Democrats' Chance to Be More Dynamic

Bloomberg View , August 02, 2016

Donald Trump has given the Democratic Party a chance to expand its base. In nominating him for president, the Republican Party has rejected the open society of Reaganite ideals in favor of strongman governance, winner-take-all identity politics and zero-sum economics. Longtime Republican voters, as well as many independents, are looking for a new home.

Hillary Clinton and Barack Obama are savvy enough to see the opportunity.

Clinton’s acceptance speech last week and her choice of Senator Tim Kaine of Virginia as her running mate combined traditional liberalism with an outreach message of common values and common sense (“A man you can bait with a tweet is not a man we can trust with nuclear weapons.”) Rather than demonize Republicans, she invited their support.

Appealing to broadly shared American ideals of liberty and self-rule, the convention’s most philosophically resonant line came in the president’s speech: “Our power doesn’t come from some self-declared savior promising that he alone can restore order. We don’t look to be ruled.”

Obama offered a brief example of the power of cultural evolution from the bottom up: “Through countless acts of quiet courage, America learned that love has no limits, and marriage equality is now a reality across the land.” Only after couples, families, employers, religious organizations and states had tested the idea did gay marriage become the law of the land.

The big question now is whether Democrats can make room for allies who apply a similar decentralized dynamism to economic questions as well as to political self-governance and cultural institutions. Is there room in the convention’s upbeat talk of the future for progress without a central plan -- for unpredictable, open-ended, sometimes disconcerting innovation? For risk-taking and resilience rather than promises of certainty and security?

Here, too, Trump has given the Democrats an opening.

The Republican nominee treats creative destruction as a conspiracy against the common man and trade as a battle rather than a mutually beneficial exchange. He calls himself a builder yet idealizes a static society. He attacks, denigrates and disregards successful American companies. At best -- and this is wildly optimistic -- he offers a version of French dirigisme: good at infrastructure and job protection, bad at innovation and job creation. In Trump’s America, Peter Thiel gets his government-directed space program, but surprises like smartphones or fracking, minimills or online commerce, don’t disrupt the plan.

Back when Clinton thought she would be running against someone like Marco Rubio or Jeb Bush, she declared, “I believe we have to build a growth and fairness economy. You can’t have one without the other.” What made her different then was the fairness. Now it’s the growth.

Admittedly, the Democratic Party doesn’t look like a natural home for economic dynamism. Democrats love regulation. It’s their go-to solution for problems real or imagined. Facing something new -- genetically modified corn, free-agent employment, DNA testing services, commercial drones, Uber, Airbnb -- Democrats will clamor for restrictions often designed to kill it. In their lexicon, “unregulated” means “dangerous.” And, as Trump likes to remind them, Bernie Sanders’s socialist supporters share his zero-sum views.

But a Democratic version of economic dynamism is in fact possible. Recall that one of the most important legacies of Bill Clinton’s administration was the decision to resist the panic, left and right, over the emergence of the internet and to let new institutions and businesses evolve with minimal interference. (Technophile Newt Gingrich played a similar role among Republicans.)

Instead of appeasing Sanders voters with Trump-style economic nationalism, for instance, Democratic dynamism can address their concerns about open data and copyright reform. The guiding principle should be to “protect knowledge flows, not just knowledge stocks,” as Deloitte researchers William D. Eggers and John Hagel put it. Make it easier for innovators to build new ideas on old ones.

A commitment to economic dynamism reflects the liberal values of discovery, openness and improvement. A “growth and fairness” version would seek to dampen the pain of turbulence by helping individuals adapt. It would see government’s role primarily as funding rather than running services, opening the way for competition, variety and choice. And it would use the dynamic processes of competition and criticism, rather than immediately resorting to regulation, to guard against the concentrations of political and corporate power that regulation tends to feed.

Given the public’s concern about jobs, a good place to start is with improving economic mobility by enhancing geographic mobility. Building on Michelle Obama and Jill Biden’s work on behalf of military spouses, Democratic officials could make it easier for licensed professionals to take their credentials across state lines. A Michigan hair dresser could move to North Carolina, a Kentucky plumber to Colorado, a Mississippi schoolteacher to Florida. (These efforts might have the political side benefit of bringing more Democratic voters into traditionally Republican or swing states.)

Restricting the availability of housing in such rich Democratic cities as San Francisco, Boston, Los Angeles and New York hurts both growth and fairness. “Excessive or unnecessary land use or zoning regulations have consequences that go beyond the housing market to impede mobility and thus contribute to rising inequality and declining productivity growth,” Jason Furman, the chairman of Obama’s Council of Economic Advisers, said in November. Tangles of building regulations benefit insiders like Trump who know how to work the system while handicapping upstarts or small enterprises. And they hurt workers who might better their lives by leaving low-wage regions. Allowing significantly more home construction in high-wage areas is a natural, if difficult, cause for Democrats.

Democrats might also adopt a version of the New Homestead Act ideaadvanced by conservative policy analyst Henry Olsen. This would include incentives, such as moving expenses and portable government benefits, to help Americans in depressed areas move to places with more opportunity. It’s a practical way to cushion the pain of an evolving economy and one particularly appropriate for the party of immigrants and the Great Migration.

In my 1998 book “The Future and Its Enemies,” I wrote that the old left-right categories were breaking down in favor of new divisions that created new alliances: “These two poles, stasis and dynamism, increasingly define our political, intellectual, and cultural landscape. The central question of our time is what to do about the future.” The Sept. 11 attacks and subsequent wars obscured the realignment in favor of more-traditional coalitions, but the stasis-dynamism split didn’t go away. The Republican Party has now renounced its commitment to dynamism. Will the Democrats give its adherents a home?

  1. The bipartisan team of California Republican Christopher Cox and Oregon Democrat Ron Wyden created an all-important safe harbor from liability that allowed internet publishers, including eventually social media, to flourish.
  2. James Besson, an economist at Boston University School of Law, finds that since 2000 regulation has been a major source of increased corporate profits and higher stock prices, led by five industries: pharmaceuticals/chemicals, petroleum refining, transportation equipment/defense, utilities, and communications.