Even Top Liberal Pundits Still Don’t Understand the Division in the Democratic Party

by Benjamin Studebaker

Today a friend of mine sent me a piece by Franklin Foer in The Atlantic. In the piece Foer gives some thought to what ails the Democratic Party, and he comes to a constructive conclusion–the party needs to reach out to the white working class. But the way Foer gets there troubles me. Too many liberal commentators don’t quite understand the division within the Democratic Party, even the ones who are actively trying to understand that division. Let me show you what I mean.

Like many pundits these days, Foer sees the party as split between a wing which emphasises race and identity and a wing which emphasises economic issues:

Two of the party’s largest concerns—race and class—reside in an increasing state of tension, a tension that will grow as the party turns toward the next presidential election.

He puts race and class up against each other, and he even says that this tension “will grow,” as if it were necessarily the case that the interests of the white working class and people of color conflict. But this dichotomy is too reductive. The two factions in the party do not see themselves as only caring about race or class–they have more sophisticated ideological positions which produce a suite of policy views on both issues.

The fundamental divide in the Democratic Party is between neoliberalism–the movement which has dominated the party since at least the late 70s–and left egalitarianism, the movement which dominated the party from the 30s to the 70s and which has been revived in the last few years as a form of anti-establishment left wing politics.

In the late 70s, the country was wracked by stagflation, and there were two competing explanations for this fact:

  1. The Left Egalitarian Explanation: stagflation was primarily the product of the two oil shocks–the 73 OPEC embargo and the 79 Iranian revolution. It was a contingent condition and could be shrugged off if we relieved our dependence on foreign oil. If the economy didn’t rely on oil, then rising oil prices would have less impact on inflation and the rate could come down without generating excess unemployment or making other fundamental changes to the economic system.
  2. The Neoliberal Explanation: stagflation was primarily the product of structural problems–the unions were too powerful, and the economy needed to be reformed to make labor markets more flexible, making work more precarious and most importantly limiting wage growth so as to bring down inflation. More wealth and income needed to go to investors, and then the gains would “trickle down”.

Both the Democrats and the Republicans eventually embraced the neoliberal explanation. President Carter, who appeared to some like a champion of the left egalitarian view, appointed Paul Volcker to run the Federal Reserve. Volker immediately began raising interest rates to reduce the money supply, cutting inflation while at the same time leading to large-scale layoffs. The economic price we paid in 1980 for this policy helped Carter lose the election to Reagan, but Reagan also subscribed to the neoliberal explanation, and he intensified policies aimed at weakening labor. The 80s did not feature 70s-style oil shocks, and when Volcker and Reagan lowered the interest rate and raised spending in advance of the 1984 election, inflation did not return. Indeed by 1986 there was a global oil glut, with oil prices falling.

The effect of this was to solidify public confidence in neoliberalism, and the Democrats increasingly found they could not compete politically unless their candidates embraced it. So it became a firm tenet of the Democratic Party that left egalitarianism had to be repudiated, that economic growth was only possible if labor continued to weaken. The party’s rhetoric doesn’t always match this, but we’ve seen it again and again in the policy. Rising inequality has been produced by both Democratic and Republican administrations since the late 70s:

There are other ways to see this–inflation-adjusted wages are not much higher than in 1979:

And the “wage share” of economic output has fallen:

Nevertheless, for a while, median household income continued to rise, initially because women entered the workforce and later because of the subprime lending boom in the 00s:

As you can see, there hasn’t been any lasting gain since the late 90s, and we are only just now catching up to where we were immediately before the crash in 2008. Neoliberalism had the public’s confidence when it was continually producing increases in real median household income, but as those increases have become less reliable and more unstable, confidence in politicians who espouse neoliberalism has deteriorated, and this manifests, in both parties, as a reaction against those politicians who are seen as “status quo” or “establishment”. Neoliberalism only works as long as the trickling down actually happens.

But for neoliberal politicians, there is nothing fundamentally wrong with the distribution of wealth and income in the country–indeed, strengthening labor and the unions and heavily taxing the rich would violate their core belief that sustainable economic growth comes from flexible labor markets and trickle down. Many older pundits and commentators came of age politically in the 70s, 80s, 90s, and 00s, and for them left egalitarianism sounds retrograde, because it contradicts what is, for them, the key lesson we learned in the 70s. You can see this in Clinton’s reluctance to support the $15 minimum wage, in her reluctance to break up the big banks, in her support for the Trans-Pacific Partnership, in her opposition to the financial transaction tax, and so on down the line. Neoliberals in the Democratic Party generally only support leftist economic policies when it is politically necessary to do so. They rarely follow through when in office because they don’t believe that distributive justice is a serious concern. For them, social justice is only about discrimination and status. The issue is not how many poor people there are or how many rich people there are, it is whether the cohort of poor people and the cohort of rich people look like the country as a whole, and whether the people in those cohorts who come from historically marginalised groups are treated with equal status and equal respect relative to the white men in those cohorts.

