Economic crisis, political rebirth?

The week's economic news makes clear that a new flock of chickens--not perhaps as large as the one that appeared in 1929, but large enough--is finally coming home to roost. The credit collapse that has begun in the housing market (and, the papers tell me, threatens to spread through unpayable credit card debt) is lowering employment, and it may get much worse. Like the two previous crises in our national life (1860-8 and 1929-45), it has been largely brought about by the unbridled ideological or economic excesses of a Prophet generation--the Transcendentals (b. 1792-1821), the Missionaries (about 1863-1884), and now, the Boomers (1943-1960.) Born into as secure an environment has humankind has been able to create, such generations begin disrupting it in young adulthood, have eaten away the foundations by mid-life, and, as they reach elderhood, have to try to find a few surviving members who can help build a new order with the help of the younger generations.

The critical issue for the Transcendentals, of course--the one that dwarfed all others in importance--was slavery. The text of the Constitution shows that the Founding Fathers had regarded slavery as an embarrassment and an anomaly, and they carefully avoided referring to it by name, much less defining more than one legal class of "persons." The Founding generations had already banned slavery in the Northwest Territories before the Constitution was adopted, and much evidence suggests that, as Transcendental Abraham Lincoln later claimed, the Founders hoped that by confining slavery, they could make it disappear. Their children, however, rejected such a practical view. Southern Transcendentals were arguing by the 1830s that slavery was a positive good, perhaps the highest form of civilization, while their northern contemporaries started a militant abolitionist movement and, eventually, the new Republican Party. The compromising spirit that had swept the issue under the rug in 1820 and again in 1850 eventually passed away along with the older generations, leading in 1860 to the split int he Democratic party between northern moderates and southern fire-eaters, Lincoln's election, secession, and civil war. Fortunately, perhaps, subsequent Prophet generations have not had to deal with a clash between two totally different ways of life, fought with a large portion of the United States as yet largely unsettled and unorganized. Unfortunately, for reasons too complex to take up now, the Civil War merely reunited the Union and abolished formal slavery, without really making the former slaves citizens for more than a very brief period for another century.

The Republican/Northern victory in the Civil War also enshrined free markets, high tariffs, and cheap unorganized labor as orthodoxies, and they remained so until the 1890s, when the Missionary generation began to make its mark. Progressivism, which did not change all that much during the first two decades of the twentieth century but did at least enshrine the idea of government as a benevolent regulator of the economy, challenged that orthodoxy, but by the 1920s it appeared to have burned itself out. Meanwhile, on Wall Street, the Missionaries were busily designing clever new schemes to inflate markets and values, including insider trading, very low margin rates (creating a massive credit pyramid), and a generally unregulated market. The 1920s saw several cycles of boom and bust (most notably in housing and in Florida land values) before the great crash of 1929-32 wiped out credit all over the country and brought us nearly to an economic halt. Missionary Herbert Hoover refused to regard the Depression as anything but a temporary aberration, and turned in the last two years of his term to solutions that made things even worse. Roosevelt in 1933 came into office without any real program or settled ideological view of what had to be done, but showed a determination to try almost anything to get the country back on its feet. Although he had only intermittent success against the Depression, he fundamentally changed the role of the government and opened the way to the mass organization of industrial labor. The drafting of more than ten million men during the war and the benefits they were granted when they returned home did as much or more than the New Deal to create a new, much more egalitarian America.

Boomers, stimulated by their GI parents' greatest mistake, burst upon the scene in the late 1960s, repudiating all the basic principles of their parents' culture, morality, and foreign policy, while taking their domestic achievements entirely for granted. They also transformed the universities and colleges they were attending, and the humanities have been declining at an accelerating rate ever since. But their real impact only became clear during the 1990s, when they achieved a plurality in the House of Representatives in 1994. (They now have done the same in the Senate.) Perhaps because left-wing Boomers had concentrated on academia and popular culture, right-wing ones turned out to have more success in politics. From 2001 until now they have taken advantage of their own determination and a series of unpredictable events--the Florida vote in 2000 and 9/11--to undo most of the New Deal and the foundations of American foreign policy in the second half of the twentieth century.

They have also been at work, obviously, on Wall Street. Many Americans do not realize the extent to which the elite American educational system has become a mechanism for identifying our brightest young men and women and funneling them into the upper layers of our financial and legal system, where they begin working 80-hour days, frequently to pay off the tens of thousands of dollars of debt they have accumulated during college. In the last twenty years they have busily designed new financial instruments, such as sub-prime mortgages and the securities that have "backed" them. We should keep in mind that this relentless drive by people who are already rich by any standard to gain yet more money is behind our present predicament--and that it will be harder to climb out of it because the mass of people who really need more money have been getting less and less of it. The Boom generation of managers has also avenged their missionary grandparents by finding new weapons against organized labor--most notably, the weapon of outsourcing.

It is not clear that the political process is ready to deal with the crisis. Last week, Boomer Mitt Romney, who fallaciously claimed that he would bring manufacturing jobs back to Michigan, defeated Silent John McCain, who courageously recognized that those jobs are not coming back. On the Democratic side, as John Edwards fades, identity politics have taken the place of any serious discussion of issues. The question I have been pondering is whether Barack Obama, who will turn 47 this year, is really the counterpart of Abraham Lincoln (who was 51 in 1860 when he was elected), or of John Charles Fremont, the 43-year old Republican candidate in 1856, who was defeated by Compromiser James Buchanan. (If McCain should beat Obama, the parallel would be exact.)

Having been born in 1947, I count as an early Prophet--and I can now see how front-loaded the benefits of such a status were. I enjoyed the best of the postwar era, and above all, I lived through the whole exciting Awakening as a young adult. But my middle years have witnessed a steady decline of every American institution, including the ones I care about the most--my own profession, and national politics. I am not surprised that my two favorite Missionaries, W. E. B. Dubois (b. 1868) and Charles A. Beard (b. 1871) found themselves totally out of sympathy with the direction of national life by the time they reached seventy, and died isolated and embittered. Having learned to understand this particular recurring cycle, I am heartened to think that I can live to see thing turn around before (like them) becoming so disillusioned as not to even recognize the change. But we may have to wait a good deal longer all the same.

Note: Earlier versions of last week's post referred to a purported conversation in Israel between Benjamin Netanyahu and President Bush, supposedly reported by Israeli radio. The two men did meet, and you can read about what supposedly transpired all over the blogosphere, but no actual news source has confirmed it as yet. (I don't know if I have any readers in Israel, but if I do, your input would be appreciated here.) Meanwhile, the Israeli press reports that Mahmoud Abbas, our chosen Palestinian instrument, has threatened to resign because Israeli strikes in Gaza and the West Bank are embarrassing him so badly in the wake of Bush's supposed peace initiative. That story, as far as I can tell, has been unreported here.