Michael Meeropol: Decline Of American Character Not To Blame

Mar 3, 2017

On February 21, David Brooks wrote an OP ED for the New York Times entitled, “This Century is Broken.” 

In this article, Brooks lamented the fact that the US as a country is “decelerating, detaching, losing hope, getting sadder.   Economic slowdown, social disaffection and risk aversion reinforce one another.”   He argued that we do not innovate, we are less adventurous as a people.   (We don’t, for example, pull up stakes and move as much as we used to.)    The following quote indicates the anguish with which Brooks writes:

“Between 1985 and 2000, the total hours of paid work in America increased by 35 percent. Over the next 15 years, they increased by only 4 percent.   For every one American man aged 25 to 55 looking for work, there are three who have dropped out of the labor force.   Fifty-seven percent of white males who have dropped out get by on some form of government disability check. About half of the men who have dropped out take pain medication on a daily basis. A survey in Ohio found that over one three-month period, 11 percent of Ohioans were prescribed opiates. One in eight American men now has a felony conviction on his record.”

Brooks makes this out to be a failing of US character.   But he’s got the causation backwards.   We have to begin with his assertion of a slowdown in US economic growth.  

“….between 1948 and 2000 the U.S. economy grew at a per-capita rate of about 2.3 percent a year.   But then around 2000, something shifted.  In this century, per-capita growth has been less than 1 percent a year on average, and even since 2009 it’s been only 1.1 percent a year.  If the U.S. had been able to maintain postwar 20th-century growth rates into this century, U.S. per-capita G.D.P. would be over 20 percent higher than it is today.”

The slowdown actually began earlier, during the 1980s.   Before that, with the exception of the Great Depression of the 1930s, the 20th century was a great success.

Just think of the transformations in the country for those first 8 decades.  Infant mortality was 100 per 1000 live births in 1915 and was in the teens by 1980.   

Life expectancy jumped from 47 years for white men and 49 years from white women to 71 for white men and 78 for white women between 1900 and 1980.    (The improvement for black men and women was even more dramatic – jumping from 33 for black men and 34 for black women to 65 for black men and 73 for black women over the same eight decades.)   [For details, see https://www.elderweb.com/book/appendix/1900-2000-changes-life-expectancy-united-states]

In 1900, less than 10% of 17 years olds were high school graduates.  That percentage jumped to over 70% in 1980.  [For a historical diagram see “120 Years of American Education:  A Statistical Portrait”  https://nces.ed.gov/pubs93/93442.pdf  Figure 11, P. 31.]   Real GDP per capita (deflated by 1990 prices) went from $4091 (remember that’s per person) in 1900 to $18577 in 1980.    [See US Real Per Capita GDP from 1870–2001”   http://socialdemocracy21stcentury.blogspot.com/2012/09/us-real-per-capita-gdp-from-18702001.html   (September 24, 2012)]      I could go on and on with examples but I hope a clear picture emerges.

Brooks’ complaint about the United States applies to the US since 1980, and can be summarized in one word --- stagnation.   There is a well-developed analysis in economics that emerged at the end of the 1930s when the recovery from the Great Depression stalled (there was a major increase in unemployment in 1937).   It is called the stagnation thesis. 

[Responding to the sharp increase in unemployment and the end to four years of economic recovery during the first four years of Franklin Roosevelt’s New Deal, an American discipline of Keynes, Alvin Hansen, wrote Full Recovery or Stagnation?  (NY, 1938).    The analysis continued with Josef Steindl’s Maturity and Stagnation in American Capitalism (Oxford:   Basil Blackwell 1952) and later Paul Baran and Paul Sweezy, Monopoly Capital (NY:  Monthly Review Press, 1966).   For my understanding of this important analysis of 20th century American Capitalism, see Michael Meeropol, “Monopoly Capital in the Classroom” Monthly Review Vol. 68, No. 3 (July-August 2016):  90-97).] 

The stagnation thesis has never been popular with mainstream economists and the rapid growth after World War II made it easy to dismiss.   When I studied economics as an undergraduate, we were assigned a book that attempted to refute Hansen, George Terborgh, The Bogey of Economic Maturity (1945).   In graduate school at Cambridge University, I was introduced to Steindl’s book and the Baran and Sweezy book but in graduate school in the United States (1966-1970) there was no reading assigned that even considered any of the stagnationist writings.  

