The American economy is growing at a historically rapid clip. Unemployment is near record lows, while job satisfaction is at an all-time high. Real wages have been rising for most of this year and are now higher than they were in 2019, when approval of the economy sat near a two-decade high.
The percentage of prime-age Americans in the labor force is higher than it’s been since the 2008 financial crisis. And thanks to the abundance of employment opportunities, lower-income workers have recovered roughly 25 percent of the increase in wage inequality that accrued between Ronald Reagan’s election and Joe Biden’s.
Yet American voters have rarely given their economy lower marks. Consumer sentiment is low and polls routinely find widespread dissatisfaction with the economy, and with Joe Biden’s management of it.
And some on the left believe that this is good news.
For months, Blue America’s most ornery social-media addicts have been arguing about how to explain the disconnect between the economy’s many objective merits and the public’s subjective discontent. Some have insisted that the economy’s unpopularity testifies to the fact that media narratives (including social-media ones) do more to shape public opinion than material reality does. Others have argued that only a cosseted liberal technocrat could believe that the public’s disaffection lacks a material basis. After all, America just witnessed a sustained period of declining real wages and the retrenchment of the COVID-era expansion in social-welfare spending.
In principle, ideology should not dictate one’s position in this debate, which concerns a mere question of fact. In practice, leftists have tended to insist on the relevance of material conditions to the public’s discontent, while liberals have proven more sympathetic to the “it’s the media, stupid” thesis (sensible left-liberals like myself, meanwhile, have taken both sides of the argument).
Although the debate is ostensibly about the determinants of public opinion, many disputants have mistaken it for an argument about whether the American economy is “good” in some absolute sense. Some leftists have therefore set out to demonstrate that the economy is in fact bad. This is not a difficult case to make from a progressive point of view. America’s labor and social-welfare institutions are far less egalitarian than those of most Western European nations. But when leftists cite such long-standing features of the U.S. political economy, liberals often respond by reminding them that (1) this is supposed to be an argument about public opinion, and (2) voters overwhelmingly approved of the economy in 2019, when America’s economic institutions were the same as they are today, while income inequality was even higher.
There are reasonable rejoinders to this point. For instance, people tend to judge their economic circumstances in relative terms rather than absolute ones. And although Americans are doing better economically now than they were in 2019, they’re doing a bit worse than they were in early 2021 after the stimulus checks hit their bank accounts and before inflation started biting.
But some extremely online leftists have instead sought to demonstrate that the contemporary economy is worse than it was both in 2019, and for many decades prior (when Americans were objectively much poorer than they are today). This has led to some goofy claims, such as the idea that population growth is causing mass unemployment.
Responding to such sloppy reasoning, the liberal historian Jake Anbinder posted on X over the weekend, “I do think it is a problem for the current iteration of political leftism … that its appeal and explanatory power diminish as the economy gets better.”
Osita Nwaneuvu, a socialist columnist for The New Republic, replied, “Explanatory power is one thing, but people feeling terribly about the economy even as it is doing well by standard metrics is obviously good for the left.”
I get where Nwaneuvu is coming from. If American capitalism is succeeding on its own terms yet people remain discontent, then that would seem to provide an opening for advocates of radical economic change. By contrast, were U.S. voters broadly content with the status quo, the socialist movement might have greater difficulty building support for dramatic changes in rates of taxation and patterns of ownership.
If this analysis makes sense in the abstract, however, I’m not sure it actually holds in practice. Certainly, in this particular historical moment, the fact that Americans are feeling terribly about the economy doesn’t seem remotely beneficial for progressive politics. More broadly, widespread economic discontent has often abetted the right, while periods of broad support for the reigning economic order have witnessed major advances for egalitarian policy.
The unpopularity of Bidenomics is a problem for the left.
There are (at least) two reasons why the unpopularity of today’s economy is bad for the left. First, the public’s discontent threatens to undermine recent progress toward more progressive forms of macroeconomic management. Second, and more obviously, such discontent increases the likelihood of a second Trump presidency, which would be detrimental to virtually every cause that the left exists to uphold.
In the wake of the Great Recession, the U.S. government failed to adequately stimulate the economy. Even as the financial crisis had sucked $1.7 trillion of demand out of the American economy by December 2008, Congress authorized a mere $787 billion in stimulus spending the following year. The consequences of failing to fill this demand hole were profound. The poverty rate spiked in 2009 and 2010, while unemployment hovered near double digits for years. This sapped labor’s bargaining power, abetting inequality while condemning the entire nation to nearly a decade of lackluster growth and investment.
