Why America Needs A Third Way
“You can’t fall off the floor” my brother used to say, referring to how his suffering from Multiple Sclerosis couldn’t get any worse. I’d say America is in the same place. That’s why we elected Donald Trump. “What the hell do have you have to lose?!” Trump famously challenged the African-American voter, “you’re living in poverty, your schools are no good, you have no jobs…” Trump may or may not have the right answers, but he made his point. This election wasn’t about the failure of the Democratic party. This election was about the failure of both the Democratic and Republican parties. Trump was elected because neither party was able to put forward a compelling vision for America. What we are witnessing is the end of modern American political ideology (both progressivism and conservatism). And that’s why we need a Third Way.
When I refer to the Third Way, I’m not talking about a third political party. And I’m not talking about compromise or centrism. What I mean is that America needs a “third way” of thinking — not conservative or progressive — that offers a fundamentally different approach to solving our most intractable problems. We’re not just stuck in a two-party system, we’re stuck in a two-way mindset: tax & spend vs. cut social programs; invest in business growth vs. help the poor; fight terrorism vs. lose our freedom; deport undocumented immigrants vs. enforce the law; help Israel vs. help Palestine; pro-life vs. pro-choice; curb second amendment rights vs. reduce gun violence; use excessive force vs. jeopardize public safety. These are all false trade-offs: artificial, either-or distinctions that frame our decisions in the wrong way and limit creative thinking. It’s time we disrupt this polarizing mindset and introduce a bolder, more enlightened political ideology to take this country into the 21st century.
The Third Way movement has five key tenets:
1. Focus on Outcomes. Modern political ideology is based on different philosophies about the role of government: spend more or spend less; raise taxes or cut social programs; smaller or bigger government. And that’s the fundamental flaw in modern politics. Political debate today is unhinged from what citizens really care about. Instead of debating issues and ideology, the electorate wants bold, creative solutions to real problems. The Third Way introduces a new political language — one that doesn’t just focus on positions (e.g. pro-life, or pro-choice) or vague issues (e.g. abortion), but instead focuses on shared outcomes (e.g. reducing unwanted pregnancies) and then seeks out the most effective strategies for achieving those outcomes. This completely obviates the need for a debate because we solve the root problem. Outcomes unify the electorate. The language of outcomes creates a common standard for governing, and clarifies what voters really want. What’s most amazing is that, despite all of our differences, the majority of citizens actually want the same outcomes. In fact, when asked about which outcomes people value most — Republicans and Democrats, rich and poor, married and single, working and unemployed, white and black — all agreed on 4 of the top 5: increase employment, improve school quality and performance, create new jobs, and reduce crime.¹ It’s time we focus on results and impact vs. ideology and rhetoric.
2. Focus on Creating Public Value. I would contend that America does not have a resource problem, we have a resource allocation problem. We spend $4 trillion per year on social programs, yet problems continue to get worse!². Spending $4.5 trillion isn’t going to make much difference. The underlying problem is simple: we have no earthly idea which interventions are most effective, so we fund thousands of well-intentioned programs and “hope” that they work. Some call it ‘spray and pray.’ And that’s absolutely why governments are so deep in debt.³ Perfect case in point: the American Recovery and Reinvestment Act (the “stimulus”) authorized $850B of spending to create jobs and stabilize the economy, yet even by the most generous estimates of the program’s impact, the cost per job created was somewhere between $174,000 and $500,000.⁴ Think about that. Most of those jobs were low wage and temporary. Few would argue that was worth the bang for the buck. Many other programs aren’t much better. We need to focus less on how much we spend and more on the “cost per outcome” and expected return from government programs. Using predictive analytics, existing evidence and better decision making tools, we could easily identify which programs are more likely to succeed. Ultimately, we could probably find a way to generate twice the impact for half the cost. Imagine being able to delight conservatives by cutting taxes in half, and delight progressives by doubling the number of people helped! That’s the Third Way. The Third Way shifts the focus of government from spending money to ‘purchasing outcomes.’
