Two reasons for optimism for the New Year
The resilience of the American economy and political system give hope for an iterative path to a better future.
I am generally pessimistic these days. Not about personal things, but about the political life of our country.
Donald Trump, consciously or unconsciously, is undermining democratic and constitutional norms and constraints to an extent unprecedented in the post World War II era.
He has forfeited any moral authority the United States had as the leader of the free world. He has rendered the United States just another grubby big-footed player in a revival of the great power politics of the 19th Century.
He is even undermining the principles of our market economy, with his capricious and erratic tariffs and having the government take equity and managerial stakes in private companies.
In the midst of this gloom, however, I have two sources of optimism. I thought it would be good to share them for the start of a new year.
The first is an essay I read decades ago by economist Herbert Stein in the Wall Street Journal. It has profoundly affected my outlook ever since.
In the essay, Stein recounted all the economic folly, in terms of government policy, he had participated in or witnessed over his long career, culminating, as I recall, with Nixon’s economy-wide wage and price controls.
Despite all this foolish government policy, Stein observed, the American standard of living steadily, and sometimes markedly, improved. The conclusion that Stein reached was that, so long as the American people were relatively free, particularly economically, their industry and ingenuity would overcome and overwhelm any foolish or misguided government policies put in their way.
I think that remains true. There is a lot of foolish or misguided government policy standing in the way these days. A Fed unserious about taming inflation. A president and Congress, irrespective of the party in charge, pursuing an unsustainable debt-financed fiscal policy. Industrial policies leading to less-than-optimal allocation of private sector capital, whether Democratic subsidies or Trump’s crony capitalism.
Yet the American economy plugs along, sluggish but steady. Most economic activity takes place under rules set by the government, but without the government’s direct involvement. So long as that remains the case, productive trade that leaves both parties better off will continue to be the chief characteristic of our economy. And that is the engine of improving living standards.
The second source of optimism is the resilience of the American political and governmental systems.
The American people are mostly pragmatists, not ideologues. They want a government that works. And when they sense that government isn’t working, they change directions.
As gloomy as I am about the current condition of the country, at my age I have seen worse. I’m mildly surprised at how little recognition there is today of just how bad things were in the 1960s and 70s.
In the 1960s and 70s, there were assassinations of political and civic leaders. John Kennedy, Robert Kennedy, and Martin Luther King were killed. George Wallace was paralyzed. There were race riots and violent protests against the Vietnam War. The 1970s was a period of economic stagnation and economy-wide wage and price controls followed by double-digit inflation. The political divisions of today are nowhere near as intense, heated, and threatening as those of that era.
In 1980, the American people chose Ronald Reagan as president, not so much because in the interim they had become full-spectrum conservatives like Reagan, but mostly because the status quo wasn’t working. In 1984, Reagan was able to run for re-election on the theme that it was morning in America again.
The earlier rise of Margaret Thatcher in Britain is an even greater source of optimism. The Britain Thatcher inherited was truly socialistic, not the faux charge of socialism Republicans toss at Democrats in this country. The government owned and managed many of the country’s leading industries.
The success of the Reagan-Thatcher policies influenced the direction of political economies throughout the world, even when opposition parties eventually took over, and to a certain extent still does.
Trumpism and MAGAism isn’t working and isn’t going to work. Easy money, big deficits, greater state control over private companies, erratic tariffs, vindictive domestic politics, and a bully-boy foreign policy isn’t the path to a better future. Eventually, the American people will want a change in direction – perhaps, if not probably, as early as the 2026 midterms.
The alternative on hand won’t be a return to the Reagan-Thatcher policies, but whatever concoction Democrats cook up. American politics are iterative. The pragmatic electoral consideration will always be: Is it working? I think the Reagan-Thatcher policies are the ones that work. Democrats can attempt to disprove that next time in power. And if they fail, the iterative American politics will ultimately get back to what works, however sinuous the route.
Now, Trump attempted a coup in 2020, plotting to remain in office despite losing the election. And it was a more closely-run thing than usually credited. I am haunted by the question: What if Mike Pence had said yes rather than no?
If an election repudiates Trump and Trumpism, there will be an attempt to discredit it, and perhaps to overturn it. This is the stress point in my optimism. Is our system of checks and balances strong enough to withstand an attempt from within to overturn a decision by the American people to change directions?
I believe that the answer is yes, although I am less clear as to how the resistance manifests itself and prevails. Trumpism and MAGAism are minority viewpoints within the body politic. The pragmatic majority won’t stand for overturning a democratic decision in favor of a change in direction. And at some point, what Trump is asking from the remaining Republicans of good will will be too much. In that respect, the resistance of Indiana legislative Republicans to Trump’s demand to game redistricting is a hopeful sign.
Happy New Year.
Reach Robb at robtrobb@gmail.com.