Clive Crook vs. economic populism

Clive Crook's Financial Times column today ($$) plows a familar road -- the Democratic turn towards economic populism: Whoever wins their party?s presidential nomination, the Democrats are preparing to fight the next election on a platform of left-leaning populism. The contrast with Bill Clinton is evident. He was a centrist, pro-trade, pro-enterprise president ? an avowed ?New Democrat?. The next Democratic occupant of the White House, if the candidates? campaigns are to be believed, will be old-school. Mr Clinton campaigned against the odds to secure passage of the North American Free Trade Agreement. Today the party is against such deals. Mr Clinton worked hard to get China into the World Trade Organisation. Hillary Clinton and Barack Obama are Senate co-sponsors of a new China-bashing law. And the move to the populist left is not confined to trade. All the Democratic contenders are turning up the volume on stagnating middle-class wages, soaring profits, swindling bosses, dwindling union membership (Mrs Clinton and Mr Obama back the abolition of secret ballots on union representation), tax loopholes for the super-rich, oil company gouging, insurance company gouging, drug company gouging and every other kind of gouging.... Mr Clinton?s conviction that globalisation was good for America owed a lot to the experts ? including economists of the highest professional standing ? who surrounded him. Recently, eminent economists such as Alan Blinder, Paul Krugman, Larry Summers (who served as Mr Clinton?s Treasury secretary) and Brad DeLong have all expressed new doubts about the benefits of globalisation for the US. It is all more complicated than we thought, they say. It was hard enough for Mr Clinton to fight for freer trade when every highly regarded economist in the country said it was good for the US. Now that their message has changed to ?We might have been wrong about this. We?ll get back to you?, the prospects for liberal trade have dimmed. Economic populism traditionally marries scepticism on trade with fear of big business: ?It?s all about profit.? A striking feature of many Democratic proposals is the belief that cheaper petrol, cheaper drugs, universal health insurance, higher wages, more generous employment benefits, almost any good thing you can think of, can be achieved by demanding them, in one way or another, from companies, or else by raising taxes on the super-rich. The perverse results of the tax-subsidised healthcare mandate on American businesses show where this approach leads. In the end, the burden falls back on workers and consumers as lower wages and higher prices. The dispiriting wedge between growth in productivity and growth in earnings, the organising principle of the Democratic party?s current economic thinking, gets even bigger. There is no question that the Democratic contenders are talking about the issues that concern most Americans. There is an excellent centrist case to be made for tax reform, to lift the burden of income and payroll taxes from the low-paid and to increase the burden on the better-off. Universal healthcare is long overdue, a shameful state of affairs in so rich a country. Americans pay more than they should for their medicines. More generous and more imaginative assistance for Americans who lose their jobs because of trade ? or because of changing tastes and technology ? is needed. The present administration has little to offer on any of these questions. But the costs of reform cannot be confined to foreigners and plutocrats.