According to a recent poll by Quinnipiac University, a majority of registered voters believe that, to some degree, America has lost its identity. Sixty-four percent of those surveyed said that some degree of “radical change” is needed to make America prosperous again.
This sense of dissatisfaction could be fueling the presidential campaign of Donald Trump, a candidate with no background in politics who promises to restore America’s prosperity, says Jacob S. Hacker, the Stanley B. Resor Professor of Political Science and director of Yale’s Institute for Social and Policy Studies.
Hacker argues that Americans have forgotten what made it the world’s most prosperous nation during the 20th century: a “mixed economy” in which government and the market work in tandem for the greater good.
“American Amnesia: How the War on Government Led Us to Forget What Made America Prosper,” a new book Hacker coauthored with Paul Pierson, the John Gross Professor of Political Science at the University of California-Berkeley, makes the case that America “can and must restore a well-functioning politics that promotes shared prosperity.” Hacker recently spoke to YaleNews.
Your book is titled “American Amnesia.” What has the nation forgotten?
The book’s title is meant to suggest not only that we’ve forgotten the enormous contribution that government made to our prosperity in the 20th century, but also that we’ve been hit on the head, so to speak, as critics of government have denounced and denied this contribution and the rest of the political establishment has mostly retreated from talking about the kind of active government that was at the heart of America’s economic success. “American Amnesia”is also a story about the collapse of the political coalition that made that successful economic model possible, a coalition that included moderate Republicans and business leaders.
You described that successful model as a “mixed economy.” What does that term mean?
The term “mixed economy” isn’t used much anymore. By it we mean — to borrow an analogy from Yale political economist Charles Lindblom — the use of the strong thumb of government alongside the nimble fingers of the market. We show that all rich countries are mixed economies and that they became rich in very significant part because they used the strong thumb of government alongside those nimble fingers of the market. The United States not only isn’t an exception to that general story, in many ways it pioneered the active use of government to promote prosperity.
Today, however, we’re not using government as effectively to foster prosperity, and we’re paying the price. It’s not that we have stopped progressing entirely; we are moving forward in many areas, but we’re doing so very slowly — more slowly than in our past and, even more telling, more slowly than in other rich nations. That’s a sign that we’re not using the strong thumb of government effectively to work with those nimble fingers of the market. Without that strong thumb of government, we’re not capable of dealing with many of the most pressing challenges that face advanced societies, such as global climate change, inequality and the strains on the middle class, and the mounting sense of distrust and dissatisfaction with our political system.
What are some of examples of how the mixed economy produced prosperity?
There are too many examples to enumerate here — they are described in the book — but two that don’t get as much attention as they should are the United States’ pioneering role in education, beginning with primary and secondary schooling from the 19th century onward and in higher education after World War II. The second forgotten example is our huge investment in scientific and technological research and development. During World War II we became the world’s leading scientific power in large part because of such investment, which was spearheaded by the federal government and overseen by MIT scientist Vannevar Bush, a conservative Republican. Almost all of the breakthroughs in technology that propelled the economy in the late 20th century can be linked to this leadership role.
What is an example of technology we use today that exists because of government-funded research?
The iPhone is a great example. Steve Jobs was obviously a brilliant innovator who brought together all of these underlying technologies to create something of great value that millions of us have in our pockets. But in fact all of the major components of the iPhone emerged from government research — primarily federally financed research, but also work by foreign governments and academics financed by them. This is true of the Internet as well, which was a creation of academic institutions with direct public support. The original Internet was ARPANET, named after the Advanced Research Projects Agency of the Defense Department. Private companies didn’t see the potential in those technologies until they had reached scale.
That’s a story that we tell in the book, and we think it is important not just for understanding the past but also seizing future opportunities. While computing technology is fairly mature, there are lots of other technologies emerging in the 21st century that need that kind of public investment, including green-energy technology, brain science, and nanotechnology. Over the last 20 years there has been a big retreat from that kind of investment as we have cut back discretionary federal spending.
What role does government regulation play in the mixed economy?
