I hope Michael Tomasky is right when he says that Reaganomics died last Tuesday.
Here’s something that happened in this election that has been largely overlooked but I think is a very big deal indeed. Trickle-down economics died last Tuesday. The post-election chatter has been dominated by demographics, Latinos, women, and the culture war. But economics played a strong and even pivotal role in this election too, and Reaganomics came out a huge loser, while the Democrats have started to wrap their arms around a simple, winning alternative: the idea that government must invest in the middle class and not the rich. It’s middle-out economics instead of trickle-down, and it won last week and will keep on winning.My only question is why did it take so long? It always defied logic and many of not most of the people pushing it knew it was absurd but also knew it was a great scam for taking from the middle and giving it to the rich. Business does not hire people because they get tax breaks the hire people when there is demand for their goods and services. A healthy economy depends on a healthy middle class - it's not trickle-down but middle-out economics.
Supply side was rejected. And in its place, voters went for an economic vision that says: don’t invest in the wealthy in the hope that they’ll decide to spread the wealth around; invest in the middle class, because it’s demand from a prosperous middle class that ultimately creates more jobs, and because doing that makes for a healthier society all the way around. Obama embraced this message late last year in his speech in Kansas, and even though I wouldn’t say he pressed it consistently for a whole year, he certainly emphasized it in the second debate and spoke regularly about it toward the end. “I believe you grow the economy from the middle out,” he said in a key October ad.Obama in his second term has the opportunity to kill trickle-down once and for all but it won't be an easy fight. But it is the only way to save this economy.
He did not originate the phrase. Writing in The New York Times in July, Nick Hanauer and Eric Liu, authors of The Gardens of Democracy, wrote: “Lasting growth doesn’t trickle down; it emerges from the middle out.”
A whole cohort of progressive economists and activists has been at work on middle-class economics since 2009. Robert Reich has been there, as have Hanauer and Liu and the Center for American Progress, especially Heather Boushey and David Madland. I’m proud to add that the journal I edit, Democracy, has been in on this crusade too. Hanauer and Liu are advisers to the journal, and in our Spring 2011 issue Madland wrote the first long piece to appear on middle-class economics.