Thinking Big: Progressive Ideas for a New Era

Thinking Big: Progressive Ideas for a New Era

by Nathaniel Loewentheil, Progressive Ideas Progressive Ideas Network

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A long and painful episode in our nation's history is ending, and a new and more promising chapter is beginning. At this critical juncture progressives have a unique opportunity to reassert themselves as agents of bold ideas and catalysts of political and social transformation. This volume presents new and innovative solutions to some of the most difficult problems


A long and painful episode in our nation's history is ending, and a new and more promising chapter is beginning. At this critical juncture progressives have a unique opportunity to reassert themselves as agents of bold ideas and catalysts of political and social transformation. This volume presents new and innovative solutions to some of the most difficult problems we're facing: the financial crisis, healthcare reform, greening the economy, expanding the middle class, improving America's standing in the world, and many more.

These are difficult times, but the authors of these essays remain optimistic. Together we can restore the power of good government and develop programs that serve our national needs and encourage faith in our public institutions, creating a positive cycle of political change and space for further reform. To do so we will need a rare combination of ideas, action, resolve and leadership. This book is a critical piece of that puzzle.

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Berrett-Koehler Publishers, Inc.
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Thinking Big

Progressive Ideas for a New Era

Berrett-Koehler Publishers, Inc.

Copyright © 2009 Progressive Ideas Network
All right reserved.

ISBN: 978-1-60509-279-9

Chapter One

Building Shared Prosperity

Lawrence Mishel and Nancy Cleeland

For the better part of three decades, our country has been stuck on a single, simplistic idea about the economy: less government equals more prosperity. American leaders have sought to create a marketplace unfettered by rules and regulations. Let people fend for themselves, they said, and innovation and entrepreneurship will flourish, the economy will grow as never before, and the benefits will eventually lift the fortunes of all.

That was the promise. We have seen—and lived—the reality. From 1989 to 2006, the highest-earning 10 percent of U.S. households collected over 90 percent of the nation's income gains. Today the top 1 percent of American families receives 23 percent of all personal income, up from just 10 percent in 1979. Corporate executives earn 275 times as much as average workers, compared with 27 times in 1973.

It's been a fine time to be a CEO or a hedge fund manager, in other words. But the great majority of Americans are less secure and hopeful than they were a generation ago. Jobs are disappearing. Real family incomes are falling. Retirement security is a fading ideal. Health care is becoming a privilege rather than an expectation. In the struggle to keep up with expenses (or avoid falling too far behind), Americans are working longer hours, borrowing more, and living closer to the financial edge.

By degrees, the United States has become a more economically unequal country than at any time since the 1920s, and the most unequal of all of the world's developed nations today. By that measure, in fact, we are drifting away from the relatively egalitarian pattern of Western Europe and the Pacific Rim countries and toward the orbit of Russia and Latin America.

This is not a safe path. Extreme inequality hobbles mobility, leaving poor and working-class Americans and their children with little chance to move into higher-paid and more rewarding jobs. The stress of constant financial worry among the majority stifles innovation and technological progress. In an economy that relies heavily on consumer spending, the shortage of disposable income makes a bad situation worse.

Our leaders used to understand the danger. "The welfare of each of us is dependent fundamentally upon the welfare of all of us," said a Republican president, Theodore Roosevelt, at a time not unlike our own, when the rich had been getting richer while workers struggled with low pay, unsafe conditions, and the ever-present dread of falling off a financial cliff.

Bit by bit, against fierce opposition, the reformers of Teddy Roosevelt's day succeeded in enacting an early set of consumer and worker protections. But it took additional decades and the Great Depression before the country was ready to put solid legal weight behind the ideal of shared welfare. That happened when another Roosevelt—Teddy's Democratic fifth cousin Franklin—pushed through the landmark legislation that we remember as the New Deal.

From the 1940s into the 1970s, leaders of both parties carried on the effort to promote broad-based economic security and opportunity. Although not all racial and ethnic groups benefited equally, the laws and programs that became the postwar social contract helped tens of millions of Americans enter a middle class that was the envy of the world.

Then came the harsh ideology (concealed in the sunny rhetoric) of the "Reagan Revolution." Since the early 1980s, Reagan and his heirs have hacked away at FDR's legacy. Years of deregulation, deunionization, skewed tax policies, and lax enforcement of worker protections have tipped the scales in favor of corporate and financial insiders, and against the great majority of American workers and families. Those same policies have fed waves of financial speculation. In one of the most recent and destructive of these episodes, millions of Americans were talked into booby-trapped mortgages. Many now face the threat of losing their homes; others stand to lose much of their home equity wealth.

