Obamanomics: Liberals Live with No Growth?

“Roosevelt. . . was tired of utopias. [He] formulated a bet. If he followed his political instincts, furiously converting ephemeral bits of legislation into solid law for specific groups of voters, then he would win reelection. He would focus on farmers, big labor, pensioners, veterans, perhaps women and blacks. He would get through a law for pensioners, one for organized labor. . . would take care of the poor and homeless of the countryside.”

--Amity Shlaes, The Forgotten Man, Chapter 9, “July 1935: Roosevelt’s Wager,” pp. 246-47.

Shlaes’ amazing study of the Great Depression overturns much of the history I grew up with. It turns out that economically, nothing really worked for Roosevelt (unemployment in 1940, the Depression’s 11th year, was still over 14%). In his first two years (1933-34), Roosevelt tried everything, and did lift a nation’s spirits even as the economy continued underperforming.

Shlaes highlights a real turning point for Roosevelt: July 1935, when he gave up on grand economic schemes and turned instead to government paying off enough constituencies to assemble a winning political coalition. Politically, he succeeded--massively in 1936--in the process building the coalition of government-dependent special interests that is the prototype of today’s Democratic Party.

Obama and company today seem similarly focused on holding a government-based coalition together, rather than clearing a path for economic growth. But is this a fair assessment?

Jonathan Cohn, in the liberal New Republic, makes the case for turning America into social democratic Scandinavia, with no mention of the region’s low growth rate (Norway, 2.1%; Sweden, 0.7%; Finland, -1.8%; Denmark, -0.3%; Scandinavian average: 0.7%):

In the red states, government is cheaper, which means the people who live there pay lower taxes. But they also get a lot less in return. The unemployment checks run out more quickly and the schools generally aren’t as good. Assistance with health care, child care, and housing is skimpier, if it exists at all. The result of this divergence is that one half of the country looks more and more like Scandinavia, while the other increasingly resembles [Guatemala. T]he liberty the red states seek is the liberty to let a whole class of citizens suffer.

The New Yorker’s progressive Hendrik Hertzberg likewise speaks not of growth but of “an energetic public sphere” and “collective action,” phrases associated with European-style democratic socialism:

[Obama’s] Inaugural Address . . . added up to a quietly passionate brief for both the necessity and the Americanness of an energetic public sphere—a manifesto for what the President dared to call, with a touch of sly provocation, “collective action.” That mainstream newspaper editors [subsequently] felt free to trumpet what is still sometimes called “the ‘L’ word” in such a charged context, and with no discernible fear of giving offense, suggests that the Arctic isn’t the only place where the ice is melting.

Yet there are some on the left who recognize the economy’s poor performance poses a problem. Shortly after Obama had been re-elected, NBC’s Brian Williams actually said, “With the election now over, it is once again safe to talk about the economy and jobs. Now that it is not a campaign issue, it’s back to reality.” Kudos to Williams for honestly admitting the media--in the tank for Obama--stayed away from discussing America’s poor economic performance during election season.

So what do liberals think about today’s economy? Tom Blumer of “PJ Media” showed us the pessimistic outlook of America’s major wire service:

[AP’s] three-part series bemoaning the rapid advancements in technology and smart machines [summed up the current “recovery”]: “This time it’s different. For decades, science fiction warned of a future when we would be architects of our own obsolescence, replaced by our machines. … [T]he future has arrived.”

Katrina vanden Heuvel, editor/publisher of the progressive Nation, while faithful to the left’s traditional concern with re-cutting the national pie into more equal pieces, does at least recognize something has to be done about the economy:

The media now chronicle the flailings of Republican leaders slowly awakening to the weaknesses of a stale, pale and predominantly male party in today’s America. . . In his inaugural address, President Obama spoke powerfully to this rising American electorate — single women, minorities, the young —. . .But today, the progressive coalition must address the challenge faced by the original progressive movement, at the dawn of the last century — of extreme economic inequality, which is turning the American dream into a bygone memory.

Who can fail to see that this rising American electorate is sinking economically? More than 20 million people are in need of full-time work— and single women, minorities and the young have fared the worst. . . The young find good jobs scarce, even as they carry record student loan debts, now higher than credit card debt. . . Making this economy work once more for working people will require a new strategy for growth — and a confrontation with the current complacency and its entrenched interests and exhausted ideas.

Right on, vanden Heuvel, you do see the problem clearly! But her solution is a stale return to the Democrats’ New Freedom (Woodrow Wilson, 1913-21) and New Deal agendas of 100 to 80 years ago:

in the Gilded Age at the dawn of industrial America at the turn of the last century. . . hundreds of thousands of farmers created a people’s movement for a new monetary policy. Workers organized unions in the face of police billyclubs. Muckrakers exposed the tentacles of the trusts, the miseries inflicted on working people. It took years — and a Great Depression and a world war — but we built the first broad middle class the world had known.

Groan. Those are the very class warfare policies failing today!

Further evidence of a party stuck in the past comes from liberal Jonathan Chait of New York magazine, who writes, “asked whether deficit spending had helped prevent a depression, as the vast majority of economists believe[, Paul Ryan] said, “I think that it’s pretty clear that [Keynesian economics] doesn’t work.”

It’s pretty clear Chait and vanden Heuvel think Keynesianism--government spend, spend, spending to prosperity--does work. But no, what works is private sector ingenuity, as we found out during that most important value-of-spending test case of all, World War II.  

New York Timesman Tom Friedman likes to position himself between liberals and conservatives, and champion a “radical center”. So what does Friedman tell us to do? His advice:

to sustain the kind of public institutions and safety nets that we’re used to [requires] a lot more growth by the private side (not just more taxes), a lot more entrepreneurship, a lot more start-ups and a lot more individual risk-taking — things the president rarely speaks about. . . for the last two centuries it happened that productivity, median income and employment all tracked each other nicely. . . But there is no economic law that says technological progress has to benefit everyone. It’s entirely possible for the pie to get bigger and some people to get a smaller slice. [It’s] why we have record productivity, wealth and innovation, yet median incomes are falling, inequality is rising and high unemployment remains persistent.

Uh oh. Is Friedman going down the conventional pessimism path we saw from AP’s study (above), the liberal pessimism recorded in an earlier blog entry here? Maybe not. Certainly, it’s nice to have him conclude with a call both for more personal responsibility and for moving beyond the SAT meritocracy, and in the process talking language conservatives understand:

How to adapt? [M]ore individual initiative. . . more of the “right” education. . . The winners won’t just be those with more I.Q. It will also be those with more P.Q. (passion quotient) and C.Q. (curiosity quotient). . . the president needs to explain that this won’t just be an era of “Yes We Can.” It will also be an era of “Yes You Can” and “Yes You Must.”