A Dangerous Split

The split developing within the Democratic Party is worrisome. Old fault lines that were on display in events like the WTO protests in Seattle are opening again. They were never really closed, just united against a common cause, that of defeating Republicans. But now that Democrats have power again, we are seeing the reemergence of the evil multinational corporations and the politicians they control as the focal point of anger for one side of the dispute. Health care reform and the bailout of the financial system, both of which are seen as serving the needs of corporations rather than the populace, have helped to stir things up.

The other side doesn’t think corporations are evil per se, e.g. both globalization and financial innovation have their positive aspects. This side believes bailout of the financial system was necessary to save Main Street, it wasn’t just a giveaway to the executives in mega-banks, and that health care reform makes real progress, it is not just a giveaway to insurance companies. Progress toward goals is important, even if political realities mean that some principles must compromised in order to move forward. The nature of those compromises, and the extent to which they are driven by money and power rather than the needs of the people politicians are supposed to represent, is part of the dispute.

With financial reform still to come, I’m not sure I want to tone down the anger just yet — it could be useful in getting politicians to enact needed reform of the financial sector (though I worry they will go to far and do damage to institutions such as the Fed). This could also be useful when the deficit hawks turn their sights on programs such as Social Security. But more generally this is not a healthy state of affairs for Democrats, and it’s a split that could easily be exploited by Republicans in coming elections.

I’m not sure I’ve fully captured or correctly characterized the source of the division, so let me turn it over to all of you. How would you characterize the split? Can the two sides be brought together?

About Mark Thoma 243 Articles

Affiliation: University of Oregon

Mark Thoma is a member of the Economics Department at the University of Oregon. He joined the UO faculty in 1987 and served as head of the Economics Department for five years. His research examines the effects that changes in monetary policy have on inflation, output, unemployment, interest rates and other macroeconomic variables with a focus on asymmetries in the response of these variables to policy changes, and on changes in the relationship between policy and the economy over time. He has also conducted research in other areas such as the relationship between the political party in power, and macroeconomic outcomes and using macroeconomic tools to predict transportation flows. He received his doctorate from Washington State University.

Visit: Economist's View

Be the first to comment

Leave a Reply

Your email address will not be published.