Why Bernie vs Hillary Matters More Than People Think

Lately the Internet has become full of arguments about the merits and demerits of Bernie Sanders and Hillary Clinton. Over the past couple weeks, I've been discussing and pondering all the various views about this, and I'm increasingly of the opinion that most of the people engaging in this debate don't really understand what is at stake in the democratic primary.

This is in part because many Americans don't really understand the history of American left wing politics and don't think about policy issues in a holistic, structural way. So in this post, I want to really dig into what the difference is between Bernie and Hillary and why that difference is extremely important.

We have a tendency in American politics to focus too much on individuals and personal narratives, especially in presidential campaigns. Who's in touch with ordinary people? Who is experienced? Who is a nice person? Who connects better with different identity groups? Who would you like to have a beer with? This is in large part because many democrats like to think of Hillary and Bernie as different flavors of the same Democratic Party popcorn.

Consequently, they mostly just pay attention to which candidate they feel they can more readily identify with. But Sanders and Clinton represent two very different ideologies. Each of these ideologies wants control of the Democratic Party so that this party's resources can be used to advance a different conception of what a good society looks like. This is not a matter of taste and these are not flavors of popcorn.

What are these two groups? Bernie Sanders describes himself as a democratic socialist -- he connects himself politically with Franklin Roosevelt and Lyndon Johnson, with the New Deal and the Great Society. To understand what that means, we need to know the history of this ideology. Under Calvin Coolidge's right wing economic policy in the 1920s, economic inequality in the United States spiked:

The left in the 1930s understood rising inequality as the core cause of the Great Depression. Because wealth was concentrating in the hands of the top 1 percent, the amount of investment steadily increased while the amount of consumption stagnated. Whenever there is too little consumption to support the level of investment in the economy, investors struggle to find profitable places to invest their money.

Investment is usually a positive thing -- it helps businesses increase their production and create jobs. But with consumption weak, businesses have little reason to increase their production, because no one will buy the additional goods and services provided. So instead, businesses that receive investment tend to reinvest that money rather than use it to grow. That investment circulates through the financial system and accumulates in speculative bubbles -- places like the stock market, housing market, commodities market, or various foreign markets.

These assets become massively overvalued until one day, the markets recognize the overvaluation. The assets collapse in value and the bubble bursts. People relying on these assets to pay off other debts get into serious trouble, and a contagion can spread throughout the economy with horrifying consequences.

So what did the left do?

As you can see in the chart, between the 1930s and the 1970s, the United States drastically reduced economic inequality. It redistributed wealth from the top to the middle and the bottom, resulting in consistent wage increases and consequently consistent consumption increases. This allowed investment to be put to effective use -- because the bottom and the middle were rising, they were able to support the additional spending that business owners needed to successfully expand.

This was accomplished through a series of policies that if they were proposed today, would strike most Americans as socialist-Social Security, Medicare, Medicaid, welfare, strong union rights, high minimum wages, high marginal tax rates on the wealthy (with a 90 percent top rate under Eisenhower), and strong enforcement of financial regulations and anti-trust laws.

Democratic presidential candidates that can be associated with this ideological tradition include Franklin Roosevelt, Harry Truman, Adlai Stevenson, John F. Kennedy, Lyndon Johnson, Hubert Humphrey, and George McGovern. That's it. Starting with Jimmy Carter in 1976, the Democratic Party became something different, something that was no longer ideologically continuous with this. Even the Republican Party to a large degree acknowledged the need for these policies during this period-Eisenhower and Nixon supported and even extended parts of this system that kept investment and consumption in balance.

I've written about what happened in the 1970s in detail elsewhere -- the short version is that in the '70s there were two oil shocks, in which the price of oil went up very rapidly (the OPEC embargo in the early '70s and the Iranian Revolution at the end of the decade). Rising oil prices created stagflation, because they drastically increased the price of goods over a very short span of time. This reduced consumption, damaging economic growth, while simultaneously leading governments to increase wages in an attempt to prevent workers from rapidly losing purchasing power, creating inflation.

To solve this problem, governments needed to stabilize oil prices or reduce dependency on foreign oil. They also could have allowed real wages to fall temporarily until that was accomplished (in tandem with a strong social safety net to protect those at the bottom of the wage scale).

Instead what happened is that the right co-opted the oil crisis to claim that the entire project of balancing investment with consumption was fundamentally mistaken, that the problem was that there was not enough investment and too much consumption. The right embarks on a political platform of reducing union power, reducing the real value of the minimum wage, cutting welfare spending, reducing taxes on the wealthy, and deregulating the financial sector.

Inequality, which in the U.S. bottomed out in 1978, began rising rapidly and during the new millennium has frequently approached depression-era levels, having the same harmful effects on consumption that it had in the early 20th century and creating the same endemic risk of bubbles and financial crises.

Many people think that it is the Republican Party alone that is responsible for this, but beginning in 1976 with Jimmy Carter, the Democratic Party was captured by this same ideology, which in academic circles is often referred to as neoliberalism. It is now largely forgotten that it was Carter, not Reagan, who began deregulating the market. Indeed, during the 1976 democratic primary, there was an ABC movement -- Anybody But Carter.

