Jim Henley really knows how to look on the bright side:
I’ve become a pessimist. I think our future is Argentinian: a nation’s elites can have very nice lives for themselves if the commonality is financially secure and healthy, but history shows that a nation’s elites can have very nice lives for themselves even if most people live crabbed, fretful existences. You just need more security guards or, if necessary, paramilitaries. Since the financial crisis of last year, we’ve seen that the FIRE sector will work overtime to redistribute wealth to itself while working overtime to keep from redistributing wealth elsewhere. I think that with the normalization of the filibuster in the Senate, we’ve just about completed a revolution-within-the-form that is a much bigger deal than Barack Obama’s personal failings. The government works perfectly well at ensuring the lifestyles of defense contractors and investment bankers. That is its purpose. America may have one more good bubble in it. Or we may go straight to villas and bodyguards for the comely daughters.
The fatalist in my finds this story appealing, but ultimately I don’t think it’s right. To be sure, the insularity of the American elite, and its relative imperviousness to ordinary democratic processes, is a serious problem. And it has certainly been a growing problem over the last 10 or 20 years. But I think if we take a longer view, the problems we’re facing today just aren’t out of line with problems faced by previous generations.
Consider, for example, the 1960s. At the beginning of the decade, the South was still in the grips of an entrenched southern power structure that was fighting tooth and nail to preserve Jim Crow. The Civil Rights Act was a major accomplishment, but by the late 1960s riots and assassinations made it seem like the future might hold chaos and bloodshed rather than racial harmony.
The Vietnam war was much deadlier than either Iraq or Afghanistan. Thanks to conscription, the military was able to kill tens of thousands of kids, rather than just thousands. By the end of the 1960s, there was little reason to believe the war would end any time soon.
By the late 1960s, the economy was starting to show signs of trouble too. Inflation was edging upwards and the top marginal tax rate was 77 percent. America’s transportation and communications industries had constructed cozy legal monopolies that allowed them to keep prices up and innovation down. The American auto industry was a cozy cartel not yet facing serious competition.
And let’s not forget that the 1960s were the high-water mark of J. Edgar Hoover’s FBI, which spied on and harassed thousands of innocent people regarded as threats to Hoover or his political allies. The red scare of the 1950s was still relatively fresh in peoples’ minds, and fear of communism were used to justify repeated violations of peoples’ rights.
I think someone standing in August 1969 and looking at the coming decade would have had reason to be very pessimistic. Then the 1970s went better than anyone could have expected, at least from the perspective of making governing elites more accountable:
- Jim Crow was dismantled, and shifting public attitudes ensured it would never come back.
- The continued fiasco in Vietnam turned America against the war and eventually forced American evacuation. As a bonus, America abolished the draft, ensuring that future unnecessary wars would kill far fewer Americans.
- Watergate shattered Americans’ confidence in their government, prompting the Church Committee, which exposed the abuses of civil liberties from earlier decades. Congress passed the Foreign Intelligence Surveillance Act, strengthened the Freedom of Information Act, and laid the foundations for a (relatively) accountable government over the subsequent quarter century.
- The academic critique of America’s transportation and communications cartels got noticed by policymakers, who deregulated the trucking, airline, and telephone industries, with dramatic effects on the American economy. Japanese competition forced Detroit to start making better cars.
- Pres. Carter appointed Paul Volcker as Fed Chairman, who successfully brought inflation under control by the early 1980s.
I don’t think these were isolated developments. I think four decades of elite arrogance caused the government to finally overstep its authority so egregiously (in the form of Vietnam and Watergate) that it created a backlash that made broad, serious reforms possible.
I don’t think things are as bad today as they were in 1969. Our pointless wars aren’t killing tens of thousands of Americans. We don’t have race riots on our streets. We don’t yet have serious inflation. And as far as we know, the NSA is abusing its power less than the FBI did 40 years ago (although we may learn otherwise at some point). And if the government does continue abusing its power, I think it’s only a matter of time before there’s a Watergate-style screw-up followed by a Carter/Reagan-esque backlash.
Great analysis. You almost sound happy and optimistic!
