A few months ago, I read a smart research brief Topos wrote for Demos called Promoting Broad Prosperity. Topos has done a ton of surveys, focus groups, etc. to figure out how most Americans think about the government’s role in creating a good economy. They’ve come up with a very interesting approach I think will be helpful in rethinking my framework.
The problem, according to Topos, isn’t that most folks are ideologically opposed to “government ‘interference’ in the economy.”
Rather, the more fundamental problem is that they find it difficult to even see that policy shapes the economy. Many default to thinking of the economy as either “natural” (a “free” market that will “turn around”) or shaped by the decisions of multiple individual actors (greedy business executives who offshore jobs, irresponsible consumers who buy more than they should, hard-working small employers who treat employees well, unskilled workers who aren’t prepared for certain jobs, etc.). In neither case is intentional, collective action to shape the economy relevant to the public’s considerations. After all, you can’t legislate away the irresponsibility of consumers who borrow more than they should, or create policies to cause executives to stop making decisions based on personal greed.
To tackle these views, Topos says we should use 2 key ideas that test well. The first idea:
The Intentional Middle Class: A strong middle class, which is the engine driving our economy, doesn’t arise by accident, but is the result of deliberate and proactive choices.
For example, this statement tested well:
A middle class does not happen by accident—it takes long-term planning and particular kinds of policies like an affordable college education, home mortgage deductions to encourage homeownership, and tax and investment policies that allow people to build more savings. In this country we’ve worked hard to grow and strengthen the middle class, with policies like these. Some societies don’t take significant steps to build a middle class and those societies have a large class divide.
Why focus on the middle class?
It helps people focus on broad-based prosperity and collective stakes, as opposed to individual outcomes. Since the vast majority of Americans see themselves as “middle class” or aspiring to be middle class, steps to grow and strengthen the middle class are steps that are in our collective interest. It puts the focus on what government should (try to) achieve, and avoids the question of whether government can achieve economic results…. Americans usually think of the middle class as “most Americans”—it is natural to believe that government efforts should benefit most Americans. …“Middle class” means “all of us,” so steps to help and strengthen the middle class are steps that build broad-based prosperity and are in our collective interest.
The second idea: “public structures.”
Public Structures as Economic Foundation: The “public structures” created and maintained by government are foundational to prosperity and economic stability, as well as the strength of the middle class.
Topos argues there are 2 useful ways to talk about how public structures help create a good economy. The first: by “paving the way” for new innovations and industries. For example, this statement tested well:
One of the things that has always boosted the economy most is new products, new ideas, new industries. And these major innovations have almost always depended on government “paving the way” for businesses, rather than just “getting out of the way.” For example:Government-supported researchers develop a new idea and companies make it profitable (Internet, various medicines).
Government creates a regulation, and companies compete to find better ways of doing things (more efficient light bulbs).
Company invents something, and government purchases enough to get the industry launched (microchips).
Economists say government paving the way has always been one of the keys to the US’s economic success and leadership.
The other idea: talking about policies as plumbing, directing the flow of resources.
Experts say American voters really need to focus more attention on the complex set of laws and policies that together act like a giant plumbing system directing money to different parts of our society. Two examples of how this important system works: Laws that make it harder to declare bankruptcy end up directing money towards credit card companies, and policies that offer student loan guarantees channel money towards families. In fact, this network of policy “pipes” is how we create the kind of economy and society we want. For example, if we want to encourage certain kinds of businesses, or make families stronger, or cut down on pollution, one of the key ways we do that is by adjusting the system of policies that direct the flow of money.
Topos’ research shows that the ideas of public structure and the intentional middle class also work well when combined together. For example:
One way economists define the middle class is people who make heavy use of so-called “public structures.” On average, it is middle class people who benefit most from both physical structures like highways and levees, and other public structures from the school system to air traffic control, FDIC insurance, Medicare, the court system, etc. Economists say that countries with a thriving middle class have invested significantly in these public structures. Third-world countries, by contrast, have limited public structures and no real middle class.
There’s a lot to like in Topos’ approach. There are also parts that think need some work. In the next two weeks, I’ll explore what I think does and doesn’t work and what implications it might have for the RTE framework.
Other interesting findings from the report:
On the GDP Versus the “Lived” Economy:
From the perspective of those who desire more action by government to effect economic outcomes, one promising finding is that Americans’ bottom-line criteria for evaluating the economy are often closer to what advocates frequently focus on—such as unemployment rates, wages, expendable income and job security— than to what economists and economic reporters often focus on—such as stock prices or the Gross Domestic Product (GDP). People tend to judge the economy based on their perceptions of how they and people like them are doing; as this quote from a research respondent illustrates:
Money spent on Wall Street is fine, but it’s still not putting cash in the everyday person’s pocket. If we don’t have money to spend or deposit, it’s not really helping in the long run.
(34 year-old moderate woman, Tennessee)And in fact, for average people the phrase “the economy” usually means the economic circumstances on the ground—as opposed to the much more complex and structural picture that insiders associate with that term.
On the Problem of Blaming “Elites”
It is easy for average Americans, particularly in tough economic times, to feel that elites (Individual Actors) are “rigging” the game in their own favor, one way or another. Intervention in the economy—by government, big business or both—must be working against average people. This view obviously implies both a passive and defeatist stance.
