Beyond the Waste Land: A Democratic Alternative to Economic Decline
During the last two and a half years there has been no shortage of comment on what is at fault in Reagan’s economic policy; the very word Reaganomics has now developed a well-justified connotation of acute denigration. And, however overtly immune, the administration itself has not been wholly unaffected. There has been a disorderly retreat from supply-side economics; its surviving proponents, in unlikely alliance with the liberal left, have now turned their fire on the monetarists. “Tight money” did them in. As to monetary policy, there also has been a retreat if not precisely a regrouping. Interest rates have been eased; the money supply, however defined, is no longer being so ostentatiously controlled, and Professor Milton Friedman, according to longstanding practice, has disavowed his former disciples. They have been slack and erratic; they have not stayed the course. This negative adjustment has been sufficiently strong so that there is now at least a glimmer of a chance of recovery. Those among us who predicted continuing disaster are hedging bets in a sensible way. It’s not that the original Reagan policies were any good; rather, there has been more willingness to retreat from them than most foresaw.
Such are the gains from purely negative reform; it may be that they are not slight, and we must be grateful in the economic world for small achievements. Still, it would have been agreeable and enlightening if, during these last years, there had been more affirmative comment on what should replace the Reagan despair. Washington is alive with committees to this end; the results so far have not been notably rewarding. Nor, as yet, have the speeches of the Democratic candidates. Nor, with exceptions, have the proposals from the professional economic world. For innovative ideas, Felix Rohatyn has had the field to himself to an undue degree.
The reasons for this reticence are not obscure. Apart from the considerable pain and effort associated with affirmative thought, there is, for the politicians, the terrible choice between going back to what seems an unhappy history and going on to what seems unduly dangerous innovation. In his last presidential months Jimmy Carter, surrendering to his economists and Paul Volcker, achieved a serious recession, substantial unemployment, and a high rate of inflation. No one wants to return to that. And for the risks of premature innovation, there remains the terrible memory of George McGovern and his “demogrant” payments. Who can think it wise to get out in front like that again?
For the economists, there is, again with many exceptions, the matter of professional reputation and esteem. Anything new, being in the nature of the case untried and unproven, has a slightly radical aspect. In the strictest sense of the term, it lacks reputability and therefore is something that the decently circumspect scholar avoids. Professional esteem is best safeguarded, even enhanced, by a thoughtful articulation of what is already believed, a powerful recommendation of what is already a matter of actual experience. What has come to …