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.