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The most important function of the federal government
is mailing checks to citizens--Social
A democracy cannot exist as a permanent form of government.
It can only exist until the voters
The most famous line in this essay--one of the most famous (or infamous, depending on your viewpoint) political pieces in the Republic's history--is the quote from Stockman himself : "None of us really understands what's going on with all these numbers." In the parochial world of Washington politics, this admission was taken as proof that the critics of Reaganomics had been right all along and that the attempt to drastically cut taxes while dramatically boosting military spending was a massive fraud. Ever after, Stockman's words have been used as a whip with which to beat supply siders and the chiv with which to gut Republican tax cut proposals.
There's a wonderful, though surely apocryphal, tale that is told, of a staffer for a Republican Senator who was giving a group of foreign dignitaries a tour of the Capital building. One of his charges asked how many political parties we have here, to which the staffer replied : In America, we have just two political parties : the evil party and the stupid party. That the GOP is the stupid party is almost conclusively proven by their inability to claim this essay for their own purposes. For what William Greider's profile of David Stockman shows, above all else, is just how accurate the conservative view of the world really is.
Folks now may not remember David Stockman too well. He was Ronald Reagan's first Director of the Office of Management of the Budget. Formerly a brash young House member, he was considered to understand the details of the Federal Budget as well as anyone in the Congress. (The modern comparison would be to John Kasich.) Stockman had once been a student radical, but had drifted back to the Right and had latterly converted to supply-side economics. This gave him the worst combination of qualities you'll ever find in a bureaucrat : first, he was a true believer in an untried political ideology; second, he believed that he understood how the government worked. No, not just the government; he believed he knew (in Jude Wanniski's hubris laden phrase) "how the world works."
He brought to his job a belief that politics had changed with Ronald Reagan's victory, that people were prepared to face up to the fiscal wreckage left by forty years of deficit spending. He truly believed that elected officials and their constituents would be willing to forego pet programs and special interest spending to help get the budget back in balance, that, for however brief a moment, greed would be replaced by enlightened responsibility. And he pushed the supply side tax cut because he believed, with mathematical certainty, that marginal rate tax cuts would automatically generate increased tax revenue, because of the boosts in the economy that they would cause.
Now, before I bash Stockman, let me acknowledge that I too believe in the efficacy of tax cuts. In the abstract, I even believe that cuts may trigger sufficient growth to more than make up for the loss of revenue from the cuts. However, life does not take place in the abstract. Supply side economics is not such an inexorable force that it can overcome the economic realities in which it occurs. And at the time of the Reagan cuts, the Fed, with the President's blessing, was simultaneously pursuing a classic conservative idea, regaining control of the money supply.
With inflation and unemployment in double figures--the notorious stagflation, which finally disproved Keynsian economics--Fed Chairman Paul Volcker cranked interest rates well up into the double digits too. This drove the American economy into a brutal recession, but it also squeezed out the inflation which had become a seemingly permanent part of the economy. With such drastic measures underway on the monetary front, no tax cut, nor any other economic experiment, could possibly get a fair trial. Only someone who had been blinded to reality by their own ideology could think that supply side economics would be a more significant force, in a given year, than a planned recession.
Of course, the situation that prevailed in the overall economy was only short term. It is entirely possible that the tax cuts deserve credit for flattening and shortening the recession, and that they were largely responsible, along with the victory over inflation, for giving birth to the economic recovery that followed. However, by then, Stockman and others had given up on the ideas, because they hadn't worked in the precise way that they envisioned--tax cuts were supposed to lead to greater revenues as surely as the dawn follows the night. When they didn't, Stockman became so spooked by his own projections that he turned into one of the biggest skeptics of the Reagan economic program, sharing his doubts with Greider and producing this sensational bit of journalism.
Make no mistake; it was sensational, both in the reaction it provoked, and in the lessons which, properly understood, it teaches. The former sensation grew out of the simple but inexplicable fact that a high ranking Washington official actually spoke his own mind. The notion of a politician or bureaucrat telling the truth, as he sees it, was just as unlikely then as it would be now. And, of course, the fact that Stockman's "truth" was that supply-side economics wasn't working, only made his candor all the more delightful to Democrats, the Press and the pundits, most of whom had vociferously opposed the program, and the very concept of a Reagan presidency, to begin with. Meanwhile, Republicans, the members of the Stupid Party, played into their opponents hands by condemning Stockman and howling for his head. This made it seem like they were trying to silence Stockman for telling the truth, and played into the hands of the Left.
The proper response however, and the real insight of the essay, lay within its most famous line, when Stockman acknowledged that no one understood what was going on. Here was the perfect modern technocrat admitting that neither he nor anyone else was capable of fathoming the very numbers upon which government policy is based. This is exactly what conservatives had been saying since at least the publication of The Road to Serfdom by F. A. Hayek : the operations of the economy are far too complex for individuals and governments to comprehend or predict them, which makes all government economic planning an inherently risky, and often counterproductive, exercise. This fundamental truth is not repealed during Republican administrations; the economy is equally unlikely to perform precisely as they wish as it is during Democratic administrations. That is why the argument for tax cuts should never be couched in terms of its effect on the economy (a lesson that the administration of George W. Bush has obviously not learned). The rationale for cutting taxes should be to return money to taxpayers and let them decide what to do with it, precisely because government is incompetent to make these decisions on a large scale. Individual taxpayers will make bad decisions too, but taken together, in their hundreds of millions, taxpayers/consumers, if given a free market in which to function, will tend to be more efficient than centralized government can ever hope to be.
