The Lessons of the 2024 Election; Robert Reich

The lesson of this election is that Democrats must attack inequality – and not cede working-class voters to Trump

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A political disaster such as what occurred last Tuesday gains significance not simply by virtue of who won or lost, but through how the election is interpreted. This is known as the Lesson of the election. The Lesson explains what happened and why. It deciphers the public’s mood, values, and thoughts. It attributes credit and blame. And therein lies its power. When the Lesson of the election becomes accepted wisdom – when most of the politicians, pundits and journalists come to believe it – it shapes the future. It determines how parties, candidates, political operatives and journalists approach coming elections. What’s the Lesson of the 2024 election? According to exit polls, Americans voted mainly on the economy – and their votes reflected their class and level of education. While the US economy has improved over the last two years according to standard economic measures, most Americans without college degrees – that’s the majority – have not felt it. In fact, most Americans without college degrees have not felt much economic improvement for four decades, and their jobs have grown less secure. The real median wage of the bottom 90% is stuck nearly where it was in the early 1990s, even though the economy is more than twice as large now as it was then. Most of the economy’s gains have gone to the top. This has caused many Americans to feel frustrated and angry. Trump gave voice to that anger. Harris did not. The real lesson of the 2024 election is that Democrats must not just give voice to the anger, but also explain how record inequality has corrupted our system, and pledge to limit the political power of big corporations and the super-rich. The basic bargain in America used to be that if you worked hard and played by the rules, you’d do better, and your children would do even better than you. But since 1980, that bargain has become a sham. The middle class has shrunk. Why? While Republicans steadily cut taxes on the wealthy, Democrats abandoned the working class. Democrats embraced Nafta and lowered tariffs on Chinese goods. They deregulated finance and allowed Wall Street to become a high-stakes gambling casino. They let big corporations gain enough market power to keep prices (and profit margins) high. They let corporations bust unions (with negligible penalties) and slash payrolls. They bailed out Wall Street when its gambling addiction threatened to blow up the entire economy but never bailed out homeowners who lost everything. They welcomed big money into their campaigns, and delivered quid pro quos that rigged the market in favor of big corporations and the wealthy. Joe Biden redirected the Democratic party back toward its working-class roots, but many of the changes he catalyzed – more vigorous actions against monopolies, stronger enforcement of labor laws and major investments in manufacturing, infrastructure, semiconductors and non-fossil fuels – wouldn’t be evident for years. In any event, he could not communicate effectively about them. The Republican party says it’s on the side of working people, but its policies will hurt ordinary workers even more. Trump’s tariffs will drive up prices. His expected retreat from vigorous anti-monopoly enforcement will allow giant corporations to drive up prices further. If Republicans gain control over the House as well as the Senate, as looks likely, they will extend Trump’s 2017 tax law and add additional tax cuts. As in 2017, these lower taxes will benefit mainly the wealthy and enlarge the national debt, which will give Republicans an excuse to cut Social Security, Medicare and Medicaid – their objective for decades. Democrats must no longer do the bidding of big corporations and the wealthy. They must instead focus on winning back the working class. They should demand paid family leave, Medicare for all, free public higher education, stronger unions, higher taxes on great wealth, and housing credits that will generate the biggest boom in residential home construction since the second world war. They should also demand that corporations share their profits with their workers. They should call for limits on CEO pay, eliminate all stock buybacks (as was the SEC rule before 1982) and reject corporate welfare (subsidies and tax credit to companies and industries unrelated to the common good). Democrats need to tell Americans why their pay has been lousy for decades and their jobs less secure: not because of immigrants, liberals, people of color, the “deep state”, or any other Trump Republican bogeyman, but because of the power of large corporations and the rich to rig the market and siphon off most of the economy’s gains. In doing this, Democrats should not retreat from their concerns about democracy. Democracy goes together with a fair economy. Only by reducing the power of big money in our politics can America grow the middle class, reward hard work and reaffirm the basic bargain at the heart of our system. If the Trump Republicans gain control of the House, they will have complete control of the federal government. That means they will own whatever happens to the economy and will be responsible for whatever happens to America. Notwithstanding all their anti-establishment populist rhetoric, they will become the establishment. The Democratic party should use this inflection point to shift ground – from being the party of well-off college graduates, big corporations, “never-Tumpers” like Dick Cheney and vacuous “centrism” – to an anti-establishment party ready to shake up the system on behalf of the vast majority of Americans. This is and should be the Lesson of the 2024 election. Robert Reich, a former US secretary of labor, is a professor of public policy at the University of California, Berkeley, and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. His newest book, The System: Who Rigged It, How We Fix It, is out now. He is a Guardian US columnist. His newsletter is at robertreich.substack.com. The Guardian is globally renowned for its coverage of politics, the environment, science, social justice, sport and culture. Scroll less and understand more about the subjects you care about with the Guardian's brilliant email newsletters, free to your inbox.

