Dear Commons Community,
Former U.S. Treasury Secretary Larry Summers, is emerging as the Democratic Party’s chief economic policy strategist for the 2016 presidential election. In an opinion piece for the New York Times by contributing columnist, Thomas Edsall, Summers ascendance is a reflection of “the abandonment by much of the party establishment of neoliberal thinking, premised on the belief that unregulated markets and global trade would produce growth beneficial to worker and C.E.O. alike.” Instead:
“Summers’s analysis of current economic conditions suggests that free market capitalism, as now structured, is producing major distortions. These distortions, in his view, have resulted in gains of $1 trillion annually to those at the top of the pyramid, and losses of $1 trillion every year to those in the bottom 80 percent.
At a Feb. 19 panel discussion on the future of work organized by the Hamilton Project, a centrist Democratic think tank, Summers defied economic orthodoxy. He dismissed as “whistling past the graveyard” the widely accepted view that improving education and job training is the most effective way to reduce joblessness.
“The core problem,” according to Summers, is that there aren’t enough jobs, and if you help some people, you can help them get the jobs, but then someone else won’t get the jobs. And unless you’re doing things that are affecting the demand for jobs, you’re helping people win a race to get a finite number of jobs, and there are only so many of them.
He adds that he is “all for” more schooling and job training, but as an answer to the problems of the job marketplace, “it is fundamentally an evasion.”
To counter the weak employment market, Summers called for major growth in government expenditures to fill needs that the private sector is not addressing:
“In our society, whether it is taking care of the young or taking care of the old, or repairing a lot that needs to be repaired, there is a huge amount of very valuable work that needs to be done. It’s much less clear, to use a modern phrase, that there’s a viable business model for getting it done. And I guess the reason why I think there is going to need to be a lot of reflection on the role of government going forward is that, if I’m right, that there’s vitally important work to be done for which there is no standard capital business model that will get it done. That suggests important roles for public policy.”
Earlier this year, Summers co-wrote the Report of the Commission on Inclusive Prosperity, a forceful set of economic proposals released on Jan. 15 by the Center for American Progress.
In order to stem the disproportionate share of income flowing to corporate managers and owners of capital, and to address the declining share going to workers, the report calls for tax and regulatory policies to encourage employee ownership, the strengthening of collective bargaining rights, regulations requiring corporations to provide fringe benefits to employees working for subcontractors, a substantial increase in the minimum wage, sharper overtime pay enforcement, and a huge increase in infrastructure appropriations – for roads, bridges, ports, schools – to spur job creation and tighten the labor market.”
It is my opinion that Summers is right on most everything he is saying. The Democratic Party that embraced neoliberal thinking is losing the enthusiasm of its core constituencies especially the working class and union members. As an example, look at the runoff mayoral election that is going on in Chicago where the incumbent Democrat, Rahm Emanuel, is in a battle for his political life with the Chicago Teachers Union candidate, Jesús G. Garcia. The Democratic Party leadership should heed what Summers is proposing and abandon the neoliberal stances taken by the Obama administration and by a number of state governors including Andrew Cuomo here in New York. It should instead invest in job creation, public works, and support for labor unions both public and private.