Why the Contest Between Hillary and Bernie Is Such a Big Deal for the Future of Our Economy

As the New York primary approaches, the candidates are getting tough with each other and their supporters are getting even tougher.

But is all this fighting really warranted? Is there something at stake that runs deeper than personality differences, the first women president, Clinton fatigue, or pie-in-the-sky Bernie? Since both candidates are so much better than the Republican crazies, does it really matter all that much whether Hillary or Bernie gets the nod? Yes, it matters.

We are witnessing the first campaign since 1933 that directly challenges the essential features of our economy. We are now living through a 40-year neo-liberal dystopia. Finally it is under assault. Any objective observer would note that Hillary operates within that neo-liberal order while Bernie is its attacker.

Neo-liberalism refers to the set of theories and practices that swept through our political system (and many others) in the late 1970s. It argues that prosperity for all will occur only if we 1) cut taxes (especially on the higher income brackets); 2) cut government regulations on the private sector; and 3) cut/privatize government social programs. This combination of policies, it is argued, maximizes economic efficiency and increases economic incentives which together continually improve and expand our economy.

By the time Reagan came into office, both political parties had adopted this model. In short order trucking, airlines, telecommunications and finance were deregulated. Taxes on the highest income earners were slashed. Cuts in welfare became the order of the day. Both parties tripped over themselves to unleash the private sector.

Both parties also oversaw cuts in government employment and the privatization of government services. Corporate taxes as a percent of state and local revenues fell by half. Both parties acted as if any and all jobs in the private sector, by definition, were more wholesome than those in the public sector. Both parties competed strenuously for Wall Street campaign funds by eviscerating New Deal controls on speculative activity and the size of financial institutions. Goodbye Glass Steagall, hello too-big-to-fail banks.

That set in motion a generation of runaway inequality as the incomes of the wealthy skyrocketed while the wages of the average worker stagnated. In 1970 the gap between the top 100 CEOs and the average worker was $45 to $1. Today it is an incomprehensible $844 to $1. (All data for this article comes from Runaway Inequality: An Activist's Guide to Economic Justice.) Not only did runaway inequality crash the financial system in 2007-'08, by then Wall Street was so large and so powerful it could extract trillions of dollars in bailouts. Today the biggest banks are even bigger than before the crash. And during the current seven-year recovery, 95% of all the new income created in the entire economy has gone to the top 1%. Runaway inequality is the new normal.

Meanwhile, we live in a perpetual fiscal crisis as large corporations and the wealthy shift their money offshore. The richest country in the history of the world faces a crumbling infrastructure, barely potable water, decaying schools and a deteriorating environment. We lead the world in prisoners, but are second to last among developed nations in childhood poverty and labor rights, last in paid family leave and holidays, and nearly last in upward mobility. And we've mortgaged the future by placing our children under $1 trillion in student debt.  

Hillary's Answer to Neo-liberalism

Her direction is clear—make it better because it's too strong to change fundamentally. She wants to tweak the system so it is fairer to people of color, the LGBT community and women, not a small matter. She also wants to modestly rebuild the infrastructure, reduce student debt and ratchet up Wall Street controls at the margin.

Her economic program is the liberal wing of neo-liberalism. Hillary starts by accepting the ways of the world. Wall Street is there, it is powerful, Democrats need its campaign support. The conservative Congress is there, and it must be worked with. She has trained herself to work from within. She believes she can deploy the many connections to the world of money and power the Clintons have amassed over the decades.

Her economic program speaks for itself. Corporations are central to it. She wants to provide tax incentives to entice corporations to repatriate their profits and keep jobs here at home. She wants to build government-private partnerships to invest in inner cities. She does not want to break up the big banks. She does not want a Wall Street speculation tax. And she does not want free higher education at public colleges and universities.

This is realistic because some version of these proposals might pass through the established neo-liberal order. However, none of these proposals are likely to dent, let alone reverse runaway inequality. Instead, they might lead to more fairness for women and people of color at the higher professional levels.

But such fairness will not extend to working people and the poor, especially low-income people of color. Their plight can only improve through a more radical reversal of runaway inequality, through policies that undermine neo-liberalism and therefore are deemed by the established order as unrealistic. Even Hillary supporters must see that her economic proposals are not designed to reverse runaway inequality.

Bernie's Assault on Neo-liberalism

The Sanders campaign rejects the neo-liberal order. It argues that Wall Street and our campaign finance system are rigged and must be radically restructured. Each of his proposals is designed to redistribute wealth from the billionaire class to the rest of society and re-establish robust social services.  

The emblematic proposal is the financial speculation tax to fund free higher education, which moves hundreds of billions of dollars from Wall Street into the expansion of higher education. Just like the GI Bill of Rights after WWII, it would produce millions of new jobs to construct, teach and administer at expanded colleges and universities. None of these jobs could be exported.

Sanders knows that these proposals, along with campaign finance reform, massive infrastructure investments, single-payer health care, and public banks will crash into a mighty neo-liberal wall of resistance. Nearly every Republican congressperson, along with corporate Democrats, will defend their system and undermine Sanders' proposals. Hence, the pie-in-the-sky critique.

Sanders knows what he's up against; what we're up against. Nothing changes unless we mobilize en masse to take on the neo-liberal machine. An election here or there won't change it. It requires following the path of civil rights activists and labor organizers who in the past built mighty movements in the streets, the courts and the political arena. Sanders is correct to say that real changes comes from the bottom up. But, oh is that difficult to do.

The Choice

Do we make a perpetual accommodation with neo-liberalism or do we take it on?  That's the defining choice in this election. It also explains some of the gap between Hillary and Bernie supporters.  

It's exhausting to think about movement building. We haven't seen it on a mass scale since the 1960s. It takes enormous energy and hope. Without that drive and optimism, it's hard to picture a million people marching on Congress against a corrupt campaign finance system or in behalf of free higher education. That's the work of young organizers.

It's much easier to imagine Hillary pushing for change here and there, getting a few things done or maybe not getting much done at all if she decides to govern from the center. At least, she won't do bad stuff, so the argument goes (assuming her inner hawkishness doesn't take over in foreign affairs). And at least, she doesn't put the burden of change on the rest of us.

Sanders wants to reverse each component of the model. He wants to increase taxes on the wealthy; re-regulate powerful financial and corporate institutions and expand the public sector and the social safety net. But none of this stands a chance of success unless his supporters keep at it after the election, win or lose. The 5 million $27 buck-a-head donors must be willing to finance a new progressive populist movement, year after year. And most importantly, young people in large numbers must be willing to dedicate their lives to it.