The Conscience of a Liberal

1 THE WAY WE WERE

I was born in 1953. Like the rest of my generation, I took the America I grew up in for granted—in fact, like many in my generation, I railed against the very real injustices of our society, marched against the bombing of Cambodia, went door to door for liberal political candidates. It’s only in retrospect that the political and economic environment of my youth stands revealed as a paradise lost, an exceptional episode in our nation’s history.

Postwar America was, above all, a middle-class society. The great boom in wages that began with World War II had lifted tens of millions of Americans—my parents among them—from urban slums and rural poverty to a life of home ownership and unprecedented comfort. The rich, on the other hand, had lost ground: They were few in number and, relative to the prosperous middle, not all that rich. The poor were more numerous than the rich, but they were still a relatively small minority. As a result, there was a striking sense of economic commonality: Most people in America lived recognizably similar and remarkably decent material lives.

The equability of our economy was matched by moderation in our politics. For most but not all of my youth there was broad consensus between Democrats and Republicans on foreign policy and many aspects of domestic policy. Republicans were no longer trying to undo the achievements of the New Deal; quite a few even supported Medicare. And bipartisanship really meant something. Despite the turmoil over Vietnam and race relations, despite the sinister machinations of Nixon and his henchmen, the American political process was for the most part governed by a bipartisan coalition of men who agreed on fundamental values.

Anyone familiar with history knew that America had not always been thus, that we had once been a nation marked by vast economic inequality and wracked by bitter political partisanship. From the perspective of the postwar years, however, America’s past of extreme inequality and harsh partisanship seemed like a passing, immature phase, part of the roughness of a nation in the early stages of industrialization. Now that America was all grown up, we thought, a relatively equal society with a strong middle class and an equable political scene was its normal state.

In the 1980s, however, it gradually became clear that the evolution of America into a middle-class, politically middle-of-the-road nation wasn’t the end of the story. Economists began documenting a sharp rise in inequality: A small number of people were pulling far ahead, while most Americans saw little or no economic progress. Political scientists began documenting a rise in political polarization: Politicians were gravitating toward the ends of the left-right scale, and it became increasingly possible to use “Democrat” and “Republican” as synonyms for “liberal” and “conservative.” Those trends continue to this day: Income inequality today is as high as it was in the 1920s,[1] and political polarization is as high as it has ever been.

The story of rising political polarization isn’t a matter of both parties moving to the extremes. It’s hard to make the case that Democrats have moved significantly to the left: On economic issues from welfare to taxes, Bill Clinton arguably governed not just to the right of Jimmy Carter, but to the right of Richard Nixon. On the other side it’s obvious that Republicans have moved to the right: Just compare the hard-line conservatism of George W. Bush with the moderation of Gerald Ford. In fact, some of Bush’s policies—like his attempt to eliminate the estate tax—don’t just take America back to the way it was before the New Deal. They take us back to the way we were before the Progressive Era.

If we take a longer view, both the beginning and the end of the era of bipartisanship reflected fundamental changes in the Republican Party. The era began when Republicans who had bitterly opposed the New Deal either retired or threw in the towel. After Harry Truman’s upset victory in 1948, the leadership of the GOP reconciled itself to the idea that the New Deal was here to stay, and as a matter of political self-preservation stopped trying to turn the clock back to the 1920s. The end of the era of bipartisanship and the coming of a new era of bitter partisanship came when the Republican Party was taken over by a radical new force in American politics, movement conservatism, which will play a large role in this book. Partisanship reached its apogee after the 2004 election, when a triumphant Bush tried to dismantle Social Security, the crown jewel of the New Deal institutions.

There have, then, been two great arcs in modern American history—an economic arc from high inequality to relative equality and back again, and a political arc from extreme polarization to bipartisanship and back again. These two arcs move in parallel: The golden age of economic equality roughly corresponded to the golden age of political bipartisanship. As the political scientists Nolan McCarty, Keith Poole, and Howard Rosenthal put it, history suggests that there is a kind of “dance” in which economic inequality and political polarization move as one.[2] They have used a sophisticated statistical technique to track the political positions of members of Congress. Their data show the Republicans moving left, closer to the Democrats, when income inequality declined, producing the bipartisanship of the fifties and sixties. Then the Republicans moved right, creating today’s bitter partisanship, as income inequality rose. But what makes the dancing partners stay together?

One possibility is that inequality takes the lead—that, to change metaphors, the arrow of causation points from economics to politics. In that view the story of the last thirty years would run like this: Impersonal forces such as technological change and globalization caused America’s income distribution to become increasingly unequal, with an elite minority pulling away from the rest of the population. The Republican Party chose to cater to the interests of that rising elite, perhaps because what the elite lacked in numbers it made up for in the ability and willingness to make large campaign contributions. And so a gap opened up between the parties, with the Republicans becoming the party of the winners from growing inequality while the Democrats represented those left behind.

