Tales of a New America

by Robert B. Reich

  These two intellectual currents—Keynesianism and pluralism—were easily combined. Just as Keynesianism legitimized the idea of activist government as a way to stabilize the economy, pluralism legitimized it as a way to stabilize politics. Both currents were ultimately propelled by the comforting notion that some people could be helped without imposing undue costs on others. Full employment in the economic sphere, coupled with the ongoing accommodation of interest groups in the political sphere, would ensure that everybody got his, by and by. Public issues were subtly transformed into group claims, all of which could eventually be satisfied. The logic of public action could be left vague. There was no finely honed and rigorous liberal public philosophy—no story about where we were going or who we were—because there seemed to be no need for one.

  9

  Postwar liberalism was doomed to excess. Its fullest flowering, in the 1960s and early 1970s, occurred in an anomalous moment of history during which the United States was particularly unconstrained, its economy buoyant, its power unequaled. This was a sheltered and rich environment, a cultural hothouse unlike anything America had experienced before or is likely ever to experience again. Any public philosophy so germinated would be enfeebled once it left the hothouse. Liberalism was no exception. As the economy began to slow in the 1970s and American preeminence came under challenge, it was no longer possible for some groups to benefit without the burden manifestly falling on others. But because liberal pluralism lacked any definition of the public good apart from the sum of group claims and any coherent principles for screening and balancing such demands, conflicts grew harsher, and claims more insistent.

  By the late 1970s liberalism and, inevitably, the Democratic party appeared less the embodiment of a vision of solidarity and more a tangle of narrow appeals from labor unions, teachers, farmers, gays, Hispanics, blacks, Jews, the handicapped, the elderly, women—proudly separate, vocally self-aware and self-interested subgroups. Of course these demands were no more parochial than those from traditional Republican claimants—bankers, oil companies, insurance firms, doctors, and corporate bureaucrats, among others. But that is precisely the point. The traditional Democratic constituencies had previously represented “us,” the common people. The voices of unionized workers and farmers, of mechanics and common laborers, had been our voices. In the liberal parable, the bankers, industrialists, and special interests had been cast as “them,” admittedly useful but corruption-prone elites requiring constant surveillance lest they enrich themselves and exploit the common man.

  Decades before, the Progressive historian Vernon L. Parrington had drawn the distinction:

  From the first we have been divided into two main parties. Names and battle cries and strategies have changed repeatedly, but the broad party division has remained. On one side has been the party of the current aristocracy—of church, of gentry, of merchant, of slave holder, of manufacturer—and on the other the party of the commonality—of farmer, villager, small tradesman, mechanic, proletariat. The one has persistently sought to check and limit the popular power, to keep control of the government in the hands of the few in order to serve special interests, whereas the other has sought to augment the popular power, to make government more responsive to the will of the majority, to further the democratic rather than the republican ideal—let one discover this and new light is shed on our cultural tendencies.22

  The decay of the community of the common man, the splintering of the Democratic party, made this distinction untenable. Each of the modern Democratic constituents appeared to be just another one of “them,” with no more legitimate claim on the nation than any other. Although they might garnish their demands with references to the common good, these obeisances were understood as mere formalities—appropriate attire for public occasions. None spoke of the social obligations attendant upon the receipt of public benefits. All seemed simply and cynically intent upon getting as much as they could.

  By the late 1970s, accordingly, the liberal public philosophy conveyed no central principle to organize and rank political claims. There was no story to explain the new reality in which we found ourselves. Liberalism offered nothing but a feeble and unconvincing call to charity and conciliation, routinely discounted as window dressing. The central function of politics was to accommodate claims, rather than to forge ties of reciprocal responsibility. The best government was the one that gratified the greatest number of groups and enraged the fewest. “Responsiveness” became a cardinal public virtue.

  Claims were routinely asserted as rights. Welfare recipients, criminal defendants, students, recent immigrants, blacks, and the elderly, among others, declared themselves entitled to specified benefits. Such demands—made in both formal legal proceedings and informal public argument—served to further dramatize that the claimants were different from everyone else. They were members of unique groups with special needs, which the majority must acknowledge and accommodate. Quite apart from whether the majority acceded to these claims (and this depended largely on which group demanded what), the mere act of claiming was itself divisive, further separating “them” from the rest of us, and thereby undermining the ideal of social solidarity. The language of entitlement suggested that the claimants owed nothing to the majority in return; because claimants had a presumptive right to what they were demanding, obligations all flowed in one direction, to “them” from the rest of us.

  Liberal politicians, as a result, had no compass for determining what they stood for. There were no governing principles on which they could draw. They typically fell back on the only available sources of guidance: the claims put forward by leaders of the various groups that comprised the liberal constituency, and the results of polls which revealed in greater detail what the members of these groups wanted for themselves. The speeches and position papers of liberal politicians dutifully appealed to group sentiments; party platforms predictably promised something for every group in attendance.

