Politics & Media
Mar 30, 2009, 06:00AM

Oh, What a Lovely Recession

Left-wing redistributionists seize the moment.

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Photo by aturkus

There’s presently a school of thought, mostly among the liberal intelligentsia, that the devastating recession has morphed from sheer panic to sour resignation throughout the nation. As a result, we’re now seeing the first wave of magazine and newspaper articles that assess the wreckage and grandly speculate upon the future of American society. This “first draft of history” is premature—in fact, the Las Vegas-tinged economy, where the rules are constantly changing, remains enveloped in gut-wrenching uncertainty—but I’m not an armchair sociologist with a sinecure at a prestigious university or think tank, or insulated by the downturn from inherited wealth or celebrity.

These pundits, left-leaning economists, and other designated “experts,” differ on the precise ramifications of the vanished “American Dream,” but the crux is similar: we’re entering a long, long era of reduced expectations and simpler way of life. Considering the sources—and academia is the epicenter—it’s not surprising that “Reaganism” is now a filthy word, Wall Street money-grubbers are and will be considered pariahs on the order of pornographers and ambulance-chasing lawyers, and high taxes are both necessary and desirable. An element of this commentary is the lingering resentment of the Bush years—the “stolen” election of 2000, Kerry’s loss in ’04, and the supposed philistinism of the former president—but the larger theme is, hey, we’re now in charge! Most of the writing expresses hostility to entrepreneurship and the commercial world, the belief that business, large and small, is somehow dirty, anti-intellectual, and brings out the worst in people. The underclass must be protected because it’s too fragile to be trusted to the greedy, corrupt upper class; a huge, benign government needs to steer such unfortunates in their private and professional lives.   

Typical of this paternalistic mindset is the cover story of April’s American Prospect, “Less is the New More: Why post-consumer America could be a better place,” written by Cornell University economist Robert H. Frank, an out-and-out exercise in wishful thinking that’s not uncommon among self-styled “progressives,” who, between the lines, believe that the current financial collapse will ultimately be recorded as a positive paradigm shift. In other words, to use the catchphrase from Martha Stewart, one of the discredited icons of the “greedy” culture that purportedly began with Reagan, the continuing economic crisis can be turned into “a good thing.”

A central tenet of Frank’s essay is the advocacy for a “steeply progressive tax on each family’s total annual consumption,” one in which, for example, a wealthy person would pay a 100 percent surcharge to the government if he or she adds a “$2 million wing to [their] mansion.” Frank writes that taxes in general will have to rise more than what President Obama has outlined in his exorbitant budget, although aside from the standard cry for bilking the richest Americans (the amount of revenue generated by this alone won’t begin to cover the administration’s wish-list of spending programs), he skirts around the specifics of tax rates for the less affluent. He also, curiously, calls tax hikes “the third rail of American politics,” even though Obama wasn’t shy about this issue during his campaign and still won the election convincingly. Besides, I thought tampering with Social Security reform was the “third rail,” as well as immigration reform and legalization of gay marriage; that sure makes a lot “third rails” in politics. But I digress.

Frank also has, in my view, a warped and condescending (not uncommon in his circles) sense of how Americans relate to each other when consumerism is considered. While he claims it’s not a matter of “keeping up with the Jones’,” he writes: “[Traditional economic models] assume, preposterously, that an investment banker remains just as satisfied with his twin-engine Cessna even after learning that his Nantucket summer neighbor commutes to the island in a Gulfstream G200.” Talk about stereotyping. Frank’s “eat the rich” trope continues: “Even more striking gains would result from the [consumption] tax’s indirect effect on the expenditure cascades that have made life more difficult for middle-income families. If the rich spent less on housing, gifts, and other things, the near rich would spend less as well, and so on, all the way down.”

Translation: The United States is populated by envious sheep.

Kurt Andersen’s cover story in the current Time, “The End of Excess: Is This Crisis Good for America?” explores some of the same themes as Frank, absent the Father Knows Best hectoring. Andersen romps through life in America since the early 80s, the good and bad, opening his long article with the sentence, “Don’t pretend we didn’t see this coming for a long, long time.” That’s easy to say in retrospect, even if “The popular culture tried to warn us,” yet if you had polled a group of diverse Americans just one year ago, as the recession was starting to be felt, it’s very hard to believe that aside from a few stray Cassandras that many people, whether involved in finance, government, medicine, entertainment, media, charity work or education, would’ve have predicted the magnitude of this rotten economy.

