Economics

Centrism Takes On the Extremes

A blend of free markets, regulation and redistribution turned the U.S. into the world's richest nation. What's not to like?

The original neoliberal.

Source: Keystone Features/Getty Images

We live in an age where political discourse is defined by internet memes -- iconography and symbols that compress complex ideas into short bursts suitable for the age of social media. Donald Trump’s most ardent online supporters often brag that they “memed a president into office.” But because memes are typically used by young people with extreme views, the format naturally lends itself to ideological excess. The sensible center just doesn’t have many memes of its own.

The people at the r/neoliberal subreddit -- a small neighborhood in the sprawling online forum Reddit -- aim to change that.

“Neoliberalism” isn’t the most well-defined of terms. It loosely refers to free-market economic ideas, combined with a technocratic, incrementalist approach to fixing market failures and redistributing wealth. Many criticize the term for being too vague, but it’s slowly catching on:

The Center Tries to Hold

Search intensity for the term "neoliberalism"

Source: Google Trends

Neoliberalism is essentially the centrist economic framework embraced by U.S. presidents like Bill Clinton, George W. Bush and Barack Obama. It’s also the paradigm that most academic economists implicitly use to think about policy -- they see themselves as advisers offering smart, often subtle advice to generally benevolent policy makers. In other words, neoliberalism is the model the U.S. has been operating under for decades, and it has had significant influence abroad as well.

People on the socialist left, especially in the U.K., like to blame neoliberal ideology for many of the woes of the modern world. Meanwhile, on the right, protectionist and xenophobic ideas have rapidly replaced free-market libertarianism as the rallying cry of the Republican base. The neoliberal center is under assault from both sides. So some internet jokesters have decided it’s time to fight back.

The neoliberal memes poke fun at both the socialist left and the populist right. They proudly defend taco trucks from Trump’s rhetorical assaults and tease left-leaning politicians like the U.K.’s Jeremy Corbyn and the U.S.’s Bernie Sanders. And they portray centrist leaders like Germany’s Angela Merkel, France’s Emmanuel Macron and Canada’s Justin Trudeau not as embattled apologists for a disintegrating order, but as saviors leading the strays back to the light:

This nascent pushback is long overdue. People in Western countries have been far too quick to throw centrist technocracy into the dustbin of history. Despite the deep wounds of the Great Recession and the 2008 financial crisis, developed countries have not seen their economies collapse. Employment languished for almost a decade, but it’s now recovering to pre-crash levels:

The Long Road to Recovery

Employment population ratio, 25-54 years of age

Source: Federal Reserve Bank of St. Louis

Meanwhile, wages have begun to rise in the U.S. and are increasing faster for those at the bottom of the income distribution. Home prices and stock markets have fully recovered from their recession-era lows. There are still plenty of economic problems to be dealt with, but it’s now clear that advanced economies based on neoliberalism have not suffered any kind of systemic collapse. Battered and scarred, the system built in the late 20th century still stands.

And young radicals on either side of the political divide should heed the warnings of history. The Great Depression, almost a century ago, prompted many countries to turn to new and extreme political and economic philosophies -- communism, fascism, or militarism. In the end, the country that came out of that era in by far the best shape was the U.S., whose leader, Franklin D. Roosevelt, was the original center-left technocrat. The New Deal has taken a lot of criticism from hardcore free-marketers in recent decades, but it was just the compromise the U.S. needed to steer a middle path between self-destructive extremist ideologies. Many will disagree, but to me FDR seems like the original neoliberal.

But even as they rediscover their confidence and their voice, neoliberals should take caution. Recent decades have exposed flaws in standard centrist ideas that need to be addressed in order to neutralize the threat of extremism in the long term.

For example, economists are finding that workers displaced by forces like trade and technology are much slower to find new jobs than had been previously assumed. Standard neoliberal answers -- for example, that the government should compensate those who lose their jobs because of trade, or provide them with retraining assistance -- have proven either politically untenable or have failed outright. A better method of protecting workers from career-destroying shocks is needed.

Another issue is wealth inequality. Though some European scholars like economist Thomas Piketty have called attention to the problem, their counterparts in the U.S. and U.K. have shown much less interest. Wealth disparities have risen steadily, in good times and bad. Instead of assuming that this inequality isn’t a problem, neoliberals should talk more about how to combat it.
QuickTake Income Inequality

A third problem is monopoly power. For reasons not entirely known, a few superstar companies are coming to dominate their industries, fostering inequality and threatening to reduce economic output. Neoliberals should be thinking about how to use law and regulation to halt the menace of industrial concentration.

So while it’s great to see neoliberals fighting back against the dangerous forces of extremism, winning that fight will ultimately require more than funny internet memes. Centrism’s success comes from successful reforms that patch holes in the system. “Neoliberalism: Mend it, don’t end it” should be the slogan of the day.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

    To contact the author of this story:
    Noah Smith at nsmith150@bloomberg.net

    To contact the editor responsible for this story:
    James Greiff at jgreiff@bloomberg.net

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