It Can’t Happen Here

Back in 2005, the Harvard macroeconomist Benjamin Friedman published a wonderful book called The Moral Consequences of Economic Growth. There were no equations. No Greek letters. No models. This is Economics? Yeah, and readable too. Unless you think it’s obvious, but then you hardly need it. Friedman’s point was that when you have an expanding economy, there is less rent-seeking, and far fewer zero-sum games. In plain English, if the pie is growing, and if the rules of dividing it up include some means of ensuring that everyone gets something, life is better. Sure. People don’t squabble over small increments to product–they don’t fight over scraps–because they don’t have to. There is less partisan division, less social conflict, more cooperation, a greater largeness of spirit. It’s not just culture, you know. It’s the logic of scarcity, or to put it differently, it’s economics. It’s an erudite, well written and highly relevant book. I often wonder how many people read it. Very few economists, to be sure. No Star Wars math and stat moves to impress the credulous. Just words.

Watching the storm over Washington unfold yesterday, Friedman’s book ran through my mind. One of the things that seemingly distinguished America from its neighbors in Latin America was a sort of implicit “labor peace.” To put it bluntly, class conflict had been muted because the economic pie had grown fast enough since the Depression to assure that most everyone got a share. There were “unassimilables”, like Black Americans, but hey, hadn’t we agreed in the 1960s we were gonna fix that? There was poverty, but Jesus aside, poverty is part of the human condition. Some enthusiasts will tell you it is an indispensable part of the human condition; it gives the poor something to shoot for. Be that as it may, we weren’t oblivious. If you grew up with Michael Harrington (and I did), you weren’t kidding yourself. But the system seemed elastic enough and prosperous to handle poverty too. At least until LBJ got himself caught up in Viet Nam. Then guns and butter and the tradeoff–inevitable, like it or not–began to bind. And someone was gonna get left behind. And did. Boy did they.

But still, until the late 1960s, we seemed to have it figured out. Ok, there were gross disparities in the way men and women were treated, but even there, you could see signs of change. A bright cousin of mine went to MSU and became a successful lawyer. She did. Emphasis on she. Stuff was changing. Maybe too slowly, but change–and therefore, hope, there was. We thought we could do more. We thought we could be better. There was, to put it in flowery terms, a largeness of spirit that people like Bobby Kennedy and MLK captured. Before they got killed.

You’re not gonna find much agreement about any of what went wrong, but I have my own theories. Richard Nixon, a louse, but no fool, knew an opportunity when he saw one. And civil rights, hippies, drugs, miniskirts, oh Lord–Woodstock–could shock some people who were already uneasy about what the changes afoot meant for them–white, working class, blue collar Democrats uneasy with the new world. I remember watching the movie Joe on a cold night in college and thinking it was way too much. It couldn’t happen here. No way white status anxiety and resentment could produce that kind of self-destructive violence. Right?

Nixon and George Wallace saw an opportunity, and they ran with it. 1968 was a big year. You can draw a line from 1968 to Donald Trump. Not a straight line, because as my historian colleagues remind me, history doesn’t go in straight lines. Ok. I’m gonna run a regression. And force a straight line. Close enough for government work. And let you worry about explaining the errors. You got do some thinking here.

In 1971, Crafty Richard took the USA off the gold exchange standard. He didn’t have much choice, and the post-world economic world, called Bretton Woods by cognoscenti, was falling apart quickly. It didn’t just hit the US, as any of our Friendly Neighbors in Mexico could tell you. That’s when the rot really set in but it took until 1976 to become obvious there. In between 1971 and 1976 was the first big OPEC oil shock. You can’t prove it by most conventional means, but that’s when the economic tide really began to turn. And when the West joined the Rest, as David Landes, my other favorite Harvard economist, liked to provocatively say. Something happened. Maybe 2 percent of western GDP got shifted out of our orbit and into other pockets in the Middle East. And Benjamin Friedman’s Edenic world fell apart because that was just enough of a disturbance to upset the economic applecart. Maybe you’re old enough to remember brawls at gas stations (especially in Jersey, God Bless them)? I am. A taste of what awaited God’s Country.

