• Public Options: Talking to Ganesh Sitaraman

    What might American democracy look like after neoliberalism? What might economic democracy look like within that context? When I want to ask such questions, I pose them to Ganesh Sitaraman. This present conversation focuses on Sitaraman’s book The Great Democracy: How to Fix Our Politics, Unrig the Economy, and Unite America. Sitaraman is chancellor’s faculty fellow, professor of law, and director of the Program in Law and Government at Vanderbilt Law School. He is the author of The Crisis of the Middle-Class Constitution, The Counterinsurgent’s Constitution: Law in the Age of Small Wars, and (with Anne Alstott) The Public Option: How to Expand Freedom, Increase Opportunity, and Promote Equality. He previously served as Elizabeth Warren’s policy director during her 2012 Senate campaign, and as her senior counsel in the Senate.

    ¤

    ANDY FITCH: By 2008, you tell us, acute shortcomings of the present political order had started to manifest in the form of escalating inequality, localized industrial decline, dysfunctional government responses to global climate change. Our readers will remember all of this first-hand. But could we start by taking a couple steps slightly further back? Could you sketch a 20th-century timeline on which the postwar liberal era’s push for a more inclusive polity gradually gets undermined by resilient modes of structural domination? Could you then trace how neoliberal approaches prioritizing not positive freedoms (participatory self-governance supported by basic social conditions, rights, and solidarities) so much as negative freedoms (freedom from constraint) gradually enable further concentrated private power and state capture?

    GANESH SITARAMAN: This book begins by arguing that the neoliberal era of the past 40 years has come to an end. But as your question suggests, in order to see these four decades as an “era,” we have to start thinking through other previous eras as well. Since World War Two, we’ve actually lived through two different historical eras. The liberal era lasted from World War Two’s end through the 1970s. Throughout this era, we had a form of regulated capitalism that differed both from the state control of communist and fascist governments, and from the laissez-faire free market. A relatively cooperative relationship among big government, big business, and big labor provided substantial benefits for individual stakeholders and for society as a whole. And there was a broad consensus around what we could call “liberal” policy and politics — even conservatives agreed with these basic premises. Eisenhower built the interstate highway system. And it was Nixon who said: “I am now a Keynesian in economics.”

    In the mid to later stages of this era, however, we had a series of crises: wars, oil shocks, stagflation, social conflicts. The liberal era ended during the Carter presidency — when Democrats controlled every part of government, but couldn’t implement some of their long-held policy goals. The challenges of that moment seemed new.

    In this late-70s moment, neoliberalism emerged as a global force, particularly through the rise of Margaret Thatcher and Ronald Reagan. “Neoliberalism” is a tough word. Some think of it as an epithet. Others say it has too many different potential meanings. But I actually consider neoliberalism’s basic policy components pretty simple and straightforward: deregulation, liberalization, privatization, and austerity. Neoliberal policy ideas stem from thinking of individuals as the basis of our economy, and as fundamentally responsible for themselves. Instead of government and corporations and unions balancing the interests of stakeholders and the community, neoliberalism sees the marketplace as the primary regulator of society’s interests. And again, during this neoliberal era, even liberals pursued neoliberal agendas. It was Bill Clinton who declared that the era of big government was over, and deregulated Wall Street and the telecoms. Tony Blair transformed the Labour Party into New Labour.

    Eventually this era too brought wars, the Great Recession, massive levels of inequality, social fracturing. That takes us to today. I think Donald Trump’s presidency is the end of the neoliberal era.

    So your own book seeks to push beyond some more limited late-stage horizon of projected technocratic fixes (characteristic, perhaps, of both the Clinton and Obama administrations), and to address social, political, economic, technological, and environmental challenges of a greater magnitude that confront us today. And in each case, your book starts from this basic question of: what comes after neoliberalism? You do note possibilities for a reformed (more inclusive) neoliberal paradigm, or for a Steve Bannon-style nationalist populism. But you see either an epoch of nationalist oligarchy or of great democracy as most likely to stabilize itself for the longer term. Here could you first flesh out your conception of nationalist oligarchy, maybe by describing how it differs from present-day discussions of resurgent authoritarianism?