Left-wing critics of the Obama administration lamented this failure of macroeconomic management. Their critique was not simply technocratic; the problem wasn’t a mere technical mistake. Rather, they contended that the government’s decision to err on the side of high unemployment reflected its class biases. Those at the high end of the labor market, who already enjoyed job stability and healthy salaries, had more to lose from inflation than unemployment. An economic policy that privileged price stability over full employment served them fine. Indeed, an under-stimulated economy made it easier for urban professionals to find cheap nannies, rideshare drivers, and delivery services. The preservation of a large pool of underemployed workers desperate for a paycheck translated into an abundance of affordable and docile servants for the upper-middle class.
Progressives therefore organized behind a demand for the prioritization of full employment at all times, and more generous relief policies during recessions. And during the COVID crisis, their vision was largely realized. Thanks to House Democrats, the CARES Act provided most laid-off workers with unemployment benefits equal to roughly 100 percent of their old wages, in addition to $1,200 relief checks to most U.S. households, and funding for small businesses that kept workers on staff. As a result, for the first time on record, poverty declined in the midst of recession. The government had effectively demonstrated that recessions as we’d known them were a policy choice: The idea that the capitalist business cycle must inevitably impose periodic hardship on the vulnerable was false. The government could shield the people from the slings and arrows of outrageous downturns. Until now, it simply hadn’t bothered to do so; at least, not to the extent necessary to insulate the poor and jobless from further hardship.
When Joe Biden took office, meanwhile, he prioritized the restoration of full employment over the minimization of inflationary risk to an unprecedented degree. In March 2021, the total net worth of U.S. households was $12 trillion higher than it had been before the pandemic. Most American families were, in strictly financial terms, doing unusually well. Thanks to the trillions in relief spending that Congress had already authorized, American consumers had less debt and more disposable income than they’d had at the peak of the Trump-era expansion.
Nevertheless, unemployment was over 6 percent and the public-health crisis was ongoing. The Biden administration therefore chose to err on the side of an excessively rapid labor-market recovery. Over the loud objections of Larry Summers and some other center-left technocrats, Democrats enacted a $1.9 trillion relief bill replete with enhanced unemployment benefits, $1,400 stimulus checks, and a monthly child allowance for most of America’s parents, among other things.
Of course, a historic spike in inflation ensued. This was largely attributable to the pandemic’s impact on supply chains and patterns of consumption. The COVID crisis disrupted production in myriad manufacturing hubs, even as it abruptly increased global demand for manufactured goods. With many in-person services no longer available, consumers the world over suddenly shifted disposable income away from services and into goods. This mismatch between demand for manufactured goods and global productive capacity inevitably yielded shortages, and thus, price increases. Similarly, when the economy reopened, demand for in-person services recovered much faster than businesses could restaff, which led to demand-supply mismatches, and thus, price increases.
For these reasons, among others, every developed country witnessed a surge of inflation in the wake of the COVID recession. It is doubtlessly true that U.S. inflation would have been slightly lower in the absence of the American Rescue Plan, since the law increased consumer demand at a time of constrained supply. But a historic spike in prices was in the cards regardless. And Biden’s policies ultimately enabled the U.S. to enjoy higher growth and lower unemployment than its European peers, at no greater cost in inflation.
If U.S. voters ultimately punish Biden and his party for their economic record, then it will be much harder to win a progressive response to the next recession or macroeconomic policies that prioritize full employment more broadly.
Leftists might wish for politicians to interpret the contemporary economy’s unpopularity as an indictment of welfare-state retrenchment. During the pandemic, the government established new social-welfare programs — from world-class unemployment benefits to a child allowance — and then allowed those programs to expire. So, from one angle, it might look like the real political lesson here is that the American public demands a larger welfare state.
But this is not the message that Washington is hearing, not least because it is not the one that voters have been conveying. In polling, a majority of Americans opposed making Biden’s child allowance permanent. When asked about their complaints with the economy, meanwhile, voters overwhelmingly cite high prices and inflation. Given that only a minority of the electorate benefited from Biden’s child allowance or enhanced UI benefits, while all voters are burdened by rising prices, it seems safe to conclude that inflation has driven public discontent with the economy far more than the rollback of pandemic-era welfare benefits.
In truth, the most plausible materialist explanation for the economy’s unpopularity might be this: People tend to attribute wage gains to their own efforts, even as they blame price increases on economic mismanagement. This hypothesis is backed up by survey data. And it implies that elected officials would be unwise to prioritize tight labor markets over price stability. After all, if they err on the side of overheating the economy, they will receive no credit for facilitating wage increases, but will be blamed for rising prices.
