Berman - Thinking Like an Economist : How Efficiency Replaced Equality in U.s. Public Policy (9780691226606)

THINKING LIKE AN ECONOMIST

Thinking like an Economist

How Efficiency Replaced Equality in U.S. Public Policy

Elizabeth Popp Berman

PRINCETON UNIVERSITY PRESS

PRINCETON AND OXFORD

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Library of Congress Cataloging-in-Publication Data

Names: Berman, Elizabeth Popp, 1975 author.

Title: Thinking like an economist : how efficiency replaced equality in U.S. public policy / Elizabeth Popp Berman.

Description: Princeton : Princeton University Press, [2022] | Includes bibliographical references and index.

Identifiers: LCCN 2021042133 (print) | LCCN 2021042134 (ebook) | ISBN 9780691167381 (hardback ; alk. paper) | ISBN 9780691226606 (ebook)

Subjects: LCSH: United StatesEconomic policy. | United StatesSocial policy. | EqualityUnited States. | Policy sciencesUnited States. | United StatesPolitics and government. | BISAC: SOCIAL SCIENCE / Sociology / General | POLITICAL SCIENCE / Public Policy / General

Classification: LCC HC106.84 .B47 2022 (print) | LCC HC106.84 (ebook) | DDC 330.973dc23

LC record available at https://lccn.loc.gov/2021042133

LC ebook record available at https://lccn.loc.gov/2021042134

Version 1.0

British Library Cataloging-in-Publication Data is available

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For Daniel, Nova, and Naomi

THINKING LIKE AN ECONOMIST

In 2008, Barack Hussein Obama was elected to the presidency of the United States on a promise of hope and change. The first Black president, born fifteen years after Bill Clinton and George W. Bush, Obamas election represented for many the turning of a page: the arrival of a new, multiracial America that would be able to transcend its racist past and build a brighter, more inclusive future.

Beyond the symbolic importance of breaking what the New York Times called the last racial barrier, many of Obamas supporters anticipated that he would usher in substantial policy change. After eight years of the George W. Bush presidency, these voters hoped Obama would find a way to ensure that all Americans had healthcare, rein in Wall Street, and finally address the mounting crisis of climate change. Progressive Democrats, in particular, were excited and energized by the results of an election that had once seemed so unlikely.

Obama did oversee the resolution of the 2008 financial crisis and the nations long, slow climb out of the Great Recession. He had some major legislative accomplishments, which included the Affordable Care Act (ACA), the Dodd-Frank financial reforms, and a massive economic stimulus package. Yet even before 2010, many progressives began expressing disappointment with Obamas policy leadership.

What stands out in retrospect about the Obama presidency is its continuity with the recent past. The truly ambitious new policiesones that might have been top-of-mind for Democrats in 1970, or 1935never materialized. This is not because such possibilities were pursued unsuccessfully; they were never even seriously considered. And the policies that were proposed tended to share some characteristics more commonly associated with Republican administrations: a focus on leveraging choice, competition, incentives, and the power of markets in the pursuit of outcomes that would be not just effective, but efficient.

Take healthcare policy. Obamas signal accomplishment in social policy, Obamacare, was modeled after Republican Mitt Romneys 2006 Massachusetts healthcare reform bill. Obamas version combined elements from both Republican and Democratic health reform plans of the early 1990s.

Financial reform offers another example. The Dodd-Frank Act, passed in the aftermath of the 2008 financial crisis, was meant to ensure that banks deemed too big to fail could never again threaten to bring down the entire financial system with them. Yet while the bill introduced new regulatory requirements and created the Consumer Financial Protection Bureau, Dodd-Frank did little to take on the power of the banks.

Or consider policies to address climate change, a core plank of Obamas 2008 campaign. The administration originally supported the Waxman-Markey Bill, a 2009 cap-and-trade bill that would have limited greenhouse gas emissions for the first time, but the proposal died in the Senate. Both the cap-and-trade and regulatory approaches built on an economic framework that sought to use market forces (in the former case) or cost-benefit calculations (in the latter) to achieve efficient policy results. The strategy of simply instructing government to determine safe levels of emissions and requiring firms to meet them, as Democrats might have proposed in the 1970s, was not even discussed.

Obama was, of course, faced with many constraints that shaped both the options he considered and what he could actually accomplish: Republicans in Congress, more conservative members of his own party, the particular scrutiny he received as a Black man in the White House, and, notably, the worst recession in seventy years. The limits on what he was able to realize as president are not solely explained by a failure of imagination. But what is so striking about Obamas time in Washington is not that he sought to achieve fundamental change and failed. It is how constricted the very horizons of possibility seemed to be.

Moments of crisis like 2008 can be moments of political transformation. As Rahm Emanuel, Obamas chief of staff, suggested that year, You never want a serious crisis to go to waste. So why, then, did the Obama administration not produce, or even seek, more fundamental change, despite coming to power during just such a crisis and having, for two full years, control of both the House and the Senate? Why did it remain committed to an incrementalist, modestly ambitious vision of government, even as the country faced unprecedented challenges? And should we expect the same from the Biden administration, which inherited much of Obamas legacy (and many of his advisors), and came to power during a global pandemic, but also at a time of greater mobilization on the political left?

There is no single right answer to this question. The Democratic Partys enduring commitment to a market-friendly, technocratic approach to policy since 1990 has many sources, including the influence of the tech and finance industries within the national Democratic Party, the ever-rightward shift of Republicans, the relative weakness of organized movements on the left, and the depth and complexity of interest-group politics in domains like healthcare and climate policy. Any one of these makes transformative change hard; combined, they can make it feel impossible.