I appreciate your analysis and perspective, interesting points. For me the primary driver of my pessimism is that our Federal government (and State and local to a lesser extent) is growing more and more massive and that ever-growing unelected bureaucracy is enforcing an ever-growing set of Federal laws. Even though the wars and scandals are cyclical, the behemoth is intruding into more and more aspects of our lives and is armed with more and more manpower. Size of the Federal government seems to primarily head in one direction and is not cyclical. That’s my concern.
So the case for optimism is that we’re heading for another Watergate/Veitnam?
With all due respect Tim, the problem with your analysis is that it’s not really a response to Henley, whose argument it about the way our economy works now for the vast majority of citizens. You do mention market innovation and low inflation, but Henley is talking about economic oligarchy – an oligarchy which seems to be largely immune to practical political pressure, even after catastrophic failure (high inflation is no more scary than possible deflation – in fact, some inflation helps middle class people. Civil Rights and Vietnam, while the latter was expensive, were not economic issues solved. You can end all foreign wars, legalize gay marriage, and achieve a racially equitable culture, but what good does it do if you still have the vast bulk of Americans with a low, and ultimately, perhaps, very low, standard of living? That’s the problem.
I’d also assert that the US was in much better fiscal condition in 1969 than it is now. We are fortunate to have low long term interest rates, but that’s hardly a sturdy foundation on which to rely forever.
Argentina was pretty much always oligarchical in its set up, while we in the States gave land away to settle the west, and had a progressive income tax, inheritance tax, GI bill, etc. What Henley is worried about I have also worried about – that we are changing our tune.
I’m sorry, but during the Bush Administration the following crimes and/or complete government fuck-ups happened:
-Incompetently executed Iraq War based on lies and distrotions to begin with
-Neglect of war against Taliban/al-Qaeda in Afghanistan due to focus on above
-Warrantless wiretapping on a vast scale
-Abu Ghraib and widespread use of torture by our government
-Firing of U.S. Attorneys for political reasons
-Economic strategy based on the invincibility of a ridiculous housing bubble
-Hideous handling of Hurricane Katrina from start to finish
Then at the end:
-Near total collapse of world financial system and new Great Depression, which thankfully seems to have been averted
But despite all of that, we need another Vietnam/Watergate to wake us up and change the country? I don’t really get it. We already got a redux of Vietnam/Watergate and the Great Depression in one Administration. Granted, we were able to pull ourselves back from the edge, but can we not learn any lessons from this?
JB-
“Don’t believe them, don’t fear them, don’t ask anything of them.” My favorite Solzhenitsyn quote. I think the bottom-up answer for the people worrying that politics still isn’t making anyone’s life any better is to look at China. There is optimism, there is growth, there is a positive sense of the future — and the country literally run by a mafia that deeply reveres the philosophy of Mao Zedong. Governments can and will do whatever helps them advance the interests of the people controlling them — it is a vector of human social organization that is at least as persistent and predictable as human sexuality. Certain people just have to be on stage and feel important — you can find them in every elementary school. 1% of them become politicians, 2% of them become investment bankers, .0005% of them get shows on MSNBC or Fox. They are just there in the background, always obnoxious, always wrong, always coming up with ingenious scams and rackets. These people exist in Argentina, and they are the politicians and public-private partnership flim-flam artists there too. It is not so clear to me how much these people matter (pessimism is believing they matter a lot, optimism the reverse.) In any case they matter vanishingly little to an individual life as compared to, say, the decision about what to major in that you make at 19. I think to the extent that countries do decline it is much deeper, complex, and mysterious than electing bad politicians — and also probably has a lot of material and technological factors. If I had the sense that the US is in decline (which it is relatively, and in pockets absolutely), I would say the cause is in the erosion of respect for learning, the widespread cultural desire to emulate famous people who make money without working, and a general cultural replacement of day-to-day reasoning and problem-solving into rule-making.
HTownTejas,
Government spending a percentage of GDP has been basically constant–fluctuating between 18 and 22 percent–for the last half century. The stimulus package will likely create a spike for 2009-10, but there’s no evidence of an upward long-term trend.
jonnybutter
I agree the analogy isn’t precise, but I view the deregulation of the 1970s was an example of economic elites being taken to the cleaners by a popular backlash. Also, I think part of what’s going on is that public opinion moves fairly slowly. The dominance of Washington by Wall Street has only become really obvious in the last year or so. I think it’ll take a few more election cycles before a politician comes along who can make it a really salient issue.
