Democrats used to be known as the party of the working people—so how did they get so off track? Who took over the party, and why? Author and professor James Kwak joins Nick and Paul in a blistering analysis of the decline of the Democratic Party, and explains how we can get it back on track. This episode originally aired in January 2020.
News clips credit: C-SPAN, ProfGP, CNN
James Kwak is a professor at the UConn School of Law and the chair of the board of the Southern Center for Human Rights. He is the author or co-author of 13 Bankers, White House Burning, and Economism. His latest book, Take Back Our Party: Restoring the Democratic Legacy, is available for free online at The American Prospect.
Read Take Back Our Party on The American Prospect:
Introduction – Restoring the Democratic Legacy: https://prospect.org/politics/take-back-our-party-restoring-the-democratic-legacy/
Chapter 1 – Their Democratic Party: https://prospect.org/takebackourparty/chapter-1-their-democratic-party/
Chapter 2 – Bad Policy: https://prospect.org/takebackourparty/chapter-2-bad-policy/
Chapter 3 – Bad Politics: https://prospect.org/takebackourparty/chapter-3-bad-politics/
Chapter 4 – Our Democratic Party:
Nick’s twitter: @NickHanauer
Paul: Hi there, I’m Paul Constant. Today I’m excited to revisit a conversation that Nick and I had with author and professor James Kwak in January 2020. It’s a blistering analysis of the Democratic Party… we cover how the party that used to be known as the party of the working people was captured by neoliberalism. You know, this was recorded around the time of the impeachment, and it’s so interesting to hear Professor Kwak stress how important it is that the Democrats develop a backbone, stand for something, and deliver an alternative to Republicans… in the conversation we all lamented the return to Clinton-era Democratic politics that Biden, who was running for President at the time, seemed to represent. for me, it couches the notable non-neoliberalism of the policies and programs that got us through the pandemic in a super celebratory light. The Biden administration has totally pivoted the Democratic party away from the path we were on. We have made so much progress as a party in the ways that we think about the economy, particularly in our recognition of the middle class as what drives the economy and the policies we prioritize because of that knowledge. The fight isn’t over, of course, and neoliberal ideas are still sneaking in here and there, so it’s important that we remain on guard against them. This episode can help with that, and it’s a great history lesson with a fascinating person too. I hope you enjoy!
Nick Hanauer: The Democratic Party was either complicit in or leading, in many cases, a lot of the neoliberal ideas and policies that have created the inequality that we find in our economy today.
James Kwak: The Democratic Party is the most important political party in the world. That’s why it’s especially important today that the Democrats develop the backbone to stand for something and provide a real alternative to the Republicans.
Paul Constant: It’s really important for Democrats to think about what we want to be in the future …
Speaker 4: From the offices of Civic Ventures in downtown Seattle, this is Pitchfork Economics with Nick Hanauer. It’s like Econ 101 without all the BS …
Nick Hanauer: I’m Nick Hanauer, founder of Civic Ventures.
Paul Constant: I’m Paul Constant, and I’m a writer at Civic Ventures …
Nick Hanauer: Well, Paul, today we get to bring back our old friend James Kwak, Professor James Kwak, who wrote that fantastic book, Economism, a couple of years ago. And just to remind listeners, Economism was a book about what we call Econ 101ism or otherwise known as neoliberalism. It’s this set of ideas that are loosely based on neoclassical economics like raising wage and skilled jobs, and people are paid what they’re worth, and the only methodology that works in structuring a human economy is through markets, and so on and so forth. And that was a super interesting book. And he’s just written essentially a new book. Does he call it a book?
Paul Constant: He does call it a book. It’s an interesting set up here. He’s got a book called Take Back Our Party: Restoring the Democratic Legacy. And the way he released it was as a series on the American Prospect. So he felt he had something to say about this immediate political moment as we head into 2020, and the publishing industry is so painfully slow that the only way he could do it was to go through a magazine. And it’s an incredible document, this book, because you’ve heard all of the arguments before, I think, Nick. And I think that many of our listeners have heard a lot of the facts and the figures that he’s building on in Take Back Our Party. But it’s a really intelligently and elegantly structured argument that the Democratic Party has just failed in this moment.
Nick Hanauer: And the cool thing, I mean, the important part of this effort, I think, is acquainting Democrats, and this is very painful for a lot of people, acquainting Democrats with the degree to which the Democratic Party was either complicit in or leading in many cases a lot of the neoliberal ideas and policies that have created the inequality that we find in our economy today. And I think that’s the big lift here and the important lift. I think that the central point he’s making is there used to be a party of big business and rich people, the Republicans, and a party of the people, the Democrats. And at some point, that kind of went away, that we both became parties of the economic elite and the rest is history. And that was a serious screw up. It will be fun to talk to James about how that happened and why that happened and who led those changes.