    Our society could move in a number of different directions right now, any of which could define our politics for the next generation. And like you said, I don’t think a reformed neoliberalism (a system that just tinkers around the edges, but keeps the basic structures in place) can get at the root causes of inequality or social fracturing. Reformed neoliberalism would just mean that we will still have those problems, and there will still be demagogues waiting in the wings. We can’t just nostalgically hope for things to “get back to normal.”

    For the nationalist populism I associate with Steve Bannon, I just can’t imagine many financial or government elites supporting this constellation of policies. As a result, I think this type of populism is unlikely to become entrenched as the basic means by which we govern our political lives.

    I do see a much greater threat from what I call nationalist oligarchy, which combines with its nationalist and oligarchic tendencies the rigging of our political system — so that a small minority can strengthen and perpetuate their hold on power. I think it’s important to call this nationalist oligarchy, rather than authoritarianism, because the latter emphasizes only political structures. But when you look at Russia or Hungary (or when you imagine what might happen even in the United States), the foundation for today’s anti-democratic tendencies is sustained corruption, with policies serving the wealthy and the well-connected at everybody else’s expense. The term “nationalist oligarchy” suggests that this form of government has a political economy and a set of social policies too.

    Now for outlining what great democracy might look like, with its inclusive social solidarity and its egalitarian economic dynamism, could we start with why the US (and equivalent liberal-democratic nations whose norms and institutions appear increasingly less worth defending to many of their citizens) cannot resolve its contemporary crises of government without addressing its pressing crises of society: such as our narrowly individualized range of reference, or our presumption of all-encompassing zero-sum contests between competing demographic and/or partisan groups?

    When I think of reinvigorating our constitutional democracy, I don’t just mean our election process, or related political norms and institutions. Of course I consider these incredibly important components of democracy. But with so much already written about these crucial elements of American democracy, I want to stress an additional set of factors and preconditions.

    First, we need to address economic inequality much more directly. As I argued in The Crisis of the Middle-Class Constitution, since the ancient Greeks and Romans, philosophers and statesmen have worried that democracy cannot persist in a society with severe economic inequality. Either the rich will oppress the poor and create an oligarchy, or the masses will overthrow the rich — with demagogues leading the way. This view suggests that nobody can have disproportionate economic power if you want to maintain a sustainable political democracy. And political scientists have shown the striking extent to which our government today responds mostly to the desires of the wealthy and to big corporations. A government that is mostly unresponsive to the majority of the people is hardly a representative democracy.

    Second, when a society grows deeply divided by race, religion, clan, tribe, or ideology, democracy likewise becomes difficult to sustain. Democracy is basically a form of government in which we collectively determine our shared destiny. But when we get divided to the point of aiming at distinctly opposed futures, democracy itself gets threatened. Abraham Lincoln said that a house divided against itself cannot stand. You need an element of social solidarity, a sense of unity across the general population.

    Here could you sketch the place of soulcraft in great democracy — perhaps alongside your reluctance to accept any false dichotomy between advocating for specific marginalized groups or advocating for structural economic change? How and why should present-day progressive soulcraft help to bring about redefinitions of family, faith, education, work, community, class, society? And how can such soulcraft return us to modes of identity politics that foster cross-cutting solidarities rather than insular isolated camps?

    Representative Alexandria Ocasio-Cortez recently said: “I can’t name a single issue with roots in race that doesn’t have economic implications, and I cannot think of a single economic issue that doesn’t have racial implications.” It’s an extremely important and perceptive point. In an interconnected society like ours, we can’t pull apart and separate these questions. Our individual and group backgrounds shape in complex, overlapping ways the social and economic dynamics in our own lives, and across our culture.

    As a result, we need to see each other’s struggles for justice as our shared fights. We can’t just focus on what matters most immediately to us as individuals. So I think of soulcraft as one way to address these broader ethical requirements imposed by democracy. Since part of democracy involves deciding together on our shared future, soulcraft has to push us beyond thinking about democracy as the aggregation of our individual, self-centered preferences.

    A lot of the time it’s conservatives who discuss moving beyond selfishness. In the book, I discuss what Patrick Deneen and Yuval Levin have written about this topic in recent years. But I take a different view from theirs, because I believe we need to really think through the kinds of institutions and public policies that will enable a democratic ethic at the broader societal level.

