A HISTORICAL PERSPECTIVE ON TODAY'S ECONOMY
MARCH 25, 1996
The NewsHour regular panel of historians looks at the current feeling of economic insecurity in America. Margaret Warner moderates.
MARGARET WARNER: Throughout last week, we examined the various facets of economic insecurity that many voters say they feel, debating the economics as well as the politics of the issue. Tonight: an historical view. We get it from three NewsHour regulars: Presidential historians Doris Kearns Goodwin and Michael Beschloss and author and journalist Haynes Johnson. Joining them is Robert Samuelson, national columnist for "Newsweek" and author of The Good Life and Its Discontents: The American Dream in the Age of Entitlement. Welcome, everybody. Bob Samuelson, you've written extensively recently, saying you think all of this attention to economic insecurity is really grossly exaggerated. Why do you believe that?
ROBERT SAMUELSON, Newsweek: I don't--it's not that we shouldn't be paying attention to it, but I think it's been blown out of proportion. You have to remember that we have an unemployment rate of 5.5 percent. If you look at the average unemployment rate in the first half of the 90's and compare it to the first half of the 80's, it's slightly more than 6 percent in the 90's, it was more than 8 percent in the 80's. So in general, our labor markets are probably looking better today than they were 10 years ago. There is insecurity; there is downsizing, but there's always some anxiety and insecurity in a competitive economic system, and I'm not sure it's dramatically higher today than it has been in the past. In fact, I would argue that it isn't.
MARGARET WARNER: Haynes, how do you see this?
HAYNES JOHNSON, Journalist/Author: Well, we really have a difference on this one. I have spent the last ten, fifteen years in particular traveling around the country and it has been cumulative. It isn't just anecdotal. People really feel, and it is an attitude but it's also a fear that the old rules have changed. It isn't just the smokestack industries that are gone, but, but there's a whole tapestry of feelings about the system, the compact is broken, they can't trust government, they don't trust leaders, they don't trust institutions, and the most stunning figure I think Gallup is tracking, the faith in American institutions since 1975 to '91, they went down dramatically with one exception, the military. That went up. And so '91 on, it even got worse, so you may say that these attitudes aren't real or whatever, but people feel them, and it has powerful political and personal reactions in the country.
MARGARET WARNER: Michael, last Summer, Paul Taylor of the "Washington Post" took somewhat Bob Samuelson's view. In historical terms, he said, is a single mother working at McDonald's today really any worse off than the immigrant wife who had to work in the Chicago slaughterhouse in 1915? I mean, from an historical perspective, is there something to that critique?
MICHAEL BESCHLOSS, Presidential Historian: I think there is, but it does have a lot to do with expectations I think that Haynes was suggesting, and especially in recent times. You look at the period, for instance, since World War II. People were accustomed to a growth rate in the 1950's and the 1960's of upwards of 4 percent. They also assumed, as John Kennedy used to say, that a rising tide would lift all boats, that when you were in a period of great economic expansion, that everyone would benefit. Those two things are really no longer the case, and one problem that we have had, I think, in the last twenty years or so is that when we began to come down from that perhaps artificial boom after World War II, when we were benefiting from being the only economic superpower in the world, with Germany and Japan devastated, our political leadership, our Presidents did not do very much to prepare us for it. You had Presidents like Kennedy and Johnson and Nixon essentially saying not only is there a boom but we're responsible and you can expect to see that in the future. Interestingly, the one President in recent times who has tried to level with the American people about the fact that perhaps we will not be living in this artificial age anymore was Jimmy Carter. He paid for it so badly that very few political leaders in the future will do that again.
MARGARET WARNER: Doris, how do you think that current times compare to other times of economic insecurity in the past?