Paul Constant: So Nick, I think it’s helpful before we talk to Professor Kwak to give some real-life examples of neoliberalism in the Democratic Party. We have some examples from Bill Clinton, Barack Obama, and Hillary Clinton framing policies and ideas in a neoliberal way. The first example we have is President Bill Clinton during his 1996 State of the Union when he’s talking about the importance of limited government.
Bill Clinton: We must answer here three fundamental questions. First, how do we make the American dream of opportunity for all a reality for all Americans who are willing to work for it? Second, how do we preserve our old and enduring values as we move into the future? And third, how do we meet these challenges together as one America? We know big government does not have all the answers. We know there’s not a program for every problem … We know and we have worked to give the American people a smaller, less bureaucratic government in Washington. And we have to give the American people one that lives within its means. The era of big government is over. But we cannot go back to the time when our citizens were left to fend for themselves.
Paul Constant: The idea of limited government is intrinsically neoliberal. It’s taking this idea that Ronald Reagan popularized that all government is bad government, and the role of government should be to shrink itself to a point where it can basically be taken away entirely at some point in the future. Bill Clinton took this limited government idea and ran with it under the auspices of bipartisanship basically affirmed the reality in America that government is a bad thing. There’s a famous Ronald Reagan quote from 1986. He said, “The nine most terrifying words in the English language are, ‘I’m from the government and I’m here to help.’”Bill Clinton took that joke and turned it into policy, which is kind of the quintessential neoliberal move.
Paul Constant: Our next example is Barack Obama. A lot of critics on the left today argue that Barack Obama wasn’t as liberal a president as he may have seemed at the time, and in retrospect, this does seem pretty clear. Here’s a clip from his inaugural address in 2009 that shows that he was already coming into office with a Clintonian or neoliberal framing in his approach to government.
Barack Obama: The question we ask today is not whether our government is too big or too small but whether it works, whether it helps families find jobs at a decent wage, care they can afford, a retirement that is dignified. Where the answer is yes, we intend to move forward. Where the answer is no, programs will end. And those of us who manage the public’s dollars will be held to account to spend wisely, reform bad habits, and do our business in the light of day because only then can we restore the vital trust between a people and their government. Nor is the question before us whether the market is a force for good or ill. It’s power to generate wealth and expand freedom is unmatched. But this crisis has reminded us that without a watchful eye, the market can spin out of control.
Paul Constant: President Obama of course is a writer and is a lot more eloquent than Bill Clinton, especially in his speeches. Clinton tended to go off book and riffed a fair amount. So it’s a little bit harder to parse out what Obama was saying there, but at the center of that clip, he is saying that the market is unquestionably a force for good. He’s making a case for a little bit of regulation. He’s maybe stepping back just a tiny bit from Bill Clinton. But he is making some pretty huge assumptions about the economy in his inaugural speech that place the market and not the middle class at the center of the economy. By doing so, he’s sort of setting the stage for what he then went onto do with the bailouts by bailing out banks and leaving homeowners to twist in the wind when their mortgages were put in peril.
Paul Constant: What he’s doing here is laying the case for a very market-centered economy that then would trickle down and help the American middle class, which is arguably the biggest economic failing of his administration, and it’s right there in his sort of opening statement. And you can also see this in the Affordable Care Act which used markets and the private sector to achieve a public good, by which I mean the government has a very limited role in health care under the ACA. It is basically used to sort of funnel the unquestionable good of the private sector to people. It’s role is basically distribution not actually affecting outcomes the way that single payer healthcare plan would. Right in his inaugural speech, you can see his opinions on how the economy works, and it’s a very neoliberal understanding of the economy.
Paul Constant: And our final example is from Hillary Clinton in one of her 2016 debates with Senator Bernie Sanders. Clinton again here is leaning more towards the Obama flavor of neoliberalism as opposed to the Bill Clinton version, but listen to this.
Hillary Clinton: I think what Senator Sanders is saying certainly makes sense in the terms of the inequality that we have. But we are not Denmark. I love Denmark. We are the United States of America, and it’s our job to rein in the excesses of capitalism so that it doesn’t run amuck and doesn’t cause the kind of inequities that we’re seeing in our economic system. But we would be making a grave mistake to turn our backs on what built the greatest middle class in the history of the world.