That, more or less, is the story I believed when I began working on this book. There’s clearly something to it. For example, a close look at the campaign to repeal the estate tax shows that it has largely been financed by a handful of families with huge estates to protect. Forty years ago there weren’t many huge estates, and the country’s superrich, such as they were, weren’t rich enough to finance that kind of campaign. So that’s a case in which rising inequality has helped pull Republicans to the right.

Yet I’ve become increasingly convinced that much of the causation runs the other way—that political change in the form of rising polarization has been a major cause of rising inequality. That is, I’d suggest an alternative story for the last thirty years that runs like this: Over the course of the 1970s, radicals of the right determined to roll back the achievements of the New Deal took over the Republican Party, opening a partisan gap with the Democrats, who became the true conservatives, defenders of the long-standing institutions of equality. The empowerment of the hard right emboldened business to launch an all-out attack on the union movement, drastically reducing workers’ bargaining power; freed business executives from the political and social constraints that had previously placed limits on runaway executive paychecks; sharply reduced tax rates on high incomes; and in a variety of other ways promoted rising inequality.

Can the political environment really be that decisive in determining economic inequality? It sounds like economic heresy, but a growing body of economic research suggests that it can. I’d emphasize four pieces of evidence.

First, when economists, startled by rising inequality, began looking back at the origins of middle-class America, they discovered to their surprise that the transition from the inequality of the Gilded Age to the relative equality of the postwar era wasn’t a gradual evolution. Instead, America’s postwar middle-class society was created, in just the space of a few years, by the policies of the Roosevelt administration—especially through wartime wage controls. The economic historians Claudia Goldin and Robert Margo, who first documented this surprising reality, dubbed it the Great Compression.[3] Now, you might have expected inequality to spring back to its former levels once wartime controls were removed. It turned out, however, that the relatively equal distribution of income created by FDR persisted for more than thirty years. This strongly suggests that institutions, norms, and the political environment matter a lot more for the distribution of income—and that impersonal market forces matter less—than Economics 101 might lead you to believe.

Second, the timing of political and economic change suggests that politics, not economics, was taking the lead. There wasn’t a major rise in U.S. inequality until the 1980s—as late as 1983 or 1984 there was still some legitimate argument about whether the data showed a clear break in trend. But the right-wing takeover of the Republican Party took place in the mid-1970s, and the institutions of movement conservatism, which made that takeover possible, largely came into existence in the early 1970s. So the timing strongly suggests that polarizing political change came first, and that rising economic inequality followed.

Third, while most economists used to think that technological change, which supposedly increases the demand for highly educated workers and reduces the demand for less-educated workers, was the principal cause of America’s rising inequality, that orthodoxy has been gradually wilting as researchers look more closely at the data. Maybe the most striking observation is that even among highly educated Americans, most haven’t seen large income gains. The big winners, instead, have been members of a very narrow elite: the top 1 percent or less of the population. As a result there is a growing sense among researchers that technology isn’t the main story. Instead, many have come to believe that an erosion of the social norms and institutions that used to promote equality, ultimately driven by the rightward shift of American politics, has played a crucial role in surging inequality.[4]

Finally, international comparisons provide a sort of controlled test. The sharp rightward shift in U.S. politics is unique among advanced countries; Thatcherite Britain, the closest comparison, was at most a pale reflection. The forces of technological change and globalization, by contrast, affect everyone. If the rise in inequality has political roots, the United States should stand out; if it’s mainly due to impersonal market forces, trends in inequality should have been similar across the advanced world. And the fact is that the increase in U.S. inequality has no counterpart anywhere else in the advanced world. During the Thatcher years Britain experienced a sharp rise in income disparities, but not nearly as large as the rise in inequality here, and inequality has risen modestly if at all in continental Europe and Japan.[5]

Political change, then, seems to be at the heart of the story. How did that political change happen?

The story of how George W. Bush and Dick Cheney ended up running the country goes back half a century, to the years when the National Review, edited by a young William F. Buckley, was defending the right of the South to prevent blacks from voting—“the White community is so entitled because it is, for the time being, the advanced race”—and praising Generalissimo Francisco Franco, who overthrew a democratically elected government in the name of church and property, as “an authentic national hero.” The small movement then known as the “new conservatism” was, in large part, a backlash against the decision of Dwight Eisenhower and other Republican leaders to make their peace with FDR’s legacy.

Over the years this small movement grew into a powerful political force, which both supporters and opponents call “movement conservatism.” It’s a network of people and institutions that extends far beyond what is normally considered political life: In addition to the Republican Party and Republican politicians, movement conservatism includes media organizations, think tanks, publishing houses and more. People can and do make entire careers within this network, secure in the knowledge that political loyalty will be rewarded no matter what happens. A liberal who botched a war and then violated ethics rules to reward his lover might be worried about his employment prospects; Paul Wolfowitz had a chair waiting for him at the American Enterprise Institute.

There once were a significant number of Republican politicians who weren’t movement conservatives, but there are only a few left, largely because life becomes very difficult for those who aren’t considered politically reliable. Just ask Lincoln Chafee, the moderate former senator from Rhode Island, who faced a nasty primary challenge from the right in 2006 that helped lead to his defeat in the general election, even though it was clear that the Republicans might well need him to keep control of the Senate.

