Midterm Excuses
Originally published November 1, 1982
BY THE TIME this reaches you, the election returns will be in and the pundits may well have finished talking about them. As I write, however, the election is almost a month away and the pollsters have made only the vaguest of preliminary predictions. Yet I have no hesitation in saying that appalling numbers of people will have expressed approval of Reaganomics. (Since I am appalled that even Reagan himself approves of his policies, you may think that my crystal ball doesn’t have to be very clear.) Very few of these approving voters are beyond disappointment with the present state of affairs, but all of them are sustained by the belief that we are on the right track. Or they may use some other metaphor.
The one that seems most popular now, almost two years into the Reagan Presidency, compares the economy to a person who has destroyed his health in years of overindulgence and today faces a long and rigorous convalescence. You cannot, we are earnestly assured, correct in a year or two the mess made in 10 (or 20 or 30) years of mismanagement. This is absurdity of a high order.
Nevertheless, let’s take it at its face value. The economy has, the story goes, been on an extended debauch. When did this all start? Is Jimmy Carter solely to blame? To say so is unfair, since it was he who appointed Paul Volcker chairman of the Federal Reserve Board and so may be said to have initiated the “cure.” Surely Gerald Ford and Richard M. Nixon aren’t the ones, for they are Republicans. Was it Lyndon B. Johnson, then? That would make John F. Kennedy the Golden Age, which can’t be allowed. One is tempted to like Ike, but the sad fact is that he ran up the largest peacetime deficits until the advent of Ronald Reagan.
The metaphor is nonsense on its face. The alleged debauch never began. There was never a pre-existing” healthy” state that we should now be returning to. The Golden Age is and always has been merely an enchanting dream.
Another trouble with metaphors is that, once you get them started, they’re hard to stop. This is perhaps particularly true with medical metaphors, medicine being an art and all that. In the present instance, the doctors of the far Right agree with the diagnosis of the doctors of the far Left; but instead of an austere program of drying out, they prescribe an equally drastic program of surgery. On the basis of metaphor, there is no choosing between programs. Block that metaphor.
Of course, there may still be some truth behind the metaphor. It is conceivable that when an economy has been badly damaged it cannot be repaired in a short period of time. If this is so, it would certainly be churlish to deny President Reagan time for his program, as he says, to take hold. If, on the other hand, there is a case where a ruined economy made a rapid recovery, then we had better recognize that Reaganomics is a failure and quickly embark on another program.
Well, there is such a case. I’ll name it, but first let’s glance at John Stuart Mill’s Principles of Political Economy, a work that even more than Adam Smith’s The Wealth of Nations can be called the leading statement of “classical” economics.
“Capital,” says Mill, “is kept in existence from age to age not by preservation, but by perpetual reproduction: every part of it is used and destroyed generally very soon after it is produced, but those who consume it are employed meanwhile in producing more …. This perpetual consumption and reproduction of capital afford the explanation of what has so often excited wonder, the great rapidity with which countries recover from a state of devastation; the disappearance, in a short time, of all traces of the mischiefs done by earthquakes, floods, hurricanes, and the ravages of war.”
Some may object that the world has grown vastly more complicated in the almost century and a half since Mill wrote, that today’s factories and infrastructure could not be replicated so easily as those of the mid-19th century. It might have been no great thing to reinvent the water wheel; it would be harder to rebuild the automobile industry from scratch. But this objection is beside the point.
The devastation alleged to have been caused by an economic debauch has not extended to factory buildings or machinery. As was pointed out in the debates over saving Lockheed and Chrysler, the physical factories would have remained even if the companies had gone bankrupt. The factories may be judged obsolete, as people tell us the steel industry is, yet it is noticeable that U.S. Steel decided against modernizing its plants, not because it lacked the ability to do so, but because it felt the economy too weak to need the steel it could produce. Nor has the infrastructure been destroyed; it has merely been allowed to deteriorate, and the deterioration has resulted precisely and solely from the astringent measures of the end the-debauch doctors.
