A Surprising Shift in Economics

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By Ketrin Agustine

A Surprising Shift in Economics

Economic thinking has become more progressive in recent years.

A then-obscure think tank named the Roosevelt Institute released a report in 2015 that called for a new approach to economic policy. It was unabashedly progressive, befitting the history of the institute, which was created by trusts honoring Franklin and Eleanor Roosevelt.

The report called for higher taxes on the rich, a higher minimum wage, more regulation of Wall Street, more support for labor unions, more aggressive antitrust enforcement and more government investment in economic growth. National news outlets covered the report while also noting how much of a break it represented with decades of economic policy by both the Democratic and Republican Parties. There was ample reason to be skeptical that much would change.

But much has changed in the past eight years.

President Biden has enacted the biggest government investment programs in decades, two of which — in infrastructure and semiconductor development — received bipartisan support. Both the Biden and Trump administrations showed more interest in antitrust policy than their predecessors. Many states, blue and red, have increased their minimum wages. American workers have become more interested in unionizing, and labor unions in both the auto industry and Hollywood have recently won big victories. Even some Republican politicians speak positively about unions.

“It’s very surprising this all happened,” Felicia Wong, the longtime president of the Roosevelt Institute, told me. “For a long time, those of us who have been arguing for it were on the outside looking in.”

In today’s newsletter, I want to consider two questions: What explains the shift toward what Wong and her colleagues call (in a new report, released today) a New Economics? And is that shift likely to continue?

The simplest explanation for the shift is that the old economic approach hasn’t worked very well for most Americans. Starting in the 1980s, the U.S. moved toward an economic policy that’s variously described as laissez-faire, neoliberal or market-friendly. It involved much lower taxes for the wealthy, less regulation of business, an expansion of global trade, a crackdown on labor unions and an acceptance of very large corporations.

The people selling this policy — like Milton Friedman, a Nobel laureate in economics — promised that it would bring prosperity for all. It has not.

Incomes for the bottom 90 percent of workers, as ranked by their earnings, have trailed economic growth, and wealth inequality has soared. For years, Americans have told pollsters that they were unhappy with the country’s direction. Perhaps most starkly, the U.S. now has the lowest life expectancy of any affluent country; in 1980, American life expectancy was typical.

Conventional wisdom rarely changes quickly. Friedman and his fellow laissez-faire intellectuals spent decades on the fringes, before the 1970s oil crisis and other economic problems caused many Americans to embrace their approach. But conventional wisdom can change eventually. And after decades of unmet promises about the benefits of a neoliberal economy, more people have grown skeptical of it recently.

Donald Trump also played a crucial role. He won the Republican nomination in 2016 while defending Social Security and Medicare and criticizing free trade and high immigration, two pillars of neoliberalism. By doing so, he proved that even many Republican voters had drifted from the views of Ronald Reagan and Paul Ryan.

As president, Trump often contradicted his own populist rhetoric. (His one big piece of legislation was a tax cut that mostly benefited the rich.) But he shattered so many basic norms of governance that Democrats came to think they too could discard long-held beliefs. As Neera Tanden, who is now Biden’s top domestic policy adviser, said to me in 2018, “Donald Trump has widened the aperture for policy discussions in the United States.”

Where does the New Economics go from here?

For all the progress it has made, the movement remains far from its biggest goals. In many ways, Americans are still living in the Reagan era. Taxes on the rich remain low. Corporations are much larger than in the past, and they can often prevent workers from forming unions even when most employees at a work site want to join one. Many progressive proposals, like universal pre-K, remain dreams.

In the short term, the biggest question is probably whether Biden can win re-election, given Trump’s lack of a consistent economic policy. One threat to Biden’s re-election is voters’ unhappiness with the economy’s recent performance, especially inflation.

Today’s high prices are mostly not Biden’s fault, as my colleague German Lopez has explained; inflation has also been a problem in other countries, related to Covid disruptions, the war in Ukraine and other factors. But Biden has failed to persuade voters that he is sufficiently focused on high prices, and they give his overall economic policy much lower marks than they give his specific policies, like the investments in infrastructure and semiconductors.

For all these reasons, the New Economics both has made surprising progress over the past decade and remains vulnerable to reversal.

Related: After ignoring inequality for years, economists are now publishing books about it. They disagree on how to address the problem, The Times’s Jennifer Szalai writes.

Biden and Xi Jinping.Doug Mills/The New York Times
  • President Biden and Xi Jinping met at an estate near San Francisco, reaching modest agreements to ease U.S.-China tensions. It was their first conversation in a year.

  • Biden said China would regulate chemicals that make fentanyl, which has fueled America’s opioid epidemic, and that the two countries’ militaries would resume talks to avoid accidents.

  • Xi criticized U.S. export controls on advanced computer chips and called for the U.S. to stop sending weapons to Taiwan.

  • The public exchanges were carefully choreographed. “We have to ensure that competition does not veer into conflict,” Biden said. “Planet Earth is big enough” for both superpowers, Xi replied.

  • Asked if he would keep referring to Xi as a dictator, Biden said, “Well, look, he is.”

  • Xi signaled that China might send new pandas to the U.S., The Washington Post reports. (The National Zoo in Washington had to return three recently.)

  • “He said, Xi said”: Late night hosts joked about the meeting.

The New York Times
  • Israel raided buildings on the campus of Gaza’s largest hospital, Al-Shifa, searching for evidence of a Hamas military presence. See where the troops were reported.

  • Israel released video of about 10 guns it said soldiers had found in a radiology building, as well as ammunition and body armor.

