excerpts from the book
The Conscience of a Liberal
by Paul Krugman
WW Norton, 2009, paperback
The story of how George W. Bush and Dick Cheney ended up running
the country goes back half a century, to the years when the National
Review, edited by a young William F. Buckley, was defending the
right of the South to prevent blacks from voting - "the White
community is so entitled because it is, for the time being, the
advanced race" - and praising Generalissimo Francisco Franco,
who overthrew a democratically elected government in the name
of church and property, as "an authentic national hero."
The small movement then known as the "new conservatism"
was, in large part, a backlash' against the decision of Dwight
Eisenhower and other Republican leaders to make their peace with
Over the years this small movement grew
into a powerful political force, which both supporters and opponents
call 'movement conservatism.' It's a network of people and institutions
that extends far beyond what is normally considered political
life: In addition to the Republican Party and Republican politicians,
movement conservatism includes media organizations, think tanks,
publishing houses and more. People can and do make entire careers
within this network, secure in the knowledge that political loyalty
will be rewarded no matter what happens. A liberal who botched
a war and then violated ethics rules to reward his lover might
be worried about his employment prospects; Paul Wolfowitz had
a chair waiting for him at the American Enterprise Institute.
There once were a significant number of
Republican politicians who weren't movement conservatives, but
there are only a few left, largely because life becomes very difficult
for those who aren't considered politically reliable.
Money is the glue of movement conservatism, which is largely financed
by a handful of extremely wealthy individuals and a number of
major corporations, all of whom stand to gain from increased inequality,
an end to progressive taxation, and a rollback of the welfare
state - in short, from a reversal of the New Deal. And turning
the clock back on economic policies that limit inequality is,
at its core, what movement conservatism is all about.
Movement conservatism is ultimately about rolling back policies
that hurt a narrow, wealthy elite, it's fundamentally antidemocratic.
Movement conservatism has gone from fringe status to a central
role in American politics because it has proved itself able to
Ronald Reagan, more than anyone else,
showed the way.
[Ronald Reagan's] early political successes were based on appeals
to cultural and sexual anxieties, playing on the fear of communism,
and, above all, tacit exploitation of white backlash against the
civil rights movement and its consequences.
The legacy of slavery, America's original sin, is the reason we're
the only advanced economy that doesn't guarantee health care to
our citizens. White backlash against the civil rights movement
is the reason America is the only advanced country where a major
political party wants to roll back the welfare state.
When Bush moved into the White House, movement conservatism finally
found itself in control of all the levers of power - and quickly
proved itself unable to govern. The movement's politicization
of everything, the way it values political loyalty above all else,
creates a culture of cronyism and corruption that has pervaded
everything the Bush administration does, from the failed reconstruction
of Iraq to the hapless response to Hurricane Katrina. The multiple
failures of the Bush administration are what happens when the
government is run by a movement that is dedicated to policies
that are against most Americans' interests, and must try to compensate
for that inherent weakness through deception, distraction, and
the distribution of largesse to its supporters.
in 1910 almost 14 percent of adult males were non-naturalized
immigrants, unable to vote. Meanwhile Southern blacks were effectively
disenfranchised by Jim Crow. Between the immigrants and the blacks,
about a quarter of the population - and by and large, the poorest
quarter-were simply denied any role in the political process.
By the mid-fifties the real after-tax incomes of the richest 1
percent of Americans were probably 20 or 30 percent lower than
they had been a generation earlier. And the real incomes of the
really rich-say, those in the top tenth of one percent-were less
than half what they had been in the twenties.
Working Americans were far better off in the fifties than they
had been in the twenties, while the economic elite was worse off.
And even among working Americans economic differences had narrowed.
The available data show that by the 1950s unskilled and semiskilled
workers, like the people manning assembly lines, had closed much
of the pay gap with more skilled workers, like machinists. And
employees with formal education, like lawyers and engineers, were
paid much less of a premium over manual laborers than they had
received in the twenties-or than they receive today.
On the other side F. Scott Fitzgerald's remark that the rich "are
different from you and me" has never, before or since, been
less true than it was in the generation that followed World War
II. By the fifties, very few Americans were able to afford a lifestyle
that put them in a different material universe from that occupied
by the middle class. The rich might have had bigger houses than
most people, but they could no longer afford to live in vast mansions-in
particular, they couldn't afford the servants necessary to maintain
those mansions. The traditional differences in dress between the
rich and everyone else had largely vanished, partly because ordinary
workers could now afford to wear (and clean) good clothes, partly
because the rich could no longer afford to dress in a style that
required legions of servants to help them get into and out of
their wardrobes. Even the traditional rich man's advantage in
mobility - to this day high-end stores are said to cater to the
"cartrade" - had vanished now that most people had cars.
