Symposium | The Middle-Out Moment Is Here

An Economy with Ethics

By Tara McGuinness

Seventy-seven years ago, the founders of the Mont Pelerin Society laid out a stark landscape. “The central values of civilization are in danger,” wrote the newly formed group of neoliberal thinkers. “Over large stretches of the Earth’s surface the essential conditions of human dignity and freedom have already disappeared.” The society’s solution was to advance “an international order conducive to the safeguarding of peace and liberty.” They went out of their way to emphasize that they were not espousing a worldview or seeking to change hearts: “The group does not aspire to conduct propaganda. It seeks to establish no meticulous and hampering orthodoxy.” Those words are interesting today, because looking back, the neoliberals were in fact wildly successful at establishing a meticulous orthodoxy. Their framework has animated political economies around the globe and guided policy decisions for decades. But their policy aims for human flourishing fell short.

In 2013, in the pages of this journal, Nick Hanauer and Eric Liu laid out an alternative vision for a new economic future, one that would unwind decades of inequality wrought by trickle-down economics and replace it with a system of more broadly shared prosperity. By centering the working and middle classes, they proposed a “middle-out economics” to chart a surer course to sustained opportunity for everyone. A decade later, we see some indications that a middle-out vision is taking hold in our politics and policy. In his 2024 State of the Union address, President Biden spelled out the shift: “America’s comeback is building a future of American possibilities, building an economy from the middle out and the bottom up, not the top down.” Consider the bipartisan pandemic-era economic supports, or the recent rise in worker power, or, for better or for worse, the category-breaking populist candidacies on both the left and right in countries the world over, which have gained ground by focusing on the middle of the populace.

The sticky twentieth-century paradigms of rugged individualism and growth at all costs are fracturing. The question is what will come next. James Baldwin wrote, “A country is only as strong as the people who make it up and the country turns into what the people want it to become.” [emphasis added] It is time for an economic vision that aligns with Americans’ loftiest aspirations.

The Peak of the Neoliberal Era

We are at the apex of what happens when trickle-down economics drives our political economy. Over a period of 50 years, the neoliberal experiment has driven down global poverty rates, but it has also brought us peak inequality. While there are now fewer people in the world getting by on $2 a day, the gap between rich and poor has only grown, and the racial wealth gap in the United States has widened decade after decade. Neoliberalism has led us toward peak coal (2023), peak oil (perhaps 2026), peak greed (the gap between CEO and worker compensation hit an all-time high in 2021), and peak ego in every sector (see: Musk, Elon; Trump, Donald; etc.).

With its intense focus on the rise of the individual, the neoliberal era has also brought us peak loneliness. Survey after survey shows that Americans have never been more separated from one another; last year, U.S. Surgeon General Dr. Vivek Murthy declared an “epidemic of loneliness and isolation.” And just as we have never felt so disconnected from each other, we have never felt so lacking in a sense of purpose. This purpose part matters. Milton Friedman, in Essays in Positive Economics, wrote that economics should be “independent of any particular ethical position,” meaning it should not concern itself with questions of purpose. But if we trace the origin of the word “economy” back to its Greek root, oikonomia, we find a concept with a much deeper connection to ethics and the good life. “The ancient Greek writers on oikonomia believed that humans live in a world of natural abundance that is sufficient for what people need for subsistence,” writes scholar Dotan Leshem in the Journal of Economic Perspectives. “From their perspective, the main task of economic rationality is to advance the good life as they understood it, which means support for philosophy, for involvement in public life, and…for not giving in to what they viewed as the unnatural urge to pursue economic goals or luxuries for their own sake.”

When you talk to Americans about their daily lives, it becomes obvious just how deeply neoliberalism has eroded our sense of purpose and connection. The New Practice Lab, a policy and design group at New America that I founded and lead, conducts qualitative research with working class families with young kids, engaging dozens of parents in discussions about what would make them thrive. The desire for connection comes up over and over. “From day to day, I…feel like I don’t have the support I need or that my kids deserve,” said Julie, a mother of five living in Minnesota. “I have to rely on my six-year-old for help with his younger siblings sometimes.” We heard a nearly identical story from Evelyn, a mother of four who grew up in Ghana and now also lives in Minnesota. “Where I come from back home…you can leave your kid with your neighbor,” she said. “Here, there’s nobody…. I say hi to my next-door neighbor and he looks at me like I’m weird.”

