December 18, 2008
The good news about the Obama leadership team is that it is composed of seasoned hands*, ready to take over on January 20—or even before; conditions are worsening at a pace that is pulling the Obama team into the policymaking process as almost a fourth branch of government. This would seem to augur well for the kind of emergency action that will leave no time for settling in. It also aligns well with the calm-and-in-control image Obama has sought to project throughout the campaign and since the election. It was a critical element in winning the election, contrasting as it did with the McCain campaign’s frantic play-calling, and it is already a critical element in Obama’s effort to reassure an economy, a nation and a world that often seems on the verge of panic.
So if there’s a God in heaven, Obama’s team of seasoned and steady public servants will pull the economy out of the nosedive it’s now in.
Then what? The flash fires that the crisis managers in the Bush and Obama administrations are trying to extinguish are not so much fundamental problems as they are the manifestations of the deeper, more systemic problems that we have allowed to develop. Former Dallas Cowboys coach Tom Landry—if I may switch metaphors here—was often asked, after losing a close game, whether this or that erroneously-called penalty had cost the Cowboys the game. “The penalty didn’t cost us the game,” Landry would reply. “We cost ourselves the game, by having so small a lead that that a penalty could turn a lead into a loss.”
So, too, with many aspects of our jury-rigged infrastructure of economic policymaking and regulation, patched and reinforced over the years in response to the transitory exigencies, but now hopelessly out of sync with the US and the world in the 21st century. Is the team of establishmentarians Obama is putting in place equipped to devise creative long-term solutions to underlying problems of which the current crisis is only the most visible part? Problems like:
Debate over Social Security has remained stubbornly narrow: raise taxes or cut (or postpone) benefits. But the program is more than seventy years old. When it was passed, not only did few people work past 65, few people lived past 65. As a result, the number of people paying into the system was many times the number receiving benefits. All that has changed. People live much longer. Many can—and many need to—work much longer. The careers of others are cut short before retirement age but past the age at which employers are willing to hire new workers. We still need something to provide at least a modest income for those who are, as labor leader Walter Reuther put it, “too old to work and too young to die.” But does a one-retirement-age-fits-all program still make sense? Can we still afford to pay benefits to people who don’t need them while withholding them from those who do need them but are too young or made too little? Is this still the right kind of program, in other words, for today’s realities?
Our locally-controlled, free-and-compulsory-through-high-school system of education dates back over a century, to a time when people often lived out their lives near where they were born and grew up, and when a high school degree was enough to get a job on whose wages a family could live. Our school-year schedule dates back even further, to a time when families needed children at home during the summer to get in the crops. Those days are long past. Almost every family-supporting job requires at least an undergraduate degree—but college has become so expensive that few can afford it without incurring crippling debt. The labor market is national and international but schools are still local. Studies show that much of what is learned from September through May is forgotten from June through August. Do mass-production schools prepare people for an information-and-idea-based workplace? Should college be compulsory, the way high school is? Does our nineteenth century educational system still work for a 21st century nation and world?
A gaggle of programs, practices and policies—labor laws, health insurance and unemployment compensation, to name three—are based on an industrial economy that has long since passed into history. The economy was dominated by major industries facing little or no competition at home or abroad. The path of least resistance was to pass the cost of negotiated pay raises, health insurance policies and pensions along to consumers. To spend an entire career in one industry, even at one company, and then retire on a pension, was a reasonable aspiration. Now it’s not. Can we adapt industry and industrial relations to 21st century economic realties without reverting back to the pre-union–i.e. pre-employment-health benefits, pre-paid-vacation, pre-sick-leave—days?