In part, Andersen—successful novelist, journalist and talk-show host—is addressing his own crowd, especially with a paragraph like this one: “We don’t need to turn ourselves into tedious, zero-body-fat, zero-carbon-footprint ascetics, but even after the economy recovers, deciding to forgo that third car or fifth TV or imperial master bedroom or marginally cooler laptop will come more naturally.” On the whole, Andersen’s laundry-list article is by turns entertaining, astute and revisionist—although his donning of a hairshirt seems a bit false—but unlike the angry liberals who are gleefully projecting their own utopia of a strictly regulated, protectionist, Big Government, European-like (as if the U.K., Germany, France et al aren’t having their own problems) United States, Andersen is more reasonable.

Aside from the obvious (to all but the most left-wing) point that while storied institutions have failed or gone belly up in the past year, new entrepreneurs will take their place, to me, the key snippet in this piece is the key role that immigrants will play in America’s recovery. That is, if politicians allow this to happen. Andersen says, “The sooner we can agree on a coherent national policy to encourage as many as possible of the world’s smartest and most ambitious people to become Americans, the better our chances of forestalling national decline.”

Paul Krugman, on the cover of Newsweek now (in another cliché of more prosperous times, the Princeton professor, Nobel Prize winner, and New York Times op-ed columnist, is considered a “rock star” economist), isn’t as optimistic as Anderson. Then again, optimism isn’t in the man’s vocabulary. (I did enjoy the anecdote in Evan Thomas’ mostly puffy profile of Krugman, in which the Great Man says that he’s never met Obama and besides, at a press conference the President pronounced his name wrong.) Writing on March 27, Krugman longed for the days—even in the “go-go years” of 1960s bull market—back before Reagan when finance wasn’t glamorous but boring and small and “primitive,” when banks “attracted depositors by providing convenient branch locations and maybe a free toaster or two.”

Neat. Let’s return to the pre-ATM era, and, while we’re at it, that marvelous economy of the 1970s. The left doesn’t want to hear it, but once the recession does end, the country will need a fully-engaged, humming economy, and for that to happen it’s imperative that talented, business-oriented individuals lead the way. Government’s role is to be the umpire, not the shortstop, pitcher, and clean-up hitter all in one. It’s too early to tell whether Obama, at least if he wants to be re-elected, understands that the United States is a centrist country, and once the furor over AIG and TARP companies dies down, if he tacks to the left and embarks on a program of income redistribution, a Howard Jarvis-like populism will take hold and his “transformative” plans will be scuttled.

  • Great piece, Russ.There are lots of signs of Far Lefties licking their chops at the opportunity to control the business world and to paternalistically enlighten the underclass.But the pendulum won't stay left forever as ours is fundamentally a centrist country. The excesses and mistakes of the past twenty-five years will go away but the unintended suppression of the economy by the innately anti-business, academic policy-makers now running the show could well become a BIG problem. Obama has to coax out a very prosperous economy if he wants to achieve and afford all that he has announced - healthcare, education, and energy overhauls - and unless he governs from the broad middle and takes his boot off the necks of the most productive contributors to the economy he won't be able to attain the important needs he's talked about.Indeed, the economy has to "hum" to get there. And that's going to require everyone's willing effort.

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  • I like the baseball analogy, and agree that the gov't's proper role is as the umpire. But what if the shortstop and the right fielder, who sucked anyway, break their legs and are done for the season? Wouldn't you want to spend some time thinking about what types of shortstops and left fielders might do a better job than the horrible ones that are currently injured? That isn't social engineering, it's common sense!

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  • I don't know enough about economics as to know who's right or wrong. All I know is for once in my life, I do feel lucky to have a job, and that's a little depressing to me.

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  • I wouldn't have expected the anti-intellectualism that plagues American discourse to crop up here. I had hoped it might be restricted to Glenn Beck crowing about universities being the last bastion of (gasp) Marxism, but alas. And I thought dearly departed Milton Friedman -- proud father of the mess we're in -- was a tenured professor at University of Chicago? "Talented, business-minded individuals," in businesses of all stripes and in government, contributed brilliantly to our current situation, and they ought not sneer at the academic left when plotting a way forward. Whether Obama & co. have them or not, new ideas are exactly what we need.

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  • There is a startling trend of condescension amongst the left, but can you really blame them after eight years of W.? It's just basking in the glow of Obama's win. The biggest problem in our society today is the rampant partisanship that disables us from getting along, and both sides are to blame for that.

