With the US election just a year away, books that seek to explain the next long-term zig in terms of the last long-term zag are piling up. For example, there is Jonathan Chait’s The Big Con: The True Story of How Washington Got Hoodwinked and Highjacked by Crackpot Economics. Or Paul Krugman’s The Conscience of a Liberal, with its echo of Barry Goldwater’s title of nearly fifty years ago. Both authors are unable to tell the whole truth, or even all the truth they know: Chait is constrained by the depth-of-field of his magazine focus (he is a senior editor at The New Republic); Krugman, by his dual citizenship as newspaper columnist and leading professional economist.
For that reason the most interesting of these campaign histories may be Michael Perelman’s The Confiscation of American Prosperity: From Right-Wing Extremism and Economic Ideology to the Next Great Depression. Perelman, professor of California State University at Chico, author of 17 cranky and original books, is the most completely unrepentant populist economist around, a regular Howard Zinn for the economics class. He has little reason to hold back.
For Chait, the story of the last 25 years is all about journalists Jude Wanniski and Robert Bartley, economists Arthur Laffer and Robert Mundell, intellectuals George Gilder and Irving Kristol. The more mainstream Martin Feldstein appears but twice, fleetingly, in Chait’s pages, and Milton Friedman barely once. He writes, “American politics has been high-jacked by a tiny coterie of right-wing economic extremists, some of them ideological zealots, others merely greedy, a few of them possibly insane. The scope of their triumph is breathtaking. Over the course of the last three decades, they have moved from the right-wing fringe to the commanding heights of the national agenda.” It is hard to take that statement seriously.
Krugman takes a longer view, going back to William F. Buckley, who wrote God and Man at Yale in 1951 and founded The National Review in 1955, and Barry Goldwater, who was the Republican presidential nominee in 1964, to locate the beginnings of “movement conservatism.” (Ronald Reagan’s speech on Goldwater’s behalf in October 1964 was the breakthrough moment in Reagan’s political career.) Strident anti-union sentiment in the business community contributed too, he says, though he doesn’t mention any names. So did University of Chicago economists and sociologists associated with the quarterly The Public Interest. Race was an important issue. “White backlash against the civil rights movement is the reason that America is the only advanced country where a major political party wants to roll back the welfare state.”
With Perelman we get a description of what he calls “the great capitalist restoration” that is at once more nuanced and more free-wheeling. His version of “the Plot” to overturn the “Golden Age of Capitalism” that followed the New Deal began as long ago as the Taft-Harley Act of 1947, which cut back on the organizing power of unions. For him a key event was the memorandum that attorney Lewis Powell completed for the US Chamber of Commerce (“Attack on the American Free Enterprise System”) in August 1971, two months before he was appointed to the US Supreme Court (“this short piece set off a movement that changed the face of the world,”)
Developments such as the founding of the Federalist Society by a trio of law students in 1982; or the emergence of Harvard’s Feldstein, as the nation’s most prominent conservative economist after 1977, when he became president of the National Bureau of Economic Research, play a prominent role in Perelman’s story. He is certainly correct that technical economists played a leading role in justifying many of the changes that took place: deregulation, restructuring and the like. Unfortunately, he has nothing to say about the parallel changes occurring in the former Union of Soviet Socialist Republics, its satellites, and the People’s Republic of China. What’s needed now in the US, writes Perelman, is a liberal version of the Powell memorandum, a long-term strategy for taking back the initiative in the task of building a less risky, more humane society. (Presumably that is the document that Krugman set out to write; the goals he proclaims are guaranteed basic health care and a more equal distribution of income.)
(Perelman is an inventive fellow, always worth listening to. In an earlier book, Railroading Economics, he showed how the economists who studied railroads in the late 19th century and early 20th century achieved an understanding of businesses with high fixed costs and low marginal costs that, though generally neglected, is highly relevant to understanding economics of the high-tech age.)