  • A senior Israeli official said troops were interrogating people inside the hospital. “Everyone is scared,” a witness said.

  • Israel believes the raid will pressure Hamas to finish a deal to trade dozens of Israeli hostages for Palestinian prisoners.

  • What Israel finds — or doesn’t — in the hospital could affect international sentiment about the invasion, Patrick Kingsley and Iyad Abuheweila write.

  • Biden said ending the conflict permanently required a Palestinian state, alongside the Israeli one.

  • Christopher Wray, the F.B.I. director, said the bureau was investigating tips related to Hamas “radicalization and recruitment” in the U.S.

  • Law enforcement authorities clashed with protesters calling for a cease-fire outside the Democratic National Committee, CNN reports.

  • The Senate overwhelmingly passed a bill to extend government funding into next year. Biden is expected to sign it, averting a shutdown.

  • Hard-line House Republicans blocked a separate spending bill, protesting Speaker Mike Johnson’s decision to pass the bill to avert a shutdown with Democratic votes.

  • Tammy Murphy, the wife of New Jersey’s Democratic governor and a former financial analyst, is running for Robert Menendez’s seat in the Senate.

  • New Hampshire will hold its presidential primary on Jan. 23, defying the Democratic Party’s efforts to put South Carolina first.

  • Lawyers for Trump called for a mistrial in his New York civil fraud case, accusing the judge and his clerk of political bias.

  • U.S. officials have arrested hundreds of people on the terrorist watch list at the southern border in recent years. That is a small fraction of the migrants apprehended.

  • Britain’s Supreme Court ruled against a government plan to deport asylum seekers to Rwanda.

  • An Interpol campaign identified a woman killed in Belgium 31 years ago. She was British, and a relative recognized her flower tattoo.

  • “The smell of death is everywhere”: Seven months into Sudan’s civil war, a paramilitary group is on the verge of seizing the entire Darfur region.

  • Armed boats that are officially commercial fishing vessels are helping China quietly gain command in the South China Sea.

In Louisiana.Emily Kask for The New York Times
  • “You could taste the salt”: Extreme weather is tainting drinking water in the South.

  • Southeastern Florida is preparing for up to 10 inches of rain. That could cause flash floods in and around Miami.

  • The mother of a 6-year-old who shot his first-grade teacher in Virginia received a 21-month prison sentence.

  • The police in North Carolina opened an investigation after a video showed an officer repeatedly punching a woman while other officers held her to the ground.

  • Staffing shortages and outdated technology threaten the safety of the U.S. aviation system, a report found.

  • Thousands of Starbucks workers plan to walk out today over contract negotiations.

  • American bishops are navigating a contentious relationship with Pope Francis that has brought street protests to a usually drama-free meeting.

Any calls for a cease-fire in Gaza must also include a demand for the release of hostages, Moshe Emilio Lavi, whose brother-in-law was kidnapped, writes.

The West Wing may believe Bidenomics is working, but it hasn’t improved most voters’ lives. That’s a problem for the president in 2024, Karen Petrou argues.

Here are columns by Pamela Paul on liberalism, Gail Collins on Trump, Charles Blow on anti-Zionism and Bret Stephens on antisemitism.

A hooded warbler.Micah Green for The New York Times

Bird watching: The narrow peninsula of Fort Morgan, Ala., is a crucial pit stop on migration flights.

Run, don’t walk? Walking is good for you. Running is better.

Helicopter parenting: Facebook groups for parents of children in college have become mainstream, The Cut reports.

Iceland: A volcano may soon erupt. Here’s what to watch for.

Lives Lived: Joe Sharkey advised business travelers in hundreds of New York Times columns, and survived a midair jet crash in 2006. He died at 77.

N.H.L.: An arrest has been made over the death of Adam Johnson, a former Pittsburgh player whose neck was cut by a skate during a match in England.

M.L.B.: Major League Baseball is likely to shorten the pitch clock to 18 seconds from 20 with runners on base next year, to limit game times.

Soccer: Megan Rapinoe underwent successful surgery to repair the Achilles’ tendon that she tore in her final professional game.

Basketball: The N.B.A. suspended Draymond Green for five games over a fight during which he put the Timberwolves’ Rudy Gobert in a chokehold.

James Kerr/Scorpion Dagger

Football everywhere: The N.F.L. is already a broadcast juggernaut — its games accounted for 83 of the nation’s 100 most-viewed telecasts last year. To reach viewers who don’t watch broadcast TV — many of whom are young — the league is expanding onto streaming services with documentaries that show its personal side. It has more than 50 productions in the works, Emmanuel Morgan writes in The Times, including a Netflix documentary on the Dallas Cowboys’ famously ornery owner, Jerry Jones.

  • Justin Torres won the National Book Award for “Blackouts,” his novel about erasure and queer history.

  • Jimmy Kimmel will host the Oscars for a fourth time next year.

  • Jennifer Aniston and other “Friends” actors shared their memories of Matthew Perry, who died last month.

Watch a step-by-step pie dough tutorial, then make and freeze your own. Have you seen our glorious collection of Thanksgiving pies?

Johnny Miller for The New York Times

Bake cranberry lemon bars, perfect for a potluck Thanksgiving.

Keep clothes looking new with a fabric shaver.

Buy an office chair that feels “like going to a spa.”

Here is today’s Spelling Bee. Yesterday’s pangram was meatloaf.

And here are today’s Mini Crossword, Wordle, Sudoku and Connections.

Thanks for spending part of your morning with The Times. See you tomorrow. — David

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