficient economic structure - with little regard for fairness, decency, the ubiquity of opportunity, and the potential for human suffering. Ironically, the anti-trust and New Deal policies of the Roosevelts, far from undermining capitalism as their critics contend, actually strengthened capitalism and allowed for its continued existence and esteem. The reforms of the Roosevelts helped sell capitalism to the world. Thus, Capitalist Populism embraces capitalism, but realizes the wisdom of the old axiom that power corrupts, and at this time there is unchecked power in charge of making many of this nation's economic decisions.

Becuase of its central tenets, Capitalist Populism will allow Democrats to shed the elitist label and adopt a compelling narrative that appeals to ordinary Americans who crave a moral structure to politics. Instead of engaging in ad hoc justifications for seemingly unrelated policies as they come along on the legislative conveyer belt, the Democrats can expand upon a core values system and a meta-frame (
ala Lakoff), weaving together what might look like incongruous parts into a cohesive story and a purpose. It is a classic struggle that Americans relate to, almost instinctively. It is the desire for fairness and opportunity for all, the rewarding of hard work and responsibility, and the compelling tale of the underdog struggling to the top against adversity and the odds stacked in favor of the powers that be. Most encouraging, this story pierces partisanship and polarization in furtherance of the common and shared experience.

The Track Record

I think it will please the Praktikes and Brad Plumers of the world to know that Capitalist Populism is a message already being touted, in the specific, by a variety of Democratic candidates (liberal, moderate and conservative alike) to remarkable success in some of the reddest areas of our nation. In a thought provoking piece by
David Sirota (hat tip to Pas at the PBA), the author recounts how Democratic candidates have been able to muster the support of voters in such bastions of red America as the North Dakota, South Dakota, Montana, Mississippi and others, as well as red districts in otherwise blue states such as Oregon, Wisconsin, and Vermont. Though some of these candidates are social conservatives and some socially liberal, and many have varying positions on foreign policy issues such as the Iraq war, there is one common theme: Capitalist Populism. The fact that this set of policies can traverse divides on the spectrum for Democrats and Republicans alike, is a testament to the power of the message.

No one example exemplifies the potency of this new message more than the candidacy of Brian Schweitzer who was able to win the governorship in one of the reddest states in America: Montana. Publius at
Legal Fiction described Schweitzer's ground-breaking formula for success:
But in addition to a winning personality and strong populist convictions, Schweitzer had an innovative, three-part political strategy, one that perfectly fit the current conditions in Montana, but which Democrats across the country could learn from. First, Schweitzer took advantage of public dissatisfaction with two decades of insular one-party rule in the state capital, casting himself as an outsider and a reformer. Second, he rallied small business, usually a solidly GOP constituency, to his side by opposing the deals Republicans had cut in Washington and Helena to favor large or out-of-state corporations over local entrepreneurs. Third, and most interesting of all, Schweitzer figured out how to win over one of the most important, reliably Republican, and symbolically significant groups of voters: hunters and fishermen.

Now at first glance, Schweitzer’s success seems to vindicate Thomas Frank’s argument that the Democrats need to move "left" and become economic populists railing against the corruption of corporate influence on politics and the public sphere. But what Schweitzer did was a bit more complex - and [Jackson] Pollock-like. First, he did strike a very populist tone economically (and I lean toward Frank on this point). But, it’s not clear that he moved "left." Look at how he attacked the corporations – he rallied small business, not angry unions or the proletariat. He was populist, but he appealed to the American entrepreneurial spirit at the same time. It’s not clearly left or right – it’s just damn good policy. Corporations are way out of control, and currently dominate our national House of Representatives. Small business, by contrast, is the embodiment of everything good about America and the American dream. Schweitzer’s "Third Way" (which I don’t like because it assumes a linear baseline) was a sort of populist capitalism that struck the perfect balance (how’s that for a slogan?). Populism doesn’t have to be "left," and capitalism doesn’t have to be "right."
The Framework

From Sirota and Publius, we see some common themes emerging. First, Capitalist Populism champions small business against the hegemony of big business. It is important to note that this is not a position that is anti-big business per se, just one that seeks to restore balance to the economy by mitigating some of the hyper-influence big business is able to exert on the denizens of Washington who are held captive by the allure of campaign contributions. As noted, this stance is superior to a pure labor vs. management dynamic in that it seeks to engage entrepreneurs who themselves are management, not just pitting one side of the economic divide against the other. In this regard, the Democrats are seen as facilitators of jobs growth and economic advancement, not only as a hindrance to industry. Expanding on this, it is important to note that small business owners comprise the segment of the economy that actually employs the majority of working Americans. Thus, small business issues directly touch the lives of most Americans.