For neoliberal Democrats, justice looks something like this:

In the above chart, white men are the white bubbles, and the historically marginalised groups are the black bubbles. Roughly 1 in every 3 Americans is a white man. For neoliberal Democrats the problem is that the white men overly dominate the top end of the distribution. The answer, then, is to proportionalize the distribution of white space, and this means, in practice, moving some white men down the scale. In total, a little more than one full white bubble has moved down and a little more than one full black bubble has moved up. White men are likely to see that kind of politics as a threat to them, and at a time when everyone in the country is under economic stress and the economy feels like a zero sum game, it discourages them from supporting the Democrats. The Republican neoliberals think that it is every bubble’s personal responsibility to do the very best it can to move to the right end of the distribution, and if it doesn’t make it there then that’s its own fault. So for them, the status quo is justice:

Justice for Neoliberals GOP

Since the 80s, the fight between the two parties has been primarily about these two distributions, and that’s it. But the left egalitarians never completely disappeared. Some of them accepted that their preferred candidates couldn’t win elections and opted for “lesser evil” voting, some gave up and stayed home, some continued to organize politically to defend the welfare programs, labor rights, regulations, and other policies put into place by folks like Franklin Roosevelt, Lyndon Johnson, and even post-war Republicans like Dwight Eisenhower and Richard Nixon. They still believe it’s possible to have strong economic growth with strong wage growth and with a fairer (though not necessarily strictly egalitarian) distribution, and in a political climate where neoliberalism is no longer trusted the way it once was, they have the opportunity to push something like this:

Here we have a proportionate distribution among the white and black bubbles, just like neoliberal Democrats have, but we have also eliminated the very richest and very poorest cohorts, instead opting to expand the middle class. There’s still some level of inequality, but the society has markedly less stratification. One of the consequences of this is that we are not constantly moving the white men down–we are also moving some white men at the bottom of the distribution up. The only white men who are really targeted here are the white men in the wealthiest column. Notice that we also hit a small number of top-end people from historically marginalised groups–that second wealthiest bubble goes from all black to one-third white. In total, 1 white bubble has moved down, 1/3rd of a black bubble has moved down, but 2 black bubbles and 1 white bubble have moved up. The rich white men are worse off, but the poor white men are better off, and historically marginalized groups have made gains at the same time–indeed, they’ve made larger gains than they would have if we’d just eliminated discrimination, because eliminating the wealthiest cohort gives the state more wealth and income to redistribute.

So for the left egalitarians it’s not class instead of race, it’s both class and race together, while for the neoliberals in the Democratic Party it’s race alone. Now, if the economy were booming and all people, even white men, were seeing their incomes increase, white men could get behind that, as they did in the 1990s. White men can support a party that increases their incomes in absolute terms, even if it increases the incomes of other groups at a faster rate. But because incomes are increasingly stagnant relative to the late 90s, the neoliberal Democrats appear to be attempting to expropriate white men as a bloc. When the pie doesn’t grow, the only way to increase your income is by making relative gains at someone else’s expense. At a time of weak economic growth, you need a redistributive scheme that has more winners and fewer losers. The way to get poor white men to support redistributing some of the rich white men’s income to historically marginalized groups is to give the poor white men their share of the spoils.

There are two reasons neoliberal Democrats can’t do that:

  1. They don’t recognize that we have a distributive justice problem, so they can’t expropriate the top bubble, limiting the amount of redistribution they can do in the first place.
  2. They don’t recognize that we have a distributive justice problem, so they don’t recognize poor whites as an oppressed group that is worthy of help.

The Democratic Party’s problem isn’t about race vs class. Everyone agrees that discrimination is unacceptable. The difference is that neoliberals think the economy can only grow well with a highly unequal distribution, and the left egalitarians think it grows better when the distribution is a bit fairer. As neoliberalism continues to fail to deliver results and as the 70s recede further into the mists of history, more people, especially more young people, will be inclined to reject it. If the Democrats don’t offer an alternative, desperate and anxious people–especially white people–will continue to be pushed into the hands of Republican demagogues. The only way forward is left.