Clearly, the economy will be the first order of business for the new leaders who take office in January 2009. Just as clearly, the old answers—the familiar mix of tax cuts and fiscal and monetary tinkering—will no longer do. But America needs more than a new set of economic policies; it needs a new purpose for economic policy.

The mission before us is to build an economy of shared prosperity. That will mean taking steps to reduce economic insecurity and give Americans a chance to breathe easier and plan for the future without dread. Another key piece of a shared-prosperity agenda (discussed in the essay that follows) is public investment in our crumbling infrastructure, in education, and in job creation. Finally, we must shape a new brand of globalization that serves ordinary people in exporting and importing countries alike.

Most Americans grasp the need for bold action. Polls show a widespread recognition that the current economic model is not sustainable. But while the old mythology has failed disastrously on the ground, it still echoes powerfully in Washington and other centers of influential opinion; the push for an agenda of shared prosperity promises to be a mighty struggle. But the outcome will be worth struggling for: a world of less stress, more opportunity, greater mobility, more fairness, and renewed confidence.

We have every reason to expect that an economy of shared prosperity will be a stronger economy, too. "We have always known that heedless self-interest was bad morals," said Franklin Roosevelt, looking out on the damage wrought by the laissez-faire policies and corporate excesses of the 1920s. "We know now that it is bad economics."

We knew it then, and we know it now. This time, America must not forget.

Prosperity Ideas

Addressing Key Roots of Economic Insecurity

Skyrocketing health care costs are hurting U.S. businesses as well as families and individuals. The current system denies access to some forty-five million Americans while pushing costs higher than those in comparable countries. Employers faced with these rising costs are cutting benefits or passing on costs to their workers, who increasingly are forgoing health insurance altogether. Medical bills now account for half of all bankruptcies.

Retirement has also become increasingly risky for Americans, who can no longer count on the pension plans that were once a standard employment benefit. Today, a shrinking number of employers provide any sort of retirement plan, and those who do overwhelmingly favor personal accounts such as 401(k)s, which are managed by employees and often require matching contributions. Financially, the baby boomers are ill prepared for retirement: more than one-third of those fifty-five and older have less than $25,000 in savings, and a growing number are dipping into retirement accounts to fund routine expenses.

This double dose of risk is bad news for the overall economy as well as the individuals involved. But there are ways to rebuild stability into these two important features of life. The Health Care for America Plan, detailed in Chapter 7, combines employer-provided health insurance with a set of public plans to cover all Americans, at a net savings to national health spending. It reduces costs for responsible employers and puts all businesses on a level playing field.

A fix to retirement insecurity is also within reach. First, it should be recognized that Social Security, always designed as a supplement to retirement, is fully funded for decades to come. Raising the earnings cap—now set at a low $102,000—so that top earners contribute a fair share would eliminate shortfalls down the line. The system was originally intended to draw revenues from 90 percent of all wages; that ratio should be restored.

In addition, a plan known as the Guaranteed Retirement Account (GRA), authored by economist Teresa Ghilarducci of the New School University and released by the Economic Policy Institute, would augment Social Security payments so that all Americans can retire in dignity. The accounts would be funded by employer and worker contributions with a guaranteed payout after retirement. The new system would cut tax subsidies that mainly benefit the very rich in order to provide the retirement contributions for low-income workers.

Investing in Competitiveness

From the nation's earliest years, federal infrastructure projects—in such things as highways, railroads, electricity, and water systems—have helped fuel economic growth while improving the quality of life for all. But such investments have been woefully inadequate for years. The American Society of Civil Engineers estimates it would take $1.6 trillion over five years to bring the nation's bridges, dams, sewer systems, and other infrastructure up to good condition. Schools are also badly in need of public investment for repairs and maintenance. And we must invest money in broadband build-out, so that all parts of the nation can participate in technology-related productivity growth.

In addition to improving public health and safety, these projects have the added benefits of stimulating the weakening economy and creating millions of good jobs. For example, a $20 billion investment in school repairs would generate an estimated 250,000 jobs. To make the most of this approach, we must ensure that all jobs associated with this public spending offer fair pay as well as benefits and policies that allow for work/life balance.

We can also rebuild the nation's important manufacturing base while improving the environment by promoting jobs in the area of renewable energy. Having a comprehensive green job strategy involves not only doing the work but also ensuring that the components used to generate energy from the wind, the sun, and other alternative sources are made domestically. With the right policies, the United States can have a revitalized manufacturing sector that brings with it good jobs, rapid innovation, and environmental sustainability.

Reconnecting Pay and Productivity

Productivity has risen 20 percent since 2000, yet most benefits of that economic growth have gone to the very rich, while typical workers' incomes have stagnated or declined. The growing disparities reflect the declining power of workers to demand their fair share of growth. Several practical steps to restore the necessary economic balance between employers and employees are possible.