Paul Constant: This is something that actively bothered me at the time, I remember, when she says that, “We’re not Denmark,” in America. And she doesn’t explain that. She doesn’t say why we’re not Denmark, what qualities make America different from Denmark, why it wouldn’t be possible to do it. She just says, “We’re not Denmark.” The implication here is that our version of market capitalism delivers prosperity. It subscribes to the America is the greatest nation on earth and therefore we are inherently different somehow, but where she lands on this is she’s talking about how … She’s reaffirming Obama’s inherent idea that government’s role should be limited in controlling the markets of healthcare and stripped down to basically a distribution model, and at worst case, a referee who decides which way the market should flow.
Paul Constant: And it’s building on the Obama idea that government should be a limited actor to not even harness the private markets, but to sort of funnel it to where it can do the most good. Like with Obama, Hillary Clinton’s case sounds kind of believable from the outside. It sounds a lot like what we’re saying here at Pitchfork Economics because we believe in capitalism in general, but I think the important distinction to make is that Clinton said that the economy built the strongest middle class in the history of the world. Whereas we believe that the strongest middle class in the history of the world is what built the American economy and what makes the American economy great. It puts the cart before the horse to use a cliché by saying that middle class economic strength is a consequence of a strong market. Whereas it’s really the other way around. And that’s the central distinction between progressive thinking, liberal thinking, and this sort of neoliberal apologist for the market thinking that Kwak is talking about in his great book and what we talk about on this podcast when we talk about neoliberalism.
Paul Constant: And now that we’re all on the same page, here’s Professor James Kwak.
James Kwak: My name’s James Kwak. I’m a professor at the UConn School of Law, and I just finished a book called Take Back Our Party: Restoring the Democratic Legacy.
Nick Hanauer: In your book, you make an argument that is even, how should I say it, spicier than the argument that we traditionally make, which is that the world has been taken over by neoliberalism, what you called Economism in your last book. But you’re making an even sharper argument, which is that it wasn’t just Republicans. In fact, it was Democrats too. And that in many ways, the degree to which neoliberalism infected the Democratic Party was perhaps more harmful to citizens and certainly harmful to the Democratic Party than people understand or sort of give credit to.
James Kwak: I think so. I think Democrats play a crucial role in this story. And to put it into context, of course in many ways the conservatives are worse, more ridiculous, more ideological, more given to taking the side of the wealthy. But I think in a sense that’s to be expected in a two-party system. You’re going to have a party of the rich. You’re going to have a party of big business. And the counterweight is supposed to be the party of the people. The party of ordinary people, the party of workers, whatever. And we used to sort of have one. Not quite in the Western European social democratic sense, but FDR, LBJ. We had that party. And that was the counterweight to the conservative zealots. And I think that counterweight has … vanished might be too strong a word, but it’s certainly gotten swept along. It’s become-
Nick Hanauer: Shriveled might be a good word.
James Kwak: It’s the second part of capitalists, at this point. Yeah, exactly. And right now, with no exaggeration, the Democratic Party is the most important political party in the world. The Republicans are just gone, far gone beyond just economism, what I talked about with you last time, certainly with Trumpism I think they’re beyond hope at this point. The impeachment is only making that more clear. And that’s why it’s especially important today that the Democrats develop a backbone, stand for something, and provide a real alternative to the Republicans. Because again, they are the only … I don’t believe we’re going to have a viable third party in my lifetime. The Democrats are the only hope we’ve got, I think, in this political system, sad as it is to say.
Nick Hanauer: Can you talk us through a little bit how neoliberalism came to eat the brains of the Democratic Party and sort of how we got to this place
James Kwak: The rise of conservative economic thinking on the right, among the Republicans, is well known. It’s been documented a lot. And I think among the Democrats, it was largely a case of … It was two things. It was me-too-ism. They saw how successful Ronald Reagan was, which is a very simple message. In these times, government is not the solution, government is the problem. And then I think the other aspect, and one thing I think that is somewhat original to my book, not entirely, is the idea that the Democratic Party essentially from the Democratic Leadership Council, from Bill Clinton onwards. You know how people often construct their identities in opposition to what they don’t want to be? They did not want to be the old Democratic Party which they saw as the party of welfare, redistribution, union bosses, welfare queens, poor people, factory workers. That was the image of the Democratic Party that Ronald Reagan foisted on them. And instead of fighting back, they kind of accepted that. They said, “We don’t like that either. We want to be a new Democratic Party.”