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  • IN DANGER OF COLLAPSING!! Thats how Obama and the Media protrayed it. To big to fail. Not to small to fail. Failure of any kind is not an option. Obama is right for the times. People are afraid of failure. People who are afraid usually cough up what's asked to be required of them. Some may notice that in all this legislation thats been passed and waiting to be passed they've given up their liberty. Thats freedom from government as juxtified against freedom from religion. We're hard pressed to tell the difference anymore. The more promises the government makes the less free we are. Where failure is not an option then freedom is not optional. So letting the government decide in writing Obamas next list of regulations., (You may not have noticed how Obama usurped the powers of Congress in the first stimulas spending bill.) how private financial institutions like Tom Smiths cummunity bank in Perham started 30 years ago in an agricultural county gets to have a federal supervisor looking over Toms shoulder. Owning money to make money is a capitalist, free market way of doing business. I think in a few years they'll be able to remake, Its a Wonderful Life. Jimmy Stewarts confrontation will be after waiting in line to see Mr. Potter, now the federal bank inspector. He'll have to explain to him how the loans he made to people he knows will be paid back., "Can't make the mortgage?? Potter says, and Jimmy says, "Walll, I guess he could make it, but these new regulations make it near as close to impossible for a fox leaving the hen house empty handed". Now the truth is banks fail. One a week from the 8000 that exist today. Failure is an option. What happens when the government sets bonuses, stock options, pay scales or whether to unionize or not in order meet the requirements to recieve help from Obamas next stimulas package? And guarrentees no failure. Yup, you guessed. Guarrented failure.

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  • "Translation: The United States is populated by envious sheep." No. The United States is populated by a middle class that is sick and tired of having their earnings DISTRIBUTED upwards for the past eight years -- then finding out that nothing trickled down but a devastating recession.

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  • But, as the article suggests, you won't be getting "new" ideas from the academic left. More taxes (for everyone), more regulation and a more intrusive government aren't new ideas; they're just the blueprint for a non-competitive society and culture.

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  • Once again, I turn to Mike Gravel: "The biggest challenges are threefold: one is going to be dealing with the economic meltdown, which I don't think they're going to be able to do. You can't use the same people that caused it to deal with it. So it'll continue with band-aids until it really brings the whole crushing defeat of capitalism. Even before the meltdown we were in a catastrophic economic situation where all the things that they were promising could not be met and they still promise tax cuts and all the rest of it. It's unbelievable... If we buy into American imperialism we can't redirect the economy to solve our domestic needs, which are education, health care, building infrastructure, and cleaning up the environment. What we should be doing is turning around and building five million windmills and solar power plants in a five-year crash program. That will create an unbelievable amount of jobs. We don't have to worry about bailing out the banks. Screw the banks." http://www.splicetoday.com/politics-and-media/blow-up-guantanamo-recognize-cuba-and-withdraw-from-iraq Ohh, oh Mike. Where are you now?

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  • Of course, but "there is nothing new under the sun" isn't a new idea, either. But sticking to the same old "more taxes, intrusive government" tack seems to me to be insufficient to the moment we're in. We're watching what could be the end of an unsustainable economic way of life, and the right is going to keep playing the same records? All I'm saying is there might be lessons to be learned from the sectors whose names Cantor & co. can barely bring themselves to spit: "academia," "the left," "Europeans," "social democrats". I think more agnosticism about free market capitalism - as in, ideas to give coherence to the unbelieving anger most Americans I know feel right now - could be valuable.

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  • I do agree that economic conservatives--who are at odds with social conservatives on any number of issues--are not acquitting themselves well right now. Yet academics generally live in a bubble, and mostly have a distrust of entrepreneurs. And, of course there's anger in America--that's what happens in a recession, especially a deep one. There wasn't a lot of the same anger even a few years ago, when Americans were buying houses on easy credit, day-trading and often receiving annual raises. Again, as for Europe, in England Gordon Brown is on his way out, and is vilified in the media there. Sarkozy? Who knows, he's a wild card. Germany's Merkel is instinctively conservative, and she has problems of her own, with unemployment. And, I may add, that European countries have done a terrible job in attempting, or not, assimilating the vast numbers of immigrants. France has essentially shut out their immigrants, consigning them to de facto ghettos with no employment possibilities. At least in the U.S., despite the current and repugnant anti-immigration wave, which is non-partisan, immigrants have a far better chance of melding into society.

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