By Andrea Shalal and Heather Timmons
Vice President Kamala Harris' choice of Minnesota Governor Tim Walz as running mate in the Nov. 5 U.S. presidential election puts "progressive economics" center-stage in the race for the White House.
Walz, a 60-year-old former high school teacher, is a self-proclaimed champion of "progressive values" who, as governor, made school meals free, set goals to cut greenhouse gases, expanded paid leave and protected collective bargaining and overtime.
Conservatives say Harris has revealed her leftist agenda.
Understanding Progressive Economics
Progressivism, much like European social democracy, says companies need strong government oversight to prevent them exploiting workers and the environment; that free-market capitalism is not self-correcting; and that some groups need government protection.
"Progressive economics looks at the world and says: markets are incredibly valuable and powerful, but require public intervention to make them work," said Michael Linden, senior fellow at the Washington Center for Equitable Growth, a former budget official under President Joe Biden.
It contrasts with the "trickle-down economics" favored by Republicans and some Democrats: the notion that tax breaks and policies that favor corporations and rich individuals will boost spending and job creation, ultimately helping everyone.
Walz urged Democrats to embrace progressive values in a call supporting Harris, seeking to redeem the tag of 'socialist', which can have strong negative associations in the U.S. "One person's socialism is another person's neighborliness," he said.
Critics and Concerns
Critics say government assistance programs and union membership undermine the work ethic, kill innovation and hamper output, ultimately slowing economic growth.
Michael Strain, director of economic policy studies at the American Enterprise Institute, said progressive policies can be inflationary. For instance, he said, government mandates for universal pre-Kindergarten care would raise prices for services while not necessarily increasing provision, given labor shortages.
Concerns about a weakening economy, high debt levels and inflation are not limited to Republicans.
Both Senator Joe Manchin, a Democrat who registered as independent this year and represents heavily-Republican West Virginia, and Senator Kyrsten Sinema, who switched from Democrat to independent in 2023, blocked Biden's push to expand child tax credit.
The National Bureau on Economic Research, asked to assess those concerns, found a temporary child tax credit during the pandemic "had no meaningful impact on employment and labor force participation after six months of benefit distribution."
Recent Supreme Court challenges to reforms enacted by the Federal Trade Commission (FTC), including a ban on "non-compete clauses", show how hard it is to advance progressive policies, said Heidi Shierholz, who runs the left-leaning Economic Policy Institute:
"It feels like it's a heyday for progressive economics in terms of the public discourse, but there are so many obstacles in the path of actually seeing the realization."
Analysis and Impact
Progressive economics is gaining traction in the U.S. political landscape, with the Harris-Walz ticket putting these ideas at the forefront of the presidential race. The debate between progressive and conservative economic policies will shape the future of the country's economy, impacting issues such as income inequality, labor rights, and environmental protection.
For investors, understanding the implications of progressive economics can help in anticipating policy changes that may affect various industries and sectors. Keeping a close eye on the developments in the presidential race and the potential implementation of progressive policies can provide valuable insights for investment decisions.
Overall, the rise of progressive economics in the U.S. signals a shift towards a more interventionist approach to market regulation and social welfare, with potential implications for businesses, investors, and the broader economy.
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