James Kwak: The question of the new Democrats, the Democratic Leadership Council, Clinton, Gore, and those people was to come up with a new Democratic identity that was not unions and welfare but at the same time was not just conservative Republicanism. They knew they couldn’t just completely copy the Newt Gingrich Contract on America. In a political sense, it was very successful. They created this new platform. They said, “We’re the party of growth and innovation and finance and technology, and a bright new future when everyone’s going to have a high skill job and college education, and economic growth will benefit everybody.” And that was the story, and I think it was a compelling message. The problem is that it was kind of empty of policy and it failed for reasons we can talk about.
James Kwak: That I think was the crucial moment when they said, “Okay, Carter was crushed, Mondale was crushed, we don’t want to go back to being the party of the New Deal and social security and workers. We want something new.” They chose this new identity, and in doing so, they became the second party of capital. As Gingrich moved the republicans to the right, the Democrats basically took the space that used to be occupied by Rockefeller Republicans. That’s the two-party system we have today.
Nick Hanauer: In their defense, they were surrounded by very smart sounding neoclassical economists who were telling them that markets were perfectly efficient and people were perfectly rational and tax cuts for rich people created growth, and there was an absolute and direct trade off between increasing wages and the number of jobs, and all sorts of other crap that was internally consistent but not true. I think people bought it. I mean, I know they bought it. They just thought it was true. And so the political narratives and policies that they adopted were consistent with those beliefs, and the rest is history.
James Kwak: Yeah, exactly. I mean, I think that a lot of these people were well-meaning, and a lot of them were certainly very smart and well-educated beginning at the top with Bill Clinton and his staff. I say I think at the end of Chapter One … Chapter One describes the transformation of the Democratic Party, and I say at the end essentially, “This was a coherent vision. The vision was, what we’re going to do is we’re going to manage the economy better. And if we manage the economy right, if we make markets work, and if we …” it was the doctrine of growth and opportunity. If we make markets work so we have more economic growth, and if we help people, disadvantaged people, by helping them get a better education … Basically when they say opportunity they mean education, we’ll let everybody tap into this growth.
James Kwak: And I say at the end of the first chapter, “Yes, this is the Republican vision, but it’s not nonsensical on its face. It kind of makes logical sense.” That’s why I think it’s then important to say, “Okay, now it’s 25, 30 years later. Let’s look at what happened.” And I think we all know what’s happened. The 1% has done fabulously well, and the 75th to 99th percentile has done pretty well, and everyone else has done poorly. So we’ve had growth, and it hasn’t trickled down, and we have as we know deep seated economic insecurity. I think their vision, in a sense they had a chance. And it failed.
Nick Hanauer: Yeah, one of the really interesting things that I’ve experienced, and I’ll bet you many of our listeners have experienced is that when as a Democrat you suggest to other Democrats that we have been complicit in this shitshow, people get very angry and defensive. So it would be fun if you could give some examples of what we did and where we went wrong that were specific to frame out a little bit more what we mean.
James Kwak: So the two examples that come most readily to mind are probably familiar to some of the audience. I’ll try to be quick. The most obvious is the natural deregulation. I won’t spend more than 30 seconds on that, but essentially from the late 1980s until the early 2000s, financial deregulation was entirely a bipartisan affair co-led by Republicans and Democrats, led by Bill Clinton and his treasury department. And the landmark pieces of legislation we think of, like the Gramm-Leach-Bliley which overturned the Glass Steagall Act and the Commodity Futures Modernization Act which deregulated derivative. These were under Democratic administrations and with the consequences that we all know.
James Kwak: We did not just have a housing bubble and a collapse and this scary moment in 2008. But the long-term kind of wealth effects of the financial crisis and Great Recession were extremely inequality increasing, because at the very top, people’s wealth is largely based on their stock portfolios, which as we know have tripled, maybe quadrupled, I’m not sure, since 2009. And in the middle class and below, people’s wealth has basically devalued their houses, which have not come back.
James Kwak: Second example, again probably familiar to much of the audience, is welfare reform, which was again a bipartisan accomplishment. In 1992, Bill Clinton essentially ran to the right of George Bush on welfare reform. His catchphrase was, “Two years, and you’re off.” You get two years of benefits, and then you’re done. You can’t get cash assistance. And a lot of research has gone into welfare reform, the effects. And I would say that no one would argue with inequality increasing in the sense that some people on welfare with better educations, better health, more stable family situations were able to get jobs and work. But essentially the bottom 40% or so of welfare recipients were not able to get jobs. A lot of them have been cut off from cash assistance, and we’ve had this explosion in the number of people in extreme poverty.
