(Bloomberg Opinion) -- In many ways, the economic debate in the U.S. has been stuck for quite a while. Progressives want higher taxes on the rich, more spending on the poor and more government health care; conservatives and libertarians want less. The 2016 election brought some innovation, with Donald Trump’s protectionism and the socialist revival sparked by Bernie Sanders. But the biggest breath of fresh air is coming from Democratic presidential candidate and Massachusetts Senator Elizabeth Warren.
Just since the start of this year, Warren has released no fewer than 19 detailed economic policy proposals. This outpouring of ideas has been so dramatic that it has spawned Twitter hashtags such as #shehasaplan. Warren’s ideas are neither the cautious, technocratic tweaks that tend to emerge from centrist think tanks, nor the bold but vague promises often issued by the socialist left. Nor are they merely a laundry list of campaign promises. Instead, they represent a coherent, unified program for transforming the U.S. economy.
Four Warren proposals stand out as particularly original. The first calls for allocating some corporate board seats to workers -- an idea commonly known as co-determination. Used in Germany, the co-determination system has the potential not just to ensure that company policies take account of the interests of employees, but also to increase productivity by allowing workers to contribute more of their knowledge to the corporate decision-making process.
Warren’s second fresh idea is regulation of big technology companies. Although her proposal calls for companies such as Facebook, Alphabet (Google) and Amazon to be broken up, in practice most of her ideas involve enhanced oversight rather than traditional antitrust remedies. Since platforms such as Amazon and Google tend to have strong network effects -- people usually want a one-stop-shop for online retail and a single website for internet search -- breaking them up wouldn’t lead to a competitive market in the long run. Warren’s plan seems to recognize this, and would instead treat these companies more like utilities, forcing them to allow smaller businesses to profit off of the infrastructure they create.
The third big innovation concerns housing. With costs for shelter eating a bigger piece of Americans’ paychecks, and local government paralyzed by incumbent homeowners, the country needs a big solution. Warren’s would combine incentives for raising zoning density with increased public construction.
But the biggest Warren idea is industrial policy, which she calls “economic patriotism.” Instead of relying on tariffs as President Donald Trump has done, Warren would promote exports. She would also leverage research and infrastructure to promote U.S. industry, and pressure countries to stop holding down the value of their currencies against the dollar. This represents a decisive break with the free-trade consensus of the past few decades, but isn't simply a return to traditional inward-looking protectionism.
These four ideas, which are the most unique and original among Warren’s impressive oeuvre, give a picture of the senator’s economic philosophy. A good term for it might be “progressive industrialism.” Though Warren wants to rebalance the economic power of labor and capital, and use government to assist the needy, she also wants to harness private industry to create growth. Her plans for technology regulation and her export promotion would boost small businesses, while her housing plan would leverage the power of private development and her co-determination plan would more closely align the interests of labor and capital. The strategy is reminiscent of the New Deal, in which President Franklin D. Roosevelt strove to integrate private industry with government spending in order to advance both growth and equality. It also bears some resemblance to the strategies used by Germany and Japan to recover from World War II.
Warren’s ideas are also notable for their specificity. In their recent book “Concrete Economics,” economist Brad DeLong and historian Stephen S. Cohen argued that successful policy programs should have concrete goal instead of leaving the future up to the vagaries of the market. Warren seems intent on doing exactly that -- under her industrialist program, Americans would get more housing, more opportunity to start their own businesses and more respect and power at work. They would also get more child care, cancellation of student debt, assistance with addiction, and a number of other tangible benefits. A health care plan is surely also forthcoming.
This isn't to say that Warren’s plans are ideal in their current form. Her co-determination plan could benefit from the inclusion of German-style worker councils, her industrial policy should remove its harmful “buy-American” provision, her corporate tax plan might discourage investment and her wealth tax might run into constitutional obstacles.
But ultimately no set of big, transformational ideas will be perfect. The New Deal certainly wasn’t. But by thinking big, combining intelligence with ambition, and being willing to engage both the public and private sectors, Warren has set herself up to be the closest thing modern American politics has to a successor to FDR. Now it remains to be seen if she can communicate this vision to the public in an inspiring way.
To contact the editor responsible for this story: James Greiff at jgreiff@bloomberg.net
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Noah Smith is a Bloomberg Opinion columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.
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