In short, Mill’s observation remains as sound as ever. And we have had, well within the memory of man, a situation that confirms it. Although Congressman Jack Kemp (R.-N.Y.) is perhaps not old enough to have experienced the Great Depression, and President Reagan apparently had his mind on other problems, some of us remember how things were and how they changed. I hasten to add that I am thinking of Mr. Win-the-War, not of Mr. New Deal. I don’t mean to denigrate Mr. New Deal; I merely say that, for change, Mr. Win-the-War was nonpareil.
In the late’ 30s I was a traveling salesman and had occasion to travel over a good deal of the northeastern United States. I was not a very good salesman, but I did keep my eyes open, and what I saw out the day coach windows was miles and miles of abandoned factories, empty warehouses, and railroad sidings whose rusted rails were overgrown with weeds. In between were miles and miles of farmland that no one bothered to farm. People were scarcely visible. I did not sell many books; once I spent an entire day in Albany and Troy, called on a wholesaler, a department store, and five bookstores, and didn’t sell a single book. This was in the winter of 1938-39.
In mid-1940, when France fell, there were about 8 million unemployed in the United States, or 14.6 per cent of the labor force. Those figures make little allowance for women, who stayed home if they could, and blacks, who just tended not to be counted. The GNP, in 1958 dollars, stood at $227.2 billion. Two years later, unemployment was practically nonexistent and the GNP was up to $297.8 billion, for an increase of 31.1 per cent. Contrast these figures with those of the first two years of Reaganomics.
Yes, there was a war on. I noticed that myself. When you stop to think of it, that makes the achievement all the more remarkable. The state of the economy in 1940 was incomparably worse than it was in 1980. War industry does not, in itself, improve the standard of living. Guns (except handguns, which aren’t of much use in war) are not consumer goods. The 18 million of us who ultimately wore khaki or blue suits did not produce anything of ordinary usefulness while we did so. But by the end of the War, there were 7 million more civilian jobs than there were in 1939.
THERE IS ONE crucial difference between Mr. Win-the-War and all the proposals and programs that we have had for the last 35-40 years. Mr. Win-the War saw what had to be done, and did it. All subsequent programmers – and I mean all, both Right and Left-have tried to accomplish their ends by indirection.
If millions are out of work, the problem is to be met by the indirect route of encouraging investment; and if one wants to encourage investment, one encourages savings; and to encourage savings, one attacks inflation; and controlling inflation seems to require controlling the money supply-which immediately throws people out of work but, it is hoped, will do better in time. That’s the conservative scenario.
The liberal scenario, I’m sorry to say, is not much better. It now goes like this: If people are out of work, they are disadvantaged and have the wrong skills or none, so they need to be trained or retrained; in the meantime, a nationwide commission of unemployed economists will be convened to figure out what industries should be fostered – and how they should be fostered – to employ the retreaded workers. This remedy will also take time. In the long run we are all dead.
But can the national will be mobilized except in time of war? Is there a moral equivalent of war? There’d better be, or we are all either amoral or dead. It will not, however, be something incidental, like cutting down on the consumption of oil, as Jimmy Carter, costumed in a cardigan sweater, and posed before a fireplace in supposed imitation of FOR, told us an inner light had told him. Nor will it be something mean spirited and tawdry, like depriving the poor and helpless in order to bribe the rich and fortunate into making themselves richer, hoping thereby to improve the GNP. The GNP, too, is incidental, perhaps a means but certainly not an end in itself.
The only ends are people. I’m not going to give a lecture on morality – at least not a comprehensive one, not here-but I will say this: Each of us as individuals and as a nation is responsible for ourselves. If we are not responsible, we are nothing. One version of the Hippocratic Oath starts with the words, “First, do no harm.” Even in terms of medical metaphor, Reaganomics is a failure. Two years of irresponsibility in Washington are more than enough.
The New Leader
The Dismal Science 