A Short History of Intransigence

When did things begin to go seriously wrong in American politics? I’ve been covering political economy a long time, mostly from a newspaperly perspective. I’ve leaned this way or that for years at a time, but always sought to remain within speaking distance of those near the center on the other side. Last week I went back over my memory of events. I wanted to reconstruct how I, at least, reacted to the various twists and turns in the path to the ugly present day.

I date the beginnings of the current trend to 1986. That was when liberals in the Democratic-led Congress turned on President Reagan. They were reluctant to recognize his very real achievement for what it was – a midcourse correction to the successful policies of the New Deal.

Reagan had just signed a tax simplification act ratifying a sensible two-bracket progressive income tax that was deemed revenue neutral because it closed a good many loopholes. A couple of years before he had signed off on a bipartisan compromise that had restored balance to the Social Security System. The soaring inflation of the 1970s had been subdued, thanks to his support of Federal Reserve Chairman Paul Volcker, who had been appointed by President Jimmy Carter.

Whereupon the Congressional Democrats turned the Iran-Contra affair, news of which began to break in November 1986, into Watergate-style Congressional hearings, complete with a special prosecutor, imperiling Reagan himself (who by then probably was beginning to suffer from Alzheimer’s disease) and ultimately indicting former Defense Secretary Caspar Weinberger of perjury in his testimony about the Reagan administration’s dealing on Nicaragua and with Iran. (George H.W. Bush pardoned him.) I’m not saying that Iran-Contra wasn’t a big deal, just that it deserved a lesser response.

The editorial page of The Wall Street Journal, a major actor in this drama, long had embraced positions that I thought were dubious – the gold standard, the cartoon growth theory they called “supply side economics,” the certainty of Soviet germ warfare in Laos. The extraordinarily rancorous debate over Reagan’s nomination of Robert Bork to the Supreme Court in the summer of 1987 added fuel to the fire. But it was in the context of the long and demonstrably partisan investigation led by Lawrence Walsh (who re-indicted Weinberger and implicated President George H. W. Bush by name a week before the 1992 election) that the editorialists seemed to me to slip their moorings altogether and begin to drift further and further away from the center pier.

Thus the Iran-Contra business was, as I remember it, the time in which raised voices first could be legitimately described as shrill; when partisan showmanship took precedence over good-willed negotiation; when uncompromising behavior began that violated the tacit rules by which the United States had been governed for most of the twentieth century. (Iran-Contra was wrong, but it wasn’t that wrong, and in any case was a sideshow to the main events.) Trouble has been escalating ever since.

Republican Jack Kemp’s bid to supplant the presidential candidacy of Vice President Bush in 1988 was next – the breakaway of tax-cut, starve-the-beast populism from fiscal common sense. Then came the H. Ross Perot insurgency of 1992, which deprived the elder Bush of a second term. When Bill Clinton was elected, the Republicans were enraged.

There followed Hillary Clinton’s failed health care reform; Newt Gingrich and his Contract with America; the shutting-down-government battles of 1995 and 1996, the impeachment and trial of Bill Clinton; the Tie Election of 2000 and the go-to-hell presidency of George W. Bush; and, now, the Tea Party.

But politics is hardly the source of the narratives that animate and give meaning to these events. Those have their origins in a very different domain: among the theorists, analysts, explicators and storytellers who populate universities; lobbying concerns (of which “think tanks” and public policy institutes have become the collectivities of choice); and, of course, the press.

Exhibit A is The Age of Greed: The Triumph of Finance and the Decline of America, 1970 to the Present, by Jeff Madrick, a superb book that deserves the widest possible audience. As the subtitle suggests, it locates events in an ambitious narrative of the last forty years – a story in which a great assemblage of activists, a “thought collective,” in author Dieter Plehwe’s phrase, seek to reverse the accomplishments of the New Deal and bring about an age of sharply bounded government from which it may no longer be possible to escape.