In the [nineteen-]twenties, taxes had been a minor factor for
the rich. The top income tax rate was only 24 percent, and because
the inheritance tax on even the largest estates was only 20 percent,
wealthy dynasties had little difficulty maintaining themselves.
But with the coming of the New Deal, the rich started to face
taxes that were not only vastly higher than those of the twenties,
but high by today's standards. The top income tax rate (currently
only 35 percent) rose to 63 percent during the first Roosevelt
administration, and 79 percent in the second. By the mid-fifties,
as the United States faced the expenses of the Cold War, it had
risen to 91 percent.
Moreover, these higher personal taxes
came on capital income that had been significantly reduced not
by a fall in the profits corporations earned but in the profits
they were allowed to keep: The average federal tax on corporate
profits rose from less than 14 percent in 1929 to more than 45
percent in 1955.
And one more thing: Not only did those
who depended on income from capital find much of that income taxed
away, they found it increasingly difficult to pass their wealth
on to their children. The top estate tax rate rose from 20 percent
to 45, then 60, then 70, and finally 77 percent. Partly as a result
the ownership of wealth became significantly less concentrated:
The richest 0.1 percent of Americans owned more than 20 percent
of the nation's wealth in 1929, but only around 10 percent in
So what happened to the rich? Basically
the New Deal taxed away much, perhaps most, of their income. No
wonder FDR was viewed as a traitor to his class.
If there's a single reason blue-collar workers did so much better
in the fifties than they had in the twenties, it was the rise
At the end of the twenties, the American
union movement was in retreat. Major organizing attempts failed,
partly because employers successfully broke strikes, partly because
the government consistently came down on the side of employers,
arresting union organizers and deporting them if, as was often
the case, they were foreign born. Union membership, which had
surged during World War I, fell sharply thereafter. By 1930 only
a bit more than 10 percent of nonagricultural workers were unionized,
a number roughly comparable to the unionized share of private-sector
workers today. Union membership continued to decline for the first
few years of the depression, reaching a low point in 1933.
But under the New Deal unions surged in
both membership and power. Union membership tripled from 1933
to 1938, then nearly doubled again by 1947. At the end of World
War II more than a third of nonfarm workers were members of unions-and
many others were paid wages that, explicitly or implicitly, were
set either to match union wages or to keep workers happy enough
to forestall union organizers.
Franklin Delano Roosevelt's Madison Square Garden speech on the
eve of the 1936 election
We had to struggle with the old enemies
of peace-business and financial monopoly, speculation, reckless
banking, class antagonism, sectionalism, war profiteering.
They had begun to consider the Government
of the United States as a mere appendage to their own affairs.
We know now that Government by organized money is just as dangerous
as Government by organized mob.
Never before in all our history have
these forces been so united against one candidate as they stand
today. They are unanimous in their hate for me - and I welcome
In the 1920s status-quo conservatism helped block liberal reforms.
Any proposal for higher taxes on the rich and increased benefits
for workers and the poor, any suggestion of changing labor law
in a way that would make unionization easier, was attacked on
the grounds that the would-be reformers were irresponsible people
who just didn't understand how the world worked-that their proposals,
if adopted, would destroy the economy.
FDR's second inaugural address
We have always known that heedless self-interest
was bad morals; now we know that it is bad economics.
Although the U.S. entry into World War II wasn't planned as a
gigantic demonstration of government effectiveness, it nonetheless
had that effect. It became very difficult for conservatives to
claim that government can't do anything well after the U.S. government
demonstrated its ability not just to fight a global war but also
to oversee a vast mobilization of national resources.
In 1946 Truman proposed a system of national health insurance
that would have created a single-payer system comparable to the
Canadian system today. His chances of pushing the plan through
initially looked good. Indeed, it would have been much easier
to establish national health insurance in the 1940s than it would
be today. Total spending on health care in 1946 was only 4.1 percent
of GDP, compared with more than 16 percent of GDP now. Also, since
private health insurance was still a relatively undeveloped industry
in the forties, insurance companies weren't the powerful interest
group they are now. The pharmaceutical lobby wouldn't become a
major force until the 1980s. Meanwhile public opinion in 1946
was strongly in favor of guaranteed health insurance.