    And here we also need to keep in mind that, for all the differences Americans certainly do have (any two individual people are, of course, quite distinct from each other), we still hold a great deal in common in our aspirations for ourselves, for our families, our communities, our country, and our future. Finding that commonality can help build solidarity and make it real. But to get there we can’t separate out the economics, the politics, the questions of identity. They’re all linked.

    Economic democracy, in turn, would break up certain concentrations of power, and would call on us to proactively reshape the role of markets in society — rather than simply embracing, or rejecting, or correcting for the neoliberal era’s sweeping prioritization on markets. Here I think of your skepticism towards most UBI approaches, with even left-leaning UBI advocates apparently resigning themselves to hyper-concentrated neo-neoliberal economic structures. So here could you outline why you would much prefer predistribution reforms: rethinking regulatory, antitrust, and corporate-ownership paradigms?

    Well, as a starting point, we need to acknowledge that markets don’t just exist as a part of nature. They operate against a backdrop of laws. They work because we enforce rules. And we ourselves get to design those rules. In a democracy we make choices, through our elected representatives, about which rules to establish. We can choose these rules for markets based on what will maximize corporate profits. But we can also choose these rules based on what will help strengthen our democracy and promote our deep moral commitment to certain kinds of activities (or our opposition to other activities). In fact, we do this all the time. We ban certain activities from taking place within a market context, when we have moral concerns — we have laws to prevent the buying and selling of organs, for example. We’ve always had to decide which activities should be left to the markets and which should not.

    Jacob Hacker has made an important distinction between policies of predistribution and redistribution. With redistribution you might maintain current economic arrangements, though then you’ll take some money, in the form of taxation, from the people who have done very well, and you’ll redistribute this money, either directly or through various types of transfer programs, to people who have done less well. You can alleviate inequality this way. But predistribution asks us to think about setting the rules for markets, so that they lead to a more equal distribution from the start. You don’t necessarily have to first produce a deep inequality and then correct for it. You can build a broader democratic basis into the policies driving our markets and our economy.

    Antitrust probably offers the clearest example. Antitrust allows you to prevent any one company from dominating an entire industry, from eating up all the other companies, and from concentrating wealth and power among a very small number of people. Antitrust allows us to imagine an economy in which many, many thriving companies compete with each other — distributing ownership and wealth and profits among a much bigger group. Economic ecosystems can tend either towards monopoly or towards competition. As a predistribution policy, antitrust allows us to build a more competitive economy with less concentrated market power and with less inequality.

    I’ll want to get back to antitrust. But first, just to sketch a broader range of topics related to concentrated economic and political power, how should great-democracy corporate decision-making take place? What role should workers themselves play in charting and implementing this vision? And what sorts of government initiatives (for instance: establishing automatic/opt-out union membership, recognizing sector-based collective bargaining, incorporating joint labor-management works councils) would most help to secure pro-worker conditions society-wide?

    I personally find it fascinating to look at American history and see how corporations started off as quite different from how we think about them today. At earlier points, if you wanted to start a corporation, you had to get a charter from a state legislature, granting you this special privilege. Over time, that expanded into more generalized incorporation laws allowing anyone who met certain criteria to create corporations. But these corporate charters still do get issued by our state governments, as a privilege granted according to state law. So here again we see in striking fashion how corporations, and corporate structures, and the power balance between corporation management and workers, doesn’t just come about naturally. We as a democracy choose to allow corporations to exist, because we believe they add real value to our economy and our society. Similarly, we shape how corporations get organized through these charters.

    So in the book I propose that we imagine different ways for corporations to get organized, and to go about their decision-making. Teddy Roosevelt, for example, proposed a federal incorporation law. We could have federal incorporation laws that impose greater obligations on the largest companies. Senator Elizabeth Warren has proposed having 40 percent of big corporations’ board members be employees. This approach already exists in Germany, where they call it co-determination. All of these proposals would change significantly not just who makes up a corporate board, but how it makes decisions — including about its responsibilities to employees, the community, and the country.

    We also could rebalance the power between corporations and their workers by, as you mentioned, thinking differently about the role of labor unions. We could promote unionization in various ways. We shouldn’t overlook the fact that at World War Two’s end, and in the liberal era’s early years, unionized employees made up a huge part (roughly 30 percent) of the workforce. Today, unionized employees make up about 11 percent of the workforce. That shift has directed a significant amount of concentrated power back to corporate management. So one current proposal would change the default, so that you as an employee automatically join the union.