Now, I don’t think that this thesis is entirely true. Even if the public punishes inflation more than it rewards wage gains, the latter surely still helps incumbents, all else equal. Notably, although Biden’s approval is low, it is higher than that of most other G-7 leaders, who have presided over weaker wage growth than he has. What’s more, the 2010 Tea Party wave demonstrated that under-stimulating the economy has real political hazards.
Nevertheless, if voters continue telling pollsters that they disdain the economy, and then vote Biden out of office in 2024, there’s a very good chance that Washington’s consensus on macroeconomic policy will shift in a conservative direction.
In practice, over the long run, this would mean higher unemployment and looser labor markets. That is bad for the economy’s most vulnerable workers. And it is also bad for union organizing and worker militancy. There is no coherent strand of left-wing politics that does not have an investment in worker power. And such power is inextricable from tight labor markets.
Likewise, any left-wing movement earnestly committed to progressive change has an interest in preventing Donald Trump from reclaiming the White House. It is conceivable that a second Trump presidency would increase the DSA’s membership rolls, as the first one did. But surely, such parochial interests are of less consequence than the composition of the Supreme Court, rates of taxation, the security of existing social programs, and the maintenance of liberal democracy. A second Trump presidency would consolidate the conservative movement’s dominance of the judiciary, which would in turn further circumscribe the rights of workers, women, and myriad minority groups. It would also occasion a fascistic assault on America’s undocumented workers. And if the ex-president himself can be believed (granted, a big if), it will also bring the persecution of “the communists, Marxists, fascists, and the radical-left thugs that live like vermin within the confines of our country.”
Some revolutionary socialists may believe that all this will accelerate a decisive political crisis, in which the left will prevail. But they are wrong.
Bad economic times are not necessarily good for progressive change.
I don’t think Nwaneuvu would disagree with much of what I’ve written thus far. In my reading, he was less asserting that the economy’s unpopularity in 2023 is advantageous for the left than arguing that widespread economic discontent is good for proponents of radical economic change. And it obviously is not difficult to recall historical examples in which such discontent facilitated progressive breakthroughs. The New Deal emerged out of the Great Depression, as did the welfare states of many European nations.
This said, I think the relationship between economic satisfaction and progressive political gains is not at all straightforward. Hard economic times can increase the public’s openness to new ideas and dramatic reforms. Yet scarcity can also foster zero-sum thinking that erodes social solidarity across the lines of class, race, and ethnicity. Meanwhile, widespread economic dissatisfaction often promotes low levels of trust in political authorities. And absent such trust, building support for expanding the public sector’s responsibilities can be difficult.
Perhaps for these reasons, many of the left’s greatest advances in the 20th century came amid relatively high levels of support for status-quo political and economic institutions. When Lyndon Johnson implemented his Great Society agenda, which included the socialization of health insurance for the poor and elderly, the U.S. economy was nearing the third decade of a historic boom, and trust in the government sat near 80 percent in Pew’s polling. Johnson himself boasted a nearly 80 percent approval rating.
Meanwhile, no society has ever gotten closer to implementing democratic socialism than Sweden did in the early 1970s. And the Olof Palme government’s experiment with wage-earner funds also came at the tail-end of a decades-long boom, amid high levels of trust in the government. Indeed, trust in the established order was so high that Palme’s social democratic party had been in power continuously for four decades.
In both the U.S. and Sweden, the resurgence of widespread economic discontent in the face of the stagflation crisis undermined progressive political forces and facilitated a rightward lurch in economic orthodoxy.
All this makes it difficult to say precisely what optimal leftist messaging about the economy should look like. On the one hand, there is an imperative to combat complacency with the existing economic and political orders. On the other hand, evangelizing for perpetual economic despair, denying any and all progress toward social democratic goals, and portraying the government as incurably corrupt can actually serve to encourage a grubby, cynical public mood that reactionaries are best positioned to exploit.
Regardless, when one moves from the timeless realm of abstract theory to the concrete one of present-day politics, this dilemma disappears. If American voters feel badly about the economy when a pro-labor Democrat is in the White House, and a proto-fascist is preparing to face him in the next election, then that is bad for the left (no matter how one defines that term). And this is all the more true if the public’s discontent comes in the wake of a historic experiment with progressive macroeconomic policy.
How precisely liberals and leftists can mitigate the political implications of Americans’ economic dissatisfaction is unclear. But surely making the economy appear worse than it is is not helpful.