In an encouraging synergy, from the Democratic Party's perspective, the interests of labor and small businesses are gravitating toward the same destination - spurred on by the practices of non-unionized big businesses like Wal-Mart. The non-union shops are bankrupting small business owners through their aggressive corporate practices and low price point offerings, fueled in part by the savings afforded them by low-wage employment models as well as fervent outsourcing of jobs and importing of merchandise - facilitated by the lack of a union presence, as well as sweet-heart deals from pro-business Republicans. Small businesses, by contrast, don't outsource jobs. The
Wal-Martization of our economy is thus compounding the effects of outsourcing by encouraging businesses to copy Wal-Mart and continue to outsource production while bankrupting the small businesses that serve as bulwarks against job erosion, much like a tree prevents soil erosion in arid regions. According to Sirota:

The small-business lobby in Washington is a de facto wing of the Republican Party. But Democrats are finding that, at the grass-roots level, small-business people are far less uniformly conservative, especially as the GOP increasingly helps huge corporations eat up local economies. While entrepreneurs don't like high taxes and regulations, they also don't like government encouraging multinationals to monopolize the market and destroy Main Street.
So Democrats should target this business group as ripe for defection with an innovative mixture of Capitalist Populism: combine the rhetorical praise for the virtues of hard working American entrepreneurs with tangible benefits such as tax cuts for small business and a curtailment of the excessive privileges afforded big business. These tax cuts for small business should be paid for out of a repeal of the Paris Hilton-estate tax cut, and other tax cuts slanted heavily in favor of passive income. After all, Democrats reward the American ethos of hard work and responsibility, not the right of idle heiresses and indolent trust fund babies to avoid paying taxes like the rest of us.

In addition, Democrats should temper their dedication to the free trade movement. This is one area where the Clintonian approach went too far. Some free trade policies are positives for our economy and facilitate the spread and influence of our ideas internationally, but these initiatives must be structured in a way that does not result in the massive migration of jobs overseas and the crippling of American manufacturing and small business interests. There is nothing more disheartening than to see hard working Americans put out of a job, and put out of a trade that they have cultivated for years if not decades. Americans with such solid values should be rewarded with decent lifetime employment, not some bare subsistence retail job they are forced to take because that same retail giant helped put them out of a job. More balance is needed in this area, and the Democrats need to offer an intelligent and viable alternative to the unfettered trade advocates of the GOP. When Democrats have offered these opposing views, they have been rewarded with success at the polls, while free trade proponents like Senate candidate Erskine Bowles in North Carolina are often out-flanked on the populist side by their conservative opponents. Sirota again:

In the Midwest and New England, progressives are focused on small manufacturers. These traditional GOP constituencies, which sell components to large multinationals, have been decimated by a trade policy that encourages their customers to head overseas in search of repressive, anti-union regimes that drive down labor costs. "When the economy turned soft [in 2001], we anticipated the business would come back," one owner of a factory-machine business told BusinessWeek. "But it didn't. We saw our customer base either close, or migrate to China."

Free-trade critics like Democratic Reps. Mike Michaud, Ted Strickland and Tim Holden, who perpetually win Republican-leaning districts, are rewarded for their stands with support from these kinds of businesspeople, who had previously been part of the GOP's base. The U.S. Business and Industry Council, which represents America's domestic family-owned manufacturers, now lists these and other progressives at the top of its congressional scorecard.

