Time to fix the holes in the progressive worldview

Two forgotten ideas that America needs now.

Trump built the MAGA movement and took the White House twice in part by exploiting two fatal missing pieces in the worldviews of both parties. Until progressives fill these two holes in their thinking, MAGA could remain in power indefinitely.

The first is the concept of a nation’s “means of making a living.” The second is the idea that a nation can intentionally and rapidly upgrade its means of making a living to deliver prosperity for all.

Democrats, progressives and even most lefties today don’t think or talk much about America’s means of making a living. The very idea was removed from the set of intellectual building blocks available in American discourse way back in the 20th century.¹ In part because of that, it’s impossible for Americans to imagine their country intentionally and rapidly upgrading and expanding its means of making a living to deliver full economic independence, security, and prosperity for all.

Under Biden, a small miracle of industrial policy was carried out by a handful of Democratic policy leaders through the Inflation Reduction Act. Unfortunately the miracle was so small relative to the U.S. economy, and so under-publicized by the Biden administration, that it had almost no impact on national politics. Kamala Harris barely mentioned it in her campaign. This now creates a confusing situation for development-oriented Democrats. They really feel that what they did in the IRA was the biggest possible thing any administration could hope to do. And it was nowhere near enough. Therefore, they’re now in danger of giving up ever trying anything in that direction again.

So as not to keep you in suspense: Yes, I’m going to show that we can go far, far bigger than the IRA, and that going bigger doesn’t mean spending more tax dollars or taking away from other national priorities. We are free to build entire new industries, to massively scale up and modernize our existing industries, and to overhaul our entire national infrastructure. We can do all that while fixing failing schools, expanding our healthcare system’s capacity, building and repairing tens of millions of housing units, and adding millions of places for students to our universities in in-demand fields. Due to those two core missing pieces of our economic worldview, as well as a handful of other lost concepts, there’s no one-sentence summary for how all of that can be possible. I’m going to attempt to explain it concisely below, and will be posting more in depth in the days and weeks ahead.

Returning to our present political context: Progressives in America today face a dilemma that’s all too common in the history of declining economies. When progressive-leaning elites finally get around to trying to fix their country, they almost always start with half measures. When those fail, they often decide to give up forever. Many countries have failed to develop or recover from decline thanks to this dynamic.

That’s why it’s so important that progressives take accurate lessons from the IRA experience, and to learn some new things, and eventually to come to see how it’s possible for America to do something that’s far more sweeping and transformative than their worldview currently allows them to imagine. This will require developing an understanding of the concept of a national means of making a living and learning about a whole set of tools available to nations to rapidly and dramatically upgrade their means of making a living.

Trump’s stump speeches since 2016 have included digressions that demonstrated his understanding of and passion for rebuilding the national means of making a living.

“The politicians dismantled your means of making a living. Devastated your communities. I will rebuild,” he’d begin, elaborating with details of the biggest, best, and most beautiful factories in the world that he would build.

I’m not saying that Trump’s industrial policy fever dream was what won it for him. Trump and the MAGA movement won by piecing together several unpopular positions that mobilized a solid base — calling for abortion bans, labeling all immigrants as rapists, and chanting “lock her up.” But that wasn’t enough to win. He needed disaffected working class Democrats in key swing states too. That’s where “they dismantled your means of making a living” came in.

It wasn’t mere calculation. Trump is a builder. Early in his career, he was determined to develop New York when most had given up on the city. He’s done business around the world for decades and has been impressed watching many countries rapidly doubling and quadrupling the standard of living of their people and by the scale and level of their industries and infrastructure. This came through, for example, in his tirades against U.S. airports, bridges and tunnels in comparison to the ones he’s seen even in developing countries.

The first time I heard him talking about rebuilding America’s means of making a living, I was furious. I had been talking about this to Democrats and progressives for decades. The response was usually something along the lines of: “Those words don’t mean anything to me. They certainly won’t mean anything to voters.” And now here was Donald Trump, winning the Republican primary and then general election in part on this message.

