Imagining a New New Deal

More government intervention will mean more freedom, not less—but only if progressives focus directly on issues of power and equity.

By K. Sabeel Rahman

Tagged Civil RightseconomyInequalityInfrastructurepandemicThe New DealTrump Administration

The hideous pandemic response and the attendant economic collapse are at their core failures of government. On the health front, the Trump Administration has utterly failed to craft a pandemic response to contain the virus, and the racial disparities in mortality reflect our long-term patterns of disinvestment from our public health infrastructure and concentration of poverty and pollution in communities of color. On the economic front, despite the more than $2 trillion price tag of various relief bills, the federal government has largely failed to provide relief at the needed scale, or with the necessary laser focus on working families and the communities hardest hit. Instead we’ve seen undersized stimulus, one-time $1,200 cash payments for families that is woefully inadequate for the level of economic collapse, and no action to protect families from housing costs or debt service. Myriad exemptions and red tape have blocked most workers and small businesses from accessing critical benefits like paid sick leave or payroll support. Working families, and Black and brown communities in particular, are the hardest hit.

The task of crisis response and reconstruction will largely fall to the next administration. Joe Biden, the presumptive Democratic nominee for President, has rightly grasped the enormity of the task ahead, and has proclaimed a newfound, Rooseveltian ambition for his potential presidency. Grassroots advocates and progressive legislators are similarly mobilizing for an economic agenda operating at the scale of FDR’s New Deal, from the Green New Deal coalition’s calls for a “people’s bailout” to calls for a New Deal style federal job guarantee, to proposals to recreate Depression-era efforts to federally finance economic investment.

But addressing the crisis will require more than good policy ideas; it will require a fundamental rebuilding of government itself. The Trump Administration, and decades of conservative and centrist attacks on “big government,” have left the civil service and public sector largely decimated. For any new administration to be successful, it needs to draw on past moments of successful crisis response that have involved the creation of new government authorities and capacities. The New Deal ushered in the modern safety net and regulatory state, as FDR’s Administration helped create Social Security, the Tennessee Valley Authority, public jobs programs, expansive new forms of federal regulation of big corporations, as well as of finance, labor rights, and more. The civil rights movement similarly embedded many of its aspirations for greater racial equity in civil and voting rights through new federal powers: the Voting Rights Act empowering the Department of Justice to protect against voter suppression tactics; the creation of civil rights enforcement requirements for equal access to government services in programs like Medicare; and more. Even in the aftermath of the 2008 financial crisis, the Obama Administration created the Consumer Financial Protection Bureau, while the Federal Reserve created new lending programs to stave off financial collapse for a range of businesses.

But these past measures also had their limitations. The New Deal systematically excluded Black, brown, and women workers. Meanwhile, the response to the 2008 financial crisis did little to dismantle the concentrated power of Wall Street and bailed out banks without the same level of attention to homeowners, to say the least. If a potential new administration is to address the worst economic crisis in modern history, it will have to learn from both the strengths and weaknesses of these past episodes of progressive reform. The strengths and failures of these moments highlight three key principles that progressives must heed to meet the challenge of the moment: commit to expansive direct public provision of key goods and services; dismantle concentrations of private economic power; and create institutions that affirmatively promote inclusion, equity, and accountability.

1. Expand direct public provision of basic goods and services

In recent decades, many have grown accustomed to viewing government provision with suspicion. But any effective response to the current crisis will require a massive expansion of direct public provision of key goods and services.

In the late nineteenth century, state governments pioneered the creation of public utility commissions, wresting control of essential services like water, electricity, transportation, and even the production of key goods like milk from private actors who exploited the public’s needs to impose arbitrary conditions, high prices, and poor quality controls. These efforts forged a new level of public sector capacity to ensure the fair and equitable provision of basic goods and services—sometimes through direct state provision, other times through the imposition of strict public oversight of essential industries.