DORIS KEARNS GOODWIN, Presidential Historian: Well, surely, if you look at the 1890's or you look at the Great Depression in absolute terms, people lived in much worse conditions, the working conditions at the factories were horrible. Yet, that doesn't answer the question as to where the anxiety is coming from today, because what happened in the 1890's, when you had a similar kind of structural change from an agrarian to an industrial economy, just as now we're having a change to a global economy, people began to have an answer to their problems. They began to form unions, state and local governments began to form protective legislation, minimum wage, worries about the sweatshop were undone when they began to regulate them, so there was a feeling of forward motion in a certain sense, similarly, in the Depression, when unlike today, everyone was hurt. Stockbrokers were presumedly jumping out of windows on high rises, just as the working people were hurt. Today what's different is you've got an economy that's going forward. It may not be as fast a rate as it was in the past. Productivity is there, but the fruits of that economy are not being shared equally by the people at the top and the people throughout the rest. And people feel that unjustness, and they don't have sources to turn to. Unions don't have the strength they had in the past. They're much, much less powerful than they were as a protective tool for the workers, and people don't believe in government in the same way that they did either in the 1890s when the state governments took up the cudgel, or the New Deal, when finally the federal government set up unemployment insurance, Social Security, and pensions. So I think the people are feeling adrift. Leaders aren't addressing it. Their institutions aren't addressing it. And that anxiety, I suspect, is even deeper in some ways, even though the absolute conditions of their life may not be as bad as they were in the past.
MARGARET WARNER: Well, Bob Samuelson, do you think we are now in a completely different era in terms of economic growth, as Michael was saying?
MR. SAMUELSON: Well, the economy is always evolving, and that is one of the things that people, it seems to me, are having a hard time adjusting to, that in a competitive economy there is constant change. We had this sense of entitlement that we were going to be entitled to calm and security, but that's a complete antithesis of a market economy, and people have to get used to the notion, and we're having a hard time getting used to the notion that the kind of economy we have inevitably involves some anxieties and some insecurities. But I don't think we should exaggerate the extent to which people feel these today. Gelb does an interesting poll in which they ask people whether or not they're going to feel better. They expect to feel better in a year economically than they do today. The most recent poll done in March, 66 percent of the people expect to feel better in a year than they do today. In 1980, it was less than 30 percent. It's hard to imagine those people think they're going to lose their job in the next year, and probably most of them won't. What Haynes says is absolutely true. There has been this precipitous decline in confidence in institutions. But I would argue, and I do argue in my book, that the reason for this is that we develop very, very unrealistic expectations of what these institutions could, in fact, produce for us, government corporations. And now these expectations are being shattered, and people feel disillusioned with the institutions, but the pervasiveness of the pessimism, it's just not that pervasive. It's focused on our institutions, our leaders, and to some extent our ideas, but people are not walking around in kind of a collective depression in America about their own personal lives, so there's just--there's a schizophrenia.
MARGARET WARNER: Let me turn to one thing, and you've raised it, Haynes, but talk about it a little more. And Bob Reich talks about it too. He says there used to be a social compact between American companies and their workers and that that's been broken. Is he romanticizing the past, or was it different then? Was this relationship different?
MR. JOHNSON: We're really not far apart here. What Bob is talking about, if you ask people individually about their own lives, they feel pretty good about their own life, most people, but institutions are more than just names. They are where you work. They are the people you trust. There is even your church, your union, your newspaper, the television you watch, and if the sense that somehow you can't trust or believe those, then you feel that something's broken. The social compact idea was in this most optimistic society tomorrow will be better than today, and there's always been a way up. You talk about the American dream. What that was, it's not just a myth. It was a way up, and the idea that it's a rigged society is very dangerous. If you see the disparity at the top to bottom, the increasing wealth given at the top, and it's not just a statistic, it's real, the increasing numbers of those at the top versus those at the bottom, and people begin to feel I'm getting hurt unfairly and unjustly. That's a recipe for real dislocation in a society politically and economically, and I don't disagree with your economic prescription, but I think the attitudes about, upon which the basis of the society operates, are at risk.
MARGARET WARNER: Michael, when have been the other times most vividly in American history where you had this sense in the population that some people were getting more benefits than they deserved, but that they were just getting rooked by the system, and what happened? What has been people's response to that?