So the concept of stagnation was not even worthy of study according to mainstream economists.   Until 2013 that is.  In that year, Lawrence Summers, former Secretary of the Treasury, almost Chairman of the Federal Reserve Board (President Obama considered appointing him before bowing to pressure from the left wing of the Democratic Party and appointing Janet Yellen instead) proposed that the reason the recovery from the 2008 Great Recession was so slow was because the US had entered a period of secular stagnation.   Without mentioning either Steindl or Baran and Sweezy, he reinvented the wheel initially discovered by Hansen 75 years previously.

I agree in large part with the major thrust of the stagnation thesis.   I believe that for much of the 20th century, the domination of most industries by a handful of giants has led to a lessening of the dynamic growth spurts that characterized the earlier centuries of capitalism in Britain and the US.   The 19th century was characterized by booms and busts --- growth would be interrupted by periods of crisis and depression – with high levels of unemployment, falling incomes, failing businesses.   However, recoveries would be very dramatic rebounds and over the course of recurring business cycles, the economy would experience significant long term economic growth.

For the 20th century, it has been a different story.   Many recoveries (starting in the period after 1907 in the US) have been quite sluggish.   The US economy has relied on wars and the preparation for wars to sustain high rates of growth.   When extended periods of growth occur without war or large scale military buildups, say in the 1920s and 1950s, the development of a great new industry such as the automobile industry-- which stimulates dramatic increases in investments elsewhere in the economy – can be the source of sustained economic growth.   Beginning in the 1970s, with military spending declining as the US war in Indochina came to an end, the economy began to slow down.   Even with the military build-up under Ronald Reagan in the 1980s, the economy continued to slow down.   [For comparative details on growth in the 1960s, 70s and 80s in the US, see Meeropol Surrender, How the Clinton Administration Completed the Reagan Revolution with a summary table of data on P. 168.]

In addition the improvement in the standard of living for most Americans has stopped.   It is not the American character that has failed us --- it is the American economy.

Most of Brooks’ statements in his column can be easily explained as a result of the frustrations of the end of the period of dramatic growth that had characterized the US economy between the end of World War II and the 1970s.   Those frustrations boiled over in the desertion from the Democratic Party by some white working class voters in the rust belt states of Ohio, Pennsylvania, Michigan and Wisconsin and the electoral college victory for Donald Trump.

Trump promises to solve the problem of stagnation with massive re-industrialization and removal of so-called “job killing regulations” so that coal mining, oil drilling and manufacturing will re-employ HUGE NUMBERS.   That’s nonsense.   Most manufacturing jobs have been lost because of increases in productivity and most coal mining jobs have been lost because of low cost natural gas due to fracking.   The reduction in regulations of banking will not create lots of jobs --- it will merely permit banks to once again start fleecing consumers and creating more speculative bubbles putting ordinary people at risk once again, just as they did during the housing bubble of the pre-2008 meltdown.

However, the US economy could experience a massive transformation as dramatic as the one that occurred when the automobile and truck replaced the railroad as our major method of ground transportation.   That would involve investing in new systems for generating energy as well as new storage batteries and a new grid to carry it from places of generation (solar fields and wind farms) to places of consumption (major cities).   Instead of fossil fuels, we could be reconfiguring our entire energy system towards renewables.   The technology exists, but the entrenched power of vested interests in the fossil fuel industries has so far thwarted the people’s will.  

Another major way to increase investment is by replacing the internal combustion engine transportation system with high speed railroads and electric cars.   Not only would reconfiguring energy and reconfiguring ground transportation create massive numbers of good paying jobs --- jobs that could not be outsourced --- the changes in our energy and transportation system would be an important step towards cutting back on greenhouse gas emissions and, literally, saving the planet.

The problem for our politics is that such changes involve the active involvement of government. Unfortunately, unless we are spending money on the military, police and prisons, Americans have been brainwashed into believing that any other growth in government spending is a dangerous giant step towards changing the UN into a country like Stalin’s Russia.   (Yes, I am exaggerating but unfortunately too many Americans believe Bill Clinton, Barack Obama and Hillary Clinton are socialists.)

So rather than having a really valuable debate about how the US could use government to make the kinds of transformations that will both combat secular stagnation and change our energy and transportation systems, we have David  Brooks blaming our difficulties on the decline of the American character.   In fact, we have abundant evidence that it is our politicians who lack character.

Michael Meeropol is professor emeritus of Economics at Western New England University. He is the author (with Howard Sherman) of Principles of Macroeconomics: Activist vs. Austerity Policies.

The views expressed by commentators are solely those of the authors. They do not necessarily reflect the views of this station or its management.