The results of the 2024 election have inspired much hand-wringing and soul-searching on the political left. What should be the new direction of the Democratic Party?
They might start with a different question: Why are some voters Democrats in the first place? Those who so identify, I believe, tend to think differently than the typical Republican on five dimensions.
Psychology
If you think back over the long scope of human history, the way we are living our lives today is very unusual. On a typical weekday, more than 200 million US adults of working age get up in the morning, and most of them go to work. When they are not working, they are shopping, running errands, or pursuing some form of socialization or entertainment.
In doing these things, we are all acting in our own self-interest. Although there are government and social restrictions here and there, for the most part we are not told what to do by government, by neighbors, or by friends. We live in a world where virtually everything that happens is the result of people pursuing their own interests.
Adam Smith told us why this arrangement works so well. The way you can meet the most needs of the most people is to pursue your own interest in the marketplace. The more successfully you meet the needs of others, the more profitable your business.
But for the first 200,000 years or so, this is not how our ancestors lived.
Our ancestors lived in small tribes. They had no market economy or even a government as we know it today. Survival depended on individuals subordinating their self-interest to the welfare of the group as a whole. Cultural institutions encouraged this behavior.
In battles with other tribes, for examples, heroes were needed. But it is in no one’s self-interest to be a hero. In hunting large game, they needed risk-takers. Yet it is in no one’s self-interest to take such risks. In gathering food and maintaining their camp, they needed people who do not shirk. Yet substituting leisure for work is in the natural self-interest of most people.
The psychological framing of our ancestors, therefore, was quite different from the psychology that makes the modern world as prosperous as it is. To the extent that evolutionary psychology is at work, it seems likely that some people have a genetic predisposition to think the way our ancestors thought.
When Bernie Sanders says no one in any part of the health care system should be making a profit, he is speaking emotionally, not logically. He may in fact think anyone, in the entire economy, making a profit evidences injustice. If he were living in a tribal community thousands of years ago, he would fit right in.
Economics
Economists envision a market of many different people with different resources and different tastes. By trading, people exchange something they value less for something they value more. They continue making trades until a point at which no one can be made better off through any more transactions.
Economists are so enamored of this result that they have a name for it: “Pareto optimality.”
Note, in achieving this bliss point there is not a single act of altruism. It is totally the result of self-interested behavior.
I find that, like Bernie Sanders, many people on the left do not like the idea of a market. Perhaps for that reason, they don’t spend much time trying to understand economics. Consequently, they propose many well-intentioned government interventions that defy economic logic and impose great harm and hardship in the real world.
Public Choice
The basic approach to politics by the Democratic Party was shaped by Franklin Roosevelt. He was the politician who understood better than any before him that successful politics is interest group politics. In particular, if you promise special interests the one thing they want most, they will support you even if they disagree with everything else you are doing.
So, farmers got price supports. Labor unions got the Davis-Bacon Act and other favorable interventions. Big city machines got money for patronage. Southern segregationists got no challenge to Jim Crow.
The crown jewel of the Roosevelt approach was the National Industrial Recovery Act (NIRA). The dark genius of this approach is that people are far more focused and reliable as a political force in their role as producers than they are in their role as consumers.
So, the NIRA allowed (even required) every industry and every trade to organize as a cartel— restricting output and charging monopoly prices. This is a classic example of taking from Peter (the consumer) and giving to Paul (the producer) in a way that makes society as a whole worse off.
The Supreme Court eventually declared the NIRA unconstitutional. However, the spirit of the effort continues today in the form of occupational licensing by state governments. In most places, to be a hair braider, a barber, an interior designer, or to enter hundreds of other occupations you need a license. Studies show that licensing acts as a barrier to entry, restricting supply and forcing prices higher.
In the 1950s, only one in twenty US jobs required a license. Today it is one in four. Of course, Republicans can be as bad as Democrats on this score. Politically manipulated via protection of their role as producers, voters inflict damage on themselves as consumers.
Regulation
Proponents of government regulation almost always claim that regulation protects consumers. But for regulations in most of US history, the benefit has been to producers at the expense of consumers. By the time Jimmy Carter (a Democrat) became president, this was well understood by economists.
The Civil Aeronautics Board was acting as a cartel agent for the airlines. The Interstate Commerce Commission did the same for the truckers and railroad interests. The Federal Communications Commission did the same for the broadcasters.
Among the most significant accomplishments of the Carter presidency was the deregulation of these and other industries. But you’ll almost never hear Democrats praise Carter for the effort.
In future, if they wish to recapture public support, Democrats would be well advised to see regulations as generators not only of benign and agreeable consequences, but of higher prices, pinched growth, and public discontent.
Redistribution
Many Democrats believe that their party’s goal is to take from the rich and give to the poor. But their approach to both taxes and spending is almost completely in service of special interests and lobbyists. We spent trillions on the War on Poverty, only a pittance of which ever went to the poor in the form of cash. Healthcare dollars go to hospitals and insurance companies, rather than to those in need of healthcare. Food stamp money goes to agribusiness. Housing dollars go to developers. Education dollars go to the education establishment, which consists of adults, not kids.
Democrats favor high marginal tax rates, but that gives them the opportunity to trade loopholes for political support, and to attempt social engineering by crudely manipulating incentives.
For the Future: Face Facts
The Democratic Party faces a crossroads. While its traditional industry-lobbyist politics, regulatory instincts, and redistributive policies have shaped its identity for decades, voters have turned away. If Democrats hope to regain momentum, they must grapple with the unintended consequences of their interventions — how regulation can stifle competition, how redistribution often enriches special interests rather than those in need, and how outdated economic thinking alienates potential supporters. A party that trades in economic realities, rather than mere rhetoric, may find broader appeal in the years ahead.