James Kwak: So I’ll mention those two just to give me 30 seconds, I just want to mention Obamacare as well. Obamacare I think was a step forward. It was certainly an improvement on what we had before, but I think it’s an example of the kind of technocratic democratic solution which is, “We want everyone to have health insurance. We want everyone to afford it.” To me, that sounds like we need a national government program where you pay taxes based on your income, and everybody gets healthcare. But no, we decided to do it by harnessing the power of private markets in these exchanges. We have this extremely complicated system which I think is bound to fail in five to 10 years essentially because it doesn’t have the ability to control costs. So I think as people know the scandal of today is not just that people are uninsured. The number of people who are uninsured declined and has since stabilized, but that many people who nominally have insurance can’t afford it because all of the costs are being shifted to the back end, to deductibles and copayments.
James Kwak: Again, Obamacare was better than nothing, but it’s an example of how dedicated this generation of Democratic policymakers was to the idea we always have to use the private sector and markets. And it’s an example, I think, of the limits of that approach.
Nick Hanauer: It is true for me as a 43-year-old man to say that Obama was the best president of my lifetime. But also that he was a disappointment in that he continued these neoliberal policies. But when I say that, people get very upset, Democrats. And there’s a lack of introspection in the party and a refusal to accept criticism. I was wondering if you could maybe talk about what kind of reception you’ve gotten with this piece and if you have any ideas for how people can critique the party with minimizing the sort of pushback from Democrats?
James Kwak: I’m not sure I have a good answer to that last question. I’ll see if I can think of one. The challenge is that Barack Obama was a rockstar. And I think looking back … I would say among the politically astute left, Obama’s image is very equivocal at this point. I mean, many people have negative opinions of Obama. The challenge looking back, even back to 2006/2007, I initially supported John Edwards, not Obama. Of course, John Edwards turned out to be awful in many ways. But my opinion of Barack Obama from the beginning is this man is a moderate. And I believe there’s actually a quote, which I’ve heard it said, that Barack Obama himself said during the campaign essentially something to the effect of, “I am a screen on which other people project what they want to see.” And people wanted to see, because he was an African American, the first African-American president, which is an enormous accomplishment. They wanted to see the next Abraham Lincoln. They wanted to see the next FDR.
James Kwak: And Barack Obama, he’s from the same mold as Bill Clinton and Tim Geithner and Larry Summers and all of them. He’s an extremely educated, extremely smart, extremely ambitious meritocrat. He was the editor and chief of the Harvard Law Review. The people who want to be editor and chief of the Harvard Law Review are basically people who are driven by ambition and making the next rung on the ladder. And that’s perhaps beside the point. He had this political magic. He was able to govern as a centrist. And to do things like negotiate a grand bargain with John Boehner which of course fell through in which he offered a decrease in social security benefits. He was able to do all of this while, because of his image and charisma, posing as a man of the people. Because of that, his legacy, his image is sacrosanct among a lot of Democrats, which is causing problems in this primary right now because people like Elizabeth Warren and Bernie Sanders cannot criticize Barack Obama. And all Joe Biden has to do is say, “I was Barack Obama’s vice-president.”
James Kwak: It’s interesting. There are specific issues on which many Democrats now say Obama was wrong, like he deported more immigrants than anyone before him, and Afghanistan. Now it’s pretty clear that he was part of the unnecessary perpetuation of Afghanistan. But he has this magical charisma. People say, “Okay, he may have been wrong about this. He may have been wrong about that, but he was a great man.”
Nick Hanauer: Yeah, but at least he could string a sentence together.
James Kwak: In comparison to his predecessor and his successor, as Paul said, there’s no comparison. Whom would I rather have as president?
Nick Hanauer: Yeah, but it is highly problematic politically because he did govern as a neoliberal. And Hillary Clinton ran as a neoliberal.
James Kwak: And now Joe Biden as wanting … I wouldn’t say he’s running as a neoliberal, but Joe Biden is running as a return to the good old days of Barack Obama and Hillary Clinton.
Nick Hanauer: Yeah, pretty much.
James Kwak: And what I would say is that I think that … I said earlier, the Democratic party is the most important party in the world. And I think my very high level impression of the past 30 years of politics has been Republicans are in power. They move the country to the right. Democrats are in power, we kind of hold the line for a while. And then we know the Republicans will come back into power and move the party to the right. So sure, Biden would be better than Trump. There’s absolutely no question. But I don’t feel like Joe Biden is going to undo much of the damage of the past 20 years. And at some point, a Republican will win again.
