Top Down, Bottom Up

I have continued thinking about the Reagan presidency, by mulling over origins of “the Turn.” The Turn is the most satisfying term I know for the global movement that, beginning in the 1970s, affected about equally the Second World, the Third, and the First.  Everyday usage in the German-speaking lands contributed die Wende to describe the astonishing series of events during the 1980s, from demonstrations in Leipzig to the fall of the Berlin Wall to the entry into the North Atlantic Treaty Organization of a reunified Germany, in 1991. The term Turn suits equally well developments about the same time that occurred around the world.

I have in mind everything from China’s entry into the global market system, beginning after 1978, to the collapse of the Soviet union in 1991; the political and industrial transformations that swept the US, Britain, and Europe, starting in the late ’70s; similar sea-changes beginning even earlier in nations of the former Iberian empires and throughout East and South Asia; anti-communism in the Roman Catholic Church under Pope John Paul II; and the end of apartheid in South Africa.

When someone says, as does Jacob Weisberg in his little biography Ronald Reagan (Times Books, 2016) that “today Reagan stands as the second most important president of the twentieth century, following Franklin D. Roosevelt,” it is Reagan’s leadership during the Turn that he has in mind.

Like his early hero…, Reagan became president at a moment when the country’s future looked bleak. He sought to revive morale through both a set of policies and reassertion of the nation’s values. He led the United States to victory in a global conflict leaving it… victor in the battle of ideas.

This much, I think, is intuitively obvious to anyone who paid attention to what was happening in those years. No less a figure than President Barack Obama has called Reagan a “transformational president.” But why is there so little consensus about what he did?  Some can be ascribed to simple obstinacy.  Roosevelt-hating persisted in some quarters of the US into the ’60s. But the fact is that there still exists no broad shared understanding of what Reagan did – and didn’t do.

Here’s an example of the problem:  Weisberg writes, “Where Roosevelt tried to solve the country’s problems through decisive federal action.  Reagan tried to solve them by removing government. Roosevelt gave us the era of the New Deal; Reagan ended it.” As an independent-minded Democrat, I think this is demonstrably misleading.  Reagan repaired the Social Security program and left Medicare untouched. He beefed up US armed forces and even went beyond the “containment” foreign policy of every president from Truman in hopes of reversing Soviet expansion and promoting change within its empire.

True, he set out to run the rest of the engines of US government without changing the oil.  His administration borrowed enormous sums of money, giving “conservative” a new meaning in the process (“starve the beast”) He also successfully battled inflation, restoring stability to asset markets; cut tax rates from war-time highs to reasonable levels; and accelerated the de-regulation that had begun under Presidents Nixon, Ford and Carter.

But he left basically intact the architecture that emerged from the New Deal, a policy that continued after 1988 with President George H. W. Bush. It was a coalition that emerged within the Republican Party after 1978 that sought to reverse things.  Led, more often than not by Newt Gingrich this faction dominated the presidency of George W. Bush (the first six years, at least); surged in the Tea Party mid-term election of 2010; and, six years later, secured the Republican Party nomination for Donald Trump.

My sense is that the Reagan presidency is misunderstood because so little good journalism and history was written about it at the time and after. This is what I had in mind last week when I compared the influence in the present day of Robert L. Bartley, for thirty years the editor of the editorial page of The Wall Street Journal, (1972 to 2002), to that of newspaper columnist  (Today and Tomorrow) Walter Lippmann in the years between 1931-1967.

A Turn of a different sort swept the industrial democracies of the West, starting with the New Deal in the US during the Great Depression, taking hold in Europe and Japan in the years after the convulsion of World War II.  That Turn curved in the opposite direction, empowering governments and assigning them vast new tasks, not to plan but to manage; not to eliminate competition but to create safety nets  This was the movement that gave rise to the familiar taxonomy of First, Second, and Third Worlds – industrial democracies, communist economies, and post-colonial nations. How this broad consensus was achieved was described to good effect by Walter Isaacson and Evan Thomas in The Wise Men: Six Friends and the World They Made (Simon and Schuster, 1986), better, in Postwar: A History of Europe since 1945 (Penguin, 2005), by Tony Judt; and perhaps best, by Jeffrey Frieden, in Global Capitalism: Its Fall and Rise in the Twentieth Century (Norton, 2006).

