Hillary Clinton says she welcomes the “rare” opportunity for a “real contest of ideas” with Senator Bernie Sanders. Though Sanders remains a longshot for securing the nomination, the battle of ideas between the two candidates is very real. But the debate between Clinton and Sanders does not just pit pragmatism against idealism, it also reflects a deeper divide within progressive politics over fundamental theories of governance.
Clinton takes a managerialist view of how government works, embracing the idea that, with sufficient expertise, government can fine-tune the economy to prevent crises. Sanders, by contrast, is skeptical of expert oversight, and instead seeks to radically restructure the economy itself.
Take their positions on financial regulation and the problem of “too big to fail” financial firms. Sanders wants to restore the New Deal-era Glass-Steagall Act, which mandates a separation between commercial and investment banking, and proposes to break up financial firms that are too big to fail into smaller entities, to limit their economic and political influence. As Sanders has argued, “if a bank is too big to fail, it’s too big to exist.” Clinton, by contrast, seeks to extend and deepen oversight of by strengthening the Dodd-Frank financial-regulatory overhaul passed in 2010. She argues that the financial crisis itself was caused not by big banks, but by so-called “shadow banks” like Bear Stearns and Lehman Brothers. These financial firms play a critical role in an interconnected financial system, but exist outside conventional financial regulation, and would be relatively unaffected by either a re-instatement of Glass-Steagall, or by breaking up banks like Citi or Bank of America. Clinton’s critique is sound, and several economists and commentators have warned that Sanders’s approach will not address shadow banking. But it misses the broader implications of Sanders’s position, which is not just about financial regulation policy, also concerns the underlying approach to governance more broadly.