  This is not to suggest that conservative politics was any less influenced by the concerns of its constituents or that conservative groups were more restrained in asserting claims on the public. But at the least, by the end of the 1970s, there was coming to be a coherent conservative viewpoint that allowed such claims to be sifted and ranked. Even more importantly, conservative politicians were able to provide the public with a plausible story about why the nation would be better off—why “we” would benefit—from a policy of accommodating the claims of conservative constituencies. There was no such integrating philosophy on the other side. Fractious subgroups, each promoting its own agenda, were all that liberalism had to show to the citizenry.

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  The philosophical watershed, where conciliating “them” gave way to disciplining “them,” came with the administration of Jimmy Carter, the Democratic president who carried into policy many of the central precepts of the new conservative public philosophy. Carter understood the public’s growing disdain for government. He had campaigned as an outsider, against Washington, and what he termed “the complicated, confusing, overlapping, and wasteful government bureaucracy.” For Carter, the Rot at the Top was located along the Potomac.23 Similarly, the proliferation of asserted rights was perverting the Benevolent Community: Carter decried “fraud, waste, and abuse” in the burgeoning welfare system and sought its overhaul. (Carter’s abortive reform effort adopted the model of the negative income tax, first proposed by conservative economists in the Nixon administration.) Carter’s conservative tendencies became particularly open in the latter years of his administration. He appointed Paul Volcker chairman of the Federal Reserve Board and supported the Fed’s decision, in October 1979, to limit the nation’s money supply in order to combat inflation, even though interest rates and unemployment would quite predictably rise as a result. And it was Carter, and his national security adviser, Zbigniew Brzezinski, who ended détente with the Soviets. The Mob at the Gates had become a more palpable threat. In the wake of the Soviet invasion of Afghanistan Carte
r embargoed grain sales to the USSR. When the Soviets deployed SS-20 missiles in Eastern Europe, Carter moved to install comparable American weapons in Western Europe.

  This renunciation of liberal conciliation was not a random shift in political fashion, nor was it inspired by delusion. The Soviets were acting more aggressive. Inflation was soaring, and unionized workers indeed were collecting pay gains outpacing productivity. Something was seriously amiss in the welfare system. Government regulations were growing costly and cumbersome. Jimmy Carter was a man of generally liberal instincts; so were the majority of his countrymen. But they adopted the conservative public philosophy because it seemed to offer insight into what was happening and what to do about it. The world was already divided into “us” and “them”—the Soviets and other foreigners, greedy workers, meddling bureaucrats, and the clamorous poor. The choice was to be either charitable and conciliatory toward them or assertive and tough. The first alternative was demonstrably not working. It was time to try the second. America’s metaphors shifted: We had to stop soft-pedaling and play hardball, better to be hard-nosed and hardheaded than soft-hearted and wishy-washy, time to take a hard line rather than be a soft touch. Absent any respectable alternative—without any new vision of social solidarity to replace that which liberalism had abandoned—the public’s perception began to be shaped by the conservative parable.

  CHAPTER 3

  THE NEW CONTEXT

  1

  Cultural myths are no more “truth” than an architect’s sketches are buildings. Their function is to explain events and guide decisions. Thus while it is pointless to challenge myths as unrealistic, it is entirely valid to say that a culture’s mythology serves it well only to the extent it retains its connection to the reality the culture faces. Myths must evolve as the context evolves. Stories that stay rigid as realities change become ever less useful cultural tools.

  The new conservative story conveys an important set of insights. Permissiveness—that is, liberalism’s overwhelming preference for smoothing over rather than facing conflict—contributed to an environment in which unaccountability flourished, both at home and abroad. In abdicating public authority, America issued an invitation to irresponsibility. But the skeins of cause and effect behind the breakdown of Great Society liberalism are far more tangled than the conservative story suggests. The mythology that inspired liberalism in its salad days of the 1960s can indeed be faulted for failing to address the harsh realities of the 1970s and 1980s. The world has changed. But the change has not been along a single dimension, from benign to hostile, mandating an equally simple shift from conciliation to toughness. A subtler, more sweeping transformation has been taking place that touches on most areas of public concern—the Soviet threat and the Third World, the national economy, the poor within America, the role of government. The stresses Americans began experiencing in the 1970s are intimately connected with an evolution of the global economy and society.

  2

  Some of the symptoms are painfully familiar—the two oil shocks of the 1970s, the flood of Japanese automobiles and consumer electronics into America, the loss of American jobs in basic manufacturing, the unrest that periodically erupts into violence in obscure places around the globe. Other aspects of the transformation are less well understood. Two central trends stand out.

  The first is that America’s economic position in the world is becoming less distinctive. The rest of the world is catching up, and America’s preeminence by default is over. Beginning in the late 1960s, and continuing to the present day, the cost of sending things or information around the globe has fallen dramatically. This is due, principally, to rapid advances in technologies of transporting and communicating, to such innovations as container ships, satellites, and computers. Until recent times most goods were produced close to where they were to be consumed; the main exceptions were certain minerals, agricultural goods, and economically unimportant exotica. This pattern has been breaking down at an increasing pace. Consumers of cars, refrigerators, television programs, insurance policies, and even money, often live in different nations or on different continents from the producers. The producers, in turn, often depend on far-distant sources for components, designs, or information. It is now often cheaper to ship raw steel across an ocean than across the United States. Slight differences in interest rates may induce a New York corporation to raise money in Tokyo or in Bonn instead of on Wall Street. Across an unprecedented range of goods and services, quality and cost matter more than location: Whoever can do it best and cheapest, anywhere in the world, sells to whoever is willing to pay the best price, anywhere in the world. The elegant curves of supply and demand that so charm economists are meeting up in the oddest of places.

