Democrats used to be all about big ideas. Then economists took over.
Democrats used to be all about big ideas. Then economists took over.
Sociologist Elizabeth Popp Berman on why progressives should be less concerned about the idea of efficient government.
By Noah Berlatsky
Should we guarantee free healthcare for everyone in the United States? What about free college? Should we institute a Universal Basic Income large enough to lift everyone out of poverty?
Sure, but there’s the small matter of the cost. There are other considerations too, like is really fair to provide free college to wealthy people who don’t need it? If you gave everyone in the country $13,000 in UBI a year — just enough to put an individual above the poverty line — you’d be handing out a lot of money to middle-class and wealthy people. That would be wildly costly and inefficient.
To anyone used to policy discussions, these questions about cost and efficiency seem natural. But Elizabeth Popp Berman argues that they aren’t.
Berman is a Professor of Organizational Studies and Sociology at the University of Michigan. Her book Thinking Like an Economist: How Efficiency Replaced Equality in US Public Policy is a historical study of the growth of economic thinking in Washington.
Before the 1960s, Berman argues, policy was made by politicians, not economists. And liberal politicians, especially, framed their arguments in terms of rights and equality, rather than efficiency. Lyndon Johnson’s War on Poverty was thought of as a necessary intervention to provide opportunity and empowerment to all, rather than as a technical exercise in raising people’s income.
But over the last 60 years, conservatives‘ argument for smaller government began to take hold. Even center-left Democrats — Carter, Clinton, and Obama — embraced the idea that the main goal of government should be efficient distribution of resources first, and any other consideration second.
Berman refers to this idea as the “economic style” of thinking. And she argues it has put major constraints on progressive thinking and policy-making.
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Democrats have increasingly shied away from ambitious and sweeping universal programs — universal healthcare, universal college, universal income — and instead tried to create more efficient, targeted interventions. They’ve likewise eschewed industry wide environmental restrictions in favor of industry-approved plans to balance costs of polluting with the benefits of production. Put simply, they’ve let efficiency circumscribe their ambitions.
With the student loan bailout and the recent climate bill, Berman sees signs that the economic style may be in retreat — or at least in flux. I spoke to her about what the economic style is, how it gained such power, and what it’s future might be.
Noah Berlatsky
Most people think of people like Milton Friedman and Reagan as the drivers of neoliberalism. But you argue that it’s really the center-left that has embraced the economic style of thinking. Could you explain that?
Elizabeth Popp Berman
Reagan and Friedman matter to the full story of American politics over the last 50 years. But that story has been told really well. The story was missing something in the way it focuses so much on people who were trying to create a free market space.
But that's not the only thing that changed. All these people who were [identified as] Democrats or progressives bought into the idea that we need to make more aspects of government function like markets.
One way you could think of that story is, the right wing became a more libertarian-oriented movement and pulled everybody else along in that direction. But the story is also about how people who really want to use government to make people's lives better decide that the only logical way to pursue governance is through economic efficiency.
Noah Berlatsky
You write that in Johnson’s War on Poverty, the programs were originally designed to empower marginalized people. And they were somewhat successful in doing that. But Democratic mayors were horrified that these marginalized communities were developing rival political bases and institutions. And so the economic style, focusing on efficient aid delivery, was a way to pursue antipoverty measures without angering local politicians who relied on certain groups remaining disempowered.
Elizabeth Popp Berman
That's right. The economic style allows you to take this technocratic orientation to policy that takes some of the politics out of it.
So, like you said, during the War on Poverty, they decided empowerment was not the way to go, and instead decided to treat it as a technical problem. They wanted to figure out how to give money to poor people as efficiently as possible. And that’s great in itself, and is obviously a liberal policy goal. But focusing mainly on the technical aspects allows you to sidestep thinking about racism as being a central component of who's poor and how poverty works.
The economic style also often allows you to sidestep the question of who wins and who loses because of a particular policy. I talk about cost benefit analysis in the book. And the way people do cost benefit analysis doesn't typically consider who's actually benefiting and who's actually paying the cost.
And the economic argument around this has always been, well, that's a political consideration. We're going to set that aside. We're going to let the political people deal with that. We're just going to calculate whether there's a net benefit or not and let other people deal with the distributional concerns.
But when you say, “We're not going to account for it upfront,” sometimes it just means it doesn't get accounted for at all.
Noah Berlatsky
You say the economic style has restricted what Democrats can do in part by making efficiency the only rationale for policy and excluding other considerations. What are some of those arguments that centering efficiency pushes aside?
Elizabeth Popp Berman
Well, antitrust has been a very live political question in the last few years. So, what's the purpose of this big policy domain that was created in order to try to limit concentrated corporate power?
You can take the economic approach to it. And the economic approach holds that the purpose of this whole area is just to make sure that firms can't raise prices above a competitive level, basically.
Or you can say, well, this is something that is more expansive. Antitrust could be a way of thinking about what kinds of powers corporations have in our society. That’s one example where, if you take the economic starting point, then those bigger questions become illegitimate or fall outside of the bounds of policy consideration.
I think the student loan conversation also illustrates this. What are we trying to achieve by loaning people money for college? Is the goal to try to make it possible for people to invest in their human capital for as low cost to the government as possible? Or do we want to think about education in a broader way? Maybe that should be our starting point for thinking about our objectives rather than starting with this economic conception of the problem which limits the range of things we’re willing to consider.
Noah Berlatsky
Republicans in the Reagan era just came out and said they didn’t want poor people to get an education because it would disrupt society. But Democrats have had trouble saying clearly that we want to educate everyone because it’s good for society.
