American Amnesia: How the War on Government Led Us to Forget What Made America Prosper by Jacob S. Hacker, Paul Pierson
What has government ever done for us?
Quite a lot, actually, but we seem to have forgotten that. In American Amnesia, two political science professors, Jacob Hacker from Yale and Paul Pierson from UC Berkeley, argue that there has been a concerted effort to cause us to forget and, more insidiously, to get us to regard our government not as the facilitator of our prosperity, but as a hindrance.
It seems obvious to me that the benefits of government don’t stop with things like roads and bridges. Because of governmental regulations, we can be fairly sure that the food and medicine we buy isn’t toxic; that our appliances, cars, homes, and other purchases are reasonably safe to use; and that whatever else we buy will function almost as well as the sellers claim it will. Our air and water are cleaner, our workplaces are safer, our workdays are shorter, and our pay is better than in the not-so-distant past because of government. If we are in the fortunate position of having a fulltime job, we may enjoy some kind of insurance or even paid holidays because of governmental policies. These benefits did not emerge from the invisible hand of market forces. They came about through governmental actions required to curb abuses of consolidated wealth in its pursuit of selfish interests.
But that’s history, and American Amnesia is not a lesson about the Depression, the Progressive Era, or the New Deal. It’s about the ongoing effort to make us forget them. Hacker and Pierson don’t claim this is a conspiracy, exactly. The people behind it are not united enough for that, but there is a common ideology at the heart of it that is impervious to facts and immune to rational argument. It’s a simplistic, good guy versus bad guy fiction in which government is always bad and private enterprise is always good. It’s the imaginary world portrayed in Atlas Shrugged by Ayn Rand. Real world history doesn’t matter. Facts are irrelevant. The fiction is clear and compelling, and adherents are determined to prove its validity by undermining the U.S. government’s ability to succeed. After all, if government is bad, any action it takes to improve things will end up doing the opposite, right? To those who subscribe to this dogma, government failure is a forgone conclusion.
There is, however, a tiny grain of reason behind this fantasy. Governmental policies and regulations can be a hindrance to accomplishing narrow, short-term monetary goals. If next quarter’s profits are a factory owner’s main concern, he may not appreciate the government compelling him to address what Hacker and Pierson call ‘externalities’. The pollution caused by his factory can be one of these. Spewing toxins into the environment doesn’t factor into the business owner’s decision-making process because it doesn’t affect his ability to produce and sell his products. He may not like seeing dead fish floating on the river outside his corner office, but the fish aren’t his customers, and the river isn’t his problem. Any effort he might take to reduce his outflow of noxious sludge would undoubtedly cut into his profit margin. If the costs of reducing his pollution were passed down to the buyers of his products, it could harm his business because companies that don’t clean up after themselves will have a cost advantage. The best thing for him to do from a purely private business perspective is to ignore this negative externality.
He is also likely to ignore positive externalities. These are a bit less intuitive, but they are no less a part of the environment in which he does business. Like the polluted river, they don’t have a spot on his balance sheet, so he doesn’t want to pay for them if he can avoid it.
The government provides many positive externalities that befit our factory owner. It provides the framework within which he negotiates contracts with other business, and it provides him with legal recourse in the event of contract violation. The government helps him by restricting monopolies from eliminating him as a potential competitor (e.g. through a hostile takeover, dumping goods, or intimidating his suppliers). It provides the roads on which his company distributes its goods. It educates his workers. The government also helps him sell what he produces because it instills consumer confidence. Customers feel safe buying from him because they can assume that governmental regulations require him to produce safe and effective products.
Between the early 1940s and the mid-1970s, America was in the heyday of what the authors call a mixed economy. This was a time of unprecedented national achievement and growing prosperity. Under a mixed economy, private companies acknowledge that government has a legitimate, possibly even a beneficial role to play. Businesses continue to do what they do best—produce and sell products and services—but they accept the legitimacy of governmental policies that compel them to pay some attention to negative externalities and to pay their fair share for positive externalities. As long as all businesses operate under the same rules, they, their workers, and their customers benefit. It turns out that a nation of healthier, freer, more secure, and better-educated consumers is an externality that is good for business.
Things have changed since then. Many people now see Business and Government as adversaries rather than as partners working toward a common goal. This change in attitude, and the erosion of our formerly successful mixed economy, doesn’t have a single cause. Individuals and organizations motivated to preserve their relatively privileged positions were part of it. The rise of ideological market absolutists were another. But whether prompted by selfish interests or honest but misguided beliefs, the opponents of government have been largely successful. They have accomplished what their preconceptions told them was true to begin with. They have created a dysfunctional government. They gutted regulations, installed regressive tax policies, allowed the dangerous deterioration of our national infrastructure, and they have enabled the rising wealth disparity between the extremely rich and the rest of us. They have also institutionalized political gridlock that handcuffs the government from taking effective actions to resolve any of these problems. They said government was bad, and they worked hard to make it so.
The authors attempt to end their tale of economic sabotage on an upbeat note. Government, despite attacks over the last four decades to hobble it, can still accomplish much, they claim. Once we realize “how badly we are served by the misleading juxtapositions that dominate public debate: markets versus the state, freedom versus tyranny, free enterprise versus big government”, we’ll once again see government as it really is, a facilitator of a free and prosperous national economy. All it takes, they say, is to establish “a more realistic and historically grounded starting point [from which] we can have vigorous, reasoned, fact-based debates….”
Now who’s mistaking fiction for reality? The authors’ trust in the power of rational debate is admirable, but judging from political soundbites I’ve seen in the news, and from infrequent, painful glimpses of CSPAN, Congress is not accustomed to reasoned, fact-based debates. I have a difficult time imagining a serving member of Congress, especially a Republican one, deviating from his or her party dogma because of reasoned debate or, for that matter, hard data. Doing so, in fact, seems to me as if it would be political suicide. Members of Congress are there to drink their party’s Kool Aid, parrot the sanctioned rhetoric, and oppose any efforts of their political opponents. They behave as if they view the legislative branch of our government as some kind of zero-sum game in which they must be good team players and do whatever their coaches tell them, not so much to win but to ensure that the other party loses. If they have goals beyond this, they seem to be matters of faith, not unlike those of religion or any other fervently held ideology. Objective facts don’t matter. Party dogma provides absolute truth. It trumps the lessons of history, the opinions of experts, and even objective evidence. Questioning the faith is tantamount to a political sin. Any who succumb to rationality, ethics, or a sense of personal responsibility, will likely find themselves metaphorically burned at the political stake.
I know my attitude is showing, but I’ve become more than a bit cynical about Congress. Apparently, I’m not alone. According to Gallup polls, it’s hasn’t topped a 20% approval rating since May 2011, when it briefly hit 24% before slipping back to 17% a month later. But this may be because 80% of the people responding to the polls assume that the role of Congress is to address societal concerns by creating, debating, and passing effective legislation. If so, it has most certainly failed. But for those who see the role of Congress as a means to cripple effective government, it has done quite well. Perhaps it is these people who account for the almost 20% who say they approve of it. I can understand why they would be pleased.
American Amnesia provides an excellent example of how an uncritically accepted ideology can harm a great nation. Such things have happened before. And I agree with Hacker and Pierson. The way to overcome this slow economic suicide is to examine issues based on facts rather than through the distorting prism of economic or political dogma. I just can’t see that happening. In our culture, well-financed special interests have a great deal of influence over our government. They fund political campaigns, they draft legislation, and they control the popular media, which means they can shape public opinion. There may be ways to overcome political polarization and get the government working again, but I don’t know what they are. I do know it won’t happen soon and it won’t be easy.