Democrats who remained committed to the party's egalitarian ideology rightly feared that Carter was too right wing and would effectively strip the party of its historical commitment to the continuation and expansion of the legacy of FDR and LBJ. However, they ran too many candidates against Carter, splitting the left vote and allowing Carter to win the nomination.

Bill Clinton took the party even further to the right. In 1992, he ran on the promise to "end welfare as we know it," a total repudiation of the FDR/LBJ legacy. With the help of republicans, Clinton was eventually successful in drastically cutting the welfare program. Clinton also signed important deregulatory bills into law, like the Commodities Futures Modernization Act and the Gramm-Leach-Bliley Act.

Most economists blame one or both of these pieces of legislation with directly facilitating the housing crisis in 2008 (there is a robust debate about which one is more important, with economists like Paul Krugman leaning toward CFMA as the more important one while Robert Reich argues GLBA). Hillary Clinton supported these measures during the 1990s and has in some cases continued to voice support for them. Bill signed all of this legislation into law. Bernie Sanders was against welfare reform and GLBA at the time (he voted for CFMA-it was snuck into an 11,000 page omnibus spending bill at the last minute).

The 2008 primary between Hillary Clinton and Barack Obama is sometimes billed as if it were a contest between two ideologies, but the most prominent difference between them was the vote on the Iraq War. On economic policy, there never was a substantive difference. The major economic legislation passed under Obama (Dodd-Frank and the Affordable Care Act) did not address the structural inequality problem that the Democratic Party of the '30s, '40s, '50s, '60's and early '70s existed to confront.

Wealth inequality, which decreased under FDR, Truman, JFK, and LBJ, increased under Carter, Clinton, and Obama:

On economic policy, contemporary establishment democrats have more in common with contemporary republicans than they do with the FDR/LBJ democrats. Carter and Clinton took the party away from economic progressives. The Democratic Party, which was once the party that saw economic inequality and poverty as the core causes of economic instability, now sees inequality and poverty as largely irrelevant.

Instead of eliminating inequality and poverty to fuel the capitalist system and produce strong economic growth, establishment democrats now largely agree with establishment republicans that the problem is a lack of support for business investment.

So Bernie Sanders is not merely running to attempt to implement a set of idealistic policies that a Republican-controlled Congress is likely to block. He is running to take the Democratic Party back from an establishment that ignores the fundamental systemic economic problems that lead to wage stagnation and economic crisis.

Those who say that the Democratic Party cannot be reclaimed by the FDR/LBJ types or that if it is reclaimed it will flounder in elections against the GOP are thinking too small. In the 1968 and 1976 republican primaries, this guy called Ronald Reagan was running to take the Republican Party back from the Richard Nixon types who went along with the democrats on welfare and regulation in a bid to return the republicans to their 1920s Calvin Coolidge roots.

At the time, Reagan's plan was considered madcap-everyone in the '60s and '70s knew that hard right Coolidge style economics leads to depression and crisis. But the stagflation in the '70s created an opportunity for Reagan to convince republicans and eventually the country as a whole to fully embrace a totally different ideology that was much closer to Coolidge's politics than it was Eisenhower's or Nixon's.

In the years since 2008, many Americans, in particular young people, are willing to consider the possibility that neoliberalism -- the economic ideology espoused by both the post-Reagan republicans and the post-Carter Clinton-era democrats -- is fundamentally flawed and must be revised or potentially replaced entirely.

This can only happen if democrats recognize that Bernie Sanders is not just a slightly more left-wing fellow traveler of Clinton's. This is not a contest to see who will lead the democrats, it's a contest to see what kind of party the democrats are going to be in the coming decades, what ideology and what interests, causes, and issues the Democratic Party will prioritize. This makes it far more important than any other recent primary election.

The last time a democratic primary was this important, it was 1976. Only this time, instead of Anybody But Carter or Anybody But Clinton, the left has Bernie Sanders -- one representative candidate that it is really excited about. The chance may not come again for quite some time.

Hillary Clinton is a neoliberal building on the legacy of Ronald Reagan and Bill Clinton. She doesn't understand the pivotal role inequality plays in creating economic crisis and reducing economic growth. She has been taken in by a fundamentally right wing paradigm, and if she is elected she will continue to lead the Democratic Party down that path.

Bernie Sanders is a democratic socialist building on the legacy of Franklin Roosevelt and Lyndon Johnson. He understands that inequality is the core structural factor in economic crisis and that growth in real wages and incomes is required for robust, sustainable economic growth.

It doesn't matter which one is more experienced, or which one's policies are more likely to pass congress, or which one is more likely to win a general election, or which one is a man and which one is a woman. This is not about just this election, or just the next four years.

This is about whether the Democratic Party is going to care about inequality for the next decade.

We are making a historical decision between two distinct ideological paradigms, not a choice between flavors of popcorn. This is important. Choose carefully.

This post originally appeared on BenjaminStudebaker.com.