But Truman's effort failed. Much of the
responsibility for that failure lies with the American Medical
Association, which spent $5 million opposing Truman's plan; adjusting
for the size of the economy, that's equivalent to $200 million
today. In a blatant abuse of the doctor-patient relationship,
the AMA enlisted family doctors to speak to their patients in
its effort to block national insurance. It ostracized doctors
who supported Truman's plan, even to the extent of urging that
they be denied hospital privileges. It's shocking even now to
read how doctors were told to lecture their patients on the evils
of 'socialized medicine,"
But the AMA didn't defeat Truman's plan
alone. There was also crucial opposition to national health insurance
from Southern Democrats, despite the fact that the impoverished
South, where many people couldn't afford adequate medical care,
would have gained a financial windfall. But Southern politicians
believed that a national health insurance system would force the
region to racially integrate its hospitals. (They were probably
right. Medicare, a program for seniors equivalent in many ways
to the system Truman wanted for everyone, was introduced in 1966-and
one result was the desegregation of hospitals across the United
States.) Keeping black people out of white hospitals was more
important to Southern politicians than providing poor whites with
the means to get medical treatment.
Between 1935 and 1945 the percentage of American workers in unions
rose from 12 to 35 percent; as late as 1970, 27 percent of workers
were union members.
By 1966, 80 percent of the population had health insurance, up
from only 30 percent at the end of World War II, and by 1970 the
fraction of the population with health insurance surpassed today's
85 percent level.
President Lyndon Johnson, March 1965
As a man whose roots go deeply into Southern
soil, I know how agonizing racial feelings are. I know how difficult
it is to reshape the attitudes and the structure of our society.
But a century has passed-more than 100 years-since the Negro was
freed. And he is not fully free tonight. It was more than 100
years ago that Abraham Lincoln-a great President of another party-signed
the Emancipation Proclamation. But emancipation is a proclamation
and not a fact.
A century has passed-more than 100 years-since
equality was promised, and yet the Negro is not equal. A century
has passed since the day of promise, and the promise is unkept.
The time of justice has now come.
President Lyndon Johnson to presidential aide Bill Moyers, after
the passage of the Civil Rights Act
I think we've just delivered the South
to the Republican Party for the rest of my life, and yours.
Time [magazine] readers were probably a bit puzzled in 1998, when
the magazine named Walter Reuther, who was president of the United
Automobile Workers from 1946 until his death in 1970, one of the
one hundred most influential people of the twentieth century.
By the century's end, American unionism was a shadow of its former
self, and Reuther had been all but forgotten. But once upon a
time Reuther was a towering-and, to some people, terrifying-figure.
In 1958 Barry Goldwater declared Reuther a "more dangerous
menace than the Sputnik or anything Soviet Russia might do to
Time magazine, 1998
[Walter] Reuther kept pressing for new
and better benefits, and over time, the union won the things that
employees today take for granted. Year by year, workers gained,
among others, comprehensive health-care programs, tuition-refund
programs, life insurance, profit sharing, severance pay, prepaid
legal-service plans, bereavement pay, jury-duty pay-plus improvements
in vacations, holidays and rest time.
The origins of neoconservatism can be traced largely to two groups:
Chicago economists led by Milton Friedman, who led the pushback
against Keynesian economics, and sociologists led by Irving Kristol
and associated with the magazine The Public Interest, who rebelled
against the Great Society.
... In the early years after World War
II, with the memory of the depression still fresh, most economists
believed that keeping the economy on track required an extensive
role for the government. Mainstream economics rejected calls for
a planned economy, but it did accept the need for government intervention
to fight recessions, as well as a generally increased role of
government in the economy as a whole.
Once the crisis had passed, however, it
was inevitable that some economists would return to the old faith.
By the late 1940s Friedman and his colleague George Stigler were
already inveighing (with considerable justification) against the
evils of rent control. Over the course of the 1950s this expanded
into a broad attack on government intervention and regulation
in general. By the early 1960s Friedman had made almost a complete
return to free-market fundamentalism, arguing that even the Great
Depression was caused not by market failure but by government
failure. His argument was slippery and, I'd argue, bordered on
intellectual dishonesty" But the fact that a great economist
felt compelled to engage in intellectual sleight of hand is, itself,
an indication of the powerful allure of free-market fundamentalism.
Free-market economists began rejecting not just the New Deal,
but the reforms of the Progressive Era, suggesting that even such
government actions as policing food and drug safety were unjustified
The revolt of the sociologists came later
than the return of free-market fundamentalism, and had a darker
tone. Where Friedman and his associates radiated Panglossian optimism,
the group that coalesced around Kristol and The Public Interest,
founded in 1965, were skeptics, even cynics. They were rebelling
against Lyndon Johnson's Great Society...
... The Friedmanites and the neoconservatives
saw themselves as outsiders, alienated from the liberal establishment.
To a remarkable extent the heirs of these movements still manage
to feel this way. Yet, by the 1970s the intelligentsia of movement
conservatism had an establishment of its own, with financial backing
on a scale beyond the wildest dreams of its liberal opponents.