Unfortunately, these kinds of trailblazers are not yet being rewarded by their own party in Washington. According to reports, the House Democratic leadership is considering promoting some of the most ardent free traders to the Ways and Means Committee, the panel that oversees trade policy. Apparently Democrats have not yet lost enough seats in the heartland to honestly address their Achilles heels.
Closely related to this issue, is the support of family farms in their competition with large corporate run farming operations and agri-business food processors like ADM and Cargill. Again, the Clinton administration's zeal to woo big business led to some legislative outcomes that were less than desirable from a policy perspective, and from a political point of view, ended up costing Democrats credibility amongst farmers.

Northern Wisconsin and the plains of North Dakota are not naturally friendly territories for progressives. Both areas are culturally conservative, yet their voters keep sending progressive Democrats like Rep. David Obey and Sen. Byron Dorgan, respectively, back to Congress...

Dorgan and Obey also opposed the Republican-backed "Freedom to Farm Act," which President Clinton signed into law. Instead of pretending the subsidies in the bill were good for the little guy, Obey told the truth and called it the "freedom-to-lose-your-shirt" bill. He noted that the new subsidies would primarily go to large corporations, encourage overproduction that depresses prices, and reward big farms over small ones.
Farmers deserve the right to work hard and compete on a level playing field with their over-sized rivals. Corporate farms and agribusiness enjoy some advantages naturally, and this should be accepted, but there is no justifiable rationale to further tilt the balance in favor of the big guys through legislative boon. That is overkill based on political favoritism, not free market principles.

Another important facet of Capitalist Populism is the Clintonian/Rubinian emphasis on balanced budgets. For decades, the GOP was able to use Americans' innate desire for a balanced checkbook (rightly so) to demagogue "tax and spend" Democrats who seemed content to carry sizable revenue draining budget deficits from year to year. Now the tables have turned and the GOP leadership is making the Democrats' dalliance with deficits look modest in comparison - yet remarkably we still hear the tired old "tax and spend" charge being leveled against the left. In reality, the GOP is taking budget deficits to such a reckless extreme that they are threatening the
stability of the dollar and the long term health of entitlement programs like Social Security and Medicare. Democrats need to make balanced budgets a popular movement again, bolstered by their relation to the dollar and the cherished entitlement programs. Jeopardizing the health of the greenback, long a symbol of our strength and our appeal as a nation, is simply un-American.

Since Capitalist Populism is built on the principles of fairness, responsibility, opportunity, and the rewarding of hard work, we must actively eradicate corporate and government corruption which undermine the credibility of our most cherished institutions through unfair gaming of the system. Further, this corruption limits competition, opportunity, is an abdication of responsibility and leads to inefficiencies because it rewards cheaters not hard work. Investors do not opt for markets that are being unfairly manipulated, and capitalism works best in the absence of monopolies and competition stifling measures.

Similarly, voters tend to revolt against what they perceive as intransigent corruption and insider-ship. Let's take a cue from Newt Gingrich and rail against the insider baseball being pitched to Americans from the Republican White House, Senate, House of Representatives and Supreme Court. We are talking about an administration that has, in an unprecedentedly cynical move, appointed business insiders and lobbyists to almost every major regulatory post in Washington. The foxes are guarding the nation's hen houses.

Whether it be corrupt government agencies or corrupt business practices, or where the twain often meet, the interests of hard working Americans are being usurped and trampled upon by an insiders club of money and power. Aspiring gubernatorial candidate, and New York Attorney General
Elliot Spitzer (hat tip to the incomparable Mick Arran), offers an intelligent perspective:

But, even as Republicans invoke pleasant-sounding slogans at every turn, they pursue policies that undermine the values they claim to represent. Take the following three recent scandals: conflicts of interest among Wall Street analysts, who duped small investors with tainted research; predatory lending, which imposed illegal and unconscionable mortgages on homeowners; and illegal practices of mutual-fund traders, who skimmed billions from people saving for their kids' college tuitions and their own retirements. In each of these situations, the Bush administration and congressional Republicans not only impeded the investigations but actually proposed legislation that would preempt the ability of state regulators to combat the problems.

