I keep seeing Christopher Hayes’ “Deficits of Mass Destruction” article from The Nation pushed among my contacts. This isn’t a surprise, because I follow the magazine’s editor Katrina vandenHeuvel on Twitter. But now it also popped into my email from MoveOn, the progressive lobbying group. It’s an example to me of the failure of the Democrats and the Left to articulate a clear alternative to the unsustainable economic model that partially collapsed and had to be so recently bailed out.
What troubles me about the model we are operating under is that the economy is not healthy without growth. In fact, as Hayes notes, even slow growth counts as unhealthy:
right now we face a joblessness crisis that threatens to pitch us into a long, ugly period of low growth, the kind of lost decade that will cause tremendous misery, degrade the nation’s human capital, undermine an entire cohort of young workers for years and blow a hole in the government’s bank sheet.
Now if you ask the question abstractly, “can an economy grow forever?” I don’t think it is possible to answer in the positive. It is the opposite of sustainable, and this fact is completely ignored, even as people are worried about how the environment can support so many billions of people. Nowhere in the article, or in the Democrats’ ideal platform as this liberal commentator imagines it, is there room for sustainability, even as the concept is in vogue in the hearts of those on the Left. (It only shows up in policy as vague suggestions to devote more resources to developing “green energy” from wind, solar, etc.)
Growth is the primary metric for evaluating the economy, far more important than the fluctuations of the Dow. This is because the money supply comes as the principal of a loan from the Federal Reserve. That principal must be paid back with interest, so in order to achieve economic health, the system must grow faster than the interest rate on the loans. If it grows too slowly, some people are able to pay back their loans, and others fall under the bus. I think this is the mechanism that creates an unsustainable economy.
I think that Democrats will have a lot more trouble motivating their “base” to get out to the polls this November and in 2012 than they had in 2008, when they could run on a platform of “Change.” Now that they’ve been in power, it’s becoming clear that their economic strategy is really just a smidge different than the people they replaced, as critics of the Summers/Geithner team have been saying all along. Most people on the Left, like Christopher Hayes here, think the Democrats can be successful if only they execute the growth strategy better then the Republicans, who depended on tax cuts for the rich as their economic driver. I agree with Hayes that succumbing to anti-deficit pressure on stimulus spending would hurt Democrats’ chances to propel growth, but I wish they had a 50-year plan on the table instead, because then they would be forced to think about long-term sustainability.