The “more government” line is often spoken by those who have been unfortunately misled into believing in what’s referred to as anti-politics. Governments have the possibility of being under democratic control, or in worse cases, at least some semblance of it. The corporate sector, with a prominent quasi-totalitarian, top-down structure of organization that has caused a lot of misery, lacks that benefit of distribution of power.
The upward redistribution of the last four decades has been driven by government policies. It can be reversed by different government policies, which does not necessarily mean more government.
The first and most obvious item on this list of policies is Federal Reserve Board monetary policy. Right now the Federal Reserve Board is in the process of raising interest rates. The point of this policy is to slow the economy and reduce the pace of job growth. This is ostensibly because the Fed is concerned about inflation getting too high, but the immediate effect of the policy is to keep people from getting jobs and reducing the bargaining power of those who do have jobs.
A Fed that doesn’t raise interest rates doesn’t imply any bigger government than a Fed that does raise interest rates. In the decades immediately following World War II, when most workers shared in the gains from economic growth, The Fed was more committed to full employment and less concerned about inflation. There is no reason that Democrats could not champion a more worker-friendly Fed.
There is a similar story with trade policy. While it will not be possible to get back or even most of the millions of jobs lost to trade in the last decade, the United States could pursue policies that get the trade deficit closer to balance. A trade deficit in the range of 1.0 percent of GDP ($190 billion), instead of the current trade deficit of around 3 percent of GDP (around $550 billion) would imply another 1–2 million manufacturing jobs. This would provide a substantial boost to the labor market for workers without college degrees.
This also does not require bigger government. First and foremost it requires a focus on getting the value of the dollar down against the currencies of our trading partners. This would make U.S. goods and services more competitive internationally, thereby reducing our trade deficit.