The problem with each of these books, at least for my taste, is that none goes deep enough to constitute a persuasive story about what happened in the 1960s, ’70s, ’80 and ’90s, and therefore, none is very persuasive about what to expect next. For example, none of the three has any discussion of the significance of Paul Volcker, the conservative Democrat who as chairman of the Federal Reserve Board brought double-digit inflation under control. Krugman mentions the conquest of inflation only in passing. And the emphasis on fiscal discipline and tax simplification that was at the heart of so much of political debate these last 35 years, West and East, is ignored altogether.
At least since Henry Adams, it’s been a commonplace that a reliable cycle is to be observed in American politics. Adams described a periodicity of around 36 years, alternating between centralization and diffusion of power. Nearly a century later, historian Arthur Schlesinger Jr., following his father, considered that the swing was between liberalism and conservatism, “between periods of concern for the rights of the few and periods of concern for the wrongs of the many.”
Ralph Waldo Emerson earlier had seen the pattern differently, in terms of periods of social innovation followed by interludes in which consolidation gained the upper hand: “The castle which conservatism is set to defend is the actual state of things, good and bad…. Conservatism never puts the foot forward; in the hour when it does that, it is not establishment, but reform.” And in these terms, it is easy to understand the political tide that reached full flood with Ronald Reagan in 1980 in its own terms, as reform — the national foot put forward in one direction (from which standpoint Presidents Nixon and Ford appeared to have been cautious defenders of the status quo), nearly forty years after Franklin Roosevelt had stepped out boldly in another. In other words, a great long zig followed by a comparable zag.
So for many reasons, the wisest treatment of these matters that I know remains the one that Robert J. Samuelson, the economic journalist, published in 1995 — The Good Life and Its Discontents: The American Dream in the Age of Entitlement 1945-1995. Samuelson’s book about the economic, political and social evolution of the US in the half-century after World War II is a dozen years old now — twice that, if dated from his initial impulse to write a book — but it reads even better today than when it first appeared. Its organization alone — “The Entitlement Society,” “The New Capitalism,” “The Politics of Overpromise,” “After Entitlement” — sets out to tell a more satisfying story than any of the three new books. If ever a political essay wanted a second chance in a new edition, it is this one.
(Some of the book’s more topical sections have dated, it is true, but in such a way as to demonstrate the author’s sagacity. In the penultimate chapter, “Responsibility, Not Entitlement,” Samuelson wrote, “The first requirement is to balance the budget. It is not that balancing the budget is the country’s only problem, or, in some ways, even its most important. But it is something that elected officials can affect, and their refusal to do so condones and perpetuates overcommitted — and irresponsible — behavior.” It was a sound judgment in 1995, at a time when Bill Clinton and Newt Gingrich were tossing back and forth responsibility for the federal budget as if it were a hot potato.)
For Samuelson, as for Emerson, the tendency of Americans to tack in one direction for a generation or two, then in another, is less important than is the nation’s fundamental impulse to act upon its “unchanging ideals.” The real cycle, he writes, “is one of exertion and exhaustion, of romantic assault and ugly accommodation. This is hardly the sum total of our history, because the history of any country or people is a mosaic of blinding complexity….[but] The understanding of history involves the selective viewing of the mosaic in an effort to discover some order and pattern, and the existence of these broad rhythms — driven by contradictions between ideal and reality — is one such recurring pattern.” That seems true, as far as it goes. But among our most deeply cherished ideals may be some sufficiently incompatible that they can only take turns at the head of our agenda — liberty and equality, love and justice, individuality and communal solidarity. Hence the zig-zag of American politics.
A powerful backlash is obviously building against the Republican Party, and the vague but broad mandate for change under which it has operated for thirty years. The country seems poised to step off in a new direction, if only tentatively. The trick will be to hold to the real gains in self-understanding that have been made in the past thirty years, as the next bold push into the future gains momentum.