Thursday, June 21, 2012

Fear Can Be Productive, Fearlessness Destructive

There is something different happening in this economic downturn. It's not just the fact that the recovery has been stubbornly slow, but the political response to it. For the first time in modern American history, conservatives have no fear of the social consequences of economic distress.

This is an unprecedented situation, and a dangerous one. It has turned one of the two political parties into an uncompromising, extremist faction blinded by ideology.

In his column in the New York Times last Friday, David Brooks argues that Republicans today are not extreme, they just have a different viewpoint: "many Republicans have now come to the conclusion that the welfare-state model is in its death throes." Democrats, on the other hand, fail to see the writing on the wall and are simply re-arranging the deck chairs on the old Titanic.

The behavior of today's Republican Party is a problem for those like Brooks who see themselves as responsible conservatives. No reasonable person wants to defend the people who still question where the president was born, or the people in Michigan who put a sign saying "Obama Presidential Library" on a bullet-hole pocked outhouse last week, or even legislators who are willing to take the government to the brink of default.

So Brooks ignores that kind of embarrassing extremism and focuses instead on this big-picture "viewpoint" that he clearly views as much more intellectually respectable. The problem is this: the very viewpoint he identifies is also an extremist one.

Brooks implicitly suggests that the perception of extremism is due to the extremity of the situation: we are at a turning point in world history: the "welfare-state model" is dying. I would respond that we are now seeing the domestic economic and political consequences of a real turning point in world history that came over twenty years ago: the death of communism.

The limited welfare state in this country came into being as a response to two great crises of American capitalism--the depression of the 1890s and the Great Depression of the 1930s. What we call the "welfare state" was initially the product of two large movements that followed those economic calamities: the Progressivism of the early 20th century and the New Deal.

In both cases, intelligent American political leaders had one central insight: the only way to preserve American capitalism from the threat of revolution was to reform it, to moderate it, to curb its worst excesses. As Theodore Roosevelt put it in 1912:
There is urgent necessity of applying both common sense and the highest ethical standard to this movement for better economic conditions among the mass of our people if we are to make it one of healthy evolution and not one of revolution.
Without reform, revolution was inevitable. The true conservative, TR knew, was a reformer.

The reformers of both eras knew there was something worse out there as a possibility: the specter of communism. That radical ideology gave disgruntled workers an alternative that promised a more just and equitable society. The wisest of the capitalists understood the threat this ideology represented, and more importantly, they knew that the only way to preserve capitalism was to reform and limit it. On some level, they were scared--but this was the good kind of scared, the kind that sees a real threat and responds to it rationally and reasonably, producing something better.

The result was a regulatory system that began modestly under TR with legislation like the Pure Food and Drug Act and the Hepburn Act (which empowered the Interstate Commerce Commission so that it could effectively regulate the railroad industry). Under FDR, the result was Social Security and unemployment insurance, both of which were designed (at least in part) to prevent future economic downturns from spiraling out of control. The New Deal also saw the creation of the SEC to regulate Wall Street and the Glass-Steagall Act to regulate the banks.

The result of all of this reform was the emergence of the United States as the great economic powerhouse of the mid-to-late 20th century.

What is different in this latest crisis of capitalism is that capitalists today are not scared of the "mass of our people." Ever since the collapse of the Soviet empire and communism 20 years ago, American conservatives have had no fear of social unrest, at home or abroad. They believe that there is no alternative for frustrated workers, so these reforms of the 20th century are no longer needed. They can turn back the clock on reforms they never really liked, ones they'd only grudgingly accepted as necessary to preserve social peace.

With nothing to fear, they have spent the last 20 years trying to undermine the regulatory state and the limited welfare state. They've deregulated the financial industries, repealed Glass-Steagal. They've repeatedly cut taxes to "starve the beast." They've encouraged the growing income disparity that has left the middle and lower classes stagnant or declining while the wealthiest accumulate ever-greater shares of the national wealth.

And when as a result it all came crashing down in 2008, they blamed not the tax cuts, not the increasing concentration of wealth at the very top, not the deregulation, not the banks, not the markets. Instead, they blamed the unions, people on unemployment, recipients of public assistance, government workers. The people they no longer feared, the people they've long seen as impediments to even greater profits and concentrations of wealth.

The Republican Party has, for the last three years, acted like people who think they hold all the cards. They don't need to compromise. The worse the economy gets, the better it is for them politically, the easier it becomes to scapegoat the government and administer the final death blows to the welfare state. They are not afraid.

Unlike smart conservatives in earlier ages, today's conservatives see no reason to curb the excesses of capitalism. Far from it. They rail against "Obamacare" despite the fact that it retains (and arguably subsidizes) the private insurance system and is dominated by conservative ideas of health insurance reform. They whine that the modest financial industry reforms of the Dodd-Frank Act mark the end of freedom.

More cruelly, rather than trying to take the edge off in tough times, they seem intent on sharpening the pain inflicted by the failings of the economic system.

Feeling no fear, seeing no need to reform, they are pressing what they see as their advantages--not only do they refuse to raise taxes on the wealthiest Americans, they are pushing for further cuts in tax rates that are already unusually low. Rather than bolster the protections against the vicissitudes of the economic system (like unemployment insurance and food stamps), they seek to diminish or remove them. Rather than make concessions to unions to help workers, they try to destroy them.

The argument (such as it is) that Brooks makes is that we cannot afford the "welfare-state model" anymore. In this perverse vision, government is so big that it has strangled capitalism (fact--there are 500,000 fewer federal government employees today than there were in 1980, though there are 82 million more Americans). Now the welfare state is too expensive, we can't afford it, it has outlived its usefulness, so now it has to go.

But the historical reality is different. Yes, undeniably, the modern welfare state would be impossible without the wealth creation of capitalism. But it was also the emergence of the regulatory state and the welfare state that made possible the continued growth of capitalism after its near self-destruction in the depressions of the 1890s and the 1930s.

Without adequate regulation, without government policies to moderate its impact, free market capitalism produces socially destabilizing and destructive swings of boom and bust.

Smart conservatives in America's past knew that. Today, a precious few like David Frum occasionally try to pull conservatism back in that direction (e.g., reminding them that opposition to "Obamacare" is not enough, they need an alternative that addresses the problem of the uninsured).

But mostly, people like David Brooks, people who should know better, enable modern conservatism's short-sightedness by elevating it to a respectable "viewpoint" and ignoring its extremism.

It is extreme. It is short-sighted. It is stupid. And worst of all, it is self-destructive.

It used to be that conservatives were wise enough to fear extremism. Today, they embrace it.

1 comment:

  1. When tax hikes on the wealthy have been considered where I live, I have argued that it could help stave off revolution. Mostly, I get "you're being excessive" looks, but the truth is that the only reason something bigger than the OWS movement hasn't happened is that most people are still comparably comfortable.