Robbie,
I think part of what’s going on is that in 2008 voters concluded (not unreasonably) that the solution to elect a Democrat to the White House and give the Democrats larger majorities in the House and Senate. If Obama and Dems in Congress screw it up, I think the next backlash is likely to be less partisan and more broadly anti-incumbent. This is at least roughly parallel to the situation of the 1960s: LBJ was unpopular so they elected Richard Nixon. When he screwed up, that opened the door to a decade of strong anti-incumbent politics that was directed against elites in both parties.
1, that’s really high considering the meager powers our Federal Government is supposed to have, and 2, given their Constitutional constraints I’m not sure that government spending should be linear tracking GDP growth. At 18-22% of GDP we can afford, and are getting, an aweful lot of tyranny.
I’m not saying I like it at 22 percent. I’m just pointing out that this isn’t evidence we’re headed toward a dystopian future where the government consumes an ever-larger share of the economy.
Fair enough about the spending. I’m pretty pessimistic though because more and more of my daily activities are regulated by the government at some level.
Increasingly I have fewer choices in what I can do with my property, how I earn a living, how I live, etc. I’m increasingly monitored online, while driving, while walking through major metropolitan cities. My financial transactions are monitored, my travel to foreign cities is limited (Cuba), my biological information is increasingly logged (drivers license requires fingerprints).
I’m increasingly violating laws I’m not even aware of. Even the definition of criminal activity has changed from causing-and-intending-to-cause-harm to violating an administrative rule even if not aware of it and even if nobody was harmed. Law enforcement is increasingly militarized, and even the military has been deployed to to the U.S..
I’m a little pessimistic because empires seem to have cycles and our choices, historically speaking, are live in the dystopia or fix it with a revolution. I’ll take revolution, but that still sucks.
America’s endless wars of the 21’st century are indeed killing American kids in the hundreds per year rather than the thousands as in the 1960’s. But another part of the story is how many are killed in total. Our military killed at a ratio of roughly 50:1 in the Vietnam War; in the first Iraq war the ratio was perhaps 1,500:1. The ratio is probably higher still in current conflicts.
In a war for existence waged by a capable and ruthless enemy against America, such kill ratios will be well appreciated. When the conflict is morally ambiguous, the enormity of our responsibility to use the American military responsibly is evident. I believe we have failed and are continuing to fail this test in the Bush and Obama administrations.
The other cause for concern is that the massive fraud perpetrated by realtors, appraisers, mortgage originators, rating agencies, banks, and investment houses in the run-up to the housing bubble and its subsequent collapse is going largely un-investigated and unpunished. It is more expedient to re-inflate assets, preserve the wealth of bondholders and finance workers, and re-capitalize banks than to identify and correct the excesses that caused the financial melt-down.
I lived through the Watergate crisis as a teenager and remember well the almost daily exposes and outrage at the excesses of the Nixon administration. There seems to be little sense of moral outrage in 2009, even when we spy on our own people, torture captives in contravention to international law, and steal shamelessly from each other.
It seems nothing fazes us these days, which is fine when the stakes are low. But when the issues are of major importance, a higher level of thoughtful engagement is needed from the American people, starting with but not ending at our representatives in Government.
Deregulating telecoms was a GOOD thing? Unreal.
MNPundit, there was no such thing as “the telecoms.” There was a single company, AT&T, which had a monopoly in the telecommunications market. And yes, I think the deregulations that allowed firms like MCI to enter the market were a good thing.
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A “Watergate-style screwup?” BWAHAHWA Watergate was much ado about nothing – some morons breaking into Democrat campaign headquarters to try and get campaign information. OMG OMG OMG!!!
And “the elites” of America? What elites? Millionaires and billionaires? Please. It’s great that America is such a free nation 65% of all new fortunes are self-made. Go get a job and work – maybe you’ll be a millionaire (with this attitude probably not) maybe not. But we don’t have an “elite” class in the United States.