I know this is kind of long and horribly oversimplified, but I have to throw in a couple more critical moments in the line from 68 to Insurrection. My choices would be Reagan and George H.W. Bush. No, not W. Just wait. Uncle Ronnie blew up the labor peace, such as it was, in the US, by busting PATCO, the air traffic controllers’ union. Economists applauded, cause this was all part of the de-regulatory strategy that would bring the magic of the market to bear on an increasingly sclerotic American economy. And hey, who, other than John Nash, would argue with Adam Smith? And look what happened to poor Nash. (Watch the movie, ok? Entertainment, if not great econ) Of course, sending poorly educated and unhealthy people into a market economy is like sending unarmed troops into battle. You can’t expect much, can you? I’ll answer that for you. You can’t, other than a slaughter.

Now, I know there is this dopey reverence for George Bush. War Hero. Entrepreneur. Primo Number One White Boy. Please take it somewhere else. “Read my lips. No new taxes.” And Lee Atwater, his muse, who made genteel locker room racism acceptable in American politics because it avoided the “N word” while invoking its substance. See, complaining about taxes is essentially complaining about something someone else gets that you don’t. It is essentially invidious and divisive while masquerading (like insider trading, as American as apple pie or violence). Total nonsense, but the well was truly poisoned. Thou shalt cut taxes to join the Club of the Unpalatables. Thanks, George. Like your feckless offspring said, “Mission Accomplished.”

See, these guys broke the labor peace because, in the context of slower growth, it was breakable. They broke the the intergenerational compact about government spending because “deficits don’t matter” as Dick Cheney pointed out: “as Reagan showed us.” Oh yeah, and tax cuts birth surpluses by magic. In some other universe. You give to the rich and screw the poor. You can only cut taxes. That’s how you build political coalitions now. You set people against each other. Because you can. It’s all about incentives.

So, we end up where? With the top 0.01 percent of the US wealth distribution holding over 20 percent of the nation’s wealth. Cause tax cuts for the rich make the rich richer, silly. With a toxic racial atmosphere because, well, because “they get into law school and I don’t” (former student…..he’s a lawyer now, his gift of prophecy evidently tainted by Fox News). Because them Messicans take away jobs from God-fearing white Americans who are just lining up to work in the fields or under houses or doing roofing in the South Texas summer. And lots of women nurturing genuine grievances about the way society expects them to put out and shut up, and for less money. You see much largeness of spirit these days in America? A whole lot of generosity outside of food banks run by good people. It’s tough when the pie doesn’t grow and some unprincipled politician sees an opportunity to use it to their own advantage. Especially the kind who went to Harvard. You think Cruz and Hawley are stupid? They know exactly what they’re doing. Benjamin Friedman taught at Harvard. Hell, maybe he taught them.

I know we can’t push a button and go back to the 1960s again. I’m so disgusted with the ability of Americans since Katrina to do anything right that I strongly suspect we need another New Deal, but probably can’t pull it off with anything approaching middling success. But I do know one thing. Unless we start, and now, to reverse the social, economic and political rot that has set in over the past half century, yesterday’s “insurrection” was a day at the beach. Hey, talk to a Mexican or a Peruvian or an Argentine. They’ll tell you what a real revolution looks like. And why yesterday was nothing. And if we don’t wake up, we’ll find out the hard way. Unless you like blood in the streets, because you’ll get plenty of it. It can and will happen here.

Correction: Hawley never went to Harvard. I guess no one can monopolize the Federalist Society crackpots.

Published by RJS El Tejano

I sarcastically call myself El Tejano because I'm from Philadelphia and live in South Texas. Not a great fit, but sometimes, economists notwithstanding, you don't get to choose. My passions are jazz, Mexican history and economics. Go figure

4 thoughts on “It Can’t Happen Here

  1. OK, So this is the Cliff Notes version of how you think we got here. Now what? You know many House and Senate Republicans, after 60 or so unsuccessful court challenges, voted not to accept the PA or AZ vote counts. It still comes down to playing with alternate views of reality.

    It comes down to not accepting any information of any sort that is contrary to the preferred world view.

    Can’t agree on whether the chicken crossed the road even though we watched the chicken cross, watched my neighbor pick it up and slaughter it and went over to his house and had it for dinner with him.

    The NY Times, WAPO, Boston Globe, NPR, PBS may be doing a great job reporting as factually as they possibly can but half the country doesn’t believe it. Half the country can watch deadenders storm the Capitol Building and make up out of whole cloth that it was Antifa’s riot.

    So, Prof, how we got here is interesting but now what?

    Like

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