As our cover package of articles suggests, the Democrats triumphed in 2006 not just because of Iraq and Republican blunders running the gamut from Katrina to macaca, but because Democrats at last ran as economic populists. Although the economy was not considered Topic A by the pundit class, nearly every Democrat who picked up a Republican seat articulated the economic distress felt by regular people.
Populists get bad press. The New York Times, exploring the surprising role of populism in a front-page piece November 12, wrote an odd headline: "For Incoming Democrats, Populism Trumps Ideology." But populism is an ideology -- the ideology of using government to help regular people and counteract the financially powerful.
Populism can have an ugly face when it scapegoats immigrants for the pocketbook distress of ordinary folks, rather than placing the blame where it belongs -- on the politically dominant financial elite. Lou Dobbs' bestselling book, The War on the Middle Class, is marred by streaks of nativism, which also infected the original populist movement of the 1890s. But the press too readily puts all populism in this category, just as it disparages class warfare -- as if top-down class warfare were not what we have today in America. The progressive populism of the New Deal was salutary class warfare of regular Americans against economic royalists. This brand, which resonates in the politics of a Sherrod Brown, is precisely the antidote to nativism.
Now that Democrats have recovered their economic souls, can they deliver? Nancy Pelosi and Harry Reid have identified the low-hanging fruit: Raise the federal minimum wage. Require a genuine prescription drug benefit under public Medicare. For Democrats, it is heads--I win, tails--you lose. Bush can sign these bills, bending to Democratic leadership on pocketbook issues. Or he can veto them, nicely demonstrating the difference between the parties.
But these measures don't fundamentally change the dynamics of the deregulated, privatized, and globalized economy that has been undermining economic security for three decades. To reverse the misfortunes of the broad, working middle class, Democrats would need to reinvent the managed capitalism that thrived between the late 1940s and early 1970s. That would mean re-regulating much of the economy, and tying trade to decent social standards, so that a managed economy at home is not undermined by laissez-faire globally. This is not as radical as it sounds. Bill Clinton actually included labor standards in two bilateral trade deals with Cambodia and Jordan, though neither had adequate teeth.
However, populist Democrats run up against not just Republicans, but many in their own party. Ironically, free-traders Rahm Emanuel, who heads the Democratic Congressional Campaign Committee, and Chuck Schumer, his Senate counterpart, helped scores of fair-trade Democrats like Sherrod Brown oust Republicans and gain influence in the Democratic caucus.
Opinion elites are alarmed by this influence. The Times editorial of November 13, "Truth About the Trade Deficit," warned against Democratic "protectionism," adding, "The surest way to make American businesses more competitive -- and workers more secure -- is to resolve the nation's health-care mess. And the government needs to update and strengthen the safety net for workers who are hurt by global competition."
But while universal health insurance and other social protections would be a fine start, they would not reverse the drag on wages caused by the alliance between slave-labor factories in China and U.S. retailers like Wal-Mart. They would not address other nations' mercantilist policies, willingly enabled by U.S. trade deals, that subsidize the export of entire American industries. Legislating public subsidies for well-paid human-service jobs to replace good factory jobs lost to trade and automation would require not just a stronger "safety net" but a quantum leap in social outlay. And Apollo-scale industrial policies to create new technologies and new high-wage domestic jobs would require Washington to disavow the very World Trade Organization it invented.
There's nothing nativist about a trade regime that helps workers, both in the third world and at home, gain more of the fruits of their productivity. But the United States would first need to change its core trade strategy from one dominated by corporate interests to one that addresses the well-being of citizens, just as our domestic social compact once did. It will be invigorating to watch the freshman class of populists lead on these issues but it will take even more of a political transformation before they prevail.