In an effort to start making sense of what is an indisputably confusing situation, we asked some of the most thoughtful people we know the question: How will America change as a result of the economic downturn? Here's Alan Brinkley, the provost and a professor of history at Columbia University, as well as a National Book Award-winning author.
Now that even the longshot bailout has self-destructed, it's hard to predict anything about the near-term future of the economy, and I will not attempt to do so. But at some point, after who knows how much damage, we will reach a point of stability, look over the wreckage, and decide collectively how to proceed.
It is hard for me to imagine that the view from that grim point would support a continuation of the anti-government, anti-regulation regime that has benefited so many wealthy and powerful people, while stagnating or impoverishing so many others--and leading us into the catastrophe that appears to be unfolding now.
I am a historian of, among other things, the New Deal, and in my lifetime I have seen nothing that resembles the 1930s more than the present moment. We have protections today that we did not have in 1929: federal insurance of bank deposits, which has prevented runs on consumer banks; a much more complex and international economy that will provide areas of resilience, even as many key areas of the economy decline; and the low likelihood of the Federal Reserve Bank's responding to this crisis as counter-productively as the Fed did in the early 1930s. But these seem frail defenses against the financial meltdown that could soon occur.
What is also striking is how much of the New Deal regime has been dismantled in the last 25 years, and how much of that dismantling has occurred in the last eight years. It seems clear to me that the next president, whoever it is, will have almost no choice but to rebuild some of the regulatory powers that have been scuttled along the way, and perhaps also to build some additional supports for ordinary citizens whose livelihoods may be gravely damaged by this crisis. The New Deal probably is not a model for recovery. Too much has changed to use it as a template. But the spirit of the New Deal--the rejection of ideology, the commitment to "persistent experimentation," and the belief that the government has a responsibility to help individuals in times of crisis--does have some relevance to our time.
Is this the end of the "end of big government?" Will the right fade into obscurity to be replaced by the long-awaited revival of liberalism or progressivism? I doubt that we will see such a fundamental shift in the polity. But I think it is realistic to hope that the highly ideological politics that have driven our public life now for several decades will give way to a somewhat more pragmatic and realistic approach to our problems.
For now, though, we face the daunting prospect of trying to find a solution to this crisis in what could be the worst imaginable political circumstances: a repudiated president unable to influence his own party; a Secretary of the Treasury and a Fed Chief with relatively little experience or stature; a Congress with weak leadership of its own facing re-election while being asked to pass an unpopular bill; two presidential candidates jockeying for position without having any authority. No wonder the markets are in chaos.