Next week we will be celebrating the 20th anniversary of the founding of the Center for Economic and Policy Research (October 29th to be precise). I’m going to take this opportunity to point out how much economic debate has shifted over the last two decades, and also do a bit of boasting.
When Mark Weisbrot and I started CEPR at the end of 1999, it was the heyday of neoliberalism. Bill Clinton had won reelection in 1996, assuring us that the era of big government was over. Two big agenda items from his first term were the passage of NAFTA and welfare reform, which, as he put it, “ended welfare as we know it.” In international economics, the Washington Consensus reigned supreme, with privatization and austerity being pushed pretty much everywhere in the developing world.
Mark and I felt that the debate on economic policies had become overly narrow, and we thought that a small dynamic think tank, without major institutional constraints, could make a difference.
One of the first issues that we weighed in on was Social Security. At the time, the conventional wisdom, even among Democrats, was that Social Security was in crisis and that benefits had to be cut. Our book, Social Security: The Phony Crisis, came out just as CEPR was launching. Two decades later, not only have benefits not been cut, but the centrist position in the Democratic Party has shifted to benefits should be raised.
We also had pushed for full employment policies. In two books, Jared Bernstein and I argued that the benefits from low levels of unemployment to workers at the middle and bottom of the pay ladder were enormous. We also argued that economists had underestimated the economy’s ability to maintain low levels of unemployment without spiraling inflation. Today, as the unemployment rate sits at 3.5 percent, Jerome Powell, the chair of the Federal Reserve Board, has largely adopted our position.
Internationally, contrary to the widely held view at the time, we pointed out that the era of the Washington Consensus had actually been pretty bad for most of the developing world, with the major exceptions of China and India, neither of which were closely following the model.
When Argentina went to war with the International Monetary Fund (IMF) in 2001, we showed that the institution’s growth projections showed a serious political bias, coming in consistently higher than actual growth in the period in which Argentina was following IMF policies, and then coming in well below actual growth when it followed an unorthodox path. We also caught the World Bank telling a bogus story on NAFTA, concealing the fact that Mexico’s growth had actually been very weak in the first decade following the pact’s implementation.
A series of papers that John Schmitt and I did with David Howell and Andrew Glyn, helped to correct what had been the prevalent view at the OECD, and among labor economists more generally, that European countries had to dismantle their welfare state protections if they were to enjoy low unemployment rates like the United States. Today, most of the countries with strong labor market protections have better labor market outcome measures than the United States.
Eileen Appelbaum, the current co-director, who joined CEPR a decade ago, has done pathbreaking work with Rosemary Batt on the private equity industry. She also has pointed out that private equity is at the center of the current battle over surprise medical bills. In addition, her work showing that paid sick days and paid family leave do not cost jobs is routinely cited in efforts to promote family-friendly workplace policies.
There are many other areas where CEPR has helped change the terms of the debate. We were pushing financial transactions taxes from our inception when such a proposal appeared loopy. Now, most of the Democratic presidential contenders are on record supporting such a tax. We also pushed to have states adopt state-run retirement plans to offer a universal low-cost alternative to private 401(k)s. This policy has now been adopted by California, New York, and many other states. We also pushed to have publicly-funded research for prescription drugs so that new drugs could be sold as low cost generics, a position now embraced by the Labor Party in the United Kingdom and taken seriously in policy forums around the world.
We can point to much work in other areas, like destroying George W. Bush’s claims for his Social Security privatization plans and warning (unfortunately unsuccessfully) that the housing bubble would burst and give us a serious recession. Our work has also helped build the case for a higher minimum wage and stimulus packages following the Great Recession.
Of course, CEPR has had great partners in these accomplishments. A Washington think tank with a budget of just over $2 million is not going to accomplish big things on its own. At the top of this list would be the AFL-CIO and other unions. We have worked with a large number of community groups over the years, most notably the Fed Up Coalition, that successfully pressured the Federal Reserve on full employment and the Family Values at Work Coalition, which has been behind the drive for family friendly workplace policies. We have also worked closely with the state-level policy groups in the EARN network and the Economic Policy Institute, where I and many other CEPRites spent many years.
Mark and I may have had no idea what we were doing 20 years ago when we started CEPR, but we were right to think it could make a difference.