Madrick has been following the economy as long as I have, as editor of Challenge magazine, and, in recent years, a frequent contributor to The New York Review of Books. He is a paleo-liberal, meaning he believes that Americans were panicked by the events of the 1970s into a series of unwise choices, that they would have been better off if Jimmy Carter had been re-elected in 1980, or replaced by Edward M. Kennedy, instead of Reagan; that Volcker could have accomplished the same thing with only moderately high interest rates if the Reagan tax cuts hadn’t been enacted in 1981.

But Madrick’s book is anything but dull and tendentious. He tells his story through a series of profiles of movers and shakers that are almost compulsively readable, even though their stories are well known (or perhaps because they have become well known: Madrick makes great use of secondary sources). Robert Kaiser, the author of So Damn Much Money: The Triumph of Lobbying and the Corrosion of American Government, describes Madrick’s project as “one of those rare, wonderful books that allow us to understand a huge and important historical development that we may not have realized was a coherent and coordinated series of events.” I’m not so sure about the “understand” part, but The Age of Greed certainly enables us to see the broad outlines, min IN terms of headlines, of the last forty years.

Periodization is the key to Madrick’s saga. He breaks the story into two parts.

“Revolution, ” the first part, consists of magazine-quality portraits of individuals who “laid the foundation for a new age”: Walter Wriston, of First National City Bank of New York, “an adamant believer in laissez-faire economics,” whose father had declaimed against the New Deal as president of Brown University; economist Milton Friedman; President Richard Nixon and Fed chairman Arthur Burns; merger and acquisition lawyer Joseph Flom; arbitrageur Ivan Boesky; Wriston again (by now running the renamed and expanded Citibank); entrepreneurs Ted Turner (Cable News Network), Sam Walton (Wal-Mart) and Steve Ross (TimeWarner); tax activists Howard Jarvis (Proposition 13) and Congressman Kemp, a former pro quarterback; and presidents Carter, Reagan and Fed chairman Volcker. A prologue, about Lewis Uhler, father of constitutional limits on government spending, suggests that the men who made the revolution were New Deal haters (or their children), who had simply bided their time. But most of Madrick’s subjects are those whom we call innovators, “business pioneers who fought regulation or, through innovation, escaped government oversight.” They promulgated the view that big government was a malign force that “held all Americans back.”

“Once government was no longer a counterweight and a new political ideology had cleared their path,” Madrick writes, a new breed appeared. These were mostly financiers, and in “the New Guard,” the second half of the book, Madrick tackles Jack Welch, of General Electric, and management guru Tom Peters; junk bond impresario Michael Milken, Fed chief Alan Greenspan; hedge fund operators George Soros and Jack Meriwether; bank roll-up artist Sandy Weil; four from the dot com craze (Jack Grubman, Frank Quattrone, Ken Lay and, again, Weil, by now having assembled Citigroup); mortgage banker Angelo Mozilo; and four from the 2008 collapse (Jimmy Cayne, of Bear Stearns; Richard Fuld, of Lehman Brothers; Stan O’Neal, of Merrill Lynch; and Chuck Prince of, yes, Citigroup). When you are done, the case against greed seems overwhelming.

What’s wrong with all this is that Madrick doesn’t recognize the fundamental discontinuity between the aims of Reagan’s “revolution,” and the very different project those who came after — for a time they called it “the opportunity society.” Newt Gingrich is missing from his account; so is Bill Gates, tax-activist Grover Norquist, pollster Frank Luntz, political counselor Karl Rove, Gerald Cassidy (the subject of Kaiser’s book), economists-turned legislators Sen. Phil Gramm and Rep. Richard Armey; and the formidable tag-team of lobbyist Jack Abramoff and Congressman Tom DeLay. And, of course, the whole response to Obama is missing.

