'American Amnesia' describes the forgotten success of the mid-20th C. American economy. Lance Compa reviews.
In American Amnesia, the political scientists Jacob Hacker and Paul Pierson mount the barricades crying: “What Do We Want?”—“A Mixed Economy!”—“When Do We Want It?”—“Now!”
It is hard to get the juices flowing for a mixed economy, compared with “A Political Revolution!” or “Build That Wall!” But Hacker and Pierson have written a compelling argument for restoring a vital role for government in economic and social policy. They start cleverly by evoking Adam Smith, an eloquent advocate of government intervention in the market, notwithstanding his “invisible hand” metaphor. Taxes are “a badge of liberty,” Smith said. And “regulation in favor of the workmen is always just and equitable,” while unregulated business “ends in a conspiracy against the public.” American Amnesia is an extended argument for reviving and applying Smith’s insights.
The authors recall mid-20th century decades, when strong government, business and labor institutions underpinned steady growth and widespread prosperity. But starting in the 1980s, two of those legs crumpled under an onslaught of antigovernment, antiunion ideology that left business standing supreme. It was led by an alliance of right-wing think tankers and media noisemakers, frat-boy politicians who read Atlas Shrugged in college and arrested their intellectual development then and there, and a new generation of “malefactors of great wealth” taking their revenge on Franklin Roosevelt (and Theodore, who coined the epithet).
Rather than Roosevelt and his successors, though, the heroes of Hacker and Pierson’s account are a mix of long forgotten and still remembered post-New Deal figures from the political middle: Vannevar Bush, an architect of the National Science Foundation in the late 1940s; Eric Johnston, a head of the Chamber of Commerce in the 1940s; George Romney, a wealthy industrialist-turned-Michigan governor; the mid-century corporate heads Paul Hoffman of Studebaker and Marion Folsom of Kodak; Dwight Eisenhower; and Richard Nixon.
These were mostly Republican believers in free enterprise who also accepted a strong supporting and coordinating role for government and a role for unions, too. Hoffman said, “The personal dignity of the workman certainly encompasses the privilege of belonging to a union and dealing collectively with his employer”; Johnston said, “Collective bargaining is an established and useful reality”; Eisenhower said, “Freedom expresses itself in the right of workers to strike”; Nixon said, “Collective bargaining must be strong and effective.”
Hacker and Pierson say the accomplishments of the mixed economy are hidden in plain sight: public health measures and a quantum leap in life expectancy; Social Security, Medicare and other social protections; cleaner water and air; mass education and scientific breakthroughs funded by government; hydroelectric and solar power; interstate highways and other public goods thankfully still with us. All required mobilizing, organizing, coordinating, financing and other powers of government to promote public welfare over private greed.
In contrast with their heroes, Hacker and Pierson present villains who launched a concerted “forced forgetting” campaign against the achievements of the mixed economy and brought us income inequality, infrastructure decay, consumer victimization, political gridlock, even a decline in life expectancy for working class men. The perps include banking and investment magnates who won Wall Street deregulation and gave us the 2008 financial meltdown, a hyper-aggressive business lobby that replaced C.E.O. statesmen of the past, a right-wing noisemaking machine that cowed the rest of the media into a phony equivalence stance that offers the center right and the far right as competing poles, a shadowy network of tycoon-financed think tanks and phony grassroots groups, and high government officials from both Republican and Democratic administrations who had the means but not the will to confront their erstwhile and future colleagues in corporate and financial elites.
The authors are not shy about naming names. Think Citigroup’s Sanford Weill and Blackstone’s Stephen Schwarzman; Chamber of Commerce boss Thomas Donohue, Big Pharma’s John Castellani and Big Oil’s Philip Cooney; Glenn Beck and Fox News; the Koch brothers’ Freedom Works, Freedom Partners and Americans for Prosperity; Clinton administration veterans Robert Rubin and Lawrence Summers.
Peter Peterson gets the authors’ special attention for his career arc. Peterson moved from being an expelled M.I.T. student to serving as an acolyte to Milton Friedman at the University of Chicago; from being Bell & Howell’s C.E.O. to Richard Nixon’s commerce secretary; from cashing out at Lehman Brothers (before its financial house of cards collapsed and the firm disintegrated) to the private equity Blackstone group. When Blackstone went public in 2007, Peterson cashed out again, this time for billions, not just tens of millions. Along with former Republican Senator Alan Simpson and the Clinton advisor Erskine Bowles, Peterson used his money to create multiple institutes and think tanks dedicated to sowing panic about federal deficits and to shrinking government—mainly by cutting Social Security and other bulwarks against disability and poverty.
Hacker and Pierson give concrete details and examples of the forced-forgetting, deliberately antigovernment offensive that has led to what they call “blanket hostility to the core policies and practices of the mixed economy that made America great.” Wait a minute. Are they saying, “Make America Great Again!”?
Yes they are, proposing policy measures that include campaign finance reform, restoring workers’ bargaining power in labor unions, enhancing democracy by protecting the right to vote and beating back efforts at voter suppression, launching large-scale infrastructure rebuilding projects, completing the move toward universal health insurance, tackling climate change and other social missions that depend on strong government alongside strong private institutions.
Hacker and Pierson have their eyes open. They recognize that their avatars of a mixed economy look like “dinosaur-like creatures” whose achievements are now forgotten—the “amnesia” of the title. The examples and lessons in their book are an attempt to recover the memory of robust government action meeting real human needs.
Unfortunately for them—like everyone else who published books on policy and politics before the 2016 presidential campaign—Hacker and Pierson now have to account for Donald J. Trump’s putative takeover of the Republican Party. The party’s antigovernment, antimixed-economy ideologues have lost control and must now contend with Trump’s akimbo policy pitches—tear up trade agreements, restore tariffs, punish companies who invest abroad, build a 2,000-mile wall, detain and deport 11 million people. This is government intervention with a vengeance.
The 2016 Democratic Party standard-bearer and congressional candidates can learn much from Hacker and Pierson’s book. But “Mixed Economy Now!” is not a winning campaign slogan. Candidates will have to combine American Amnesia’s policy prescriptions with a broader call to Americans’ better angels. Otherwise, Hacker and Pierson’s next book might well be titled American Dementia.
This article also appeared in print, under the headline “The Better Deal,” in the October 10, 2016, issue.
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