These innovations in turn laid the groundwork for the New Deal itself, which dramatically expanded direct public provision of a wide range of goods and services: from guaranteeing jobs through public works programs to publicly run massive infrastructure projects like the Tennessee Valley Authority to the creation of a national public safety net with programs like Social Security. In many of these cases, the initial efforts were justified as part of an emergency response to the extreme suffering of Americans in the Great Depression; but over time, these origins in charity gave way to a moral demand for these public goods as essential guarantors of economic freedom. By 1944, FDR famously sought to expand and constitutionalize the faith in public provision of basic goods with his proposal for an “economic bill of rights.” While the New Deal itself systematically excluded many Black and brown workers and women from this vision of the social contract, the vision of truly inclusive, universal public goods provision that animated later reform efforts, including the civil rights movement’s vision of economic equity.

Our modern unease with public provision reflects the combination of two related ideological currents that have been ascendant in the last 40 years, undermining progressive possibilities: first, the dominance of anti-government, free-market fundamentalist views that privilege privatization and private innovation over public provision; and second, the tradition of racialized attacks on public goods, which demonized public provision and government safety net programs as handouts to the “undeserving poor,” playing on racial stereotypes to lower public support and driving efforts to defund and privatize the safety net. Today’s movements for racial and economic justice, from the renewed attention to economic rights to the continuation of Martin Luther King’s Poor People’s Campaign, underscore how expanding the provision of public goods and guaranteeing access to these necessities is central to securing economic freedom and racial equity.

Indeed, one of the big reasons the pandemic and economic crisis have been so devastating is that we have, for decades, dismantled and divested from public goods and public infrastructure—from health care to drug development to environmental protections to a truly universally inclusive safety net. A bold progressive response to the COVID crisis has to involve an expansive and full-throated commitment to direct public provision of key goods and services, either through direct government provision or through the provision of “public options”—state-run alternatives that compete alongside private alternatives.

Health care is a familiar example. Millions of Americans are suddenly without access to health care at precisely the worst possible time. At the same time we are also facing the looming financial collapse of a health system dependent on cross-subsidies from elective surgeries. Proposals for universal and public health care would address these concerns. Public provision will be needed in other contexts as well. Consider the chaos surrounding the Paycheck Protection Program, a key component of the crisis response that relied on private banks to provide forgivable loans to small businesses to help them maintain their payroll during this time. The predictable result was that banks steered the cash toward their preferred clients, and many small businesses, especially in communities of color, were unable to access the funds. By contrast, other proposals could provide direct cash to families and businesses from public actors like the IRS or through a form of public banking via the Fed or the post office.

The bottom line is that our push to avoid direct public provision of goods and services inevitably leads to chaotic workarounds that leave millions of Americans without access to these key supports, and creates problematic opportunities for private actors to operate as middlemen, exploiting their position for profit or self-dealing. A new administration must commit to truly universal, inclusive, and public provision of these essential goods and services.

2. Dismantle economic autocracy in the workplace and in the marketplace

For Progressive Era and New Deal reformers, free market fundamentalist ideas of liberty were flawed not only because they were often deployed to argue against the provision of what were in fact freedom-enhancing basic goods and services; these free market ideas also obscured the realities of economic autocracy and control that shaped most Americans’ lives.

As the plight of today’s essential workers highlights, most workers, especially precarious and vulnerable low-income Black and brown workers, live and die at the whims of their employers—and in service to the requirement to generate returns for investors and shareholders. By stripping away benefits and suppressing wages while demanding more and more production, the modern workplace has, over the last few decades, become a deadly machine for investor return, at the expense of worker safety, health, and economic security. This is true not only in the tech-enabled gig economy, but also in sectors like shipping, retail, restaurant work, and more.

The disparities of economic power in the workplace are mirrored by a similar concentration of power by new monopolies and modern finance over the macroeconomy itself. A century ago, progressive reformers battled Gilded Age monopolists like J. P. Morgan’s banks; Vanderbilt’s railroads; and Jay Gould’s control of the telegraph. These individuals and their firms had such outsized control over key industries that they effectively governed the macroeconomy, with the power to determine the economic fates of whole regions and sectors by deciding who could access capital and transportation and information—and on what terms. Today’s economy faces a similar concentration of power. Amazon is becoming even more powerful while we quarantine, gaining market share and exercising even more control as businesses desperate to reach buyers must play by Amazon’s rules to get their goods to market. Private equity is already poised to snap up struggling businesses—which has often resulted in returns for investors but collapse for the businesses themselves.