What got me going was Walter Lippmann: Public Economist (Harvard, 2015), by Craufurd Goodwin. It turns out that Lippmann, more than any other journalist, introduced the Keynesian Revolution in the economics profession to readers in the US (just as earlier he had introduced Sigmund Freud). It was Lippmann, too, who in the second Roosevelt term turned away sharply from the syndicalist tendencies of the New Deal, especially the National Recovery Administration. With the publication of The Good Society, in 1937, he laid the intellectual groundwork for the rhetoric of the “free enterprise system” for which Friedrich Hayek and Milton Friedman eventually became widely-read intellectuals (and, in the case of Freidman and his economist wife, Rose Director Friedman, talking heads).

What do we know about the broadly-defined Reagan revolution? There are various interesting first-person accounts by participants:  Reagan’s own memoir, An American Life and an authorized biography, Dutch: A Memoir of Ronald Reagan, by Edmund Morris; accounts by Treasury Secretaries William Simon, Donald Regan and Nicholas Brady; Secretaries of State George Shultz and James Baker; Central Intelligence Agency Director Robert Gates; and speechwriter Peggy Noonan. But, until recently, what we have thought about Reagan’s “supply side” economic policy has been dominated by books by Jude Wanniski (The Way the World Works, Gateway, 1978) and Bartley himself (The Seven Fat Years: And How to Do It Again, Free Press, 1992).  Both ascribe the fundamental logic of the Reagan’s economic initiatives to the authors’ own advocacy of policies devised Columbia University economist Robert Mundell (later a Nobel laureate for his work on international currencies) and his student Arthur Laffer.

A few weeks ago, a friend alerted me to the existence of a The Econoclasts: The Rebels Who Sparked the Supply-Side Revolution and Restored American Prosperity (ISI Books, 2009) by Brian Domitrovic, of Sam Houston State University. It adds little to the journalistic accounts, — and almost nothing about Mundell’s turbulent career in the economics profession – but at least it’s by a professional historian. Meanwhile, a series of dissenting books by former Reagan adviser Bruce Bartlett, culminating in The New American Economy: The Failure of Reaganomics and a New Way Forward (St. Martin’s, 2009), have been all but run off the road by the think-tanks that banished Bartlett to a home office.

Was there something that could be described as a crisis in the 70s, leading to the global Turn to which Ronald Reagan could be said to be responding? I came of age in the ’70s, and I certainly got the feeling there was one, if nothing more than a crisis of confidence. I read Friedman and Hayek and the philosopher Robert Nozick (author the National Book Award-winning Anarchy, State, and Utopia, Basic, 1974), and Forbes, where senior editor E. Lawrence Minard wrote the cover stories that introduced Joseph Schumpeter and Friedrich Hayek to a new generation of readers.

In due course I found my way to still another generation of economists who were changing the way things were done: to Martin Feldstein and Robert Willig, Robert Lucas and Thomas Sargent, James Buchanan and Gordon Tullock, Michael Jensen and William Meckling, Paul Milgrom and Charles Plott; Douglas Diamond and Bengt Holmstrm, Robert Barro and Paul Romer, among others. Mundell and the monetary approach to the balance of payments certainly played a part in this. But the version that historian Domitrovic relates in Econoclasts is unlikely to persuade new readers. Better to start with Age of Fracture (Harvard, 2012), by historian Daniel T. Rodgers, of Princeton University, a particularly trenchant account of the Turn by an author who has little sympathy for it.

We need more books about the ’70s. I keep on my desk a thick little paperback called The Strenuous Decade: A Social and Intellectual Record of the 1930s, edited by Daniel Aaron and Robert Bendiner (Anchor, 1970).  It is a cladistic history, a history from the bottom up (or, if you prefer, from the ancestor down).  Until we get more of these about the ’70s and ’80s, we will be forced to rely on top-down narrative like Weisberg’s to make our points and find our problems (“the second most important president of the twentieth century). It’s a start, but top-five lists are no substitute for narrative and interpretation.

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