Public Policy Saboteurs

Some people have an agenda that includes sabotaging, or at least making public entities look bad. If you’re interested in that last topic, try Rick Perlstein’s histories of the rise of the conservative movement, from Goldwater (The Gathering Storm) to Nixon (Nixonland), to Reagan (The Invisible Bridge, Reaganland). Thomas Frank also wrote The Wrecking Crew: How Conservatives Ruined Government, Enriched Themselves and Beggared the Nation. Or...Nancy MacLean's Democracy in Chains: The Deep History of the Radical Right's Stealth Plan for America.

One thing Perlstein makes crystal clear: to make their opposition to the then-popular Democrats effective meant Republicans had to “organize [and encourage] dissent.” The principles involved did not matter. The late Jerry Falwell actually supported abortion before he opposed it. The point is not to be consistent, it’s to divide and rule. It’s been very effective.

Meanwhile, one pundit says Republicans go for the jugular; Democrats go for the capillaries.

One other example of that unprincipled dynamic: Republican strategist Jude Wanniski, a supporter of supply-side/trickle-down economics, advised the Republicans to run up as big a deficit as possible when in power, and then complain as bitterly as possible when out of power. Reagan took his advice and had a still record-breaking deficit increase. Reagan’s deficit exceeded the sum of all previous administrations’ deficits. He got an economic revival, too, called “Morning in America” by the Wall St. Journal. It was an average business cycle recovery, but the marketing has been flawless. Here’s a graph of GDP from the St. Louis Fed:




Note the very large spikes for the New Deal and that big public works project we call “World War II” … and notice how the Reagan recovery is in line with the rest of the business cycles since 1950. But hey, it’s “Morning in America!”...or an average business cycle recovery marked by lower-than-average capital investment. See Paul Krugman’s Peddling Prosperity for more about this.

One more comment: if orthodox economics theories of “crowding out” (government prevents private sector access to resources) or “loanable funds” (government borrowing prevents private sector access to money) were accurate, wouldn’t GDP decline during these two massive injections of federal spending in the ‘30s and ‘40s?