Dean Baker, author of The End of Loser Liberalism: Making Markets Progressive, and Jared Bernstein, author of Crunch: Why Do I Feel So Squeezed? (And Other Unsolved Economic Mysteries) and the blog On the Economy, explored the framework for a successful progressive economy on November 9 at Busboys and Poets in Washington, D.C. Both panelists challenged what they said has become the “distorted debate” about free markets between conservatives and progressives.
Baker began by explaining his term “loser liberalism”—the simplified idea that conservatives support free markets while progressives want “the government to intervene, take money from winners, and give it to losers. We have embraced this story by the right,” said Baker, suggesting instead that progressives support free markets and the conservative approach is “the one rigging the game.” Using the Goldman Sachs bailout and prescription drug regulation as examples of Republican-led government intervention, Baker argued that through the current conservative interpretation of “free markets,” income is concentrated at the top rather than “trickling down.”
Baker and Bernstein then expanded the conversation into a discussion on what constitutes a free market, how progressive policy should shape and interact with the market, and the way forward for progressive policymakers.
Bernstein emphasized that all iterations of the free market inherently involve government regulation, and the more important question toward building a moral economy is whom the government is regulating. He suggested the progressive approach answer the question: Who does the market work for? “It’s not about promoting the free market, or wanting it to fail,” he said, “it’s about getting it to work for a different set of people.”
One way to achieve this, Baker argued, is to ensure all institutions answerable to Congress are held accountable by Congress. Using the example of the Federal Reserve, Baker described the structure that to date includes seven presidential appointments and five regional bank presidents. “We should debate Fed policy. It should be part of the conversation,” he said. “[This current structure] would be like sitting Pfizer and Merck in on the FDA.” Bernstein agreed, saying even the economist Adam Smith suggested that banks have to be watched “because they will speculate if no one is watching.”
Both panelists agreed progressives must shift the conversation from specific regulations to the larger question of how to make markets work; as Bernstein said, to “restructure government for broad growth and prosperity.” If the market doesn’t distribute equitably, he said, “It is not just a market failure but a government failure.”
Bernstein pointed to the Occupy protests, saying “this is the most important insight of this generation: that the government has structured the market for an elite minority. If we turn this around to be rewarding to a broad majority, than our government will not only be supported, but worthy.”