One of our most respected American political writers, at least in my opinion, is U. S. News & World Report's columnist Michael Barone. He is a keen observer of the both history and political developments of our nation. Last week Barone asked if there was a pendulum swing going on in America? He put it his way: "You can sum up much of the 20th century by saying that in the 1930s Americans decided that markets didn't work and government did, and that in the 1970s Americans decided that government didn't work and markets did." I think that is a tad simplistic but sometimes a simple picture is worth a thousand words. And the picture gets it about right in my estimation.
Both the decades of the 1930s and the 1970s produced protracted changes in public attitudes. The bread lines of the 1930s produced a public that was willing to give government huge powers to intervene in the economy to fix problems while the 1970s brought us gas lines and unbelievable inflation (called "stagflation" at the time) that drove people the other way, toward less government involvement in the economy.
Now it appears the pendulum is once again swinging. Regardless of who wins this current presidential election there is the likelihood that government will become even more involved in how we make and spend our money in the decade to come. (This, of course, is barring a complete collapse. Then it is anyone's guess as to which way we would go, but my money would be on larger and bigger government response since most of those under 40 think government is there to help them make it.)
Obama has successfully used the present financial crisis to "spin a narrative" that says deregulation and greed are the real problem and government is the primary answer. McCain agrees, just not quite so deeply. I believe that it is quite likely that Obama will be our next president and that the Democrats will be given the power to make huge changes if they control both houses of Congress with even greater numbers. Will they raise taxes on the wealthy in order to level the playing field? (This is a form of income redistribution no matter what you call it. The rich have a responsibility to help the rest of us and the government is there to take it and give it to us. Just be honest about this if you agree. I totally disagree with it and believe it has long-term negative consequences for everyone, and the rich will still be very rich when it is over.) The normal pattern for Democrats is to tax and tinker with the society by government involvement, not simply by regulation and punishment of criminal behavior, which we all agree should be done. If the Democrat approach is followed the consequences could be immense. On the other hand McCain will not sit by and let the markets rule without intervention of some sort. We simply do not know from our present vantage point what this will mean. (Anyone feel confused by the last two weeks and what you are being told?) The one positive here is that Obama is a very bright man and may govern to the right of his past voting record once he is in the White House.
Barone suggests that the reason FDR was re-elected to a third term in 1940 was much more because of Adolph Hitler and the looming war, than because he fixed the economy. I think he is fundamentally right. The likelihood that the pendulum would have swung back again was strong at that time. But nearly 13 years of FDR made this approach permanent and we have never been the same since.
Postwar America then experienced a huge boom in a number of ways. The tax-cuts of JFK (does anyone remember that he ran on tax-cuts and not just for the 95% that Obama continually talks about) and the passage of civil rights legislation all spurred us forward.
Barone has a very interesting conclusion:
Are we looking at another inflection period today? Maybe so. Reversing the long course of history, I think it's obvious that market capitalism, together with the rule of law, hard currency and regulations that ensure transparency and accountability, has produced bounteous growth and the resources to address problems that require government action, like defending the nation and protecting the environment.
Barone suggests that voters will generally tend to consider the history they know. This history is what most people get via the media. The vast majority of young adults have no desire to think about lessons learned from the past. Like all young people they tend to live for the present. So for them the issue is "What's happening now?" With such a short memory they are likely to go for the fix that seems apparent at the moment. The answer to this is twofold, gaining (1) A basic knowledge of economics and markets and how they work to benefit most people, and (2) The realization that personal responsibility and strong incentive are critical to human and societal success.
We who have enjoyed so much affluence have failed to educate and equip the next generation for the future. It is likely that hard and difficult experience will have to do the job for us. The problems we face are systemic and life-changing. The next president cannot fix them. He might slow all this down, or he might speed it up, but he cannot fix it through political action. Most people my age have a sense that this is the case, but few of us will to do the hard work to teach it.
In the long run I am not pessimistic. America has recovered before and will, very likely, recover again. What this shift may do is set the stage for a massive spiritual revival, which has likewise had a major impact on both past recoveries and past collapses. I would welcome that with all my heart, boom or bust. I am far more interested in God's blessing of the church than in the markets of America. This is why I do not think the solutions we debate every four years are nearly as important as we think.