Third Way

You may know about Third Way. It is a supposed centrist party that doesn't fall into the trap of the supposed extremist Democratic and Republican parties. The problem is that when they talk about policy, it turns out that it is what the Democratic Party establishment already supports. Now this is an indictment of the Democratic Party, because it shows that it is not liberal, at least on economic issues. But the reason that Third Way doesn't just get behind the Democratic Party is that they aren't really for centrist policy. Instead, they are professional centrists who get their gravitas by pretending to be the mean between the two extremes. They have never been able to explain how the modern Democratic Party is extreme, except in that the Republicans say it is and that they disagree in some small ways.

Over the weekend, the top two people at Third Way, Jonathan Cowan and Jim Kessler, wrote an OpEd in The New York Times, Capitalize Workers! They argue that low wage workers don't need no stinkin' minimum wage increase. What is really behind income inequality is that low wage workers aren't vested in the stock market. So they propose forcing employers to pay 50¢ per hour into a private investment account for employees. They claim this will result in an annuity worth $790 per month at retirement.

Note first how they frame the debate in a way that appeals to their base: the business interests. Raising the minimum wage would actually move money from corporate profits to worker wages. But forcing employers to add 50¢ to every hour worked would end up getting taken out of the employee wages. So this is a way of just forcing workers to invest some part of their earnings and not requiring anything from employers. Note also: all of the proposals to raise the minimum wage are a lot more than 50¢ so even at its best, this proposal is yet another attempt by economic conservatives to do as little as possible to help low wage workers.

But it's much worse than this. Dean Baker goes through all the numbers and shows that the annuity would be far less—perhaps only half as much. And it is a huge giveaway to Wall Street. It represents between $25 and $50 billion per year in fees for the investments. And then another $25 to $50 billion for turning the investments into annuities at retirement.

Last December, the same two men were at The Wall Street Journal arguing, Economic Populism Is a Dead End for Democrats. So they are very much aware that Obama and the Democratic establishment push policies that are effectively identical to their own. And they are afraid that populism of the Warren and de Blasio type might break out—because they would be bad for their corporate base. So it is clear where they are coming from.

Sadly, the media generally treat Third Way as though it had something useful to say. But this goes back to a point I've argued for a long time. Elite media figures are upper class urbanites. They see their interests represented by third way: economic conservatism and social liberalism. Of course the actual people of the country are the opposite; they are economic liberals and social conservatives. And that's why the Third Way boys push this investment nonsense: it's a great way to confuse people into thinking that the government is doing something for the working poor, when it is actually just stealing money from them.