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Friday, April 08, 2011

The End of an Era?

The government shutdown is in the news, but I doubt very much that it will look extremely significant thirty years from now. Yes, the Democrats may successfully save funding for Planned Parenthood, but they have already agreed to cuts big enough to do a great deal of harm to important parts of the federal government without making any significant impact upon the deficit. We all remember that Bill Clinton prevailed politically the last time we had a shutdown, but I also remember that he had reacted to the Republican victory in 1994 by announcing that the era of big government was over. Now it looks to me as if an era of American civilization--though not, perhaps, western civilization--that has lasted about a century is coming to an end.

Quite simply, that was the era in which Americans believed that they could, through their government, apply reason and science to improve their lives and insure a certain degree of justice within the framework of a modern, capitalist economy. Capitalism's extraordinary capacity to generate inequality had become apparent before the First World War, and two younger generations--the Progressives (born about 1842-62) and the Missionaries (about 1863-1884) had reacted with various reform movements. The accidental accession of Theodore Roosevelt in 1901 brought these ideas into the White House, and Roosevelt talked specifically about using the power of the executive branch and the Sherman Anti-Trust Act to curb monopoly power and give the American people a "square deal." He did not get far, but the new generation got its chance in 1932 as a result of the Depression--and as the British say, they took it. The New Deal aimed specifically at regulating the excesses of the financial system, regulating agricultural and industrial markets, insuring the rights of labor, increasing the tax burden on the wealthy even in the midst of the depression, putting the unemployed to work, and providing social security in old age. While far from a complete success, it won the support of well over half the American people and enshrined a new way of thinking. The Nomadic Lost generation (b. about 1885-1904) was not won over to the New Deal, but some of its more liberal members played key roles in it nonetheless. The sacrifice of hundreds of thousands of the GI generation in the Second World War created a new sense of government responsibility to the people, and even the Lost collaborated in the construction of a new postwar society. By the time the Republicans regained the White House in 1953 they had no real desire to undo the achievements of the last twenty years.

"When I was a young man," the great Missionary W. E. B. Dubois (1868-1963) wrote in the late 1930s, "the foundations of present culture were laid, the way was charted, the progress toward certain great goals was undoubted and inevitable. There was room for argument concerning details and methods and possible detours in the onsweep of civilization, but the fundamental facts were clear, unquestioned and unquestionable." So it was too in my youth, and especially in the first half the 1960s, when JFK and LBJ tried to extend the New Deal tradition still further. Yet as so happens, the apotheosis of that particular civilization also marked the beginning of the end. The Vietnam War, that awful product of GI hubris, accelerated the process, but perhaps it was inevitable in any case. In 2000, at the end of my book American Tragedy, I drew on Strauss and Howe and predicted some kind of crisis and civic rebirth. I was right about the former; it seems now I was wrong about the latter, and I can see why.

The United States has in many ways been on a downward path since the age of Reagan. Reagan introduced two critical new trends: the gradual erosion of our progressive tax code (Reagan did not, in fact cut taxes--he shifted them to the middle and lower classes), and the decline of union rights and the de-industrialization of America. But Reagan was a GI, as were the leaders of the Congress in the 1980s, and the process was not allowed to go that far. The deregulation of the S & L industry in the late 1980s was catastrophic, but then, at least, the perpetrators faced punishment. 5000 industry insiders drew jail time for S & L fraud; not one major player has been convicted of anything for the crash of 2007. That is because in the interim new generations have come to the fore, with completely new principles.

The Silent generation (born 1925-42) got the deregulatory ball rolling. Alan Greenspan, Robert Rubin, and many of the other key players in the process were Silents. But a Boomer President and an increasingly Boomer Republican Congress repealed the Glass-Steagall Act. The process accelerated under George W. Bush. By cutting taxes and embarking upon two very long wars at the same time, Bush created a new permanent federal deficit even in good times. That has turned out to be a critical achievement for him and those on his side of the aisle, because it has made it absolutely impossible for the federal government to respond adequately to the economic crisis that deregulation brought about.

To Prophet generations like the Boomers, Strauss and Howe argued, falls the duty of giving society a new direction when the old order collapsed. We have failed that test, and our day in power is just about over, even though the youngest Boomers have only just turned 50. Why? Conservative Boomers, like conservatives of every generation except perhaps the GIs, have been devotees of the free market, which is really another form of social Darwinism. The most transformational Boomer President was George W. Bush, who crippled the finances of the federal government and started an endless involvement in the Middle East. But what about liberal Boomers?

Forty years ago our parents viewed liberal Boomers protesting the Vietnam War as spoiled children. It turns out that they were right, although not perhaps in exactly the way we believed. Liberal Boomers--including the few liberal politicians of any importance like Bill Clinton--have pretty much abandoned the New Deal tradition. They have stood by or collaborated in the de-industrialization of America and the deregulation of the financial system. Instead, they have focused on the rights of minorities, women, and gays. Those were important issues, but they stood out in the 1960s and 1970s largely because other at least equally important economic issues had been solved by our parents. We took those achievements for granted and assumed they would go on forever. They would not. We have secured minorities' equal right to participate--but in what?