The events we call the Reagan Revolution were real enough. The platform with which Barry Goldwater was virtually laughed off the stage in 1964, came back to win under Reagan in 1980. It’s not Madrick’s imagination that, from 1964 on, powerful forces were working on public opinion in the United States. (An excellent companion to his book, incidentally, is Invisible Hands: The Making of the Conservative Movement from the New Deal to Reagan, by Kim Phillips-Fein, of New York University, a scorecard with a whole different line-up, including GE’s Lemuel Boulware; Leonard Read, of the Foundation for Economic Education; William Mullendore, of the US Chamber of Commerce; and attorney [and later Supreme Court Justice] Lewis Powell.) Nor is Madrick mistaken about the sense of panic engendered by the economic dislocations of the 1970s: inflation, OPEC, slowing productivity, a stagnant stock market, the rise of Japan and all that. Others, especially Kevin Phillips and Paul Krugman, have emphasized a role played by a Southern backlash against the Voting Rights Act of 1965

The problem is that Madrick’s analysis omits a number of other forces giving rise to a turn against government: the Beatles, for instance (see Rock around the Bloc: A History of Rock Music in the Soviet Union and Eastern Europe, 1954-1988, for instance, by Timothy Ryback); revulsion against Soviet communism after the Prague Spring of 1968 and Chinese communism after the Cultural Revolution; the anti-war movement in the United States; a distaste for the policy of détente, as personified Nixon and Henry Kissinger; a mistrust of privilege (Chris Welles, The Last Days of the Club: The Passing of the Old Wall Street Monopoly qnd the Rise of New Institutions; or Robert Christopher, Crashing the Gates: The De-Wasping of America’s Power Elite); and a growing enthusiasm for entrepreneurial zeal in the face of corporate administration (the over-turning of the reserve clause in Major League Baseball, for instance, which put superstar economics on the map; or the early years of the personal computer). Even state governors such as Carter and Michael S. Dukakis originally marched in ranks of zero-based budgeters. Liberty League hold-outs, Birch Society members and Ayn Rand enthusiasts were not the only people in the 1970s who believed that government had gone too far.

Nor does Madrick’s interpretation ascribe much role to learning and the growth of knowledge in the last fifty years, whether scientific and engineering (from mainframe computers to the Worldwide Web); industrial organization (from the Fortune 500 to entrepreneurial finance); economics (deregulation, mainly in the spirit of Ronald Coase, and collaborative governance); or simply demonstration effects (the successful entry of Japan and the economies of Singapore, Hong Kong, Taiwan and Korea into world trade). Toyota convinced more American consumers and Chinese technocrats of the power of entrepreneurs, and markets, than Ayn Rand ever did.

There are, of course, deeper accounts of the origin of what seems to be a right wing triumph. As it happens, I have been reading two of them this week: The Road from Mont Pelerin: The Making of the Neoliberal Thought Collective, edited by Philip Mirowski and Dieter Plehwe; and Building Chicago Economics: New Perspectives on the History of America’s Most Powerful Economics Program, edited by Robert Van Horn, Mirowski and Thomas Stapleford. These narratives, too, are highly selective. As much relevant information as they contain, they omit even more. They demonstrate mainly that determined forces on the Left are at work, too, as pertinacious as on the Right, and just as visceral.

So much, then, for my short history of intransigence. The perceptive reader will have recognized it as an exercise in self-control, an effort to contain my disgust at what the Tea Party has done to American democracy. I don’t believe for a moment that a certain among of self-righteous indignation among leaders of the Democratic Party a quarter-century ago excuses the zeal of a minority of the Republicans today – only that, in some degree, it helps explain it.

10 responses to “A Short History of Intransigence”

  1. With all due respect, Iran Contra was a series of deliberate criminal acts. You failed to mention William Casey (CIA) whose attitude was to skirt or flaunt the law deliberately if possible. I also remember that the entire corporate and Republican structure was determined to do whatever they wanted, unconstrained by law or custom and hide it as long as possible, treating it as cost of doing business – from whence they took the concept. They would avoid a Watergate at all costs, by whatever means, as the expense of anyone. If that meant killing or stealing, so be it. Any means to the ends, which including dominating the US for the long term. As always the Republicans were the instruments of the wealthy and corporations. Go back to Louis Powell’s letter of 1970 to the Chamber of Commerce and its members about the reassertion of power by wealth and business.