MR. BESCHLOSS: Well, Doris touched on a couple of them, the 1890's and the 1930's. These were periods in which you had mass misery that came from a very bad economic depression, perhaps recession in the earlier case, and the result was that you had many Americans looking for an answer and an answer that suggested that the reason why I am poor, the reason why I'm suffering is that there is someone else who's benefiting and perhaps cheating the rest of us. In the 1890's, that is the reason why you had a great movement toward the populist, the populist candidate for President did awfully well, James Weaver. He suggested the reason why people were suffering was in part because there was a cabal of international bankers in New York who were benefiting in a way that was causing foreigners to go bust. In the 1930's, the same thing could have happened. There were other demagogues. It was only because there was Franklin Roosevelt to provide the political explanation to people that made them feel a little bit more assuaged. That's what we really have not had in the last 20 years because our leaders, our Presidents to a great extent I think have not quite leveled with us.
MARGARET WARNER: Doris, do you think then that what we're saying is in the past people did ultimately look to government at times like these?
MS. GOODWIN: Well, I think it's not only looking to government. I think, as I said earlier, they looked to their unions. I mean, look at what happened in the 1930's and the 1940's, when World War II came business was finally necessary to the government to produce the weapons, the tanks, the ships, the planes that were going to win us the war, and they went to Roosevelt and essentially said if we're going to do this task for you, you've got to undo some of these New Deal social protections you put in against capitalism, we can't afford speedy mobilization if we have to worry about minimum wage, about overtime, about good conditions in the factory. Roosevelt said, no way, the only way we're going to go forward is to have a healthy working place for the people. Unions got stronger during World War II. Business was productive. It's probably the model we should look for today. Never before has the partnership been greater than doing that period of time because both partners in this have to be at their strength. Now, I think what we have to figure out is how do we get corporations to realize they have as much responsibility to their employees and to their communities as they do to their shareholders because it's in everyone's interest that the consumer base stay strong. That's what happened in the 1920's. If you cut that consumer base, the rich get richer, you're not going to have a base to buy the product, and then you're in real trouble as a whole society. So we're all in this together, but I'm not sure that many corporations see it that way.
MARGARET WARNER: Bob Samuelson, what do you think history tells us about what the answer is at a time like this, what the model is, or is that the wrong question?
MR. SAMUELSON: I guess I don't--I have a hard time predicting the future, and I look back at the past, and I think I wonder about the future. I don't know. I think that, you know, this is a very messy society, and it always seemed that we're unhappy with something. People look back to the 1950's now as a very kind of nostalgic period when everything was fine, but I grew up in the 1950's, and that is not the way people felt about the 1950's in the 1950's, so my sense is that we are in a period in which we are undergoing a lot of kind of superficial turmoil, some of it quite deep. But I don't think it really compares with some of the other periods in which we've had really deep social tensions. If you compare the 90's with the 60's, for example, in the 60's, this country was really coming apart in many fundamental ways, Vietnam, civil rights, campus turmoils. These were deep social tensions which affected people at a very, very deep personal level. A lot of what is going on now is the normal operation of a very diverse, large society in which you have a lot of different people with a lot of different opinions, different people coming in. You know there's always going to be a kind of a level of noise and turmoil in a society like the United States. And I think if you compare today with a lot of earlier periods, it's fairly placid, relatively speaking. We're never going to be totally placid.
MARGARET WARNER: Do you think we're romanticizing the past?
MR. BESCHLOSS: I honor Bob and I'm very admiring of his book, but I guess I would disagree. I think in recent years we really have come to something of a rubicon, and the rubicon is that for most of our history we felt that America was unique, that we were perhaps not subject to the booms and busts as severely as, for instance, the countries of Europe. There was an expanding future, that the future would always get better, I think that's now changing. We're beginning to get like everyone else. When that happens, it's emotional shock, and that's a shock that I think we'll have to deal with politically and also economically.
MARGARET WARNER: Haynes, do you agree with Michael, the point he made earlier, that political leaders in general have not spoken sort of honestly in times like this and that you pay too big a political price if you do?
