DEMOCRATS thought they knew the boundaries of acceptable economic discourse. Then came Donald Trump, who trashed them, yet won the presidency. He upended Republican positions on trade, and exposed the vulnerability of the Democratic Party on its home economic turf: the well-being of American workers. He also seems to have liberated the left to think big ideas—and confront hard questions.

Since 1992 Democratic economic policy has been rooted in technocratic centrism, meant to smooth the rough edges of the market. “We reject both the do-nothing government of the last 12 years and the big-government theory that says we can hamstring business and tax and spend our way to prosperity,” read the party platform in 1992. “Instead we offer a third way.” This was a desperate effort to escape the political wilderness. Yet it also reflected intellectual trends in economics. Inflation and falling productivity in the 1970s seemed to bear out the views of economists such as Milton Friedman, that faster growth could only be achieved through freer markets. Left-leaning economists largely conceded the point. Democrats sought to level the playing field a bit through education and progressive taxation, but generally they accepted that a limber economy offered the best route to growth and good jobs.

Confidence in the approach ebbed as wage growth stalled in the 2000s. Republicans spent Bill Clinton’s budget surplus on tax cuts for the rich, and, in 2008, the American economy fell into its worst crisis since the 1930s. In 2011 Dean Baker, a left-leaning economist at the Centre for Economic and Policy Research, published a book attacking “loser liberalism”. He argued that Republican policies—from trade deals that above all affected low-skilled manufacturing jobs to “right-to-work” laws that sapped labour power—could be seen as ways to alter the balance of economic power as much as principled attempts to liberate markets. Democrats’ narrow focus on efficiency, playing down labour’s loss of bargaining power, meant workers were taken for suckers.

That view is increasingly held across the American left. Stagnant wages and rising inequality seem to vindicate critics of the “neoliberal” approach. Recent research lays bare how feebly workers were able to adjust to the costs of globalisation, and suggests that inequality and inadequate government spending could doom the economy to perpetual, “secular” stagnation.

The left is yet to decide how to respond. Leading voices, like Bernie Sanders and Elizabeth Warren, full-throatedly declare that the economy has been rigged against working people. Their proposals are far bolder than recent Democratic platforms. A plan to make tuition at public universities free for most people, and to reduce student-loan debt, would allow young workers more room to experiment with different careers after graduation. A single-payer health-insurance system would allow workers to leave jobs they do not like without fear of loss of health-care coverage, boosting workers’ leverage.

In contrast, the orthodoxy among centre-left economists has not shifted much. They favour investment in public goods, like education and research, and wage subsidies, which boost incomes of the poor without discouraging work. Some, like Larry Summers, reckon that chronically weak demand implies a need for bigger government deficits, ideally spent on worthwhile infrastructure projects. Worries about corporate concentration and market power are renewing interest in antitrust policy.

As the left grapples with these issues, it is considering two wildly ambitious proposals for reforming the welfare state. One envisages a job guarantee: a policy once embraced by Martin Luther King and more recently endorsed by the Centre for American Progress, a centre-left think-tank. Any adult who wants a job would be promised one, paying a salary (and benefits, for those who work sufficient hours) of perhaps $12 per hour. The government could assign work directly, or serve as a clearing-house matching would-be workers with openings in projects submitted by communities or local governments. The aim of the policy would be to set a floor for living standards and private-sector job quality, while meeting unmet social needs.

The other big idea is a universal basic income (UBI): a “citizen’s dividend” paid to every adult whether working or not. A UBI is not exclusively a lefty proposal. Some envision it as a simpler replacement, in the form of a cash payment, for lots of other government-benefit programmes. Silicon Valley moguls are enthusiastic about it; Mark Zuckerberg (whose politics are obscure) praised the idea in a recent speech. On the left, a UBI is often seen as a welcome new entitlement that would enshrine the idea that, no matter their circumstances, all deserve to benefit from economic growth.

For now, both policies remain pie in the sky. If implemented nationally, they would require vast increases in tax collection, and could generate large, unforeseeable and unwelcome side-effects. But the two policies share an important feature: they give workers the ability to walk away from lousy private-sector jobs.

Labour’s love lost

Should they prove politically viable, such ideas nonetheless leave the left in a bind. Both a job guarantee and a UBI create paths (albeit diverging ones) to a world where most people do not hold paying, private-sector jobs. Although the ability to reject bad jobs is crucial to establishing labour power, it might also hasten the day when lots of workers are simply unnecessary to the functioning of the economy. That is a difficult and risky pill to swallow for a party historically committed to strengthening the role of labour. Political relevance, like middle-class prosperity, is harder to sustain than once appreciated.

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