The End of Expansion Economics

Be sure to check out Robert J. Samuelson’s Newsweek cover story on the financial crisis. Warning: It’s not a pick-me-upper. Here’s a key quote:

[T]he long-term problem is … to mediate between all the competing demands on the nation’s income and to expand the economy’s capacity to produce the output that satisfies those demands. The closer the economy comes to stagnation, the more Americans will succumb to distributional struggles – not just between the rich and the poor, but also between the young and the old and between immigrants and natives. Down that path lies “affluent deprivation.” To use an old but apt cliche: people will fight over pieces of a fairly fixed economic pie rather than sharing ever-larger pieces of an expanding pie. The winners may be pleased, but the losers will feel short-changed – and so the conflicts may intensify, with yesterday’s winners possibly becoming tomorrow’s losers. Politics, which is often about rewarding some and punishing others, may become more so. Nor is this prospect merely theoretical. Already, Americans face far more claims on their incomes than can be easily met.

This dovetails somewhat with Peter Beinart’s analysis that the culture wars are over:

Today, according to a recent Newsweek poll, the economy is up to 44 percent and “issues like abortion, guns and same-sex marriage” down to only 6 percent. It’s no coincidence that Palin’s popularity has plummeted as the financial crisis has taken center stage. From her championing of small-town America to her efforts to link Barack Obama to former domestic terrorist Bill Ayers, Palin is treading a path well-worn by Republicans in recent decades. … Palin’s attacks are also failing because of generational change. The long-running, internecine baby boomer cultural feud just isn’t that relevant to Americans who came of age after the civil rights, gay rights and feminist revolutions. Even many younger evangelicals are broadening their agendas beyond abortion, stem cells, school prayer and gay marriage. And just as younger Protestants found JFK less threatening than their parents had found Al Smith, younger whites – even in bright-red states – don’t view the prospect of a black president with great alarm.

A couple of caveats. First, there’s always a rush to pronounce this-and-that political era “over” before the results are in. Also, analysts tend to, well, over-analyze. There’s a pretty simple explanation for why economic concerns are at the top of voters’ priorities. The economy stinks. Voters will be concerned about the economy for as long as it stinks. When it no longer stinks, cultural issues will return to the fore. Or, when a significant national security event occurs – as usually happens when the economy stinks for an extended period – voters are going to start worrying about national security. This isn’t rocket science. Second, Palin is not exactly the culture warrior liberal analysts make her out to be. She rarely mentions social issues on the stump. If you read this piece in today’s Times, you learn that, on the trail, Palin is most passionate about special-needs children. That isn’t a divisive issue. Palin, moreover, mentions her faith far less than some pundits do. And during the vice presidential debate, she implied that there was almost no difference between the two tickets on the issue of same-sex marriage. Palin has not hesitated to go after Obama’s associations and his economic policies. But to ask why Obama would associate with Bill Ayers is not necessarily to engage in a high-minded discussion of the “legacy of the sixties.” Rather, it is to raise questions about the character of the Democratic nominee. After all, Bill Ayers isn’t a fashionable painter or photographer. He’s not Jane Fonda. He’s a former domestic terrorist. Can we at least agree on that? The GOP ticket’s embrace of Joe the Plumber and Tito the Builder also has little to do with the culture war. It is, instead, an embrace of populist economics. It’s a signal that the GOP is aligning with tradesmen against professionals, who are overwhelmingly pro-Obama. This type of distributional politics is what Samuelson is talking about in his article and new book. Values politics may take shelter during this economic storm. But the new politics of class resentment won’t be any prettier.

The End of Expansion Economics

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