The Conscience of a Liberal: Reclaiming America From The Right [Hardcover]

Why is it that the most powerful nation in history, one capable of landing men on the moon, is incapable of providing 15 per cent of its populace with little more than the most basic of healthcare? Why does it not provide a more generous welfare system? Why does it have such a massive gulf between its richest and poorest citizens?

A key reason, according to Paul Krugman in this well-argued polemic, is the "movement conservatives" who, starting back in the sixties, conspired to conscript the organisational muscle of the Republican Party in order to elect into power a number of placemen whose role was to wipe out the gains of the New Deal. This process was by no means straightforward. The job would have been much easier had Dewey won his expected landslide presidential victory in 1948. Instead it was Truman who triumphed and was thereby able to consolidate the gains of the New Deal to the extent that his successor, Eisenhower, a Republican, inherited well-entrenched institutions which were difficult to dismantle.

As a result, during the period from the mid-forties to the sixties or early seventies the US underwent what Krugman refers to as the Great Compression, when through a combination of New Deal legislation and union activism lower end wages rose as those in the higher bracket were more or less frozen.

In the fifties, he points out, the largest employer in the US was General Motors, and the mean wage of its workers was the equivalent then of $40,000 now. The movement conservative insurgency changed all this, starting with the Reagan presidency which saw, for example, striking air traffic controllers handcuffed and sacked, with the result that today's largest US employer, Wal-Mart, pays the equivalent of $18,000 at the mean. Just think, he muses, what would be the impact of even a small rise in that mean. One thinks, for example, of the positive impact of Henry Ford's philosophy of paying his assembly line workers well above the norm.

Unfortunately he omits to mention the role of the unions in undermining the stability of GM and the other Detroit former-leviathans, and there is space here for a plea for the unions to be a little more responsible and less selfish themselves, but he is nevertheless right that unions can be and have been a force for good, raising the bar for everyone, not just their own members. This is not an opportunity available at non-unionised and anti-union Wal-Mart.

But though there could certainly be a little more soul-searching in that vain, generally there is little to fault in Krugman's argument.

History, as it turns out, has been pretty generous to him. True, perhaps it's a little early to proclaim, as he does on page 264, "we're not in the midst of a great depression". But he at least called the outcome of the 2008 elections right (though this is by party, not by candidate; at time of writing the book, John Edwards had not yet had to excuse himself from the running, and Barack Obama was just another candidate).

Time will tell whether Obama takes up the challenge of using universal healthcare as the vanguard of the new New Deal, as Krugman proposes. Still, perhaps the very fact that we can ask that question is proof at least that Krugman's contention that the US is at last moving into a post-racial politics where it will become increasingly difficult to employ the kind of "dog whistle" tactics the movement conservatives were able to exploit in the past in order to divert a critical fraction of the popular vote away from progressive policies.

Nevertheless, he is ultra-realistic about the challenges inherent in such an undertaking, not least in overcoming the vested interests which have in the past been able by a variety of means to prevent change, particularly the exploitation of the residual prejudices of slavery and segregation.

The conscience of a liberal is a very interesting read on the economic and social evolution of XXth century America. The language is clear and the thesis well articulate.

It is, as actually stated by the author, a partisan book which helps explain how democrats can and should regain power. The author uses two main arguments:
1. The society as it is today has not evolved as a natural reaction to technology changes, immigration or development of international trade but it is the fruit of a conservative political will.
2. The resulting model is actually less American-friendly than the more egalitarian model democrats put in place after the New Deal. It has created a large income gap and on average has impoverished the population.

'The Conscience of a Liberal' is an engaging, accessible and thought-provoking account of how the United States became a 'middle class' nation, following the deprivations of the Twenties and Thirties, and of the forces that have subsequently eroded the achievements of the post-World War II years. The book goes on to elaborate the policy measures that can be taken to reverse the damage done, during recent decades, and the reasons as to why liberals might have cause for optimism on this score.

I first encounted Paul Krugman's writings, on his subject of special expertise - international trade - as a postgraduate student in the mid-late 1990s; this is the body of work that lead to Krugman's becoming a Nobel Laureate in 2008. Krugman is a prolific writer and, as anyone who is familiar with his books, essays or Op-Ed columns in the NYT (since 1999) will know, he has a gift for expressing sometimes complex ideas with great clarity and concision. Whilst he has carved out a niche, in recent years, as a populariser he has not sacrificed rigour and this book provides plentiful references to academic journals and other works - many of which are available over the Net - to build and to support his case. So, this is a work of popular economics, rather than a textbook, but Krugman provides a solid, coherent account of the forces at work that lead, first, to large reductions in inequality following the period 1870-1930 then, subsequently, to the current long-term trend towards increasing inequality; a trend that has continued largely unabated, in the United States, since about 1973.

'The Conscience of a Liberal', therefore, is about inequality - economic inequality and the social inequality to which it gives rise. There are good reasons for believing that inequality 'matters' - i.e. that the greater the inequality, the greater the negative consequences that arise as a corollary. In Krugman's own words, inequality "imposes serious costs on our society that go beyond the way it holds down the purchasing power of most families.... It corrupts our politics" (p.249). After sketching for us the situation during the period (1870-1930) to which he refers as the 'Long Gilded Age', early chapters provide evidence of the sharp reduction in economic inequality that took place under the presidency of FDR - a tendency that was maintained under the presidency of Harry Truman. These chapters explain how the New Deal, and its gradual acceptance by politicians of both major parties, brought about something little short of a revolution. Again, to use Krugman's words, "despite the limitations of the data, it's clear that between the twenties and the fifties America became, to an unprecedented extent, a middle-class nation."

As an undergraduate, in the 1990s, I learned a startling fact about the American economy, post-1973. Although the economy had grown significantly in size during the intervening period of 20-25 years, the fruits of this growth had accrued - overwhelmingly - to only a small (and decreasing) proportion of the population. During this period of time, it is highly questionable whether the 'real' (i.e. inflation-adjusted) income of the 'average' American family actually rose at all. Evidence suggests that it may, in fact, have declined - a situation that put the United States at odds with most other developed economies, so far as one could tell.

Approximately 15 years after I first learned of this phenomenon, Krugman reiterates the statistical evidence and, in so doing, highlights that little or nothing has changed to avert this trend - a trend Krugman calls 'The Great Divergence'. Now, Conservatives generally see nothing worrying in this return to a time of massive inequality and Krugman provides a fascinating dissection of the role that Movement Conservatism has played in maintaining this trend, via reference to a well-known book by the left-wing social commentator Thomas Frank (also author of 'One Market Under God' and editor of left-wing magazine, 'The Baffler') entitled 'What's the Matter with Kansas?'. In the first instance, Krugman found the thesis behind Frank's 2004 book (relating to the so-called 'values voter') to be persuasive but subsequently changed his mind, once further evidence became available. His conclusions about the actual reasons underlying rising inequality, however, are scarcely reassuring. Despite this, Krugman does see reasons for optimism and the book's final chapters provide valuable discussion as to why 'progressives' should not yet despair. He also sketches the kind of program, and the key policy items that a progressive government of the 21st Century ought to pursue if the current trend is to be halted and eventually reversed. Obviously, many books contain prescriptions for action - plans which we know will never come to fruition - but, given Krugman's high profile and caliber as an economist, his policy prescriptions can be expected to carry some weight, at the highest levels, for at least somewhat longer than it will take one to read this absorbing book.

To conclude, anyone interested in the economic and social history of the United States, during the Twentieth Century, and anyone wanting to understand some of the primary forces at work behind the major political and economic trends, in the United States, of the last hundred years, or so, would do well to read this book.