MR. JOHNSON: Yes, of course. I mean, we've seen that over and over again.
MARGARET WARNER: No examples of heroism that paid off?
MR. JOHNSON: Very few in recent times, and I think the role of the President is to be the public educator. That's about all you can do. You can't make the trains run on time. You can't make the-- nothing like that--you can't stop the weather. You can't solve diseases overnight, you can't--but you can educate the public to where the country's really going and what real problems are. And in the short-term politics we live in everything is fragmentary, and it's quick and it's a hit. And I think that really does do a disservice to the larger kinds of tensions we're talking about here. This ought to be the best time for the United States. We have no war. We have no Depression, as Doris says, we have no enemies, you know, we're not torn apart, we're not in riots, we're not in--and yet, there is, I would argue very strongly, a pervasive distrust about who we are, where we're going, what is the purpose and value of the society, and we don't know where to look.
MARGARET WARNER: Doris, how much honesty do you see in the public discourse on this point?
MS. GOODWIN: Well, I think what we need our leaders to do is to tell us that it's not simply that they have to prepare us for limits in a world that's different from before. That's part of it. But I think they have to figure out how we're going to become more competitive in a global economy. And the answer is not simply economic. It's partly making sure that corporations have given their employees what it is that they need to feel morale, to stay and not be turning over because they have a loyalty to the company. We've got to figure out how to strengthen unions so that that bargaining power with the business community is strengthened. They can educate the country. As I said before, we're all in this together. Somehow, I think that business has taken ahold of the dialogue and government seems like the enemy, so there's nobody out there really talking about ways in which Robert Reich is trying to do this. And I applaud him for doing it, and I think that dialogue has to go forward. There has to be some things, whether we believe in government as we did before, that us as a collective society can do to make our situation better. It's not written in stone that this thing has to keep going down, and we're not going to compete with third world countries, I don't believe that. I believe America has the capacity to be productive. There are other ways than downsizing, however, to be productive, and that's to get a lower cost and a better product. And maybe working with your employees in a better way can do that, and that's what we should be striving for, but that will depend on leaders having a real educative role about where our society is going in the future. And so far, no one wants to touch it. They just want to believe the economy is healthy, because they're afraid if they mention it, it will look like things are bad and they're responsible.
MR. SAMUELSON: Well, you know, I would say that our major problems are not economic. They're social, they're cultural, they're political. If you look at the economy, we have the lowest unemployment rate of all major industrial countries, with the exception of Japan. We are the world's largest exporter. We are the leader in most of the major technological industries, computers, commercial aircraft, pharmaceuticals. We were able to generate 46 million jobs since 1970. The economy is in relatively good shape.
MARGARET WARNER: So, Bob Samuelson, are you saying then that you think the political leadership is speaking on a certain honest level about this?
MR. SAMUELSON: No, the political leadership, part of the problem we have in our society at a political level is that government promises to do things that it can't do. Government cannot calibrate the rate of economic growth in a four-year election cycle. They cannot eliminate business cycles. When you lead people to believe that government can do this and then the people see in the real world that the government can't do it, naturally people feel disillusioned with their leaders, and one of the things we have to do is to discipline our expectations of government, not necessarily to have small government. We're never going to have small government in the near future, but to make sure that we concentrate government's efforts on things it can actually do so we don't pre-ordain ourselves to disappointment.
MS. GOODWIN: What about--if I could just add something--beside all those good economic indicators that you mentioned, we also have now the greatest maldistribution of income that we've had in our history, and that's what people are feeling as well, that the rich are getting richer, and that the fruits of that productivity are not spreading down to the middle class as they did in the past. One of the great things about World War II, it created a middle class which lasted for a long period of time. They're right to feel angry. They're right to feel anxious. All those indicators may keep going up, but if they're not getting the benefits from it, their living standards have gone down consistently if you look at it over time in these last years, and they feel that.
MARGARET WARNER: Speaking of time, we're out of time. Thank you all very much.