    Another approach a number of labor-law scholars have recommended would involve a sectorial bargaining system, so that companies across a whole sector get grouped together to negotiate with workers. But most generally, I’d like to see a combined effort to rebuild worker power through revised forms of unionization, corporate law, and corporate governance.

    Pivoting then to a more detailed policy agenda, could we start with your book foregrounding the question of how to regulate Big Tech (so that our democracy survives) as one of our biggest challenges at present? Could you sketch the ideological and institutional context in which Big Tech market concentration most undermines economic democracy — in which a narrow antitrust approach (prioritizing consumer-price gouges), and a weak regulatory apparatus (with the Federal Trade Commission, for instance, ill-equipped to take on a robust role), have left us particularly flat-footed in responding to ever-accelerating tech-driven change?

    First again for a quick historical perspective, for much of our existence as a country we have expressed a general fear of concentrated power — both concentrated public power and concentrated private power. These latter concerns start to manifest most strongly at the height of the Gilded Age, with the emergence of antimonopoly and antitrust policies, and with specific laws designed to check the corporate titans who had emerged by the late-19th century. That generation passed the first antitrust law, the Sherman Antitrust Act. About 20 years later came the Clayton Antitrust Act and the Federal Trade Commission — to deal with the trusts and big monopolies holding so much power over the economy and our society and our democracy. People of these earlier eras recognized that concentrated market posed an existential danger to democracy.

    Over the neoliberal era’s past 40 years, though, we’ve really moved away from that vision. This started in the late 1970s, particularly with Robert Bork’s book The Antitrust Paradox, in which Bork argued for a different antitrust agenda. Bork made the case that antitrust law should really just protect consumer welfare (basically defined as ensuring low prices for consumers), and otherwise stay out of the way of market efficiency. This very narrow approach has, over time, even helped to justify the creation of new monopolies or increasingly concentrated markets in almost every sector of our economy.

    In the tech sector especially, we’ve seen a very small number of companies gain extraordinary scale and power, and use that to buy up other companies, including potential competitors. So you might decide to quit Facebook and just use Instagram, but it turns out Facebook owns Instagram. So maybe you decide to quit Instagram and use WhatsApp instead, but Facebook owns WhatsApp too. We can end up pretty quickly with a sector in which one single company has acquired many of the different products and brands. Similarly, we see certain companies operating effectively as platforms (like an exchange or a marketplace), but also owning businesses that compete on this platform. Amazon, for example, owns and operates businesses that compete on its platform with rival companies. Obviously this raises concerns about the platform owner favoring its own businesses over rival businesses. American law has regulated that kind of unfair competitive practice for more than a hundred years.

    So I do recommend breaking up certain conglomerates — typically according to their different functions and different components. A platform should exist as a separate company from the companies selling and buying goods and services on that platform. A fair marketplace, by definition, should offer equal treatment to all of its participants. A lot of what happens in the tech sector today can seem so new and unprecedented, but many strategies and tactics these companies use have existed for decades. The regulatory models for addressing these new technologies often don’t have to differ so much.

    Now in terms not necessarily of concentration, but of coordination, you do call on the US to develop a coherent industrial policy, particularly for the most precarious domestic sectors and regions. You do call for the inclusion of proactive tax-and-transfer policies in future trade legislation. Could you describe how we might most effectively bring together such proposals in holistic fashion — say through a new federal Department of Economic Growth and Security? And what guiding principles for such a department could you see as palatable to the widest political spectrum of Americans?

    Well as your question suggests, many different pieces of our domestic and international economy interact together and influence each other, but we rarely seem to address them all in a coherent way. In terms of foreign trade, for example, the US Trade Representative’s office will work hard to lower trade barriers and expand trade and also bring in imports. At the same time, export agencies, say in the Department of Commerce, will work hard specifically to promote US companies selling abroad. We also have economic-development agencies seeking to spark domestic growth and development, most often today by focusing on tax benefits and loan programs. But all of these agendas never get placed into an overall coherent economic strategy for the country — and sometimes they are even opposed to each other.

