Playing a winning hand

Larry Mischel, President of the progressive Economic Policy Institute is one of the most honest and astute economist and political thinker out there today, and if you don’t believe me, you simply need to read his recent column in the American Prospect.

For a little context, the Prospect Online occasionally hosts debates between Democrats/liberals on a number of political and economic issues, and the state of Middle Class America was the subject of such a discussion in early August. While it is worthwhile to read the contributions of the various participants, including labor economist Stephen Rose (who wrote a provocative but in my opinion quite ill-informed piece back in April titled "The Trouble with Class-Interest Populism", Mischel's thoughts are dead-on and are worth exploring in some detail.

The crux of Mischel's argument is that "unless there is a dramatic switch in economic policies, we will not be able to achieve a broadly shared prosperity that benefits both low-income families and the broad middle class."

Rose essentially argues that the beneficiaries of Democratic/progressive economic policy are the poor, not the Middle Class, but Mischel rebuts this claim quite effectively. He notes for example that the tightness of the labor market, social insurance (i.e. Social Security and Medicare, the level of the federal minimum wage and even trade issues are important economic policies Democrats can and should be involved in changing if they take over Congress, and these very issues have high salience for Middle Class as well as low-income Americans.

Populism is a winning issue for Democrats, primarily because the vast majority of Americans haven't gained ground in the last six years when Republicans have controlled the Executive and Legislative branches. Whether you want to talk about increased income inequality, manufacturing job losses, the wholesale destruction of workers' pensions or weak income growth, the bottom 70% of American workers are treading water. At the same time, millionaires and billionaires who are the beneficiaries of massive tax cuts--made despite simultanous cuts in social spending which benefits low-income and Middle Class workers--have seen their net worth explode. It is no coincidence that the Forbes 400 is now comprised entirely of billionaires.

Democratic candidates would do well to listen to Mischel and his compatriots and consider running on core economic issues, as opposed to focusing on GOP incompetence or worse yet irrelevant social issues like flag burning. We'll see what happens in a few weeks.