:51 Doug Blackmon: Welcome Back to American Forum. I’m Doug Blackmon. A little more than 100 years ago, an American lived on average only about 45 years. There was vast, deep poverty and hunger across the country exceeding more than half the population. Sickness and little access to healthcare were endemic. For much of the population, very few schools existed, and where education was available, it was often limited to the most rudimentary skills of basic reading and arithmetic. Americans who were not both white, and comparatively wealthy, were almost certain to be living in what today we would, without hesitation, label a third-world country. Then, all that changed. In the twentieth century, the health of Americans improved dramatically, millions received ever more elaborate schooling, desperate hunger receded, an economy based on regular work and consistent pay emerged. Business flourished, technological innovation leapt forward, and the United States became a superpower. We literally grew taller as a people. How did that radical transformation occur? Was it a flourishing of the rugged individualism and limited government so often attributed to the founding of our Republic? Or was it somehow engineered and organized by an ever larger and more complex government? Today, that question: What made America powerful and prosperous? What "made America Great!" to begin with? Sits at the center of our most urgent national debates and divisions.
FACTOID: The Question: Have we forgotten what made America Great?
Has our success as a nation been because of good government, or in spite of it? These days Americans seem skeptical. They trust their government less and less, believe that free enterprise and big government are locked in a jealous rivalry, and agree with the sentiment famously expressed by President Ronald Reagan that government in fact “is the problem” afflicting our people. Joining us today are two widely influential political scientists, Yale University’s Jacob Hacker, and Paul Pierson, from the University of California at Berkeley. They offer a vigorous defense, even a celebration of government and have recently published a new book: American Amnesia: How the War on Government Led Us to Forget What Made America Prosper. Thank you for being here.
Jacob Hacker: Thanks for having us. Paul Pierson: Thank you.
3:03 Blackmon: So what has America forgotten?
Hacker: It’s forgotten the story you said at the outset. That we transited, we crossed what we call a great divide between pov- between poverty, poor health, um ah a government what wasn’t capable of protecting citizens against you know the pollution and other risks and public health crises like rampant disease in cities that caused three in ten kids to die before their first birthday. We went from that world to what you said, a world of mass prosperity, a real innovative technological rich economy. And what we want to argue is precisely is that government was at the heart of this transformation. Figuring out how to use government effectively to promote human flourishing was what the United States and other countries across this great divide were able to do in the 20th century. And so to tell the story as it’s told that government’s growth is inevitably at odds with economic expansion and is absolutely backwards. And we want to rescue this forgotten history and see how relevant it is to our present.
4:09 Blackmon: And you when we talk about that idea of that, that, that government really is the prime agent, the real change agent in this transformation of American life, but at the same time the government until pretty recently remained quite modest in American life. I mean even up until the depression for sure so the first decades in the 21st century, the taxes that are collected by government, particularly by state governments remain fairly small. The federal government’s direct intervention and widespread programs across the country are relatively spare in terms of the government. And so is it something that really happened after the depression and on or is it something that began earlier than that? But flush out the story of how, because I don’t think you’re just talking about economic development programs by the federal government that were labeled economic development or labeled public health. But what, flush out that story.
Pierson: Well we do think that it starts much earlier though obviously that the depression and World War II are important watersheds in the development of the modern political economy. What we call the mixed economy that involves the substantial but not dominant role for government. But if you go back to the early 1900s to the Progressive Era, like you’re saying Doug, much of this was happening on a state or local, local level but it was still a government initiative that was extremely important.
The public health revolution that took place in the early, late 1900s, late 1800s and early 1900s which cleaned up the water and cleaned up milk and drastically improved life expectancy, infant mortality rate in New York City in 1900 was three in ten, three in ten, out of every ten babies did not make it to their first birthday.
Hacker: And I’d also like to say that the educational revolution begins earlier than the mid-20th century. It is true that the United States pioneered early primary education but it’s really after, after 1900 that you see the massive expansion of high school education. And just as we were the pioneers in college education with the GI Bill, we were the country that really was the first country to have universal high school. We tend to focus when we think about government we tend to focus on those you know, redistributive big programmatic measures that occurred during the New Deal or after World War II. But there are also these important developments that are occurring that are really in tandem with encouraging economic development. All of this is part of this larger story. But the part that we forget is the ways in which government invested in research and development, in education, in things that really, in infrastructure, in things that were producing a powerful national economy and were broadly positive sum. They weren’t redistributed, they were helping everyone.