Our current economic paradigm’s emphasis on the notion that our highest value is only as consumers and producers, rather than as members of families and communities, has imposed upon all of us a subtle and insidious ethos. Our decisions about how to structure our economy and markets have values embedded in them. Lost in our screens and struggling to cope with rising costs and stagnant wages, we have grown so far removed from one another, and from the origins of the goods and services we consume, that we have lost track of our place in the web of humanity.

It is time to reclaim what separates us from factory robots. We must be honest about how deeply an economic framework rooted in market fundamentalism has crept into realms well beyond economics: how we use our time, our family structures, our communities, our sense of self-worth, and the health of our planet.

Middle-out economics seeks certain concrete policy goals: higher wages, fairer taxation, more generous health care and other care policies, consumer protections, and more. But we must never forget that we seek more than policies. We seek a better life for people. The highest achievement of the next economic order will be to put the market back in its place as a subordinate contributor to human flourishing, and not the other way around.

Envisioning the New Era

To understand what this means in a practical economic context, let’s imagine what the 2030s could be like.

For one thing, the combination of rising climate pressures and a conception of the world as more than just a giant market may mean that more of our goods can be made at home. The consequences of this shift will be profound. Imagine, for example, what it will feel like to live in a city or country that deploys goods made or refurbished by its own members to rebuild our food supply, trains, cars, water pipes, community centers, and schools. You can picture the land your food grew on; you are not prevented from repairing your own tools or electronic goods because a monopoly stops you. American manufacturing and craftsmanship will experience a renaissance and will reduce the carbon footprint of items previously shipped from faraway places. This is an economy that will incentivize the production of goods that are both safer for our environment and healthier for our bodies.

The renewable energy transition can power this shift. Policies enacted in the last three years have the potential to triple the United States’s renewable energy capacity while creating more than nine million new clean energy and climate jobs. This shift can put money in our pockets while also making our sources of energy cleaner and bringing them closer to home—perhaps even to our rooftops. Dramatic drops in asthma and other childhood ailments will inevitably follow. (Gas stoves alone are the cause of approximately 650,000 cases of asthma in children.) Nearly a million people will literally be breathing easier thanks to these changes.

Investments in care will support families as the middle-out economy pushes us to value things the neoliberal economy never could, like our children and elders. A tsunami of aging loved ones will force major shifts in the workplace: Faced with the possibility of losing workers, companies will provide them with the flexibility to care for their parents and partners. The federal government, the largest payer in the home care industry, will set a floor for good care worker wages, expanding the middle class and deepening the economic vitality of local communities.

We can leave behind the days when the lowest-paid graduate degree is in early education and when those who care for the elderly live in poverty themselves. Subsidized child care, paid leave policies, and shifts in workplace culture will empower us to choose whether to invest our primary labor at home or in the workplace.

On the back of these developments, the 2030s could usher in an era of more broadly shared prosperity across the income spectrum, as it was in postwar America (but this time with Americans of every race, gender, and creed benefiting).

Americans of all stripes say they value time with family more than anything, but that time with their loved ones has been demoted to make room for progress and life-swallowing careers—or worse, working multiple jobs just to get by. Economist Heather Boushey, a member of President Biden’s Council of Economic Advisers, expressed her critique of trickle-down economics to me succinctly: “One of the biggest challenges with this approach to economics is it starts with the individual and their relationship to the economy, failing to see that people live in and engage with the economy as part of families and communities.” As we recover more of our time, we will use it to turn toward each other. Fifty years have taught us that stuff is not enough and that we need each other more than we thought. Our culture will prioritize deeper connections to family, neighbors, and friends.

Signs of Change

This future isn’t so far off. If you know where to look, there are glimmers of it today.

Journalist and author Krista Tippett suggests that we should work to develop what she calls “the generative story of our time.” “We are more familiar with the story of catastrophe and dysfunction, and that is real,” she argues. “But it’s not the whole story of us…there is also an ordinary and abundant reality of things that are going right at any given time, of learning and growth that is happening, of evolution, and breakthrough.” Today, in the spring of 2024, there are real, concrete signs of this “ordinary and abundant” reality, if we look closely:

  • In 2022, more electricity was generated from renewable energy than coal for the first time.
  • A total of $310 billion of new clean energy investments, spurred by the Inflation Reduction Act, is beginning to shift the trajectory.
  • In West Virginia, former miners will be among the first production workers in one of the new cobalt-free battery plants now being built across the country. Creating the new from the old, the enterprise will be housed in a glass factory that was shuttered in 2009.
  • In Nevada, a battery components recycling and production facility is poised to create 1,600 factory positions and support an additional 3,400 good-paying construction jobs in support of the electric vehicle supply chain.
  • The Inflation Reduction Act will provide families with a tax credit of up to $2,000 for installing electric heat pumps, which can in turn save them about $500 a year on their energy bills, as well as additional tax credits for other steps to improve their homes’ energy efficiency.
  • Thanks to care worker power-building, state legislation, and more than $25 billion in federal funding from the American Rescue Plan, all 50 states are improving home care worker compensation. Florida is among the states that have passed a permanent wage raise and a wage floor for home care workers and put federal money to work. Colorado raised wages for as many as 60,000 workers who provide home care to the elderly and people with disabilities. In Maine, more than 20,000 direct care workers received bonuses averaging $3,429 per person. It is not enough, but it is a start toward a new future.
  • Programs in the American Rescue Plan temporarily cut child poverty nearly in half, to 5.2 percent—the lowest rate ever—and generated a brief uptick in levels of public trust in government.
  • The process to replace all of America’s lead pipes—which seemed impossible in 2014, when the nation was riveted by the water crisis in Flint, Michigan—has already begun, with a target of completion by 2033.

Meanwhile, communities across the country are creating more generative visions for their own economic futures. Take, for example, Hawaii’s ʻĀina Aloha Economic Futures, an initiative of more than 2,700 individuals, organizations, and businesses, or the state of Washington’s “Blueprint for a Just and Equitable Future: The 10-Year Plan to Dismantle Poverty in Washington.” Washington has also passed the Healthy Environment for All Act, creating a collaborative process through which state agencies and the communities who experience the state’s heaviest environmental health burdens can work collectively to mitigate these harms.

There is also an emerging sense among thought leaders on the left and right that the neoliberal obsession with rugged individualism has fallen short. Activist Mia Birdsong’s 2020 book, How We Show Up, and conservative columnist Tim Carney’s new book, Family Unfriendly, both take on the individualist paradigm, calling from different ends of the political spectrum for a new economy of connection among family, friends, and community.

“What showed me the limits was having kids,” Carney told me. “Four hands are not enough to raise kids. Parents know this requires community support.”

Birdsong puts it even more clearly: “Just as we cannot survive without food, shelter, and water, we cannot survive without each other.”

What Ought to Be, Not What Is

The earliest apostles of neoliberalism held a real commitment to individual freedom and human agency, and they hoped a market-dominated paradigm would be the path to the greatest well-being for the most people. When Milton Friedman wrote about economics not being attached to any particular ethical position, he sought an economics that “deals with ‘what is,’ not with ‘what ought to be.’”

Somehow, this purportedly ethics-neutral framework managed to become the dominant paradigm of the twentieth century and has lingered into the twenty-first well past its sell date. While it didn’t work to create the human flourishing it aspired to, it has deeply permeated our institutions, our government policy, and our lives, and not without consequence. By all measures, we have never worked harder, and yet been so lonely and so deeply on our own.

This shouldn’t surprise us. We rooted ourselves and our institutions in an economic theory that claims to be devoid of ethics but has reshaped how we value our time, our labor, and our relationships with the built environment and each other.

The unnecessary tension between individual freedom and an ethic of mutuality is just one of the hundreds of oversimplified binaries in American life that have kept us stuck. Perhaps it is time to replace what is with what ought to be.

If middle-out economics is to help us thrive, it must move beyond this false choice. It must hold space for both individual human dignity and development and for the reality that we are all better off when we are all better off, and when we are more deeply connected. It must face new challenges—that progress has threatened our safe, healthy, permanent residence on Earth, and that AI technologies could allow us nothing more, as writer and artist James Bridle says, than to “do the same stupid…things we’ve been doing forever, just faster and harder.” It must honestly confront the fact that economic wholeness cannot make us happy. We need love; we need each other.

As we set a course for the next ten years, we must move to an economic framework that does not pretend to be—or even wish to be—divorced from ethics. Instead, our next framework must center on what helps us thrive not only individually, but together.

From the Symposium

The Middle-Out Moment Is Here

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Tara McGuinness is the co-author of Power to the Public, a former adviser to President Obama, and the Executive Director of the New Practice Lab, a design and policy effort at New America focused on families with young kids.

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