Nick Hanauer: That’s right. I mean, the reason that I think that in particular the policy agenda of people like Elizabeth Warren is so indispensable to the future success of the party and the country frankly is that only by enacting policies that ambitious can you make a significant enough difference in the lives of ordinary citizens for people to again conclude, A, that government can make a difference in their lives that’s positive. And B, that the Democratic Party stands for more than being just feckless corporate stooges too. And in the absence of that kind of material, substantive sort of vivid change, bad things will happen, both to the country and to the party.
James Kwak: There are two good points you raise. One is that even to the extent that the Obama administration did things that were good as opposed to bad … I’m not an expert on this. Other people have written more about it. They tend to do it in ways that people are not aware of. So as I recall, there was a payroll tax cut which was intended as an economic stimulus. And they purposefully made it invisible essentially by reducing people’s withholding. Whereas George W. Bush sent people a check.
Nick Hanauer: Correct.
James Kwak: And this was done probably for the best economic intentions, but even when the Obama administration used the power of government, they disguised it, and they rhetorically talked about innovation, private sector, and all of these things.
James Kwak: The second thing I’ll say building on what you said about the Warren policy platform is that, this is something I say in the book, I think that the Democrats did a lot of things for ordinary people from the 1930s through the 1960s, maybe early 1970s when we still controlled Congress. And those real material improvements in people’s lives, social security, Medicare, Medicaid, and so on, people felt those. People understood that the government was helping them. And there was a 20, 25 year lag. What I mean by that is for 20, 25 years people still thought the Democratic Party had their backs even when they were not really doing anything for them. But that wears off eventually. And what I feel like has happened in the past few years is Chuck Schumer and Nancy Pelosi stand up and they say, “We’re all about jobs and workers and the 99% not the 1%,” and no one believes them.
James Kwak: So it will take a lot of time, as you say, of actual policy … Yes as you say, first of all, get people to believe that government can do something for them and also get people to believe that the Democrats actually care about them instead of just counting on their votes in November, which as we found out, we can’t count on them anymore.
Nick Hanauer: Yeah, it’s interesting. Again, I talk to lots of Democrats who simply can’t understand why other people do not believe that the Democratic Party is on their side. You have to only point out things like the biggest impact on wages for working people over the last 10 years has been the increases in the minimum wage. But the Democratic Party had nothing to do with that, like literally nothing to do with the increases that have happened in the minimum wage. The $15 minimum wage was not a product of the Democratic Party.
James Kwak: It’s all been local.
Nick Hanauer: It’s all been activists acting independent of the party. Now some of those activists may have been Democrats, but it took the United States Senate six years, I think, to agree that a $15 minimum wage was a good idea. Of course, Barack Obama was president for eight years, and the highest he ever talked about raising the minimum wage was to 10.10 at the very end of his term. People wonder why working people don’t think we’re on their side. It’s just nuts.
Paul Constant: At the moment, we do have some Democrats who I think largely agree with you and have these populist ideas. Let’s call them, for the sake of pulling it out of their primary and making it a larger conversation about the party, the AOC wing of the party where they’re talking about a broader populist economic standpoint. But there are still plenty of elites or neoliberals. I guess the question is how do you see the party moving forward? Is there a way to save us from the neoliberals strike back? What do you think’s going to happen?
James Kwak: This is perhaps the most controversial thing that I think and say, and that is that I often think we need to learn from the conservatives. And there are certain things we should not learn from them, like divisive politics and turning one side of America against another. There are two I think. One is that the conservatives figured out, okay, in the 1950s they were completely in the wilderness. They said, “We have to have bold ideas. We have to say things like, ‘Government regulation is bad. The free market will solve everything.’ We need bold ideas, and we need to stand for something. And people have to know what we stand for, and even if we’re a small minority, that’s okay. We have to have faith that we can convince people, and they will move in our direction.”
James Kwak: And the second thing I think, and this is probably the most controversial thing I’ll say, is that the conservatives, in my opinion, and I’m simplifying slightly, but they felt it was more important to stand for something than to get every single vote in the next election. The history of the conservatives is that they primary to moderates, even when it meant that they were going to give … that they were increasing the chances that the Democrats would get the seat because they were putting up conservatives instead of moderates. And in the long run, this is the success story of our lifetime when it comes to politics. They’ve achieved more than Barry Goldwater could possibly have managed to be possible.