Without dismantling these power structures in the modern economy, even a massive expansion of public benefits will ultimately fall short of liberating workers and communities from the deep economic devastation that the current crisis has magnified. But this is an issue where progressives have had a mixed record. Dismantling the concentrated power of monopolies and finance was a central component—at least for a few years—of the New Deal agenda, which included the creation of new antitrust enforcement measures to break up concentration, impose strict financial regulations on banking and investor interests, and secure a commitment to expand the countervailing power of organized labor. Yet in the most recent economic crisis of 2008, attempts to dismantle the concentrated power of finance by breaking up the banks and imposing tougher regulations on money markets fell short—paving the way for the Trump Administration to dismantle Obama-era financial regulations and therefore restore many of the pre-2008 market conditions. And the Obama Administration likewise did not succeed in passing major labor law reform to expand the ability of workers to organize.

Today, any response to the economic collapse will have to tackle the problem of economic power. This means expanding antitrust regulations and enforcement, dismantling widespread concentration of sectors like agriculture, pharmaceuticals, and finance, and others. It means reviving New Deal-era public utility regulatory tools, enforcing rules of antidiscrimination, fair pricing, common carriage, and basic safety on infrastructural firms like Amazon. And it also means investing heavily in this moment of worker organizing to build new forms of countervailing worker power, as well as looking beyond conventional forms of collective bargaining to place workers directly in positions of authority on corporate boards and make sure they are organized to set the wages, labor standards, and—especially now—health and safety protections for whole sectors rather than just their own workplaces.

3. Institutionalize inclusion and accountability

A third key lesson is that progressives responding to the COVID-19 crisis must institutionalize affirmative measures to ensure equity, inclusion, and accountability. A central failing of the New Deal was its deliberate exclusion of Black and brown workers, as well as women, from its vision of the social contract. By exempting industries like farmworkers, guest workers, and domestic workers, for example, the New Deal baked into its structure a racialized and gendered vision of economic inclusion. These exclusions persist to this day as many of these workers are among the most precarious and vulnerable in today’s economy. Similarly, while the response to the 2008 financial crisis did impose some new regulations on Wall Street and create a powerful new Consumer Financial Protection Bureau, the 2009-2010 stimulus and reform measures that followed largely exacerbated racial wealth disparities by doing too little to address the devastation wrought by the mortgage foreclosure crisis in communities of color. The new regulatory tools forged in the 2009-10 economic crisis response under the Obama Administration also largely failed to embed sufficient accountability for Wall Street.

The reality is that the modern economy reproduces racial and gender hierarchy through a recurring set of policy strategies: exempting employers of Black, brown, and women workers from many labor standards, privatizing public goods and public services, which imposes new costs on low-income communities in particular, and increasing barriers to accessing public services through means-testing, onerous paperwork requirements, and punitive measures that are often weaponized by state and local officials to further exclude communities of color. In the early going, the policies responding to the COVID-19 crisis were already replicating some of these past mistakes by leaning on these exclusionary and unaccountable models of policymaking.

Instead, any new administration will have to institutionalize equity and accountability in pro-active ways. First, this means moving away from means-tested, exemption-riddled, and obscure incentive programs like tax credits and complex benefits packages to more simple, visible, and universal social programs. The model should be Social Security: a public benefit where everyone is eligible and automatically enrolled, rather than what has become of the welfare system following decades of centrist Democratic and Republican erosion. Universal programs are not only more effective at addressing economic inequity; they also create a more sustainable politics, preempting racialized attempts to exclude people of color from accessing the programs, and generating greater political support from the public.

Second, like the civil rights movement of the 1960s, today’s progressives need to build a new enforcement regime charged with ensuring equitable access to benefits, focusing particularly on Black and brown communities. One of the main reasons why programs like Medicare did not re-segregate—where other social programs like Medicaid did—was that grassroots activists and sympathetic bureaucrats created an enforcement regime that directed the energies of the federal bureaucracy to require hospitals to desegregate and to investigate charges of racial disparities in access to care. Racial inclusion does not happen automatically; it has to be enforced by effective civil rights institutions. This is particularly critical in a world where the Trump Administration and the courts have gradually eroded much of the civil rights statutes and administrative enforcement tools built by civil rights activists in decades past.