The odd thing about William Greider is that he understands all of this perfectly well, and yet clings to a nearly socialist politics. Here is how he describes the key revelation of the book :
When David Stockman revealed with disarming candor
that 'none of us really understands what's
The permanent answer, I am convinced, is yes.
I too am convinced. The essence of the conservative critique of government is really that its exercise of power is de facto arbitrary and capricious and that its power should therefore be restricted. Greider, for whatever reason, perceives the problem and provides the critique, but somehow supports further concentration of power in the hands of governments. That is inexplicable, other than by resort to psychoanalysis.
The Education of David Stockman is great journalism because it reminds even conservatives that when it comes to the complex functioning of the economy, they don't know any more than Democrats do. Supply side economics is sound because it is morally right--the people should control the wealth they generate--not because it will produce any specific result. In fact, it really doesn't matter what result tax cuts produce in terms of economic growth and tax revenues. What matters is that these results will be the byproduct of millions and millions of little decisions that people make in their own lives, instead of a function of a few potentially disastrous decisions made by a few pointy headed wonks in Washington. Of course, that the lesson that folks have taken away from the David Stockman experience has been precisely the opposite of the one it actually teaches, and that they instead believe it to demonstrate the illegitimacy of supply side economics, merely proves two other core conservative principles : the intellectual opinion-making class lies to the people and the people are too stupid to realize the truth. What makes conservatism such a noble belief system is that we still think that the people, even the intellectuals, are entitled to run their own lives. Better to let us all make our own mistakes that to let the David Stockmans of the world make them for us.
See also:Presidents (Reagan)
-ESSAY : The Education of David Stockman (William Greider, The Atlantic Monthly)
-BIO & ARCHIVE : William Greider : NATIONAL AFFAIRS CORRESPONDENT (The Nation)
-ARCHIVES : "greider" (Slate)
-Institute for America's Future
-EXCERPT : Chapter One of Fortress America : The American Military and the Consequences of Peace
-ESSAY : Stockman Returneth (The Nation, April 2, 2001)
-ESSAY : Who's Progressive? : A response to Andrew Glyn's "Egalitarianism in a Global Economy" (William Greider, Boston Book Review)
-ESSAY : O and D (William Greider, Financial Markets Center)
-ESSAY : Time to Rein in Global Finance : A commentator says the World Bank & IMF may not be worthy of all the hostility they have generated (William Greider, inequality.org)
-LECTURE : Fifth Annual John S. Knight Lecture (William Greider, National Editor, Rolling Stone, April 13, 1993)
-BOOKNOTES : William Greider Title: Fortress America: The American Military & the Consequences of Peace Air date: December 13, 1998 (C-SPAN)
-INTERVIEW : (Ann Online)
-INTERVIEW : with William Greider (PBS Frontline : The Crash, spring of 1999)
-INTERVIEW : Personal Responsibility in the Global Economy (New Dimensions)
-INTERVIEW : with William Greider (Joe Sottile, Center for Defense Information)
-INTERVIEW : The Man Who Was Right: Interview with William Greider (On Money)
-INTERVIEW : (Interlog)
-William Greider page (Third World Traveler)
-PROFILE : The Accidental Theorist : All work and no play makes William Greider a dull boy. (Paul Krugman, Jan. 23, 1997, Slate)
-ARCHIVES "greider" (NY Review of Books)
-ARCHIVES : "greider" (Salon)
-ARCHIVES : "william greider" (Find Articles)
-REVIEW : SECRETS OF THE TEMPLE: How the Federal Reserve Runs the Country. By William Greider (1988) (Christopher Lehmann-Haupt, NY Times)
-REVIEW : of SECRETS OF THE TEMPLE How the Federal Reserve Runs the Country. By William Greider (Adam Smith , NY Times Book Review)
-REVIEW : of THE TROUBLE WITH MONEY By William Greider (John Taylor, NY Times Book Review)
-REVIEW : of Who Will Tell the People The Betrayal of American Democracy By William Greider (1992) (Christopher Lehmann-Haupt, NY Times)
-REVIEW WHO WILL TELL THE PEOPLE The Betrayal of American Democracy. By William Greider (Jefferson Morley , NY Times Book Review)
-REVIEW : of Who Will Tell (Tibor Machan, San Diego Tribune)
-REVIEW : of Who Will Tell The People: The Betrayal of American Democracy (Phillip A. Ross)
-REVIEW : of Fortress America by William Greider (James B. Stewart, NY Times Book Review)
-REVIEW : of FORTRESS AMERICA: The American Military and the Consequences of Peace , By William Greider. (Andrew J. Bacevich, Wilson Quarterly)
-REVIEW : of One World, Ready or Not : The Manic Logic of Global Capitalism (Matthew Miller, NY Times Book Review)
-REVIEW : of One World, Ready or Not : The Manic Logic of Global Capitalism (Michael Gerber, Salon)
-REVIEW : of One World, Ready or Not : The Manic Logic of Global Capitalism (Thad Williamson, Sojourners, 1997)
-REVIEW : of One World (John O. McGinnis, National Review)
-REVIEW : of One World (Lester Thurow, Atlantic Monthly)
-REVIEW : of One World (Steve Brzezinski, Antioch Review)
-REVIEW : of One World (Richard Hornik, TIME)
-REVIEW : of One World (The Economist)
-REVIEW : of One World (Brink Lindsey, Reason)
-REVIEW : of One World, Ready or Not: The Manic Logic of Global Capitalism (John B. Judis, Slate)
-REVIEW : of One World, Ready or Not: The Manic Logic of Global Capitalism (ABA Advance)
-AWARD : George Polk Award for Journalism : 1981 : Magazine Reporting : The Education of David Stockman by William Greider