To put it bluntly, becoming a conservative intellectual became
a good career move.
in the late 1960s and early 1970s members of the new conservative
intelligentsia persuaded both wealthy individuals and some corporate
leaders to funnel cash into a conservative intellectual infrastructure.
To a large extent this infrastructure consists of think tanks
that are set up to resemble academic institutions, but only publish
studies that play into a preconceived point of view. The American
Enterprise Institute, although it was founded in 1943, expanded
dramatically beginning in 1971, when it began receiving substantial
amounts of corporate money and grants from conservative family
foundations. The Heritage Foundation was created in 1973 with
cash from Joseph Coors and Richard Mellon Scaife. The libertarian
Cato Institute relied heavily on funds from the Koch family foundations.
Media organizations are also part of the
infrastructure. The same set of foundations that have funded conservative
think tanks also gave substantial support to The Public Interest,
as well as publications like The American Spectator.
... The Public Interest, along with the
editorial page of the Wall Street Journal, became the principal
advocate of supply-side economics.
The collapse of the U.S. union movement that took place beginning
in the 1970s has no counterpart in any other Western nation...
By the end of the 1990s, U.S. unions had been all but driven out
of the private sector, while Canada's union movement was essentially
intact. The difference, of course, was politics: America's political
climate turned favorable to union busting, while Canada's didn't.
Once Ronald Reagan took office the campaign
against unions was aided and abetted by political support at the
highest levels. In particular, Reagan's suppression of the air
traffic controllers' union was the signal for a broad assault
on unions throughout the economy. The rollback of unions, which
were once a powerful constraint on inequality, was political in
the broadest sense. It was an exercise in the use of power, both
within the government and in our society at large.
The character of the Republican Party changed rapidly in the post-Nixon
years. In 1984 Thomas Edsall of the Washington Post published
'The New Politics of Inequality' a remarkably insightful and prescient
analysis of the changes already taking place in American politics.
At the core of his analysis was the renewal and radicalization
of the Republican Party that, in his view, took place in the mid-to-late
Such previously hostile and mutually
suspicious groups as the corporate lobbying community; ideological
right-wing organizations committed to a conservative set of social
and cultural values; sunbelt entrepreneurial interests, particularly
independent oil; a number of so-called neo-conservative or cold
war intellectuals with hard-line views on defense and foreign
policy who, although sometimes nominally Democratic, provide support
for the politics and policies of the GOP; economists advocating
radical alteration of the tax system, with tax preferences skewed
toward corporations and the affluent-all of these groups found
that the Republican Party offered enough common ground for the
formation of an alliance.
In other words, movement conservatism
had taken over the GOP.
Ronald Reagan was the first movement conservative
president. Within Ronald Reagan's inner circle, views that had
once been confined to what Eisenhower described as a "tiny
splinter group" reigned: David Stockman, Reagan's budget
director, considered Social Security an example of "closet
socialism," while fervent supply-siders, who believed that
cutting taxes would increase revenue, were given key positions
in the Treasury Department and elsewhere in the government. Reagan
also did his best to reverse Nixon's environmental achievements,
slashing the budget of the Environmental Protection Agency and
gutting its enforcement activities. His first secretary of the
interior, James Watt, was a fervent antienvironmentalist with
strong ties to the religious right who I quintupled the amount
of public land open to coal mining.
After Reagan, the GOP became thoroughly radicalized. Consider
the 2004 platform of the Texas Republican Party, which gives an
idea of what the party faithful really think: national platforms
have to present at least an appearance of moderation, but in Texas
Republicans can be Republicans. It calls for the elimination of
federal agencies "including, but not limited to, the Bureau
of Alcohol, Tobacco, and Firearms; the position of Surgeon General;
the Environmental Protection Agency; the Departments of Energy,
Housing and Urban Development, Health and Human Services, Education,
Commerce, and Labor." The platform also calls for the privatization
of Social Security and the abolition of the minimum wage. In effect
Texas Republicans want to repeal the New Deal completely.
In the late 1990s, before the Bush tax cuts, a mere 2 percent
of decedents had estates large enough to face any tax at all.
In terms of income, the richest 1 percent of the population paid
almost two-thirds of the estate tax, and the richest 10 percent
paid 96 percent of the taxes.
In the 1990s the Republican Party once again began making estate
tax repeal a priority. And the 2001 Bush tax cuts included a phaseout
of the estate tax, with rates going down and exemptions going
up, concluding with total elimination of the tax in 2010, In other
words today's Republican party is willing to go further than the
Republican Party of the 1920s, the last, golden ears of the Long
Gilded Age, in cutting taxes on the wealthy.
Grover Norquist, movement conservative and anti-tax advocate
My goal is to cut government in half in
twenty-five years, to get it down to the size where we can drown
it in the bathtub.
The modern Republican Party has been taken over by radicals, people
who want to undo the twentieth century.