Third, a new administration must also institutionalize more direct forms of accountability, centering the voices of Black and brown communities and working families in the design and implementation of any economic crisis response. One of the big lessons of the 2010 creation of the Consumer Financial Protection Bureau, for example, is that a powerful new agency with a clear mandate to look out for the needs of ordinary Americans can help overcome the traditional advantage that big business interests have in lobbying regulators. By engaging communities directly and providing a dedicated forum for addressing grievances, regulators can ensure greater responsiveness to ordinary Americans. Similarly, in the War on Poverty, policymakers briefly experimented with more direct forms of grassroots participation in designing and implementing urban planning and poverty reduction policies. Today, we have similar models of direct accountability in administrative programs, from wage boards empowering workers to set labor standards to community forums that empower tenants and grassroots communities to shape local development policies.

Securing the Freedom to Thrive

These three principles—expanded direct provision of public goods, dismantling of private power, and institutionalizing affirmative measures for inclusion and accountability—provide a framework for any future progressive administration to tackle this economic crisis. All three of these components are necessary; without dismantling private power, an expansion of public provision will leave in place the most extractive economic relationships and reproduce the kinds of insecurity and precariousness that make our economy so brittle and working families so vulnerable. Without affirmative measures institutionalizing equity, inclusion, and accountability, efforts to expand public goods will be swiftly met by hidden strategies to limit access and exclude Black and brown communities.

These principles also represent a radically different moral vision for a post-COVID economy premised not on the false freedom of the “free market” but on the true liberation of working people—and Black and brown communities in particular—from the kinds of insecurity, vulnerability, and exploitation that devastate families and communities.

In a famous campaign speech in Ohio in 1932, Franklin Roosevelt blasted Herbert Hoover’s coziness with big business interests as the Depression neared its third year, and in particular Hoover’s fixation on a negative vision of “freedom,” including his opposition to greater government action. “I do not believe,” proclaimed FDR, “that in the name of that sacred word a few powerful interests should be permitted to make industrial cannon fodder of the lives of half the population of the United States.” Government, FDR reminded the voters, should be a “check on oligarchy,” securing the safety for ordinary people “rather than for the exploiter.” FDR’s attack on Hoover rings true today, as right-wing protests in spring 2020 called for “liberating” people by forcing them back to work and abandoning public health safety precautions, most specifically the wearing of face masks, in the middle of a pandemic—a deadly bargain especially for the predominantly Black and brown “essential workers” of the economy. But as John Dewey noted of the New Deal’s critics in 1935, such calls for liberty are simply an “attempt to maintain the existing system of control of power.” It is telling that Mitch McConnell has demanded Congress pass a liability waiver for employers before considering any further economic recovery measures, even in the face of over 30 million unemployed and families increasingly desperate to secure access to food, maintain their housing and their health insurance, let alone struggling to stay healthy.

The right’s vision of freedom is a definitionally exclusionary one. At worst it is a market fundamentalist notion of freedom understood narrowly as market exchange, obscuring the inequities that privilege wealthier and big business interests. At best it is a freedom that expands liberty only for whiter and wealthier communities premised on the (sometimes implicit, sometimes explicit) exclusion and exploitation of Black, brown, and indigenous communities. This exclusionary, extractive vision of freedom is rooted in a deeper conservative movement that is at its core a coalition between big business interests that have for decades organized to dismantle the New Deal regulatory state and racialized attacks on the state as part of a sustained campaign to roll back the gains of the civil rights era. And it is shaping public policy in a Trump Administration committed to gutting civil rights, labor rights, and consumer protections; and in an increasingly conservative-dominated judiciary firmly in the grips of a new skepticism, if not hostility, to these kinds of regulatory powers.

But if we are to meet the scale of this crisis, these are the fights progressives will have to take on—armed with a clear moral vision of a truly inclusive economy, a new administration staffed by personnel committed to bold ideas, and backed by the organized and mobilized power of working families and Black and brown communities.

Read more about Civil RightseconomyInequalityInfrastructurepandemicThe New DealTrump Administration

K. Sabeel Rahman is an associate professor of law at Brooklyn Law School and faculty co-chair of the Law and Political Economy Project. Most recently, he served in the Biden-Harris Administration, where he led the Office of Information and Regulatory Affairs.

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