James Kwak: So I think on the Democratic side, so perhaps we don’t want to go entirely to that extreme, but the Democratic side, we are so terrified of losing any independent voter and we are so dedicated to this mythical median voter who doesn’t actually exist that … The rhetoric is always about unity and avoiding factionalism and making sure that we unite behind the person who’s most able to beat Trump, which is code for Joe Biden. And in the best case, what does it give us? The last time we had the presidency and both houses of Congress was 2009/2010. The party policy was being dictated by Joe Manchin. That’s why when we are in power we can’t achieve anything because we are willing to let conservatives into the party and let them hold the balance of power. And I just don’t see the point.
James Kwak: So I think we need to … that’s what I think. And it’s very controversial. People will say Supreme Court, abortion, we have to win. Every election it’s like the important election of our lives. We have to win this. We have to make any compromise to do so. And that’s not what the conservatives did. And that’s all I’ll say. It’s not how they ran the last 50 years.
Nick Hanauer: Right, no, it’s so true. And the other big challenge is just the sociology of how politics … I spend a lot of time with rich people, and if you’re sitting around in a $20 million ski home talking about politics with a bunch of friends, it’s remarkable how many people agree that Bernie Sanders and Elizabeth Warren would be terrible for the country and makes them not want to be Democrats. And the problem, of course, is that Democratic politicians spend a lot of time raising money in those houses.
James Kwak: Definitely.
Nick Hanauer: And it’s very challenging. It’s not just the money, by the way, it’s easy to be persuaded by-
James Kwak: Yeah, I totally agree.
Nick Hanauer: A group of earnest, smart, successful people that a wealth tax is a bridge too far. When it probably isn’t.
James Kwak: I’m glad you say that. I’m glad you say that, Nick, because obviously you’ve been among a lot of rich people. I’ve been among a lot of rich people. And there is a … I think it’s human nature when you are … no matter who you are. Unless you’re Bernie Sanders who I think just doesn’t’ give a damn. I think it’s human nature when you’re with these titans of the private sector who’ve made billions of dollars to maybe a little bit to want their approval but also to think that they have valuable things to say. Yeah, I mean, when I was a young person in the business world, you meet a CEO. And the first time you meet a CEO of this big public company, you’re like, “Wow, this guy most be a genius.” And then after you meet 10 or 20 CEOs, you start thinking, “Okay, not so much.” We have this cult of wealth in this country. You’re right. It’s not just the money. If every Wall Street banker is telling me that Elizabeth Warren is going to mean the end of the world, then they must be right.
Nick Hanauer: Right, exactly. One of the questions we always ask our guests, James, is why you do this work? What motivates you?
James Kwak: I’ve only had an intellectual career for about a decade. At the beginning, it was very exciting to see my name in print and have lots of webpage hits and get my name in books. And that was gratifying. This book I would say that more than anything I’ve written in the past, I wrote because I really felt it needed to be written at this moment. My previous books have been largely about Republicans and what they have done because as I said earlier, the conservatives have been the driving force in American politics and policy in my lifetime. And to understand the problems we face today, I think you have to understand the damage that they have wrought on our country. But as I said earlier, right now, the Democrats are our best last hope for resisting the tide of conservatism and Trumpism and whatever else may come later. And I felt like, in a sense, this debate over the future of the Democratic Party is one of the most important debates we have right now. I wanted to say what I had to say on the topic. I also wanted to get it out before the Democratic primary, which is one reason I didn’t go with a traditional publisher, which would have taken until next summer.
Nick Hanauer: 2023.
James Kwak: Yes, exactly. So there are a lot of voices out there. A lot of people saying good things, a lot of people saying less good things. And it’s hard to know. I’ve been around the block enough to know that it’s hard to know what difference one person can make, but this time I felt like I had to try.
Nick Hanauer: That’s awesome. Well James, thank you so much for chatting us. This is just a fascinating conversation, and we appreciate your work and making these arguments.
James Kwak: Thank you very much. Same to you. Okay, thanks Paul.
Nick Hanauer: Take care.
Paul Constant: Take care, thanks,
James Kwak: Okay, bye.
Nick Hanauer: So that was a super fun and interesting conversation sure to antagonize a lot of neoliberal Democrats. But Paul, one of the things that struck me about our conversation with James was the use of the word moderate, which is something we thought a lot about here.
Paul Constant: It’s true.
Nick Hanauer: What moderation has come to mean in the Democratic Party is balancing the economic interests of the top 1% against everybody else. That’s what moderate is.
Paul Constant: It’s basically conservatism. It’s figuring out the way to make the least waves in the bathtub.