6:56 Blackmon: But when you go back to these earlier times, ah, clearly things like the transatlantic railway, um and you know that we remember that in a kind of heroic systemic way but it also had a giant economic benefit. That’s a clear point. But at the same time there are also if you dig around and in the same period of time there are endless numbers of failed railroad efforts that are sponsored by government. And endless scandals in state governments. And governors who are on the take and corruption associated. So in the time did people understand the implications of, clearly people understood there was a need for better transportation but did they, did they perceive that they were actually making great gains or did they think this was a big messy process with unclear outcomes?
Pierson: Well it was, it was messy and I think the historical record especially if you move to the latter half of the 19th century, one of the mounting problems that you had actually as the economy is developing into a national economy with firms that are operating on a national scale is that the fruits of that economic development were more limited and umm less beneficial for the whole entire population in part because you saw developing concentrations of economic power, right? That actually sounds very familiar to Americans when we think about our current circumstances. So one of the many tasks that government faces and one of, it was clearly a catalyst in the Progressive Era it was a concern that an unchecked market economy in which you did develop these concentrations of economic power was a real threat to the quality of life of ordinary citizens to the quality of American democracy. There was a risk that government would be both weak and captured by these powerful interests. So there’s this interesting double movement that takes place really beginning with the Progressive Era in which you see both an expansion with the task the government is taking on but also a growing effort to try to develop a government that can operate as a countervailing power against concentrated economic interests.
Hacker: As society becomes more complex and interdependent as these large scale corporations emerge on the scene you simply need to have a government public authority there. You can’t address some of these fundamental problems without having that counterweight. But we also want to emphasize that this wasn’t a retreat from some you know free market idol that existed before government stepped in. From the founding, and the Founders believed this strongly, the idea of having a central government that had the capacity to do the essential things that needed to be done to produce a prosperous free society was at the heart of everyone’s thinking. And so, but it’s not just about government spending. It was also about having rules of the game that kept the market from spilling over from politics. It was also about making sure that what economists called the externalities of the modern society. The fact that this company’s pollution destroys our air and water to make sure those were in check. All of this was part of this revolutionary change, truly revolutionary change, that made lives, the lives of all Americans vastly better and transformed the possibilities of human society.
10:15 Blackmon: You guys also challenge pretty strenuously the the a lot of the conventional understanding of the Founders and the discussion of the Founders, a pretty widely accepted notion that the Founders were as fearful of the power of government as they were of anything else. More specifically who were you talking about and what are you talking about? Who did we misunderstand? Or who have we amnesiaed from among the Founders?
Hacker: Well I mean I think the rehabilitation of Hamilton right? The fact that, the fact that now he’s singing popular show tunes. But the fact that he’s back in the public consciousness is good because Hamilton was really central to many of these discussions and debates. And he ended up authoring a large portion of the Federalist Papers as well as making what we think is the most powerful statement on behalf of public authority at the New York State Ratifying Convention where he essentially said, look, it was obvious why we focused so much on liberty when we were fighting against a tyrannical king.
But we seem to have forgotten the need for a vigorous affective government as well. But it wasn’t just Hamilton, I mean Madison is also I think really umm, ah, really forgotten as a key exponent of this stronger government role. At the Constitutional Convention he came supporting the idea that the federal government should have an absolute veto over state laws that didn’t comport with federal rules. And that was a position that also was linked up with his idea that there should not be equal representation of the states in the Senate but rather representation based on population. He saw a system of government that was much stronger then what we actually ended up with given the Constitutional Convention the compromises were inevitable. So and even Jefferson there’s a great quote from an economist Eric Rinehart where he says you know we basically dealt with economic policy in the United States by putting the Jeffersonians in charge of rhetoric and the Hamiltonians in charge of policy, right?
So even Jefferson was not actually that Jeffersonian when you start to look at what he actually did. He continued a lot of the infrastructure, he didn’t get rid of the national bank, um he purchased a huge tract of land using executive authority. So the point that we’re making is we’re transporting our contemporary debate over government back into this period. The debate was very different. And we’re also saying that this 20th century creation, the mixed economy, is a distinctive response to the to the challenges of a modern era independent society. So we’re not saying that the Founders gave us every piece of wisdom, but it is quite revealing that we understand them as basically anti-government libertarians. Which is absolutely at odds with what they stood for, and what the vast majority of them believed in and fought for.
FACTOID: See millercenter.org/president for resources on U.S. presidents
13:00 Blackmon: As we then move closer in time to the present ah, and the role of government being more pronounced, more obvious in the kinds of things that you’re talking about. How do we balance that out and be certain that a bigger government idea is the right approach?