Universities were a big part of the New Deal coalition, and provided a lot of the ideas that went into social and economic reform from the 1930s through the 1960s. The economists who taught me as a freshman were focused above all on keeping employment high, the legacy of their youth. They gave way to free-marketeers who almost totally dominate the economics profession now--and who, as the film Inside Job showed, are rewarded with six-figure consulting contracts. Many historians also focused upon the role of the state in society and the economy. Now those topics are virtually ignored by the faculty of our leading colleges and universities.

And that is why, it seems to me, today, in the midst of an economic, budgetary and political crisis, there is really no counterpoint to Republicans' continuing efforts to destroy the government. Roosevelt seized on the Great Depression as an opportunity to build up the federal government. They have seized upon the Great Recession as an opportunity to destroy government at every level. The punditocracy, with virtually no exceptions, has cooperated now in promoting the idea that cutting the deficit is our most important task--and no one takes the idea of tax increases seriously any more. There will be no Boomer President to restore a stronger role of government in the economy.

Generation X has gained enormously in power during the last three years. It occupies the White House and makes up most of the Republican leadership in the House of Representatives. And Generation X has no memory either of the New Deal or the postwar High. It spent its childhood amidst collapsing institutions, particularly the institution of the family, and it emerged with a lifelong distrust. The vast majority of Gen Xers view our crisis as a purely individual matter and are not interested in uniting for the common good. A Gen X Congressman, Paul Ryan, has just introduced a plan to destroy Medicare just in time for his own generation to retire. One cannot understand how that could happen without generational theory.

The attack on government has also become an attack on reason in public life. It is no accident that the darlings of the new right have included people like Dan Quayle, Sarah Palin, and Michelle Bachmann, who actually thought that the Revolutionary War had begun in Concord, New Hampshire. Intelligence is now seen as an attribute of an out-of-touch elite. It is clear that the Republican plans for health care, the economy and the budget are catastrophic--cutting government at all levels will impede recovery, not help it, and the free market is what has gotten us where we are today. But they do not care. The rationalist impulse is only one human impulse, and not by any means the strongest one. For the time being it seems that it has had its day. We live in a world of sound bites and images, with little time for reflection and understanding, and that is making it harder and harder to deal with our problems.

The Millennial generation (born about 1982-2002) might have been the new GIs, had the older generations enlisted them, too, in a great crusade. Now it seems that will not happen. Some of them are engaged in small-scale crusades of their own, using their own brains and their cooperative spirit to solve problems. That holds out a little hope for the present and more for the future. But for the next decade or two there seems little hope for any escape from our new Gilded Age. Boomers lived through a great era of American politics. Unfortunately for them and their children and grandchildren, it came to an end as they reached adulthood. Yet we can remain faithful to the best of our past, just as Europeans like Stendhal kept alive the ideals of the French Revolution in the 1820s, secure in their faith that such times would come again--as indeed, eventually, they did.

P.S. Last night, after an agreement was reached to avert a shutdown, President Obama said that Americans of different beliefs had come together and hailed "the biggest annual spending cut in history." Yes: the Republicans won on the principle of dismantling the federal government at home, the Democrats won on funding for planned parenthood and powers for the EPA that will never be effectively applied. (As of 8:20 this morning EDT, no one seems to know whether funding for PBS survived or not.) That is a fitting commentary on the power of the two parties today, and on how President Obama increasingly sees himself: a Democrat on social issues and a moderate Republican on economic ones.


Bozon said...


Great measured short essay.

I do not go in for the generational paradigm itself, but this is otherwise, in outline, historically, also my take.

The only caveat, in that regard, that jumps out, for me, is this:

"...and the decline of union rights and the de-industrialization of America." I see this process as having begun much further back, even in the late 40s early 50s, nearer WW II.

All the best,

PJ Cats said...

Dear Mr Kaiser,

a great, great post. Please please please keep on writing this stuff. I don't think there's any one out there who chronicles so pointedly and truly what is happening today.
I hope you have some good students to carry on the work. Surely there is some hope somewhere... by the way, does the situation in the US remind you at all of the situation in France prior to the revolution? Maybe you said it somewhere already, I can't quite recall.

Anonymous said...

Dear Mr. Kaiser,

Thank you for this post. As an economist I appreciate your well researched historical observations.

In the future could you touch on the impact that globalization has had on these trends. You are indicating that we are destroying ourselves from within. I believe that is true also but I think that the catalyst has been more of a response to global competition than anything. We are no longer dominant in nearly every facet of economic life as we were when I was a boy (I am in generation X).

Another thing I think is detestable is the lack of accurate unbiased data. I think if the average American could see in plain terms where the tax revenues come from and where government spending goes, as we do on say a property tax statement, we could have a rational discussion about the deficit. Instead, both sides present tired, old, and inaccurate arguments about their proposed budgets. The solution is, of course, somewhere in the middle. Increased revenues and reduced spending are needed to get our financial house in order. If we don't, I fear that our future will look much like Greece or Ireland or Portugal...social reforms and safety nets will be good ideas that we are impotent to enact.

Thank You,