 

Thomas Piketty - the billionaire class

 Thomas Piketty, 

David Marchese.  NYT.  April 3, 2022.

An economic argument in favor of billionaires is that their doing well is a sign that our system of capitalism is working and that it means growth for everyone. But growth has been slowing down at the exact same time that billionaires have been rolling in it. Has that given definitive lie to the idea that the success of the 0.1 percent is good for the rest of us, too? 

 

Thomas Piketty, 

It’s proof as far as proof can get in the social and political sciences. The evidence that we have is that if you take the United States, the growth rate of national income per capita has been divided by two following the Reagan decade. It’s been a little more than 1 to 1.2 percent per year — the national income per capita real growth rate between 1990 and 2020. It used to be more than 2, 2.5 percent between 1950 and 1980. The tax performance in the Reagan decade was supposed to boost growth: Maybe you would have more inequality, but the size of the pie is going to grow so much faster than before that the average wages and income of average Americans will grow like you’ve never seen. This is not what we’ve seen. 

The big lesson from this is that the period of maximum prosperity of the U.S. economy in the middle of the century was a period where you had a top income-tax rate of 90 percent, 80 percent, and this was not a problem because income gaps of 1 to 100 or 1 to 200 are not necessary for growth. The other big conclusion is that what really matters for economic prosperity is education and relative equality in education. The key reason the U.S. economy was so productive historically in the middle of the 20th century was because of a huge educational advance over Europe. In the 1950s, you have 90 percent of the young generation going to high school in the U.S. At the same time, it’s 20 to 30 percent in Germany, France, Britain, Japan. The story that Reagan tried to tell the country in the ’80s, which is basically forget about equality, the key to prosperity is to let the top become richer and richer — it doesn’t work. 

 

Have you seen any structural or ideological changes that you think make our moment different from historically comparable ones?

Piketty, 

Well, the dominant ideology has been moving toward the view that we’ve gone too far in terms of market liberalization, in terms of globalization without regulation and the superrich getting richer. The problem is that we’re still stuck with institutions that were set up in the ’80s and ’90s in terms of limited tax progressivity, free capital flows without any common collective regulation, without financial cadastre so that you can track who owns what where — which is a big problem when you want to impose sanctions on oligarchs. 

In the United States, this institutional setup has been reinforced because of Trump’s big tax cut on corporations. There are many dramas we associated with Trump, but part of the drama is that he has been able to tell the middle class and lower middle class, “Look, we are going to continue with tax dumping, but I’m going to protect you in another way by protecting you against Chinese and Mexicans, the Muslims.” He was able to be elected on an ideology where you don’t redistribute between the rich and the poor but rather you protect Americans, especially white male Americans, against anybody who looks foreign. The risk is that neoliberalism is replaced by this form of neo-nationalism in order to avoid redistribution. Sometimes people like Trump can be successful with this strategy because it’s a much clearer message than saying, “Let’s look at the history of progressive taxation.”

You mentioned oligarchs. In America, we don’t like to think that we have them — that’s for a country like Russia. Instead we like to think we have entrepreneurs who achieved through merit. But the similarities are obvious: They’re all taking advantage of the free global movement of capital and have a disproportionate amount of political influence. Do you see America as being as securely in the grip of the oligarchic class as other countries we think of as being less democratic?