Hacker: What we argue in the book is that the areas where government has been most powerful and effective are precisely the areas where markets tend to fall short. And we know from economic theory and history where that is. Umm and it’s both cases where markets acting on their own don’t work well. So for example externalities where environmental or other costs that are imposed on people outside of the market transaction. Those are not going to be dealt with without some kind of public policy.
Blackmon: Like pollution.
Hacker: Like pollution or public goods, right, and education being a chief case of that. Um like cases in which we know there are serious failures in the market because of information, insurance markets that break down or people who are too myopic about certain risks. And then finally I just want to say this is going back to what was distinctive about the 20th century. When we started to have these large massive concentrations of economic power, that was also threatening to our politics. So the mixed economy is both about dealing with clear cases of market failure and pushing back against concentrated economic power and that kind of balance is going to involve, it’s going to involve cases ah, it’s going to involve tradeoffs. And it’s not as if there is a, a formula that’s always going to work perfectly but it has performed enormously better ah than any conceivable alternative. And it is just the myth to think that prosperity occurred in spite of government. In fact, it occurred in a very significant part because we figured out how to harness government. And it is this anti-government rhetoric that ironically pushes us to a kind of attitude towards government and policy that produces some of the dysfunction that we’re against today. It’s not taken seriously enough how crucial this role is. In the book we write about the extent to which now there a kind of doom loop of dysfunction, right, where people are against government. They don’t want to work with it. There are politicians who are rewarded for attacking it. And then when it doesn’t work well of course that feeds that even further and those politicians are rewarded. And so we’ve gone from sort of a virtuous cycle in which, in which government was doing things that were recognized and palatable and politicians were rewarded to this much less positive, this vicious cycle in which there’s politicians are abetting disfunction and then getting rewarded for it
15:31 Blackmon: Now is that is there a conspiracy to convince, to make us forget about the good things the government is doing and focus on the, focus on where there are it’s easier to challenge the government?
Pierson: Well we do think, I, conspiracy isn’t the right word but we do think there are very powerful interests, right, who have found that, that they benefit from an environment in which government is functioning less and less well and citizens are umm, are less and less positively inclined towards it. And the two big winners in the book we call them the great enablers of the erosion of the quality of governance in the United States. One are big elements in the business community and the other is the Republican Party and the evolution of the modern Republican Party. Both of which in different ways, and we try to, we try to explain and describe the transitions of both the business community has made politically and the Republican Party has made politically. But both of them are much, much less committed to supported to supportive of the mixed economy than is true in the 1960s and 1970s. and if you go back and you read the comments of, most Republican leaders in the 1960s and at least through the first half of the 1970s, you know an economic issue they sound to the left of many Democrats today. They were Richard Nixon ah Mitt Romney’s father, George Romney, who was a prominent Republican politician in the 1960s. the list is very long. Ah, you know, these folks were supporters of the mixed economy and felt like and they would then argue about what the most effective policy was and of course there are lots of ways in which government can go awry but the conversation then was much more about smart government. How do you produce effective governance rather than the idea that you could simply get rid of government and you would somehow have a more prosperous society? So those two big political transformations.
Hacker: So when we compare Eisenhower for example and Clinton who were both similar kinds of political figures, right? Eisenhower was at odds with many of the members of his own party saying we need to modernize, we’re dealing with a Democratic world, the Republican Party has to move with the times. And so too did Clinton say that right, dealing with this Republican world. But there’s a huge difference when you look at their speeches and what they did. The way they talked about government. It’s Eisenhower, partly because of the context of the Cold War, but also because of this very different understanding of government and very different business and political context. He was much more willing to talk about a positive use for government. So I think that’s absolutely true. But the other thing to say is that this, what’s happening with Clinton where he’s talking less and less, that’s a broader problem than just Bill Clinton. All of the Democrats are hiding more from talking about government. You know, communication experts talk about a spiral of silence. If you think that an idea is disfavored, then you’re less likely to talk about it. But then of course that idea can’t be rehabilitated, right? So part of what we’re doing in writing this book is trying to, to make it clearer just how vital it is to have the government that works and talk about a government that works. And the last thing I would say Doug, is when our government doesn’t work well our natural response, and we see it again and again, is to say well the solution is less government. The solution is weaker government. But look at the IRS as an example, right? What’s happening with the IRS this weakening of government is meaning more and more tax dollars going uncollected, people are having to wait in huge lines. I mean, you know, Adam Smith called taxes a badge of liberty, right? The Founders saw creating a national tax system is essential. When did we thing that having the ability to raise the revenues to run the government was a bad thing, right? So why are we weakening government precisely where we need to work better? So that’s the point. It’s not that government always works well, it’s the prescription, the all-purpose prescription that the solution is tearing down government is the wrong prescription and it’s based on a wrong reading of our history and a wrong understanding of what makes economies prosper.