There is an interlocking set of institutions ultimately answering
to a small group of people that collectively reward loyalists
and punish dissenters. These institutions provide obedient politicians
with the resources to win elections, safe havens in the event
of defeat, and lucrative career opportunities after they leave
office. They guarantee favorable news coverage to politicians
who follow the party line, while harassing and undermining opponents.
And they support a large standing army of party intellectuals
There's nothing on the left comparable to the right-wing think
tank universe. The Washington Post has a regular feature called
"Think Tank Town," which "publishes columns submitted
by 11 prominent think tanks," Of the eleven institutions
so honored, five are movement conservative organizations: the
American Enterprise Institute, the Cato Institute, the Heritage
Foundation, the Manhattan Institute, and the Hudson Institute.
Only one, the Center for American Progress, can really be considered
an arm of the progressive movement-and it wasn't founded until
2003. Other think tanks, like the Brookings Institution, although
often described as "liberal," are in reality vaguely
centrist organizations without a fixed policy line. There are
a few progressive think tanks other than CAP that play a significant
role in policy debate, such as the Center on Budget and Policy
Priorities and the Economic Policy Institute. In terms of funding
and manpower, however, these organizations are minnows compared
with the movement conservative whales.
The proliferation of movement conservative
think tanks since the 1970s means that it's possible for a movement
intellectual to make quite a good living by espousing certain
positions. There's a price to be paid-as Bruce Bartlett discovered)
you're expected to be an apparatchik, not an independent thinker-but
many consider it a good deal.
To a very large extent these think tanks
were conjured into existence by a handful of foundations created
by wealthy families. The bigger think tanks, Heritage and AEI
in particular, also receive large amounts of corporate money
The network of conservative think tanks
has its counterpart in the world of journalism. Publications such
as the National Journal, the Public Interest, and the American
Spectator were, like the movement conservative think tanks, created
with a lot of help from right-wing foundations-more or less the
same foundations that helped create the think tanks. There are
also a number of movement conservative newspapers: The editorial
page of the Wall Street Journal has long played a key role, while
the Washington limes, controlled by Sun Myung Moon's Unification
Church, has become the de facto house organ of the Bush administration.
And there is, of course, Fox News, with its Orwellian slogan,
Fair and Balanced.
Last but certainly not least, there's
the nexus among lobbyists and politicians. The apparent diversity
of corporate lobbying groups, like the apparent diversity of conservative
think tanks, groups, the movement's true centralization.
The "K Street Strategy" [is] the name Grover Norquist
and former House majority leader Tom DeLay gave to their plan
to drive Democrats out of lobbying organizations, and give the
jobs to loyal Republicans. Part of the purpose of this strategy
was to ensure that Republicans received the lion's share of corporate
contributions, while Democratic finances were starved-a goal also
served by direct pressure. In 1995 DeLay compiled a list of the
four-hundred largest political action committees along with the
amounts and percentages of money they gave to each party, then
called "unfriendly" lobbyists into his office to lay
down the law. "If you want to play in our revolution, you
have to live by our rules," he told the Washington Post.
Equally important, however, the takeover of the lobbies helped
enforce loyalty within the Republican Party, by providing a huge
pool of patronage jobs-very, very well-paid patronage jobs-that
could be used to reward those who toe the party line.
The various institutions of movement conservatism
create strong incentives for Republican politicians to take positions
well to the right of center. It's not just a matter of getting
campaign contributions, it's a matter of personal financial prospects.
The public strongly believes that Medicare should use its bargaining
power to extract lower drug prices-but Rep. Billy Tauzin, a Democrat-turned-Republican
who was the chairman of the House Energy and Commerce Committee
from 2001 to 2004, pushed through a Medicare bill that specifically
prohibited negotiations over prices, then moved on to a reported
seven-figure salary as head of the pharmaceutical industry's main
lobbying group. Rick Santorum was clearly too far right for Pennsylvania,
but he had no trouble finding a nice think tank job after his
Younger Republican politicians have, by and large, grown up inside
a party defined by movement conservatism. The hard right had
already taken over the College Republicans by 1972... Movement
conservatives run the Republican National Committee, which means
that they are responsible for recruiting congressional candidates;
inevitably they choose men and women in their own image. The few
remaining Republican moderates in Congress were, with rare exceptions,
first elected pre-Reagan or, at the latest, before the 1994 election
that sealed the dominance of the Gingrich wing of the Party.
Bitter partisanship has become the rule because the Republicans
have moved right, and the GOP has moved right because it was taken
over by movement conservatives.
Wealthy families who hate taxes, corporate interests that hate
regulation, and intellectuals who believe that the welfare state
is illegitimate have always been with us.
