The Second Anti-New Deal

The United States has faced three major economic downturns in the last century that have also had a profound effect on our politics: the Great Depression, the Stagflation of 1973-1982, and our current mess. We all know that the Depression led to the New Deal, when millions of Americans demanded and received greater protection from the worst of capitalism. Workers organized unions now better protected under the law, Social Security provided help for the elderly and unemployed, and FDR's alphabet soup programs put Americans back to work. It was by no means perfect, but it helped pave the way for a broadened and more secure middle class. Unfortunately, we today are living in the Second Anti-New Deal.

The New Deal established a consensus over the proper form of political-economy: a free-enterprise system with a social safety net, respect for collective bargaining, and regulation of corporate power. Until the Reagan, there was not a single president who truly disputed this idea. Even Richard Nixon signed the Endangered Species Act, and created OSHA. The collapse of the Fordist industrial economy, which is almost complete today, first accelerated with a vengeance in the 1970s. Economic uncertainty (along with nationalism, a poor opponent, and a host of other factors) led to Ronald Reagan's victory in 1980.

Despite his supposed "fiscal conservatism," Reagan was a kind of quasi-Keynsian. By cutting taxes and building up defense, he injected a great deal of money into the economy via deficit spending. Unlike Roosevelt, however, aid to those suffering the worst of hard times was cut, not extended. The breaking of the PATCO strike was part of a general attack on the labor movement. While the New Deal helped broaden the middle class and reduce wealth disparities, the Reagan Revolution has helped bring us back to income distribution reminiscent of the 1920s. Whereas the 1930s saw increased regulations on the financial industry that prevented speculative bubbles, the 1980s set the banks off their leashes, leading to wonderful things like the S&L crisis and our current debacle.

Despite the fact that a Democrat holds the White House, we are living now through a Second Anti-New Deal, one that is largely being committed on the state level. All around America, and not just in Wisconsin, corporately paid Republicans are destroying bargaining rights, and cutting both taxes for the wealthy and basic state services like schools and hospitals.  All that is public is being privatized, from the prison system to charter schools.  Instead of funding public works projects, governors like Chris Christie of New Jersey and Rick Scott of Florida have refused federal money for needed additions to the transportation infrastructure.  In Louisiana, Bobby Jindal has sponsored an education "reform" that seems aimed at destroying the system of public education altogether.  I fear that that the defeat of the recall campaign against Scott Walker will only embolden the state level erosion of the New Deal.  Public institutions take a long time to build and nurture, but they can be destroyed pretty quickly, something the Jindals of the world seem to understand well.

The New Deal looked to the future, the anti-New Deals look to a mythical American past of pulling bootstraps, pioneer spirit, etc. (This despite the fact that many of the foot soldiers of the anti-New Deal benefit from Social Security, Medicare, and the Interstate Highway System.)  In reality, they are taking us to an actual American past that we spent the twentieth century trying to escape from: the Gilded Age.