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Democrats once understood the importance of economic growth. That\u2019s because growth, particularly productivity growth, is what drives rising living standards over time. Democrats sought to harness the benefits of growth for the working class, not to interfere with the economic engine of progress. They believed in the future and the possibilities for dramatic improvement in human welfare.<\/p>\n
Democrats\u2019 21<\/span>st<\/sup> century project has, at its core, been dedicated to other goals. They now prize goals like fighting climate change, reducing inequality, pursuing procedural justice, and advocating for immigrants and identity groups above promoting growth. For example, the \u201c<\/span>Deciding to Win<\/a><\/strong>\u201d report analyzed word frequency in Democratic Party platforms since 2012 and found a 32 percent decline in the appearance of the word \u201cgrowth\u201d compared to a 150 percent increase in the word \u201cclimate,\u201d a 1,044 percent increase in \u201cLGBT\/LGBTQI+,\u201d a 766 percent increase in \u201cequity,\u201d an 828 percent increase in \u201cwhite\/black\/Latino\/Latina,\u201d and a 333 percent increase in \u201cenvironmental justice.\u201d<\/span><\/p>\n This is remarkably short-sighted. The key to substantially rising living standards for the working class\u2014once the Democrats\u2019 prized goal\u2014is precisely more economic growth, especially higher productivity growth. You cannot make up for that by redistribution nor by simply spending more money on government programs. A fast-growth economy provides more opportunities for upward mobility, generates better-paying jobs, creates fiscal space for priorities like infrastructure projects, and, as Benjamin Friedman has argued, has positive \u201c<\/span>moral consequences<\/a>\u201d by orienting citizens toward generosity, tolerance, and collective advance. Slow growth has the opposite effects.<\/span><\/p>\n It is therefore completely unrealistic for Democrats to think they can accomplish their goals and build support without centering the goal of economic growth. Attempts to elide this problem have resulted in heavy reliance on chimerical projects like a rapid green transition which have not and cannot deliver the benefits of overall growth. Or, as in the Biden administration, just spending money on various party priorities and hoping for the best. (\u201cMake Spending Money Great Again,\u201d did not work.)<\/p>\n With that in mind, it is instructive to examine the Democrats\u2019 latest economic proposals and see where they fall short\u2014and frequently massively so.<\/p>\n Start with \u201c<\/span>affordability<\/strong>\u201d\u2014the Democrats\u2019 mantra of the moment. One does not have to be a cynic to see that affordability is not a program but a slogan, designed to take advantage of voters\u2019 strong dissatisfaction with the Trump administration\u2019s economic management. They feel the prices they pay for key commodities are no better aligned with their incomes than they were under Biden (perhaps worse)\u2014and they weren\u2019t happy about it then.<\/span><\/p>\n Hence the slogan \u201caffordability.\u201d If voters don\u2019t feel things are affordable, well, we\u2019ll promise to make things affordable. Of course, that\u2019s not much of an economic program and, by definition, has nothing to do with growth. The result has been a grab bag of <\/span>price caps<\/a> and controls, subsidies and <\/span>new regulations<\/a> that may or may not do much to make everyday life more affordable but at least signal that Democrats want to do <\/span>something<\/em> about the problem. Long-term beneficial effects on the economy are neither claimed nor likely.<\/span><\/p>\n Nearly as popular as affordability\u2014and frequently twinned with the affordability pitch\u2014is a <\/span>populist denunciation of the rich<\/strong> and big companies who are alleged to be responsible for high prices and nearly everything else that\u2019s wrong with the economy. As James Talarico, Democratic candidate for the Senate in Texas <\/span>put it<\/a>:<\/span><\/p>\n What I would say is that the only minority destroying this country is the billionaires\u2026We are all focused on the wrong 1 percent…Trans people aren\u2019t taking away our healthcare. Undocumented people aren\u2019t defunding our schools\u2026It\u2019s the billionaires and their puppet politicians.<\/p>\n<\/blockquote>\n Countless Democratic politicians<\/a> have made variations of this claim. But such claims have no logical connection to a coherent economic program and certainly have nothing to do with economic growth. What they do connect to is, well, taxing the rich. In particular, there is now a vogue for wealth taxes in Democratic circles including the notorious \u201c<\/span>billionaires tax<\/a>\u201d in California, a ballot initiative that would levy a 5 percent tax on net worth over $1 billion using estimates inflated by voting control rather than economic interest.<\/span><\/p>\n Going further, Democrats on the national level have twinned taxing the rich with free money and that old Republican favorite, tax cuts. The Bernie Sanders-Ro Khanna proposal would go California one better and makes the 5 percent wealth tax <\/span>annual<\/em> rather than a one-time levy, directing the revenue toward, among many other things, \u201ca $3,000 direct payment to every man, woman and child in a household making $150,000 or less \u2014 $12,000 for a family of four\u201d. Free money\u2014now <\/span>that\u2019s<\/em> an economic program!<\/span><\/p>\n The Van Hollen proposal taxes income rather than wealth and imposes escalating surtaxes on incomes over $1 million, starting at 5 percent and topping out at 12 percent on incomes over $5 million. In this proposal, the revenue raised will be used to <\/span>eliminate<\/em> federal income taxes for about half of working Americans ($46,000 individual income; $92,000 if married and filing jointly). Take that, Republicans. We may have no idea how to promote economic growth but we can beat you on tax cuts!<\/span><\/p>\n A more promising Democratic idea, with more serious economic content, is the idea of \u201c<\/span>abundance<\/strong>.