Make America (Truly) Great Again

Why we think an effective mixed economy is still possible: a response to Noam Lupu’s review of our book  American Amnesia.

By Jacob Hacker & Paul Pierson

Tagged economyGovernance

We were happy to read Noam Lupu’s stimulating review. We wrote American Amnesia in part to spark an overdue conversation about how to make a strong case for robust government in the twenty-first century, and we are delighted this discussion is taking place in a leading journal of progressive thought.

What’s more, we agree with much of what Lupu says. Though he picks a few nits (many of which, like his request for evidence that government policy contributed to the sharp decline in smoking, are actually addressed in the book), he fully endorses our core arguments: that extensive, effective public authority is necessary to achieve and sustain broad prosperity; that the exercise of such authority in the twentieth century was central to the United States’s spectacular economic rise; and that the steady corrosion (and sometimes private capture) of this authority is at the heart of the nation’s current challenges.

It is in explaining this disturbing corrosion that we begin to part ways. Lupu critiques a diagnosis that, in his view, “focuses too much on the realm of ideas…and too little on structural ways that the country, and the world changed.” On this point, we side with Lupu—against a depiction of our book that we don’t recognize. Although we do say more about ideas than we have in our previous work, the shifting balance of power among contesting interests (especially organized business and labor) continues to be our central focus. As in our earlier work, we devote extensive attention to the transformation of the American business community—both the changing incentives associated with the structural changes noted by Lupu, such as financialization, and the increasingly hostile political actions of organized business interests, including the Chamber of Commerce and the advocacy network surrounding Charles and David Koch.

At the same time, we give extensive attention to the stunning transformation of the Republican Party—a transformation that we see as primarily structural as well (though with major ideological consequences). GOP leaders were once committed participants in the political consensus that supported the mixed economy. Today, after a long migration driven by racial realignment, the emerging centrality of the South, and the growing weight of an increasingly conservative business community, the Republican establishment embraces a policy package that is catastrophic for long-term shared prosperity. It combines quasi-libertarian stances on taxes and regulation with a growing willingness to carry water for massive corporate rent-seeking in key sectors like energy, finance, and health care.

Of course, other forces have contributed to the harsh turn against capable government, not all of them purely structural. Parsing the role of ideas is notoriously difficult. Yet the evidence is very strong that shifting elite thinking about the economy and a market-celebrating political discourse have contributed to the profound transformations of the past four decades. Regnant understandings of government that exaggerate its shortcomings and downplay its achievements not only justify and reinforce patterns of elite behavior that corrode the mixed economy. They also make it harder for voters (and segments of the elite itself, including its liberal elements) to adequately grasp how vital effective public authority is for American prosperity. Nonetheless, we make clear that ideological attacks on the mixed economy are grounded in the dramatically changed alliance between organized business interests and America’s conservative party, operating (as Lupu rightly stresses) in an institutional setting that makes it easy to foment gridlock and promote political alienation.

In the end, Lupu’s big disagreement with us seems to be over just how much pessimism is in order. Sadly, his deeper skepticism is plausible. Yet Lupu regards our proposed reforms as “pie in the sky” without recognizing that some of the underpinnings of our political immobilism are potentially quite fragile. The Senate filibuster’s destructive reach has already diminished, and it is not hard to imagine it shrinking further. A single new vote on the Supreme Court (more likely than not after November) could mean the reversal of Citizens United, a breakthrough on climate change regulations, and a more robust response to appalling state-level initiatives that deprive citizens of the franchise. Broader efforts to expand turnout—which we believe could have a major impact, given the increased ideological and demographic disparity between voters and non-voters—could spread, under imaginable circumstances, to the point where Republicans finally accept that they must begin to attract minority voters.

Lupu’s deep-seated pessimism ultimately rests on his assertion that broad historical forces associated with globalization and financialization render meaningful reform a chimera. In his view, the mixed economy was a short-lived anomaly—a grand exception to a capitalism in which inequality and unchecked private power are the norms. This pessimism is understandable. Yet it ignores the extent to which it is the contemporary United States that is anomalous among affluent democracies. It is marked by much more top-end inequality than other nations that face the same structural pressures. It exhibits more blatant and extensive rent-seeking (such as a health care system that costs roughly twice as much while delivering less than the systems of other affluent democracies).

In American Amnesia, we highlight this new, unfortunate exceptionalism by showing how other countries have surpassed us on key performance indicators, such as life expectancy, educational attainment, and continuing investments in the physical and intellectual infrastructure that will foster future prosperity. Ironically, the regrettable decline in American performance also underscores the potential for reform: doing much better remains possible, and this positive-sum potential holds the opportunity for the broader political coalition that both Lupu and we believe must be built to rekindle the robust governance necessary for shared prosperity.

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Jacob Hacker & Paul Pierson are the authors of  American Amnesia: How the War on Government Led Us to Forget What Made America Prosper. Jacob Hacker is the Stanley B. Resor Professor of Political Science at Yale University. Paul Pierson is the John Gross Professor of Political Science at the University of California at Berkeley.

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