Elizabeth Popp Berman
If you think about K-12 education over the last couple of years there's this increasing conservative threat to the whole enterprise of public education. There’s a subset of people who have the long-term goal of ending public education as we know it.
And in response I think you do have an expansion of the number of people who are saying, part of the purpose of education is to support democracy. We need to have people educated in this common space so that they come to conceive of themselves as citizens who are part of a collective project.
That’s a very different way of thinking about the purpose of education than if you are focused on how much somebody is going to earn 10 years after graduation.
Noah Berlatsky
Is that part of why Biden was able to pass student loan forgiveness?
Elizabeth Popp Berman
There is a subset of economists who are really freaked out about this. They hated the idea that some people might get loan forgiveness who don't really need it, or don't really deserve it. They talk like that’s the worst thing that could ever possibly happen.
Then there are some arguments for loan forgiveness that make sense within the economic style. Like arguments about racial differences in loan repayment. Those are not purely economic arguments. But they are couched in terms that I think are convincing to people who are pretty committed to that broad approach.
But I think there's also a piece of it that is people being willing to say, “You know, this is a broken system. This is not how we should be thinking about financing education.” And from that perspective the best thing for us to do right now is to wipe debt out pretty broadly or wipe it out across the board. Not because that's going to be the most cost-effective way to do it, but because it moves us a step closer toward a more just system for financing this whole enterprise.
Noah Berlatsky
What has changed that has made that perspective more politically persuasive? Because I don’t generally see Biden as more progressive than Obama. But there seems like a lot more space for policy outside the economic style now.
Elizabeth Popp Berman
There's a piece of it that is just about people feeling that the status quo has failed in a lot of ways. And that leads people to start asking questions about the ways that we've been thinking about policy.
You’d think that would have happened after the financial crisis. At the time everyone thought, “Oh, well, maybe this is the big moment of change.” And then it wasn’t.
But now, democracy is under threat. And God knows what's happening with climate change. And so I do think there are a wider set of people who are willing to challenge the status quo, because the status quo looks really unsustainable.
I agree that I wouldn't call Biden across the board more progressive than Obama. But he's also from a generation that almost predates the economic style. He came of age at a time where efficiency wasn't everything in politics. It was much more about getting stuff done for your people.
And so I think that maybe, even though he's somewhat conservative in some ways, in other ways he’s not as technocratic as Obama was.
Noah Berlatsky
Obama had strong ideas about what he wanted to get done and how. Biden always seems more like, well, I want to be wherever the middle of the party is.
Elizabeth Popp Berman
Right. More pragmatic in a way. He just wants to accomplish what seems possible to accomplish at a given moment. And he isn't particularly concerned with ideology, for better or worse.
Noah Berlatsky
Why does the economic style have such power?
Elizabeth Popp Berman
The economic style is so institutionalized in Washington that you have to overcome a lot of veto points along the way in order to accomplish something that conflicts with it. So for example the Congressional Budget Office [which scores legislation on economic outcomes] — any policy that you want to achieve has to be able to pass that checkpoint in a way that allows members of Congress to be convinced that it's sufficiently responsible or sufficiently worthwhile that they're willing to vote for it.
It's hard to imagine Medicare having ever come to exist if the CBO had existed in 1965. [It was established in 1974.]
Noah Berlatsky
Political scientist Jonathan Bernstein talks about the Republican war on budgeting. Republicans claim they care about deficits, but really they just say that any spending they don’t like on social programs will bust the budget and any spending on tax cuts or defense is good. And Democrats often call that hypocritical. But your book kind of suggests that Republicans have the right idea! Democrats are really hamstringing themselves by focusing on efficiency and deficits.
Elizabeth Popp Berman
Certainly that’s true within the scope of the political world that we're actually in, where Republicans are not going to do more than lip service to the economic style. If you say, “We're going to be careful and responsible and really narrow in how we think about what's worth doing, and what's not,” you're just setting yourself up to lose.
I think there’s often other good reasons for not using the economic style. A lot of policies, their popularity doesn't come from their efficiency, right?
Student loan cancellation is polling very well. People are being asked, is this a reasonably fair thing to do or not? Clearly some people think it is. And there's people who think it is not. But all of them are evaluating this in very broad terms without thinking about whether it was designed as cost effectively as possible.
Or when it comes to climate, economists have been arguing for some kind of cap and trade or carbon tax program forever. And yeah, if that could actually be implemented in a serious way, that would be terrific. But in reality, it conflicts with lots of people's interests. Nobody is very excited about it. And maybe spending a bunch of money to promote investment in renewables is actually a more politically effective way of getting something done, even if it doesn't look like the best option if you're looking at it purely from an efficiency standpoint.
Noah Berlatsky
Do you think the economic style is fading? Are people willing to make different kinds of arguments now?
Elizabeth Popp Berman
Yeah, I think people are ready to make different kinds of arguments, though I don't think this particular way of thinking is fixed in one exact form for all time. There’s movement within economics. There’s a lot more attention to inequality. There’s much more interest in racial justice within the discipline. And you can imagine those kinds of concerns being incorporated into economic thinking in a more central way. That wouldn't necessarily challenge the economic style as a whole. But it would shift the universe of concerns.
You might go back to the cost benefit analysis and say, okay, we're still going to formally weigh costs and benefits, but we're also going to explicitly consider what the distributional impacts are. And we're going to do that both in terms of socioeconomic status and race.
So, yes, I think there are different ways in which you could imagine policy discussions moving. Some of them would involve more fundamental shifts than others. But it does feel to me like there is room for that movement to take place.