\u201d A <\/span>Washington Post<\/a><\/em> article<\/a> described the abundance approach as \u201ccutting back on the environmental reviews, strict zoning, labor rules and other obstacles that prevent government from efficiently building, fixing and fostering the things people want, from housing to energy.\u201d An <\/span>Axios article<\/a> summarized the new approach as \u201crespond[ing to governing failures in blue cities and states] by cutting excess regulations to build more housing, energy projects and more.\u201d<\/span><\/p>\n There has been some movement, at least <\/span>on the state front<\/a>, in implementing this approach. But resistance has been fierce from key sectors of the Democratic Party. After all, those most directly connected to the regulations, procedures and bureaucracies that the abundance approach wants to attack, not to mention the countless NGOs that defend them, are by and large Democrats. They\u2019ve got a lot of power within the party and are exerting it to the maximum to protect their self-interest.<\/span><\/p>\n A bigger problem is the ultimate <\/span>goal<\/em> of this approach. There is a distinct whiff of professional class coastal liberal preferences in the Democratic vision of abundance. That vision is heavy on infill urban housing, urban infrastructure, and building out clean energy to stave off climate catastrophe. Indeed, in the seminal text of the Democratic abundance movement, <\/span>Abundance<\/a><\/em>, by Ezra Klein and Derek Thompson, the book\u2019s introduction waxes rhapsodic on their vision of a 2050 socially liberal ecotopia, where, to paraphrase President Trump (\u201ceverything\u2019s computer!\u201d), everything\u2019s electric! Fossil fuels are but a distant memory; it\u2019s all clean energy that is dirt cheap with towering skyscraper farms for food and drones that seamlessly deliver everything your heart desires.<\/span><\/p>\n This is catnip for the book\u2019s target audience of liberal Democratic-leaning professionals but for the rest of the population\u2014not so much. Democrats have not yet grappled with the fact that the goals of their abundance approach are linked to a concept of abundance that does not line up well with the preferences of actually-existing working-class voters. These voters, quite simply, want to be richer and have more stuff. Abundance Democrats, on the other hand, seem to have in mind a <\/span>socially liberal ecotopia<\/a> that is highly appealing to educated, upper middle class liberals but much less so to the working class. As Josh Barro has noted <\/span>Democratic abundance advocates<\/a> tend to support \u201cpolicies that would make energy, and the aspirational suburban lifestyle, more expensive.\u201d And that lifestyle, he points out, is what \u201cabundance\u201d means for most ordinary Americans. Arizona Democratic senator Ruben Gallego <\/span>underscored the issue<\/a>: \u201cEvery Latino man wants a big-ass truck.\u201d<\/span><\/p>\n That connects to an even more profound limitation of the Democrats\u2019 abundance approach. As an economic program, it is not really a <\/span>growth<\/em> program but rather one that promises to deliver more of what Democratic liberals want. But what the country really needs\u2014and what most voters want\u2014is to become richer faster. And that can only be delivered through economic growth that outstrips population growth (rising GDP per capita).<\/span><\/p>\n Of course, promoting economic growth at this level is challenging. It depends above all on promoting sustainable, strong productivity growth. This in turn depends centrally on technological change and its incorporation into the economy, typically linked to the rise of new general purpose technologies (GPTs). Think electricity, the internal combustion engine, semiconductors\/computing and so on.<\/p>\n Might such a GPT be on tap today? Of course there is: <\/span>AI<\/strong>. AI boosters are not wrong to claim that AI is, in fact, a <\/span>new GPT<\/a>. If so, the effects on productivity growth could be game-changing and era-defining.<\/span><\/p>\n Democrats, however, who have long had a <\/span>streak of techno-pessimism<\/a>, are not reacting terribly positively to this development and its enormous growth potential. Indeed, the evolving reaction seems to be <\/span>downright negative<\/a>. Senator Chris Murphy, a reliable barometer of party trends, had this to say:<\/span><\/p>\n The cultural and economic impact of AI is going to be the biggest issue in politics over the next decade\u2026There is going to be a growing appetite from voters to support candidates that are going to help them manage the potential coming disaster as AI poisons our kids and destroys all of our jobs.<\/p>\n<\/blockquote>\n Murphy made this judgement on AI back in December. Democrats\u2019 views on AI have not improved since then. The current favorite trope is to bash data centers linked to AI and call for regulatory measures ranging from <\/span>a mortarium<\/a> on new ones to insisting that data centers provide and <\/span>pay for their own power<\/a>. Other proposed regulations <\/span>aim at AI companies directly<\/a> around issues of online safety, especially for minors.<\/span><\/p>\n Leaving aside the likely policy efficacy (or lack thereof) of these measures they have nothing to do with maximizing productivity growth from AI and channeling the benefits as widely as possible. They are, instead, measures to take advantage of public fears about AI, which are considerable. Blue Rose Research recently found that a fire-breathing <\/span>AI-specific populism<\/a> maximizes political benefits for Democrats. An example from their research of such an approach:<\/span><\/p>\n Within 5 years, AI is projected to eliminate 75 percent of our jobs. The biggest change in human history is here. Your job, my job…they\u2019re on the line. What happens next is a choice. Their choice? Let mega-corporations fire everyone, keep all the profits, and leave you with nothing. A future of mass unemployment, foreclosures, and chaos.<\/p>\n<\/blockquote>\n I don\u2019t doubt that such an approach could be politically effective in the short-run, especially as we approach the 2026 election. But is is woefully inadequate as an approach to AI as a new GPT that could make the country and its workers richer. For that, you\u2019d need a growth program and Democrats don\u2019t have one.<\/p>\n\n
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