by Patrick J. Buchanan – March 23, 1998
Unbridled capitalism is an awesome force that creates new factories, wealth and opportunities that go first to society’s risk takers and holders of capital. But unbridled capitalism is also an awesome destructive force…
Under Jimmy Carter, unemployment hit 7 percent, inflation 13 percent and interest rates 21 percent, setting the stage for the Reagan Revolution. And when Reagan’s tax cuts took hold, the Eagle soared as it had not done in peacetime since the Roaring ’20s.
Europe had laughed at “the cowboy” the Americans had elected. But now, Europe sat bolt upright. The cowboy had begun creating jobs at a rate of 250,000 a month, for seven long years, while Europe was not creating a single new job.
With the collapse of communism, the future seemed set. It was the End of History. Most nations had embraced Reaganism, and all seemed ready to do so, even, mirabile dictu, Russia!
But was Reagan’s victory forever? Or did our revolution, too, carry within it the seeds of its own destruction? John Gray, an ex-Thatcherite in England, believes it does. He argues his case in “False Dawn: The Delusions of Global Capitalism.”
Reaganism and Thatcherism, says Gray, have in common deep tax cuts, the slashing of safety nets and welfare benefits, and global free trade. These unleash the powerful engines of capitalism that go on a tear. Factories and businesses open and close with startling speed, in that “creative destruction” so beloved of think-tank scholars. As companies merge, downsize and disappear, the labor force must always be ready to pick up and move on.
The benefits come in huge returns on capital, reflected in the stock market. The cost is paid in social upheaval and family breakdown, as even women with toddlers enter the labor force to keep up the family’s standard of living. Deserted factories mean gutted neighborhoods, ghost towns, ravaged communities and regions that go from boom to bust to boom again, like the Rust Belt.
Reaganism and its twin sister, Thatcherism, create fortunes among the highly educated, but in the middle and working classes, they generate anxiety, insecurity and disparities in income. Since these classes seek stability, security and order from their political systems, above all else, Thatcherism and Reaganism thus undermine the very social structure on which they were built.
What is the evidence of Gray’s thesis? Unfortunately, it is mounting. In England, Thatcher’s party appears done. The attempt to impose Reaganomics in Europe has also brought backlash, as the jobless rate has risen above 12 percent. Conservative parties have been ousted in Canada, Britain, France and the United States, and the German conservatives are now running behind the socialists.
In Asia, Reaganism was always paid lip service as the giants, China and Japan, embraced nationalism. Asia’s tigers grew fat by feeding on the U.S. market, while protecting their own. Their reward: a U.S. merchandise trade deficit running in January at $225 billion a year. U.S. capital is pouring out. Yet, even in the Asian crisis, with the IMF offering $40 billion and $50 billion bribes, Malaysia and Indonesia are balking at U.S. dictates.
This weekend, Japan’s prime minister told the U.S. Treasury to stuff its demand that Japan cut taxes by 2 percent of gross domestic product. With Tokyo running a deficit near 6 percent of GDP, what the United States is asking Ryutaro Hashimoto to do is comparable to Hashimoto coming to a United States that was running a deficit of $480 billion to demand that we run it up to $640 billion to soak up Asian imports.
Hashimoto responded as any red-blooded American would.
Even in Congress, the Vatican of the Reagan Revolution, heresy is rampant. Since 1995, Congress had gone along with new social spending, and federal taxes are over 20 percent of GDP, a record. A party that boasted it would shut down the departments of Education, Energy and Commerce cannot even close the Endowment for the Arts. If revolution is moribund on the hill, where is it alive?
What Gray describes, what is happening in America, is that conservatism is being confronted with its own contradictions.
Unbridled capitalism is an awesome force that creates new factories, wealth and opportunities that go first to society’s risk takers and holders of capital. But unbridled capitalism is also an awesome destructive force. It makes men and women obsolete as rapidly as it does the products they produce and the plants that employ them. And the people made obsolete and insecure are workers, employees, “Reagan Democrats,” rooted people, conservative people who want to live their lives and raise their families in the same neighborhoods they grew up in.
Unbridled capitalism tells them they cannot. Conservatism is thus at a crossroads. And if social conservatism is at war with unfettered capitalism, whose side are we on?
A reluctance to choose lies behind the conservative crackup.