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Some corporations found ways to improve productivity through innovation and
automation. Others relied primarily on brutal layoffs, resistance to
unionization, and a further shift of production overseas. Those corporate
managers who didnÆt adapt were vulnerable to corporate raiders and leveraged
buyout artists, who would make the changes for them, without any regard for
the employees whose lives might be upended or the communities that might be
torn apart. One way or another, American companies became leaner and
meaner-with old-line manufacturing workers and towns like Galesburg bearing
the brunt of this transformation.
It wasnÆt just the private sector that had to adapt to this new environment.
As Ronald ReaganÆs election made clear, the people wanted the government to
change as well.
In his rhetoric, Reagan tended to exaggerate the degree to which the welfare
state had grown over the previous twenty-five years. At its peak, the federal
budget as a total share of the U.S. economy remained far below the comparable
figures in Western Europe, even when you factored in the enormous U.S. defense
budget. Still, the conservative revolution that Reagan helped usher in gained
traction because ReaganÆs central insight-that the liberal welfare state had
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grown complacent and overly bureaucratic, with Democratic policy makers more
obsessed with slicing the economic pie than with growing the pie-contained a
good deal of truth. Just as too many corporate managers, shielded from
competition, had stopped delivering value, too many government bureaucracies
had stopped asking whether their shareholders (the American taxpayer) and
their consumers (the users of government services) were getting their moneyÆs
worth.
Not every government program worked the way it was advertised. Some
functions could be better carried out by the private sector, just as in some
cases market-based incentives could achieve the same results as
command-and-control-style regulations, at a lower cost and with greater
flexibility. The high marginal tax rates that existed when Reagan took office
may not have curbed incentives to work or invest, but they did distort
investment decisions-and did lead to a wasteful industry of setting up tax
shelters. And while welfare certainly provided relief for many impoverished
Americans, it did create some perverse incentives when it came to the work
ethic and family stability.
Forced to compromise with a Democrat-controlled Congress, Reagan would never
achieve many of his most ambitious plans for reducing government. But he
fundamentally changed the terms of the political debate. The middle-class tax
revolt became a permanent fixture in national politics and placed a ceiling on
how much government could expand. For many Republicans, noninterference with
the marketplace became an article of faith.
Of course, many voters continued to look to the government during economic
downturns, and Bill ClintonÆs call for more aggressive government action on
the economy helped lift him to the White House. After the politically
disastrous defeat of his health-care plan and the election of a Republican
Congress in 1994, Clinton had to trim his ambitions but was able to put a
progressive slant on some of ReaganÆs goals. Declaring the era of big
government over, Clinton signed welfare reform into law, pushed tax cuts for
the middle class and working poor, and worked to reduce bureaucracy and red
tape. And it was Clinton who would accomplish what Reagan never did, putting
the nationÆs fiscal house in order even while lessening poverty and making
modest new investments in education and job training. By the time Clinton left
office, it appeared as if some equilibrium had been achieved-a smaller
government, but one that retained the social safety net FDR had first put into
place.
Except capitalism is still not standing still. The policies of Reagan and
Clinton may have trimmed some of the fat of the liberal welfare state, but
they couldnÆt change the underlying realities of global competition and
technological revolution. Jobs are still moving overseas-not just
manufacturing work, but increasingly work in the service sector that can be
digitally transmitted, like basic computer programming. Businesses continue to
struggle with high health-care costs. America continues to import far more
than it exports, to borrow far more than it lends.
Without any clear governing philosophy, the Bush Administration and its
congressional allies have responded by pushing the conservative revolution to
its logical conclusion-even lower taxes, even fewer regulations, and an even
smaller safety net. But in taking this approach, Republicans are fighting the [ Pobierz całość w formacie PDF ]