    I had a ringside seat in the Pentagon to a lot of the “adventures” that went on in direct violation of multiple treaties and laws. The Republicans were determined to get rid of what they thought of as the stain of Vietnam, a loss which was not ours to sustain. There were more shady, illegal and otherwise nefarious deals, backed by the explosion in spending on defense thanks to Reagan’s idiots. They simply put out the money and folks came and got it for whatever, no accountability. “Black programs” exploded and
    were run into the ground, until that became the way of doing business in the government. I retired early because I saw that Reagan was a fraud and was going to
    do the country in. He invoked fraudulent economic theories which still plague us today.

    Judge Welch was absolutely right. Many people should have gone to jail, including Cheney and Rumsfeld, and most certainly Oliver North and friends. Bush I was absolutely behind and involved in Iran-Contra, and again all necessary measures were taken, legal or not, to keep him out of it publicly.

    What has been consistent is warfare by the wealthy and corporations on working and middle class people, who the rich did not think should or could responsibly vote. They have finally won it appears. The current political state did not arise as friction between the parties. It was nurtured by massive amounts of money from the wealthy and the means they took to have their way with the tax payers. Their goals: (1) absolutely compliant workers, (2) uncomplaining voracious consumers and (3) political fealty to the wealthy upper classes. They have most of it, having purchased the executive, Congress and Supreme Court. Their blind pursuit of international wage arbitration is one of the most devastating things ongoing. It really turns out that, thanks to their logic, there is not just a “reserve army of labour” as Marx put it, but more appropriately, a surplus in population – something which has been latent but is now surfacing.

    The massive amounts of money these people have are polluting everything, particularly government as they attempt to privatize everything to have relatively safe places to invest (education, defense, lawmaking, etc.). As Warren Buffett said, “We have class warfare and my side is winning.” Another item in this disaster if the financialization of the US, moving FIRE from 7% of the GDP to above 40% with the banks and the Goldman Sachs types exacting rents from the middle and lower classes, accounting for the surges in profits and depression in wages – all quite intentional.

    I think your history is very one-sided in this matter and think you ought to rethink your
    story in terms of the corporate takeover of the entire US, county by county, state by
    state and countrywide—over 50 years. Where perchance is the rule of law when
    the major banks who caused this latest economic catastrophe avoid any hint of going to
    jail, bailed out by taxpayers, at whom they then thumb their noses acting as if they are
    doing something grand and profitable – they are – stealing from lower classes-affecting
    wealth transfer to the rich. And where are the prosecutions of Bush era crimes, some
    so monumental that it takes your breath away. And, yes, the perpetrators had
    learned their crafts and concealments under Reagan and Bush, contempt for any and all laws.

    Look at ALEC (American Legislative Exchange Council) and its impact on state
    legislative races and legislation over the past decade and much further back. It was
    a long term project of patient, extreme wealth, designed to disenfranchise the middle
    and lower classes. Interestingly enough, ALEC (see Wikipedia/SourceWatch) was
    founded in 1973 by that arch villain, Paul Weyrich, and it has been funded well by the Kochs, Bradleys, Waltons, DeVos’, Simons’, Scaifes and a myriad of lesser wealthy
    people and their non-profit foundations. We ought also mention the impact on the public space by the so-called think tanks on the right and the purchased academic chairs where they installed right wing idiots (I refuse to use the term academics). The Heritage Foundation is up to their throats in all this. To cap it off, Murdoch came in and made it a perfect storm with FAUX News for the hoi polloi and WSJ for the rich and
    corporations—both creating lies and propaganda for some years now and convincing
    a lot of people of things which are NOT true. These elements all set up mutually supporting and reinforcing echo chambers which have hammered any non-rightwing players and produced a chamber of rightwing idiots as congressmen. The history of
    Roger Ailes is exemplary, he developed the idea for a FAUX prototype for Richard Nixon and finally found a heavy duty patron in Murdoch; Nixon’s revenge on the people of the US.