It’s important to recognize that the mixed economy is about more than public investment, or public programs like Social Security, or even macroeconomic policies like monetary policy. It’s also about regulatory policies that ensure that market participants are taking into account some of the broader social effects of their individual actions.
We discuss the cleaning up of milk and water in the early 20th century, which is a forgotten chapter in America’s massive increase in life expectancy. Private individuals couldn’t do this on their own. Fast forward a few decades later, and government was essential to the creation of vaccines and antibiotics and the rules that ensured people were vaccinated. A few decades later, government was responsible for the regulatory policies that reduced cigarette smoking, removed lead from our cities, and cleaned up our air. You have a transformation from a world in which 3 in 10 kids were dying before their first birthday in many cities during the early 20th century, to a world where we see massively longer, healthier, and more prosperous lives.
The events in Flint, Michigan remind us of how important it is to have that effective government role and what happens when it breaks down. We shouldn’t forget that in Flint right now, while about 6% of kids have more than 5 micrograms per deciliter of lead in their blood — the level that’s considered very dangerous — in the mid-1960s and early 1970s, the average blood-lead levels among preschool-aged kids were close to 20 micrograms per deciliter. We shouldn’t forget about how far we’ve come, and how crucial good government policies are to past and future progress.
What has caused the mixed economy to fall out of favor?
From our view, the two pillars of the mixed economy that have crumbled are the moderate business community and moderate Republican Party. We don’t want to romanticize the post-war era, but it’s worth remembering that many of the major policies we write about in the book emerged under Republican presidents. President Eisenhower created the interstate highway system, the first federal aid for education, and the aid to science and technological development that fostered many of the great innovations of our day. Richard Nixon, now remembered mostly for his demonization of opponents and Watergate, was actually quite a believer in the mixed economy. Business leaders at the time of these Republican-led policy breakthroughs were also very supportive.
What happened? The pillars crumbled side-by-side. The decline of the moderate Republican Party shaped what happened with the business community and vice versa.
With business, it’s a story of financialization. We discuss in the book the differences between George and Mitt Romney. George Romney was the governor of Michigan, who had also run an auto manufacturing company. He was very moderate. At one point he said that rugged individualism is nothing but a political banner to cover up greed. He was opposed to the Goldwater ideological turn of the Republican Party, saying it would splinter the nation.
His son, Mitt Romney, was in finance, not manufacturing. He is much, much more conservative than his father on economic issues. He talked about the 47% of Americans whom he alleged don’t take responsibility for their lives. During the 2012 campaign, he denigrated the idea that government should help people afford a college education. All of this reveals the extent to which the shift of the business community toward finance, and the shift of the Republican Party to a more individualistic stance, tore the foundations out from under the mixed economy.
We won’t recapture a strong mixed economy for the 21st century until there is more pressure on the business community and Republicans to offer a constructive role. We’re not arguing for an end to America’s longstanding debate about the role of government, but the almost nihilistic, Ayn Rand-like view that government is always and everywhere a threat to freedom is just at odds with our history. The uncomfortable truth is that it takes a lot of government for advanced societies to flourish.
How is the “amnesia” affecting the current presidential campaign?
We’re seeing the bitter fruit of the attacks on government. A candidate like Donald Trump could never rise in an environment in which people felt that the political establishment knew how to solve problems and in which there was some measure of faith in our political institutions. Donald Trump is the antithesis of effective governance. He is a candidate who says that the solution to every problem is Donald Trump. Our political institutions were founded on the need to compromise and Trump is not a candidate of compromise.
But it will take more than a Democratic victory at the presidential level to reverse this slide. In many ways, the Democratic Party has been complicit in the transformation we describe in the book. We think that Republicans and the more anti-government elements of the business community have been most responsible for some of the changes that have made governance difficult, but Democrats have very much retreated from talking about government’s essential role. This spiral of silence has meant that we face a long-term challenge of investment in ideas and rebuilding of trust that will take some time.
It’s going to take more than a president. It will take a broader movement to restore some faith in government and overcome our amnesia.