THE BLOG
08/02/2013 12:00 am ET Updated Oct 01, 2013

Fast Food Strikes: Raising Wages and Saving the Economy

AP

American politics is almost always about ideas, not that you would ever get that impression from watching TV or reading newspapers. For every Weiner/Spitzer hoo-hah, there's a dozen battles to decide who we are and how we treat each other.

This is what's happening in the growing outburst of strikes by fast-food workers seeking to raise their hourly wage to $15 from their current wage, which is around $8. There have been a series of one-day strikes, organized by the SEIU, at Taco Bell, McDonald's, and other of the ubiquitous fast-food chains.

The case made by the strikers is compelling. These are hard-working folks, often with two jobs, who simply can't survive on what they are paid. Think about it. Work 50 hours at $8 bucks an hour, and your weekly pre-tax income is $400, or about $20,000 annually. Raise a family of four on that.

The American economic model is based on the happy notion that if you work hard enough, you'll make it. Not so much anymore, and not at all if you're a fast-food worker. We feel the consequences initially as an ethical breakdown. It's not fair, it's not the American Way. And the individual stories of hardship are powerful.

But there's much more to this than an appeal to our innate decency. This struggle is at the heart of a contest between two visions of the American economy.

What has dominated our thinking for thirty years is austerity: We spend too much, we tax too much and dramatic reductions in both will stimulate economic growth, jobs, and prosperity, even for the folks working at McDonald's. There's a long intellectual tradition here starting with the Austrian economist Friedrich Hayek and working through Milton Friedman and the Chicago school. It was popularized during the Reagan years as "supply-side" economics and it is now the unspoken and unchallenged paradigm. Think of all the federal state and local incentives and tax breaks for corporations, the Clinton and Bush tax cuts, sequestration, debt ceiling, etc. It is the dominant economic idea.

The problem is, Austerity doesn't work, especially in a recession. It is the root cause of enormous income equality, it distorts and depresses aggregate economic activity, and slides us toward permanent disinvestment in human and capital infrastructure.

There are certain ideas embedded in it that have value. Regular overspending leads to deficit spending which cannot be sustained (See Detroit, Bankruptcy). It is possible to raise taxes to levels that restrain investment and private sector spending. But its fundamental consequence is a blossoming 1 percent and an impoverished 99 percent. That's not the American way, either.

The Left has never had much of an intellectual alternative, and not much in political terms that countered austerity. It's not enough to be for high taxes on the rich, and not enough to be impassioned about the genuine plight of the working poor and the middle class. There needs to be an anti-austerity idea that can be explained, understood and adopted.

Comes now the fast-food workers, with an idea. "We want to be paid enough to buy the things we make, and to stimulate our economy by consumer purchases that will create demand and jobs." Holy cow, they're on to something. Call it "demand-side" economics. Put real income into the hands of real people and they will spend it on food, cars, and washing machines. They will pay taxes so that government can again invest in roads, and schools, and hospitals.

The corporate leadership of the fast-food industry has no truck with such ideas, and opposes the $15 wage demand as excessive. To an extent, that's their job. They've got a corporate self-interest in their bottom line that won't be improved by paying their workers enough to live on.

Really? That's the argument made for centuries, and it isn't true. Whoever thought we would long for the kind of capitalism wrought by Henry Ford, who came to understand that paying his workers a living wage would eventually increase demand for his cars. An economy populated by folks with a little spending cash in their pockets will likely increase demand for lots of thing, even a Big Mac. No more austerity-supply-side nonsense. We're in a new era. Pay workers enough and you will stimulate growth and investment, the 1 percent will do well, but the 99 percent can live, too. Demand-side economics, thank you very much.

The fast-food strikes are an idea in action. They have their own drama, their own news value, and their own human dynamic. But their leadership, their membership, and anyone who writes or reads about them should begin to talk about them as the avatar of a better America, of economic ideas in the service of democracy, of the most effective way of getting our economy back on its feet for everyone. If we can explain ourselves well enough, the era of austerity will vanish, and a Demand-Side New American Prosperity will replace it.