Nick Hanauer: Yeah, and for sure how to govern without materially antagonizing economic elites. We mess around at the edges, and that’s moderation. Or centrism, that’s another word that’s often used. And we strongly believe that true centrism means governing towards the middle, towards the center, and that enacting policies and building narratives that benefit the broad middle of society which means that policies like raising the minimum wage a lot, that seem not moderate, really at the end of the day, are. That if you raise the minimum wage high enough so that it actually affects the center of the income distribution, that’s centrist. If you raise it just a tiny little bit so it doesn’t antagonize rich people, that’s not moderation. That’s capitulation. That’s appeasement in the face of the neoliberal onslaught.
Paul Constant: Another way to look at it would be that the feathers that it ruffles are only the feathers of the richest Americans. If you’re pissing off those people, then you’re probably doing something right at this point in the economy.
Nick Hanauer: Correct. In the conversation, I did allude to being among rich people who substantially agree that things like a wealth tax are anti-American-
Paul Constant: Right, they’re bad for everyone, I’m sure. I’m sure they’ve got my best interests at heart when they’re in Aspen discussing how the wealth tax is going to hurt them.
Nick Hanauer: But what I sometimes do and sometimes don’t remind them is if they didn’t hate it … If people like me don’t hate it, you’re probably on the wrong track.
Paul Constant: Eat your spinach. So we’re clearly at this moment in the party where we’re kind of at a crossroads. And super good example of that has to do with the New York Times presidential candidate endorsement.
Nick Hanauer: Say more.
Paul Constant: As a lot of people know, they had a TV show where they announced their endorsement, and much to everyone’s surprise, they couldn’t bring themselves to endorse a single candidate. Instead, they endorsed Elizabeth Warren, who is a progressive candidate, and they simultaneously endorsed Amy Klobuchar, who is about the most sort of moderate in the traditional sense of the word candidate. So there is not … Just setting aside the idea of a dual endorsement in a primary as being dumb because you are telling people to vote a certain way, they picked two candidates who couldn’t be more separate, who couldn’t be more different from each other in terms of policy, in terms of what they envision for the country. It is impossible to … You can’t make a clear case of what you think you should politically do with these two candidates. There’s nothing you can triangulate from that that makes any sense at all. And I feel like that is what the Democratic Party is doing right now-
Nick Hanauer: Yeah, it’s trying to sort itself out. And by the way, I mean, we like Amy. She’s a very capable woman. She was nice enough to stop by the office when she was last in town, and we had a great chat with her about policy and politics. But she could not be more different than Elizabeth Warren.
Paul Constant: Absolutely, yeah. I’m not saying that she’s a Republican or anything like that, but I am saying that, exactly, there is a lot of difference between her and Warren. And President Klobuchar’s America looks very different from President Warren’s America. And for you to endorse both of them at the same time is mind boggling. It’s impossible.
Nick Hanauer: Yeah, it speaks to the schizophrenia that’s going on right now as we sort of collectively sort out what the Democratic Party stands for and what it means to be a Democrat. I’ll tell you the other thing that James said that I truly love and think is right is that the Democratic Party is the most important party in the world today because it will sort of set the standard, be the standard bearer for the alternative to trickle-down economics and neoliberalism and authoritarianism and this plutocratic, white vision of the future. And the Democratic Party has to figure out how you blend pluralism and an alternative to neoliberalism into a narrative and a message that a majority of citizens can get behind.
Paul Constant: Yeah, and the good news is that visions are forming of what this might look like, and there are people out there who are promoting this vision in a way that would’ve been politically unthinkable almost four years ago.
Nick Hanauer: 3.5 years ago.
Paul Constant: Yeah, exactly. So there’s an actual discussion about the values that the Democratic Party wants to have and the policies that we need to move forward. The thing that I think is maybe the greatest danger comes back to that New York Times endorsement in that you can’t have your cake and eat it too. And so you’ve got to make a choice.
Nick Hanauer: Yes, and people hate to make choices.
Paul Constant: Exactly, and so that’s really the challenge I think we’re facing in the next few months as a party as we move forward.
Nick Hanauer: Well, it was great to talk to James, and it’s great to see him continuing to write. He’s a ridiculously smart and articulate spokesperson for these ideas.
Paul Constant: Yeah, and I hope this essay doesn’t get him banned from the rooms where the people who need to hear it most work and live.
Speaker 4: Pitchfork Economics is produced by Civic Ventures. If you like the show, make sure to subscribe, rate, and review us wherever you get your podcasts. Find us on Twitter and Facebook at Civic Action and Nick Hanauer. Follow our writing on Medium at Civic Skunk Works, and peek behind the podcast scenes on Instagram at PitchforkEconomics. As always, from our team at Civic Ventures, thanks for listening. See you next week.