I’ve had countless conversations with Democratic staffers and policy wonks over the years where they lectured me about the benefits of free trade and the evils of government intervention in the economy like I was a high school freshman who had never heard these arguments. I would in turn try to explain that the U.S. was simply not making and doing enough valuable stuff to supply and trade for American’s expected living standard. They would argue with a straight face that Chinese workers will forever accept our green paper in exchange for their labor, even if we eventually make nothing of value at all. Why? Because we’re America. We have the biggest military in the world and we make amazing movies. They really said that. And they made those arguments all the way up until Trump defeated Clinton in large part by running to the left of the Democratic establishment on trade and industrial policy.

After that, things started to change. Famously, some Democratic policy figures like Brian Dees and Jeff Zients broke with their old bosses from the Obama administration and went through something of an industrial policy conversion that would take full bloom under Biden.²

The Green New Deal — as a shock to the Democratic-progressive policy system — helped too. But in that Green New Deal moment, even most left wing activists could not see how in the world it could be possible to radically upgrade and expand an economy on purpose. Even those who desperately wanted to see a Green New Deal succeed had few ideas about how to make it happen. Naomi Klein, for example, wrote three books on the subject. None included practical plans for sweeping change on a national level. She contemplated that maybe some kind of eco-fascism, with draconian forced sacrifice, might be the only way (and, for the record, she did not endorse that).³

Activists demanded details from New Consensus, where we developed the Green New Deal. But no amount of details seemed to equip them to withstand the objections of the Senate staffers and journalists they were dealing with in the years leading up to the IRA.

I came away from that experience convinced that the problem was these two missing pieces of the Democratic, progressive, and left worldviews. The tricky part is that it’s difficult to fill in those ideas without providing practical examples of how to apply them; and it’s difficult to understand the practical applications without the two concepts. It’s an ideological Catch 22.

Trump is free to describe the beautiful factories he is going to build, and his voters can get excited about them without seeing anyone on Fox News tearing him down for not having enough details for how he’d achieve it. The right is permanently unencumbered from any requirements to produce detailed policy proposals. For them, “a concept of a plan,” is all that’s needed. “25% across the board tariffs.” “Deport five million undocumented workers.” That’ll fix it! Those aren’t even concepts of plans, they’re just childish and, in the latter case, evil outbursts.

It’s not fair, but progressives will never be able to get away with that. We need a deeper understanding and we need layer upon layer of detail. The Green New Deal, if you actually read it, was much more than the concept of a plan. But we need to accept that the requirements for anyone left of center include laying out your complete economic worldview *and* to produce a comprehensive and detailed set of practical plans.

Why is Trump capable of thinking about the American means of making a living as something we can intentionally expand and improve, while Democrats and progressives can not? It’s because he’s unburdened by the once prestigious (but now rejected) economic theories that taught Democrats that America needs to go backwards while other countries storm ahead. Trump simply looks around and decides that America is giving up on making a decent living for its people for no good reason. And he’s right.

The irony is that Democrats don’t even need to understand the economic theories that are shutting down their imaginations. It’s enough just to know they are there. One time in 2016, for example, in another one of my futile conversations about this stuff with a Clinton staffer, he told me he knew I was wrong, and that he only wished his macroeconomist wife was present so that she could explain why.

I realize this is a long article. Maybe take a break — but don’t forget to come back tomorrow to read the rest!

OK, so how do we begin? I’m going to list out the key points that go into an intellectual and informed — as opposed to a Trumpian and purely instinctive — understanding of what a national means of making a living is and the tools that are available to rapidly upgrade and upscale it. I know a handful of bullet points aren’t enough, but it will have to be a start. (We hope to be offering a class that covers these topics soon!)

1. Your national means of making a living includes all the tools, machines, infrastructure and institutions that your people use to make their living every day, month and year.

Talk of industrial policy can seem to focus on factories. A nation’s means of making a living includes far more than factories, but as a practical matter it’s true that if you want to have a high standard of living, you need to manufacture lots of valuable things. People are usually surprised to learn that most of the richest countries in the world — for example Switzerland, Denmark, and Singapore — are much *more* industrial than the U.S., with manufacturing being one of the biggest contributors to GDP.

But your means of making a living also includes everything from services, transportation and energy to well-functioning legal and banking systems. You need it all. Only very small countries can get away with filling a narrow niche in the world economy.

Most professionals assume that education is the foundation of a country’s means of making a living. That’s because it’s the foundation of theirs. But education is just one of many ingredients of a nation’s means of making a living. The vast majority of jobs in the world — including very high paying ones in rich countries — do not require advanced education.