In the late 1950s and early 1960s, the "new conservatives,"
the narrow, elitist group centered around the National Review,
grew into a serious movement by merging with other factions unhappy
with the moderate, middle-class America of the postwar years.
Fervent anticommunists found in movement conservatism kindred
spirits who shared their fears. People outraged by the idea of
other people receiving welfare found a movement that could make
their resentment politically respectable. Businessmen furious
at having to deal with unions found a movement that could turn
their anger into effective political action.
[Ronald] Reagan taught the [conservative] movement how to clothe
elitist economic ideas in populist rhetoric.
Every advanced country except the United States has a universal
health care system; how did we miss out? Perhaps the best opportunity
to create such a system came in the late 1940s, when Harry Truman
attempted to create a system that would have looked essentially
like Medicare for the whole population...Truman's bid failed in
the face of opposition from two crucial groups: the American Medical
Association and Southern whites, who would have gained from the
program because of their low incomes but who opposed it out of
fear that it would lead to racially integrated hospitals.
The marriage between Southern whites and the rest of the Democratic
Party broke down over irreconcilable differences. The process
began with Barry Goldwater, who took a strong states' rights position
and came out against the Civil Rights Act of 1964. Aside from
Arizona, all the states Goldwater won in the 1964 election were
in the South. In 1968 much of the South went for George Wallace,
but Nixon picked up several border states. By 1980 Reagan could
win Southern states with thinly disguised appeals to segregationist
sentiment, while Democrats were ever more firmly linked to civil
rights and affirmative action. In fact the real mystery is why
it took so long for the South's congressional delegation to flip.
What share of the political rise of movement
conservatism can be attributed to the Southern switch? What the
numbers suggest is that the switch accounts for all of the conservative
triumph - and then some.
Race was essential to the ability of conservatives to win elections
in spite of economic policies that favored a minority over the
The current disconnect between overall economic growth and the
fortunes of typical Americans is ... unprecedented in modern U.S.
history. Inequality was high during the Long Gilded Age, but because
inequality was stable, most workers saw their standard of living
improve steadily as the economy grew.
Growth in the great postwar boom that
ended in 1973 was broadly shared. Even after inequality began
rising at the end of the 1970s, a growing economy continued to
translate into gains for almost everyone. Thus inequality was
rising in the 1980s, but the expansion of the economy from 1982
onward was still strong enough to let Reagan declare "Morning
in America" in 1984, and to get the first George Bush elected
in 1988, Inequality continued to rise during the 1990s, but there
was still a dramatic improvement in public sentiment as the economy
recovered from the 1990-92 slump.
Now, however, the stagnation of wages
and median income in the face of overall economic expansion has
become so clear that public perceptions of how the economy is
doing no longer seem linked to standard measures of economic performance...
corporate profits have soared - they're now at their highest level,
as a percentage of GDP, since 1929 - and so have incomes at the
top of the scale. But the wages of most workers have barely kept
up with inflation. Add in a growing sense of insecurity, especially
because of the crumbling health insurance system pf which much
more in chapter ii), and it's perfectly reasonable for most people
to feel pessimistic about the economic situation.
Polls also suggest that the public both
understands the role of growing inequality and supports government
action to do something about it. A massive Pew survey of trends
in public opinion found that the fractions of the public agreeing
that the rich are getting richer while the poor get poorer, that
the government has a responsibility to help those in need, that
everyone should be guaranteed enough to eat and a place to live,
have all risen to levels not seen since the early 1990s.
Governments always get an initial boost in public support when
they go to war, no matter how incompetent and corrupt the government
and no matter how foolish the war.
The United States uniquely among wealthy nations, does not guarantee
basic health care to its citizens.
Everywhere else [other than the U.S.] most health insurance is
in effect provided by the government, and ultimately by taxpayers
(although the details can be complex). Even in the United States,
a taxpayer-funded insurance program-Medicare-covers everyone sixty-five
and older, and another government program, Medicaid, covers some
but not all of those too poor to afford private insurance. But
the great majority of Americans who have health insurance get
it from the private sector. That reliance on private insurance
also makes the United States the only advanced country in which
a large fraction of the population - about 15 percent - has no
insurance at all.
The World Health Organization rates [the United States] as number
37 [in the world in quality of heath care]... Cross-cultural surveys
say that even the British have better overall access to health
care than Americans do: they wait longer for discretionary surgery
than we do, but they find it easier to see a doctor on short notice,
especially after hours or on weekends. And the Germans and French
have no significant delays of any kind.
Although America spends much more on health care than anyone else,
this doesn't seem to buy significantly more care. By measures
such as the number of doctors per 100,000 people, the average
number of doctors' visits, the number of days spent in the hospital,
the quantity of prescription drugs we consume, and so on, American
health care does not stand out from health care in other rich
countries. We're off the charts in terms of what we pay for care,
but only in the middle of the pack in terms of what we actually
get for our money.
