Third Way Report Explodes the Myths of Populism
Washington, DC – Much of what you’ve been told about the middle class is wrong, according to a provocative new report released today by the center-left group Third Way. The middle class is far wealthier, more stable, and more optimistic than most progressives believe. The middle class does have economic anxiety, but it is based on the shifting sands of change and whether they’ll be able to navigate new economic rules.
The report, entitled “The New Rules Economy,” sets out a new policy framework to create economic growth and widespread prosperity by identifying nine rules for success in the 21st century that have changed from the ones that applied in the 20th. The paper argues that many government policies are outdated and conform to the old rules, not the new ones.
“The defining challenge of our time is to help America and the middle class succeed in the 21st century world,” said Anne Kim, Director of Third Way’s Middle Class Project and one of the report’s authors. “People are anxious because they instinctively know that the rules for success have shifted, but they have been left to figure them out on their own. The role of government should be to help people understand, navigate, and play by the new rules so that they can achieve economic success.”
The opening sections of the paper critique the prevailing conservative and neopopulist philosophies and myths. “Economic conservatism is premised on the myths of an infallible market and incompetent government. Neopopulism is premised on the myths of a failing middle class, a declining America, and omnipotent corporations,” the paper asserts.
The authors go on to dissect the economic circumstances of the middle class and find that middle class income and wealth are far higher than most policymakers believe. For example, by looking at household incomes of only working age families, Third Way found that median income was around $70,000 per year, not the $45,000 that most progressive economists cite. The typical household also held no credit card debt, experienced relatively little income volatility, and was satisfied with its economic circumstances.
“We started out in the neopopulist camp, agreeing with them on the idea that risk is shifting onto the backs of a middle class that is drowning in debt. But a careful and objective look at the data took us in a very different direction,” said report co-author Adam Solomon, a Third Way Trustee. “Each side of the economic debate gets some things right, but on the whole they mischaracterize the state of the middle class and the challenges they face. That leads to the wrong policy choices.”
The paper then moves to what it identifies as the real cause for middle class anxiety and the challenge for government: adapting to the rapid and broad 21st century changes. It identifies five rule changes for individual success, two for family success, and two for business success. A few examples include:
- Under the old rules, a high school degree was enough to enter and stay in the middle class; under the new rules, a college degree is needed.
- Under the old rules, good jobs were in factories; under the new rules, good jobs are in offices.
- Under the old rules, mothers expected to stay home; under the new rules, they expect – and often want – to work.
- Under the old rules, business had limited competition; under the new rules, competition is fierce.
The paper then outlines some broad policy goals for government to help individuals, families, and businesses to adapt and prosper under the new rules.
Another of the report’s authors, Third Way Trustee Bernard Schwartz, said: “An open-minded assessment of the last twenty-five years’ extraordinary economic performance necessitates a review of the calculus for economic measurement. Globalization, productivity and technology have created wealth at an unprecedented and startling rate. This phenomenon is neither fragile nor short-term and has produced a broader, deeper and healthier growth economy for the U.S. and the world. It is time for our government to recognize this progress and enact policies that will extend this success through the rest of the 21st century.”
In addition to Kim, Solomon and Schwartz, the paper’s co-authors include Third Way Vice President for Policy Jim Kessler and Senior Economist Stephen Rose.
Contact: Matt Bennett (202) 775-3768 x212