If you add it up, our country and all the people in it rely mostly on work that creates real things, and that builds and maintains physical infrastructure and other physical systems. This is not to say the non-physical stuff is not important. But if we don’t have adequate factories, companies, and skilled workers to meet our physical needs, then we need to trade something non-physical with other countries that make what we need. What we’ve learned over the past few decades is that the world just doesn’t need enough intangible stuff to employ a nation as big as the United States.

America was once the country that made and did all the most high value stuff in the world. During that time, a huge proportion of the world’s wealth flowed to us. The only country that had ever dominated the world economy so completely was China. For centuries, most of the gold and silver in the world flowed into China in exchange for manufactured goods that only Chinese workers and businesses knew how to make. That was the world’s status quo until a technological and economic revolution in Europe and America created a whole new set of goods that only Europeans and their American descendants knew how to make. Then, Europe destroyed itself through two world wars and left the U.S. as the sole maker of just about everything high tech and valuable.

After World War II, with just 5% of the world’s population, Americans used the most advanced means of making a living in history to manufacture 50% of the world’s total industrial output. American workers used their central position in the world economy to demand — in massive, industry-wide strikes — ridiculous wage increases that no workers in world history had ever contemplated. They won. They won because they were required inputs into the production process of products that commanded high prices in international markets. Imagine iron ore going on strike. The steel mills would pay whatever they needed to get it. The workers were equally as valuable — and had minds, and lives, and families and communities. So, unlike the iron ore, they could strike and demand a higher price.

American workers won fantastical wages. American business owners resolved to never let that happen to them again. It took a while, but eventually they were able to start moving their production and technology to other countries. Just like Trump always says in his stump speeches: Elites intentionally transferred America’s means of making a living overseas. They did it to gain more control over and earn more profits from that means of making a living. Both political parties supported this transition.

That brings us to the present day where we are lacking a big chunk of the means to make our living — that is, the living, the quality of life and living standard, that the American people have come to expect.

Because of this lack, every day, month and year, our country runs a trade deficit. We receive more value from other countries than they get from us. The balance of payments must even out in the end — otherwise the U.S. dollar would crash to zero almost instantaneously. Therefore, Americans, their companies, and their governments run up debt, and we are constantly selling shares of U.S. companies, land, and intellectual property to people outside the U.S..

Because our means of making a living is not adequate to produce the living we expect, we are literally selling off our country and our future to make ends meet. It is a trade. Many in the top 10% or 20% of American income earners and wealth owners profit from that trade. But the vast majority of Americans are falling further and further into debt and losing more and more of what is theirs.

This cannot continue forever. Eventually something has got to give — and that something will be one of two things: Either we start lowering our standard of living dramatically, or we start rebuilding our means of making a living.

2. The ability to upgrade your country’s national means of making a living.

So where does a country’s means of making a living come from? How do the people of a country that barely make a subsistence living (like every country once did) develop the ability to make a modern and prosperous living for themselves? How did countries as different as Russia, South Korea, China, Finland and Argentina go from being subsistence economies to some of the richest in the world (some have fallen since their peak) in only a couple of generations? How did the first countries to become generally prosperous with a modern standard of living — including the U.S. — do it? Can the lessons from those experiences be applied today for countries that want to become widely prosperous for the first time, or that have fallen and want to restore economic prosperity for their people?

Think of an advanced national means of making a living as a highly productive garden. There are two categories of processes that bring a garden into existence and allow it to produce.

The first of those includes everything that happens naturally: seeds germinating, cells dividing, photosynthesis storing the sun’s energy in sugar molecules, and all the rest.

The second is everything that the gardener must do: till the soil, plant the seeds, provide water when the sky does not, eliminate weeds and pests, and maintain a fence to keep out animals who would devour the crops.

The processes of the first category — those that take care of and drive themselves given a certain set of conditions and inputs — correspond in an economy to processes such as invention and entrepreneurship. These are things that individuals and companies do naturally, or automatically — given, the right set of conditions and inputs.