  Similarly, the tastes and preferences of people around the globe are gradually converging. If modern communications technology has failed to endow humanity with a shared moral sense, it has at least managed to induce shared appetites. On the streets of Lima or Fez, for example, it is not unusual to hear British rock music emanating from compact recorders designed in Japan and assembled in South Korea, while the listeners wear Levi’s.

  By the late 1960s, the industrial nations that had been devastated by World War II were once again full participants in the world economy. But this commercial transformation has not been solely, or even most importantly, a matter of trade among the United States, Japan, and Western Europe. Our economic fate is increasingly shaped by developments in the Third World, especially in Latin America and Southeast Asia.

  The second central trend is demographic. The planet’s population balance has been tipping ever more precipitously in the direction of the poorer nations. In 1950 two thirds of mankind lived in the Third World; by 2020, the proportion is expected to be five sixths. To put the matter in some perspective, consider that for all eternity up to 1932, when modern American liberalism came of age, the world’s population had expanded to approximately 2 billion people. This is less than the increase in the Third World’s population between 1932 and 1985.

  These nations are wildly heterogeneous and share no other feature but relative poverty. For centuries or millennia, many African, Asian, and Latin American cultures have been characterized by fatalism. Most people harbored little hope of improving their material situation, and this has been a rational accommodation to hard reality. But as money, technology, goods, and services flow with ever greater ease around the globe, more of the world’s poor billions have come to know that a more comfortable life exists. Nothing undermines centuries of resignation as readily as a television commercial.

  Nor are their ambitions fanciful. An ever larger number of these people have not just the will but the full capacity to participate in the world economy; many have already joined in. Large-scale production of basic goods continues to migrate to the Third World. As recently as the mid-1960s the inhabitants of Taiwan, Hong Kong, South Korea, Mexico, and Brazil primarily made basic products—like clothing, shoes, toys, simple electronic assemblies—that called for cheap labor but little in the way of sophisticated capital equipment; indeed, Japanese industry had been largely limited to such basic goods a few years previously. By the mid-1970s several of these countries had followed Japan’s lead into steel and other basic capital-intensive processing industries. Japan, meanwhile, had become an exporter of steel-making equipment as well as basic steels, and had moved its industrial base into products like automobiles, color televisions, small appliances, consumer electronics, and ships—all products requiring technical sophistication as well as considerable investment in plant and equipment. By 1985 Taiwan, South Korea, and several other nations had themselves become major producers of these complex products. At the same time, poorer countries like the Philippines, Sri Lanka, and India were taking over the production of clothing, footwear, toys, and simple electronic assemblies. This second wave of industrializing nations was inexorably pushing into more advanced technologies as well. By the mid-1980s China was the world’s sixth-ranking industrial nat
ion; Brazil and India almost tied with Canada for ninth place.1

  As these newcomers to modern global capitalism jostle for room, established industries in advanced nations have been squeezed. Factories have closed. Workers have faced the loss of traditional jobs, and have had difficulty shifting into new ones. The growth trend of these economies has flattened markedly, amid calls for tariffs and quotas against foreign goods. The United States has not been immune to such demands.2 To be sure, a basic goal of American foreign policy during the postwar era was precisely to modernize the economies of poorer nations, lest they succumb to communism. It may seem inconsistent and certainly ungracious for us now to blame these nations for our economic problems. But few could foresee that the pace of change would be so quick and that America’s economic preeminence would be so suddenly at risk. When John F. Kennedy entered the White House, America accounted for 35 percent of the world’s economic output; by 1980, its share had fallen to 22 percent. In 1960, almost 22 percent of the world’s exports were shipped from the United States; in 1980, the figure was 11 percent.3

  The anxieties this evolution has provoked in America are naturally most familiar to us, but the effects in other nations of this accelerating integration have been far from tranquil. Rapid change has sparked upheaval in much of the Third World. Violent shifts in oil prices have played havoc with many developing economies. Some have sunk deeply into debt; others are confounded by inflation. Sudden industrialization also has contributed to urban poverty and corruption. The material benefits of enhanced world trade have been accompanied by a humiliating sense of relative deprivation. The enticements of commercial capitalism have aroused appetites faster than incomes, while undermining traditional cultures. The consequent social unrest has encouraged extremist left- and right-wing regimes and, on occasion, fundamentalist uprisings. The dilemma parallels that of the United States as manufacturing plants shut down: How can this immensely promising process of integration be encouraged without undercutting the cultural foundations on which continued progress depends, without spurring into devastating action the forces of reaction and retreat? This is the new context confronting America, and the rest of the world as well.