Sunny Post-Partisanship Sounds Nice, but What's Obama's Larger Vision?

By David Morris, AlterNet. Posted December 15, 2008.

The loss of the strike as a weapon crippled America's workers. Unions, the organizations that gave us the weekend, the 40-hour workweek and corporate pensions, were decimated.

After 1980, we adopted another of the key principles of Reagan's philosophy: personal responsibility should substitute for collective responsibility. Jacob Hacker describes the ensuing years as "the great risk shift." We shifted risk from the society to the individual. Reagan taught Americans that those of us who suffered economic hardship did so because of some personal failing and were not to be bailed out by society. Indeed, Reagan convinced us that by becoming more individually insecure, we would become more entrepreneurial and productive, and therefore, collectively richer.  

Corporations adopted the new philosophy at an alarming rate.

In 1980, about 24 million Americans lacked health insurance. By 2007, this had risen to more than 46 million. Almost the entire decline is due to a drop in the scope and generosity of employer-provided health coverage. In 1980, according to William Galston, the majority of employers at medium-to-large companies paid 100 percent of the premium for family health coverage. Today, less than a quarter do.

In 1980, more than 80 percent of large and medium-sized corporations offered traditional "defined-benefit" pensions that provide a predetermined monthly benefit for the remainder of a worker's life. Today, less than a third do. Instead, companies that provide plans now offer "defined-contribution" plans where the risk is transferred from the company to the worker.

We became a more fearful nation even in good times. In 1982, amid a severe recession that pushed the unemployment rate up to nearly 10 percent, a poll by a private business research firm found that 12 percent of workers were "frequently concerned about being laid off." In 2005, with the unemployment rate down to 5 percent, the number of Americans worried that they would lose their jobs was 35 percent.

Under Reaganism, curbing individual wealth at any level undermined the motivation of the wealthy to produce and therefore reduced national wealth. From 1935 through the late 1970s, the nation's wealth had become more equalized. After 1980, it became more unequal. From World War II to 1980, wages rose almost in lockstep with increases in productivity. Since 1980, according to economists Frank Levy and Peter Remin, productivity has increased by more than 70 percent while median compensation has risen by only 19 percent, and 82 percent of all personal income gains went to the top 1 percent of the population.

The economy continued to expand, not because of increases in collective wages but because of increases in public and private debt. Debt increasingly became the defining feature of the American economy. Before 1980, corporate borrowing financed investment spending; after 1980, a significant portion of corporate borrowing was for the purpose of buying back stock.

Recall that Obama admired Reagan because Reagan changed the trajectory of America "in a way that Richard Nixon did not and in a way that Bill Clinton did not." That is an important and wise observation.  

Nixon continued the trajectory of America began by FDR. Indeed, it was Nixon who in 1971 declared, "We are all Keynesians now."  

Bill Clinton continued the trajectory of America begun by Ronald Reagan. In 1996, Clinton signed into law the instructively titled Personal Responsibility and Work Opportunities Act, ending the 60-year-old commitment by the federal government to support those in greatest need. The impact on the poor of that federal withdrawal of ultimate responsibility was delayed because of the economic boom of the last half of the 1990s. But it was an artificial buoyancy created by a speculative bubble that burst the year after Clinton left office, which led to federal actions that led to the second speculative bubble that ended five months ago. In 2002, Stephanie Pomboy at MacroMavens presciently dubbed this "The Great Bubble Transfer."  The speculative burst in the home mortage market compensated for the bursting of the dot-com-driven stock market.    

Some would argue that in his early years, Clinton did try to change the Reagan trajectory. He raised the income tax on the wealthy. He tried to institute a national health plan. But that latter resulted in the loss of the House of Representatives to the Republicans, and from 1994 onwards he did little to take on Reaganism directly.

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David Morris is co-founder and vice president of the Institute for Local Self Reliance in Minneapolis, and is director of its New Rules project.

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