Medicare spends only about 2 percent of its funds on administration;
for private insurers the figure is about 15 percent... One widely
cited comparison of the U.S. and Canadian systems ... concluded
that in the United States total administrative cost - including
both the costs of insurers and those of health care providers
- accounts for 31 percent of health spending, compared with less
than 17 percent in Canada.
U.S. physicians are paid more than their counterparts in other
countries... a study comparing U.S. and Canadian administrative
costs estimate that higher U.S. physicians' salaries account for
only about 2 percent of the difference in overall costs.
Insurers have little incentive to pay for preventive car even
when it would save large amounts in future medical costs. The
most notorious example is diabetes, where insurers often won't
pay for treatment that might control the disease in its early
stages but will pay for the foot amputations that are all too
often a consequence of diabetes that gets out of control. This
may seem perverse, but consider the incentives to the insurer:
The insurer bears the cost when it pays for preventive care, but
it's unlikely to reap the benefits since people often switch insurers,
or go from private insurance to Medicare when they reach sixty-five,
So medical care that costs money now but saves money in the future
may not be worth it from an individual insurance company's perspective.
By contrast, universal systems, which cover everyone for life,
have a strong incentive to pay for preventive care.
In 2005, 80 million Americans were covered by government programs,
mostly Medicare and Medicaid plus other programs such as veterans'
health care. This was less than the 198 million covered by private
health insurance, but because both programs are largely devoted
to the elderly, who have much higher medical costs than younger
people, the government actually pays for more medical care than
do private insurers. In 2004, government programs paid for 44
percent of health care in America, while private insurance paid
for only 36 percent.
The slow-motion health care crisis began in the 1980s, went into
brief remission for part of the nineties, and is now back with
a vengeance. The core of the crisis is the decline in employment-based
insurance. As recently as 2001, 65 percent of American workers
had employment-based coverage. By 2006 that was down to 59 percent,
with no sign that the downward trend was coming to an end. What's
driving the decline in employment-based coverage is, in turn,
the rising cost of insurance: The average annual premium for family
coverage was more than eleven thousand dollars in 2006, more than
a quarter of the median worker's annual earnings." For lower-paid
workers that's just too much-in fact, it's close to the total
annual earnings of a full-time worker paid the minimum wage. One,
study found that even among "moderate income" Americans,
which it defined as members of families with incomes between twenty
and thirty-five thousand dollars a year, more than 40 percent
were uninsured at some point over a two-year period.
The most fundamental obstacle [to health care reform] is the implacable
opposition of movement conservatives, William Kristol, in the
first of a famous series of strategy memos circulated to Republicans
in Congress, declared that Republicans should seek to "kill"
the Clinton plan. He explained why in the Wall Street Journal:
"Passage of the Clinton health care plan in any form would
be disastrous. It would guarantee an unprecedented federal intrusion
into the American economy. Its success would signal the rebirth
of centralized welfare-state policy." He went on to argue
that the plan would lead to bad results, but his main concern,
clearly, was that universal health care might actually work-that
it would be popular, and that it would make the case for government
intervention." It's the same logic that led to George W.
Bush's attempt to privatize Social Security: The most dangerous
government programs, from a movement conservative's point of view,
are the ones that work the best and thereby legitimize the welfare
The fact is that no health care reform can succeed unless it reduces
the excess administrative costs now imposed by the insurance industry
- and that means forcing the industry to shrink, even if the insurers
retain a role in the system. There's really no way to buy their
Like the opposition of insurers, drug industry opposition is essentially
unavoidable, because drug companies are part of the problem -
U.S. health care is costly partly because we pay much more than
other countries for prescription drugs, and sooner or later a
universal health care system would try to bargain those prices
Consider the French [health care] system, which the World Health
Organization ranked number one in the world. France maintains
a basic insurance system that covers everyone, paid for out of
tax receipts. This is comparable to Medicare. People are also
encouraged to buy additional insurance that covers more medical
expenses-comparable to the supplemental health insurance that
many older Americans have on top of Medicare-and the poor receive
subsidies to help them buy additional coverage, comparable to
the way Medicare helps out millions of older Americans.
... the French health care system, which
covers everyone and is considered the best in the world, actually
looks a lot like an expanded and improved version of Medicare,
a familiar and popular program, extended to the whole population.
An American version of the French system would cost more than
the French system for a variety of reasons, including the facts
that our doctors are paid more and that we're fatter and hence
more prone to some costly conditions. Overall, however, Medicare
for everyone would end the problem of the uninsured, and it would
almost certainly cost less than our current system, which leaves
45 million Americans without coverage.
