Our Economic System

Ocasio-Cortez is Right: Our Economic System Needs Major Changes

I’m a moderate Democrat, and I don’t always agree with AOC’s politics. But she’s giving voice to millions of Americans who work hard but get left behind.

By HAROLD FORD JR.

American capitalism is the envy of the world. It has allocated capital and opportunity in a way that has produced the miracles of modern technology, including breathtaking medical breakthroughs, and put the country on a glide path to energy independence. Our currency is the world’s safe harbor, and U.S. assets are the most sought after by global investors.

But 19 years into the 21st century, the benefits of American capitalism are under intense scrutiny—and understandably so. Income and wealth inequality rival that of the 1920s. The median net worth of the wealthiest 10 percent of U.S. households is roughly 24,000 times greater than that of the bottom 25 percent; a gap approximately 18 times the size it was in 1992. Ten years into an economic recovery after the Great Recession, median household incomes are stagnant, while median costs have risen significantly. For too many families, basic health care coverage has become prohibitively expensive, and thousands have been forced to declare bankruptcy when confronted with the crushing costs of a serious illness. The average savings of an American at retirement age is just $12,000.

I have always been a pro-growth Democrat. When I was in Congress, I favored cutting taxes to stimulate the economy and supported strategic investments in infrastructure, scientific research and development, and public education. Since leaving Congress, I’ve worked for two powerful investment banking firms. Like President John F. Kennedy, I’ve long operated from the belief that a rising tide of strong economic growth lifts all boats and strengthens our nation long term.

And while I still believe that, I believe we can’t keep pretending that the strain of American capitalism we’ve clung to for decades hasn’t had serious—and sometimes negative—outcomes for many millions of Americans.

When the top 1 percent owns more wealth than the bottom 90 percent; when the richest nation in the world still does not have universal early-childhood education; when an opioid epidemic killed more people last year than all the U.S. troops killed in the Vietnam War, driven largely by a pervasive economic despair that has enveloped large swaths of our country; and when we continually underinvest in our public education system and thereby undermine the most important lifeline to economic opportunity, it’s time to abandon the comforts of our traditional orthodoxies.

It’s time for all of us—especially those of us who have long supported pro-growth policies—to ask: How do we modernize the American economic compact to produce growth in a way that provides more equity and fairness to the tens of millions of Americans left behind?

Now, while I don’t always agree with Alexandria Ocasio-Cortez, the first-term congresswoman from New York, I applaud that she’s giving voice to the primary grievance of the millions of Americans who want major and lasting changes to a system they don’t see working for them: the idea that ultrawealthy and well-connected elites control too much of the wealth generated in this economy. She lives among her constituents, whose lives are being upended by our changing economy and who can’t seem to get ahead no matter how hard they work, and she knows that new ideas are imperative to address these economic times.

We should not dismiss her ideas cavalierly or attack her by calling her a radical, as some are doing. Instead, her ideas—raising the marginal tax rate on the ultrawealthy, enacting "Medicare for all," investing serious resources in public education, reforming campaign finance laws, and so on—merit serious discussion. They should be accepted or rejected not based on whether you like Ocasio-Cortez but on whether they would actually work.

Eric Foner, the Columbia University professor and Pulitzer Prize-winning historian, reminds us that American history is replete with ideas initially dismissed as radical but which were ultimately accepted because they were right, proved to work and made our nation safer and stronger. Social Security, the Interstate Highway System, civil rights laws, Medicare and Medicaid—all started out as radical ideas but are now seen as fundamental responsibilities of government, ones that we cannot imagine our society functioning without.

This shouldn’t be a tactical exercise, where people stubbornly advocate for one policy over another and lose sight of the bigger stakes at hand; it requires a new vision, new—and sometimes radical—ideas, and it demands a sober and honest conversation about the best ways to build robust and enduring growth that will improve the lives of Americans who’ve been left behind.

Luckily, I think there’s a real opportunity for that conversation to happen in the near future. We’re one month into 2019, and the 2020 presidential campaign is in full swing. We’ve seen the splashy announcement videos and soaring speeches by candidates, the TV hits on cable news and Stephen Colbert's show, the typical trips to Iowa and New Hampshire, and so on. What we have not yet seen—but which I hope and expect that we will—is a wellspring of new ideas and a candid, clear-eyed, rigorous debate about them.

I believe in capitalism. And I still believe it is the most powerful engine in the world for creating opportunity for working people. But I also believe that the old ways we approached the economy don’t work, and as facts and trends change, so must we.

That has been the genius of America since our founding: Confronted by a crisis—be it economic calamity, injustice or war—we have transformed ourselves, fended off the diminishment of our country and built an America that gets close to living up to its potential.

We are at that familiar place again. The future of capitalism depends on whether we can unite our country around a new and fairer way to distribute opportunity and wealth—a new economic compact. How exactly do we do that? Let the discussion begin.