Republicans today place corporate interests ahead of consumer interests. When regulators, such as those in my office, try to call them on their cronyism, they portray our efforts as bureaucratic meddling in free markets. But we did not investigate Wall Street because we were troubled by large institutions making a lot of money; we took action to stop a blatant fraud that was ripping off small investors. We sought to right the wrong, reestablishing the level playing field that is a prerequisite to market competition and ensuring that every investor enjoys the same opportunity to profit that the insiders have.

Similarly, we did not ask the courts to stop predatory mortgage lending because we begrudge lenders an appropriate rate of return. We did so because what was happening to borrowers was illegal and wrong and needed to be stopped so that people could, in fact, have a true ownership stake in society. We didn't investigate mutual-fund companies because of a desire to increase government regulation. We did it to stop a scam that allowed a favored few insiders to benefit at the expense of all other investors.

The Bush administration, in the name of free markets, has allowed business to take advantage of the small investor, victimizing those who want to own a piece of the U.S. economy. The scandals involving Wall Street analysts, banking, and mutual funds all demonstrated the Republicans' failure to protect those Americans who want to play their part in the Ownership Society.
Again, Spitzer emphasizes that the message is not anti-business, just anti-corruption - a position shared by many industrious Americans within the business community. Spitzer also does well to point out the foundation that such ideas have in the ephemeral realm of "values." Capitalist Populism offers a way for Democrats to stake out their own claim to "values," as well as an opportunity to expose the related hypocrisy of many in the GOP.

I have written before that we have "over-valued values," but that was in a slightly different context. The way "values" was used to describe the electoral outcome was heavy handed and misleading. Abortion and same-sex marriage might have influenced some voters, but there were other larger issues at play, and there is only so far the Democrats should go in accomodating voters opposed to the Party on those grounds. That being said, the Democrats do need to reassert their moral standing and connection to regular Americans. If you doubt the importance of this connection, just consider the consistency with which right-wing pundits like David Brooks, Ann Coulter, Rush Limbaugh, etc, harp on the liberal elite meme in order to create the perception that the Republicans are the Party of regular folks, while the Democrats are coastal inhabiting, latte drinking, sushi eaters, etc. These are the same people that have worked so hard to mold the folksy, brush-clearing, rancher image for the Andover-Yale-Harvard grad, grandson of Connecticut Senator Prescott Bush, and son of a former Congressman and President. The fact that the GOP is so preoccupied with the battle of elitism is an indication of the importance of the perception amongst potential voters. Once again, Sirota:

It is this sense of cultural solidarity that often trumps other issues. For example, many battleground-state voters may have agreed with John Kerry's economic policies. But the caricature of Kerry as a multimillionaire playboy windsurfing on Nantucket Sound was a more visceral image of elitism. By contrast, successful red-region progressives are using economic populism to define their cultural solidarity with voters. True, many of these Democrats are pro-gun, and some are anti-abortion. But to credit their success exclusively to social conservatism is to ignore how populism culturally connects these leaders to their constituents.

And therein lies the Achilles heel of the GOP. As much as they pretend to be the Party of everyday people, they are, and always have been, the Party of big business and corporate interests - in a word, "elites." They just dress it up in different clothing and paint their opposition with their own sins. Capitalist Populism has the power to cut through the image in a perfect mixture of values, frames, message and specific policies. And of course, as the economy of the Clinton years suggests, it works. Democrats can assume the enviable task of buttressing small business, family farms, and industrious Americans, while maintaining a sensible pro-business approach. The left can urge balanced budgets, fiscal responsibility, and prioritized spending, while pushing for targeted middle class tax cuts such as Clinton's college tuition breaks. Further, we can take up Teddy Roosevelt's standard by rooting out corruption in corporate America and the government - the two being increasingly difficult to distinguish - which will actually improve the health of our economy by improving competition and allowing our best and brightest to rise to the top. We even have the advantage of building off a work in progress, as exemplified by trailblazing Democrats seizing territory in "red America."

Now all we have to do is convince the leaders in the Democratic Party to adopt the strategy that is working, while abandoning the sure loser. If the past 30 years is any indicator, easier said than done.

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