The second category of processes — the ones that plants can’t do for themselves — correspond in an economy to all those that were forgotten in the 20th century. These used to be widely understood by the people of every country. For example, after World War II when dozens of new countries were created as European empires collapsed, most of their leaders announced that they would stop at nothing to get these processes going in their countries. Unfortunately, the U.S., Britain, France or some combination of those powers assassinated or bought off many of those leaders to derail their plans to build up competitive national means of making a living.

Every independent and established nation that was capable of defending itself, on the other hand, worked like crazy to build up its means of making a living. To do so, they used a standard set of tools — which were the same tools that America used to build its new economy in World War II, and which it and all other rich countries had been using since the industrial revolution.

Here’s a very brief introduction to a few of those tools:

Investment and Coordination Institutions (ICIs).

These are not just banks that lent money for building new industries, they were organizations that committed the nation to build specific new industries and wrangled companies, investors, labor unions, and foreign actors to ensure success.

Examples of ICIs that changed everything for their countries are America’s Reconstruction Finance Corporation (RFC), Japan’s Ministry of International Trade and Industry (MITI), and Germany’s system of state and local public banks. These institutions were tools used by their governments to achieve national goals of building a better means of making a living.

One ICI alone can’t transform a nation’s economy. But no national economy has ever been transformed from poverty or stagnation to prosperity and health without powerful ICIs. ICIs like the RFC or MITI worked with government agencies, public and private banks, private investors, the military and other parts of their societies and economies to marshal resources and clear bottlenecks, but the ICIs had the responsibility and authority to doggedly drive progress.

Bird’s Nest Protectionism.

Protectionism is well-understood and was loathed for decades in orthodox economic circles. It’s the practice of using tariffs and government purchasing to prop up young domestic industries that can’t compete internationally. This practice fell out of favor as it was understood to create uncompetitive industries that delivered poor-quality goods to domestic consumers.

It just so happens, however, that every rich country in the world made heavy use of protectionism. This goes all the way back to the first industrial nations in Europe who protected their nascent textile industries against vastly superior goods from India and China and continues right up to the present with, for example, the Chinese auto industry.

What can explain this contradiction between a policy known by economists to be destructive and the practical evidence of history? The answer is that successful countries practiced a special kind of protectionism, which we’re calling Bird’s Nest Protectionism. Companies were protected on one special condition: that they must become internationally competitive as soon as possible, and that protections and subsidies would be removed as soon as possible, even if it meant national champions going out of business.

Macro-management.

Not to be confused with micro management! SpaceX in the U.S. is the best recent example of macro-management. The U.S. government decided it wanted to privatize its space program and used a policy of macro-management to achieve that goal.

Smart people in the government understood that if they simply asked the private sector to launch a multi-decade project to replicate the U.S. space program, it would never happen. Instead, they initiated a collaboration with a private company — SpaceX — to which they offered money up front as well as bounty payments for a whole schedule of achievement milestones.

Thanks to that system of spoon feeding money upfront and rewards for achievements, SpaceX was focused and driven to achieve what the private sector would not have on its own.

This same tactic was used liberally throughout the economic history of every country that became rich and industrialized.

Mission Leadership.

The tools I’ve just listed — and many others we’ll skip in this post — only work in the context of the national leadership rallying everyone in the country behind a plan of national economic building and renewal.

In the U.S. we haven’t had this since World War II — when President Roosevelt did a great job of focusing the nation’s efforts on industrial production, America’s primary contribution to the Allied war effort.

That history tends to lead American’s to believe that missional leadership is only possible in wartime. But many countries have organized missional transformations of their economies in peacetime, without needing an existential crisis as the spur. Examples of these include South Korea, Denmark, Finland, Singapore, and Argentina (back in the period when it turned itself into one of the richest countries in their world).

As promised, that was just a brief overview of a few of the tools that allow nations to rapidly and dramatically upgrade and up-scale their means of making a living. To develop a deep understanding of how it can work in your country will take delving into the histories of countries that have done it, including the United States which was the model for the world several times throughout it’s history.

1. See, for example, Kim Phillips-Fein’s Invisible Hands.

2. Franklin Foer’s The Last Politician has a great discussion of this transformation.

3. See, for example, This Changes Everything. If you think I’ve got this wrong, and Naomi does include anything like a comprehensive plan, let me know. This isn’t actually a criticism. It’s not her job. It’s our job, and we’re doing it at https://newconsensus.com/mfa