In examining the fruits of the New Deal, The Conscience of a Liberal does far more than simply provide a nostalgia-seeped account of post-war prosperity. Instead, the book, written by Paul Krugman, provides a consistent and cogent argument for the New Deal’s expansion. Krugman, a New York Times columnist and respected professor of economics at Princeton University, supports a government that promotes decency, not in the narrow, moralistic sense in which that’s usually meant, but rather in working to ensure comfort and care for all of its citizens.
In making this argument, the book focuses on a central theme of income inequality. While the extremely wealthy hold as great a share of our national wealth as they did in the years before the Great Depression, the rest of us are stuck forfeiting the gains of the New Deal, trading the comfort of the post-World War II boom for increasing insecurity. While some pundits argue these shifts are the inevitable consequences of modern business practices–Globalization! Technology!—Krugman is doubtful.
Other countries have been subject to these forces without similar increases in inequality, he argues. Also, our country’s fortune has largely been reaped by a thin sliver of people at the top of the income scale. The resulting gulf in evoked throughout the book. In the 1920s, for instance, the highest-earning 10 percent of the country earned 43.5 percent of the national’s income (excluding capital gains), and the top one percent earned 17.3 percent; today those statistics are 44.3 percent and 17.4 percent, respectively.
This stratification represents a change from the predominance of the middle class during the period between the Depression and today, Krugman argues. It also represents a departure from the optimism of that period, a time when “there was a striking sense of economic commonality: Most people in America lived recognizably similar and remarkably decent material lives.”
What has changed so that, even as worker productivity increased by nearly 50 percent since 1973, the U.S. has become a society where dual-parent incomes are required for basic necessities, where public schooling is scattershot and underfunded, where infrastructure is crumbling and where, uniquely in the Western world, vacations and even health care are not guaranteed?
Statistically, what’s changed is that the highest tax bracket rate has gone from being 63 percent in 1934, 79 percent in 1936 and 91 percent (!) in the mid-1950s to 35 percent today. The estate tax has gone from a high of 77 percent to being phased out in 2010. Union membership has gone from 30.4 percent in 1960 to 13.5 percent today (in Canada, the numbers are practically unchanged). Finally, CEOs have gone from making 30 times the average worker’s salary in 1973 to 300 times that amount.
What has happened is relatively clear, as the numbers attest. But why? Krugman thinks he has an answer:
Race is at the heart of what has happened to the country I grew up in. The legacy of slavery, America’s original sin, is the reason we’re the only advanced economy that doesn’t guarantee health care to our citizens. White backlash against the civil rights movement is the reason America is the only advanced country where a major political party wants to roll back the welfare state.
It’s a damning accusation, but one that Krugman presents persuasively. The gradual dismantling of the United State’s middle-class society was achieved with appeals to racism, subtle and overt, that carry to today’s attempts to demonize Latino immigrants.
As Krugman relates, a plan presented by Truman to establish a single-payer insurance system was derailed because it would require hospitals in the south to desegregate. Ronald Reagan’s political career had its roots in a challenge to California’s Fair Housing Act (“If an individual wants to discriminate against Negroes or others in selling or renting his house,” Reagan said, “he has a right to do so.”) His later outrage over “Cadillac-driving welfare queens” (the race of whom never needed to be stated) inspired a number of “Reagan Democrats” to pull the ballot lever for him, even as inequality began to rise in the 1980s.
Over the same time period, right-wing think tanks were introduced, entities funded by private fortunes to endow conservative thinkers to produce studies espousing laissez faire government and low taxes. As Krugman says:
Yes, Virginia, there is a vast right-wing conspiracy. That is, there is an interlocking set of institutions ultimately answering to a small group of people that collectively reward loyalists and punish dissenters. These institutions provide obedient politicians with the resources to win elections, safe havens in the event of defeat, and lucrative career opportunities after they leave office. They guarantee favorable news coverage to politicians who follow the party line, while harassing and undermining opponents. And they support a large standing army of party intellectuals and activists.
These ranks include the American Enterprise Institute, whose homepage currently has features on “Islam’s Silent Moderates” and “Why the Worst is Probably Over in Iraq.” They include the Heritage Foundation (“Don’t Be Misled by NIE on Iran’s Nuclear Efforts,” “Expanding SCHIP: Not The Best Option“), the Manhattan Institute (“Stop the Black KKK”) and the Hudson Institute (“Worried? Blame The Chinese And Arabs”). These organizations provide cover for regressive social and economic policies, nurturing them out of the public eye and then pushing them onto the media. They’re the ones that argue that adopting nationalized healthcare would bankrupt our economy or that providing a more extensive, “European” safety net for workers would lead to stagnation and high unemployment.
The reality, Krugman states, is that the United States currently spends twice as much per capita on health care as Canada, France, Germany and Britain but has the lowest life expectancy of any of them. Ignoring morality, from a cost standpoint alone single-payer healthcare would be a winner.
Similarly, while France stands at 74 percent of the U.S.’s GDP per capita, that figure may stem more from guaranteed vacation time and free higher education than an ossified union system, as its detractors would claim. After all, Krugman states, “Worker productivity per hour appears to be slightly higher in France than in the United States.”
During the past century, amazing gains have been seen in both worker productivity and worker’s lifestyles, but while the United States has maintained primacy in the former, it has fallen behind other Western nations in the latter. Our nation’s legacy of racism has colored attempts to arbitrate inequality; at the same time, extreme wealth enables undue influence on our public discourse.
Despite these setbacks, Krugman remains optimistic about the future. Racism is fading in our society, he states, even as people seem to be increasingly ill-at-ease with the economic status quo. Healthcare reform seems likely in the wake of the next election, as does a return to a more progressive tax structure. None of these advancements are assured, however, unless people are prompted to espouse the urgency behind them and act as their advocates. In writing this book, Krugman has done well on both accounts.