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Econobamanomic Theory


The optimistic reading of this account is that Obama is simply following in the time-honored tradition of Democratic-primary pandering. Because if he believes this story, hoo boy, he may be beyond salvation. For all the caterwauling over NAFTA et al., the negative effects of such trade deals on the American economy are vanishingly small. As for amending them: “It won’t make a flying fuck of a difference to U.S. workers if there are labor standards in these trade agreements or not,” says one of the preeminent Democratic economists in the country. And though it’s easy (and fun!) to bash Beijing and Gucci Gulch, they pale in importance beside other forces—information technology primary among them—in affecting the prosperity of working- and middle-class voters.

For Obama, the challenge, which Clinton met so effectively in 1992, is to fashion a narrative that acknowledges and even embraces those forces and then describes how they can be channeled. His failure so far to offer anything like that is a source of frustration among Democrats (including many who support him) who believe that doing so is of paramount strategic importance. That his political advisers, including chief strategist David Axelrod, are avowedly policyphobic is typically cited as an explanation, as is the fact that his economic team—led by Austan Goolsbee, the University of Chicago academic who got himself and his candidate in hot water with his off-message chat with a Canadian official about NAFTA—is politically green. “Austan is a nice guy and a smart economist,” says one Democratic economic-policy geek. “But about this kind of stuff, he’s totally clueless, which is kinda frightening.”

But Obama’s difficulties in this realm are deeper than that. In 1992, Clinton was able to set himself apart from a prevailing Democratic orthodoxy that was retrograde in the extreme. “Clinton’s story was the right story then, and though certain things have changed, it’s still the right story,” says former Treasury secretary and ex–Harvard president Larry Summers. “So you can say things that are new or you can say things that are true, but it’s hard to say both—which makes it difficult to frame an exciting economic narrative.”

Reich maintains, however, that the Clinton story would be a decent starting point for an Obama narrative. “Democrats have to be willing to say, ‘We had a great shot in the nineties, we did a little, but mostly we did dipshit,’ ” Reich tells me. “You can blame it on Gingrich or Greenspan or the Reagan deficits. But there’s a huge unfinished agenda to be completed.” In Reich’s view, the next part of the story is what’s happened in the past ten years: that all the growth has gone to the top 5 percent of earners, and the thing that kept the middle class afloat—debt—has reached its outer limit. “In the Clinton era, we had the middle-class squeeze,” he says. “Now the middle class is collapsing, and the only way for the economy to utilize its productive capacity is to make big investments in education, health care, and green-tech.”

Robert Shapiro, another veteran of the 1992 Clinton economic team and author of a new book on globalization, agrees. “The narrative is: The U.S. is way ahead in the global economy, but we need to make basic changes so that everyone can prosper,” Shapiro says. “We need to get control of health-care and energy costs, because without it, American workers will never see rising wages—since the burden on businesses is otherwise too great.” As for training, Shapiro has proposed giving grants to all the community colleges in the country to keep their computer labs open on nights and weekends so that anyone can show up and learn (for free) the skills they need to compete in a tech-centric economy. “We can do it for $125 million a year, and even if it costs twice that much, it would be worth it.”

The Obama campaign has already adopted this last idea of Shapiro’s. And as the hopemonger moves closer to securing the Democratic nomination, the party’s savviest economic-idea merchants are beginning to congregate around him. (Late last week, Reich formally endorsed Obama; his first memo to Axelrod advancing his concept of “bottom-up economics” will no doubt have been dispatched by the time you read these words.)

For Democrats, all this should be a cause for hope—if Obama will listen, that is. Assuming he is the nominee, he’ll face in McCain and the GOP an opposition hell-bent on caricaturing him as the ideological offspring of George McGovern and Mike Dukakis (with a Weatherman for a godfather), as a hackneyed, knee-jerk, retrograde lefty gussied up as an avatar of the future. For Obama, therefore, telling the right kind of story about the economy will not only allow him to trump McCain on a subject where the latter has barely the faintest clue. It will offer him perhaps his very best chance to prove he is what he claims to be.



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