19:45 Blackmon:You also in terms of voices that have facilitated this change another institution you critique is the U. S. Chamber of Commerce. But, but. So tell us about that.
Pierson: So the Chamber Court, Chamber of Commerce is a really interesting story how it’s evolved over the last 30 years or so and umm both because it’s become more powerful umm and because it’s become a much more vigorous opponent of the mixed economy. Umm, so, umm it’s grown dramatically over the last 25 or 30 years. It raises much more money from the largest companies than it used to. Has moved into a much closer alliance with the Republican Party. It used to be much more bipartisan in its orientations and actually in the decisive moment in the history of the Chamber was when the then leader of the Chamber fin 1993 actually came very close to having an agreement with the Clinton administration about healthcare reform. And there was a rebellion within the ranks. There was a rebellion from prominent members of Congress including John Boehner who was then an up and coming young congressman from Ohio. And there was basically a coup within the Chamber ah that led to the installation of a much, much more conservative hardline regime which is now in the business increasingly a little blunt but not too blunt of selling its services to individual industries to do whatever it is that they want done in Washington. So, you know, very hostile on climate change. Very hostile on financial regulation. Very hostile on any efforts to contain healthcare costs. Umm and these are all cases, we would argue where they may benefit businesses within those particular sectors but they’re quite damaging to American business as a whole, right? It is damaging to American business that we pay so much more for healthcare than other countries do without, as Jacob was saying, without producing good outcomes. Ah, and so the Chamber has been again a great enabler of these efforts by individual industries to, as economists would say, essentially extract rents. Right? You know, rather than competing based on producing great products at reasonable prices, essentially in this case rigging the system so that they can, they can benefit from the weakness of government, from the absence of the effect of regulation.
22:14 Blackmon: What are the other barometers and who, who is failing that? Who is suffering or about to suffer the most from the failure of government to be involved in these investments that you are talking about?
Hacker: We are not just underperforming our past which you know you might argue with just this very distinctive period so we’re underperforming other rich democracies in these areas. And you know the height is not an end in itself but it’s worth noting that you know during World War II we were a couple inches taller than the Germans we were fighting and now we’re way below Western Europe in average height. And that’s not just because of immigration, it’s a kind of measure of social health that tells us of a lot of other changes that are taking place. And you see it most starkly with younger Americans.
And the one thing I would say is that we’re now seeing these very same trends play out in white America that were much more prevalent in black America. You know it’s driving home a message that is uncomfortable but is true is that part of the reason that this anti-government sentiment has risen is that after the Civil Rights Act and the shift to the South into the Republican fold race became a very clear dividing line between the parties in a way it hadn’t been before. Because before we were not confronting this in the same way. And that as it did anti-government rhetoric was racialized. That is to say that when people talked about us and them or those who were dependent on government for a lot of people, white people, it was a picture of someone other than different skin color. And so I don’t, you know I hope that these trends that are bringing some of these same challenges to white America will help reverse that. At the moment it seems right that that is not happening. That in fact that umm that the anger and angst and despair that’s being produced, right, is creating the cauldron of discontent with government. But the fact is that all Americans benefit from well-functioning government. And in many ways those who are facing the most challenging economic prospects and social prospects right now would benefit the most. And so we don’t think of this as a story about how we have to help you know the people left behind because in fact our story, our history, is really a story about huge investments that helped everybody umm in really profound ways. And those are the kinds of investments we need to start making on a, on a intense and long term level today.
24:47 Blackmon: Jacob Hacker, Paul Pierson Thanks for joining us. (Hacker and Pierson: Thank you.) The book is American Amnesia: How the War on Government Led Us to Forget What Made America Prosper. We hope you’ll continue this debate—wherever you are, with the other citizens you know, who care deeply about our national life. American Forum is all about dialogue on the defining dimensions of our society and its future. And the questions don’t get any bigger than the ones we tackled today. We also hope you’ll tell us what you think—at the Miller Center Facebook page, or by following us on Twitter @douglasblackmon or @americanforumTV. To send us a comment, watch other episodes, download podcasts or read a transcript visit us at millercenter.org/americanforum. I’m Doug Blackmon.