Probably my favorite thing about the recession (and there are so many things I like about the recession, it’s really hard to choose a favorite) is that Reagan-era officials are coming forward to be like, “Oh hey, we royally fucked up the economy. Sorry about that.” (Oh hey, Alan Greenspan!) David Stockman did precisely this a few days ago in an op-ed in the New York Times. According to Stockman, the Republican Party has done four disastrous things in the past four decades. First, Nixon took the dollar off the gold standard. Second, the Reagan administration supported tax cuts, although perhaps it’s worthwhile to note that the “tax revolts” of the late 1970s predated the Gipper in the White House by a few years. I think I just defended Ronald Reagan… and threw up in my mouth a little. The third is the explosion of the financial services sector of the economy, aided by deregulation (hey, remember the Savings and Loan Crisis?), which produces nothing but “[extracts] billions from the economy with a lot of pointless speculation in stocks, bonds, commodities and derivatives.” Well put. The fourth major misstep boils down to outsourcing. But it’s not “we” who have “steadily sent jobs and production offshore,” it’s corporations who have done so, although they’ve certainly been aided by free trade measures like NAFTA. In any case, it’s the search for a cheap labor force that has pushed production overseas (Jefferson Cowie documents part of this process in Capital Moves) because workers in the U.S. expect things like a living wage and health care. Jerks.
A couple things bother me about this piece. One is Stockman’s reference to the two “primordial forces–the welfare state and the warfare state–”that increased the national budget at the same time that it was being eviscerated by the administration’s tax cuts. This is problematic because with this rhetorical move Stockman implies that there’s some kind of equivalence here, that federal spending to provide for the basic needs of its poorest constituents is as onerous as pumping money into a bloated military-industrial apparatus in order to scare the rusting Soviet Union into submission. Oh, and also there was that whole thing where we propped up right-wing dictators in the Third World because hey, at least they weren’t communists or socialists or left-wingers of any stripe! And also that Reagan slashed and starved a whole host of social services that aided the “undeserving poor.” But we’ll leave all that for another day.
The other thing that bothers me is that Stockman calls McConnell’s proposed tax cuts “vulgar” and “recycled” Keynesianism, which it is most certainly not. The Keynesian apparatus erected during the New Deal and maintained through the mid-70s sought full employment, not low inflation, and relied on a tripartite accord among management, labor, and the federal government to keep (white, male) Americans at well-paying industrial jobs. We’ve moved so far away from that in our fiscal policy, what is politically viable, and the structure of the global economy that I doubt a return to mid-century Keynesianism is possible, regardless of whether or not it’s desirable. But the real problem in the context of this piece is that extending tax cuts for the wealthy isn’t recycled Keynesianism, it’s recycled Reaganism, as suggested by the title of an op-ed on the same topic by Paul Krugman. And when Stockman calls for renewed “austerity” and “financial discipline,” I have a feeling that he’s thinking less of subsidies to Big Oil and Big Agro than of Temporary Assistance for Needy Families and Head Start. I could be wrong on that, but to me this feels very much like some old jellybeans in a new jar.