Money is the glue of movement conservatism, which is largely financed by a handful of extremely wealthy individuals and a number of major corporations, all of whom stand to gain from increased inequality, an end to progressive taxation, and a rollback of the welfare state—in short, from a reversal of the New Deal. And turning the clock back on economic policies that limit inequality is, at its core, what movement conservatism is all about. Grover Norquist, an antitax activist who is one of the movement’s key figures, once confided that he wants to bring America back to what it was “up until Teddy Roosevelt, when the socialists took over. The income tax, the death tax, regulation, all that.”[6]

Because movement conservatism is ultimately about rolling back policies that hurt a narrow, wealthy elite, it’s fundamentally antidemocratic. But however much the founders of the movement may have admired the way Generalissimo Franco did things, in America the route to political power runs through elections. There wouldn’t be nearly as much money forthcoming if potential donors still believed, as they had every reason to in the aftermath of Barry Goldwater’s landslide defeat in 1964, that advocating economic policies that increase inequality is a political nonstarter. Movement conservatism has gone from fringe status to a central role in American politics because it has proved itself able to win elections.

Ronald Reagan, more than anyone else, showed the way. His 1964 speech “A Time for Choosing,” which launched his political career, and the speeches he gave during his successful 1966 campaign for governor of California foreshadowed political strategies that would work for him and other movement conservatives for the next forty years. Latter-day hagiographers have portrayed Reagan as a paragon of high-minded conservative principles, but he was nothing of the sort. His early political successes were based on appeals to cultural and sexual anxieties, playing on the fear of communism, and, above all, tacit exploitation of white backlash against the civil rights movement and its consequences.

One key message of this book, which many readers may find uncomfortable, is that race is at the heart of what has happened to the country I grew up in. The legacy of slavery, America’s original sin, is the reason we’re the only advanced economy that doesn’t guarantee health care to our citizens. White backlash against the civil rights movement is the reason America is the only advanced country where a major political party wants to roll back the welfare state. Ronald Reagan began his 1980 campaign with a states’ rights speech outside Philadelphia, Mississippi, the town where three civil rights workers were murdered; Newt Gingrich was able to take over Congress entirely because of the great Southern flip, the switch of Southern whites from overwhelming support for Democrats to overwhelming support for Republicans.

A few months after the 2004 election I was placed under some pressure by journalistic colleagues, who said I should stop spending so much time criticizing the Bush administration and conservatives more generally. “The election settled some things,” I was told. In retrospect, however, it’s starting to look as if the 2004 election was movement conservatism’s last hurrah.

Republicans won a stunning victory in the 2002 midterm election by exploiting terrorism to the hilt. There’s every reason to believe that one reason Bush took us to war with Iraq was his desire to perpetuate war psychology combined with his expectation that victory in a splendid little war would be good for his reelection prospects. Indeed, Iraq probably did win Bush the 2004 election, even though the war was already going badly.

But the war did go badly—and that was not an accident. When Bush moved into the White House, movement conservatism finally found itself in control of all the levers of power—and quickly proved itself unable to govern. The movement’s politicization of everything, the way it values political loyalty above all else, creates a culture of cronyism and corruption that has pervaded everything the Bush administration does, from the failed reconstruction of Iraq to the hapless response to Hurricane Katrina. The multiple failures of the Bush administration are what happens when the government is run by a movement that is dedicated to policies that are against most Americans’ interests, and must try to compensate for that inherent weakness through deception, distraction, and the distribution of largesse to its supporters. And the nation’s rising contempt for Bush and his administration helped Democrats achieve a stunning victory in the 2006 midterm election.

One election does not make a trend. There are, however, deeper forces undermining the political tactics movement conservatives have used since Ronald Reagan ran for governor of California. Crucially, the American electorate is, to put it bluntly, becoming less white. Republican strategists try to draw a distinction between African Americans and the Hispanic and Asian voters who play a gradually growing role in elections—but as the debate over immigration showed, that’s not a distinction the white backlash voters the modern GOP depends on are prepared to make. A less crude factor is the progressive shift in Americans’ attitudes: Polling suggests that the electorate has moved significantly to the left on domestic issues since the 1990s, and race is a diminishing force in a nation that is, truly, becoming steadily less racist.

Movement conservatism still has money on its side, but that has never been enough in itself. Anything can happen in the 2008 election, but it looks like a reasonable guess that by 2009 America will have a Democratic president and a solidly Democratic Congress. Moreover, this new majority, if it emerges, will be much more ideologically cohesive than the Democratic majority of Bill Clinton’s first two years, which was an uneasy alliance between Northern liberals and conservative Southerners.

The question is, what should the new majority do? My answer is that it should, for the nation’s sake, pursue an unabashedly liberal program of expanding the social safety net and reducing inequality—a new New Deal. The starting point for that program, the twenty-first-century equivalent of Social Security, should be universal health care, something every other advanced country already has. Before we can talk about how to get there, however, it’s helpful to take a good look at where we’ve been. That look—the story of the arc of modern American history—is the subject of the next eight chapters.