    If you pass a trade deal that increases the competition some of our domestic industries face, and if you know we’ll lose jobs in certain areas of the country, and if you don’t do much to try to improve the economy in those areas, that’s a huge problem. And we’ve seen this happen over and over again. So with my colleague Tim Meyer, I’ve proposed we establish a single agency, a Department of Economic Growth and Security, that can coordinate our thinking about trade, about exports, about growth domestically and internationally, about economic security, about the economic threats we might face from foreign countries. When we think about how to strengthen our economy or ensure prosperity for ordinary Americans, we need to bring all of these concerns together — instead of just focusing on them one at a time.

    I likewise find quite appealing your proposals for a broad range of “public-option” initiatives: including robust public options for child care, higher education, personal banking, retirement planning. Could you offer a broader conceptual framework for this public-option agenda (ensuring preconditions for the full participation of American citizens in an economic democracy), and could you then make concrete how a couple of your favorite examples might play out in people’s everyday lives?

    So if you look around our society today (and really throughout our history), you actually can find a lot of public options. “The public option” came into public conversations during Obama-era healthcare debates, and some Democrats today support a publicly provided health-insurance system coexisting alongside private health insurance. But we in fact have public options almost everywhere in our society. We have public schools and public libraries. We have the federal postal service coexisting along with FedEx and UPS. We have public swimming pools and golf courses alongside private country clubs. In many parts of our lives we receive publicly provided goods and services, channeled through the government and ultimately funded by taxpayers. We often prefer these public options. So I see lots of room to consider additional kinds of public options going forward.

    For one specific example, consider a public option for broadband Internet. About a third of rural America has no access to high-speed internet. And for many additional people throughout our country, you really only have one choice for your provider — so, in effect, no choice at all. If you have no choice in your Internet provider, you probably pay high prices without getting great service. So I think a public option for broadband could really help a large and diverse group of Americans. Chattanooga, Tennessee, for instance, has for the past decade offered one-gigabit service for an affordable price to its citizens. And this public investment has enhanced business development and boosted economic growth.

    So in terms of future prospects, I again very much appreciate this book’s concluding case that we do not at present face a choice between nostalgic longing for some neoliberal equilibrium, or embittered recourse to permanent partisan warfare — that progressive political leaders cannot just hope to win the next election and make things right again (or to extract tit-for-tat revenge), but instead must win “a new equilibrium.” How can they win that equilibrium? And where to push hardest to bring about a virtuous cycle of economic equality, political equality, and constructive policy implementation?

    Most basically, I’d point to this deep concern you’ll hear today that we might get stuck in permanent partisan combat — and I’d also point to presidents like Franklin Roosevelt or Ronald Reagan, who successfully established eras lasting for quite a long time. A successful presidential administration with a relatively clear and coherent set of values and perspectives and policy approaches can reorient or realign how much of the country thinks about our major political challenges. Ultimately, when the equilibrium shifts in this way, even the other party might come to share these views and propose its own related policies, as happened both during the liberal and neoliberal eras.

    So what could our post-neoliberal equilibrium look like, and how do we build towards it? The book argues that great democracy offers this kind of ambitious and sustainable and coherent way to think about politics, economics, and society — to address our biggest challenges. I sense there is the opportunity for a new equilibrium along these lines if we fight hard to achieve it.

    To close then by returning to a broader historical span: reading your book, I sometimes wondered if the liberal era’s equilibrium (at least its most inclusive side) built itself around the concerns of young idealistic baby boomers, and if the neoliberal equilibrium built itself around middle-aged suburban-style boomers. What if today’s new equilibrium builds itself around older cynical boomers (with this older segment of the electorate living much longer, and growing proportionately much bigger, than ever before)? Might Donald Trump in fact already have won this new equilibrium? Or what new equilibrium should progressives propose that can support and excite older Americans as much as younger?

    This book argues that we really find ourselves at a crossroads, and need to decide what kind of country we’ll become — and that we do have various different options. Again I consider the great-democracy approach, and the nationalist-oligarchy approach, and reformed neoliberalism all as options on the table. Any of those three could define our future. A lot depends on how the elections go this year, and what direction we take as a country, and then how the winner of the presidential election decides to govern.

    But I don’t know if there’s a strong age component to that. I see a lot of older Americans very much aware of where our society has been failing, and where we need a significant shift. I see a lot of young people with a wide range of answers to these tough questions. I think the fundamental question is will we shift away from a nationalist-oligarchic approach, and move beyond calls for a reformed neoliberalism, and agree instead to rebuild together our political, economic, and social democracy.

    FacebookTwitterEmail