This Is the Moment for Progressives' Policies
(Bloomberg View) -- Whether you welcome or dread progressive policies, their time has come. Conditions are better for lefty priorities than they have been for a generation. As Democrats return to power, as they just have in New Jersey, they'd be wise to seize their moment.
Often, but not always, progressive policies act as a tax or a reduction on economic activity. Higher taxes disincentivize working or production. Higher minimum wages beyond a certain point lead to less hiring. Stricter environmental regulations lead to a combination of higher prices and less production of fossil fuels. Deficit-financed government spending when the economy is at full capacity crowds out private sector activity. So all else equal, if you're in favor of progressive policies, you'd want to enact them at a time when they're likely to do the least harm to the economy.
Which is basically now. The unemployment rate is at its lowest level in a generation. Fossil-fuel prices have recovered somewhat since their early 2016 lows, but shale energy supply should stave off any shortage. The U.S. economy continues to move away from the energy sector, and solar energy is booming. Corporate profitability is high, particularly in the tech sector. Outside of the housing sector, where prices are high and supply is constrained, most pockets of the economy are well positioned to absorb the costs of progressive legislation.
We've gotten a couple data points to this effect in recent days. Germany enacted laws mandating that Facebook monitor its content in the country, and now, despite having only 1.5 percent of Facebook's total users, Facebook is devoting 16 percent of its content monitors to German content. The company's profit margins are astronomical, so it's well positioned to absorb any regulatory burden put on it by policymakers.
Last week Walmart announced it was raising its minimum wage to $11 an hour from $10 an hour in response to the Republican tax cuts. Another factor may have been that California's minimum wage went up to $11 an hour on Jan. 1 -- so why not roll out the minimum wage nationwide? Especially for companies dealing with labor shortages.
Conditions were not nearly this favorable when Democrats had control of government in 2009-10. It was the worst labor market in decades -- not exactly the best time to raise the minimum wage. The price of a barrel of crude oil shot up to $80 at the end of 2009, as plentiful shale supply had yet to come online. Solar energy capacity was a fraction of what it is now. And political capital had been spent on bailouts of the financial and auto sectors.
Democrats tend to do better electorally when the economy is bad: Franklin Delano Roosevelt was elected during the Great Depression, and each of the last three Democratic presidents was elected during or in the aftermath of an economic shock.
At the moment the party controls only a handful of states right now, and while they're likely to pick up some more statehouses and governor offices in 2018, the White House won't be theirs again until 2021 at the earliest.
There's no guarantee the environment will be as favorable for progressive policies three years from now, but it might be more favorable for Democratic candidates. In any case, campaigning has become a 365-day-a-year sport, so Democrats are already making their progressive pitch.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Conor Sen is a Bloomberg View columnist. He is a portfolio manager for New River Investments in Atlanta and has been a contributor to the Atlantic and Business Insider.
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