    The gap is not left-right, it is up and down, with a great number of the middle and lower classes having been convinced to work hard and entertain ideas which are absolutely against their best interests. These people have drank the Koolaid. The Tea Party folks were developed and sponsored (Americans for Prosperity, Freedomworks, etc.) by the Kochs and their billionaire friends on the right. They have probably pumped some 200 to 500 million into these projects, but their return on investment has been 200 times in terms of subsidies and tax breaks. And to think their father Fred was a cofounder of the Birch Society. These old rightwingers are still in there (Shlafly comes to mind, and
    Weyrich just passed).

    This is why I challenge your paradigm – it does not account for the billions spent in this country to influence outcomes, and these people get what they want or step on people regularly. Fascism is close. Remember “It Can’t Happen Here”, and the plot to topple FDR using Smedley Butler? Sure you do. Well, the gang in there not is smarter, meaner, cleverer and more clearly focused than that lot. I do not predict good things.

  2. My take is it started after WW2 when the R’s decided to use the anti-commie theme with a fifth column as the scare tactic to regain power. There was a commie under every bed. It worked. And here we are.
    Maybe I think this way cause I am older than you and remember the era.
    PS: Now there is a Muslim under every bed.

  3. My take on Iran-Contra was the same as hapa. It was certainly not a contrived or hysterical event. It was the exposing of systematic criminal activity by members of the government.

    And hapa’s analysis overall is much more to the point than your own. The right-left meme is part of ‘the show.’

  4. I agree with the comment above that you have misread the Iran-Contra Affair. You seem to imply that it was the fault of Democrats that a successful cover-up occurred. Why not fault the Democrats for “turning on” Nixon after Watergate?

    I look forward to reading Madrick’s book, on your recommendation. But I think the proximate cause of the mess we find ourself in was the election on Ronald Reagan on a “government is the problem” platform. The working out of that philosophy has come close to undermining the achievements of almost a century of social welfare legislation.

    The very worst of Reaganism was avoided largely because he had to compromise with Democratic Congresses. But the full evil emerged after Republicans (when in the presidency), cut taxes, curtailed the functions of government and turned laws and regulations to benefit corporate predation. When out of the presidency, they complain that the government they have undermined is wasteful and inefficient.

    Maybe I’m not bi-partisan enough in assigning blame? The Democratic Party learned quickly enough, and became clients of a greatly enlarged financial sector. Accepting the Republican mantra of “no wealth redistribution” and the oxymoron of “growth through low taxes and low deficits,” Democrats have placed the New Deal heritage in its present jeopardy.

    “Now we are engaged in a great civil war, testing…etc. etc.”

  5. Cap Weinberger was not convicted of anything. He as pardoned following his indictment.

  6. Your “TeaParty” column compares at great length the apples of the Tea Party resistance to Federal over-spending with the oranges of HUAC and Joe McCarthy. One notes also the grteat length of the exegesis of the Iran-Contra affair, and the general slant of both column and comments will, I am sure, gladden the hearts of your Democrat-Liberal-Ptogressive readers.

    I wonder if the Tea Party people thought their constituents elected them to make a deal to raise the debt-limit (is that not the same as approving additional debt? or did I screw up in English Class) in exchange for a promise (from entrenched politicians!!) to cut spending in the future – and all founded on our peculiar federal base-based accounting system, by which any failure to increase is a “cut”.

    I have been a fan of “Economic Principals” and of Mr Warsh for years, because of economics, not the politics. I relish the left-of-center slant of most of the content, but am disturbed by the “extreme” (yes! THAT word) content of the current column and commentary.

  7. Two further factors that have increased labor/management friction:

    The introduction of containerized shipping and the interstate highway system have allowed many industrial jobs to be done outside of the relatively central areas of the traditional “rust belt” cities. This brought a much large fraction of the US population into competition for industrial jobs, which enabled companies to lower industrial wages. (See Marc Levinson’s “The Box”.)

    The invention of the junk bond by Michael Milliken enabled shareholders of companies to seize in practice the control that they had in theory. This changed the power dynamic of large companies from “Management and Labor vs. Shareholders” into “Management and Shareholders vs. Labor”, because it was now possible for the shareholders to fire the top management.

Leave a Reply

Your email address will not be published. Required fields are marked *