One is to restore the ability of workers to freely join unions by passing the Employee Free Choice Act (EFCA), which permits unionization if a majority of workers sign union cards. The benefits of union membership are clear: members earn 14 percent more on average than nonmembers and are far likelier to have a pension plan and health insurance.

The federal government also has an important role in this area. The Labor Department must return to vigorously enforcing and improving the laws that govern wages, hours, overtime premiums, and occupational health and safety. The minimum wage should be raised to match half the average wage (as it once did) and maintained at that level.

More fundamentally, we as a nation should set a goal of full employment, which in itself will empower workers. It is no coincidence that income grew and poverty rates fell across all population groups in the late 1990s, when a roaring economy created millions of jobs and briefly drove unemployment rates down to historic lows.

Boosting Trade and Prosperity: Home and Abroad

American workers are losing ground in the global marketplace, where corporate interests have trumped all others in rule making for international trade. The United States has shed seven million jobs tied to trade since the late 1970s, when imports began to grow faster than exports. Changes in technology and economic policy have facilitated the movement of jobs offshore, and now some 50 percent of all manufacturing production of U.S.-based companies is located in foreign countries. As outsourcing expands, globalization's losers extend well beyond the least educated and unskilled. The idea that trade's negative impacts could be reversed with job training and education clearly has not been born out.

A serious response to these trends must begin with public investment at home—supporting education, job assistance, and innovation. Meanwhile, we should declare a strategic pause in trade agreements and insist that any future agreements include provisions for enforceable labor rights. Another key step is to enforce current trade policies and to eliminate perverse tax incentives that favor overseas investments, and consider instituting value-added taxes that favor exports over imports, as other nations do. Finally, we should promote a more stable and equitable global financial system.

Chapter Two

Investing in Our Future

Nathaniel Loewentheil and Vera Eidelman

AMERICANS have always expected life to be better for the next generation. But now, according to recent polls, they no longer do. Imagine: for the majority of Americans, the past is brighter than the future. The American dream is becoming an American memory.

This pessimism reflects an alarming trend: as a country, we have stopped investing our resources in a shared future. In previous eras, a vision of a shared future united the country around great national initiatives. In the mid-1800s, federal legislation spurred the railroad boom, opening the country to a growing population. In the 1930s, the Tennessee Valley Authority permanently transformed an entire region, creating a completely new set of industries and opening a new way of life for millions. In the decades following the Great Depression and World War II, encouraged by our victories over great forces, we made even greater investments. Through legislation like the GI Bill and the early Highway Acts, we manifested a sense of collective power and interdependence not matched before or after. In the 1950s and 1960s, federal infrastructure investment peaked at almost 2 percent of the gross domestic product (GDP). At the same time, we spent 7 percent of our economic output on education and 2 percent on research and development. The results proved the power of public investment—in the decades that followed, the United States enjoyed one of the most remarkable periods of economic growth in world history.

But then a strange myth took hold, propagated by conservative thinkers and politicians, that all private spending was wise and productive, all public spending foolish and wasteful. Beginning in the 1970s, the federal government began deregulating industries, lowering taxes, and abandoning public investments in favor of the inviolable invisible hand. For the last thirty years, as conservatives are quick to point out, the economy has continued to grow. The market has provided private goods in abundance—as many cars and televisions as we could ask for. But without the hand of government and provision for public goods, we have fallen behind on the things the market cannot provide, things that secure our shared economic future: our children's education and our physical infrastructure. Today, infrastructure spending as a percentage of GDP has decreased nearly 50 percent since its peak. Education spending as a percentage of GDP has remained stagnant since 1969, while research and development funding has declined by half in the same time period.

Through a self-reinforcing set of public attitudes and government actions, we've largely abandoned our intergenerational responsibilities. The most important distinction isn't between public and private spending. It's between short-term and long-term thinking. We don't need to cut our spending; we need to invest more and more wisely.

The decline in national investments comes at a precarious moment as the United States engages in an increasingly competitive global economy. The country lost 3.3 million manufacturing jobs in the last ten years, and trade imbalances are equally disheartening. Even in areas of strength, the United States lags behind. We have become a net importer of high-technology products. Our national debt—the world's largest—is set to grow to almost $15 trillion in the next decade. Meanwhile, the economic growth rates of developing countries like China and India are nearly three times that of the United States.


Excerpted from Thinking Big Copyright © 2009 by Progressive Ideas Network. Excerpted by permission of Berrett-Koehler Publishers, Inc.. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.


Meet the Author

James Lardner, a writer for" The New Yorker" and" The Atlantic Monthly," is the author of "Crusader: The Hell-Raising Police Career of Detective David Durk,"
Thomas Reppetto is a former Chicago commander of detectives and has been the president of New York City's Citizens Crime Commission for twenty years.

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