3. Focus on Solving Intractable Problems. The problems facing our country today are the same problems that we faced 50 years ago: poverty, health, literacy, housing, immigration, workforce development, racial equity, access to education, hunger, and so on. Seriously? We haven’t solved these yet? In the meantime, we’ve split the atom, mapped the entire human genome, put a man on the moon, birthed the internet, invented driverless cars and discovered a treatment for HIV. Yet we still can’t figure out how to eradicate homelessness? Hunger? Drug addiction? Illiteracy? It’s time we challenge ourselves to fundamentally solve these problems, once and for all, within our lifetime. To do so, we’ll need to unshackle ourselves from conventional, either-or thinking and perfunctory policy ideas and seek out bolder, more transformational and less costly solutions. We spend almost all of our resources and energy caretaking and mitigating problems; it’s time we get to the things that really move this world forward — maximizing happiness, advancing humanity, and generating new breakthroughs in science, health, the arts and humanities. America needs to lead — to put forth a more hopeful, positive vision for life on this planet, and then exert real leadership to make it happen.
4. Focus on True Accountability. Accountability in traditional politics is mostly about preventing waste, fraud and abuse. Is “making sure we don’t waste money” the best that we can expect from government? If so, we may have set the bar too low… In a world of outcomes, the electorate can speak with a clear “voice” to elected officials: “I care about these outcomes, and I want my tax dollars spent accordingly.” Citizens could not only elect public officials, but they could vote on the outcomes they want, and hold government accountable to whether they deliver on that mandate, and at what cost! While there may be thousands of “issues” and millions of programs to fund, there are only 132 common outcomes, or types of social benefits that citizens want from government. Now that we have a universal language for social change, we can measure our return like any other shareholder, and make government into a truly accountable institution.
5. Focus on New Ways to Finance Social Change. Why are taxes the only way that governments can generate revenue?⁵ And why does government have to pay the freight for solving all of society’s problems? What if we were able to find new sources of capital to finance the outcomes people want? Al Gore once pointed out that more money is allocated by markets around the world in one hour than by all the governments on the planet in a full year. Think about that. Now think about this: Fortune 500 companies alone generated almost $27.6 trillion in revenue in 2015, which is 73 percent of U.S. GDP.⁶ What if we could find a better way to tap the capital markets to finance public policy objectives? I’m not referring to T-bills, municipal bonds, or even impact investing. I’m talking about putting an actual economic value on societal outcomes and “selling” those outcomes to corporations and investors. Think about the value of STEM graduates to Boeing or Intel: how much would they “pay” the government to produce more engineers out of the public schools so that they could recruit better talent and improve productivity? How much would real estate developers “pay” the government to eradicate homelessness and increase property values in a particular neighborhood? How much would Google or Cisco “pay” the government to reduce the digital divide and hook up more people to the internet? How much would commuters “pay” to reduce gridlock and traffic? Estimates show, for example, that traffic currently costs Americans $124B per year.⁷ It’s time we completely re-think the way we finance government, and we now have the tools and capabilities to do so.
In short, the Third Way is the American Way. It’s about boldness, innovation, leveraging the power of markets, and creating good old-fashioned value for taxpayers. Donald Trump may be the Democrat’s and Republican’s worst nightmare. Or he may well represent a transformational moment in American politics. It’s time we wake up, take back control of our political destiny and find a new way forward. Perhaps, a Third Way.
¹ “New Illinois Survey Finds Surprising Agreement of Democrats And Republicans On Government Spending,” http://www.wirepoints.com, (October 2013). The one difference was that Democrats included “improve affordable access to healthcare” in their top five, while Republicans added “attract, retain and grow businesses.”
² The poverty rate in America (15%) is the highest since 1997. The rate of “economic insecurity” among U.S. adults is a whopping 79%. Approximately one in seven households in America is “food insecure,” the highest number ever recorded. Public high school graduation rates have dropped from 77 percent in 1969 to 74.7 percent in 2013. Over the last 30 years, average SAT scores declined from 1049 to 1020. The number of Americans with asthma has more than doubled in the last twenty years, and childhood obesity has almost tripled. Violent crime increased by 42 percent since 1970, and the number of Americans in prison or on probation or parole has more than tripled.
³ Combined, the U.S. federal government and states have accumulated more than $23T of debt.
⁴ Dylan Matthews, “Did the stimulus work? A review of the nine best studies on the subject,” https://www.washingtonpost.com, (August 2011).
⁵ Roughly 80 percent comes from the individual income tax and the payroll taxes that fund social insurance programs and another 11 percent comes from the corporate income tax, and the rest is from a mix of sources, according to The Tax Policy Center’s Briefing Book.
⁷ Federico Guerrini, “Traffic Congestion Costs Americans $124 Billion A Year, Report Says,” http://www.forbes.com, (October 2014)