Some of the most important things in history are things that didn’t happen — even though just about everyone thought they would.
Recent example: Scads of liberals gleefully predicted that the financial crisis and deep recession would destroy Americans’ faith in markets and increase their confidence in big government. Many conservatives gloomily feared they were right.
Hasn’t happened. If anything, public opinion has moved in the other direction, with most Americans rejecting the stimulus package and the health care bill, denying that government action is needed to address global warming, expressing negative feelings about labor unions.
How to explain this? One way is to see the public’s reaction as opposition to governance by an alliance of Big Units — Big Government, Big Business and Big Labor.
In the 1930s, Americans supposedly lost faith in markets and rallied to government. But if you go back and look at public opinion polling then, you find something rather different. You find majorities grumbling about Big Government, scorning Big Business and opposing Big Labor.
The 1940s were different. Facing the threat of total war, Franklin Roosevelt transformed himself from “Dr. New Deal” to “Dr. Win the War.” He fostered cooperation between Big Government, Big Business and Big Labor. Roosevelt was brilliant at selecting, from all these sources, the best men (and women) for jobs he considered important.
The result was a war effort that was brilliantly successful. America was the arsenal of democracy, vanquishing its enemies and inventing the atomic bomb. Big Unit governance gained enormous prestige and held onto it for a generation after the war.
The result was prosperity but also stasis. The Big Government of 1970 looked a lot like the Big Government of the 1940s. The same Big Businesses that dominated the Fortune 500 list in 1940 did so in 1970. The list of Big Labor unions remained pretty much the same.
Around 1970, these Big Units lost their edge. Big Government got mired in wars on poverty and in Vietnam. Big Business got hidebound and bureaucratic. Big Labor started to shrink.
Starting around 1980, the country began to revive. Big Government lowered taxes and deregulated transportation and communications. Entrepreneurs and investors replaced stodgy corporate managements with new companies and new products. The conformist “organization man” Americans of the 1950s were replaced by non-conformist innovators, risk-takers and creators who made a new economy that central planners could never have envisioned. Bill Gates and Steve Jobs didn’t wait for those at the top of Big Units to tell them what to do.
Big Business changed: The Fortune 500 list of 2010 doesn’t look anything like that of 1970. Big Labor almost vanished: Most union members today are public employees.
The Obama Democrats, faced with a grave economic crisis, responded with policies appropriate to the Big Unit America that was disappearing during the president’s childhood.
Their financial policy has been to freeze the big banks into place. Their industrial policy was to preserve as much as they could of General Motors and Chrysler for the benefit of the United Auto Workers. Their health care policy was designed to benefit Big Pharma and other big players. Their housing policy has been to try to maintain existing prices. Their macroeconomic policy was to increase the size and scope of existing government agencies to what looks to be the bursting point.
What we see is Big Government colluding with Big Business and trying to breathe life into Big Labor.
Some of this can be defended. The Obama Democrats are right in pointing out that the TARP financial bailout was the product of the George W. Bush administration, and they may well be right that it would have been disastrous to allow Citibank to fail.
But Big Unit policies are not a good fit for a country that has grown out of the wreckage the Big Units made of things in the 1970s. They freeze poorly performing incumbents in place, and they don’t provide the breathing room for small units to start up and grow.
In the meantime, the Big Units are not performing as well as they did for Dr. Win the War. The visibly flagging economy and the slapdash stimulus and health care bills have left most voters ready to take a chance on the still reviled Republicans. The unanswered question is, will the Republicans have an effective alternative to Big Unit governance?