The International Economy
The international economic modalities under which we live, like Bretton Woods and the World Trade Organization, have their roots in the period after World War II and during the Cold War. How many now recall that the “third world” designation for underdeveloped and developing economies arose from a division of the countries of the world into a prosperous First World—the US and Western Europe; a militarily powerful but economically tubercular Second World of Communist countries; and a poverty-stricken Third World? Today we face serious competition from Second World countries like China and Third World countries like India. At the same time, however, the modern industries and sleek downtowns of Chinese and Indian cities coexist with a grinding poverty that has no equal in the west, a poverty that is at least decades, perhaps more, from being eliminated. How long can that coexistence remain peaceful, and what are the implications for us if it does not? Can the Bretton Woods and WTO regimes accommodate competition between modern industrial economies and erstwhile Second and Third World countries?
No time in our past seems as similar to our current dilemma as the New Deal. But the precedent is more complicated than it may seem. Unemployment and other aspects of the Depression were slow to yield to New Deal measures. In 1937, four years after taking office, and almost a decade after the stock market crash, FDR still saw “one-third of a nation ill-housed, ill-clad, ill-nourished.” But as Russell Baker told me in an interview for a TV segment on the Depression, the freshet of New Deal action did give people the reassuring feeling that, finally, after four years of Hooverian paralysis, something was being done. And although unemployment didn’t go down until World War II, programs like the Works Progress Administration, the National Recovery Administration and the Civilian Conservation Corps provided a measure of short-term relief. And the jaunty confidence that Roosevelt exuded kept the whole thing afloat.
So the reason we look back at the New Deal so fondly is not that it put a quick end to the Depression, but that it transformed many of the underlying economic conditions and institutions whose failure had caused so much misery. In fact, it was the genius of Franklin D. Roosevelt and the New Deal to come up with solutions that took advantage of the nation’s desperation to push through badly-needed measures with long-lasting implications—the minimum wage, Social Security, the Wagner labor relations act, and the Securities and Exchange Commission, to name just a few—that Congress would have balked at in normal times.
Obama will not face in 2009 what FDR faced in 1933—a Depression already in its fourth year, 25% unemployment, bread lines, thousands of banks collapsing. Neither, however, will he bring to his challenges what FDR brought to those of his time. Obama is only four years out of the Illinois State Senate. Roosevelt had been a state senator as well. But although he was only four years older than Obama when he was sworn in as president, FDR had already served seven years in Washington as Assistant Secretary of the Navy, two of them during World War I, and two terms as governor of New York during the Depression. He had run an unsuccessful statewide campaign for the US Senate, and an unsuccessful national campaign for Vice President.
Beneath Roosevelt, however, in cabinet and sub-cabinet positions and “Brains Trust” advisers, were a corps of men and women, many of whom had no previous high-level federal experience whatever. Treasury Secretary Henry Morgenthau had been a state and federal agricultural and conservation official. Labor Secretary Frances Perkins had worked for Roosevelt in New York, as had top aide Louis Howe. Interior Secretary Harold Ickes was a newspaper reporter and Chicago political activist. Agriculture Secretary Henry Wallace had been an agricultural journalist and agribusinessman. Members of FDR’s influential “Brains Trust,”—men like Raymond Moley, Rexford Guy Tugwell, and A.A. Berle—had been university professors.
Some of Obama’s new hires, Education Secretary Arne Duncan, for example, seem reminiscent of FDR’s model. But by and large, the work-in-progress Obama administration looks like an inversion of the New Deal: a supremely confident but lightly experienced chief presiding over a cadre of officials who are not only deeply experienced in crafting and executing policy at the highest levels but who previously, in some cases, held almost the very same jobs to which they now return.
The dogmas of the past are inadequate to the present, Obama’s favorite president and fellow Illinoisan told Congress 146 years ago this month. “As our case is new, so we must think anew, and act anew. We must disenthrall ourselves, and then we shall save our country.”
Can old dogs like Lawrence Summers, Paul Volcker and Rahm Emanuel, men who made their bones triangulating and tweaking policies and institutions whose reasons for existence date back as much as a century, learn the new tricks that the new realities demand? Will there gather, at the Under-, Deputy, and Assistant Secretarial levels and within the White House staff, the creative yet pragmatic thinkers and doers who can think and act anew?
And will the new president be able to lead and manage them as Roosevelt did just halfway between Lincoln’s time and ours?