Proposals to institute a single-payer system, aka Medicare for
all, face several major political roadblocks. The roadblock one
hears about most often is the implacable opposition of the insurance
and drug industries to a single-payer system. Reformers should
realize, however, that these interest groups will go all out against
any serious health care reform. There's no way to buy them off.
In purely economic terms, single-payer is clearly the way to go.
A single-payer system, with its low administrative costs and strong
ability to bargain over prices, would deliver more health care,
at lower cost, than the alternatives. The perfect can, however,
be the enemy of the good. It's much better to go with a reform
plan that's politically feasible and achieves some of the advantages
of single-payer than to hold out for the ideal solution.
The principal reason to reform American health care is simply
that it would improve the quality of life for most Americans.
Under our current system tens of millions lack adequate health
care, millions more have had their lives destroyed by the financial
burden of medical costs, and many more who haven't yet gone without
insurance or been bankrupted by health costs live in fear that
they may be next. And it's all unnecessary: Every other wealthy
country has universal coverage. Reducing the risks Americans face
would be worth it even if it had a substantial cost-but in this
case there would be no cost at all. Universal health care would
be cheaper and better than our current fragmented system.
There is, however, another important reason
for health care reform. It's the same reason movement conservatives
were so anxious to kill Clinton's plan. That plan's success, said
Kristol, 'would signal the rebirth of centralized welfare-state
policy-by which he really meant that universal health care would
give new life to the New Deal idea that society should help its
less fortunate members. Indeed it would-and that's a big argument
in its favor.
Universal health care could, in short,
be to a new New Deal what Social Security was to the original-both
a crucially important program in its own right, and a reaffirmation
of the principle that we are our brothers' keepers. Getting universal
care should be the key domestic priority for modern liberals.
Once they succeed there, they can turn to the broader, more difficult
task of reining in American inequality.
Robert Frank in his book "Richistan"
Today's rich had formed their own virtual
country... [T]hey had built a self-contained world unto themselves,
complete with their own health-care system (concierge doctors),
travel network (Net jets, destination clubs), separate economy...
The rich weren't just getting richer; they were becoming financial
foreigners, creating their own country within a country, their
own society within a society, and their economy within an economy.
Liberals want to restore the middle-class society I grew up in;
those who call themselves conservative want to take us back to
the Gilded Age, undoing a century of history. Liberals defend
longstanding institutions like Social Security and Medicare; those
who call themselves conservative want to privatize or undermine
those institutions. Liberals want to honor our democratic principles
and the rule of law; those who call themselves conservative want
the president to have dictatorial powers.
Adlai Stevenson, 1952
The strange alchemy of time has somehow
converted the Democrats into the truly conservative party in the
country - the party dedicated to conserving all that is best and
building solidly and safely on these foundations. The Republicans,
by contrast, are behaving like the radical party-the party of
the reckless and embittered, bent on dismantling institutions
which have been built solidly into our social fabric.
Movement conservatism has been antidemocratic, with an attraction
to authoritarianism, from the beginning, when the National Review
praised Francisco Franco and defended the right of white Southerners
to disenfranchise blacks. That antidemocratic, authoritarian attitude
has never gone away. When liberals and conservatives clash over
voter rights in America today, liberals are always trying to enfranchise
citizens, while conservatives are always trying to block some
citizens from voting. When they clash over government prerogatives,
liberals are always the defenders of due process, while conservatives
insist that those in power have the right to do as they please.
After 9/11 the Bush administration tried to foster a deeply un-American
political climate in which any criticism of the president was
considered unpatriotic - and with few exceptions, American conservatives
The central fact of modem American political life is the control
of the Republican Party by movement conservatives, whose vision
of what America should be is completely antithetical to that of
the progressive movement. Because of that control, the notion,
beloved of political pundits, that we can make progress through
bipartisan consensus is simply foolish. On health care reform,
which is the first domestic priority for progressives, there's
no way to achieve a bipartisan compromise between Republicans
who want to strangle Medicare and Democrats who want guaranteed
health insurance for all. When a health care reform plan is actually
presented to Congress, the leaders of movement conservatism will
do what they did in 1993 - urge Republicans to oppose the plan
in any form, lest successful health reform undermine the movement
conservative agenda. And most Republicans will probably go along.
To be a progressive, then, means being
a partisan - at least for now. The only way a progressive agenda
can be enacted is if Democrats have both the presidency and a
large enough majority in Congress to overcome Republican opposition.
And achieving that kind of political preponderance will require
leadership that makes opponents of the progressive agenda pay
a political price for their obstructionism-leadership that, like
FDR, welcomes the hatred of the interest groups trying to prevent
us from making our society better.