The post-mortem of the midterm elections is widely held to show that people are more concerned about economic stagnation than about any of the specific policies Democrats promote, such as climate control, immigration reform, and Internet neutrality. My interviews with middle-class Americans reveal that many are even more concerned with losing what they have than with gaining more of the same. True, they are bitter that their real income has not increased for years on end, and they sense that they will be unable to provide a better life for their children than they had. However, they are even more concerned about the fact that they are no longer sure that the job they have will be there tomorrow; that Social Security will be there when they retire; and that their pension fund will not be retroactively diluted and is properly funded. They are even more alarmed about the future of Medicare, which they are told will go broke in the near future, and they are not at all sure that they can afford the "affordable" Obamacare, which does not cap the costs of the health insurance access that it provides. They read about millions who have been kicked out of their homes in recent years. In short, they feel insecure, and for good reason.
Psychological studies support the impressions I gained from my interviews that people care more about insecurity than stagnation. One of the most robust findings of these studies is that people are highly "loss averse." In plain English, they are much more concerned about losing a $1,000 they have than with gaining another $1,000, although many an economist will tell them that both thousands have the same purchasing power, the same value. Finally, many people seem to not believe that the policies Democrats tout -- such as increasing the minimum wage and investing in education and infrastructure -- will return the economy to a high-growth pathway and lift most people's wages in the foreseeable future, and neither do I. Democrats should hence add to their efforts to find more effective ways to restore higher economic growth an economic security agenda that would combine refurbished and reframed existing policies with some new ones. The main elements should include:
• Job security. Any person seeking a job should be able to find one. If none is available in the private sector, jobs should be provided through public works, as they were during the Depression.
• Basic income security. Negative income tax, which in effect provides a floor underneath which the income of many millions of American may not fall, is for some reason unknown to many Americans and not flogged by Democrats. It should be expanded and reissued as a basic income security plan.
• Retirement security. Democrats should call for applying the Social Security tax to all incomes (under 2015 rules, only income below $118,500 is taxed!), and show that this change alone will suffice to make Social Security safe for generations to come. They should also favor stronger pension fund insurance.
• Health care insurance. Democrats should call more attention to the fact that Medicare is doing much better than many feared, as the rise in healthcare costs has slowed down over the last few years. And they should add a public option to the array of options offered under Obamacare, to ensure that there will be an affordable option and one that does not have astronomical deductibles.
Of course, I realize that the Republicans will not buy any of this. However, this opposition will not prevent economic security from becoming a powerful agenda for the next election that will speak to what I believe concerns the majority of Americans even more than increases in wages.